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This webpage is on procurement guidance and requirements for all Child Nutrition Programs, including School Nutrition Programs (such as the National School Lunch Program, Special Milk Program, and School Breakfast Program), the Summer Food Service Program, and the Child and Adult Care Food Program. Procurement means the process of obtaining goods and/or services in accordance with applicable rules and regulations. Procurement rules ensure that program benefits are received by eligible schools and participants, and that taxpayer dollars are used effectively and efficiently, with no waste or abuse. Regulations require that all purchases made, whether funded wholly or in part with Child Nutrition Program funds, comply with all federal, state, and local procurement requirements.

All procurement transactions must be conducted in a manner that provides maximum open and free competition. Procurement procedures must ensure they do not foster noncompetitive practices between firms, do not create organizational conflicts of interest, and do not restrict or eliminate competition. Procurement must not place unreasonable requirements on firms, require unnecessary experience, or establish unrealistic bonding requirements. Cost plus a percentage of purchase is not an allowable system. There must be descriptions of all products purchased and identical instructions provided to all potential vendors.

Formal standards of conduct should govern the performance of officers, employees, and agents in the award and administration of contracts. These standards should provide that officers, employees, or agents should not solicit nor accept gratuities, favors, or anything of monetary value from contractors, potential contractors, or parties of sub-agreements.​

 Rules and Regulations

​​Local

  • School Food Authority/ Sponsoring Organizations may set more restrictive purchasing thresholds per board/local policy and documented in written procurement procedures.

State

  • 105  ILCS 5/10-20.21: The Illinois Public School Code states that all purchases, except perishable foods and beverages in excess of $25,000 (or lower as required by district board policy), must be competitively bid and awarded to the lowest responsible bidder. The $25,000 level refers to aggregate purchases on an annual basis.
  • Request for Proposals (RFP) not allowed.

Federal

  • 2 CFR 200: Uniform Administrative requirements, Cost Principles and Audit Requirements for Federal Awards
  • 7 CFR Part 210: National School Lunch Program
  • 7 CFR Part 215: Special Milk Program
  • 7 CFR Part 220: School Breakfast Program
  • 7 CFR Part 225: Summer Food Service Program
  • 7 CFR Part 226: Child and Adult Care Food Program
  • 7 CFR Part 3016: Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments
  • 7 CFR Part 3019: Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations

USDA policies and resources

 Procurement Methods

​The primary contracting methods used by the federal government are micro-purchasing, small purchase, and competitive sealed bidding.

When procuring goods and services for the Child Nutrition Programs, a School Food Authority/ Sponsoring Organization must determine whether they must use an informal or formal procurement method. It is important to understand and then identify which method best meets the needs of your individual food service operation. Informal procurement occurs when a School Food Authority's/Sponsoring Organization's purchases fall at or below the federal, state, or local small purchase threshold (whichever is more restrictive). The informal procurement method is commonly referred to as procurement under the small purchase threshold or simplified acquisitions. Although this method is permitted when the amount of a purchase falls at or below the most restrictive small purchase threshold, a School Food Authority/ Sponsoring Organization could choose to use the formal procurement method (see below for more information) rather than the informal procurement method.

INFORMAL

  • Micro-purchasing: Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $ 10,000. 
    • Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable. (2 CFR 200.320)
    • Must distribute micro-purchases equitably among qualified suppliers.
    • Simple purchase.
  • Small purchase: Procurement by small purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $ 250,000 (or a lower amount as required by local/district board policy). Also known as simplified acquisition or informal purchase. 
    • In applying the small purchase threshold, the School Food Authority/Sponsoring Organization must adhere to the most restrictive, lowest limit set.
    • Develop a written purchase description of the services/items being solicited;
    • Solicit quotes/bids from three or more potential vendors based on the purchase description; document vendor names along with the date and method of contact - be sure to maintain free and open competition;
    • Record all quotes/bids received and any notification received from vendors declining to bid;
    • Evaluate the quotes for conformance to the purchase description;
    • Award the purchase/contract (record the justification for the award); and
    • ​Maintain all documents on file for potential audit purposes. 

NOTE -- For public schools only: The Illinois School Code states that all purchases, except perishable food and beverages in excess of $25,000 (or a lower amount as required by district board policy), must be competitively bid and awarded to the lowest responsible bidder. The $25,000 level refers to aggregate purchases on an annual basis. However, if supplies, equipment, or any non-perishable food/beverage items are purchased from the full-line vendor in addition to the food/beverage items, the $25,000 threshold becomes applicable. In other words, if paper goods and/or cleaning supplies are purchased from the same vendor that supplies canned, frozen, and/or dry goods, a formal competitive sealed bid must be used if the total annual amount for all foods and items purchased is over $25,000 (instead of $250,000).

