Section VI. Procurement
A. Allowable / Unallowable
The purpose of Federal procurement requirements is to provide a system where maximum open and free competition allows a purchaser to acquire the goods and services needed at the best possible price. It is not the purpose of Federal procurement rules to require child nutrition program operators to purchase sub-standard goods simply because the price is lowest; nor is it the purpose of Federal procurement rules to permit unreliable suppliers access to the child nutrition programs simply because these suppliers underbid reliable companies.
Allowable Procurement Practices:
1. Obtaining publicly available information such as:
• Product brochures, product specification handouts, etc.
• Information obtained from the Internet
• Information/recommendations obtained from other food service personnel
• Information obtained by visiting food service operations, industry and professional trade shows
• Trade journal information
2. Obtaining information from manufacturers and distributors including:
• Recommendations of one product versus another product
• Features that make one product different from another
• The price for the product
• The price for specific features
• The model number, make, and manufacturer of products that may be acceptable
• Specification sheets and product information hand-outs
Unallowable Procurement Practices:
1. Allowing a potential contractor to write the bid or proposal terms, product specifications, and procurement procedures or contract terms.
2. Allowing a potential contractor to evaluate bids or proposals submitted by competitors.
3. Delegating bid/proposal acceptance or recommendation for acceptance to a potential contractor competing on the procurement.
4. Allowing a potential contractor access to sealed bid information before the bids are publicly opened.
5. Disclosing the content of proposal offers submitted by others to a potential supplier prior to the supplier submitting an offer.
6. Negotiating under the formal advertising method (sealed bid) of procurement.
7. Accepting non-responsive bids or offers.
For additional information on USDA procurement requirements see 7 CFR 210.21; Title 7 Code of Federal Regulations (CFR) Part 3015, Part 3016, Part 3017, and Part 3018.
B. Buy American
USDA requires that whenever possible, School Food Authorities shall only purchase food products that are produced in the United States. Exceptions to the “Buy American” requirement are allowed when:
• The recipients have unusual or ethnic food preferences that can only be met through purchases of products not produced in the United States,
• Products are not produced or manufactured in the United States in sufficient and reasonable available quantities of a satisfactory quality;
• The cost of the domestic produced food products is significantly higher than that of foreign products.
C. Debarment and Suspension/Lobbying
A school district is prohibited from contracting with a company or individual that has been debarred or suspended in accordance with 7CFR Part 3017. This prohibition applies to new contracts and extensions or renewals of existing contracts of $100,000 or more and to contracts for audit services, regardless of amount. A “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion” must be filed with all bids of $100,000 or more. An area specialist can assist school districts with questions regarding debarment and suspension.
See 7 CFR 3018 for Lobbying Certification for Contracts of $100,000 or more.
D. Exclusive Beverage and Snack Contracts
If the Child Nutrition Program is included in exclusive beverage contracts, all federal procurement requirements must be met. See Director’s Memo IA – 99 – 010 for additional information. Copies of the contract and procurement documentation must be available for review by legislative audit each year. Federal procurement procedures are found in 7 CFR 210.21, 7 CFR Part 3015, Part 3016, Part 3017 and Part 3018.
These regulations require: "All procurement transactions… without regard to dollar value shall be conducted in a manner that provides maximum open and free competition." Documentation must be maintained to prove that the appropriate procurement procedures were used and that the final selection is the most efficient and economical for the Child Nutrition programs. In addition, that portion of all commissions, considerations, donations (including scholarship funds) or any other funds received by the district that is based on the participation of the Child Nutrition programs in this contract must be deposited in the Child Nutrition account for Child Nutrition programs use only.
There are several other very specific requirements in the regulations based on the method selected to procure products. If a district includes Child Nutrition programs in an exclusive beverage contract, and the district does not have copies of 7 CFR 210.21, 7 CFR 3015, 3016, 3019, 3017, and 3018, please contact this office.
If the exclusive beverage contract does not include the federal Child Nutrition programs, the contract does not have to comply with the USDA procurement regulations cited above, but it must still comply with the appropriate state procurement requirements.
E. Procurement Process
The following are additional excerpts from 7 CFR Part 3016, which must be followed during the procurement process.
• Code of Conduct
7 CFR Part 3016.36 (b) (3) A School Food Authority (local school district) “will maintain a written code of conduct governing the performance of their (SFA) employees engaged in the award and administration of the contract. No employee …shall participate in selection or in the award or administration of a contract supported by Federal funds if a conflict or interest, real or apparent would be involved."
7 CFR Part 3016.36 (b) (3) (iv) This regulation states: "…employees…will neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, potential contractors, or parties…."
• Non-geographic Preference
7 CFR Part 3016.36 (c) (2) A School Food Authority (local school district) “will conduct procurements in a manner that prohibits the use of statutorily or administratively imposed in-State or local geographical preferences in the evaluation of bids or proposals…”
• Selection Procedures
7 CFR Part 3016.36 (c) (3) (i) The request for proposal (RFP) or invitation to bid shall: "incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not… contain features, which unduly restrict competition."
7 CFR Part 3016.36 (c) (3) (ii) The RFP or invitation to bid shall: "Identify all requirements which offerors (vendors) must fulfill and all other factors to be used in evaluating bids or proposals."
• Access to Contractor Records
7 CFR Parts 3016.36 (i) (10) "Access by the grantee (state agency), the Federal grantor agency (USDA), the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract for the purpose of making audit, examination, excerpts, and transcriptions.”
7 CFR 3016.36 (i) (11) Regulations require “ retention of all required records for three years after … the final payments and all other pending matters are closed.”
When a school district agrees to participate in the United States Department of Agriculture (USDA) Child Nutrition Programs, the district signs an agreement. In this School Food Authority Agreement between the Arkansas Department of Education and the local education agency, the school district agrees to make all accounts and records pertaining to its school food service available to both the state and federal audit for review. Comply with other contract provisions, as required by 7 CFR 3016.36(i), EEO, Clean Air, etc.
F. Sales Tax
Except for the soft drink tax, schools are exempt from the sales tax on food. They are not exempt from the sales tax on non-food items used in the operation of the school foodservice program.
It is the responsibility of a non-resident vendor to be registered with Arkansas to collect Arkansas tax. If you have a vendor who is not collecting sales tax, you may contact Sales and Use Tax Section, Arkansas Department of Finance and Administration, P. O. Box 1272, Little Rock, AR, 72203, or at (501) 682-7104.