Procurement 101: Developing a Code of Conduct and Written Procurement Procedures Presented by: Laurie Pennings, MS, RD Courtney Hardoin, MS, RD Nutrition Education Consultants California Department of Education Audiovisual Sponsor
Who is Here? What programs? Agency types? Which states? Vended meals? Below and above small purchase threshold Self preparation? Below and above micropurchase threshold Attended other procurement sessions?
Training Objectives Learn why the U.S. Department of Agriculture (USDA) and the California Department of Education (CDE) are focused on procurement regulations Understand what procurement documents are required Identify the components to include in written procurement documents Learn what to expect in future Administrative Reviews (AR) for agencies in California
Why Focus On Procurement?
Procurement Oversig ht 2013 Office of Inspector General audit 2014 USDA begins development of Local Agency Procurement Tool 2015 USDA procurement trainings for state agencies and issuance of procurement policy memo 2016 Began training agencies on procurement
Getting the Word Out Conference sessions Procurement Web page: www.cde.ca.gov/ls/nu/pr/ Webinars: http://www.cde.ca.gov/ls/nu/pr/cnpprocuretraining.asp California Mandatory Training: http://www.fresnocitycollege.edu/index.aspx?page=2204
Action Items Agencies are required to: 1) Develop a written code of conduct 2) Comply with Subpart D, Procurement Standards, in Title 2, Code of Federal Regulations (2 CFR), sections 200.318 200.326 http://www.ecfr.gov/cgi-bin/textidx?tpl=/ecfrbrowse/title02/2cfr200_main_02.tpl 3) Develop written procurement procedures
California Off-site Procurement Review o Assess whether the agency has the two required written procurement documents 1. Written Code of Conduct 2. Written Procurement Procedures
Written Code of Conduct
Written Code of Conduct Agencies receiving federal awards must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Standards of Conduct = Code of Conduct 2 CFR, Section 200.318(c)(1)
Code of Conduct Applies to... All employees, officers, or agents engaged in the selection, award, and administration of contracts
Importance of Written Code of Conduct Protects employees from engaging in unethical and unallowable behavior Provides for disciplinary actions to be applied for violations Protects agency s reputation
Conflict of Interest No employee, officer, or agent should be involved in the procurement process if they have a real or apparent conflict of interest. 2 CFR, Section 200.318(c)(1)
Conflict of Interest A... conflict of interest would arise when the employee, officer, or agent, or any member of his or her immediate family, his or her partner, or any organization which employs or is about to employ any of the parties indicated, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. 2 CFR, Section 200.318(c)(1) CDE MB CNP-01-2015
Real versus Apparent (Perceived) Conflicts of Interest Real professional judgement is compromised because of a financial or tangible personal benefit Apparent a reasonable person would think that the professional s judgment is likely to be compromised
Conflict of Interest? Scenario One Bob Jones is the Program Director for a child care agency. He awarded a one year contract to his brother who owns a company which vends meals.
Conflict of Interest? This is a real conflict of interest.
Conflict of Interest? Scenario Two Sue Lee is the Director for a child care agency. She regularly has lunch with her childhood friend, the owner of a vended meals company, but always pays for her own lunch. She followed proper procurement procedures and awarded the vending contract to her friend.
Conflict of Interest? This is an apparent (perceived) conflict of interest.
Activity #1: Conflict of Interest Scenarios
Activity #1: Conflict of Interest Scenarios 1. Get into groups of 2-4 people 2. Think of a potential conflict of interest scenario 3. Write it on index card 4. Determine if real, apparent, or no conflict of interest 5. Choose reporter to share scenario 6. Group discussion: real, apparent, or not a conflict of interest
Disciplinary Action for Violations The code of conduct must provide for disciplinary actions to be applied for violations of these standards. Examples of disciplinary actions include: Verbal warning or written reprimand Fines Suspension or termination 2 CFR, Section 200.318(c)(1)
Soliciting Gifts is Prohibited The officers, employees, and agents of the non-federal entity must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties of subcontracts. 2 CFR, Section 200.318(c)(1)
Gratuities, Favors, or Gifts Non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. 2 CFR, Section 200.318(c)(1)
Example: Setting a Standard for Gifts of Nominal Value The ABC Child Care agency allows its employees, officers, and agents to accept up to $10 per calendar year, per vendor, for unsolicited gifts.
Allowable or Unallowable? Tiffany Jones, Preschool Director Code of conduct allows employees to accept up to $25 in unsolicited gifts per year Paul Smart, owner of Tasty Meals (vendor), sends Tiffany: A box of candy (worth $20) Baseball game tickets (worth $200) Is Tiffany allowed to accept these gifts?
Answer #1 The box of candy (worth $20) is allowable because her code of conduct allows this.
