Procuring Local Foods for Child Nutrition Programs
Good morning everyone and welcome to today’s webinar, Procuring Local Foods For Child Nutrition Programs. This webinar is being presented through Project PA, a collaboration between the Pennsylvania Department of Education, Division of Food and Nutrition, and Penn State University. I’m Elaine McDonnell, Director of Project PA, and I will be co-presenting today’s webinar along with Audrey Hess, Public Health Nutrition Consultant at PDE. We also have on hand for today’s webinar from PDE, Amanda Dakin and Marissa Hockenberry. Amanda and Marissa are part of PDE’s procurement team and they’re here to assist in responding to questions that you might have about today’s webinar content. So just a few reminders before we begin. Speaking of questions, we will take questions following today’s presentation. You can type your questions into the chat box at any time and we’ll collect them and save them until the end of the presentation. In the file share box at the lower left hand of the screen you will find the slides in handout format that are available to download. You might notice the slides might look slightly different than what you see on the screen. We have this presentation that has been provided to us by USDA. Although we’ve modified it slightly to provide Pennsylvania-specific information, the slides had some a lot of graphics on them and dark background, so we removed those to make printing quality better. At the end of the webinar you’ll also find a Continuing Education certificate, available to download from the file share box. And finally, we’re recording today’s webinar and the webinar will be available on the Project PA website to view in the future, along with the downloadable slides. So with that, let’s get started. Today we’ll be talking about first, just general procurement principles and regulations and procurement methods, then we’ll move into defining local. How do you define local? Who defines local? And where can you go to find local products? Then we’ll get into the specifics of local procurement and how to do local procurement within those principles and regulations. Then we’ll discuss geographic preference. What is it? And how can you use it to purchase local products? We’ll look at some other ways to buy local and then finally we’ll end with some local procurement resources. So before we talk about local procurement, we need to make sure that we’re all on the same page, in terms of just general procurement principles and regulations. So why are procurement rules important? While they are important to ensure that program benefits and taxpayer dollars are received by eligible schools and children and are used effectively and efficiently with no waste or abuse, regulations require that all purchases made from the nonprofit food service account, whether wholly or in part, are required to follow federal regulations. So what is procurement? Procurement is the purchasing of goods and services. Now today, because we’re specifically talking about procuring local foods, we’re talking about procurement of goods, obviously. The procurement process involves first planning. Deciding what it is that you want to purchase, how much do you need, when do you need it by, and let me just put in a plug right now for a new module that we have on the School Nutrition Toolbox site. One of our latest modules is on Forecasting. So that covers this first step in the procurement process. Then drafting specifications. Describing what it is that you want to purchase. Advertising the procurement. So letting potential suppliers know what your needs are. Awarding the contract, and then managing the contract. So later we’ll spend some time talking about drafting solicitations and specifications to target local, but first we want to cover some four key concepts that are involved in any procurement. First, American Grown. Knowledge of State and Local Regulations. Competition. And Responsive and Responsible. And we’ll talk about each of these in more detail. So first, the Buy American provision. The National School Lunch Act requires SFAs to purchase domestically grown and processed foods to the maximum extent practicable. Processed products must be processed in the United States, and 51% of the ingredients must be domestically grown. Schools should include a Buy American clause in all product specifications, bid solicitations, request for proposals, purchase orders, and other procurement documents. There are two situations that might warrant an exception from this provision. One is if the product is not processed or manufactured in the United States in insufficient quantities of a satisfactory quality. Bananas or pineapples are a good example of this. Another exception would be if competitive bids reveal that the costs of a U.S. product are significantly higher than that of a foreign product. Next concept we have is state and local procurement policies. We’ll be talking about a lot of federal policies but schools must be aware of procurement requirements at all levels: federal, state, and local, and are responsible for complying with all policies at all of these levels. In some cases, state and federal regulations may be in conflict with each other. In some cases there may be state or local requirements or policies but no federal regulations. Examples of this might be a requirement to have a certain amount of liability insurance in order to purchase from a potential supplier. There are no state or federal requirements for this but you may have a local requirement. Another example is use of school garden produce in school meals programs. There are no federal or state policies or regulations that prohibit that but you could have some local policies that prohibit that. Probably the most important of the principles is competition. Competition is essential to ensure the best cost and quality of goods and services. The regulations refer to full and open competition, meaning that all potential suppliers are on a level playing field. Why is competition important? Well, for one thing- price. In a competitive procurement environment sellers may accept a smaller margin of return on a given sale rather than make no Sale all, and schools may receive more goods or services at a lower price than in a non-competitive environment. Similarly- quality. In a competitive environment, businesses will seek to differentiate themselves in terms of quality and innovation and each procurement offers an opportunity to consider new and/or higher quality products and services. So basically, in the absence of competition, a potential supplier or vendor really has no incentive to offer the best price on a product or the highest quality product. So that is why competition is important. There are certain things that are considered competition killers and are not allowed. One of them would be placing unreasonable requirements on firms. For example, requiring that a firm have over a hundred employees. That would not be allowable. Requiring unnecessary experience. Schools can’t require that a potential vendor have 50 years of experience in selling to schools. You cannot give non-competitive awards to consultants or vendors. You can’t have organizational conflicts of interest, and an example of this would be awarding a bid to a school board member. You can’t specify only brand-name products without allowing an equal product to be offered. You can’t make arbitrary decisions in the procurement process. So, for example, awarding a contract or bid to a potential supplier because you like that company’s branding. You can’t write bid specifications that are too narrow and limit competition. You cannot allow potential contractors to write or otherwise influence bid specifications, and you can’t provide insufficient time for vendors to submit bids. And finally, you can’t use local as a product specification. And this is something that sometimes causes a bit of confusion, because people have heard of the term “geographic preference.” Audrey will be talking about geographic preference later. A big difference here is a specification is a requirement, so the specification means that you are requiring a local product. A preference means that you’re preferring a local product, but you’re not necessarily