Section 10: Prices and Awards 1

1
Food Purchasing for Child Care Centers

• Section 10
• Prices and Awards (Steps 6 and 7)

2
Lesson Objectives
The learner will be able to

• explain the difference between a line-item award
  and a bottom-line award,
• state which methods to use for obtaining prices
  from retail vendors and wholesale vendors,

3
Lesson Objectives
The learner will be able to

• state the six parts of an IFB/RFP, and
• identify where to obtain advanced training on an
  IFB/RFP.

4
Steps 6 and 7

• Obtain price quotes
• Award business
• Board of directors
• Owners

5
Which One?

• Line-Item Award
• Or
• Bottom-Line Award

6
Line-Item Award

• You buy each item from the vendor offering the
  lowest price quote that meets quality standards.

7
Line-Item Award
8
Bottom-Line Award
all or nothing

• You buy all food products in a group from the
  same vendor.

9
Bottom-Line Award

• Award business to vendor with lowest
  total(bottom line)
• Use quantity estimates accurate to 10

10
Bottom-Line Award

• Compare extended prices, not unit prices

11
Unit vs. Extended Prices

• Unit prices
• Prices of single cans or cases
• Extended prices
• Unit prices x quantities

12
Example

• A case of peaches costs 20. The center will buy
  12 cases of peaches.
• Unit price 20
• Extended price 20 x 12 240

13
Bottom-Line Award

• Adding the unit prices of all items is not the
  bottom-line method.

14
Bottom-Line, No Quantities
15
Bottom-Line, Quantities
16
Obtaining Prices

• To maintain full and open competition, a center
  must give every vendor an opportunity to compete
  for the business of the center.

17
Obtaining Prices

• Quality wanted
• Best price

18
Obtaining Prices

• Different methods used to obtain prices from
  retail and wholesale vendors

19
Retail Vendor Prices

• If you buy from retail vendors, the best approach
  for determining where to buy your food and
  supplies is the market basket.

20
Market Basket

• A representative list of the foods a center uses
  in a typical week

21
Retail Vendor Prices

• Make a list of the foods and quantities that your
  center uses in a typical week
• Obtain the prices of these foods from the retail
  vendors in your community and write them down
• Compare the prices using the line-item or
  bottom-line method (whichever one your center
  decides to use)

22
Retail Vendor Prices

• Determine which vendor offers the lowest price
• Make a recommendation to your board of
  directors/owners to purchase from that vendor

23
Retail Vendor Prices

• You may need to split the food into several
  smaller market baskets.

24
The Decision . . .

• . . . where to purchase must be approved by the
  board of directors or owners for a certain time
  period.

25
How Often?

• How often determined by board/owners
• Recommended at least once a year with board/owner
  approval
• May be repeated at any time

26
Market Basket

• Sometimes a center may need to purchase from a
  vendor not awarded the market basket.

27
Market Basket

• If purchasing from vendor not awarded the
  business

• Write down the reason
• Keep it with the invoice
• Keep documentation for audit or review

28
Activity 13
29
Activity 14
30
Wholesale Vendor Prices

• Different pricing structure than retail vendors
• Long-range firm prices possible

31
Wholesale Vendor Prices

• To purchase from a wholesale vendor and assure
  better pricing, it is necessary to have a
  contract.

32
Contract

• Guaranteed price from the vendor
• Guaranteed quantity to be purchased

33
IFB/RFP

• Should be used in obtaining pricing from a
  wholesale vendor

34
Federal Principles

• Private non-profit centers Must use IFB/RFP for
  purchases of more than 100,000 or amount in
  their organizations procedures, if less
• Public centers Must use IFB/RFP for purchases of
  more than 100,000 or amount in State law or
  local procedures, whichever is less

35
Federal Principles

• For-profit centers Must use IFB/RFP for
  purchases of more than 10,000

36
IFB/RFP

• IFBonly variable is price
• RFPmany variables including price

37
Wholesale Vendor Pricing

• Write an IFB/RFP document
• Invite (advertise) vendors to respond to the
  IFB/RFP during a stated time period
• Compare prices from the vendors responses using
  the line-item or bottom-line method (whichever
  one your center decides to use)

38
Wholesale Vendor Pricing

• Determine which vendor offers the best price
• Make a recommendation to your board of
  directors/owners to purchase from that vendor

39
Evaluating an IFB/RFP
First Choice A Purchasing Systems Manual for
School Food Service
Chapter 10
40
Parts of an IFB/RFP

• Signature page
• General instructions
• Special instructions
• Product list
• Delivery sites if more than one
• Potential vendor list

41
Signature Page

• Dates pricing is firm
• Shorter period, better price
• One year normal
• Date and time IFB/RFP due
• Contractual statement the vendor signs

42
General Instructions

• Corrections of mistakes on the price list
• A list of laws that must be followed
• Whether fax copies of price list accepted
• Penalties for failure to perform
• Other general information

43
Standard Contract Language
First Choice A Purchasing Systems Manual for
School Food Service
appendix 16
44
Special Instructions

• Drained weight of canned fruits and vegetables
• Delivery time and frequency
• Grade standards
• Private labels of potential vendors
• Other information related to product list

45
Product List

• Name and quality standards for each product
• Quantity center wants
• Product item number
• Product bid unit

46
Bid Units
First Choice A Purchasing Systems Manual for
School Food Service
chapter 6
47
Product List
48
Delivery Site List
(only if more than one delivery site)

• Name, address, phone number, contact person of
  sponsoring organization and information on
  delivery site
• Name, address, phone number, hours of operation,
  and the contact person of each delivery site

49
Potential Vendor List

• Used to contact vendors
• Contains
• Names of distributors

• Names of newspapers or other sources where
  IFB/RFP will be advertised

50
IFB/RFP
Any organization that is large enough to purchase
from wholesale vendors should get more training
on the IFB and RFP.
51
Awarding the Business

• If board/owner approval needed
• Summarize reasons for vendor award in
  written/oral presentation
• Consider time needed for board/owner approval
• Have board/owners decide before current
  purchasing authority expires

52
Awarding the Business

• If board/owner approval not needed, promptly
• Sign contract with wholesale vendors
• Notify vendor when purchasing will begin