Answer #2 Baseball game tickets (worth $200) are not allowable.
What is Your Agency s Policy? Does your agency have a policy that allows employees to accept gifts? Do you know the amount ( standard ) that you can accept? Does your agency have a policy that prohibits employees from accepting gifts? What are the pros and cons of allowing employees to accept gifts of minimal value?
Organizational Conflicts of Interest Agencies that have parent, affiliate, or subsidiary organizations that are not a government agency or Indian tribe must address organizational conflicts of interest. Agencies must ensure that they are and appear to be impartial in conducting all program-related procurement. 2 CFR, Section 200.318(c)(2)
Political Reform Act Government Agencies The code of conduct must: Identify officials and employees within the agency who make government decisions based on the positions they hold Disclose their financial interests Form 700 Visit the California Fair Political Practices Commission Web page at http://www.fppc.ca.gov/the-law/the-political-reform-act.html
Summary of Components to Include Conflicts of interest (required) Define a conflict of interest Ensure staff with a conflict of interest do not participate in contract-related activities Disciplinary action (required) Include disciplinary action for code of conduct violations Gratuities, favors, and gifts (required) Ensure applicable staff do not solicit gifts from contractors Address whether staff are allowed to accept gifts of nominal value or not; if allowed, include the nominal value
Summary of Components to Include Organizational conflicts of interest (if applicable) Ensure ability to be impartial if conducting a procurement transaction involving a related organization Statement of Economic Interest (if applicable) Ensure public employees who make or influence governmental decisions submit Statement of Economic Interest, Form 700
Activity #2: Writing a Code of Conduct
Activity #2: Writing a Code of Conduct 1. Get into groups of 2-4 people 2. Read the regulations 3. Read the list of items to consider 4. Discuss with the group 5. Write language for this component
Possible Language for Gratuities, Favors, and Gifts The ABC Child Care Agency s employees, officers, directors, volunteers, or agents shall never solicit and may only accept gratuities, gifts, consulting fees, trips, favors, or anything having a monetary value in excess of $25 dollars annually per vendor, potential vendor, or from the family or employees of a vendor, potential vendor, or bidder.
Next Steps Does my agency have a written code of conduct? If no, develop a written code of conduct. If yes, does the code of conduct include all the required components or are revisions required?
Train designated staff on the code of conduct Consider obtaining signatures from designated employees Determine if you need approval by the governing board
Questions?
Procurement Procedures
Written Procurement Procedures The non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. 2 CFR, Section 200.318(a)
Importance of Procurement Procedures Ensures purchases made are in compliance with federal, state, and local rules Provides purchasing staff with a guide on proper procurements = decrease in unallowable transactions
Understanding Procurement Procedures Document containing specific information and processes for procurement transactions Update as procedures change Unique to each agency Documented Follow the procedures
Activity #3: Shopping Procedures
Activity 3: Writing Procedures Activity Standard: Purchase Groceries Written Procedures: Check procedures you follow when purchasing groceries
Activity 3: Writing Procedures Activity Standard: To purchase groceries, agencies must: Park in the closest parking spot Lock their vehicles Bring their own shopping bags Purchase store brands, when available Purchase only items on the original shopping list Use the regular check-out lane Pay by debit card and do not obtain cash back
Procurement Standards
Where are Procurement Standards Found? 2 CFR, Part 200: Uniform Grant Guidance Sections 200.318 200.326 cover Procurement Standards Located on the U.S. Government Publishing Office Electronic Code of Federal Regulations Web page at http://www.ecfr.gov/cgi-bin/text-idx?node=2:1.1.2.2.1
Other Regulations (not an inclusive list) California Public Contract Code (PCC), sections 20110 20118.4 California Education Code, sections 17596, 45103.1, 45103.5, and 49554 Local laws If laws, codes, or regulations differ, agencies must comply with the requirements that are most restrictive and do not conflict with federal rules.
