Emergency shelters participating in CACFP who plan to purchase meals or services from outside sources must follow procurement procedures.

Procurement Methods

Sponsors participating in the Child and Adult Care Food Program (CACFP) who plan to purchase meals or services from outside sources must follow proper procedures in purchasing these services.

All procurement of food, supplies, goods, and other services with program funds must comply with procurement standards in 2 CFR 200.317-326, 2 CFR part 400 and part 415, and Food and Nutrition Services (FNS) Instruction 796-2, Rev. 4, program-specific regulations in 7 CFR 226.22, as well as State Regulations and local policies. These standards ensure that such materials and services are obtained for the program efficiently and economically and in compliance with applicable laws and executive orders.

Important Terms

• Bid means an offer to perform for a fixed price in accordance with the specifications and conditions set forth in an invitation for bids.
• Food Service Management Company (FSMC) Under the CACFP, an FSMC means an organization other than a public or private nonprofit school with which a sponsor may contract for preparing and, unless otherwise provided for, delivering meals, with or without milk for use in the program (7 CFR 226.2).
• Procurement means the process of obtaining goods and/or services in accordance with applicable rules and regulations.
• School Food Authority (SFA) means the governing body that is responsible for the administration of one or more schools and has legal authority to operate the National School Lunch Program (NSLP) or School Breakfast Program (SBP) therein or be otherwise approved by FNS to operate the program.
• Vendor means a merchandiser of complete meals, meal components, or raw materials.

Methods of Procurement

There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and 7 CFR 200.317, 7 CFR 200.318, and 7 CFR 200.319.

• Informal Procurement Methods for Small Purchases - These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in 7 CFR 200.1. The CACFP sponsor may also establish a lower threshold. Informal procurement methods include:
  • Micro-purchases are those purchases that do not exceed $15,000 per transaction. These purchases can be awarded without soliciting competitive quotations if the price is reasonable based on research, experience, purchase history, or other information, and the sponsor maintains related documentation on file. The sponsor should also equitably distribute purchases among qualified suppliers rather than buying all supplies from one source.
  • Simplified Acquisitions (Small Purchases) are those between $15,000 and $350,000 per transaction. These purchases can be made using informal methods, such as price or rate quotations for securing products or services. The methods used must ensure free and open competition. The sponsor must contact at least three reputable companies to obtain price quotations for any purchase they plan to make. This information must be documented. If an aggregate purchase exceeds $50,000 or the selected bid is not the   
    lowest price, it must be submitted to the State Agency for approval before acceptance. These quotes/bids must meet all federal regulations, including not contracting with a company that poses a conflict of interest.
    
    A bid packet that includes the informal competitive bid procedures and forms for meal service contracts $350,000 or less can be found at the CACFP website under Food Service Management Contracts. All food service management contracts must be submitted to the State Agency for approval before acceptance.
• Large Purchases or Competitive Sealed Bids: When purchases are estimated to exceed the simplified acquisition threshold of $350,000, a sponsor must conduct a price analysis and follow a formal competitive sealed bid process. Bids are publicly solicited from two or more responsible bidders, and a bid opening evaluation must be completed by the Department of Health and Senior Services, Community Food and Nutrition Assistance (DHSS-CFNA). Competitive sealed bid procedures include preparing the invitation for bid, publicly announcing not less than 14 days before bids are opened, notifying the DHSS-CFNA of the time and place at least 14 days before bid opening, publicly opening all bids, and submitting a selected bid to the DHSS-CFNA before accepting the bid. These bids must be approved by the State Agency before the final acceptance. These bids must meet all federal regulations, including not contracting with a company that poses a conflict of interest.

A bid packet that includes the formal competitive bid procedures and forms for meal service contracts greater than $350,000 can be found at http://health.mo.gov/cacfp under Food Service Management Contracts.

When using vended meals, FSMC contracts must be current to receive reimbursement for those meals. Be proactive about renewing your FSMC contract to avoid the expiration of the contract. Ensure that your FSMC contract and supporting documentation are fully completed and accurate prior to submitting them. Submit them to the State agency as soon as possible to allow time for processing and approval of the contract.

If your FSMC contract expires, vended meals served during the period without a valid FSMC contract may not be eligible for reimbursement. Meal reimbursement will only resume after your FSMC contract is renewed and approved by the State agency.

Procurement Standards

Sponsors participating in the Child and Adult Care Food Program (CACFP) who plan to purchase meals or services from outside sources must follow proper procedures in purchasing these services.

