procurement review process for school nutrition programs
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New Jersey Department of Agriculture 1New Jersey Department of Agriculture 1
Procurement Review Processfor School Nutrition Programs
What New Jersey schools
need to know……
August 2018 WEBINAR
New Jersey Department of Agriculture 2New Jersey Department of Agriculture 2
LEARNING OBJECTIVES Participants should be able to:
Understand federal, state and local requirements for procuring goods and services –Enterprise Fund (60) – Food Service account
Understand the federal requirement to have a written Code of Conduct for Procurement and a written Procurement Procedure
Understand the four allowable procurement methods
Understand the federal Procurement Review Process
New Jersey Department of Agriculture 3New Jersey Department of Agriculture 3
Procurement in the School Nutrition Programs (SNP) was
brought to the forefront in December 2013 when the federal
government released Title 2, Code of Federal Regulations (2
CFR), Part 200, also known as the Uniform Grant Guidance or
the
“SUPER CIRCULAR”
Procurement: The HOT Topic
New Jersey Department of Agriculture 4New Jersey Department of Agriculture 4
School Nutrition Program Fundamentals
Schools participating in School Nutrition Programs receive federal & state funds
Federal regulations
Government – wide - 2 CFR 200 (THE SUPER CIRCULAR)❖ COST PRINCIPLES ( allowable/unallowable costs)
❖ PROCUREMENT
▪ Program specific (7 CFR 210, 215, 220 & 250)❖ ELIGIBILITY
❖ MEAL REQUIREMENTS
❖ FOOD SERVICE ACCOUNT
New Jersey Department of Agriculture 5New Jersey Department of Agriculture 5
School Nutrition ProgramsFundamentals – con’t
New Jersey School Code
Public School Contract Law - N.J.S.A. 18 A - 18 A -1
Local Public Contract Law - N.J.S.A. 40A:11-1 et seq
Applies to ALL public schools (including charter schools)
Sections apply to school meal programs:
REIMBURSEMENT
PROCUREMENT
New Jersey Department of Agriculture 6New Jersey Department of Agriculture 6
What is PROCUREMENT?▪ Procurement is the act of obtaining goods or
services in exchange for money or value
▪ As recipients of federal dollars, all schools are expected to procure goods and services in the proper manner.
▪ ALL procurement, regardless of the dollar amount, must provide for full and open competition
▪ ALL procurement must adhere to federal requirements. In addition, when state and/or requirements are stricter, they must be followed too!
▪ Award to responsive and responsible vendors
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The purchase of goods and services
What is Procurement ?
Awarding
a ContractManaging
a Contract
Advertising
Procurement
Drafting
SpecificationsPlanning
New Jersey Department of Agriculture 8New Jersey Department of Agriculture 8
Procurement Methods
Informal Formal
Micro-
Purchases < $10,000 NEW
FEDERAL
THRESHOLD
Aggregate Single
Purchase
Small Purchases>$250,000 NEW FEDERAL
THRESHOLD
NJ State Threshold = $29,000
(With a QPA = $40,000)
Sealed Bids
(IFBs),
Competitive
Proposals (RFPs)
&
Non-competitive
Proposals
* Requires public
advertising
Requires price quotes
from at least 3 bidders
Distribute
equitably among
suppliers
Formal
FEDERAL FUNDS PROCUREMENT
METHOD SELECTION CHART
THERE ARE TWO (2) PROCUREMENT METHODS, FORMAL AND INFORMAL. THE METHOD THE SCHOOL FOOD AUTHORITIES (SFA) NEEDS TO USE DEPENDS ON TWO (2) FACTORS, THE AMOUNT OF THE CONTRACT AND WHETHER THE SFA IS A PUBLIC/CHARTER OR NON-PUBLIC SCHOOL.
