Procurement Frequently Asked Questions

Introduction

Questions and Answers (Q&A) to aid CNP Operators with understanding the procurement standards in Title 2, Code of Federal Regulations (2 CFR), Part 200, and Title 7, Code of Federal Regulations (7 CFR), Part 226, and other federal and California state procurement laws, regulations, and policies.

The California Department of Social Services (CDSS) does not intend these Q&As to be inclusive of all terms, provisions, and program requirements applicable to procurements and contracts. Each CNP Operator is responsible for ensuring that their procurement documents comply with all applicable laws, program instructions, and guidance materials. Each CNP Operator should consult with their legal counsel regarding any proposed procurement methods or contract language.

For additional information, please visit the U.S. Department of Agriculture Q&As on the Transition to and Implementation of 2 CFR, Part 200 web page.

General Terms

Contact Information by Program Type

School Nutrition Program Operators:

For more information on allowable costs, SNP Operators may contact the CDE Resource Management Unit by email at SNPCafeFundQuestions@cde.ca.gov.

For more information on procurement, SNP Operators may contact the CDE Procurement Resources Unit by email at SFSContracts@cde.ca.gov.

Child and Adult Care Food Program Operators:

For more information on procurement, CACFP Operators may contact the Community Procurement Unit by email at ProcurementCACFP@dss.ca.gov.

CACFP Operators may also contact their CACFP County Specialist by phone or by email, please refer to the CACFP 01 Contact List and County Assignments located in the Download Forms section of the CNIPS.

Frequently Asked Questions

Brand Name

Buy American Provision

Code of Conduct

Cooperative Purchasing Groups

Discounts, Rebates, Points, and Other Incentives

Food Service Management Companies and Vended Meals

General Procurement

Geographic Preference

Micropurchase Method

Noncompetitive and Sole Source Procurement

Procurement Methods (formerly Formal Procurement Method)

Procurement Procedures

Small Purchase Method

Topic: Brand Name

Q1: Can a CNP Operator include a specific brand or product in their written specification?

A1: Yes, a CNP Operator may include a brand name in the specification but they must also include the language “or equivalent” and describe what constitutes an equivalent product in the specification to ensure that they are not limiting competition.

2 CFR, Section 200.319(a) and (b) states:

All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements. Some of the situations considered to be restrictive of competition include but are not limited to:

• Placing unreasonable requirements on firms in order for them to qualify to do business
 
• Requiring unnecessary experience and excessive bonding
 
• Noncompetitive pricing practices between firms or between affiliated companies
 
• Noncompetitive contracts to consultants that are on retainer contracts
 
• Organizational conflicts of interest
 
• Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement [emphasis added]
 
• Any arbitrary action in the procurement process

Q2: If a CNP Operator conducts a taste test and the tasters like a specific brand of burrito, can the CNP Operator release a solicitation for that burrito only?

A2: No, a CNP Operator must include the brand name or equivalent language in the solicitation. The federal regulations in 2 CFR, Section 200.319(d)(1), do not allow brand name-only solicitations (refer to question 1 above).

Q3: At what point in the procurement process does a CNP Operator determine the list of preapproved equivalents for brand name food?

A3: The federal regulations do not define at what point a CNP Operator determines a list of preapproved equivalents.

Q4: How does a CNP Operator include a brand name or equivalent in the specification to ensure that they are not limiting competition.

A4: [2 CFR, Section 200.319, and 7 CFR, Section 226.22(h)(1)(i)].

Examples of how a CNP Operator can include a brand name or equivalent in the specification for competitive procurements are listed below. Note: this does not apply to sole source procurements. For guidance on sole source procurements, see the Noncompetitive and Sole Source Procurement section.

A CNP Operator indicates their preferred brand name or equivalent language in the specification. The prospective bidder can access the district’s Web site to obtain specifications and bid on other brand names that the vendor feels are equivalent to the brand name specified.

A CNP Operator lists the preferred brand name and a list of several brand name equivalents. If a vendor specifies another brand that is not on the list at the same or lower price, then the food service has 30 days to determine if it is “equivalent” to the brands listed. The vendor will need to provide samples so the district staff and/or students can conduct taste testing to determine if the product is an acceptable equivalent.

Back to Frequently Asked Questions

Topic: Buy American Provision

Please note that if your agency operates the School Nutrition Program, the National School Lunch Program, or the Summer Food Service Program, we encourage you to refer to the CDE Frequently Asked Questions located at: Procurement in Child Nutrition Programs - Nutrition (CA Dept of Education).

Q1: What CNP Operators must adhere to the Buy American Provision?

A1: Title 42, U.S.C. Section 1760(n), requires SNP Operators located in the contiguous United States that purchase domestic commodities or products for the NSLP and SBP to adhere to the Buy American Provision. The Buy American requirement in the NSLP (as provided in 7 CFR, sections 210.21[d] and 220.16[d]), also applies to purchases made with FFVP funds. For more information on the FFVP, access the USDA FFVP: A Handbook for Schools.

