Introduction to Procurement Wendy Barkley, SNS Assistant Director - - PDF document

Introduction to Procurement

Wendy Barkley, SNS Assistant Director OSPI Child Nutrition Services

Introduction to Procurement 1

We Will Review…

Recognize and use common Create a Procurement Plan and Code procurement vocabulary

• f Conduct for your organization

Describe the three purchasing Find resources to help you do thresholds their requirements compliant procurement

Today, our learning objectives are all about preparing Child and Adult Care Food Program procurement plans and code of conduct which will establish basic parameters for purchasing. Once basic parameters are established, the organization can begin purchasing within the federal guidelines. We will review basic procurement guidelines too. Slide: Recognize and use common procurement vocabulary Create a Procurement Plan and Code of Conduct for your organization. Describe the three purchasing thresholds and the procurement requirements

• f each

Find resources to help you do compliant procurement 2

Resources for this Presentation

2. Sponsor Template for Procurement

• 1. Sponsor Checklist for Procurement

If you believe your organization does not already have a procurement plan or code of conduct, you will need to develop one. We have made a handy checklist and template to help with this process. It’s the first step to ensure you are purchasing

• correctly. Please have these handouts to reference throughout the presentation. It

will help you understand how to document your plan and how you can purchase

• correctly. You can find these linked next to this presentation on the Training webpage

3

Why all the Focus on Procurement??

7 CFR 226.22 CACFP Procurement 2 CFR 200.318 - .326 Uniform Grant Guidance

Proper procurement has always been a requirement when using federal funds. The funds you receive in the way of reimbursement for meals served in your programs are Federal funds. Most recently, in December 2013 the federal OMB issued new rules, commonly referred to as the “Uniform Grant Guidance”. The new guidance significantly changed the way federal funds are administered. At about the same time, USDA mandated that a Procurement Review be done for all sponsors in addition to the Administrative Review to ensure program integrity – that federal dollars are being spent appropriately through fair, open and competitive procurement processes. It ensurSes that materials and services are obtained efficiently and economically and in compliance with applicable laws. .It doesn’t matter if you are a small family day care home, a center with 50 children in your care or a larger organization, the procurement requirements apply to all Child Nutrition Program operators that are receiving federal reimbursement through the Child and Adult Care Food program. 7 CFR 226 : https://www.ecfr.gov/cgi‐bin/text‐ 4

idx?SID=2f081cae16887d5ce0b1673c32ff67a2&mc=true&node=pt7.4.226&rgn=div5 #se7.4.226_122 2 CFR 200: https://www.ecfr.gov/cgi‐bin/text‐ idx?SID=8c66e85932c85bc4260aa20a76b3cade&mc=true&tpl=/ecfrbrowse/Title02/2 cfr200_main_02.tpl 4

What is Procurement?

Buying Stuff????

More than just buying stuff….

A multi-step PROCESS for obtaining goods, products, and/or services, at the best possible price.

Here is the fancy definition. However, there is a difference between procurement and purchasing. Procurement is the work you do before you purchase an item. 5

Do you have experience with PROCUREMENT?

Buying Groceries

Purchasing a household appliance

Contracting for house/car repair

Certainly we all have some level of experience with procuring goods and services. We buy groceries, we purchase household appliances, and we contract for house and car repairs occasionally. Most of you would raise your hand when asked if you compare prices of products at the grocery store. Most would raise their hands when asked if they research brands of appliances to find out which brand has the best

• reviews. And, most would say yes to getting quotes or bids on house and car repairs.

Recall that we are creating free and open competition to obtain goods and services at the best price. Procurement is centered around buying goods and services AKA Food and Equipment that meet the specific needs of our programs. Quality nutritious food that meets meal pattern requirements and quality equipment that works for your style of meal production. Proper procurement ensures that you get the 7 “Rs” of procurement: The right – Goods and Services Quantity Time Place Source 6

Price Service 6

Procurement Process

 Developing procurement procedures

Who is allowed to purchase?

 Forecasting and planning

What are your “rules”

 Selecting the proper procurement method

around purchasing?

 Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

Here is the procurement process – we’ll go through each step. CLICK. The first step is about procedures. Read bubble. Go to next slide. 7

Procurement Process

What do we

 Developing procurement procedures

need?

 Forecasting and planning

How much do we

 Selecting the proper procurement method

need?

 Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

Writing the menu and making the grocery list. 8

How much are we spending?

Procurement Process

 Developing procurement procedures  Forecasting and planning  Selecting the proper procurement method  Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

We’ll go in to more detail about this – about which procurement method you use ‐ micro, small or formal however it’s is based on your forecasting and planning and is all about the amount of money you will be spending. 9

Procurement Process

 Developing procurement procedures  Forecasting and planning  Selecting the proper procurement method  Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

What type or kind? What features?

We’ll talk more about specifications when we talk about the requirements of the different methods – about what specifications mean. And how to issue a solicitation – or the “ask”. 10

Procurement Process

 Developing procurement procedures  Forecasting and planning  Selecting the proper procurement method  Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

Who has the best price that meets the specifications I’m looking for?

Look at all the responses to the quotes you have received or your solicitation and determine who you are going to buy from. 11

Procurement Process

 Developing procurement procedures  Forecasting and planning  Selecting the proper procurement method  Developing specifications / solicitation  Evaluating quotes / bids / proposals  Purchasing / awarding contract  Receiving / managing the contract

Making the purchase!

Telling the successful and unsuccessful responders who you intend to do business with and awarding the contract (legally binding document) to the successful vendor. 12

Procurement Process

 Developing procurement procedures  Forecasting and planning  Selecting the proper procurement method  Developing specifications / solicitation  Evaluating quotes / bids / proposals

Did you get what you paid for?

 Purchasing / awarding contract

Does it have the qualities and

 Receiving / managing the contract

features you determined you needed?

Many believe that once the procurement process is finished by identifying who you will buy from is the end of the process. But procurement can be considered an

• ngoing process. Throughout the length of the contract we are monitoring to ensure

we get what paid for. – and if the answer to any of these questions is “no” it’s time to take action. 13

Procurement – Why?

• PROCUREMENT embraces the concept of COMPETITION

Free and open COMPETITION means that everyone is on a “level playing field”

• If the “playing field” is level,

vendor participation is encouraged/increased

• If more vendors are vying for the opportunity,

the cost of products and services will be lower in price

The process needs to be transparent,

• PROCUREMENT embraces the concept of COMPETITION

Free and open COMPETITION means that everyone is on a “level playing field”

• If the “playing field” is level,

vendor participation is encouraged/increased

• If more vendors are vying for the opportunity,

the cost of products and services will be lower in price . 14

Procurement Process

Clipart by Pixabay | CC By

Listen to this story and then I will have some questions. Patrick Planner likes to plan. He does his shopping on Monday evenings. Before he goes to the store he does some planning. He plans his menu for the week, checks the pantry and refrigerator to see what is on hand, looks at the store ad, gathers his coupons and writes a list. After dinner on Monday evening, he goes to the store with a list and coupons and does his shopping. Lily Nilly likes to “wing it.” She shops “when she gets around to it” and often picks up something at the 7‐11. Last week she had to dump out “a full gallon of milk – I guess she shouldn’t have bought three gallons, even if it was on sale. “something slimy” is in her produce drawer” – she was going to start making and taking salad for lunch, but she didn’t have any salad dressing and some cheese was growing fuzz (kinda forgot that she had it). She grabs fast food more nights than she cares to admit, because there’s “nothing to eat at home.” Questions: Who do you think spends more for food? Who wastes more food? Who has the greatest potential to eat better (both nutritionally and taste). And the biggest question of all…..Who would you want to be responsible for your food dollars? 15

Procurement Procedures

A written document that describes how your

• rganization will conduct procurement

transactions in accordance with federal, state, local and tribal laws and regulations.