NEW JERSEY PUBLIC/CHARTER SCHOOLS PURCHASING THRESHOLDS
AMOUNT ACTIVITY PROCUREMENT METHOD
INFORMAL PROCUREMENT
Below $4,350 without QPA N.J.S.A. 18A:18A-3 Sound Business Practice *
Below $6,000 with QPA APPLIES TO PURCHASES BELOW THE QUOTATION THRESHOLDS
SMALL PURCHASE QUOTATION PROCEDURES
$4,351 or $6,001 up to $29,000 or $40,000
N.J.S.A. 18A:18A - 37
Quotation using SFA Internal Procurement Procedures
ANY PURCHASE EXCEEDING QUOTATION THRESHOLDS REQUIRES A QUOTE UP TO THE APPLICABLE N.J.S.A. BID THRESHOLDS OF $29,000 (without a QPA*) OR
$40,000 (with a QPA*)
NOTE: ANNUAL AGGREGATE AMOUNTS
· FORMAL PROCUREMENT
$29,000 or $40,000 and above
N.J.S.A. 18A:18A - 37
Bid - Invitation for Bid (IFB) OR Request for Proposal (RFP)
· Bid Threshold without a QPA* - $29,000
· Bid Threshold with a QPA* - $40,000
* QUALIFIED PURCHASING AGENT
NEW JERSEY NON-PUBLIC SCHOOL PURCHASING THRESHOLDS
AMOUNT ACTIVITY PROCUREMENT METHOD
INFORMAL PROCUREMENT
Below $10,000 *Micro – purchases 2 CFR 200.320 (a)
Single Transaction aggregate cost less than $10,000Sound Business Practice *
* Or LESS than $10,000 if local SFA Procurement Policies are more restrictive
$10,001 - $249,999 Small purchase procedures 2 CFR 200.320(b)Quotation using SFA
Internal Procurement Procedures
FORMAL PROCUREMENT
$250,000 and aboveAs per federal requirements in 2 CFR Parts 200.317 – 200.36
Bid – Invitation for Bid (IFB) OR Request for
Proposal (RFP)
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Procurement Procedures Must have documented procurement
procedures that conform to federal requirements and reflect applicable state and local standards
Must have written code of conduct for procurement
Bid protest procedures must be available
Documentation throughout the process is key for transparency. Build it into the procedure.
New Jersey Department of Agriculture 12New Jersey Department of Agriculture 12
Identify/Forecast Needs
Conduct an independent cost analysis to determine what the anticipated cost may be (e.g. ask colleagues, check websites)
The anticipated cost will determine method of procurement (e.g., formal vs informal)
Gather information related to product or service (research, review market, discuss with colleagues, attend professional trainings, etc. in order to write a comprehensive solicitation
New Jersey Department of Agriculture 13New Jersey Department of Agriculture 13
Identify/Forecast Needs continued…
Contractors that develop or draft specifications, requirements, statements of work, solicitation documents must be excluded from competing for the procurement.
New Jersey Department of Agriculture 14New Jersey Department of Agriculture 14
Procurement 101 Informal Procurement Process
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Procurement 101 Formal Procurement Process
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Competitive quotes are not required
Purchaser writes product specification and any additional vendor requirements
Purchases must be equal to or below $3,500 (or current federal micro-purchase threshold)
Purchaser considers the price of the goods or services to be reasonable
Purchases must be distributed equitably among qualified “responsive” suppliers
SFA must keep all receipts, invoices, and purchase orders
Procurement 101Micro-purchase Method
New Jersey Department of Agriculture 17New Jersey Department of Agriculture 17
Develop a specification
• Apples, US No. 1, five 185-count boxes per week for September through December
Solicit quotes
• Contact vendors (by phone, fax, e-mail or in person and provide them with specifications
Procurement 101Small Purchase Method
Informal Procurement: “Three Quotes and a Buy”
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• Specifications/product description provide enough detail for vendor to respond adequately
• Telephone or written quotations from 3 qualified and responsible vendors (followed up by an email/fax)
▪ Date of quote
▪ Name of vendor and representative
▪ Description of item being quoted
▪ Quantity
▪ Price of item
▪ Date item needed
Procurement 101
Informal Procurement: “Three Quotes and a Buy”
New Jersey Department of Agriculture 19New Jersey Department of Agriculture 19
If less than three (3) vendors exist to provide product or service, thoroughly document how this determination was made, such as research conducted to reach this conclusion, etc.
The lowest responsible bidder is awarded the contract (2 CFR 200.31(h)).
Retain all documentation for three (3) years plus the current school year.
Procurement 101
Informal Procurement: “Three Quotes and a Buy”
New Jersey Department of Agriculture 20New Jersey Department of Agriculture 20
Procurement by competitive sealed bidding by issuing an IFB
Use when• A complete, adequate and realistic specification is
available
• The contract can be awarded solely on the basis of price
Procurement 101Formal Procurement: Invitation for Bid (IFB)
New Jersey Department of Agriculture 21New Jersey Department of Agriculture 21
Procurement by competitive proposal by issuing an RFP
Use when
• Conditions are not appropriate for a sealed bid
• Price won’t be the sole basis for the award
• Typically used to procure a qualitative service
Procurement 101Formal Procurement: Request for Proposal (RFP)
New Jersey Department of Agriculture 22New Jersey Department of Agriculture 22
Statement of work includes sufficient detail - General description of goods and services (specifications)
There is a balance of providing enough information to obtain the quality of product/service that is desired, but not overly prescriptive that limits free and open competition
Timeline and procedures
Technical requirements
Evaluation method, evaluation criteria and their importance are identified (e.g., point scale, scoring matrix.etc.)