CNP Operators that do not operate the NSLP or SBP do not need to comply with the Buy American requirement. Federal law and regulations only require purchases made for the NSLP (including the FFVP) and the SBP to comply with the Buy American Provision.

SNP Operators that operate other CNPs (e.g., CACFP, SFSP) may also need to comply with the Buy American requirement for food purchased for those programs. In order to determine if an SNP Operator must adhere to the Buy American requirement, the SNP Operator must ask the following questions: (1) For which program is the food being purchased? (2) Which funding source is being used to purchase the food?

Back to Frequently Asked Questions

Topic: Code of Conduct

Please note that all CNP Operators are encouraged to seek the advice of their agency’s legal counsel in regard to their written Code of Conduct or Conflict of Interest, pertaining to procurement.

Q1: Are employees who are designated to adhere to the written code of conduct allowed to accept contractor-sponsored meals?

A1: Per 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22, nonfederal entities are required to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. In California, the Political Reform Act (California GC, sections 81000 et. seq.), and California GC, sections 1090 et. seq., govern conflicts of interest. Additionally, local conflict of interest rules may also apply. Please consult with legal counsel to determine if your agency’s conflict of interest code allows employees to accept vendor/contractor-sponsored meals, and what limits apply to these meals.

Q2: Can a CNP Operator ask vendors to donate to a fundraiser or other event?

A2: An CNP Operator cannot ask vendors to participate or donate to fundraisers and other events. Per 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22 the officers, employees, and agents of the agency may not solicit gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.

Q3: Does the code of conduct need board approval?

A3: Per 2 CFR, Part 200.318 and 7 CFR, Section 226.22, only requires nonfederal entities who participate in the selection, award, or administration of a contract supported by a federal award are required to maintain a written code of conduct. Any board with oversight or decision-making authority regarding federal funds must adhere to an agency’s written code of conduct. CNP Operators should consult with legal counsel to determine if the code of conduct must be approved by the governing board.

Q4: Is an employee who is designated to adhere to the written code of conduct allowed to keep a raffle prize with a ticket that was purchased with public funds?

A4: CNP Operators should consult with their legal counsel to determine whether the agency’s code of conduct allows the employee to keep the raffle prize. State and local rules pertaining to gift limits may also apply.

Q5: If an instance of unethical conduct occurs during a solicitation, does it void that solicitation and require restarting the solicitation process?

A5: Agencies should consult with their legal counsel when they think an instance of unethical conduct occurs during a solicitation.

2 CFR, Section 200.318(k) and 7 CFR, Section 226.22 states in part:

The non-federal entity alone must be responsible in accordance with good administrative practice and sound business judgement for the settlement of all contractual and administrative issues arising out of procurements. [Procurements should always comply with 2 CFR, Section 200.319—Competition] … Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction.

Court decisions have found contracts made in violation of California GC, Section 1090 were void. These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the non-Federal entity of any contractual responsibilities under its contracts. The Federal awarding agency will not substitute its judgment for that of the non-Federal entity unless the matter is primarily a Federal concern. Violations of law will be referred to the local, state, or Federal authority having proper jurisdiction.

Q6: Which employees must adhere to the code of conduct?

A6: Any employee, officer, or agent that is engaged in the solicitation, selection, award, or monitoring of contracts must adhere to the code of conduct per 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22.

The Political Reform Act, (California GC, sections 87100 et. seq.), and California GC, sections 1090 et. seq., provides information for public officers and employees on prohibitions applicable to specified officers and employees.

Ultimately, it is the responsibility of the CNP Operator to determine who must adhere to the code of conduct. CNP Operators should consult with legal counsel to determine who must adhere to their code of conduct.

Q7: The federal regulations allow CNP Operators to accept unsolicited gifts of nominal value. What is the dollar limit that defines nominal value and is this limit per gift, per vendor, or per year for all vendors?

A7: Per 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22, nonfederal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The federal regulations do not define nominal value for local entities; however, the nominal value established for favors, gifts, and gratuities in the CNP Operator’s food service department code of conduct should be consistent with the agency’s general code of conduct policies. Each CNP Operator must determine their policies and nominal value threshold for accepting unsolicited gifts. CNP Operators should consult with their local counsel to determine what qualifies as a nonsubstantial financial interest or a gift of nominal value.

Q8: Can a CNP Operator adopt the district or parent company’s code of conduct as their own?

A8: Yes. A CNP Operator may use the district or parent company’s code of conduct if it has all of the components required in 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22.

Q9: After a CNP Operator awards a contract to a pizza vendor, the food service director wants the staff and students to taste the new pizza before the contract starts so they can promote it. Can they ask the vendor to give them free pizza before their contract starts for staff and students?

A9: No. Soliciting gifts from vendors is prohibited per 2 CFR, Section 200.318(c)(1) and 7 CFR, Section 226.22. Taste tests can be done during the solicitation process.

