Laurie: It is definitely a hot topic and one which requires agencies to take action!

Transcription

1 Laurie: Welcome to Code of Conduct and Procurement Procedures for Community Nutrition Programs. This Webinar is for agencies participating in the Child and Adult Care Food Program, which we will refer to as the CACFP, and, the Summer Food Service Program, which we will refer to as the SFSP. I am Laurie Pennings. Courtney: And I am Courtney Hardoin. Providing agencies training and technical assistance or TA on procurement is currently the number one priority of the Nutrition Services Division or NSD. Laurie: It is definitely a hot topic and one which requires agencies to take action! 1

2 Courtney: Laurie, what exactly are CACFP and SFSP agencies required to do? Laurie: Agencies are required to: 1) Develop a written code of conduct 2) Comply with procurement standards in Title 2, Code of Federal Regulations, Sections We will refer to these regulations as 2 CFR, Part 200. It may be helpful for you to print these regulations as we will be referring to them throughout this training (A link to the regulations is included on this slide. You will need to scroll down to Subpart D, Procurement Standards) 3) Develop their own written procurement procedures which reflect applicable state, local, and tribal laws and regulations Courtney: When are agencies required to do this? Laurie: These regulations are in effect now. When an agency has their next procurement review, they will be asked whether they have a written code of conduct and written procurement procedures. Courtney: What will happen if an agency doesn t have these documents in place? Laurie: The Nutrition Services Division will provide training and technical assistance during program years and However, agencies should get started now developing a code of conduct and procurement procedures. Courtney: Let s get started. This Webinar will contain three parts code of conduct, procurement standards, and procurement procedures. 2

3 Courtney: We will cover the three action items listed on the previous slide in three parts. Let s get started with Part One, Code of Conduct. 3

4 Courtney: The regulations state that agencies receiving federal awards must 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. The regulations refer to standards of conduct. The NSD uses the phrase code of conduct. They mean the same thing. 4

5 Laurie: The purpose of a written code of conduct is to ensure employees involved in the procurement process understand the agency s expectations for proper behavior. It promotes fairness and competition, and can reduce the likelihood for a lawsuit, and/or a bad reputation. Courtney: No one wants to be reported in the newspaper for unethical behavior. 5

6 Laurie: Courtney, the code of conduct should clearly state what s listed on this slide. No employee, officer, or agent should be involved in the procurement process if they have a real or apparent conflict of interest. If the agency does not have officers or agents, they can limit this policy to employees. Courtney: What is the definition of a conflict of interest? 6

7 Laurie: A conflict of interest arises when an employee, officer, or agent, any member of his or her immediate family, his or her partner, an organization which employs or is about to employ any of the parties listed above has a financial or other interest in, or a tangible personal benefit from a firm considered for contract. Agencies should include this definition in their code of conduct. 7

8 Laurie: The regulations refer to real and apparent conflicts of interest. Let s discuss what is meant by a real conflict of interest versus an apparent conflict of interest. A real conflict of interest occurs when the professional judgement of an employee is compromised because of a financial or tangible personal benefit. Remember, this includes benefits to a member of his/her immediate family, his/her partner, or a person or organization with which the employee or parties listed above are negotiating for employment An apparent conflict of interest is one in which a reasonable person would think that the professional s judgment is likely to be compromised. It is also referred to as a perceived conflict of interest. Agencies should take as much care to avoid the appearance of a conflict of interest as they must to avoid a real conflict of interest. 8

9 Courtney: Let s review a scenario and determine if it constitutes a real or apparent conflict of interest. Scenario One: Bob Jones is the Program Director for a child care agency. He awarded a one year contract to his brother who owns a company which vends meals. Is this a real or apparent conflict of interest? 9

10 Laurie: Courtney, this is a real conflict of interest because Bob Smith s brother will benefit financially from this procurement. This is not allowable because he is in his immediate family. Bob Smith should have excused himself from participating in the procurement process because of this conflict of interest. 10