Procurement procedures play a critical step in the overall process because they determine the type of procurement methods that will be used by the Sponsor/Institution. The procurement procedures tell the story of how goods and services are procured. They are a useful guide. 16

Procurement Procedures

 Required by regulations  Applies to all items purchased  Helps to determine procurement methods to be used  Tells the story of how procurement is done

HANDOUT 2 CFR 200.318 requires that Sponsor/Institution have procurement procedures in place. The procedures provide the specific roadmap for how the Sponsor/Institution is conducting procurement and compliance with regulations. The resource you see on this slide is our procurement reference sheet. If your

• rganization already has a procurement plan and code of conduct, you can use this

reference sheet to ensure the existing documents meet the federal requirements. https://www.k12.wa.us/sites/default/files/public/childnutrition/pubdocs/Procureme ntProceduresReferenceSheet.pdf Now it’s time to take out the two additional resources created specifically for CACFP sponsors that do not currently have a procurement plan/code of conduct and need to establish one. They are titled, Sponsor Checklist for Procurement and Sponsor Template Procurement. Please make sure you have these documents handy as we will spend some time going over them at the end of the training. 17

Procurement Checklist: https://www.k12.wa.us/sites/default/files/public/childnutrition/pubdocs/SponsorPro curementChecklist.docx Procurement Plan and Code of Conduct Template: https://www.k12.wa.us/sites/default/files/public/childnutrition/pubdocs/Procureme ntPlanCodeofConductTemplate.docx 17

Code of Conduct

A written document that governs the actions of employees engaged in procurement activities.

Code of Conduct A written document that governs the actions of employees engaged in procurement activities. 18

Code of Conduct

 May be part of the Procurement Procedures  May have a different name

(i.e. Conflict of Interest)

 Identifies potential conflicts of interests  Describes disciplinary action in the event standards are violated

The Code of Conduct sometimes called a Conflict of Interest protects the reputation

• f the sponsor and defines acceptable behavior for employees and consequences of

unacceptable behavior. It does not have to be a separate document but must include language that prohibits soliciting of gifts and other incentives from prospective contractors, accepting gifts, and disciplinary actions. Also may contain definitions of an organizational conflict of interest such as purchasing goods and services from a family member. Again, your organization may already have a code of conduct that covers purchasing. If you are in need of creating a procurement procedure, you can reference the existing code of conduct. Or if you are going to get started using our templates, the code of conduct has been included. https://www.k12.wa.us/sites/default/files/public/childnutrition/pubdocs/writtencod eofconductreferencesheet.pdf 19

Procurement Procedures and Code of Conduct

Who does what?

• Writes and annually reviews procedures
• Writes product specification
• Awards contracts
• Purchases food and supplies

So think about these things for your facility or facilities. Who does what?

• Writes and annually reviews procedures
• Writes product specification
• Awards contracts
• Purchases food and supplies

20

Procurement Procedures and Code of Conduct

Who does what?

• Receives food
• Pays invoices
• Record keeping
• Monitors procurement

If you can identify who does what, you are almost there. Next step is to put this down on your procurement procedure. We are simply formalizing your procedure so it tells a story about the purchasing process for your organization. The template prompts you to identify the position titles of those responsible for these purchasing activities. 21

Procurement Procedures and Code of Conduct

How Do You Operate?

• Purchasing thresholds
• micro, small, formal
• Solicit quotes
• Advertise an IFB or RFP
• Accepting gifts
• Disciplinary action

Now the forecasting and planning phase comes into play. I’ll use food as an example from here. From our records, we can fore cast how much was spent on food in the prior year, we have also planned our menu for the upcoming year. We know the type

• f food we need to purchase and we know the dollar value we will spend on food and

can now decide which procurement method to use. Please pull out the Sponsor Checklist for Procurement. Look to the first page, section

• 1. titled procurement using Federal Funds, Goods and Services. After the next

section of this training, you will be able to identify in your procurement plan what goods will be purchased using your organizations purchasing threshold. Recall, the procurement plan becomes your purchasing story. 22

Must be conducted at the most restrictive procurement threshold.

Federal Threshold Sponsor Threshold

Micro Purchase $10,000 or less

???

Small Purchase (Informal) $249,999 or less

???

Formal Purchase (IFB or RFP) $250,000 or more

???