Q10: What specific information should the code of conduct document contain?

A10: The code of conduct document must include several components:

Conflicts of Interest: Define a conflict of interest and ensure staff with a conflict of interest do not participate in contract-related activities

Disciplinary action: Include disciplinary action for code of conduct violations

Gratuities, favors, and gifts: Ensure applicable staff do not solicit gifts from contractors and address whether staff are allowed to accept gifts of nominal value or not. If gifts are allowed, the code of conduct must include the nominal value

The code of conduct document may contain additional components, depending on the type and structure of the CNP Operator:

Organizational conflicts of interest: This ensures the ability of the CNP Operator to be impartial if conducting a procurement transaction involving a related organization

Statement of Economic Interest: This ensures that public employees who make or influence governmental decisions submit a Statement of Economic Interest, Form 700, when required

Back to Frequently Asked Questions

Topic: Cooperative Purchasing Groups

Q1: What is cooperative purchasing?

A1: Cooperative purchasing occurs when entities join to accomplish all or part of the steps in the purchasing process. Cooperative purchasing is a system aimed at using group purchasing in an effort to increase buying power, reduce costs, and improve the quality of products and services available to members, and ultimately the children in the meal programs these agencies operate. The purpose of cooperative purchasing is to use the collective buying power and expertise to obtain the highest quality products at the best price.

Cooperative purchasing groups may or may not be beneficial to a CNP Operator. The benefits may produce considerable savings and improve the quality of products purchased. On the other hand, the possibility of fewer deliveries or elimination of some specific products may not be beneficial and may actually cause hardship to a district.

For more information on cooperative purchasing, see the Special Topics chapter, beginning on page 76 in the Procuring Local Foods for CNPs guide located on the USDA Procuring Local Foods web page and USDA Policy Memo SP 05-2017, CACFP 03-2017, SFSP 02-2017, Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-party Services.

Q2: Does a cooperative need to follow the same rules when procuring goods and services as an agency acting on its own behalf?

A2: Yes, USDA Policy Memo SP 05-2017, CACFP 03-2017, SFSP 02-2017, Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-party Services states in part:

A cooperative that is comprised solely of Program operators and/or the CNP State agency may procure as a group and must do so in compliance with the procurement standards that apply to the individual Program operator per 2 CFR 200.318-.326. This includes complying with all State and local procurement standards, if more restrictive, and publishing solicitations and contracts with all terms, conditions, required contract provisions, as applicable, and clearly identifies all product descriptions, specifications, and estimated quantities required for operators that are that are operating at-risk with the School Breakfast Program and National School Lunch Program. The Buy American and cost-reimbursable provisions in 7 CFR 210.21(d) and (f) are required. Further, each program operator is responsible for monitoring vendor performance to ensure compliance with all contract provisions. Written agreements delineating roles and responsibilities are encouraged.

Q3: If a cooperative purchasing group does not follow proper procurement procedures, who is responsible?

A3: Each individual agency operating a CNP involved in a cooperative purchasing group is responsible for ensuring that all procurements are conducted correctly and according to all applicable federal, state, and local regulations, laws, and rules. For example, if twenty agencies form a cooperative with one lead agency, and the lead agency does not follow all federal, state, and local procurement standards when conducting procurements, all twenty agencies may have a finding during their AR. The CDSS will provide the lead agency with guidance and TA prior to issuance of the solicitation and award of the contract.

Back to Frequently Asked Questions

Topic: Discounts, Rebates, Points, and Other Incentives

Q1: Can a CNP Operator use points earned from vendors to purchase goods, services, or redeem the points for travel to CNP-related conferences?

A1: Yes, as long as the goods, services, and travel support the operation and maintenance of the nonprofit school food service program. Per 2 CFR, Section 200.405, costs are allocable if the cost:

• Is incurred specifically for the federal award
 
• Benefits both the federal award and other work of the nonfederal entity and can be distributed in proportions that may be approximated using reasonable methods
 
• Is necessary to the overall operation of the nonfederal entity and is assignable in part to the federal award in accordance with the principles in this subpart.

Per 2 CFR, Section 200.406, applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect costs. Examples of such transactions are:

• Purchase discounts, rebates or allowances
• Recoveries or indemnities on losses
• Insurance refunds or rebates
• Adjustments of overpayments or erroneous charges

To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate.

For SNPs, 7 CFR, Section 210.14(a), states in part, “…Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service…”

For CACFPs, on the USDA FNS Documents and Resources web page, FNS Instructions 796-2, Rev. 4, paragraph (VI)(C)(2), states in part, “The institution must maintain accounting records documenting proper cost allocation between the Program and non-Program components of its food service operation and the State agency must ensure through the review process that all CACFP reimbursements are used solely for conducting nonprofit food service operations.”