limiting local products and hopefully this will become a little more clear throughout the presentation. So here are some examples of language where local is used as a specification. So these are examples of language that would NOT be allowable: This RFP is restricted to producers within the state. This RFP is for Pennsylvania-grown products. For Pennsylvania Grown Week, we are soliciting bids from producers within a 150 mile radius. We are soliciting bids for Pennsylvania-grown products and only products grown within a 300-mile radius will be accepted. Again these are all examples of using local as a specification and that is not allowable. The fourth procurement principle is responsive and responsible awards must be made to vendors that are both responsive and responsible. Responsive means that the vendor submits a bid that conforms to all terms of the solicitation. So, for example, if you put out a bid for apples and the vendor returns with a quote for peaches, that’s considered not being responsible. If you require delivery to four sites but the supplier says that they can only deliver to one site, that is considered not responsive. Potential vendors must also be responsible, which means that they are capable of performing successfully under the terms of the contract. So, for example, if you ask for references and you contact a certain supplier’s references and you learn from that reference that that supplier did not meet the delivery schedule, that vendor would then be considered not responsible. This is a concept that will come into play kind of in a major way when we talk about targeting local products later in the presentation. So just to summarize this section, products served through the federal school meals program must be grown in the U.S. although we talked about two exceptions to that rule. Schools must know and understand state and local rules. Full and open competition is essential, but local cannot be used as a vendor or product specification. And vendors must be both responsive and responsible. Okay, now we’ll move into procurement methods. The school food budget is composed about 80% of cash reimbursement. So this is federal and state reimbursement for school meals. The other 15 to 20 percent consists of USDA entitlement dollars, some of which can be used for purchasing through the DID Fresh Program and that’s something that Audrey will talk about later in the program. We are talking about the eighty percent of the school food service budget that is composed of the cash reimbursements, so this is a chart that we’ll come back to throughout the presentation. Regulations make an important distinction between Formal and Informal procurement, and federal rules determine the need for a Formal procurement based on the small purchase threshold. So at the federal level that small purchase threshold is $150,000. So purchases above that amount are considered a Formal procurement, which are done through sealed bids, or invitation for bids, and competitive proposals, which are requests for proposals, both of which require public advertising. For purchases less than $150,000 an informal purchases used. So this is a small purchase that requires price quotes. And if the purchase does not exceed $3500, it is considered a micro purchase, which involves just making a purchase and equitably distributing micro purchases among qualifying suppliers. A couple of things to remember: federal regulations require that all procurement transactions must be conducted in a manner providing full and open competition, even if other entities do not, and state and local regulations may set a lower purchase threshold, imposing more formal procedures. And the most restrictive threshold applies, so I mentioned that the federal threshold is $150,000. In Pennsylvania we make a distinction between perishable and non perishable products. So for perishable products the small purchase threshold mirrors the federal threshold. So again, micro purchase is $3,500 or less. It’s a non-competitive procedure. Above 3,500 up to 150,000 is Informal, requiring at least three quotes. Above $150,000 is a Formal procedure, requiring sealed bids. And this is, for the purposes of our presentation, (since we will be talking about procuring local foods) we’re primarily looking at this purchase of perishable products. But for non-perishables, we follow a similar structure, except the small purchase threshold for non perishable products is $19,700. Okay, the steps of a micro-purchase, and again this is if we’re talking about perishable products, $3,500 or less. You develop specifications describing what you want, you contact a vendor and make the purchase. There’s no requirement to contact multiple vendors in this case, or to advertise, and you distribute micro purchases equitably among qualified suppliers. So if you’re doing multiple micro purchases and there are multiple suppliers that can provide that product, you should distribute them equitably among those suppliers. And then retain documentation for three years plus the current school year. For informal procurement, so this is above $3,500 up to $150,000, you develop specifications, identify and gather at least three quotes from suppliers that are eligibleable and willing to provide products. You evaluate the vendors responses to the specifications, you determine the most responsive and responsible vendor at the lowest price, and award the purchase, manage the purchase, and retain documentation for three years plus the current school year. Formal procurement for perishables above $150,000, you develop a solicitation. And then step two, which makes this different than informal procurement, you must publicly announce the invitation for bid or the Request for Proposal, evaluate the vendor’s responses, award the contract to the most responsive and responsible vendor at the lowest price, manage the contract, and retain documentation for three years plus the current school year. I mentioned two types of formal procurement. One is competitive sealed bidding. This is procurement by competitive sealed bidding is done by issuing an invitation for bid or an IFB. This is used when a complete, adequate, and realistic specification is available and when the contract can be awarded solely on the basis of price. We also have competitive proposals. Procurement by competitive proposal is done by issuing an RFP (or Request for Proposal) and this is used when conditions aren’t appropriate for a sealed bid. And price won’t necessarily be the sole basis for the award. Price will carry more weight than any other criteria, but you might want to look at other things if you’re issuing an RFP, such as technical expertise, years of experience, a number of years in business, marketing, or other factors. So to summarize this section, we hope that you understand that the small purchase threshold determines whether formal or informal procurement will be used. In Pennsylvania the small purchase threshold for perishable products is $150,000. Know when and how to use the micro purchase procedures, know when and how to use small purchase procedures, understand that there are two ways to structure a solicitation under the formal procurement method and understand the importance of documentation. With that, I’m now going to turn it over to Audrey, and she’s going to pick up in defining local, and discussing where to find local products. Thank you Elaine, and good morning, everyone. A common question coming in to a local procurement conversation is, “What is local?” We’ll talk about defining local, as well as ideas for where to find foods grown locally to your nutrition program. Elaine, should I be able to advance? Audrey, yes you should. Don’t you have arrows on the bottom of the screen? Ah, thank you. You’re welcome. Keep in mind that any component of a meal may be sourced locally. While vegetables and fruits might come to your mind first, local meat or meat alternates, milk, and grains also may be available. Some schools develop entirely new recipes or even menus based on what is produced in their area. Also, remember that starting points for incorporating local foods can be taste tests, our Harvest of the Month program, salad bars, as well as local foods as part of the meal or snack menus. It’s up to each Child