All procurement of food, supplies, goods, and other services with program funds must comply with procurement standards in all state and local laws and regulations, as well as the Federal Standards identified in 7 CFR 226.22, 2 CFR 200.317-326, 2 CFR parts 400 and 415, and Food and Nutrition Services (FNS) Instruction 796-2, Rev. 4. These standards ensure that such materials and services are obtained for the program efficiently and economically and in compliance with applicable laws and executive orders.

Federal regulations 2 CFR 200 require that all sponsors of federally funded child nutrition programs maintain written procurement documents, which include a code of conduct and procurement procedures. These can be written in two separate documents or combined into one document.

Code of Conduct

Sponsors must maintain written standards of conduct covering conflicts of interest and governing the actions of their employees engaged in the selection, award, and administration of contracts as described in 2 CFR 200.318(c).

• No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award.
• A conflict of interest includes when the employee, officer, agent, or board member, any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity considered for a contract.
• An employee, officer, agent, or board member of the sponsor may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors. However, the sponsor may set standards for situations where the financial interest is not substantial or a gift is an unsolicited item of nominal value.
• The sponsor’s standards of conduct must also provide for disciplinary actions to be applied for violations by its employees, officers, agents, or board members.

If the CACFP sponsor has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian Tribe, the sponsor must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest mean that, because of relationships with a parent company, affiliate, or subsidiary organization, the CACFP sponsor is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.

Procurement Procedures

Sponsors must maintain and use written procurement procedures that are consistent with state and local laws and regulations, as well as the Federal Standards identified in 7 CFR 226.22, 2 CFR 200.317-326, and Food and Nutrition Services (FNS) Instruction 796-2, Rev. 4, for all procurements made with CACFP funds. The procedures must also conform to procurement requirements that may be established by the State agency, with the approval of FNS, to prevent fraud, waste, and Program abuse.

Sponsors may use their own procurement procedures that reflect applicable State and local laws and regulations, if procurements made with Program funds conform with the provisions of this section and with procurement requirements that may be established by the State agency, with the approval of FNS, to prevent fraud, waste, and Program abuse.

The written procurement procedures should include the applicable method(s) of procurement. The following information, as well as additional information found in 7 CFR 226.22, 2 CFR 200.317-326, and Food and Nutrition Services (FNS) Instruction 796-2, Rev. 4 should also be included in the written procedures as appropriate to the needs of the sponsor:

Oversight of Contractors/Vendors

2 CFR 200.318(b)

CACFP sponsors must also maintain oversight to ensure that their contractors perform according to the terms, conditions, and specifications of their contracts or purchase orders.

Avoidance of Unnecessary or Duplicative Items

2 CFR 200.318(d)

The sponsor's procedures must avoid the acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. When appropriate, an analysis should be made between leasing and purchasing property or equipment to determine the most economical approach.

Procurement Arrangements Using Strategic Sourcing

2 CFR 200.318(e)

When appropriate for the procurement or use of common or shared goods and services, CACFP sponsors are encouraged to enter into State and local intergovernmental agreements or inter-entity agreements for procurement transactions. These or similar procurement arrangements using strategic sourcing may foster greater economy and efficiency. Documented procurement actions of this type (using strategic sourcing, shared services, and other similar procurement arrangements) will meet the competition requirements of this part.

Use of Excess and Surplus Federal Property

2 CFR 200.318(f)

Sponsors are encouraged to use excess and surplus Federal property instead of purchasing new equipment and property when it is feasible and reduces project costs.

Responsible Contractors/Vendors

2 CFR 200.318(h)

CACFP sponsors must award contracts only to responsible contractors who possess the ability to perform successfully under the terms and conditions of a proposed contract. When conducting a procurement transaction, the sponsor must consider contractor integrity, public policy compliance, proper classification of employees (see the Fair Labor Standards Act, 29 U.S.C. 201, chapter 8), past performance record, and financial and technical resources. See also 2 CFR 200.214.

Procurement Records

2 CFR 200.318(i)

The CACFP sponsor must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price.