11 Laurie: Here s another scenario to consider. Abigail Lane was recently hired as the Program Director for an agency participating in the SFSP. Previous to her hire, she was good friends with the owner of a company which vends meals. She still regularly has lunch with the owner, but always pays her own way. She followed proper procurement procedures and awarded the vending contract to her friend. Is this a conflict of interest? 11

12 Courtney: This could be an apparent or perceived conflict of interest. It may appear to others that she may not have been impartial when awarding the contract to this vendor. In this case, Abigail can t avoid an apparent or perceived conflict of interest. Even if she did not participate in the procurement process, others may feel that there was bias because of her friendship. It s important that Abigail maintain proper documentation to show that the procurement process was followed competitively and fairly. 12

13 Courtney: The regulations state that officers, employees, and agents of the agency may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, agencies may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. If an agency chooses to set standards that allows employees to accept unsolicited gifts that are of nominal value, agencies must describe these standards in their written code of conduct. Agencies must define and document the dollar amount they consider to be not substantial or of nominal value. Please note. Agencies should not include the language listed in bullet two verbatim in their policy. The regulation is stating that agencies may develop a policy that allows employees, officers, and agents to accept unsolicited gifts of nominal value. Agencies should consider whether they want to allow employees, officers, and agents to accept unsolicited gifts. If they choose to do so, they must include in their code of conduct the dollar amount they determine to be of nominal value. 13

14 Laurie: Can you give me an example of a standard an agency might set for accepting unsolicited gifts? Courtney: Yes, here s an example. The ABC Child Care agency allows its employees, officers, and agents to accept up to $10 per calendar year, per vendor, for unsolicited gifts. Laurie: I noticed that the regulations use the phrase unsolicited gifts. Courtney: Yes, an unsolicited gift is a gift that the employee, officer, or agent did not request from the vendor. Employees, officers, and agents should not solicit gifts from vendors as it could result in the employee developing a preference for one vendor over another vendor, if they know one will provide freebies when requested. Laurie: If it s not in the terms and conditions of the contract, tread carefully. 14

15 Laurie: Let s look at another scenario. Tiffany Jones is a Preschool Director. She has a code of conduct that allows employees to accept up to $25 of unsolicited gifts from one source each calendar year. Paul Smart, owner of Tasty Meals (vendor), sends a box of candy (worth $24) and baseball game tickets (worth $200). Is Tiffany allowed to accept these gifts? 15

16 Courtney: Because Tiffany s code of conduct allows her to accept up to $25 of unsolicited gifts each calendar year, she is not in violation of her code of conduct for accepting the candy. However, tickets to a baseball game exceeds this threshold so she should not accept them. 16

17 Courtney: The code of conduct must clearly state that disciplinary action will be taken when the standards are violated. Employees should be aware that disciplinary action will be taken. Here are some examples of disciplinary actions that could be taken in the event of a violation of a written code of conduct: Verbal warning or written reprimand Fines Suspension or termination 17

18 Laurie: Conflicts of Interest can arise at the individual or business level. An organizational conflict of interest can occur if the agency has a parent, affiliate, or subsidiary organization; however, we are not referring to government agencies, or Indian Tribes. Let s review an example. An organization owns two different businesses, a child care program, and a food catering business. It could be an organizational conflict of interest for the organization s child care sites to automatically obtain vended meals from the parent company s food catering business because the owner of the parent company profits from the sale of meals to the child care agency. The child care agency must follow the competitive procurement process in determining a food vendor. In this case, the agency s code of conduct must address organizational conflicts of interest. If the agency does not have an organizational structure that could lead to a conflict of interest, these procedures are not required. 18

19 Courtney: Government agencies participating in either the CACFP or SFSP must comply with California s Political Reform Act. Under the Political Reform Act, local governmental agencies must adopt a conflict of interest code that identifies all officials and employees within the agency who make governmental decisions based on the positions they hold. These individuals must disclose their financial interests by completing the Statement of Economic Interests Form 700. For more information on the Political Reform Act, go to the California Fair Political Practices Commission s Political Reform Act Web page at the Web address on the bottom of this slide. 19

