Buy Right with the NEW Regulations
Definition A bid is a contractual procurement agreement between a school foodservice and a vendor for: v. Specified Time v. Specified Price v. Specified Quantity
Purchasing decisions must be based on the nutritional needs of children. • Purchasing supports the primary goal of the Child Nutrition Programs, which is “to protect the health and well being of the nation's children, ” As stated in the National School Lunch Act of 1946
Why is Purchasing Important? • Ensure quality meals that meet student preference for best possible price • Food and supply costs under control of school managers/directors • Shrinking resources
Why Bid? • • Preferred product Legal Issues Lowest Price Keep Distributors Honest • District Requirements
Procurement Regulations • NSLP – Title 7 of Code of Federal Regulations (CFR) Part 210. 21 • Federal Procurement 7 CFR – Part 3016 – Part 3019 fns. dpi. wi. gov/fns_procurement
Methods of Procurement 3 Most Common Types of Purchasing – Bid – Invitation for Bid (IFB) – Request for Proposal (RFP)
Bid Selection (Contract Award) of Product or Service is Based On – Price Only
Invitation for Bid Selection (Contract Award) of Product or Service is Based On – Price Only – Minimum Specification
Request for Proposal Selection (Contract Award) of Product or Service is Based On – Price Only – Minimum Specification – Weighted Criteria
Weighted Criteria • Assigned Points Reflect Significance of Item or Goal • Price Must be the Most Significant
Weighted Criteria • Point spread between the best proposal and the second best should be mostly based on the importance of the item or goal • Matrix used to sum up points and award contract
Informal Method of Procurement Definition: • Total Value of the Contract for • Goods and Services is under $ 100, 000 Solicitation of Companies (minimum 3) Known to be Doing the Kind of Business Needed
Formal Method of Procurement Definition • Must be Written • Total Value of the Contract for Goods and Services is over $ 100, 000 • Mailed to all Companies (minimum 3) Know to be Doing the Kind of Business Needed • Intent to Purchase Must be Published a Minimum of 14 Days Prior to the Due Date in the Legal Notice Section of a General Circulation Newspaper • Opened Publicly
Bid Protocol at Opening Absolutely NO feedback until evaluation is completed –then it goes to the bid department • Offers are taken under advisement • 2 – 3 people present • Only bidders may view other bids before public record • Public record after awarded and purchased
Getting Started Identify: • • Goods and/or Services Quantities Needs and/or Requirements Separate “Got to Have” from “Nice to Have”
Procurement • • • Good Administration Ethics in Purchasing Free and Open Competition Clear and Accurate Description Procedures
Good Administration • Award bids or proposals to only responsible contractors • Ensure that pre-qualified lists of person, firms or products are current • Adequate number of qualified sources
Good Administration Do you have written selection procedures for procurement transactions that ensure that all bids or solicitations: 1. Use “brand name or equal” or multiple brand names without “equal” when it is impractical to clearly describe technical requirements of the product? 2. Identify all requirements which the bidders must meet and all other factors that will be used in evaluation bids or proposals?
Ethics in Purchasing • Questions related to ethics do not always have clear answers. A good general rule is: “If you question an action, then you should not proceed. ”
Purchasing professionals agree that unethical behavior is: • Providing one supplier’s cost information to another supplier before supplier selection. • Showing preference to suppliers because of pressure from administration or boards. • Accepting gifts or cash from a supplier.
Additional ethical issues: • Allowing personality to enter into purchasing decisions • Obtaining proprietary information from one supplier and sharing it with their competitor • Accepting free trips and entertainment.