For SFSPs, FNS Instruction 796-4, Rev. 4, paragraph (XI)(A) states in part, “…Sponsors shall allocate credits, as necessary, and apply the appropriate amounts to their program administrative and operating expenses to reduce program costs. Costs claimed for reimbursement must be reported net of applicable credits.”

Allowability of the use of points is often determined on a case-by-case basis. To ensure the allowability when using points, SNP Operators should contact CDE staff by email at SNPCafeFundQuestions@cde.ca.gov and all other CNP Operators should contact their program analyst, listed in the Download Forms section of the CNIPS.

Q2: Can a vendor issue a rebate check to a CNP Operator instead of providing a direct rebate on an invoice? For example, a CNP Operator receives a rebate check from a distributor rather than a rebate on the invoice.

A2: A check or a rebate is allowable as long as the cafeteria fund is the sole recipient of this credit. Per 2 CFR, Section 200.406, credits accruing to or received by an agency that relate to allowable costs must be credited as either a cost reduction or cash refund, as appropriate.

Q3: In a cost-reimbursable contract, can a CNP Operator accept a food product from a vendor rather than a rebate on the invoice?

A3: No. Rebates are monetary returns used to offset expenses and acts as a purchasing incentive. When a CNP Operator receives legitimate discounts, rebates, or credits from a vendor, they need to be taken directly off the invoice (or provided in the form of a check as noted above) which can serve as the CNP Operator’s documentation.

Back to Frequently Asked Questions

Topic: Food Service Management Companies and Vended Meals

Q1: Can we use one FSMC contract if we operate multiple food service programs (e.g., CACFP and an SNP)?

A1: Yes, if an operator is operating multiple food service programs (e.g., CACFP and SNP) they can have one contract and they are able to use the FSMC contract. Please note that use of the FSMC contract, under the SNPs, require pre-approval from the Procurement Resources Unit at CDE.

Please refer to USDA FNS – Contracting with Food Service Management Companies Guidance for State Agencies, which is located at: Updated Guidance: Contracting with Food Service Management Food and Nutrition Service.

Back to Frequently Asked Questions

Topic: Procurement Methods (previously Formal Procurement Method)

Q1: How can a CACFP operator find additional information regarding federal procurement methods (e.g., micropurchase, small purchase, and formal purchase)?

A1: All program operators operating a child nutrition program must follow the procurement standards and regulations provided under 2 CFR, Section 200.318 through 200.327. The procurement threshold guidance is provided under 2 CFR, Section 200.320.

Program operators should also refer to USDA Guidance set forth in Policy Memo SP-05-2017 regarding estimated quantities, type, and descriptions within a solicitation (e.g., Request for Quote, Request for Proposal, Invitation for Bid, etc.)

Q2: What are the federal procurement methods?

   

Q3: Do all solicitations need to be publicly advertised?

A3: A public advertisement can be used with any procurement, but it is required for formal procurements (Request for Proposal or Invitation for Bid). The public advertisement is an important step in the solicitation process. The program operator will formally advertise the solicitation in the local, regional, state, or national newspaper and/or post the advertisement (notice) to their procurement webpage, where other procurements are normally shared.

The goal of any procurement is to receive at least three responsive proposals from responsible vendors. If necessary, the agency may need to increase its public notice viewing area to state or national newspapers to receive adequate responses. The program operator must make every effort to ensure maximum competition is achieved.

Q4: Does the evaluation criteria need to be in the public advertisement?

A4: No. CNP Operators do not need to publicly post the evaluation criteria in the advertisement, but they do need to direct prospective respondents to the location of the solicitation, which includes information on how bids or proposals will be evaluated.

Q5: How does a CNP Operator award points for price in an RFP?

A5: Each CNP Operator determines how it will award points for price in an RFP. Federal regulations do not prescribe the maximum number of evaluation points; however, contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered. Price must be weighted the heaviest when other evaluation factors are taken into consideration. An example of this is shown below (using a total of 100 points possible):

Price: 25 Points [weighted the heaviest]
Product specifications: 20 Points
Service and deliveries: 20 Points
References: 20 Points
Experience: 15 Points

Q6: How can a CNP Operator write in their solicitation the criteria they use to evaluate and award contracts?

A6: The criteria could be summarized on an evaluation criteria page, and the criteria could be further defined in the scope of work or minimum requirements. CNP Operators can find examples of evaluation criteria on Appendix J, page 126 of the USDA Procuring Local Food for CNPs Guide located on the USDA Procuring Local Foods web page. To ensure compliance with federal, state, and local laws, agencies should consult with legal counsel.

Q7: Can the same solicitation be used to procure goods and services for multiple CNPs such as the NSLP and the CACFP?

A7: Yes; however, doing so requires that the solicitation reflect the most restrictive provisions required by the funding source. For example, since the Buy American Provision only appears in regulations for the NSLP and SBP, a CNP Operator purchasing agricultural commodities and products for both the NSLP and SBP and any other CNP must include the Buy American Provision in the solicitation.