20 Laurie: Now that we ve covered the basic requirements of a code of conduct, what are the next steps an agency should take? First, agencies should check to see if they have a written code of conduct. They should review it to ensure that it includes everything we just discussed. If an agency s code of conduct does not include the applicable components, they will need to amend it. If an agency doesn t have a written code of conduct, they will need to develop one. Courtney: If an agency is large and they have an existing code of conduct, does the food service program need their own code of conduct? Laurie: No, the agency s code of conduct should cover conflict of interest related to employees, officers, and agents who are participating in the procurement process using federal funds. 20

21 Courtney: Remember! Designated employees should be trained on the code of conduct and how it applies to them. We recommend that all designated employees sign the code of conduct with a statement that they have read the code of conduct and understand the policy within it. We also recommend that an agency s governing board, if they have one, approve the code of conduct. 21

22 Laurie: We ve covered Part One, Code of Conduct. Now let s move to Part Two, Procurement Standards. 22

23 Laurie: Courtney, what are procurement standards? Courtney: Merriam-Webster s dictionary defines standards as a level of quality and achievement that is considered acceptable or desirable, or ideas about morally correct and acceptable behavior. Think of procurement standards as the rules for acceptable procurement practices. Procurement practices that do not meet the standards are unacceptable! 23

24 Courtney: Since October 1, 2015, the main source of procurement standards for all federal grants is in 2 CFR, Part 200, which is known as the Uniform Grant Guidance, because it consolidates eight older regulatory sections into one document that covers all administrative requirements, cost principles, and audit requirements for all federal awards. The guidance in these regulations pertains to all agencies that receive federal awards or funds, not just agencies participating in the child care or summer programs. The sections we are interested in today relate to procurement standards. They are sections through

25 Courtney: I mentioned that 2 CFR, Part 200, includes regulations related to procurement for all agencies that receive federal funds, but there are other regulations specific for the CACFP and SFSP. For the CACFP, the regulations are 7 CFR, Part 226. There is also the Food and Nutrition Services or FNS Instruction 796-2, Revision 4. This guidance covers financial management for the CACFP. Agencies that purchase items beyond food and supplies, must ensure that these purchases are allowable. This document will help agencies understand what is and is not allowed and when they need to request prior written approval before making a purchase. Both of these documents are available in the Download Forms section of the Child Nutrition Information and Payment System, better known as CNIPS. The NSD encourages agencies to contact their program specialist before they plan to use their program funds for things other than food and supplies, like equipment or rent. 25

26 Laurie: Like the CACFP, there are regulations specific to the SFSP and they are found in 7 CFR, Part 225. Agencies can find these regulations in the Download Forms section of CNIPS. Agencies should also be familiar with FNS 796-4, Revision 4. This guidance covers financial management for the SFSP. Similar to the CACFP, if agencies are purchasing items beyond food and supplies, they must ensure purchases are allowable. This document will help agencies understand what is and is not allowable. The link to this document is on this slide. 26

27 Courtney: There are additional regulations that may pertain to some agencies. Schools must comply with regulations in the California Public Contract Code or PCC and the California Education Code. The California Education Code citations refer to laws for contract terms and extensions and contracting for services. There may also be local procurement requirements which may be more strict than federal or state requirements. It is important for all agencies to know which regulatory agency they fall under. If laws, codes, or regulations differ, agencies must comply with the requirements that are the most restrictive. 27

28 Laurie: Courtney, why are there so many procurement standards? Courtney: Well Laurie, the California Department of Education or CDE distributes a significant amount of tax payer dollars to child care and summer agencies. For example, in , the CDE distributed $416 million to agencies participating in the CACFP and over $25 million to agencies participating in the SFSP. Laurie: I can see why procurement standards are set to ensure that taxpayer funds are used effectively, efficiently, and ethically. Courtney: Absolutely. 28

