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Presented by: Kathryn Hodges, NH - ppt video online download
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1 Presented by: Kathryn Hodges, NH
Procurement Basics 101 Presented by: Kathryn Hodges, NH
2 Workshop Objective Define Procurement Procurement Regulations
Procurement Methods Small Purchase Thresholds Good Procurement Principles Good Procurement Practices The Importance of Specifications Prohibitive Procurement Practices A Short Quiz Read Slide.
3 Procurement refers to the purchasing of GOODS and SERVICES.
What is Procurement? Procurement refers to the purchasing of GOODS and SERVICES. Any item or service purchased for any amount must follow the Procurement Regulations. This is applicable to all meals programs.
4 Why is Procurement Important?
To ensure that the Purchaser receives the best and most responsive product or service at the lowest possible price. Federal Law Requires all Purchases made out of the non-profit school food service account follow federal procurement regulations. Why? Because we want to ensure that taxpayer dollars are use in the most efficient way possible. In the simplest terms, a well-run procurement process ensures fair and open competition. If vendors know there will be competition, they are more likely to give a lower price or a better product, rather than risk not making the sale. This saves your program money! USDA intends to begin requiring states to review School Food Authority Procurement practices in the near future – now is the time to get in compliance!
5 PROCESS, Remember, PROCUREMENT IS A NOT AN EVENT.
There are many steps in the Procurement Process and often does not end once the item is received or the service is performed. Thus, it is a PROCESS and 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 Federal Regulations require that EVERY purchase made out of the non-profit food service account be made using a procurement process, no matter how small the purchase is. The regulations do set out a different process for small and large purchases. Purchases under the “small purchase threshold” can follow the “informal procurement method” – which is simpler – but it is still a procurement process that must be followed! Under the regulations there is no “micro-purchase threshold” or level at which you do not need to conduct procurement – even if you are purchasing $75 worth of apples, you need to follow the procurement regulations. We will talk more in a bit about the informal and formal procurement methods, but first, lets talk about what the regulations are. Procurement Regulations flow from federal to state to local – you should follow the strictest regulations that apply to you. If local or state regulations conflict with federal regulations, follow the federal regulations.
7 Federal Procurement Regulations
Found in CFR The Federal Small Purchase Threshold is currently set at $150,000. For purchases or contracts above $150,000, use one of the following types of procurement: Sealed Bids Competitive Proposals Noncompetitive Proposals (rarely used, encouraged or allowed) Federal regulations also require that your organization maintains a contract administration system, a written code of standards of conduct for awarding contracts, records of each procurement, and a number of other requirements – even if you’re not above the small purchase threshold! Your school, school district, or SAU likely already has a “contract administration system” and a written code of conduct that is used for purchasing school buses, computers, text books, etc. – check with your business administrator to see if something like this is already in place. If it is, just start following it!
8 Informal Procurement – Under the Small Purchase Threshold
You must follow the most restrictive threshold level for your area. Federal $150, New Hampshire $ amount not set RSA 21-I:11 III(a)—only (So Federal $150,000 pertains to State threshold applies) purchases Local $ ??????? The small purchase threshold is set, first, by the Federal Government. A state may issue a lower threshold. The local government (county or city/town or school district) may issue an even lower threshold. It is important to recognize that the threshold used is the most restrictive one…the lowest. Since the State of NH has not set a State small purchase threshold for non-State entities to follow, you may use the Federal threshold of $150,000, unless your local government has set a lower one.
9 Procurement Methods Informal Formal
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 -No matter which procurement method is used, no matter if the purchase is over or under the small purchase threshold, the purchase must be competitive.-If the purchase is under the threshold, you may still use the formal procurement method option.-You cannot arbitrarily break up you purchase into smaller pieces to fall under the small purchase threshold – but you can break up your purchase if you have a good reason. For example, breaking up your apple purchases from your citrus purchases because there are many local vendors who can bid on apples, but only one or two produce wholesalers who would bid on both apples and citrus – in this case, you’d be increasing competition in your apple purchase, and hopefully getting a lower price because of the increased competition. Or, if you only need lots of carrots in October for a “Harvest of the Month” menu, but you don’t normally serve a lot of carrots, you could separate the carrots you need in October into their own purchase, and then conduct a separate procurement process for supplying all of the rest of your produce during the rest of the school year.
10 Informal Procurement “Three Bids and a Buy”
Develop a Specification Granny Smith, US. No. 1, count boxes per week for Sept-Dec Solicit Bids Contact vendors (by phone, fax, , in-person or via mail) and provide them with specifications (or if calling, read same information to each vendor) Bid Documentation Write down each vendor’s bid and constraints; then file it. Soliciting Bids: You can also use prices found online, in catalogs, sale flyers, at the grocery store or farmer’s market, etc. You can choose which vendors to call, or which places to look for prices, as long as you find an “adequate number” (federal regulations, generally means 3), or other number specified by state or local regulations. In the informal procurement method, you DO NOT need to publish an announcement or invitation to bid – you approach the vendors. (unless otherwise specified by state or local regs!). It’s important that all the prices are for the same thing (listed in your specification). If you talk to or write to vendors, make sure that you tell each vendor the same requirements (don’t ask one for orange carrots, and one for multi-colored carrots, or tell one that you need Tuesday delivery, and tell another that any day will work – these differences in specifications could affect their price. Bid Documentation: Many of you already check prices in several different places before making a purchase – but if you’re not documenting that, you’re not following the law. The State Agency has a template you can use to record your bid requests. For the smaller schools/organizations, that will never need the Formal procurement method, or that buy from the local grocery stores, I would suggest you create a “shopping list” of what you typically purchase in a month. Go on a road trip to at least 3 different grocery stores/chains and write down the price for each item on the list. If you do this a couple of times a year (Fall/Spring or Winter/Summer), you would satisfy the need to “go out to bid.” Just make sure you document everything. This may also open your eyes! Are you really getting the biggest bang for your buck currently?!?