Why are Procurement Standards Important? In 2014-15, California distributed $416 million to CACFP agencies and the USDA distributed $3.13 billion nationally to CACFP agencies. Standards are set to ensure funds are used: Effectively Efficiently Ethically
Duplication of Goods/Services The non-federal entity s procedures must avoid acquisition of unnecessary or duplicative items. 2 CFR, Section 200.318(d)
Contract Monitoring Agencies must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. 2 CFR, Section 200.318(b)
Advertisements Small Purchase State of California (CA) Requirements For the purpose of securing informal bids, the board shall publish annually in a newspaper of general circulation published in the district a notice inviting contractors to register to be notified of future informal bidding projects. All contractors included on the informal bidding list shall be given notice of all informal bid projects in any manner as the district deems appropriate. CA PCC, Section 20116
Advertisements Formal Purchases State of CA A school district shall publish at least once a week for two weeks in some newspaper of general circulation published in the district, or if there is no such paper, then in some newspaper of general circulation, circulated in the county CA PCC, Section 20112 Federal Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical 2 CFR, Section 200.320 (c)(2)(i)
Responsible The non-federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. 2 CFR, Section 200.318(h)
Records The non-federal entity must maintain records sufficient to detail the history of procurement. Including (but not limited to): Rationale for procurement method Selection of contract type Contractor selection or rejection Basis for the contract price 2 CFR, Section 200.318(i)
Contractual and Administrative Issues The non-federal entity alone must be responsible, for the settlement of all contractual and administrative issues arising out of procurements. Including (but not limited to): Source evaluation Protests Disputes Claims 2 CFR, Section 200.318(k)
Competition All procurement transactions must be conducted in a manner providing full and open competition 2 CFR, Section 200.319
Restricting Competition Some of the situations considered to be restrictive of competition include but are not limited to: Placing unreasonable requirements on vendors Requiring unnecessary experience and excessive bonding Having noncompetitive pricing between firms or affiliated companies 2 CFR, Section 200.319 (a)(1-5)
Contractor Involvement Contractors must be excluded from competing for a procurement if they develop or draft: Specifications Requirements Statements of work Invitations for Bids (IFB) or Request for Proposals (RFP) 2 CFR, Section 200.319(a)
Procurement Methods Micropurchases Small purchases IFB RFP Noncompetitive proposals Webinars on methods: http://www.cde.ca.gov/ls/nu/pr/ 2 CFR, Sections 200.320(a-f)
Small and Minority Businesses, Women s Business Enterprises, and Labor Surplus Area Firms Affirmative steps must include: Placing qualified businesses on solicitation lists and notify them of solicitations whenever they are potential sources Use the services and assistance, as appropriate, of organizations such as the Small Business Administration and the Minority Business Development Agency 2 CFR, Section 200.321
Buy American Provision
Buy American Provision The National School Lunch Act requires agencies to purchase to the maximum extent possible domestic commodity or product that is produced in the United States (U.S.) and a food product that is processed in the U.S. using substantial agricultural commodities that are produced in the U.S.
Exceptions to Buy American Product not produced or manufactured in the U.S. in sufficient and reasonable quantities of satisfactory quality Competitive bids reveal the cost of the U.S. product is significantly higher than nondomestic products. USDA Policy Memo SP-24-2016
California On-site Reviews Visual inspection of agricultural commodity labels in on-site and offsite storage facilities Four categories: o Dry o Canned o Refrigerated o Frozen
Summary of Procurement Procedures Written procurement procedures are a federal requirement Procurement procedures are unique to each agency Purchases must comply with standards to ensure all transactions are in compliance with federal, state, and local rules
Activity #4: Writing Procurement Procedures
Micropurchase Standard Procurement by micropurchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micropurchase threshold. To the extent practicable, the non-federal entity must distribute micropurchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable. 2 CFR, Section 200.320(a)
Writing Procurement Procedures 1. Form groups of 2-4 people 2. Read standard (regulations), requirements, and considerations 3. Write procedures for micropurchases 4. Share with group
Sample: Micropurchase Procedures Micropurchases will be used to purchase goods and services that are needed on an emergency basis, for special or last minute catering events, or for items needed only occasionally. When micropurchasing procedures are used, the following conditions, stipulations, and terms will be met: The aggregate value of the single transaction is equal to or below $3500 including tax, delivery, and all other costs. The purchasing agent considers the price to be reasonable based on prior experience. The determination that the price is reasonable is documented and included in the procurement file. Prices found on the Internet can be used to verify that the price the agency is paying is reasonable. Micropurchases are equally distributed among qualified suppliers. A qualified supplier is defined as a supplier who will accept the agency s credit card and is located within ten miles of the agency. For emergency equipment repair, repair work will be distributed among vendors who are familiar with the brand of equipment the agency uses, is authorized to work on that brand by the manufacturer, and can respond within 24 hours.
Session Summary The USDA and the CDE are focused on procurement regulations due to need for oversight to ensure proper procurement practices Agencies are required by federal regulations to have a written code of conduct and procurement procedures which must follow procurement standards Future AR for agencies in California will include an on-site and off-site procurement review during the same cycle as the scheduled AR
Questions?
Professional Standards Crediting Information Key Area: Administration (3000) Key Topic: Financial Management (3300) Training Topic: Compliance with Regulations/Policies (3320) Total Instructional Hours: 2.0
Contact Information Visit the CDE CACFP Contact Web page at http://www.cde.ca.gov/ls/nu/cc/cacfpcontact.asp Call the NSD by phone at 800-952-5609, Option 3