29 Laurie: We re going to review the procurement standards as they are laid out in the regulations beginning with 2 CFR, (b). Agencies should include procedures that show how they monitor their contracts to make sure the terms and conditions are met. For example, let s say an agency participating in the CACFP has a vending contract in place which states that meals must be delivered at specific times of the day and must comply with the CACFP meal pattern components. Who will be checking to make sure the vendor delivers meals timely and meets the CACFP meal pattern? What will an agency do if components are missing? What will an agency do if the temperature of the milk is not acceptable when meals are delivered? Remember, the procurement process continues after contracts are signed. Someone must monitor the contract for compliance. 29

30 Laurie: The next procurement standard is (c) which we covered already in Part One, Code of Conduct, so let s skip to (d). This section states that the agency s procedures must avoid acquiring unnecessary or duplicative items. What this means is that agencies should carefully consider whether they need the items they purchase. They should ask themselves, is it necessary? Is it something they already have? The regulations also note that consideration should be given to renting versus purchasing, or any other alternative that might result in the most economical approach. For example, it would not be economical to purchase a new Mercedes to drive to the store to pick up groceries for the food program. Agencies must be good stewards of tax payer dollars. Courtney: Keep in mind that the CACFP allows nonexpendable purchases while the SFSP does not because most of the time nonexpendable purchases are too costly for the amount of time it is needed. For example, a summer program that will operate for six weeks should rent a refrigerator versus purchasing one. In addition to considering whether you need the item you want to purchase, agencies should consider the best approach to obtaining an economical purchase. For example, is purchasing groceries once a week at a grocery store the most economical approach? Although micropurchases do not require competitive price quotes, would it be a better use of federal funds to use the small purchase method and identify the store with the lowest prices? Agencies must always document why the particular procurement method chosen is the best and most economical approach to purchasing the items they need. 30

31 Courtney: Let s move on to the next procurement standard, 2 CFR, (e). This standard encourages agencies to enter into intergovernmental or interentity agreements when appropriate for procurement to use common or shared goods and services. 31

32 Courtney: Procurement standard in 2 CFR, Section (f), encourages but does not require agencies to use federal excess and surplus property instead of purchasing new equipment whenever such use is feasible and reduces project costs. To see a listing of State of California surplus property, access the Department of General Services Office of Fleet Management Services Web page at the Web address on the slide. 32

33 Courtney: The next procurement standard, 2 CFR, (h) requires agencies to award contracts only to vendors who are responsible. A responsible vendor is one who has the capability of performing successfully under the terms and conditions of a proposed procurement. Laurie: How would an agency identify whether a vendor is responsible? Courtney: There are several ways an agency could identify whether a contractor is responsible. In a solicitation, an agency could ask for references to show that the vendor has successfully met the terms and conditions of a similar contract. The agency could also ask for financial statements to ensure the vendor has the financial resources to operate while waiting for payment. An agency could also identify technical resources that must be available, such as the ability to talk to a live customer service agent within normal business hours. Another way to assess whether a contractor for vended meals is responsible, is to conduct a taste test of their food with your children. If a specific percentage of the children you determine do not like the taste of their meals, an agency could determine they are not responsible, or capable of, meeting the terms and conditions of a contract. In this case, a price quote from a vendor that does not pass the taste test would not be considered. If an agency does conduct a taste test, the process of evaluating whether a vendor passes or fails must be clearly identified and included in the solicitation. The process should be determined in advance. For example, an agency could state that children will taste the meal and be asked to circle a face with either a smile or a frown and 80 percent of the children must circle a face with a smile for the meals to pass the taste test. In summary, agencies are required to award contracts solely to responsible vendors and when determining whether a vendor is responsible, agencies should consider the factors 33