Nutrition Program sponsor to set a definition for local, their particular needs and goals. As a Child Nutrition Program sponsor, consider what you’re trying to accomplish. Having specific goals for your local purchasing efforts will help you to craft the definition for local that works in service to these goals. For example, if you’re trying to support small-scale producers, you might adopt the definition of local that includes limitations on farm size. Or, if you’re trying to get as much local product into the meal program as possible, you might prefer to use a fairly broad definition of local. It’s essential to have a definition of local, but remember that your definition can change as your program does. Let’s look at a few of the most common ways that Child Nutrition Program sponsors are defining local. Local for one sponsor might mean within their County, while local for another might include the entire state and even adjacent states. You may have different definitions of local depending on the season or the type of product that you’re purchasing. These examples are from actual school districts: Page County Public Schools in Virginia uses a tiered definition, and when we talk about geographic preference we’ll demonstrate how that tiered definition can work. Their first priority is to source products from within Page County, then from within 90 miles of Luray, and thirdly from within the state. The Oakland Unified School District in California uses a definition of local as 250 miles in radius from their city. Upper Moreland School District in Mountain Montgomery County, Pennsylvania defines local as within the state or within 100 miles of the school district, if not in the state of Pennsylvania. So these are just three examples. You have the opportunity to set your own definition. If you would like to know where to look for ideas on what is in season at what time of year in your community there are numerous places to turn. Observing what is available at the farmers market at different times of year can give you clues. Penn State Extension can provide information about local seasonal products. The USDA Census of Agriculture reports quantities of many agricultural products,, and you can search by state or even breakdown by county. Seasonality charts made for a specific region show what is in season in that area during that time and this is made by the Pennsylvania Department of Agriculture, PA Preferred program, specific to the Pennsylvania growing season. You can find that online at the website there. They actually have a new version that isn’t up on their website, as of the last time I checked, but a new one is coming out. Figuring out where to turn to actually purchase local products can build on those earlier conversations from those sources we just mentioned. At a farmers market you could begin a conversation with a farmer. You can always also find farmers through Penn State Extension offices and another PA Preferred tool, which I’ll show you in a minute. For additional ideas, you can consult producer associations, which promote a given agricultural product, or nonprofit organizations in your community that may have already established relationships with local food sources. Some communities have generated local foods resource guides that can show you what farms produce what products. The USDA Farm Service Agency has County offices all over the country. Its role is to support producers and often maintains a communication channel with a very extensive list of producers. The USDA Farm to School census can help you to find nearby school districts that are purchasing locally and you can connect with them, learn more about what products they might be purchasing locally, and through what channels. This is the Pennsylvania Preferred search tool that I mentioned. You can search by product or by category of products and by area of Pennsylvania to find farms that produce a certain item. Request for information or RFI’s are a tool for finding producers and products and sort of getting a feel for the agricultural landscape in your area. Do keep in mind that an RFI is not a procurement mechanism and should not be used to actually select vendors and award contracts, but it is very helpful to understand what products are available, when they would be available, in what quantities, and also to get an idea if producers are interested in working with Child Nutrition Program sponsors. To help maximize the time needed to gather this information you might look to collaborate with a neighboring Child Nutrition Program and perhaps tap into the assistance of a community organization that has interest in supporting local food purchasing, such as a Food Policy Council or a Food Alliance. Avenues for purchasing local foods are diverse. Many schools work with their already existing distributors to source local products, specifying a preference for local when their contract is established. This is an easy way to bring local products into child nutrition programs without creating separate distribution channels. Similarly, child nutrition programs can express the desire that their food service management company procure local foods when contracting for that management company. Schools may opt to buy local ingredients and then procure services of a processor to convert the locally grown product to a finished product. Elaine mentioned the Department of Defense or DoD Fresh and many of those vendors are offering an increased amount of local products. Some child nutrition programs choose to purchase food directly from local farmers, ranchers, and fishers. Even when you’re getting food straight from their source there still are various ways to go about it. Some programs set up contractors with producers in advance of the growing season, establishing a specific volume of product that they intend to buy at a specific price. Others solicit bids for products month-to-month based on what is affordable and available. Sometimes the solicitation requests farmers to deliver products straight to schools or to a central warehouse and other times schools pick up produce at the farm or farmers market. Remember that the delivery method must be specified at the time of the solicitation. In some areas producers have organized into cooperatives, aggregating their products and combining their marketing efforts. Food hubs also serve a similar function. These type of groups are more likely than a single small-scale producer to be able to fill large orders, deliver directly to schools and to provide some minimal processing. And school gardens are another ways to bring very local food into your nutrition program. Child Nutrition Program sponsors are often buying at least some local items, perhaps without even realizing it. Fluid milk, for example, is expensive to transport. So milk from the local area would often be less expensive than milk transported farther. Some distributors look to source products locally and may or may not advertise that in their ordering systems. So ask them what they are carrying that is local. Once you have an idea what products on your menu are already local it’s time to start thinking about additional products that could be local. Consider conducting a menu audit to determine if there are items that you could easily replace with local products. Consider substitutions and existing recipes. For an example, what seasonal local vegetable could you use in place of another vegetable? Other ways to start integrating local products include a Harvest of the Month Program, salad bars, and using a seasonal menu cycle that takes advantage of products when they are in season. Keep in mind local foods can be any component of a Child Nutrition Program meal or snack. The sponsor has the opportunity to set purchasing values through its definition of local. There are lots of resources as well as routes that can link you to local food. You may already be purchasing local foods or have a way to do so through your already established purchasing channels. And with that, I’ll turn it back to Elaine for the next section. Thanks Audrey. We’re going to talk about Farm to School and Local Procurement and we’re going to go back to this diagram, which you’ll see a lot throughout the rest of this presentation, as we focus on each type of procurement