Q8: If a potential vendor asks a question about a solicitation (e.g. terms, specifications), should the CNP Operator provide the answer to all bidders?

A8: Yes. Solicitations are required to include a clear and accurate description of the technical requirements for the material, product, or service to be procured. If a CNP Operator provides additional information to a potential vendor in order to meet that standard, the CNP Operator must provide the same additional information to all other potential vendors. As a best practice, the CNP Operator may hold a Q&A session for all potential vendors. Afterward, the CNP Operator could post the Q&As on a public portal, such as their web site.

Q9: What is an adequate amount of time to allow a vendor to respond to a solicitation?

A9: Sections 200.319 (a)(1) and 200.320(c)(2)(i) of 2 CFR, do not define what an adequate or sufficient amount of time is for a vendor to respond to a solicitation. However, not providing an adequate amount of time (e.g. three to six weeks) for a vendor to respond to a solicitation may be considered limiting competition. In order to be fair to potential vendors, CNP Operators could consider conducting market research, such as an RFI, to determine an adequate amount of time to provide a vendor to respond.

Q10: What responsibility does a CNP Operator have to solicit and advertise IFBs and RFPs?

A10: Except as provided under 2 CFR, Section 200.320(f), Procurement by Noncompetitive Proposals, all programs must solicit from an adequate number of qualified sources (2 CFR, sections 320[c] and [d]). CNP Operators may contact vendors to inform them of a solicitation and, likewise, vendors may contact CNP Operators to inquire about solicitations. In addition, 2 CFR, Section 200.321(a) states in part “. . .the nonfederal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.”

All CNP Operators issuing an RFP must publicize the proposal per 2 CFR, Section 200.320(d)(1); however, only local governments, as defined in 2 CFR, Section 200.1 (e.g., school districts and COEs), and tribal governments must publicly advertise and open IFBs per 2 CFR, sections 200.320(b)()(ii).

Further, California PCC Section 20112 requires school districts, COEs, and CNP Operators governed by a school board or COE to publicly advertise all bids (IFBs and RFPs) at least once a week for two weeks in some newspaper of general circulation published in the district, or if there is no such paper, then in some newspaper of general circulation, circulated in the county, and may post on the district’s Web site or through an electronic portal, a notice calling for bids.

Q11: Can a CNP Operator use an RFP instead of an IFB for supplies (e.g., food), or is an RFP only allowable for services?

A11: Yes. It is allowable under both state and federal laws and regulations for CNP Operators to procure supplies using the RFP method. A CNP Operator should use the IFB method in situations when there is no substantial difference among the products or services that meet specifications and the key difference among responsive bids is price. Effective January 1, 2018, all agencies using the RFP method must comply with 2 CFR, Section 200.320(b)(2), which states that contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price weighted the heaviest with other factors taken into consideration.

Q12: Can a CNP Operator use past performance as an evaluation criterion?

A12: Yes. Past performance can be used as long as the CNP Operator informs vendors that past performance is one of the evaluation criteria. An evaluation of a vendor ’s past performance can help a CNP Operator determine whether a bidder is responsible. For an example of how to use past performance as an evaluation criteria, see Appendix J on page 126 in the Procuring Local Foods for CNPs guide located on the USDA Procuring Local Foods web page.

Q13: If a CNP Operator terminates a contract for cause with a vendor who has not met the terms and conditions of a contract, can the CNP Operator enter into a temporary contract with the next lowest bidder in the original solicitation?

A13: Yes. To the knowledge of the CDSS, federal and state rules do not expressly prohibit CNP Operators from awarding to the next lowest bidder if the solicitation and contract include language that allows the CNP Operator to do so; however, CNP Operators should check that local rules do not prohibit this practice. The CNP Operator must first ensure that the terms, conditions, and cost of the proposed contract with the second lowest bidder do not deviate significantly from the original bid. As a best practice, the CNP Operator should consider adding an early termination clause in the new contract in case competitive procurement can be completed prior to the contract end date.

Even though the CNP Operator enters into a temporary contract with the second lowest bidder, the CNP Operator should conduct a new competitive procurement.

Note: Performance bonding can protect a CNP Operator from the costs incurred due to a substandard vendor in these types of situations.

Q14: Is CDSS preapproval required before CNP Operators advertise and issue their solicitation (i.e., RFP, IFB) document?

A14: SNP Operators are not required to submit their solicitation documents to the CDE for preapproval before advertising and issuing the solicitation if the procurement is not for an FSMC contract; however, when SNP Operators are scheduled for an off-site procurement review, the CDE will review their IFB and RFP documents for compliance (including compliance with advertising requirements). For SNP procurement review questions, please contact the PRU at NSDProcurementReview@cde.ca.gov.

CACFP Operators with FSMC or vended meal contracts will automatically trigger the CDE preapproval process after awarding a contract to the lowest bidder (which is after the solicitation is issued), when they disclose in the CNIPS that they are procuring a vended meal contractor. In these situations, the CDE program analyst will review the contract to assist CACFP Operators with program compliance.

