Procurement 301 ARTs Conference August 2014

1. Procurement 301ARTs ConferenceAugust 2014 Presented by: Kathryn Hodges

2. Workshop Objectives • Defining Procurement • Regulations • Procurement Process • Planning • Writing Specifications • Defining Local • Advertising • Awarding the Contract • Contract Elements • Managing the Contract • Procurement Principles • Fair & Open Competition • Fairness & Integrity • Responsive & Responsible Contractors • Transparency • Procurement Practices • Procurement Methods • Short Quiz • (If we have time)

3. What is Procurement? Procurement refers to the purchasing of GOODS and SERVICES.

4. Why is Procurement Important? To ensure that the Purchaser receives the best and most responsive product or service at the lowest possible price.

5. Remember, PROCUREMENT IS A PROCESS, NOT AN EVENT.

6. Regulations to Follow • 7 CFR Part 3016 (public) and Part 3019 (non-public) • OBM Circulars A-87, A-102, A-110, A-122 and A-133 • 7 CFR Part 210, Part 215, Part 220, Part 225 and Part 226, guidance and instructions • State law, regulations and policies that are not in conflict with Federal requirements • Local law, regulations and policies that are not in conflict with Federal requirements

7. PROCUREMENT PROCESS • Planning • Writing Specifications • Advertising the Procurement • Awarding a Contract • Managing the Contract

8. Planning(also known as Forecasting) • Inventory what you have on hand • Identify what you will need, and when, for your menu(s) • Identify the estimated amount of the procurement • (Under- or Over- the applicable Small Purchase Threshold) • Determine Procurement Method and Document Type • (Formal or Informal) • (IFB or RFP)

9. Planning continued • Identify if updated equipment will be needed • Identify if costs are projected to increase over the coming year/season • Compare next year’s school population to this year’s • Identify purchasing trends, if any • Identify the amount of available funding

10. Writing Specifications Maximize the likelihood of receiving the best possible product or service at the lowest possible price. • Clearly state what you are looking to purchase • Everyone bids on the exact same items • Allows you to articulate your needs

11. Specifications are needed for both the Informal and the Formal procurement methods. How can you buy if you don’t know what you want or need!

12. Writing Clear and ThoroughSpecifications • Cleanliness • Packaging • Delivery • Food Safety • Farm Practices and Characteristics • Product Name/Variety • Grade • Size • Quantity • Quality

13. Sections of a Solicitation • Contract Type • Introduction/Scope • General Descriptions of Goods and Services • Timelines and Procedures • Technical Requirements • Evaluation Criteria (for RFP only) Note: Desire for local items can be included in the high-lighted areas.

14. Adding Local or Geographic Preference to Your Specifications Geographic Preference may only be used for unprocessed items. “Unprocessed” means that the agricultural product retains its inherent characteristic.

15. These processes are allowed: • Cooling, refrigeration, freezing • Peeling, slicing, dicing, cutting, chopping, shucking, grinding • Making patties (no additives) • Drying/dehydrating • Washing, packaging, bagging, vacuum packing • Adding preservation to prevent oxidation • Butchering livestock or poultry • Pasteurizing

16. Who defines “Local?” YOU DO! However, your definition cannot restrict fair and open competition. For example, you can include specifications such as “harvested within 48 hours of delivery” that will increase the chances that a local vendor will win the contract, but you cannot say “Only bids from farms within Concord will be accepted.”

17. Ways to Define “Local” First, identify the sources available to you. (Perhaps issue a RFI, or Request for Information, before you start the procurement process, just to see what is out there.) Second, breakdown your definition by one of the following choices: or vary by: • Region Product • State Season • Mileage Special Event

18. How to Incorporate a Geographic Preference • Define Local • Decide how much “preference” local products will receive • Determine what type of procurement method to use • Be sure your solicitation makes perfectly clear how the preference will be applied

19. Advertising the Procurement The content of the solicitation announcement should be sufficient enough in scope to allow bidders to identify: • The general nature of the goods or services to be procured; • The method of procurement that will be used (formal or informal); • How they can obtain the solicitation or more information; and • The due date for responses to the solicitation.

20. Due Dates When determining due dates, keep in mind: • Complexity of the solicitation requirements; • Time needed for pre-bid/award meetings, site visits, etc; and • Federal Due dates: • FSMC for all program except SFSP—at least 21 days in advance of due date* • FSMC for SFSP—at least 14days in advance of bid opening* • In absence of applicable State or local laws, other solicitations should be publicly announced at least 21 days before the response is due, unless an emergency or good cause exists for expediting the acquisition. *NOTE: USDA recommends using a time period of 4-6 weeks.

21. How to Advertise To allow for Free and Open Competition, use the following ways to advertise your solicitation: • State designated newspapers • Trade periodicals • Designated internet sites • Direct mailings (informal only) • Other print media that serves the business community and general public

22. Awarding a Contract Purposes of a Contract: • Solemnity of the Commitment • Requires the parties to seriously consider the effects of performance and nonperformance upon themselves • Signing the contract is the formality that has the effect of convincing the parties of the importance of their commitments. • Record of the deal • Fulfillment of Numerous Laws • Dispute Resolution Mechanism • Feasible and Economically Viable Litigation

23. One last comment… The Contract document MUST bear resemblance to the Solicitation document. You cannot solicit for one thing and contract for another.