Procurement 101Sections of a Solicitation (RFP)
New Jersey Department of Agriculture 23New Jersey Department of Agriculture 23
Sections of a Solicitation (RFP) continued…
Cost is a major consideration of the award (primary factor), but not the sole factor
Experience, past performance, approach, financial and technical resources, etc. are considered in the award through scoring
Results in a fixed price or cost-reimbursable contract
New Jersey Department of Agriculture 24New Jersey Department of Agriculture 24
NONCOMPETITIVE PROPOSALS
When an item is only available from a single source (sole source)
The public need is urgent or an emergency exists
After solicitation from a number of sources, competition is deemed inadequate
A member or representative of the local Board of Education/Governing Board will approve, in advance, all procurements that result from noncompetitive negotiations.
New Jersey Department of Agriculture 25New Jersey Department of Agriculture 25
Procurement 101Sections of a Solicitation (RFP)
7 CFR 210.21 and 220.16 2 CFR 200.317-326
▪ Contractual Responsibilities
▪ Written Code of Conduct for Procurement
▪ Buy American Provision
▪ Geographic Preference
▪ Documented Procurement Procedures
▪ Written Code of Conduct for Procuremenmt
▪ Full and Open Competition
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Reflect federal, state and local laws and regulations provided that the procurements conform to applicable federal law
Maintain all records to detail procurement history
Product specifications
Ensuring responsive and responsible vendors
Contract responsibilities, including evaluation, protests, disputes and claims
Documented Procurement Procedures
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Governs performance of employees engaged in procurement for entities receiving federal funds
Written Code of Conduct for Procurement
New Jersey Department of Agriculture 28New Jersey Department of Agriculture 28
Prohibits employees from soliciting gifts, travel packages and other incentives from prospective contractors
Written Code of Conduct for Procurement
New Jersey Department of Agriculture 29New Jersey Department of Agriculture 29
Prohibits employees from participating in the selection, award, and administration of any contract to which an entity or certain persons connected to them, have financial interest
Written Code of Conduct for Procurement
New Jersey Department of Agriculture 30New Jersey Department of Agriculture 30
School food authorities (SFAs) must set standards when financial interest is not substantial or the gift is an unsolicited item of nominal value and may be accepted
Written Code of Conduct for Procurement
New Jersey Department of Agriculture 31New Jersey Department of Agriculture 31
Must provide for disciplinary action to be applied in the event the standards are violated
Written Code of Conduct for Procurement
New Jersey Department of Agriculture 32New Jersey Department of Agriculture 32
SFAs must purchase, to the maximum extent practicable, domestic commodities or products
• An agricultural commodity produced in the United States
• A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States
Buy American
New Jersey Department of Agriculture 33New Jersey Department of Agriculture 33
Applies to SFAs and entities purchasing on their behalf
• Food service management companies (FSMC), cooperatives, intergovernmental and inter-entity agreements and GPOs
• Use a specification of 100% domestically grown and processed
• Requires advance notice/documentation if an exception is required to be substituted
Buy American
New Jersey Department of Agriculture 34New Jersey Department of Agriculture 34
Limited exceptions
• A product is not produced or manufactured in the United States in sufficient and reasonable quantities of a satisfactory quality
• Competitive bid reveals the costs of United States product are significantly higher than the foreign product
• No dollar threshold to trigger exception
• Must document the exemption
Buy American
New Jersey Department of Agriculture 35New Jersey Department of Agriculture 35
SFAs may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products
• Unprocessed means agricultural products retain their inherent characteristics
• SFA has discretion to determine local area to which this option will be applied
Geographic Preference
New Jersey Department of Agriculture 36New Jersey Department of Agriculture 36
• Solicitation must clearly outline how responses will be evaluated and scored, including geographic preference
• Application of preference option must leave an appropriate number of qualified firms, given the nature and size of the procurement
Geographic Preference
New Jersey Department of Agriculture 37New Jersey Department of Agriculture 37
CONTRACTUAL CHANGES
Any changes to a contract or renewal must be within the scope of the original procurement.
Material changes require a new procurement.
