Applying Procurement Standards: Institutions Operating the Child and Adult Care Food Program

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1 Institutions Operating the Child and Adult Care Food Program Program Regulations found in: 7 CFR Parts 226 and 2 CFR Sandra Foss, Courtney Haueter & Wanda McNeil

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3 Institutions Operating the Child and Adult Care Food Program Procurement standards - Program Regulations - Government-wide Regulations Applying the Standards - Soliciting bids/offers using all methods - Awarding contracts, as applicable Procurement Monitoring - What to look for?

4 Institutions Operating the Child and Adult Care Food Program Program Regulations 7 CFR Part Good administration/sound judgment - also in 2 CFR Part (k) Written procurement procedures - also in 2 CFR Part 3018(a) Written code of conduct - also in 2 CFR Part (c) Avoid unnecessary/duplicative items, and lease vs purchase - also in 2 CFR Part 318(d)

5 Institutions Operating the Child and Adult Care Food Program Program Regulations 7 CFR Part Minority business enterprises - also in 2 CFR Part Maximum free and open competition - also in 2 CFR Part (a) Written selection procedures for sealed bids or competitive proposals

6 Institutions Operating the Child and Adult Care Food Program Program Regulations 7 CFR Part (contd.) Procurement methods No cost plus a % of costs method of contracting Recordkeeping Required contract provisions (Appendix II of 2 CFR Part 200) Contract administration system for contractor performance Geographic preference option, as applicable

7 Institutions Operating the Child and Adult Care Food Program Responsibilities for good administration and sound judgment

8 Institutions Operating the Child and Adult Care Food Program Written procurement procedures Obtain efficiently and economically Comply with Federal, State, and local Prevent fraud, waste, and abuse

9 Institutions Operating the Child and Adult Care Food Program Written standards of conduct: Prohibits real, or apparent conflicts of interest - Covers employees, officer, or agent engaged in the selection, award, and administration of contract - No financial/other interest in, or a tangible personal benefit from, a contract Prohibits soliciting/accepting gratuities, favors or anything of monetary value from contractors/parties to subcontracts - May have standards for situations when gifts are not substantial/gift is unsolicited and of nominal value Includes disciplinary actions for violations

10 Institutions Operating the Child and Adult Care Food Program Avoid unnecessary or duplicative items More information is found there and will be covered in the government-wide regulations

11 Applying Procurement Standards in CACFP Minority Business Enterprise Include on solicitation lists, Soliciting them when they are potential sources, Dividing requirements into smaller tasks/quantities, when feasible, Establishing schedules to assist with meeting deadlines, and Using the Small Business Administration and the Office of Minority Business Enterprise, as required.

12 Applying Procurement Standards in CACFP Full and open competition Application Competition Include all qualified sources Restricting/Eliminating competition: Doing business with only one source Any business that is related to an agent/officer of the Institution or Board member Relationship not disclosed and agency person not removed from procurement procedures (from solicitation to contracts mgt.) Having unnecessary requirements

13 Institutions Operating the Child and Adult Care Food Program Written selection procedures 7 CFR Part (h) Also in 2 CFR Part (c-d)

14 tions-us-grading-standards Specifications & US Grading Standards AMS Beef Products AMS Chicken Products AMS Egg Products AMS Fish Products AMS Fruits & Vegetables AMS Geese Products AMS Pork Products AMS Turkey Products FSA Dairy Requirements FSA Domestic Processed Official U.S. Grade Standards Dairy Products Fresh Fruits & Vegetables (all) Fresh Fruits for Processing Fresh Vegetables for Processing Livestock beef/pork/ lamb Nuts & Specialty Products Poultry & Egg Products Processed Fruits & Vegetables

15 Institutions Operating the Child and Adult Care Food Program Procurement Methods A cost plus a percentage of cost method of contracting is not allowed. Recordkeeping Required contract provisions

16 Institutions Operating the Child and Adult Care Food Program Contract monitoring 7 CFR Part (m) and 2 CFR Part (b) This is about ensuring contractors perform in accordance with the terms, conditions, specifications, and contract requirements before payment is authorized.

17 Institutions Operating the Child and Adult Care Food Program Geographic preference Program operators, may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products This means agricultural products that retain their inherent character.

18 Applying Procurement Standards in CACFP The following food handling and preservation are not considered character changing: Cooling/refrigerating/freezing; Size adjustment peeling/slicing/dicing/cutting/chopping/shucking/etc; Forming ground products into patties without any additives or fillers; Drying/dehydration/washing/packaging/vacuum packing/bagging; The addition of ascorbic acid or other preservatives to prevent oxidation; Butchering livestock and poultry/cleaning fish; and Pasteurization of milk.