method and how we can target local through that specific procurement method. So we’ll start with Micro- purchase and again these are purchases less than, that may not exceed $3,500. So in this case, it’s the simplest method. You would purchase the product, document the transaction, and then assure that micro purchases are equitably distributed. And as I mentioned earlier, if you’re making multiple micro purchases and there are several qualifying suppliers, you should equitably distribute those purchases among those qualifying suppliers. In the case of a micro purchase there’s no need to solicit quotes if the SFA considers the price reasonable. So let’s take a look at some examples of whether or not a micro purchase is allowable or not, in some cases. First, we have Active Kids Afterschool Care, who wants to celebrate Farm to Afterschool by serving local produce as part of their snack program. The program operator purchases fresh strawberries and spinach from Fresh Foods Farm on June 1st 2017. The total cost of the purchase is $1,800. So do you think that is an allowable micro purchase or not? Well the answer is yes, as long as the program operator has equitably distributed all previous micro purchases and determines the price is reasonable this is allowable. SummerFun Meals Program serves lunch at eligible community gardens, where they often have guest speakers from the five nearby farms teach students about the various fruits and vegetables they grow. This year, they’ve decided to purchase local foods from one of those farms, Hometown Produce. They bought $1,000 worth of greens in June, $1,400 worth of berries in July, and $1,000 worth of stone fruit in August. What do we think about that? Is that allowable? No, this is not. In this example, we’re going to assume that the other four nearby farms are also able to meet SummerFun Meals Program’s needs. Therefore, this is not allowable, since SummerFun did not equitably distribute the purchases. IF Hometown Produce is the only vendor able to provide the requested items, then this may be allowable, assuming the price is reasonable and the transaction is below $3500 and previous micro-purchases were equitably distributed. Okay, Growing Minds Preschool utilizes micro-purchases for their Michigan Monday’s Campaign. Each week, the center purchases Michigan-grown products from nearby small and medium-sized farms. Each purchase is approximately $1,500. In the last three months they have made 10 micro-purchases from eight different farms. While attending an annual CACFP administrative meeting, another provider mentioned that micro-purchases are reserved for emergency situations and that there is a limit to how many micro purchases an operator can make in a year. Can growing minds utilize micro- purchasing for the next Michigan Monday? Well, while this is technically allowable according to federal regulations it may not be the best procurement method. Micro- purchases, although they’re allowable, they’re not required. So in this case, it might have made more sense to combine micro-purchases into a formal or informal procurement specifically designed for this Michigan Monday Campaign. And that might result in better budget and administrative outcomes. Okay, we’ll move on now to Informal Procurement. Again, this is a small purchase that requires price quotes. We talked earlier about vendors needing to be responsive and responsible in order to be considered. Well you can use in, actually a micro purchase, informal purchase or formal formal purchase, specifications and requirements that target local products to determine whether or not the supplier is responsive and responsible. So some examples of this are requesting a particular variety unique to the region. So, for example, if you know that Winesap apples are unique to the region you can write a specification for Winesap apples in particular. You can have some requirements around freshness,for example, requiring delivery within 24 to 48 hours, and this would provide a dual purpose. First of all, it would ensure that you’re getting a very fresh product but it would also limit it to local providers, in most cases. There are some criteria that you can include that might not necessarily target local as much as just reflects some value that you might have in your purchasing process, such as maybe wanting to target a certain size of farm. Small to medium-sized farms, looking at certain types of farm practices or harvest techniques, maybe you want only farms that use hand harvesting. You can look at crop diversity, requiring farms that have a certain number of different crops that they grow. If you are working through a distributor you might require origin labeling, so you might require that they are able to specify the farm or the county of origin on the product that they’re providing. Another example is ability to provide farm visits or class visits. You could require that this supplier is able to either host field trips to their farm or come to your school to do class visits. Classroom visits or assembly. So that is going to make it much more reasonable for a local vendor to be able to provide that, than a non-local vendor. Other things to consider when writing solicitations to target local products are to be flexible. One thing you might want to think about is what grade of product do you need. Do you need necessarily the highest grade or the highest quality product or you can you allow for some cosmetic damage? Is it something that the students are even going to notice? And that way you might, in addition to getting a local product, you might even be able to get a less expensive product. Don’t include unnecessary requirements. So, if normally when you’re having delivery of produce, you require a refrigerated truck but you’re writing a specification for apples, you might not necessarily need that to be the case, and that might open the specification or the solicitation to a local vendor who does not have a refrigerated truck. You also want to consider what a vendor new to the school food market might not know. We have heard of examples, for instance, of food service directors purchasing lettuce from local farms and receiving that lettuce unwashed. So a local vendor might not necessarily know your needs and that you need that product to arrive washed, so you might want to make clear your food safety needs. Also, if you require a uniform size product, you might want to make that clear to the vendor, so that they’re aware that is one of your requirements. But that’s also something, again, to think about. Is that an area where you can be flexible? So, for example, if you’re putting out solicitation or requesting quotes for strawberries but they’re going to be cut up and used in a fruit salad then you might not necessarily need a uniform size product. Okay, let’s take a look at some product specifications. So this is a general specification for Granny Smith apples: U.S. Fancy, five 185 count boxes per week, for September through December. So how might we modify this to target a local product? Well, we might say Granny Smith or local variety, and you would put in the local variety there. U.S. Fancy or No. 1. Maybe we don’t necessarily need a U.S. Fancy grade product, and then you can say that you prefer 585 count boxes per week but you’re willing to consider other pack sizes. So here we have an example of using criteria to determine responsiveness. We have the product specification. We have three potential suppliers. They are all able to meet your needs in terms of product quality, delivery, packaging, and labeling. And they’ve all provided three references. But you might add in some other criteria to target local, such as ability to provide educational, cafeteria, or classroom visits, an ability to provide state of origin on all products. In this case, Apple Lane can’t meet those other criteria, Great Granny’s meets both, and Fred Fujis can provide state of origin but cannot be involved in educational, cafeteria, or classroom visits. So in this case, only Great Granny’s is responsive. In formal procurement is sometimes referred to as “three quotes and a buy.” So in this case, we have the specification for green apples, U.S. Fancy or No. 1, and we have some flexibility in terms of pack size. And we have