Procurement Requirements - Final Rule
TO: Sponsors of School Nutrition Programs and Special Milk Program
FROM: Joseph Lee, Policy Coordinator
Food and Nutrition Service
DATE: November 27, 2007
SUBJECT: Final Rule on Procurement Requirements
This memorandum is in reference to the U.S. Department of Agriculture (USDA) final rule on “Procurement Requirements for the National School Lunch, School Breakfast and Special Milk Programs” which was originally posted to the MDE website on November 7, 2007. The rule makes changes to program regulations that are effective November 30, 2007. Use the final rule for reference to these changes until USDA reissues updated program regulations in 2008.
School food authorities are responsible for reviewing the changes to program regulations for National School Lunch Program (NSLP), Special Milk Program (SMP), and School Breakfast Program (SBP) as provided in pages 61490-61495 of the final rule. The complete text of the final rule is available on the USDA website at http://www.fns.usda.gov/cnd/Governance/regulations/ProcRule10_07.pdf. The list provided below shows the applicable page number(s) to refer to for the primary topics in the final rule.
In addition to the actual text of the regulatory changes, school food authorities may want to refer to pages 61479-61489 of the final rule which contain additional comments and explanation from USDA that are helpful in understanding the regulatory changes.
Definitions
The following definitions are added to program regulations for NSLP (210.2), SMP (215.2), and SBP (220.2) on pages 61490-61493 of the final rule.
• Applicable credits shall have the meaning established in Office of Management and Budget Circulars A–87, C(4) and A–122, Attachment A, A(5), respectively. For availability of OMB circulars referenced in this definition see 5 CFR 1310.3.
• Contractor means a commercial enterprise, public or nonprofit private organization or individual that enters into a contract with a school food authority.
• Cost reimbursable contract means a contract that provides for payment of incurred costs to the extent prescribed in the contract, with or without a fixed fee.
• Fixed fee means an agreed upon amount that is fixed at the inception of the contract. In a cost reimbursable contract, the fixed fee includes the contractor’s direct and indirect administrative costs and profit allocable to the contract.
• Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service.
Food Service Management Companies
Changes to NSLP regulations (210.16 and 19) on page 61491 of the final rule cover the following topics. These changes to SBP regulations (220.7) are listed in the section on “Requirements for participation” on pages 61493-61494 of the final rule.
• Optional approval by State Agency of invitations and requests for proposals for food service management contracts before their issuance.
• State agency review and approval of management contract terms before contract execution.
• For SBP, provisions are added so that SBP regulations have the same provisions as NSLP regulations concerning food service management contracts.
Additional Responsibilities (State Agency)
Changes to NSLP regulations (220.19) on page 61491 of the final rule cover these topics:
• Unallowability of costs resulting from contracts that do not meet the requirements of this part.
• Annual review of food service management contracts by State agency.
Procurement Standards
Changes to program requirements for procurement cover the topics bulleted below. See pages 61491-61492 of the final rule for NSLP (210.21), pages 61492-61493 of the final rule for SMP (215.14a), and pages 61494-61495 of the final rule for SBP (220.16).
• Compliance with program regulations and 7 CFR 3016 or 3019.
• Federal, state, and local procurement procedures; required contractual clauses; written code of standards of conduct.
• Optional state agency pre-issuance review of school food authority proposed procurements; compliance with state agency requests for changes to procurement procedures and solicitation and contract documents.
• Prototype State agency solicitation documents and contracts.
• Food service account expenditures prohibited for costs resulting from a procurement that fails to meet program regulatory requirements.
• Required provisions for cost reimbursable contracts: Costs paid to contractor net of all discounts, rebates, and other credits; identification by contractor of allowable and unallowable costs; exclusion by contractor of unallowable costs and certification of allowable costs; compliance with applicable regulations and circulars; identification by contractor of amount of each discount, rebate and other credit on invoices; reporting of discounts, rebates, and other credits that are not reported prior to the conclusion of the contract; contractor documentation of cost and discounts, rebates, and other credits.
• Expenditures prohibited for costs resulting from a cost reimbursable contract that does not meet regulatory requirements.
• Expenditures prohibited for payments to a contractor in excess of contractor’s actual, net allowable costs.
Withholding Payments
Changes to program regulations for SMP (215.15 on page 61493 of the final rule) and SBP (220.18 on page 61495 of the final rule) cover the following topic. (NSLP regulations already contain authority for withholding program payments.)
• Withholding of program payments to any school food authority that fails to comply with program regulations; release of payments subsequent to corrective action.
If you have any questions about this information, contact MDE Food and Nutrition Service at 651-582-8526, 800-366-8922, or email to fns@state.mn.us.
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