The following records will be maintained for a period of three years plus the current year:

• Written rationale for the method of procurement;
• Copy of the IFB or RFP;
• The selection of contract type;
• The bidding and negotiation history and working papers;
• The basis for contractor selection;
• Approval from the State agency to support a lack of competition when competitive bids or offers are not obtained;
• The basis for award cost or price;
• The terms and conditions of the contract;
• Any changes to the contract and negotiation history;
• Billing and payment records;
• A history of any contractor claims; and/or any contractor breaches.
• Logs of all emergency and noncompetitive purchases

Settlement of Contractual and Administrative Issues

2 CFR 200.318(k)

The CACFP sponsor is responsible for the settlement of all contractual and administrative issues arising out of its procurement transactions. These issues include but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the sponsor of any contractual responsibilities under its contracts. The Federal agency will not substitute its judgment for that of the sponsor unless the matter is primarily a Federal concern. The sponsor must report violations of law to the Federal, State, or local authority with proper jurisdiction.

Inclusion of Small Businesses, Minority Businesses, Women’s Business Enterprises, Veteran-Owned Businesses, and Labor Surplus Area Firms

2 CFR 200.321

Sponsors must follow the practices specified in 2 CFR part 200 Subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, with respect to small businesses, minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms:

1. These business types are included on solicitation lists,
2. These business types are solicited whenever they are deemed eligible as potential sources,
3. Dividing procurement transactions into separate procurements to permit maximum participation by these business types,
4. Establishing delivery schedules that encourage participation by these business types,
5. Utilizing organizations such as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce, and
6. Requiring a contractor under a Federal award to apply this section to subcontracts.

Contract Cost and Price

2 CFR 200.324

The CACFP sponsor must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold of $250,000. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction, but as a starting point, the sponsor must make independent estimates before receiving bids or proposals. Costs or prices must be allowable and must comply with 7 CFR 226 and 2 CFR Part 200 Subpart E. The use of “cost plus a percentage of cost” and “percentage of construction costs” methods of contracting is not allowed.

Competition Requirements in Procurement

2 CFR 200.319

All CACFP procurement transactions must be conducted in a manner that provides full and open competition and is consistent with the standards of 2 CFR 200.319 and 2 CFR 200.320. The sponsor must have written procedures for procurement transactions that ensure that all solicitations:

1. Are made to ensure objective contractor performance and eliminate an unfair competitive advantage; contractors that develop or draft specifications, requirements, statements of work, or invitations for bids must be excluded from competing on those procurements. Examples of situations that may restrict competition include, but are not limited to:
   • Placing unreasonable requirements on firms for them to qualify to do business.
   • Requiring unnecessary experience and excessive bonding.
   • Noncompetitive pricing practices between firms or between affiliated companies.
   • Noncompetitive contracts to consultants that are on retainer contracts.
   • Organizational conflicts of interest.
   • Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement.
   • Any arbitrary action in the procurement process.
2. Incorporate a clear and accurate description of the technical requirements for the property, equipment, or service being procured. The description may include a statement of the qualitative nature of the property, equipment, or service to be procured. When necessary, the description must provide minimum essential characteristics and standards to which the property, equipment, or service must conform. Detailed product specifications should be avoided if possible. When it is impractical or uneconomical to describe the technical requirements clearly and accurately, a “brand name or equivalent” description of features may be used to provide procurement requirements. The specific features of the named brand must be clearly stated.
3. Identify any additional requirements that the offerors must fulfill and all other factors that will be used in evaluating bids or proposals.

The sponsor must ensure that all prequalified lists of persons, firms, or products used in procurement transactions are current and include enough qualified sources to ensure maximum open competition. When establishing or amending prequalified lists, the sponsor must consider objective factors that evaluate price and cost to maximize competition. The sponsor must not preclude potential bidders from qualifying during the solicitation period. To the extent consistent with established practices and legal requirements applicable to the sponsor, the sponsors are not prohibited from developing written procedures for procurement transactions that incorporate a scoring mechanism that rewards bidders that commit to specific numbers and types of U.S. jobs, minimum compensation, benefits, on-the-job-training for employees making work products or providing services on a contract, and other worker protections. Sponsors are also not prohibited from making inquiries of bidders about these subjects and assessing the responses. Any scoring mechanism must be consistent with the U.S. Constitution, applicable Federal statutes and regulations, and the terms and conditions of the Federal award.

In accordance with 2 CFR 200.320(c), non-competitive procurement may only be used if one of the following circumstances applies:

1. The aggregate amount of the procurement transaction does not exceed the micropurchase threshold (see paragraph (a)(1) of this section);
2. The procurement transaction can only be fulfilled by a single source;
3. The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation;
4. The sponsor requests in writing to use a non-competitive procurement method, and the Federal agency or State agency provides written approval
5. After soliciting several sources, the competition is determined to be inadequate.