some three responses from potential vendors. So in the case of informal procurement again you don’t need to advertise. So one strategy that you can use to target local products in this case is by only contacting local vendors. That’s allowable, assuming that there are an adequate number of local vendors who can meet your needs. SFAs cannot arbitrarily divide purchases to fall below the small purchase threshold. However, in some instances, characteristics of a product might justify the need to separate it from the overall food procurement. So, for example, milk and bread are commonly procured separately because there are fundamental differences between these and other food products, such as their shorter shelf life, specialized pricing mechanisms, and durability. Similarly, fresh produce may be considered a separate market because of similar characteristics, and in addition there are certain special circumstances such as Harvest of the Month programs, taste tests, or products for a Farm to School Month promotion that might justify separating it out, but you still again cannot use local as a specification. So now we’ll move on to formal procurement. These again are sealed bids, IFBs, and competitive proposals, Requests For Proposals (RFP), and these require public advertising. So here’s an example of an imaginary Public School District RFP and it says Locally Grown Fresh Fruits and Raw Vegetables. And again, this is not allowable because this is using local as a requirement. So if we look at the parts of a solicitation we have the contract type, which might specify if it’s an informal procurement or if it’s a Request for a Proposal, Invitation for Bid. The introduction or the scope, the general descriptions of goods and services, also known as the specifications. Timelines and procedures, where you might indicate the timeline for this solicitation, when it’s going to be awarded, the technical requirements, and then in the case of an RFP, you would also have the evaluation criteria. So there are several places where you can target local products informal solicitations. First you can define farm to school program in your introduction. And then we’ve talked about using product specifications and additional requirements, such as specifying a particular variety, requiring delivery within 24 to 48 hours, requiring origin labeling. Then you can also use evaluation criteria in an RFP. So you can include your desire for local in the introduction. A school’s interest in purchasing local products and the broader context of its farm to school program can be expressed in the introduction to a solicitation. But remember, a school may not specify that it wants only local products. A school may indicate its desire to serve local products and emphasize the importance of its farm to school program. So we have an example here from a Colorado School District. We’re in their introductory language. They have described the school district and the food service department, indicating the number of lunches they serve, their free and reduced rate, but then they’ve also added the department works to connect K through 12 schools and local food producers to improve student nutrition, provide agriculture and nutrition education opportunities and support local and regional farmers. So up front, right in the introduction, they have let potential suppliers know that this is an interest in a value of theirs. You can use criteria to evaluate the vendor proposals. In the case of an RFP you can use the same criteria that we’ve mentioned before but assign weights and the amount of weight determines how important the criterion is. So think about including criteria such as able to provide food and agricultural education, state of origin, and products grown in a particular size farm. So we have here an example of using criteria in an RFP. We have three suppliers. We have assigned weights for product quality, delivery, and packaging. And Fred Fuji’s, based on this criteria, receives 100 out of a possible 100 points. But then we’ve added in some criteria: able to provide classroom visits, state of origin, and delivery within 24 hours of harvest. Apple Lane can’t provide any of these. Great Granny’s provides all of them, so receives the 20 additional points, and Fred Fuji’s can’t do the classroom visits. They can do state of origin and they receive 7 out of 10 points for the delivery requirements. So in this case, Great Granny’s received 95 out of 100 possible points and is the highest point total, so they are awarded the contract. In this case, notice that they did not receive the highest points for the price. So in this case, the contract would be awarded to Great Granny’s, although they did not provide the best price for the product. So, to summarize this section, looking at comparing the procurement methods in the case of micro-purchase and informal procurement, you can approach only local sources, because you’re not advertising in these types of scenarios. In formal procurement you are advertising. So you could not approach only local sources. In all types of procurement, micro-purchase, informal, and formal, you can use specifications and technical requirements. So some of the criteria we mentioned: variety is unique to the region, product delivery within 24 to 48 hours, origin labeling, farm/cafeteria visits, can all be used as specifications and technical requirements in any type of procurement procedure. And then you can use these same types of criteria as evaluation criteria in an RFP. One thing that Audrey will now move into is geographic preference and she’ll talk about how you can also use geographic preference in any of these type of procurement procedures to target local. So I’ll turn it over to Audrey. Thank you, Elaine. Now that we’ve looked at those basic procurement methods as Elaine mentioned, we’ll look at a tool that can be applied to those different methods for certain products. So what is geographic preference, or why is this important? Essentially, the Code of Federal Regulations makes it clear that unless there is a specific exemption, a geographic preference could not be used. In the 2008 Food Conservation and Energy Act (also called the Farm Bill) Congress directed the Secretary of Agriculture to encourage institutions receiving funds under this act and Child Nutrition Act of 1956, to purchase unprocessed agricultural products, both locally grown and locally raised, to the maximum extent practicable and appropriate. So this effectively created the needed exemption from what was on prior slide. So after that Act was passed it was up to USDA to create regulations that further clarified the language in the act. You can probably see that questions that needed to be answered by the regulations were what’s unprocessed and what’s local. Of course, food and nutrition services, an ongoing need to provide guidance and technical assistance regarding its regulations, for Geographic Preference this has come in the form of Q&A documents as well as lots of technical assistance presentations and a procurement manual. If that’s a local level where everything plays out and where child nutrition programs use rules and their discretion to actually implement the geographic preference. Any sponsor participating in the federal Child Nutrition Program has the option to apply the geographic preference when procuring unprocessed, locally grown or raised agricultural products. So the rule clarifies a number of things: who can define local, what classifies as unprocessed, and very clearly spells out that this is a preference and is not the same as a specification. So what is unprocessed? We’ve already talked about that the sponsor can define local and that remains the case here. So talking about unprocessed agricultural products, it applies to these products that are considered to retain their inherent character. And so, the following food handling and preservation techniques, because they’re not considered to change the character of the product, they are allowable. So what you see on the slide here, butchering livestock or poultry, pasteurizing milk, cooling, refrigerating, and freezing, changing them by size mechanically by peeling, slicing, dicing, cutting, chopping, shucking and grinding, or forming ground products into