Procurement and Contracts

Small Purchase Threshold for Public Schools

Public schools must meet procurement requirements in state law, in addition to the federal procurement requirements that apply to federal child nutrition programs.

View School Board Contracts law – Minnesota Statutes, section 123B.52.

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

When federal and state procurement requirements are different, the school district must follow the stricter requirement.

Small Purchase Threshold

Contracts that exceed either the federal or state “small purchase threshold” must be obtained using formal procurement procedures, usually referred to as obtaining “sealed bids.” Although in federal law the small purchase threshold has been raised to $150,000, the small purchase threshold in state law for public school contracts remains at $100,000:

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 must use formal “sealed bids” procurement procedures for contracts that are expected to exceed the small purchase threshold of $100,000 set in state law. The higher small purchase threshold in federal law ($150,000) may be applied only to purchases of perishable food (see explanation below). Purchases that do not exceed the applicable small purchases threshold may be obtained using Informal procurement procedures, for example “quotations.”
The small purchase threshold is applied separately to each contract. For example, the small purchase threshold would apply separately to a milk contract and a bread contract – if either contract was over $100,000, formal procurement procedures would be required for that contract. Contracts may not, however, be split up for the purpose of getting dollar amounts below the small purchase threshold.

Exception for Perishable Food

The state law on school board contracts (Minn. Stat. § 123B.52) excludes purchases of “perishable food items” (except milk) of any dollar amount from the requirement to conduct a formal procurement:

“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.”

The federal small purchase threshold of $150,000, however, still applies to these food purchases. Therefore, public schools must use formal “sealed bid” procedures for contracts for “perishable food” (as defined in state law*) that are expected to exceed $150,000.

* Definition of “Perishable Food:” The state law that excludes “perishable food items” (except milk) from the requirement to conduct formal procurement procedures does not define the term “perishable food items.” The state law definitions of “perishable” and “readily perishable” food provided below are from the Food Law; Inspection and Enforcement statute (Minn. Stat. § 34A.01, subd. 9 and 11). Note: Frozen food is not included as a perishable food in these state law definitions.

“Perishable food” means food including, but not limited to, fresh fruits, fresh vegetables, and other products that need protection from extremes of temperatures in order to avoid decomposition by microbial growth or otherwise.

“Readily perishable food” is food or a food ingredient consisting in whole or in part of milk, milk products, eggs, meat, fish, poultry, or other food or food ingredient that is capable of supporting growth of infectious or toxigenic microorganisms. Readily perishable food requires time and temperature control to limit pathogenic microorganism growth or toxin formation.

This exception applies only to food items that meet the specific definitions of perishable food in state law as shown above. Frozen foods are not included in the state definitions of perishable foods, so the small purchase threshold for frozen foods remains at $100,000.

November 2013