New Jersey Department of Agriculture 38New Jersey Department of Agriculture 38
PROCUREMENT 101 RESOURCES
Institute of Child Nutrition (ICN)
Procurement in the 21 st Century
Online Courses – USDA State Agency Guidance to Procurement (Topics 1, 2, and 3)
First Choice : A Purchasing Systems Manual for School Food Service
USDA
Procuring Local Foods for Child Nutrition Programs
Food Buying Guide for School Meals Programs
New Jersey Department of Agriculture 39New Jersey Department of Agriculture 39
The Procurement Review
New Jersey Department of Agriculture 40New Jersey Department of Agriculture 40
Ensure program integrity
Ensure SFA’s compliance with USDA regulations
Ensure SFAs are good stewards of federal dollars received
Purpose of Procurement Review
New Jersey Department of Agriculture 41New Jersey Department of Agriculture 41
New Jersey Procurement Review Process
What to expect?
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Procurement Review Notification
Procurement Reviews are on the same cycle as the Administrative Review.
Reviews are for the previous school year. Reviews taking place in SY 18-19 will cover procurements during SY 17-18.
The School Business Administrator will receive an e-mail notification of a review.
New Jersey Department of Agriculture 43New Jersey Department of Agriculture 43
Procurement Review Notification
Selected SFA’s will be notified via email in the fall.
Procurement Reviews will be conducted by submitting documentation via e-mail to procurementreviews@ag.nj.gov
Phone exit conference calls will be conducted
New Jersey Department of Agriculture 44New Jersey Department of Agriculture 44
Procurement Review Documentation
Initial documentation requested will be:
1. Vendor paid list (a detailed report of all expenditures by vendor for the non-profit food service account -fund 60) – Excel Format preferred.
2. SFA Procurement Table
New Jersey Department of Agriculture 45New Jersey Department of Agriculture 45
Initial Documentation – Cont.
3. SFAs Code of Conduct for Procurement -2 CFR 200.318(c) and 7 CFR 210.21(c)
Form #327 - Sample Code of Conduct for procurement. The written code of conduct must define a conflict of interest and include disciplinary action for violations.
4. Procurement procedures/SFA Procurement Plan - 2 CFR 200.318(a) and 7 CFR 210.21(c)
Form #326 – Sample Procurement Procedures
New Jersey Department of Agriculture 46New Jersey Department of Agriculture 46
Procurement Tool
The Procurement Tool was developed by the USDA. The Tool has multiple tabs to assist the State Agency in conducting the review.
Tool is still in Draft format. The tool will have changes in the upcoming year.
Districts will receive only the SFA Table from the full tool.
New Jersey Department of Agriculture 47New Jersey Department of Agriculture 47
SFA Procurement Table
This worksheet from the Procurement Tool includes questions to be answered and a table for SFAs to input the following:
Dollar value of the SFA small purchase threshold
Memberships at retail and/or wholesale club warehouses
Use of group purchasing/buying organizations and/or cooperatives
New Jersey Department of Agriculture 48New Jersey Department of Agriculture 48
SFA Procurement Table
Information regarding all purchases in Food Service Fund 60 such as: Vendors Total paid/vendor (Use drop-down box provided for
amount ranges.) Goods/services purchased, and Competitive procurement method to procure the
product (s) or service (s)
Once the information in the table is complete, the SFA will save the Excel file and return the file to the State agency via email.
New Jersey Department of Agriculture 49New Jersey Department of Agriculture 49
SFA Procurement Table
We will now go over the sections of the SFA Procurement Table that must be filled out by the SFA. Pay close attention to the columns with red arrows as these are “drop down boxes” – select from one of the answers in the drop down box.
After reviewing the sections, we will see how the information is then populated into the tool.
New Jersey Department of Agriculture 54New Jersey Department of Agriculture 54
The Next Step……..
Next you will see how the State agency selects vendors to be reviewed.
After the SFA Procurement Table information has been added to the full Procurement Tool, the SFA information is populated into the Procurement Selection Chart
The vendors to be reviewed are prescribed and defined in the Procurement Selection Cart.
New Jersey Department of Agriculture 56New Jersey Department of Agriculture 56
Second Request for Information
SFA’s will receive a second request for documentation once vendors have been selected.
We will provide you with a PROCUREMENT REVIEW CHECKLIST. This document will indicate what vendors were selected and what documentation is required.
When returning documentation the SFA will indicate if item is attached, not applicable or not available. Please return the signed check list with documentation.
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Documentation for Micro Purchases:
Purchase Orders
Vendor Invoices
Specifications (“if required by local purchasing policy”)
Any other important information related to the purchase.
New Jersey Department of Agriculture 58New Jersey Department of Agriculture 58
Documentation for Small Purchases:
Specifications
List of Vendors requesting Specs
Quotations received
Scoring sheets and or evaluation of quotes
Purchase Orders, Vendor Invoices and Payment Vouchers
If multiple purchases – you will be asked for documents for 3 months.