Micro Purchase

Now we are going to talk about procurement thresholds and selecting the proper procurement method and purchasing thresholds. Recall you have already forecasted and planned what you will be serving in the coming year so you know about how much you are going to spend and can identify the procurement method you have to

• use. There are different rules depending on how much you are going to spend.

You’ll need to understand if your organization has purchasing threshold that is different from the federal threshold. Most just adopt the federal thresholds. In any event, you must use the most restrictive threshold. Let’s say you talk with your

• rganization and they have been using $12,000 as the threshold for micro purchase.

So this means that anytime you are spending 12,000 or less, you can spread your purchases equitably amongst qualified sources. In this case, for micro purchases, you’ll need to follow the federal threshold because it is more restrictive at $10,000 or

• less. Do the same for small purchase and formal purchases by checking with your
• rganization to determine if there is a sponsor threshold. Now let’s find out how to

purchase using the micro purchase method. 23

Micro Purchase

 Purchases where the aggregate dollar amount is ≤ $10,000  Does not require quotes, but costs must be reasonable  To the extent practicable must distribute micro-purchases equitably among qualified suppliers

So for purchases under $10K, we can use the micro purchase method of procurement. Do not have to do any activity except the prices must be reasonable and you must distribute purchases equitably among qualified suppliers to the extent practicable. 24

Small Purchase/Informal Contract

Must be conducted at the most restrictive procurement threshold.

Federal Threshold Sponsor Threshold

Micro Purchase $10,000 or less

???

Small Purchase (Informal) $249,999 or less

???

Formal Purchase (IFB or RFP) $250,000 or more

???

Here is the Small purchase/informal contract thresholds. What is the small purchase threshold for your center? The federal small purchase threshold is $249,000. Remember, you have to follow the most restrictive threshold. 25

Small Purchase/Informal Contract

 Purchases where the aggregate dollar amount does not exceed the small purchase threshold

• Federal ≤ $249,999

Therefore we will use the small purchase/informal contract method of procurement for anything over $10,000 (micro threshold) and less than $249,000. 26

Small Purchase/Informal Contract

 Must develop specifications

• What you want / need
• Comparable quotes

 Must obtain and document quotes from a reasonable number

• f qualified sources (good practice is three sources)

In the small purchase/informal contract method of purchasing, you specify what you want, how much, delivery requirements, if necessary and solicit quotes. Then you evaluate the quotes and decide where you’re going to shop. Remember to document everything! A simple sheet of recording what you want to buy including your specifications like, applesauce, individual cups, ½ cup serving size and the prices, will work just fine. Granted you have a budget and are probably already doing this. You simply need to write it down and retain it. 27

Must be conducted at the most restrictive procurement threshold.

Federal Threshold Sponsor Threshold

Micro Purchase $10,000 or less

???

Small Purchase (Informal) $249,999 or less

???

Formal Purchase (IFB or RFP) $250,000 or more

???

Formal Procurement

Now we’ll move to formal procurement. What is your threshold for formal procurement? Remember you have to use the most restrictive threshold. For now we’ll use the federal threshold. If you are purchasing anything over $250,000 using federal funds, you must follow the formal procurement method. For example, if you purchase more than $250,000 in groceries in a year, you will need to use this method. It’s a little more involved, so we’ll go through it step by step. How many people will need to use this method? If you are preparing your procurement plan from scratch and are using the checklist for preparing a procurement procedure, you can now complete the table under 1 A identifying the goods that will be purchased using the procurement methods, micro purchase, small purchase, and formal purchase. 28

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

Here are the steps – we’ll go through individually and just briefly. First you’ll decide if you need to do an Invitation for Bid or a Request for Proposal. The two are different, a bid being a contract based on price only and an rfp being a contract that is awarded based on several criteria (price, taste, appearance, etc.) Next you will develop your specifications. By this I mean the detailed descriptions of

• requirements. It includes the characteristics of the product you’re going to buy.