patties, drying, hydrating, washing, packaging, vacuum packing, and bagging or adding preservatives for the purpose of prevention of oxidation. Unallowable food handling and preservation techniques include heating and canning, because the inherent character of the product is not retained in that heating process. So now that we know how local is defined by the sponsor of the Child Nutrition Program and what products that could apply to, we’ll talk about how to incorporate it. So the first thing is to make sure you have your definition of local. You also want to determine what procurement method will need to be used and also how much preference to apply to these unprocessed, local agricultural products. This is something that you need to be thoughtful about because you want to make sure that your program can afford the price that is likely to be bid. Remember that a solicitation cannot contain language saying that only agricultural products grown within a certain geographic area will be accepted. Language that is considered overly restrictive because it is stated as a requirement, or not a preference, is not allowed. It’s overly restrictive, for example, to indicate a preference for products grown within five miles of your school district, if only one farm exists within that radius, because that requirement would be considered an unreasonable limit on competition. However, if there are 100 farms within five miles of your district it would not be considered an unreasonable limit on competition. So use your best judgment. Now we’ll look at a couple examples of how to specifically apply this geographic preference. So, here we have an example of a school district issuing an IFB for apples, and states a preference for apples grown within 100 miles of the school. The solicitation needs to make it clear that any respondent able to provide local apples will be awarded ten additional points in the evaluation process. So that’s a key to using this geographic preference, to make it very clear in this solicitation how the preference will be applied. So in this example, the ten preference points are equivalent to a ten cent reduction in price, for the purposes of comparing and evaluating the lowest bidder. In this case, Apple Lane Farms meets the stated preference for local products and receives the ten additional points, which makes it such that the price is considered to be ten cents less than the actual price that was quoted. These extra points make apple Lane farms the lowest bidder, even though the school still pays Apple Lane farms the $2.05 price initially bid. So on the slide there you see that the Apple Lane Farm quote of $2.05 was actually the highest quoted price, but crediting those ten points for meeting the local the geographic preference brought it down to $1.95, which brings it to the lowest price. The equivalent price deduction for geographic preference again, only applies to the evaluation process and does not affect the actual price paid. So this technique applies to informal procurements as well as IFBs and RFPs. So yeah, this was actually a bid. I used the term “quote” but this was actually a price bid. In this example, when we had seen examples of definitions of local, we saw one that was a tiered definition. So this is an example of how to apply that tiered definition of local with geographic preference. So the school district is issuing an RFP for its produce contract and indicates a preference for fresh fruits and vegetables produced to within 100 miles. Or, as the second tier, within the state. So, for evaluating the bids, there’s a 10% price preference awarded to a bidder that can source products from within the first tier of 100 miles, and a 7 percent price preference awarded to a bidder that can source from within the state, or the second tier. Ray’s Produce is able to supply products from within 100 miles and F&V Distribution is able to supply products from within the state. So each of these vendors receives geographic preference. However, even with the preference given to both Ray’s Produce and F&V Distribution, so even though crediting those geographic preference percentage points, Produce Express has the lowest price and wins the contract. In our third and final example of geographic preference we’ll see the use of a sliding scale. This chart assigned a certain number of points, depending on how many items on the product list can be sourced from within the stated geographic preference area. 10 preference points will be awarded to vendors able to provide over 70% of the requested items from within the State, seven points for 50-69% from within the state, and five points for 25-49%, so in this case points for local sourcing will be included along with other evaluation factors. Based on the responses from potential vendors, the sponsor would determine the amount of points the vendor receives. So clearly I’m showing this chart in the solicitation. Make sure that vendors who are bidding are aware of how this geographic preference will be applied and make sure that it’s not arbitrary. So, now with the application, that was sort of the rubric that was used and you’ll see now the responses to the RFP. There are a number of factors, in addition to the price, that can contribute to the points awarded here. Reductions in price are not the only way to confer preference to local products. So we’ll see some of the same things that Elaine mentioned that can be used in an RFP even without geographic preference. So technical expertise, past experience, years in business, marketing, as well as requiring farm visits, showing the origin of the farm on invoice, or providing farm information for cafeteria or classroom education. When factors other than price are included in the selection criteria, awards must be made to the responsible firm whose proposal is most advantageous to the program with price and other factors considered. So on this evaluation here, for this RFP, you can see that the district issued an RFP for beans and greens using the rubric that we had in a previous slide, this sliding scale. Points for local sourcing are evaluated along with other factors. So, in this example, Paula’s Pulses is able to source 75% of their products within the state, earning them ten points in the scoring process in the local product category. Gary’s Grains can source 55% of the products from within the state which Earns them seven points, and Laurie’s Legumes is unable to guarantee any products from within in the state, so did not receive any points in that local preference category. So after all the points and all the categories are totaled, Gary’s Grains would win this contract. In this section we’ve covered what geographic preference is and a few ways that it might be applied. Please remember that geographic preference is a preference and not a specification and that it’s just one tool for purchasing local products. Now we’ll talk about a few additional topics related to bringing local products into Child Nutrition Programs. About 15 to 20% of food served through the National School Lunch Program comes from USDA Foods. Every dollar’s worth of donated USDA Foods used in a school menu frees up money that a school would otherwise have to spend on commercial food purchases. As school districts face ever tightening budgets, USDA Foods have become a valuable resource to help keep local food service budgets in the black. Especially important in this regard is the federal government’s large volume purchasing power, allowing the procurement of food at a lower unit cost than if the school were purchasing it on its own. Many Child Nutrition Program directors have begun combining USDA Food products with local products to make a cost effective menu item. For example, consider combining local lettuce with USDA Foods, smoked deli turkey and whole wheat tortilla to make a wrap. You might not think of USDA Foods as locally grown products, but remember that USDA Foods are 100% American grown, so every available product is local to someone across the country. This slide shows products that have been purchased from each region for USDA Foods in the last few years. This is a pattern, but changes somewhat year-to- year. In fiscal year 2016, some items purchased from Pennsylvania for USDA Foods were canned applesauce, canned