34 on this slide. 33

35 Courtney: The next procurement standard relates to maintaining records sufficient to detail the history of procurement. These records will include, but are not limited to the following: Rationale for the method of procurement agencies should justify in writing why they chose a particular procurement method. For example, if an agency uses an Invitation for Bid or IFB, they should describe why they chose this method. The rationale might be that the purchase transaction was over the small purchase threshold and a complete, adequate, and realistic specification or purchase description was available. For the micropurchase method, the rationale for purchasing spatulas at a kitchen supply store might be because the purchase price was reasonable, and it was under the micropurchase threshold. In competitive solicitations, an agency s records should clearly show how they chose or rejected a contractor. For example, if a reviewer asked to see all of the quotes or bids an agency received for an IFB, would they see the agency awarded the contract to the lowest bidder? Or if the lowest bid was rejected, would they see documentation justifying why they were rejected? It s important to be organized. The regulations also require that documentation be kept on file to show how the amount of the contract was determined. For example, in a contract for vended meals, there should be a dollar amount per meal or snacks, quoted by the vendor which is multiplied by the number of meals and/or snacks projected for the year. When adding the cost of meals and snacks projected for the year, it should show the basis for the contract price. 34

36 Laurie: The next procurement standard pertains to time and material type contracts. A time and materials type contract is derived by the actual cost of materials and the direct labor hours which are charged at fixed hourly rates. Since this formula generates an open-ended contract price, each contract must set a ceiling price that the contractor exceeds at its own risk. If this type of contract is awarded, the agency must also assert a high degree of oversight in order to obtain a reasonable assurance that the contractor is using efficient methods and effective cost controls. For example, let s say an agency s oven breaks and the vendors who provide quotes for the repair are not sure how much time it will take their repairman to fix the oven. Because the number of labor hours is unknown, the vendors want to charge the agency the repairman s hourly salary for however long it takes to fix the oven. In this scenario, it would be in the best financial interest for the vendor to instruct the repairman to take their time, as they are getting paid by the hour to repair the oven. The longer it takes, the more money they make! Therefore, the regulations state that if this type of contract is awarded, the vendor needs to give the agency a ceiling, or limit, as to the maximum hours of labor the repairman would charge. The vendor would not be paid any labor hours over the amount stipulated. Time and material type contracts can only be used after an agency determines that no other contract is suitable. 35

37 Courtney: The regulations state that agencies are responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. This means that the CDE will not intervene in disputes between agencies and vendors, unless the matter is primarily a federal concern. Violations of law will be referred to the local, state, or federal authority having proper jurisdiction.. 36

38 Courtney: The federal regulations are clear that all procurement transactions must be conducted in a manner providing full and open competition. This section of the regulations is quite lengthy as it includes several situations that are considered to restrict full and open competition and thus are not allowed. Let s go through each one. The first situation that is considered to restrict full and open competition is when a contractor develops, drafts specifications, requirements, statements of work, IFBs or RFPs for the agency. If this were to occur, the vendor must be excluded from competing for the procurement. Agencies may ask vendors for their specifications on specific products to identify the characteristics of products available, but the agency must determine the specifications to include in their solicitation. In addition, contracts for vended meals should be developed by the agency, not the contractor, as these include statements of work. 37

39 Laurie: Here are more situations outlined in the regulations that restrict full and open competition: Placing unreasonable requirements on firms in order for them to qualify to do business. For example, requiring that their vans be a certain make and model. Requiring unnecessary experience and excessive bonding. For example, requiring a vendor to have 20 years experience is unnecessary. Having noncompetitive pricing practices between firms or affiliated companies. 38

40 Courtney: Another situation which restricts full and open competition is when an agency requests a specific brand of product in their specifications without also stating or it s equivalent. Adding or its equivalent, opens competition for vendors that are unable to bid the specific brand listed. If an agency does include a brand name or its equivalent in specifications, the agency must be transparent in the process they have for determining which products are equivalent. If there is only one brand of product that an agency needs, this would be considered a noncompetitive procurement. We encourage agencies to contact their program specialist to ensure the allowability of a noncompetitive procurement. 39

41 Laurie: Another situation that restricts full and open competition is taking any arbitrary action in the procurement process. For example, an agency can t state they are choosing a vendor because they like the cute advertisements on the side of their delivery truck or the delivery driver s smile. This would be not be based upon objective criteria and would classify as limiting full and open competition. The last situation listed in the regulations which restricts full and open competition is including a specification which requires the vendor to obtain food from local sources. This is not allowed. There are regulations however, that allow agencies to give a preference for local unprocessed agricultural products during competitive procurements. The USDA refers to this as the geographic preference option. Agencies can learn more about this option in the Formal Purchase Methods for Community Nutrition Programs Webinar as well as in the Management Bulletin USDA-CNP