FORMAL

  • Competitive Sealed Bid/ Invitation for Bid (IFB): When the value of the purchase is expected to exceed the small purchase threshold of $250,000 (or a lower amount as required by local/district board policy), School Food Authorities/Sponsoring Organizations must use the competitive sealed bid/invitation for bid method.

    The $250,000 amount is determined by examining the manner in which food has been purchased in the past. If using vendors that supply only one particular type of product, such as bread, milk, or meat, the competitive bid process must be implemented when the annual amount of purchases is in excess of $250,000 per type of product.

    When multiple vendors, such as full-line vendors, supply various items such as canned, frozen, and dry goods, the total annual purchase amount for all the vendors must be added together. If this amount is in excess of $250,000 annually, the food must be competitively bid. 
    • Competitive Sealed Bidding (2 CFR 200.320 ( c ) are bids that are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. Also known as Invitation for Bid (IFB).
    • Sealed Bids must be directly solicited to at least five (5) known suppliers
    • Providing suppliers sufficient response time prior to the date set for public opening of the bids, for all Organizations,
    • The invitation for bid must be publicly advertised for at least 10 days before the bid date.
    • The invitation for bid, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond
    • All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly
    • A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder
    • Any or all bids may be rejected if there is a sound documented reason.
NOTE -- For public schools only: The Illinois School Code states that all purchases, except perishable food and beverages in excess of $25,000 (or a lower amount as required by district board policy), must be competitively bid and awarded to the lowest responsible bidder. The $25,000 level refers to aggregate purchases on an annual basis. However, if supplies, equipment, or any non-perishable food/beverage items are purchased from the full-line vendor in addition to the food/beverage items, the $25,000 threshold becomes applicable. In other words, if paper goods and/or cleaning supplies are purchased from the same vendor that supplies canned, frozen, and/or dry goods, a formal competitive sealed bid must be used if the total annual amount for all foods and items purchased is over $25,000 (instead of $250,000).​

USDA policies and resources

 Contract Certification Forms

​The following certification forms must be included with all solicitations, contracts, and/or renewal agreements as described below. The forms must be signed by each bidder/contractor as indicated.

 Geographic Preferences

​Federal regulations require procurements to be conducted in a manner that allows for free and open competition. Therefore, a School Food Authority/ Sponsoring Organization cannot impose geographic restrictions on potential bidders, with one exception. Geographic preference may only be applied to the procurement of unprocessed agricultural products which are locally grown and locally raised, and that have not been cooked, seasoned, canned, or combined with any other products. De minimis handling and preparation are allowable in order to present an agricultural product to a School Food Authority/ Sponsoring Organization in a useable form as long as the product retains its inherent character. Handling and preservation techniques that are permissible include: cooling, refrigerating, freezing, washing, packaging (such as putting eggs in a carton), vacuum packing and bagging (such as placing vegetables in a bag), drying/dehydration, applying high water pressure or “cold pasteurization", butchering livestock, fish and poultry, pasteurizing milk, and adjusting the size through size reduction made by peeling, chopping, cutting, slicing, dicing, grinding, and shucking.

While a geographic preference may be used to encourage the purchase of locally grown and locally raised products by enabling School Food Authority's/ Sponsoring Organizations to grant an advantage to local growers, this provision does not eliminate the requirement for procurements to be conducted in a manner that allows for free and open competition as noted previously. In addition, while School Food Authority's/ Sponsoring Organizations are permitted to apply a geographic preference for the procurement of locally grown and locally raised unprocessed agricultural products, School Food Authority's/ Sponsoring Organizations are not required to do so. The School Food Authority/ Sponsoring Organization  has the discretion to determine whether and how a geographic preference meets its needs, but must keep in mind that for all procurements, whether formal or informal, bids/quotes must be obtained from a minimum of three prospective vendors.

USDA policies and resources

 Bid Protest

Any action that diminishes open and free competition seriously undermines the integrity of the procurement process and may subject any School Food Authority/ Sponsoring Organization to bid protests. School Food Authorities/Sponsoring Organizations are responsible for properly responding to protests and concerns raised by potential contractors. Pursuant to §3016.36(b) (12), School Food Authorities/Sponsoring Organizations must have protest procedures in place to handle and resolve disputes relating to their procurements and must in all instances disclose information regarding a protest to the Illinois State Board of Education Nutrition Department.​

 Competition

​​2 CFR 200.319 Competition (a) 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:

  1. Placing unreasonable requirements on firms in order for them to qualify to do business;
  2. Requiring unnecessary experience and excessive bonding;
  3. Noncompetitive pricing practices between firms or between affiliated companies;
  4. Noncompetitive contracts to consultants that are on retainer contracts;
  5. Organizational conflicts of interest;
  6. 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.