SFSP Operators with FSMC or vended meal contracts are not required to obtain CDE preapproval prior to advertising and issuing a solicitation; however, SFSP Operators will automatically trigger the need for CDE staff to be present (in person or through electronic communication) at bid openings when the SFSP Operator discloses in the CNIPS that they are procuring an FSMC or vended meals contract per USDA Policy Memo SFSP 13-2014, Procurement Threshold in the SFSP. Bids totaling $100,000 or more must be submitted to the CDE for preapproval before the sponsor can accept a bid per 7 CFR, Section 225.6(h)(4)].

Note: Any bids (regardless of dollar amount) that exceed the lowest bid must be submitted to the state agency for approval before acceptance with an explanation of why that particular bid was chosen (instead of the lowest bid) per 7 CFR, Section 225.6(m)(4)(xii).

Back to Frequently Asked Questions

Topic: General Procurement

Q1: What is the minimum requirement for determining which procurement method to use?

A1: It is up to each CNP Operator to identify the best and most economical procurement method for procuring goods and services in accordance with applicable state, federal, and local laws and regulations. Agencies must follow the most applicable small purchase threshold when determining which procurement method to use. Some questions to consider are listed below.

• What is the estimated contract cost?
 
• What applicable federal, state, and local rules define your agency’s purchase threshold (e.g. micropurchase or small purchase threshold)?
 
• Should the CNP Operator use the micropurchase, small purchase, or formal purchase method?

Q2: Can a CNP Operator award a contract to multiple vendors if a single vendor cannot supply the volume needed?

A2: Yes. If the solicitation includes language allowing for multiple contracts when quantities are insufficient from a vendor, it is allowable. However, if the solicitation lacks this language and the vendor cannot meet the volume needed, a CNP Operator can resolicit, making sure to include language in the solicitation allowing for this contingency moving forward. Sample language to consider for inclusion in contracts is provided in the Procuring Local Foods for Child Nutrition Programs Guide: “(The CNP Operator) reserves the right to award to multiple vendors, using criteria as specified in the evaluation and award provision section.”

Q3: Can assigning penalties to distributors for shortages or item substitutions be a term or condition of the contract?

A3: Yes. This is considered a contractual dispute. Per 2 CFR, Section 200.318(k), the nonfederal entity alone must be responsible for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the non-Federal entity of any contractual responsibilities under its contracts. The Federal awarding agency will not substitute its judgment for that of the non-Federal entity unless the matter is primarily a Federal concern. Violations of law will be referred to the local, state, or Federal authority having proper jurisdiction.

If the distributor demonstrates they are not responsive or responsible, penalties can be a useful remedy when dealing with a vendor who is not providing satisfactory service, provided there is a provision in the contract that allows this. The CDSS advises CNP operators to seek advice from legal counsel to address any penalties covered by the contract.

Q4: Can a CNP Operator extend contracts instead of issuing a new solicitation each year?

A4: Yes, subject to any applicable statutory and/or regulatory limitations. For example, a CNP Operator can extend contracts instead of issuing a new solicitation each year as long as the CNP Operator included language in the solicitation that they have the right to extend the contract. However, the language cannot obligate either party to extend the contract.

Note: In order to increase the price of the contract in an extension, as a best practice, the CNP Operator may compare it to an index. An example of an index is the CPI, which produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Access this information on the Bureau of Labor Statistics CPI Tables web page.

Q5: How does a small CNP Operator accommodate for fluctuating prices (e.g., produce) in the contract?

A5: Fixed-price contracts can have price adjustment provisions that are based on a verifiable price index. The price adjustments can take place at contract renewals and with agreement from both parties.

A cost plus fixed-fee contract provides for the reimbursement of allowable costs of goods plus the payment of a fixed fee to the vendor. This is an appropriate type of contract to use when market conditions are such that potential vendors are unwilling to commit to a fixed price for an extended period. For an example of how to account for fluctuating prices in a contract, see Appendix O on page 137 in the Procuring Local Foods for CNPs guide located on the USDA Procuring Local Foods web page.

Q6: If a CNP Operator solicited and has a contract with Vendor A for a product and Vendor B, who the CNP Operator does not contract with, offers the CNP Operator the same product at a lower price, can a CNP Operator use Vendor B to obtain the lower price?

A6: No. The CNP Operator solicited and awarded a contract to Vendor A. Competitive bidding rules will only allow the CNP Operator to contract with Vendor A for the product without going out to rebid.

Q7: How does a small CNP Operator efficiently handle bids?

A7: Small CNP Operators follow the same steps as larger CNP Operators when purchasing goods and services and using informal or formal procurement methods. Some small CNP Operators may decide to join a cooperative which may lead to benefits such as increased purchasing power, new menu items, labor reduction, direct to manufacturer purchasing, increased volume and volume discounts, and networking opportunities.