24. Basic Contract Elements • Contract Duration • Identification of the Contract’s parties • Scope of Work • Product Specifications • Type of Contract • Renewal Options • Modification and Change Procedures • Default and Breach provisions, remedies, penalties • Termination rights

25. Contract Elements continued • Required Compliance certifications and sanctions • Recordkeeping requirements • Laws and Regulations that govern the contract • Requirements that all costs be the net of all discounts, rebates and other applicable credits • Clear Methodology for tracking costs • Any Sanitation and Licensing requirements • Professional Certification requirements or minimum levels of experience or education

26. Managing the Contract This is also called “Contract Administration.” This ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts, and allows for adequate and timely follow-up of all purchases.

27. Managing continued The SFA must monitor the goods and services it receives to make sure it: • Receives the quantity and quality of the goods and services it requested; • Receives the goods and services on time; and • Is charged correct amounts within budget.

28. Disputes Contract Administration is important in that it plays an important role in determining the intention of the parties during a dispute. In the event of a dispute, courts and arbitrators enforce contracts according to the expressed intention of the parties, as interpreted from both • The Languageof the Contract; and • The Conduct of the Parties after the contract has been awarded.

29. Disputes continued • If the contract language is unclear, courts will resolve any dispute by discerning and enforcing the intentions of the parties as interpreted by PRACTICE by the parties. • Even if the language is clear, the CONDUCT of the parties after contract award may shift the original intention to some terms and may cause a party to lose a firm hold on its original rights and benefits.

30. SFA Responsibilities Ultimately, it is the SFA’s responsibility to follow each of these Procurement Process steps. The SFA is NOT to be guided by vendors’ opinions or requests.

31. Good Procurement Principles • Fair and Open Competition • Fairness and Integrity • Responsive and Responsible Contractors • Transparency

32. Fair and Open Competition • Competition leads to the acquisition of higher-quality goods and services at the lowest possible price. • All suppliers are playing on a level playing field • All have the same opportunity to compete

33. Fairness and Integrity • No matter how strongly an SFA official may prefer a particular product or supplier, other comparable products and suppliers must be given every reasonable consideration. • SFAs must make sure that ethical safeguards exist and are maintained at all levels in the organization, and in all aspects of the procurement process. • When/If an unethical action is identified, the SFA must immediately take action to correct it.

34. Responsive and Responsible Contractors • Responsive • Vendor’s products or services meets the SFA’s specifications. • Responsible • Vendor can and will successfully fulfill the terms and conditions of the proposed procurement.

35. Responsible? The SFA can determine if a contractor is responsible by investigating the contractor’s: • Integrity; • Compliance with public policy; • Record of past performance; and • Financial and technical resources If it is determined that the contract is NOT responsible: • Carefully document decision • Contractor becomes ineligible for award.

36. Transparency Everything done by the SFA must be: • Clear; • Above-board; and • Out in the open Transparency enhances: • Accountability (ultimately to the taxpayers); and • Cost-Effectiveness to the programs

37. Good Procurement Practices • Thoroughly understand and communicate needs, • Thoroughly understand the market and seek as many respondents as possible, • Review current resources and services to ensure that only necessary purchases are made,

38. Good Procurement Practices (continued) • Use procurement process to obtain high-quality goods or services at the lowest possible price, • Write clear evaluation criteria that are not unduly restrictive, • Develop a solicitation that contains specifications that are clear and not unduly restrictive,

39. Good Procurement Practices (continued) • Publicize the solicitation appropriately to the widest possible audience, • Allow adequate time for respondents to prepare responsive bids or proposals, • Ensure transparency in the opening and evaluating of bids and proposals, and • DOCUMENT THE ENTIRE PROCESS

40. Procurement Methods • Informal • Under applicable small purchase threshold • Still must be competitive • Formal • Over applicable small purchase threshold • Can be used if purchase is below small purchase threshold, as well • Competitive Sealed Bid Method (IFB) • Award is based solely on lowest price. • Competitive Proposal Method (RFP) • Award factors in technical resources and approach, as well as price

41. Request for Information This is a good way to find out: • what vendors are out there, • where they are, and • what they can offer. It is not to be used to issue contracts.

42. Invitation to Bid This is used when the contract will be awarded solely on the bid price. This method is most often used when contracting for GOODS. Although verbiage can be added to apply geographic preference, the contract award will still be based on the lowest bid, or the lowest evaluated bid.

43. Request for Proposal This is used when the contract will be awarded on factors other than bid price. This method is most often used when contracting for SERVICES.

44. ANY QUESTIONS SO FAR?

45. A Short Quiz (if we have time)

46. USDA defines “Local” for SFAs.

47. Answer • USDA defines “Local” for SFAs. NO Each SFA defines “local” for their own purposes. However, the definition cannot restrict fair and open competition.

48. On a formal RFP, I can contact the list of vendors that I have on file for quotes.

49. Answer On a formal RFP, I can contact the list of vendors that I have on file for quotes. . Yes and No You can contact the list of vendors that you have on file, but you also have to advertise the solicitation. That list of vendors you have may not include all possible vendors out there that may be interested in responding to your solicitation.

50. I really like the current company who is providing management services for my school. It’s okay for me to set a due date 5 days away so that I don’t have to evaluate anyone else’s bid, right?