 Procurement Procedures

​Each School Food Authority/Sponsoring Organization is required to have its own documented procurement procedures in place that reflect applicable state and local laws and regulations, provided that procurements made with Child Nutrition Program funds adhere to the standards set forth in 2 CFR 200.318(a).

  • The School Food Authority/ Sponsoring Organization must have oversight procedures and documentation.
  • The School Food Authority/ Sponsoring Organization must have written standards of conduct covering conflicts of interest that prohibit officers, employees and agents from soliciting or accepting gratuities, favors or anything of monetary value from contractors or parties of subcontracts.
  • The procedures must avoid acquisition of unnecessary or duplicate items.
  • The School Food Authority/ Sponsoring Organization must award contracts only to responsible contractors.
  • The School Food Authority/ Sponsoring Organization must maintain records sufficient to detail the history of the procurement.

USDA policies and resources

 Code of Conduct

​Each School Food Authority/Sponsoring Organization is required to have written standards of conduct covering conflicts of interest that prohibit officers, employees and agents from soliciting or accepting gratuities, favors or anything of monetary value from contractors or parties of subcontracts.

  • Procedures must provide for disciplinary actions for violations by officers, employees, or agents. 
  • School Food Authority/Sponsoring Organization must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications.  
  • School Food Authority/Sponsoring Organization must take steps to assure that small, minority and women's businesses enterprises and labor surplus firms are used when possible.

USDA policies and resources

 Group Purchasing Organization

​Participating in intergovernmental and inter-agency agreements can offer greater economy and efficiency for procurement or use of common or shared goods or services (2 CFR 200.318(e)), Program operators participating in these agreements must still conduct competitive procurement in accordance with 2 CFR Part 200.318-.326 and applicable program regulations and guidance Specifically, Program operators must ensure all:

  • Costs paid from the nonprofit food service account are necessary, reasonable, allocable, and otherwise allowable per 2 CFR 200.403 and the applicable cost principles in 2 CFR 200, subpart E.
  • Procurements are conducted in a manner maximizing full and open competition consistent with federal procurement standards in 2 CFR 200.318-.326 and in applicable Program regulations. 

Failure to competitively procure goods and services is a violation of federal regulations and may result in delays, disputes, findings of noncompliance, and costs being disallowed.

USDA policies and resources

 Buy American

​​School food Authorities are required to adhere to the Buy American provisions found in federal regulations (7 CFR Part 250.23). Actions a SCHOOL FOOD AUTHORITY should take to comply with these requirements are as follows:

  • Include a Buy American clause in all food product procurement documents (product specifications, bid solicitations, purchase orders, etc.);
  • Monitor contractor performance;
  • Require suppliers to certify the origin of the product;
  • Examine product packaging for identification of the country of origin; and
  • Ask the supplier for specific information about the percentage of U.S. content in the food product.

Sample Buy American Clauses: The following clauses may be incorporated into bid solicitations, purchase orders, and/or product specifications for food products purchased for use in any of the Child Nutrition Programs.

  • The vendor shall purchase, to the maximum extent practicable, domestic commodities or products which are either an agricultural commodity produced in the United States or a food product processed in the United States substantially using agricultural commodities produced in the United States (U.S.).
  • The vendor shall certify the percentage of U.S. content in the products supplied to the School Food Authority.
  • The School Food Authority reserves the right to review purchase records to ensure compliance with the Buy American provision in 7CFR Part 250.
  • The vendor shall provide nutrition facts labels and any other documentation requested by the School Food Authority to ensure compliance with U.S. content requirements.
  • In the event a product is not produced or manufactured in the U.S.; the cost of a U.S. produced product is significantly higher than foreign products; and/or the product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality, the vendor shall provide reasonable notice to the School Food Authority in advance of the product purchase. The School Food Authority may then issue approval of such product purchases on a case-by-case basis.

USDA policies and resources

 FFVP Procurement Information (School Nutrition Programs)

​When purchasing fresh fruits and vegetables or other allowable items, you may use your current vendor as long as proper procurement methods were already followed AND the items being purchased were included in the procurement specifications. This includes terms by which a “new" item may be purchased. If the item being purchased was NOT included in the original procurement specifications, terms were not included for “new" item purchases*, and the purchase will not total more than $250,000, informal purchase procedures must be followed and quotes MUST be obtained from a minimum of three prospective vendors (which may include your current vendor). If the purchase will exceed $250,000 annually, you must use formal competitive procurement methods. Refer to the School-Based Child Nutrition Programs Administrative HandbookPDF Document for details on determining the proper method of procurement.