from dried beans, chicken, canned tomato products, frozen mushrooms, cheese and eggs. The Department of Defense contracts with more than 45 produce vendors across the country for Fresh Fruits and Vegetables. Its each DoD fresh vendor updates its online fresh fruit and vegetable order receipt system catalog for their region on a weekly basis and marks locally procured products. Sponsors can elect to spend any portion of their USDA Foods entitlement money on fresh fruits and vegetables through the DoD Fresh program. Although DoD Fresh vendors are not required to purchase local produce they are strongly encouraged to do so. Let your DoD Fresh vendor know that you are looking for local products. This is an example of the catalog from one DoD Fresh vendor in Pennsylvania showing the local notation and state of origin. You can see here that they were Pennsylvania grown apples and cabbage available from this vendor in October. Technically, a forward contract is any contract established in advance of when the product is delivered. In the context of local procurement, it often refers to a contract or agreement established with a farmer in advance of even the growing season. A school does not pay until delivery. A forward contract may be established through an informal or formal procurement depending on the volume. From the producer’s perspective, forward contracts secure a buyer and a price, sometimes even before the crop is planted. From the buyer’s view, forward contracts help ensure you will get the desired product when you need it. For example, a forward contract may be especially useful for Child Nutrition Programs running Harvest of the Month Program. The forward contract assures the sponsor that they will received a desired local item in the appropriate month, although it’s important to keep in mind that growing conditions might change the specific date of the harvest. A school is not required to pay for a product that does not meet specifications or that is not received. So keep that in mind. There is always a possibility that due to weather or other unforeseen circumstances the harvest is not what is what was expected. The farmer bears this risk financially but it is also possible that it would inconvenience the Child Nutrition Program and needing to make last-minute adjustments. Forward contracting is permitted under federal regulations but sponsors selecting this method, like I said, must acknowledge the risk and have a contingency plan in place in case there would be crop loss. A food service management company is any organization, whether commercial or nonprofit, that contracts with the School Food Authority to manage any aspect of the school meals program. Districts use formal procurement to procure a food service management company. As with a distributor, a district may include preferences for local products in the solicitation process for the management company. That way, the company’s responsiveness to the request for local products can be evaluated during the selection process. It’s necessary for schools to include in their solicitation details about how and when they wish to have local foods purchased and how local foods should be used in the provided meals. Food service management companies are seeking strategies to distinguish themselves from competitors as a way to garner business in a highly competitive market. Offering a diverse array of local suppliers and their purchasing profile is one way these companies can stand out from their peers. Districts should keep in mind that while an FSMC may be willing to source locally, the individual involved may not be aware of local growers and producers. So that could be a role the districts play to help the companies connect with local growers and producers to help find local food. Nutrition program sponsors may receive donated foods from a variety of sources. Suppliers may donate extra produce at the end of a harvest or producers may collect leftover crops after their fields have been harvested- a process referred to as gleaning. Donated foods must conform to the same food safety standards as purchased products. It’s recommended that schools review and document food safety practices, such as good agricultural practices of producers, before accepting gleaned products. Remember to inquire about the freshness, shelf-life, and refrigeration before accepting the product. The Child Nutrition Program sponsor should also be sure to record the amount of donated food in its accounts to assure transparency and avoid any possible accusations of impropriety. While school or early care and education garden harvest can supplement salad bars, be served as snacks, or offered during taste testings, they’re not, on a larger school setting, producing large volumes to be part of the main menu item. But in some cases schools are growing their gardens to that scale. As Elaine mentioned, there are no federal regulations, either related to procurement or food safety, that prohibits sponsors from using garden produce in their child meal program. Sponsors are encouraged to connect with their local health departments to ensure that their garden meets any local food safety regulations. The sign that you see here on this slide is what Upper Moreland School District displays on their serving line when a school garden food is featured. To procure garden product, sponsors typically have three main options: donations, intergovernmental agreements, or purchasing. Garden produce may be donated to the food service. In this instance, no procurement would need to take place. Sometimes sponsors purchase the inputs for the garden, such as seeds and tools, using procurement methods that apply: micro-purchase, small purchase, or sealed bids or competitive proposals. And then the produce is donated to the cafeteria at harvest. Many districts have begun developing interdepartmental agreements with the school garden or school farm to purchase products from the garden. This option is most relevant when the school or district itself, a department within the district, or another state or local government agency that wishes to sell produce, operates the school garden. And lastly, sponsors can purchase garden produce. In many cases, the purchase may be below the micro-purchase threshold. In other cases, the purchase may be above that threshold but below the small purchase threshold, so that the sponsor can request quotes from the garden manager and compare to other sources. A portion of nonprofit school food service funds can be used for garden supplies, materials, and staffing, provided that the produce is then used within the context of the Child Nutrition Programs. And you see here the USDA Fact Sheet that provides information about school gardens as well as USDA memos that address school garden expenses. Summer’s agricultural abundance in Pennsylvania makes the Summer Meal Programs ripe for serving local foods. The same procurement regulations apply and sponsors can use the same tactics we have already discussed to purchase local products. Farm to school, of course, isn’t just for k-12 schools. An increasing number of early child care and education providers are engaging in farm to school efforts-farm to preschool. When buying food for the Child and Adult Care Food Program the federal procurement rules differ for institutions versus facilities. An institution is a sponsoring organization which enters into an agreement with the state agency to assume final administrative and financial responsibility for the program. A facility is a sponsored center or family daycare home that does not enter into a direct agreement with a state agency. With regard to procurement, institutions must follow federal regulations even when using non program funds to purchase meals. Facilities are not required to follow federal procurement regulations. However, conducting competitive procurements is encouraged. If the dollar value of product the center purchases is large enough, the sponsor should employ the same formal procurement practices described earlier to target local. In many early childcare settings, purchasing volumes are small, allowing providers to purchase local items from a farmers market or Community Supported Agriculture through informal procurement or even micro-purchases. Edible