42 Courtney: The NSD has created two Webinars that cover the procurement standards for the five procurement methods listed on this slide. The two Webinars are the Informal Purchase Methods which includes micropurchases and small purchases, and the Formal Purchase Methods which includes IFBs, RFPs, and noncompetitive proposals. All agencies should watch the Informal Purchase Methods Webinar and, if they make purchases above the small purchase threshold, they should also watch the Formal Purchase Methods Webinar. 41

43 Laurie: Regulations require that agencies take all necessary affirmative steps to assure that small and minority businesses, women s business enterprises, and labor surplus area firms are used when possible. Check with organizations such as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce for these businesses in your area. Solicit these organizations whenever they are potential sources. Agencies must still comply with the competitive procurement process but they should reach out to give these types of vendors an opportunity to submit a bid. 42

44 Laurie: Section (b) covers contract costs and price. For all contracts over the small purchase threshold, and contract modifications, agencies must perform a cost or price analysis to obtain an independent estimate of the price before receiving bids or proposals. Courtney: What is a price analysis or cost analysis? How do they differ? Laurie: A price analysis is the process of deciding if the asking price for a product or service is fair and reasonable, without examining the specific cost and profit calculations the vendor used in arriving at the price. It is basically a process of comparing the price with known indicators of reasonableness. A cost analysis on the other hand is performed whenever a price analysis cannot be performed. It entails the review and evaluation of the separate cost elements and the proposed profit of an vendor s cost proposal. A cost analysis is conducted to perform an opinion on the degree to which the proposed cost, including profit, represents what the performance of the contract should cost, assuming reasonable economy and efficiency. 43

45 Courtney: Can you give an example of how a price analysis could be done to determine the reasonableness of quotes received for vended meals? Laurie: Yes. Let s say that an agency has a vending contract in place for 60,000 lunches per year at $3.00 per lunch with their current vendor. The total contract was for $180,000. The agency is going out to bid and this time they will be asking for 10,000 more lunches per year. They ve identified that food and labor costs have increased about 2 percent since they awarded their first contract. Based on these known indicators, the agency could reasonably expect that vendors will include at least a two percent increase in their cost per meal. A two percent increase of $3.00 per meal is $3.06. Multiplying $3.06 by 70,000 equals $214,000. This is just one example of how an agency might conduct a price analysis to determine a fair and reasonable price. A price analysis should be completed before receiving quotes for a solicitation that is over the small purchase threshold. Agencies may be asked to show their price analysis during a review. A price analysis is only required for contracts over the small purchase threshold. 44

46 Courtney: Let s say that an agency needs something and there is no one else that can supply this to them. Therefore, there is no competition. The regulations require that in these circumstances, agencies must negotiate the amount of profit the vendor will make from the procurement to ensure it is fair and reasonable. In doing so, they should consider the factors listed on this slide. Complexity of the work to be performed The risk borne by the contractor The contractor s investment The amount of subcontracting The quality of its record of past performance Industry profit rates in the surrounding geographical area for similar work 45

47 Laurie: This section of the regulations highlights the requirement that costs or prices incurred and expensed to the food program must be allowable. It references Subpart E, titled Cost Principles. Costs incurred must always be necessary and reasonable, allocable, include applicable credits, and obtain prior written approval, when required. 46

48 Courtney: Contracts that are based upon the cost plus a percentage of costs are not allowable under federal regulations. 47

49 Courtney: Federal and state regulations have requirements for contract certifications that must be included. Some provisions are required only for contracts that pertain to construction. We will not cover those today. The following certifications are required to be included in all contracts for goods or services regardless of the dollar amount. These certifications are already included in the CACFP and SFSP procurement standard agreement and IFB templates. If you develop your own solicitations and contracts, you must ensure all applicable certifications are included. The certifications are: Debarment and Suspension. Even though a vendor certifies that they are not debarred or suspended, it s in the best interest of the agency to check the System for Award Management or SAM to be certain before awarding a contract. Click on the link in the slide to learn how to identify excluded entities. Other required certifications are: California Drug-Free Workplace Act of 1990 Independent Price Determinations Equal Employment Opportunity Again, the languages for these provisions are currently included in the CACFP and SFSP 48