However, if you have a Food Service Management Company (FSMC) contract you must carefully asses all contractual provisions allowing the FSMC to charge costs other than actual costs of fresh fruits and vegetable prior to executing a FFVP contract with the FSMC. This assessment will help ensure the allowability of the fixed fee component charged to the FFVP (or any other fees charged to the FFVP not related to the actual cost of the fresh fruits or vegetables) and that the resulting contract executed adheres to the FFVP requirements. Please note that, if provisions are to be added to an existing FSMC contract, the amendment must be evaluated by the State Agency prior to execution to determine whether the change is material.

*Since you cannot always foresee every single item that you may need during the course of a year or predict new items that may come on the market, you may include a method for handling new and other products in your original procurement specifications. For example, you may choose to use “vendor's cost + fee/case": $0.00–$10.00 + $1.00, $10.01–$20.00 + $2.00, and so forth. It is recommended that you research the marketplace to determine the best method for handling these types of purchases in your area.

Please contact ISBE staff at (800) 545-7892 with any questions regarding procurement for the Fresh Fruit and Vegetable Program.

 Procurement Review (School Nutrition Programs)

​The purpose of a procurement review is for state agencies to ensure the procurement process conducted by School Food Authorities (SFAs) complies with program and the government-wide procurement standards. Procurement standards must be conducted in a manner providing full and open competitive (2 CFR 200.319(a)).

Why is there a Procurement Review?

  • Procurement is a major responsibility of each SFA – almost half of the SFA's reimbursement is used on the procuring of goods and/ or services.
  • Procurement has a major impact on financial stability of the SFA's nonprofit school food service account.
  • Not just another “food service" requirement. 2 CFR 200 applies to ALL federal grants and most SFAs receive Federal grants other than just from the Child Nutrition Program.

Overview of a Procurement Review

  • Obtaining the most economical purchase should be considered in all purchases when using Federal funds.
  • All Procurement transactions must be conducted in a manner that provides maximum open and free competition.
  • Federal, state and local laws and regulations specify the procurement method, terms and conditions SFAs must follow to competitively procure goods and services, award contracts, and oversee contractor performance, (2 CFR 200.318(b)).
  • State agencies are required to ensure that SFAs comply with applicable provisions through audits, administrative reviews, technical assistance, training guidance materials and by other means (7 CFR 210.169(a)(3)).

State Agency Review Process

  • Includes reviewing the SFA's procurement documentation and assessing compliance with the procurement standards.
  • The State Agency (ISBE) has the discretion to conduct the procurement review off-site, on-site, or off-site/on-site as long as all procurement documentation needed to conduct the review can be obtained by the State Agency.
  • The procurement review may be conducted as part of the Administrative Review, or as a separate review, as determined by the State Agency. State Agencies must conduct a procurement review on all SFAs once in each review cycle.
  • Once review is complete, the State Agency (ISBE) may provide technical assistance and establish findings and required corrective action, as applicable.

Snapshot of a Procurement Review

The State Agency, the Illinois State Board of Education (ISBE), will conduct the procurement review using a step-by-step approach. From notifying each SFA of a procurement review to closing the review, each step is intended to assess compliance while providing technical assistance in the area of procurement.

Overall, the State agency will:

  • Notify SFA of a procurement review
  • Schedule the review
  • Send the SFA a Procurement Tool to complete and request a list of documentation needed to conduct the review
  • Conduct the review either on-site or off-site, or both
  • Report review results with the SFA
  • Require corrective action, as applicable
  • Review and approve the corrective action, as applicable
  • Close the review

What can you do to prepare?

  • Conduct compliant procurement processes
  • DOCUMENT! DOCUMENT! DOCUMENT!
  • Ensure you have written, detailed procurement procedures
  • Ensure you have a compliant code of conduct
  • Incorporate language in your procurement procedures, solicitations and contracts for food specification to ensure compliance with the Buy American provision
  • Monitor contractors for compliance with specification, terms, and conditions of contracts
  • Review your procurement process and procedures annually

USDA policies and resources

 Equipment

​The OMB guidance and U.S. Department of Agriculture (USDA) regulations at 2 CFR 200.33 define “equipment" as tangible personal property (including information technology systems) having a useful life of one year or longer and a per-unit acquisition cost that equals or exceeds the lesser capitalization level established for financial statement purposes, $5,000, or a lower threshold set by local level regulations.

During administrative reviews required by 7 CFR Parts 210, 225, 226 and procurement audits as required by 2 CFR 200.501, ISBE will review equipment purchases, ensuring  purchases were made based on either the approved equipment list or the ISBE prior approval process.  If equipment purchase(s) are deemed unallowable during any audit or review process, ISBE may disallow the purchase(s) and require the SFA/ Sponsoring Organization to replenish the non-profit school food account as appropriate.

Costs associated with remediation or repair to the facility (i.e. plumbing, heating, air conditioning, construction, etc) that would add to the permanent value of the facility are unallowable. These costs should be borne by the School Food Authority's/ Sponsoring Organization's general fund.

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