gardens are perfect for smaller amounts of produce and offer endless opportunities for hands-on education for children as well as for family engagement. Fun kid-friendly foods to start with include snap peas, carrots, lettuce, herbs, and cucumbers. Now that we’ve covered many mechanisms to buy local products let’s look at a few places you can go to find more information. This slide lists some of the most helpful procurement and geographic preference resources. The transition to and implementation of 2 CFR part 200 Q%A memo answers questions regarding general requirements and procurement standards, while also addressing common questions related to appropriate micro-purchase procedures. The geographic preference Q%A memos are valuable in answering some specific questions that food nutrition service from USDA has received on the final rule. Although the regulations themselves may be dry the procurement standards are the foundation of this entire training. In order to apply these principles it’s important to have an understanding of the regulations. As mentioned throughout this training, the federal regulations are just one piece of the rules that govern the school meals program. Schools need to be aware of state and local procurement regulations and guidance. You can start by working with your district’s procurement office or state agency. FNS has worked with the Institute of Child Nutrition to create an online training focused on procurement. It’s quite comprehensive and if you’re interested in learning more about procurement regulations this is a good first stop. Sponsors of School Nutrition Programs in Pennsylvania can as well as CACFP can access procurement information on the PEARS online system in Download Form. And as Elaine mentioned, the School Nutrition Toolbox website has lots of training resources, including a brand new Procurement module, which includes a very nice section on local procurement. USDA has developed a variety of Fact Sheets on a host of topics. Several of the Fact Sheets are focused on procurement and all of them are available at the USDA Farm to School website. The Procuring Local Foods for Child Nutrition Programs Guide covers all of the information covered in this training, plus examples and excerpts from real solicitations. You can find the electronic version of this guide as well as the Fact Sheets and the local foods webinar series at the USDA FNS Community Food Systems Procuring Local Foods web page. Sign up for USDA’s Farm – Child Nsutrition e-news for updates and best practices. You can see the link on this slide. The Food Nutrition Service, an office of Community Food Systems, houses the USDA Farm to Child Nutrition team. Each of the seven regional offices has a full time staff member acting as the Farm to School regional lead. Regional leads are available to provide farm to school related policy guidance and interpretation and to help state agencies and local agencies in their region integrate local products into the Child Nutrition Programs that they already operate. Tegan Bernstein, whose name and email you see, is the regional lead for our Mid-Atlantic region. Thank you so much for your time and interest. We’re excited that more and more Child Nutrition Programs are buying local products. Please use this knowledge in your community to help connect children to local foods. And I know that we’ve run tight on time but I think that we are going to take a look at least some of the questions here before we completely end. Okay, thanks Audrey, and if anyone does need to leave early I just want to point out that the webinar certificate is now available to download from the file share box. So we’ll move on to questions. First one is: “We are in southwestern PA. Can I purchase milk from an Ohio dairy? Local dairies send their milk there.” So As the SFA, it’s up to you to define local. So, many SFA’s located near a state border may use a milage radius that may encompass product from a neighboring state. Although it sounds like these products (milk) might be actually from within Pennsylvania. So you get to define local. Okay. “With Amazon, there are hundreds of qualifying vendors. How many vendors would it take to show an auditor that purchasing is being done equitably?” Well, you would need to use different vendors for the same types of purchases. You’ll just want to make sure that you’re not making repetitive purchases where it appears that you’re showing a preference to one vendor. Okay. “What if the prices from Hometown were cheapest for all three purchases?” And this is referring to one of the micro-purchase examples, where there was a summer meal program that was working with, I believe, five nearby farms but did three micro- purchases from just one of the farms (Hometown Produce) and so the question is what if the prices from Hometown were the cheapest? If you can quote at least three quotes and Hometown is cheapest, then you may use them. But this method would be the informal procurement method, not the micro-purchase method. Okay. “Are any of these procurement regulations applicable to a Food Service Management Company, providing food to a school?” Yes. The procurement regs are applicable to full-service Food Service Management Companies. Now they do not apply to vended services, like pre-plated meals. “If one of your schools is not on the NSLP are they required to be part of, or included in, the RFP?” Okay, I’d like to answer this question with the next question at the same time from Phoenixville because both of the questions had to do with schools that weren’t participating in the NSLP. So anytime that you are using dollars from the nonprofit school food service account you would need to follow the federal regs because they’re commingled with federal reimbursement dollars. However, if you would prefer not to follow the federal regs, my advice would be to use a different fund. So just keep it separate accounting for the school that’s not participating. Okay. “So we do not have to go with the lowest price bid?” And this question was asked when the discussion was about geographic preference. Well, no. Not necessarily. Now if you put out an Invitation For Bid, then you need to go with the lowest price bid. But for a Request For Proposal, you may not necessarily have to go with the lowest prices because you’re considering other factors as well but cost should be a major consideration. Now I did just hear you say something about geographic preference. No, you don’t have to go with the lowest price bid because you might have assign a weight to a local product and that may cause that vendor to win the bid then. Okay. “Will these questions and answers be available later?” Yes they will be. We will post the webinar audio on the Project PA website and we’ll also post the Q&A. “What type of language needs to be included in a Food Service Management Company regarding procurement of local goods?” When you’re writing a Request For Proposal and you have a preference to, let’s say you want to procure local foods, you can write that in your section Q, that you would like, let’s say a certain, you’d like to use as many local foods as possible or a certain percentage (a minimum) of local food. We have a question about this certificate for the training. It is in the file share box on the lower left hand side of your screen. The handout, the slide handouts, are available in that file share box and the second document that says Procurement Webinar is the certificate for today’s webinar. Oh,could we go back to the first question, regarding Amazon? Sure. You have something to add to that? I just wanted to clarify, and I think Amanda did a great job, but Amazon is considered a vendor. Not the people, not the items that they’re selling. So Amazon is one vendor. That is one quote. Then you’d have to go to another vendor to get another quote. It’s not repetitive purchases on Amazon. That is not allowable. Okay, it doesn’t look like we have any other questions at this point so I guess we will wrap up. Thank you all for joining us today for today’s webinar. Again the audio will be posted on our website along with the Q&A and the handouts, and don’t forget to download your certificate from the file share box. If anyone’s still having problem finding that please let me know. Thank you.