Promotion of Free and Open Competition • Determine Companies Doing The Type Of Business Desired • Contact All Known Companies
Situations Considered to be Restrictive of Competition, but are not limited to: • Placing unreasonable requirements on firms to qualify to do business • Requiring unnecessary experience and excessive bonding
Situations Considered to be Restrictive of Competition, but are not limited to: • Non-competitive awards to consultants hired on retainer basis • Organizational conflicts of interest • Specifying only a “brand name” product instead of allowing “an equal” product to be offered and including the specifications • Any arbitrary action in the procurement process
Promotion of Free and Open Competition • Geographic preference, or “local preference” NOT permitted See 7 CFR Part 3016. 36 (c)(2) • Use domestic products to the maximum extent possible • Follow the most restrictive of local, state or Federal law, rules
Clear and Accurate Descriptions • Product Specifications • Problems with specifications • Developing descriptions
Reasons to have Specifications • Clarifies what the food production unit wants • Informs the distributor and manufacturer what the customer wants • Advises the receiving person what should be delivered
Product Specification • • Product name Federal grade Size information: container and product Bid unit Quality indicators Packaging requirements Test or inspection procedures One source of specs http: //www. ams. usda. gov
Product Specification • Evaluate product quality before bid opening – brand pre-approval • 10 - 30 % price difference = quality difference • Direct relationship between the length of time of prices held and the price paid
Problems with Specifications • Brand prejudice – no “or equal” • Unreasonable requirements not related to quality but increase price: i. e. delivery • Competition limited due to too tight specs • Quality level specified difficult to obtain
Problems with Specifications Cont’d • Not updating specs • Purchasing and receiving staff not trained to use specs • Vendor, after gets bid: “low balls” or trades up to more profitable item • Inequality among bidders if specs too loose • If error: stuck for the bid period
Developing Descriptions • One Ingredient or • One Major Ingredient: Rely on Standards of Identity and Grade standards; state this in bid and don’t repeat info. Determine grade needed and state “to be packed to USDA grade __ standards
Developing Descriptions Multiple Ingredient (Highly processed): A system for consistent results might include Regulations: research re: manufacturer of product Industry Standards: check with professional organizations, and product and bid specialists Quality Indicators: study and evaluate those not covered by regulations
Developing Descriptions 1. Student Taste Test: to narrow down broad categories 2. Write Draft Description 3. Use draft to create product comparison work sheet with products currently available: Extra requirements not currently available increase cost 4. Modify Description as needed
Developing Descriptions 5. Review by manufacturers’ technical and bid specialists 6. Revise as needed 7. Student taste test for approved brand acceptance
Procedures Records to Keep • Documents issued to solicit price proposals • Responses from vendors • Signed award documents • Reason for vendor selection
Must maintain written selection procedures that: • Give clear, accurate requirements for the product but do not unduly restrict competition • Identify all requirements contractor must fulfill or meet • Identify other issues used to evaluate bids proposals
Documentation Schools and Districts must keep all records regarding selection of a bid to proposal to show: • Rationale for method of procurement • Selection of contract type • Vendor selection or rejection • Basis for contract price
Time Line Considerations (working backward from delivery) • Bid award to first delivery: Allow 2 -3 wks between vendor notification and 1 st delivery; inform receivers • Bid opening: take all bids “under advisement”, usually require board approval, • Bid issue to opening: at least 3 wks; consider off season; consider copies of significant pages to brokers and mfrs
Time Line Considerations (working backward from delivery) • Final Conference to Prices: Depends on accuracy of earlier steps done; ~ 2 weeks • Screening to Final Draft: Depends on number of changes to the product list and brand approvals • Screening: 1 st time could take a year for verifying, updating info; 3 mos. In later years
Rule Changes for Contracting with FSMC – Allowable costs must be net of discounts, rebates, credits. – Only allowable costs can be charged to nonprofit food service account.
Rule Changes for Contracting with FSMC DPI to review contract terms of invitations for bids and/or requests for proposals before their issuance.
Rule Changes for Contracting with FSMC The SFA is also required to obtain: DPI’s approval of any changes or amendments before any contract or amendment to an existing FSMC contract is executed.
Rule Changes for Contracting with FSMC Two Prototype FSMC Contracts: Fixed Cost plus a Fixed Fee
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