50 procurement templates. 48

51 Laurie: For contracts over $100,000, the Byrd Anti-Lobbying Amendment must be included. Notice the Byrd Anti-lobbying Amendment is set at $100,000, therefore some vendors signing the standard vending agreement may need to file the required certifications included in this amendment. For contracts over $150,000, agencies must include language that addresses administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate. 49

52 Courtney: Let s now review provisions that must be included in contracts over the small purchase threshold. Certifications should be included that require vendors to comply with the Clean Air Act and the Federal Water Pollution Control Act. Contractors must also certify that they meet the standards and policies relating to energy efficiency in California s Energy Policy and Conservation Act. 50

53 Laurie: The SFSP has specific bonding requirements in their program regulations that are not in the CACFP regulations. In the SFSP, each vendor that submits a bid over the small purchase threshold must obtain a bid bond in an amount not less than 5 percent of the value of the contract for which the bid is made. A copy of the bid bond shall accompany each bid. Each vendor which enters into a food service contract for over the small purchase threshold with an agency shall obtain and submit a performance bond in an amount not less than 10 percent of the value of the contract for which the bid is made within 10 days of the contract award. Any vendor which enters into more than one contract with any one agency shall obtain a performance bond covering all contracts if the aggregate amount of the contract exceeds the small purchase threshold. 51

54 Laurie: This next requirement also pertains only to the SFSP. When issuing IFBs, the agency must notify the CDE at least 14 days in advance of the time and the place of the bid opening. The regulations require the presence of a state agency representative at bid openings. Agencies that are combining the CACFP and SFSP into one contract must adhere to the 14 day advance notice of bid opening. 52

55 Courtney: We ve covered Part One and Two. Let s move on to Part Three, Procurement Procedures. 53

56 Laurie: This slide includes the language from 2 CFR, Section (a). This sentence is the first sentence of the general procurement standards. It reads, the non-federal entity (which is you) must use it s own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations. The phrase, own documented procedures, means that these procedures must be in writing and they must reflect your actual procurement process. These procedures should not be obtained from another agency unless they follow your identical procedures. This regulation also requires that the procedures reflect applicable state, local, and tribal laws and regulations. This means if there are state, local, or tribal laws and regulations that pertain to your agency, and they are more restrictive than federal law or regulations, they should be reflected in your written procedures. An example of a state law that is more restrictive than federal regulations is California PCC 20111, which states that school districts must award contracts to the lowest bidder. As a result, the procedures a school district would follow for awarding a contract through an RFP will likely be different than the procedures that a nonschool district would follow. In this situation, school districts that issue an RFP should include language in their solicitations that contracts are awarded to the lowest bidder. School districts should also ensure their procurement procedures reflect the more restrictive awarding requirements in California PCC There are also situations where local or tribal laws are more restrictive than federal and state laws. Therefore, agencies must identify whether they have more restrictive local or tribal laws and ensure that their procurements follow the most restrictive laws and that their procurement procedures reflect these more restrictive laws. 54

57 Let s review the second part of this first sentence in this section of the regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. This means when agencies conduct procurements, they must ensure they are compliant with the procurement and any specific program regulations. An agency s written procedures do not need to address how the agency complies with every procurement standard, however, this would be a best practice. Addressing all of the procurement standards that pertain to an agency would help to ensure that the procurement staff remember what the procurement standards are and how to comply during procurement transactions. Just like the code of conduct helps to ensure that the procurement staff are knowledgeable about expectations for ethical behavior, detailed written procedures that document compliance with the procurement standards would help ensure these staff do not violate the regulations. In summary, agencies must comply with the procurement standards when conducting procurement transactions. Written procedures must reflect state, local, and tribal laws and regulations. While written procedures do not need to specifically address how the agency complies with each procurement standard, doing so would be considered a best practice. 55