New Jersey Department of Agriculture 59New Jersey Department of Agriculture 59
Documentation for Formal Procurement (RFP/IFB):
Advertisement of Bid
Record of bid opening
Scoring Sheets/evaluation of bid
Documentation for rejecting the lowest bid (if applicable)
Purchase Orders, Vendor Invoices and Payment Vouchers
If multiple purchases – you will be asked for documents for 3 months.
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Documentation for FSMC Contracts: All Information as requested in Formal
Procurement and……
Names of FSMC Advisory Board members and minutes of one advisory board meeting. (The FSMC Advisory Board is required in all FSMC contracts)
Copies of SFA on-site monitoring reports of the FSMC (State Agency Form # 330)
Operating Statements for each of the 3 months requested and the final end of the year operating statement for the FSMC.
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FSMC Contracts continued
SFA review of FSMC Health Inspection Reports as required by the contract with the FSMC
Detailed record of Discounts, Rebates and Credits from commercial food and supply purchases.
Monthly and annual reconciliation of FSMC credited value of all USDA foods received. This should include all processed and “brown box” commodities.
New Jersey Department of Agriculture 62New Jersey Department of Agriculture 62
Commodity Processing
Solicitation Documents
Specifications
Evaluation Criteria
All relevant documents for both Formal (RFP/IFB)and Informal Purchases (Micro and Small Purchases) for all Commodity Vendors.
New Jersey Department of Agriculture 65New Jersey Department of Agriculture 65
Review of State Agency FormsThe following forms can be found in SNEARS under - Resources – Procurement Documents▪ #325 – Procurement Checklist
▪ #326 – Sample Procurement Procedures (REVISED 8/2018)
▪ #327 – Sample Code of Conduct
▪ #330 – SFA – FSMC Monitoring Form
▪ #331 – Procurement Log
▪ #358 – Federal Funds Procurement Method Selection Chart (REVISED 8/2018 )
▪ #383 -- NEW - Sample Completed Form 326 Page 2 –A . General Procurement Procedures (REVISED 8/2018)
New Jersey Department of Agriculture 72New Jersey Department of Agriculture 72
Common Findings from SY 2017-2018 Micro-purchasing – not spreading purchases equitably
among qualified vendors
Private schools/RCCIs not conducting micro-purchasing and small purchase procedures correctly with no documentation
No SFA Procurement Procedures or Code of Conduct for Procurement
Price not the primary factor in evaluation criteria
Solicitations for food do not include “Buy American” provisions
No competitive procurement of USDA Foods processors ***
*** NEW RULE ON USDA FOODS PROCESSING Effective 7/2/18 –Procurement Requirements 7 CFR 250.31
New Jersey Department of Agriculture 73New Jersey Department of Agriculture 73
New Rule on USDA Foods Processing USDA published the final rule, Revisions and Clarifications in
Requirements for the Processing of Donated Foods effective 7/2/2018
The rule has a new section on procurement of end products Section 250.31 – “Procurement requirements” that applies to SFAs
Now SFAs must comply with the procurement requirements in 2 CFR Part 200 when purchasing processed end products containing USDA Foods and related distribution and processing services from processors
Required to have certain information in procurement documents including price charged, method of end product sales, value of donated food contained in the end products, and delivery location
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FSMC CONTRACT ISSUESin Cost Reimbursable Contracts
FSMCs not providing proper crediting of commercial rebates, discounts and credits
FSMC charging monthly costs for indirect FSMC services that should be part of the management/administrative fee ( ie. payroll /computer services)
FSMC charging the cost of delivery when utilizing their own commissary in a cost-plus a percentage of cost for food/supplies
Unallowable expenses being charged to the food service account (Fund 60
FSMC not fully utilizing the SFAs USDA Foods allocation
New Jersey Department of Agriculture 75New Jersey Department of Agriculture 75
Procurement Review Webinar
This webinar can count toward 2 hours of professional standards training:
Key Area – Operations
Learning Topic – Purchasing/Procurement
Topic Code – 2400
New Jersey Department of Agriculture
School Nutrition Programs
(609) 984-0692
www.nj.gov/agriculture
USDA is an equal opportunity provider and employer
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THANK YOU FOR PARTICIPATING
Disclaimer: This presentation was provided as technical assistance to provide a general framework of the process of a procurement review. SFA’s are advised to review all reference materials and applicable federal, state and local purchasing laws to ensure compliance.
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QUESTIONS
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