Federal Agency or State Agency Review

2 CFR 200.325

The Federal agency or State agency may conduct a procurement review as described in 2 CFR 200.325. The CACFP sponsor must submit documents when requested for the procurement review.

Bonding Requirements

2 CFR 200.326

Large purchases that exceed the simplified acquisition threshold of $250,000 have the following bonding requirements:

• A bid bond must be provided at the bid in an amount not less than five (5) percent and not more than ten (10) percent, as determined by the sponsor, of the value of the contract for which the bid is made.
• A performance bond must be provided in an amount not less than 10 percent or more than 25 percent of the value of the contract for which the bid is made.

Contract Provisions

2 CFR 200.327

The sponsor’s contracts must contain the applicable provisions contain the applicable provisions described in Appendix II to Part 200 – Contract Provisions for Non-Federal Contracts Under Federal Awards.

Geographic Preference

7 CFR 226.22(c)

Sponsors participating in the Program may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products, including the use of “locally grown,” “locally raised,” or “locally caught” as procurement specifications or selection criteria for unprocessed or minimally processed food items. When utilizing the geographic preference to procure such products, the sponsor making the purchase has the discretion to determine the local area to which the geographic preference option will be applied, so long as there are an appropriate number of qualified firms able to compete.

For the purpose of applying the optional geographic preference, “unprocessed locally grown or locally raised agricultural products” means only those agricultural products that retain their inherent character. The effects of the following food handling and preservation techniques shall not be considered as changing an agricultural product into a product of a different kind or character:

• Cooling; refrigerating; freezing.
• Size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding.
• Forming ground products into patties without any additives or fillers.
• Drying/dehydration.
• Washing.
• Packaging (such as placing eggs in cartons), vacuum packing and bagging (such as placing vegetables in bags or combining two or more types of vegetables or fruits in a single package).
• Addition of ascorbic acid or other preservatives to prevent oxidation of produce.
• Butchering livestock and poultry.
• Cleaning fish.
• The pasteurization of milk.

Meal Preparation and Contracting for Food Services

The best method of meal preparation will depend on factors such as the type of menu desired, the availability of food service equipment, space and personnel, and the budget of the organization.

Meal Preparation Methods

• On-Site: On-site preparation, commonly called “self-prep,” is the most commonly used food service method. Meals are prepared at the same physical location where they are served. This is the most economical method when the center has a kitchen, sufficient food preparation equipment, and available staff. The sponsor will follow the basic recordkeeping requirements of the Child and Adult Care Food Program (CACFP).
  
  All or part of the food may be prepared on-site, and the remainder purchased by the sponsor from an outside source, such as a school, hospital, commercial vendor, or farmers market. The Food and Nutrition Service (FNS) Instruction 796-2, Rev. 4 provides guidance for funding food grown by and used in the child care center’s meals. This option offers education opportunities and may decrease food costs.
• Central Kitchens: Meals are prepared in a kitchen at one of the sponsor’s physical locations or sites by the sponsor’s employees and delivered to one or more of the sponsor’s sites. The sponsor will follow the basic recordkeeping requirements of the CACFP. When applicable, the central kitchens should use daily meal delivery tickets when delivering food to the sites, such as the Daily Meal Receiving Log, which is available on the CACFP webpage at www.health.mo.gov/cacfp under Forms. Contact the Department of Health and Senior Services- Community Food and Nutrition Assistance (DHSS-CFNA) for specific requirements for your circumstances.
• Vended: Meals are purchased from a School, a Food Service Management Company (FSMC), or a Commercial vendor. This includes an FSMC that operates within a school.
  • Purchasing from a School: Meals may be purchased from a public or private nonprofit school that participates in the National School Lunch Program (NSLP) or the School Breakfast Program (SBP), either in bulk or as individually packaged units. An independent center that receives meals from a school must enter into a written agreement with that school or district. An example of this type of agreement is when a school provides meals to a Head Start center.
    