19 Procurement Standards Program Specific Procurement Standards Programs Buy American Cost-reimbursable Contract Provisions Geographic Preference Minority Business Enterprises NSLP and SBP 7 CFR Parts (d) and (d) 7 CFR Parts (f), (e), and CFR Part (g) and (f) SMP - 7 CFR Part a(d) 7 CFR Part a(e) SFSP CFR Part (e) CACFP CFR Part (n) 7 CFR Part (d) 7 CFR Part (f) Donated Foods 7 CFR Part CFR Part (b)

20 Institutions Operating the Child and Adult Care Food Program Government-wide Regulations: 2 CFR Parts

21 Electronic Code of Federal Regulation Title 2 Grants and Agreements Chapter II Office of Management and Budget Guidance Part 200 UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

22 CACFP Government-wide Regulations: 2 CFR Sections : : General procurement standards : Competition : Procurement Methods : Contracting with small/minority/women s businesses, and labor surplus area firms : Procurement of recovered materials : Contract cost and price : Federal agency/pass-through entity review : Bonding requirements : Contract provisions

23 CACFP 2 CFR Part : General procurement standards Oversight of contractor performance Written standards of conduct Avoid unnecessary or duplicative items Maintain records Settlement of contract issues

24 CACFP 2 CFR Part : General procurement standards cont. Consolidating/breaking-out procurements for more economy Intergovernmental/inter-entity agreements Use excess and surplus in lieu of new Award contracts to responsible contractors Time and material type contracts

25 CACFP 2 CFR Part Competition All transactions require full and open competition Situations considered to be restrictive of competition: Unreasonable requirements on firms Unnecessary experience or excessive bonding Noncompetitive pricing practices Noncompetitive contracts to consultants on retainer Organizational conflicts of interest Brand name without an equal that describes relevant requirements Arbitrary action in the procurement process

26 CACFP 2 CFR : Procurement Methods (a) Micro-purchase (b) Small purchase procedures (c) Sealed bids (d) Competitive Proposals -(e) reserved (f) Noncompetitive proposals

27 CACFP 2 CFR Part Procurement Methods: Micro-purchase Aggregate transaction does not exceed $3,500 Distributed among qualified suppliers No quotes required Price must be reasonable Applying the micro-purchase method: No purchase transaction may exceed $3,500 Distribute purchases from qualified sources equitably (not just favorites) Prices must be reasonable

28 CACFP 2 CFR Part Procurement Methods: Small Purchase Procedures ($3,500-$150,000 or more restrictive threshold) Obtain quotes (may be , catalogs, website, telephone, oral) Documented More than one source Applying the small purchase method Obtain more than one price quote using: Supplier website/catalogs for prices Call/ suppliers for prices

29 CACFP 2 CFR Part Procurement Methods: Sealed Bids (Exceeds $150,000, or most restrictive threshold) Contract award -Firm fixed-price with/without cost adjustment tied to a standard index -Lowest responsive and responsible bidder Documents include a complete, adequate, and realistic specification/description 2 or more bidders available that are willing and able to compete Publicly advertised from a number of suppliers with sufficient response time for bid opening Public opening at time and place identified in document Bids may be rejected for sound documented reason

30 CACFP 2 CFR Part Procurement Methods: Competitive Proposals More than one source submitting an offer Contract award -Either fixed-price or cost-reimbursable Used when sealed bid not appropriate Publicized with evaluation factors and relative importance Qualified sources (more than one) Written method of conducting technical evaluations included Awarded to responsible firm most advantageous to Program with price and other factors considered

31 CACFP 2 CFR Part Procurement Methods: Noncompetitive Proposal Procurement through solicitation of a proposal from only one source and many be used when: -Item available from one source -Public exigency or emergency delay not permitted -Authorized by FNS or State agency due to written request -After solicitation from a number of sources, competition is deemed inadequate

32 CACFP 2 CFR Part Procurement of recovered materials New in 2 CFR (not in 7 CFR Part 3016 or 3019) For procurements exceeding $10,000 Section 6002 of the Solid Waste Disposal Act Highest percentage of recovered materials practicable Maximize energy and resource recovery Affirmative program to procure recovered materials identified in the EPA guidelines -EPA Guidelines are found at 40 CFR Part 247

33 CACFP 2 CFR Part Contract cost and price When purchase exceeds Simplified Acquisition Threshold including contract modifications Independent estimates prior to receiving bids/proposals When no price competition, negotiate fair and reasonable profit with considerations identified Costs must be allowable under Subpart E-Cost Principles (check your FNS (4)) No cost plus a % of cost or % construction cost allowed

34 CACFP 2 CFR Part Federal awarding agency or pass-through entity review Make proposed procurements available, upon request when: Prior procedures are noncompliant Procurement exceeds Simplified Acquisition Threshold AND -No competition is received - Brand name product is specified -Award is to other than low bidder under sealed bids Contract modification changes scope of contract or increases the contract amount more than Simplified Acquisition Threshold

35 CACFP 2 CFR Part Contract provisions Appendix II to Part 200 -Administrative/contractual/legal remedies -Exceeds $150K -Termination for cause & convenience - Exceeds $10K -Equal Employment Opportunity -Davis-Bacon Act Exceeds $2,000 -Contract Work Hours/Safety Standards Act Exceeds $100K -Rights to Inventions Made Under Contract -Clean Air Act Exceeds $150K -Energy Policy and Conservation Act -Debarment and Suspension -Byrd Anti-Lobbying Amendment - Exceeds $100K -Recovered materials

36 CACFP 2 CFR Part (b) Occurs after contract is awarded Ensures contractors perform as required by terms, conditions, and specifications of contracts/pos -Is the product/price/quality as specified and quoted/bid -Are deliveries as required?

37 A question we have received: Q: Are States now required to follow 2 CFR Part 200 over FNS Instruction 796-2, Revision 4, even when FNS Instruction 796-2, Revision 4 is more restrictive? A: Yes, States are required to follow the OMB regulations in 2 CFR Part 200 which were adopted by USDA in 2 CFR Part 400. As a result of the implementation of the new regulations, the FNS Instruction must again be updated.

38 Institutions Operating the Child and Adult Care Food Program Questions

39 Institutions Operating the Child and Adult Care Food Program Summary & Conclusion