Q8: If a CNP Operator's contract with a vendor expires and another contract is required to purchase the same goods or services, can they purchase from the exact same vendor as before?

A8: No, not without competitively procuring the goods or services. When a CNP Operator's contract expires, the CNP Operator must once again competitively procure goods or services using proper procurement procedures and methods unless the previous contract included language allowing a contract extension.

Q9: If only two local companies can repair a CNP Operator’s refrigerator and one of the repair companies did not previously perform satisfactorily, can the CNP Operator only use the one repair company in the future?

A9: Yes. A CNP Operator may use the one company if the other company is not responsive or responsible. The CNP Operator should document the reasons behind their decision and maintain these records for three years.

Q10: What is bid splitting?

A10: Bid splitting is intentionally dividing purchasing to avoid getting price quotes or going out to bid using a more formal procurement method.

Back to Frequently Asked Questions

Topic: Geographic Preference

Q1: Can a CNP Operator award contracts to multiple vendors based on separate regions?

A1: Yes. A CNP Operator may award contracts to multiple vendors based on separate geographic regions if the regions and that stipulation are specified in the solicitation.

Q2: What is the 2008 Farm Bill?

A2: The 2008 Farm Bill encourages CNP operators to purchase “unprocessed agricultural products, both locally grown and locally raised, to the maximum extent practicable and appropriate,” and to “allow institutions to use a geographic preference for the procurement of unprocessed agricultural products, both locally grown and locally raised.”

For more information on purchasing local foods, visit the USDA Procuring Local Foods web page.

Back to Frequently Asked Questions

Topic: Micropurchase Method

Q1: What is a micropurchase?

A1: A micropurchase is a single purchase transaction equal to or less than the micropurchase threshold. When using this method, CNP Operators are not required to obtain quotes for the lowest price. Use of the micropurchase method is allowable under the following conditions:

• The transaction is at or below the micropurchase threshold.
 
• The CNP operator making the purchase considers that the price they are paying is reasonable based on research, experience, purchase history or other information and documents it files accordingly.
 
• To the extent practical, CNP Operators should spread their micropurchases equitably among qualified suppliers.

Q2: Are equipment repairs considered micropurchases if they are below the micropurchase threshold?

A2: Yes. If there are unforeseen repairs or maintenance of equipment that are outside of the warranty period and/or is not covered by the contract, then each of the repairs could be a micropurchase transaction if it meets the micropurchase threshold. However, if a CNP Operator can forecast that pieces of equipment will need a projected amount of repairs or maintenance during a year, the CNP Operator should determine if a contract can be executed for a year's worth of repairs at a more economical price than a separate transaction for each repair.

Q3: Does the micropurchase threshold limit include tax and shipping?

A3: Yes, the micropurchase threshold includes tax and shipping.

Q4: What should a CNP Operator do if there is only one store to purchase goods within a reasonable distance?

A4: Agencies should distribute micropurchases equitably among qualified suppliers to the extent practicable. If there are no other qualified suppliers within a reasonable area, then it may not be practicable to drive a long distance to procure goods. In this situation, the CNP Operator should have documentation justifying the purchase of goods at only one store.

Q5: Can a CNP Operator use the micropurchase method when multiple printers break unexpectedly at different times throughout the year?

A5: Yes. An unexpected purchase for the printers can be accomplished at different times throughout the year using micropurchase procedures if the cost is equal to or less than the current micropurchase threshold.

Q6: If a CNP Operator visits a local grocery store several times throughout the year, and the aggregate amount spent is over the micropurchase threshold, should the CNP Operator use the small purchase method instead of the micropurchase method?

A6: Not necessarily. If the CNP Operator is using the micropurchase method to procure the same type of goods several times throughout a SY, and the aggregate amount of multiple micropurchases is significant (e.g., above the micropurchase threshold), the CNP Operator may be able to save money if they consider using the small purchase method or a formal procurement method instead of the micropurchase method.

Note: It is equally important to understand that CNP Operators cannot split purchases in an effort to avoid the appropriate threshold. CNP Operators should always forecast how much and what type of goods and services are needed throughout the SY prior to making CNP purchases in order to determine the most economical procurement method to use.

Back to Frequently Asked Questions

Topic: Noncompetitive and Sole Source Procurement

Q1: What is a noncompetitive procurement?

A1: Noncompetitive procurements occur when a CNP Operator deems that competition is inadequate or impossible. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply per 2 CFR, Section 200.320(c):

• The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold;
 
• The item is available only from a single source;
 
• The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation;
 
• The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or
 
• After solicitation of a number of sources, competition is determined inadequate.

Q2: What is a sole source procurement?