11 FORMAL PROCUREMENT PROCESS
Planning Writing Specifications Advertising the Procurement Awarding a Contract Managing the Contract You’ll see these 5 steps appear again and again in future procurement trainings. You’ll want to get acquainted with them.
12 Good Procurement Principles
Fair and Open Competition Fairness and Integrity Responsive and Responsible Contractors Transparency The next few slides will provide more information on each of these principles.
13 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 The more vendors that are competing for your business, the lower the price will potentially be.
14 Fairness and Integrity
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. If an unethical action is identified, the SFA must immediately take action to correct it. (For example, no matter how strongly an SFA official may prefer a particular product or supplier, other comparable products and supplies must be given every reasonable consideration.) This area would include guidelines around Code of Conduct policies and procedures. A proper Code of Conduct policy would help employees avoid real or perceived conflicts of interests in the procurement process. A code of conduct is required and must be followed, even if all your purchases fall under your small purchase threshold. Your school, school district or supervisory union likely already has a purchasing code of conduct in place for purchasing books, school buses, computers, etc. – check with your business administrator to see. If so, you can just begin following that code for your school food service purchases. If you just “like” a company better, then that’s not a good enough reason to go with them – but if your specs require a certain level of customer service (deliver on Tuesdays before 10am, have live telephone support 9am-5pm, etc.), then you can eliminate companies that don’t meet those requirements. Just make sure that these requirements and specs are really worth paying more for.
15 Responsive and Responsible Contractors
Contractors whose products or services meet the SFA’s specifications Responsible Contractors who can and will successfully fulfill the terms and conditions of the proposed procurement You may look back on past purchases to evaluate vendors. If a past vendor did not “hold up their end of the bargain,” then you can consider them a non-responsible contractor. You are not required to contact them or award further contracts to them. But make sure you have documentation to support ALL your decisions.
16 How can an SFA determine if a contractor is responsible?
Investigate the contractor’s: Integrity, Compliance with public policy, Record of past performance, and Financial and technical resources Did the company agree to supply you with high quality fresh produce last year, and then delivered significant amounts of rotten produce? Then that company is not “responsible” because they have a poor record of past performance.
17 Transparency Clear Above-Board Out in the Open
Transparency leads to accountability and cost-effectiveness. Everything done by the SFA must be: Clear Above-Board Out in the Open If, at any point, you feel uncomfortable about how something is being done, then step back and evaluate the situation.
18 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, Read Slide.
19 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, Read slide.
20 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 Read Slide.
21 Why Are Specifications Important?
Clearly states what you are looking to purchase Everyone bids on the exact same items Allows you to articulate your needs
22 Writing Clear and Thorough Specifications
Product Name/Variety Grade Size Quantity Quality Cleanliness Packaging Delivery Food Safety Farm Practices and Characteristics Here are just a few areas where you can specify what you want.
23 Prohibitive Procurement Practices
Don’t: Divide the purchase in order to bring the amount of the procurement under the small purchase threshold, Award a contract without advertising the solicitation, unless you can justify a sole source or noncompetitive situation due to an emergency, Negotiate with one firm prior to evaluating all proposals, or negotiating with any bidder, at any time, when competitive sealed bid procurement is used, Award a contract on the basis of only one of the elements in the solicitation,
24 Prohibited Procurement Practices (continued)
Don’t: Seek price quotes from only one source under small purchase procedures when more than one source is available, Contact only suppliers that are related or affiliated with one another, Provide only certain firms with the results of pre-bid meetings or answers to bid or proposal questions, Allow a potential contractor to draft procurement terms and/or specifications,
25 Prohibited Procurement Practices (continued)
Don’t: Release the contents of a bid or proposal to other respondents prior to public bid opening or proposal evaluation, Use outdated prequalified lists, Use lists that do not include enough qualified sources to ensure maximum full and open competition, Use lists that were developed without full and open competition, and Allow changes after the contract is awarded that may have affected the award if other vendors had known and had had the opportunity to respond to the new provision
26 A Short Quiz Explain answering process and give quiz.
27 If a vendor cannot meet a school’s specifications, is the vendor responsive?
28 Answer If a vendor cannot meet a school’s specifications, is the vendor responsive? NO If the vendor cannot provide what is asked for, in the form needed, then the vendor is not considered responsive and should not be awarded the contract without further considerations.
29 Is documentation required for informal procurements?
30 Answer Is documentation required for informal procurements? Yes
Documentation is required for ALL purchases, whether formal or informal.
31 Can a school award a contract if only one bid was received?
32 Answer Can a school award a contract if only one bid was received?
Depends. If only one bid was received, the SFA should take a second look at the specifications and confirm that they were not so restrictive that they prevented fair and open competition. If the specifications were not restrictive, then the contract may be awarded to the one vendor who submitted a bid.
33 Can a vendor request that a school change specifications or solicitation language?
34 Answer Can a vendor request that a school change specifications or solicitation language? No A vendor cannot guide the specifications of the SFA’s purchase. Nor should the SFA change the specifications or solicitation language after the purchase is advertised based on a vendor’s guidance.
35 Must schools always award to the lowest bidder?
36 Answer Must schools always award to the lowest bidder?
Not necessarily. If the solicitation included other criteria that the award will be based on, then the bid/proposal will be evaluated appropriately and the contract will be awarded to the most responsive vendor. The most responsive vendor may end up not being the low bidder.
37 Questions? Kathryn Hodges (603) 271-3861 Kathryn.hodges@doe.nh.gov
For further information, please feel free to contact: Kathryn Hodges	(603)
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