School nutrition procurement is governed by federal, state and local regulations and policies. Having a strong understanding of these regulations is key to being able to procure goods and services for covered programs with confidence that the SFAs are in compliance and are getting the best products for the best prices. Part 200 of Title 2 of the U.S. Code of Regulations titled, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, lays out the basic procurement requirements that SFAs and sponsors administering the National School Lunch Program, School Breakfast Program and Seamless Summer Program must follow when using federal funds. Program-specific rules can be found in the federal regulations governing each federal nutrition program. In accordance with regulations, schools must assess whether any expenditure being paid for from the non-profit school food service account is allowable, meaning is it necessary, reasonable and allocable. Following proper procurement practices ensures that the federal and state dollars are being spent in a free and open market and that all participants are treated fairly. The information in this section provides the base for structuring procurement practices and making procurement decisions that ensure all dollars spent from the non-profit school food service account are spent according to regulations and policies. A procurement cheat sheet and link to the Institute of Child Nutrition are provided as references.
- Bid Renewals
For all school food authorities (SFAs) to renew bids with price redeterminations, the contract must be tied to an appropriate cost index. Relating the price redeterminations in a contract to an index allows the SFA to ensure that the increases under the contract are not without basis. The indexes utilized are the Producer Price Index (PPI) and the Consumer Price Index (CPI).
The PPI program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.
The CPI program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. SFAs may use either index to measure price redeterminations. Price indexes are available for the U.S.; the four census regions; size of city; cross-classifications of regions and size-classes; and for 26 local areas. Indexes are available for major groups of consumer expenditures (food and beverages, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services), for items within each group, and for special categories, such as services.
- Buy American
SFAs must keep in mind that for all procurement transactions for food when funds are used from the nonprofit food service account—whether directly by an SFA or on its behalf—procurement transactions must comply with the Buy American provision. Implementation of the Buy American provision should be done by: including the provision in documented procurement procedures, state agency prototypes documents, and all procurement solicitations and contracts; including domestic requirements in bid specifications; contract monitoring; and verifying cost and availability of domestic and non-domestic foods using data in the USDA Agricultural Marketing Service's weekly market report.
Limited exceptions to the Buy American provision are allowed for the purchase of foods not meeting the domestic standard. These exceptions, as determined by the SFA, are:
- The product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality; or
- Competitive bids reveal that the costs of a U.S. product are significantly higher than the non-domestic product.
Before utilizing an exception, alternatives to purchasing non-domestic food products should be considered.
If the SFA is using one of the above exceptions, there is no requirement to request a waiver from the state agency or FNS in order to purchase a non-domestic product. SFAs must, however, keep documentation justifying the use of the exception(s).
The state agency has provided sample language that may be used in procurement solicitations and a sample waiver form with instructions for its use. Please note that this form is not mandatory, but all exceptions and the process the SFA follows to implement the Buy American provision must be documented.
- Small Purchases
School food authorities (SFAs) are allowed to utilize informal procurement or small purchase procedures when purchasing items above the micro-purchase threshold but below the formal purchase threshold. The formal purchase threshold varies among districts; the highest threshold allowed for public school systems in Tennessee is $25,000, while the lowest formal purchase threshold may be as low as $5,000, depending on local regulations. Small purchase procedures require adherence to procurement regulations and should be well documented. Utilization of these checklists provides the SFA with clear, consistent documentation for all purchases that are under the formal purchase threshold for their governing body. Forms are provided for documenting quotes from verbal sources, written sources, and published sources.
- USDA Foods
The USDA's Schools/Child Nutrition USDA Foods Programs support domestic nutrition programs and American agricultural producers through purchases of domestic agricultural products for use in schools and institutions. Nutritious USDA-purchased food is provided to the National School Lunch Program. In Tennessee, USDA foods are distributed through the Department of Agriculture and administered by Terry Minton, USDA foods administrator. The USDA foods distribution office facilitates the administration of the program by providing entitlement and ordering survey worksheets in early January of each year so menu plans can be finalized for the following school year. Efficient utilization of USDA foods in the form of brown box, further processed foods and Department of Defense (DOD) fresh produce ensures that the entitlement dollars provided by USDA foods are maximized at the local school district level. When planning maximum fund utilization from USDA Foods entitlement, this USDA Foods Cost Analysis Tool is a great resource.
Brown Box USDA Foods – The SFA can request processed items that are delivered through state contracted distributors in quantities needed to satisfy their menu needs. These items are requested on the initial survey worksheets and are combined with requests from other SFAs across the state. Truckload quantities of these items are ordered and delivered to state contracted warehouses for distribution to local SFAs.
Further Processed USDA Foods – For raw, bulk USDA foods to be further processed into selected end products, the recipient agency (RA) competitively procures the services of commercial food processors to have the USDA foods converted to more ready-to-use products. After competitive procurements are finalized, the information regarding processor and number of pounds of the raw commodity being contracted must be sent to the commodity distribution administrator in order to ensure that the SFA's entitlement balance is maintained. A legally binding agreement with the Food and Nutrition Service (FNS) or the State distributing agency (SDA), as appropriate, allows the processor to receive USDA foods like bulk chicken as an ingredient in the production of finished products such as fajita strips.
Department of Defense (DoD Fresh) purchasing – State Distributing Agencies may permit SFAs to allocate some or all of their USDA foods entitlement to purchase produce through DoD Fresh. A maximum value or request for these funds to be allocated to DoD Fresh must be made by the SFA when submitting their survey worksheets to the State distributing agency. SFAs are reminded that they cannot continue to purchase from the DoD Fresh vendor after all entitlement funds are utilized unless that vendor has been secured with a proper procurement.
As a resource, a suggested timeline for procurement of USDA foods is included here.