You’ll want the product name, and maybe grade (like grade A fancy), the variety (like red delicious apple), the size (like 198s or slices, packaging (case weight not to exceed 40#). 29

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

You’ll need to advertise the solicitation in a newspaper that has wide circulation. You may put it on a website. You could also advertise in an industry journal, like the Daily Journal of Commerce. 30

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

Next you wait for the responses to roll in. If it is a bid, you will need to open it publically at the date, time and place that was advertised in the solicitation. 31

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

Then you look at all the responses and decide which one best meets what you asked for in the solicitation 32

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

Next, you notify everyone who responded who the apparent successful proposer is. Their may be a protest, so allow a couple of weeks before you go to the next step which is actually awarding a contract to a supplier. 33

Formal Procurement – Step by Step

• 1. Develop Solicitation
• 2. Advertise Solicitation
• 3. Receive Responses
• 4. Evaluate Responses
• 5. Award Contract
• 6. Monitor Contract

But it’s not over yet! You must monitor the contract, meaning that you have to ensure that the supplier is following all the things they agreed to in the contract. Are you getting the right goods in the right quantity at the right time in the right place from the right source at the right price with great customer service? If not, you’ll need to contact the vendor and hold them accountable. 34

Selecting the Proper Procurement Procedure

• 1. Estimate value of the goods or services that will be

purchased for the year.

• 2. Determine what Procurement Method must be used.

Micro Purchase

Small Purchase

Formal

Specification / list of items

Purchase

Distribute equitably Invitation for Bid

Three quotes

Request for Proposal

In summary, when determining which procurement method or procedure to use, you first decide what you want, forecast how much you need, estimate the dollar value of the purchase and then you determine which procedures you must follow. Write it down in your procurement plan which remember, tells the story of how your

• rganization purchases food. Then, each year, follow your procurement plan

retaining documentation for your records. 35

What’s Next?

USDA Requirement for Procurement Reviews

The USDA has required procurement reviews of school meal program operators for the past fours years and now requires expansion to summer food operators and CACFP program operators. First steps include ensuring operators have a procurement plan and code of conduct in place. As part of monitoring requirements this year, Child Nutrition Services will ensure you have a procurement plan and code of conduct in place. If not, we will be requesting that you develop one. On future reviews, we will check to ensure you are following your procurement plan and retaining documentation that supports the purchasing method used. More to come and more training will take place to help program operators get on track and purchase meeting the federal requirements. 36

Resources

https://www.k12.wa.us/policy

• funding/child-

nutrition/procurement

There are many other resources available on the procurement page of the OSPI child nutrition services website. We encourage you to visit that webpage as well and the Child & Adult Care Food Program and the Summer Food Service Program

• webpages. And, if you have questions, we have two program specialists on staff

dedicated to procurement! Barbara Krogstad and Stacie Boyd. Their contact information is on the screen. I recommend contacting them by email right now. 37

Resources

https://www.k12.wa.us/sites/default/fil es/public/childnutrition/ProcurementR egulationsGuidance- ChildNutritionProgramsinWAState.pdf

Also included on the Procurement webpage is a reference sheet that lists all the procurement regulations for child nutrition programs in Washington State. https://www.k12.wa.us/sites/default/files/public/childnutrition/ProcurementRegulati

• nsGuidance‐ChildNutritionProgramsinWAState.pdf

38

Stay up to Date

Weekly CNS updates go out at the beginning of each week. If you are not signed up for these already, please ensure your information is up‐to‐date in WINS and you will be on our mandatory list. All of our updates are posted to the CACFP Communications and Updates webpage here> https://www.k12.wa.us/policy‐funding/child‐nutrition/cacfp‐communications‐ and‐updates IF you are not in WINS, you can always sign up for our non‐mandatory list by using the link on the right hand side of the CACFP Communications and Updates webpage. The information shared on this list is typically the same. http://public.govdelivery.com/accounts/WAOSPI/subscriber/new 39

Please email your Program Specialist. We are always willing to help and answer questions!

https://www.k12.wa.us/policy-funding/child- nutrition/child-nutrition-contacts

https://www.k12.wa.us/policy‐funding/child‐nutrition/child‐nutrition‐contacts THANK YOU for your time & attention during this presentation! We sincerely appreciate your “flexibility in learning” during this pandemic. 40

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• f their respective owners.

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