58 Courtney: Laurie, you mentioned that the procurement procedures should reflect state, local, and tribal laws and regulations. Is there anything else that is required to be included in the procedures? Laurie: Yes. In procurement standard (c)(1) states that the procedures must ensure that all solicitations: Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform to satisfy it s intended use. Detailed product specifications should be avoided. In addition, when agencies feel it necessary to put a brand name in specifications, they must be sure to include or its equivalent. The specific features of the named brand which must be met by offers must be clearly stated. In other words, it is not allowable to ask for a specific product by brand name as it s seen as limiting competition. Agencies must describe how they will evaluate whether another brand is equivalent. 56

59 Laurie: The regulations also state that the procedures must ensure that all solicitations identify all requirements which the potential vendors must fulfill and all other factors to be used in evaluating bids or proposals. Courtney: Ok, so you are saying there are two parts. First, procurement procedures must identify all requirements which the potential vendors must fulfill. Laurie: Yes. This means the potential vendors must understand the minimum requirements they must fulfill. For example, if an agency needs vended meals delivered on specific dates and specific sites at specific times this should be outlined in the solicitation. An agency needs to make sure that their written procedures ensure that their solicitations will include all requirements which the potential vendors must fulfill. Courtney: What does the second part mean: all other factors to be used in evaluating bids or proposals. Laurie: Whenever a vendor is responding to an IFB or an RFP, they should understand by reading the solicitation all of the factors that the agency will be using to evaluate the bid or proposals. It should be very clear to all vendors as to what the agency is looking for. An agency should state in their written procedures that all solicitations will include all factors to be used in evaluating bids or proposals. 57

60 Laurie: In addition to the previous two slides outlining the requirements of procurement procedures, we shared a lot of information earlier in the Webinar about what procurement standards agencies must follow. As a best practice, agencies may want to include these standards in their written procurement procedures. Let s take a minute to review these standards. They include: Monitoring the contract to ensure that contractors perform as in accordance with the terms and conditions of the contract. The avoidance of purchasing duplicative goods and services and considering leasing versus purchasing if more economical. Entering intergovernmental or interentity agreements for common or shared goods and services. Using federal excess and surplus property instead of purchasing new equipment. Awarding contracts only to responsible vendors. Maintenance of records the sufficiently detail the history of the procurement. The use of time and material-type contracts. 58

61 The settlement of contractual and administrative disputes Ensuring full and open competition Procurement methods used Affirmative steps taken to contract with small and minority businesses, women s business enterprises, and labor surplus area firms Conducting a price analysis before receiving bids for all contracts over the small purchase threshold 59

62 Negotiating profit when there is no competition Ensuring that costs or prices incurred and charged to the food program are allowable Not entering into unallowable contract types, such as cost plus percentage or cost contracts The inclusion of all required contract certifications And lastly, for the SFSP, ensuring vendors submit required bid bonds and notify the CDE at least 14 days in advance of the time and place of the bid opening 60

63 Courtney: Let s review the most important points of today s Webinar. Agencies are required to: 1) Develop a written code of conduct 2) Comply with procurement standards in 2 CFR, sections ) Develop written procurement procedures 61

64 Laurie: This concludes the Code of Conduct and Procurement Procedures for Community Nutrition Programs Webinar today. We hope that you have sufficient information to get started developing your written code of conduct and procurement procedures and complying with the federal procurement standards. If you have questions, here are the resources available to you. The NSD Procurement Web page is a great resource. The link is included on this slide. We also have additional Webinars that cover the Informal and Formal Purchase Methods. These Webinars will help you understand the requirements for following the informal and formal methods. The link to the Procurement Training for Community Nutrition Programs is included on this slide. 62

65 Courtney: If you still have questions, contact your CACFP or SFSP specialist. To find your specialist, please see the CACFP contact list on the CACFP Contact List Web page or contact the SFSP at the listed phone number or address on this slide. Specialists are here to assist you with ensuring that you are meeting the federal procurement standards. 63