A2: A sole source procurement is a type of noncompetitive procurement that occurs when the goods or services are only available from one manufacturer, distributor, or supplier. Sole source describes a condition of the procurement environment. Sole source procurements are more likely to occur when a CNP Operator is purchasing cutting-edge technology or highly technical scientific products. In a true sole source situation, conducting a traditional solicitation (small purchase, IFB, or RFP) is a meaningless act because the element of competition will not exist since the product or service is only available from a single source.

The decision that a sole source situation exists must be made by the CNP Operator, not the supplier. While one supplier may offer goods and services that contain features not available from other suppliers, the CNP Operator must be able to document that those specific features are required, not just preferred. Since a sole source procurement takes place without the benefit of competition, a CNP Operator must maintain appropriate documentation that supports its decision.

CNP Operators should be reminded that a sole source situation is a condition of the procurement environment, not a procurement method; the procurement method is noncompetitive. Again, while a supplier can claim its products are the only products available in the marketplace that meet the CNP Operator's needs, the advertisement alone does not make the claim true. Agencies that fail to validate such claims may subsequently enter into improperly procured contracts.

Q3: If daily deliveries are needed and only one vendor can meet this specification, is a noncompetitive procurement allowable?

A3: If, after soliciting a number of sources using specifications that were not overly restrictive, only one vendor can meet the specifications, then it is allowable to contract with that vendor.

Q4: Can a CNP Operator conduct a noncompetitive procurement in the event of an emergency?

A4: The CDSS recommends that agencies consult with legal counsel on whether an emergency situation exists and whether conducting a noncompetitive procurement would be allowable.

Any contract resulting from the use of noncompetitive proposals in a public emergency must be of a limited duration, until such time as conditions permit the completion of an appropriate competitive procurement. There are few circumstances under which a contract resulting from noncompetitive proposals should be in effect for more than a few months. Furthermore, extending or renewing a contract resulting from noncompetitive proposals for more than a few months should occur only as a result of the most severe type of natural disasters or similarly rare circumstances.

Back to Frequently Asked Questions

Topic: Procurement Procedures

Q1: What are procurement procedures?

A1: Procurement procedures are a CNP Operator’s written step-by-step process of procuring goods and services in accordance with federal, state, local, or Tribal laws and regulations. Procedures specify the step-by-step instructions of how an CNP Operator purchases goods and services. These procedures should be tailored to the specific needs and step-by-step processes conducted by the CNP Operator. The written procedures must outline the entire procurement process. A newly hired employee should be able to read, understand, and perform the necessary steps involved in procurement based on these procedures. The requirements that CNP Operators should include in their documented procurement procedures are outlined in 2 CFR, sections 200.318‒200.326, and 7 CFR, Section 226.22.

Q2: What help is available if I am not following proper procurement practices?

CNP Operators may contact a procurement specialist by email at ProcurementCACFP@dss.ca.gov.

Back to Frequently Asked Questions

Topic: Small Purchase Method

Q1: When can a CNP Operator use the small purchase method?

A1: Each CNP Operator needs to determine whether they must adhere to the federal small purchase threshold of $250,000 or a more restrictive small purchase threshold set by their agency/district or local government. The small purchase threshold is per contract cost. A CNP Operator cannot deliberately split transactions into amounts below the small purchase threshold to circumvent using the formal procurement method.

The small purchase threshold may fluctuate, and it is the CNP Operator's responsibility to remain updated on all purchase threshold dollar values and whether they must adhere to the federal or their local small purchase threshold.

Q2: How does a CNP Operator prove that they contacted an adequate number of vendors to obtain price quotes?

A2: CNP Operators can prove they contacted multiple vendors by creating and maintaining documentation for all price quotes requested and obtained and ensuring that the CNP Operator has an electronic file or a paper trail upon request by the CDSS.

Q3: Do CNP Operators need to maintain procurement related documents?

A3: Per 2 CFR, Section 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of each procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, vendor selection or rejection, and the basis for the contract price. Agencies should maintain written documentation showing that an adequate number of vendors were contacted.

Q4: If a CNP Operator exceeds their small purchase threshold in a procurement, do they continue to order as needed?

A4: If the small purchase threshold is exceeded, a CNP Operator should conduct a second procurement, which may involve a micropurchase or small purchase. If a CNP Operator finds their purchasing needs exceed the small purchase threshold from past experience, the CNP Operator should plan on using the formal purchase method for the next program year. Repeated failure to follow proper procurement procedures in an attempt to circumvent the formal procurement method may result in a finding during an AR or procurement review.

Q5: Can a CNP Operator consider the list of prices posted on a vendor’s Web site as obtaining a quote from that vendor?

A5: CNP Operators must obtain price or rate quotations from an adequate number of qualified sources. The federal regulations do not specify that quotes may not be obtained using a vendor’s web site; however, per 2 CFR, Section 200.320(a)(2)(i), agencies should make an appropriate analysis to determine the most economical approach.

Back to Frequently Asked Questions

This institution is an equal opportunity provider.
Esta institución es un proveedor que ofrece igualdad de oportunidades.