    This annual agreement must contain the basic provisions of the program requirements and the non-competitive bid process. A sponsor may use the Sponsor Agreement with a School or Affiliated Organization to Furnish Food Service for the CACFP located on the CACFP website. Federal regulations exempt organizations from having to bid competitively for catered meals when those meals are purchased through schools participating in the NSLP or SBP. Signing an agreement with a school to provide meals does not relieve the independent center of its program responsibilities for monitoring and recordkeeping. Additional recordkeeping is required when a sponsor obtains meals from a school; recordkeeping requirements are listed below.
  • Purchasing from another Department within the Organization: Organizations that receive meal services obtained through a competitive process by another department of the same organization, such as a university child care center whose meal services are provided by the campus dining hall or campus student union, may also use a non-competitive process to obtain CACFP meals. Such organizations may sign an agreement with the food service caterer contracted by the organization to provide meals for the entire organization. This type of situation is common in large organizations such as hospitals, nursing homes, schools, governmental entities, and universities, where food services are centralized. As long as the meals provided to the centralized food service were obtained through a competitive manner within a formal bid process, those same services may be used by the CACFP organization. A sponsor may use the Sponsor Agreement with a School or Affiliated Organization to Furnish Food Service for the CACFP located on the CACFP website when obtaining meals in this manner.
  • Purchasing from a Food Service Management Company: Food service management companies are organizations that prepare and deliver meals. An independent center that purchases meals from an FSMC must enter into a written contract with the company. The bid prototypes and CACFP guidance on meeting procurement standards are located on the CACFP website. Signing a contract with an FSMC does not relieve the center of its program responsibilities for monitoring and recordkeeping. Regulations require that a copy of the contract be submitted to DHSS-CFNA before the beginning of program operations under the contract, and all bids totaling over $350,000 shall be submitted for state agency approval before the sponsor accepts and signs any contract. In addition, all bids shall be submitted to the state agency for approval before accepting a bid that exceeds the lowest bid. DHSS-CFNA shall respond to any request for approval within ten working days of receipt (7 CFR 226.21).
  • Purchasing from a Commercial Vendor: Commercial vendors are public organizations, hospitals, college cafeterias, etc., private commercial enterprises, caterers, or individuals that provide non-food items or individual food items but not complete meals. An independent center that purchases from a commercial vendor must enter into a written contract with the vendor following the guidelines for the formal or informal competitive bid process, depending on annual meal expenditures.

Additional recordkeeping is required when a CACFP sponsor obtains meals from a school. The school or school district that provides meals to sponsors under an agreement must provide the following documentation to the CACFP contractor on a weekly or no less than a monthly basis:

• Food costs to substantiate the reimbursement.
• Daily dated menus using a minimum of a two-week menu cycle.
• Daily meal delivery tickets to verify the amount of food and/or number of meals provided to the center.
• Food Production Records.

In addition to the records required under the agreement, the commercial vendor must provide the following documentation to the CACFP sponsor on a daily, weekly, or no more than a monthly basis:

• Documentation of paid invoices to verify contractual accountability.
• Meals per labor hour recordkeeping to document staff allocation.

Federal regulations prohibit sponsors from contracting out the management responsibilities of the CACFP, including but not limited to:

• Ordering meals.
• Maintaining program records.
• Submitting claims for meal reimbursement.
• Training and monitoring.
• Determining eligibility for free or reduced-price meals.

The sponsor must monitor the conditions set forth in the food service contract and ensure compliance with CACFP requirements. The DHSS-CFNA will not intervene in contract disputes.

Meals served must conform to the cycle menus upon which the bid was based and to menu changes agreed upon by the facility and FSMC per 7 CFR 226.6(i)(4).

In accordance with 7 CFR 226.6(i)(7), the FSMC shall not be paid for meals delivered outside of the agreed-upon delivery time, which are spoiled or unwholesome at the time of delivery, or which do not otherwise meet the meal requirements contained in the contract.

The FSMC shall maintain such records (supported by invoices, receipts, or other evidence) and shall promptly submit invoices and delivery reports to the facility no less frequently than monthly. (7 CFR 226.6(i)(2))

It is the responsibility of the sponsor to monitor the requirements of the agreement for compliance with the CACFP requirements. First-occurrence meal disallowances will be taken at the CACFP monitoring reviews in the following instances:

• There is no or inadequate processed food documentation, such as CN labels.
• There are no production records.
• The production records indicate that the caterer did not provide enough food to meet the minimum portion requirement.

A Daily Meal Receiving Log and a Meal Communication and Credit Log are available in this manual and at the CACFP website under Forms for sponsors to document the date and time food was received at the center, food temperatures, and any problems with the foods received.

The procedures for the informal and formal bid processes are available on the CACFP website at the CACFP website under Food Service Management Contracts. These include:

• Bid Packet for Contracts $350,000.00 or less
• Bid Packet for Contracts greater than $350,000.00
• Annual Extension for Contracts greater than $350,000.00
• Sponsor Agreement with a School or Affiliated Organization