Procurement and Contracts

Small Purchase Threshold

When the size of a contract is expected to exceed the applicable “small purchase threshold,” the school food authority must use formal procurement procedures, such as sealed bids, to obtain the contract. The federal small purchase threshold is $150,000. State law defines a lower small purchase threshold of $100,000 that is applicable to public schools (applies to any municipality).

The small purchase threshold is applied separately to each contract. A school food authority may not separate a contract into multiple contracts for the purpose of lowering contract amounts below the small purchase threshold.

Public Schools – State and Federal Small Purchase Thresholds

Public schools must meet procurement requirements in state law, in addition to the federal procurement requirements that apply to all program participants.

View school board Contracts law – Minnesota Statutes, section 123B.52.

View Uniform Municipal Contracting law – Minnesota Statutes, section 471.345.

State Small Purchase Threshold

The state law for contracts by school boards (Minn. Stat. § 123B.52) provides that school boards may not make a contract above the dollar amount specified in the Uniform Municipal Contracting Law, which is $100,000, “without first advertising for bids or proposals by two weeks' published notice in the official newspaper.”

General rule: Public schools may obtain either quotations or formal “sealed bids” for food contracts that are expected not to exceed the state small purchase threshold of $100,000. This applies to most food purchases, including milk contracts. Contracts that are expected to exceed the state small purchase threshold must be obtained using formal sealed bids. (Perishable food other than milk may use the higher federal small purchase threshold – see next section).

Federal Small Purchase Threshold Applies to Perishable Food (Except Milk)

The state law on school board contracts (Minn. Stat. § 123B.52) provides that formal procurement methods generally are not required for “perishable food items” * (other than milk), regardless of the amount of purchase: “Contracts for the purchase of perishable food items, except milk for school lunches and vocational training programs, in any amount may be made by direct negotiation by obtaining two or more written quotations for the purchase or sale, when possible, without advertising for bids or otherwise complying with the requirements of this section or section 471.345, subdivision 3.”

* Definition of Perishable Food: State law on inspection and enforcement of food laws provides definitions of “perishable” and “readily perishable” food, for example fresh fruits and vegetables, eggs, meat and poultry. (Minn. Stat. § 34A.01, subdivision 9 and 11)

However the federal small purchases threshold still applies to purchases of perishable foods. Sealed bids are required if a purchase of perishable foods will exceed the federal small purchase threshold of $150,000. For purchase of perishable food that does not exceed $150,000, either quotations or sealed bids may be used.

Nonpublic Schools – Federal Small Purchase Threshold

A nonpublic school (any school food authority that is not subject to the state municipal contracting law) may use either quotations or sealed bids for a contract that is not expected to exceed the federal small purchase threshold of $150,000. If a contract is expected to exceed $150,000, sealed bids must be obtained.