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Geographic Preference

Applying Geographic Preference

Q1: The 2008 Farm Bill amended the Richard B. Russell National School Lunch Act (NSLA) to direct the Secretary of Agriculture to encourage institutions operating Child Nutrition  Programs to purchase unprocessed locally grown and locally raised agricultural products. Does USDA define the geographic area that is considered to be local?

A: No, USDA does not define the geographic area that is considered to be local; the decision  is left to the purchasing institution, such as a school food authority (SFA) making the purchase or the State agency (SA) making purchases on behalf of SFAs. In other words, the purchasing  institutions, such as SAs, SFAs, child care institutions and Summer Food Service Program  (SFSP) sponsors, may specifically identify the geographic area within which unprocessed locally  raised and locally grown agricultural products will originate. The purchasing institution must not  define local in a manner that unnecessarily restricts free and open competition.

Q2: Does the geographic preference option for the procurement of unprocessed agricultural  products apply to all Federal Child Nutrition Programs?

A: Institutions receiving funds through the Federal Child Nutrition Programs may apply an  optional geographic preference in procurement of unprocessed locally grown or locally raised  agricultural products, including the National School Lunch Program (NSLP), School Breakfast  Program (SBP), Fresh Fruit and Vegetable Program (FFVP), Special Milk Program (SMP), Child and Adult Care Food Program (CACFP) and Summer Food Service Program (SFSP).

Q3: Can an SFA issue a solicitation that states, “We will only accept locally grown  agricultural products from a State”?

A: No, the Federal laws allow institutions receiving funds through the Child Nutrition  Programs to apply a geographic preference when procuring locally grown or locally raised  agricultural products, as noted in the preamble of the geographic preference rule. The exclusion  of all non­locally grown agricultural products is not a preference but rather a requirement of bidding and therefore is overly restrictive.

Q4: An SFA defined “local” as the entire State and issued a Request for Proposal (RFP). Can  the SFA give a bidder geographic preference points if the bidder is incorporated outside of the  State with its principal place of business outside of the State?

A: Yes, geographic preference in a procurement does not preclude a bidder from outside the  specified geographic area from competing for, and possibly being awarded, the contract subject  to geographic preference. The geographic preference applies to the unprocessed locally grown  and locally raised agricultural product; it is irrelevant whether the bidder’s business is incorporated or has a principal place of business in the State.

Q5: An SFA wants to issue an Invitation for Bid (IFB). How does an SFA incorporate  geographic preference points into an IFB?

A: An IFB doesn’t generally include preference points; instead, an SFA determines who is responsive based on the solicitation, and then from the responsive bidders the SFA awards the  contract to the bidder with the lowest price.  Therefore, it may not be feasible to incorporate  “points” into an IFB in the same way as is done with an RFP. However, an SFA could write in  the specifications that, for example, an apple must have been picked within one day of delivery  or must have been harvested within a certain time period. Additionally, the solicitation document must clearly outline how all bids will be evaluated, including the application of geographic preference in the scoring criteria. The following is an  example of one approach on how to incorporate geographic preference points in an IFB:

Geographic preference points in an IFB would be applied after the SFA determined the  three bidders with the lowest price. The three bidders with the lowest price would be  given a total of ten geographic preference points if those bidders met the geographic  preference. In order to determine the winning bidder, the scoring criteria would clearly  state that one point would equal one cent; in other words, ten points would translate into  ten cents. If one or more of the responsive bidders with the lowest price met the  geographic preference, ten cents would be taken off of their respective prices and that  bidder could potentially win the bid. Note: Deducting ten cents from the prices of responsive bidders that met the geographic preference only applies to determining the  winning bidder and would not affect the actual price paid to a bidder.

In the following example, Bidder 2 meets the geographic preference and is given ten  points which translates into deducting ten cents from Bidder 2’s price. In this example,  Bidder 2 still doesn’t win the bid because Bidder 1 has a lower price.

  Bidder 1  Bidder 2 Bidder 3
Price $1.97 $2.10 $2.03
Meets geographic preference? No Yes (10 points) No
Price with preference points $1.97 $2.00 $2.03

 

Q6: An SFA would like to prescribe geographic preference as a percentage in their solicitation (IFB or RFP). For example, the SFA would like to give a ten percent price preference to bidders offering unprocessed locally grown and locally raised agricultural products. Can an SFA prescribe geographic preference as a percentage in their solicitation?

A: Yes, an SFA may prescribe geographic preference in their solicitation in terms of actual  percentage (e.g., ten percent price preference). Geographic preference can be prescribed in terms of points or percentages. The solicitation document must clearly outline the scoring criteria and  the method in which the criteria will be evaluated.

Q7: How many geographic preference points can an SFA assign to geographic preference?  What is the maximum price percentage an SFA can assign to geographic preference?

A: The Federal regulations do not prescribe the number of preference points or maximum  price percentage an SFA can assign to geographic preference. Generally speaking, any price preference (prescribed as points or percentage) impacts free and open competition. However, geographic preference may have a greater or lesser impact on free and open competition  depending on the characteristics of the market. The SFA’s application of the geographic  preference option must leave an appropriate number of qualified firms, given the nature and size of the procurement, to compete for the contract, as it is imperative that the SFA does not  unnecessarily restrict free and open competition.

Q8: Can SFAs split up large purchases into smaller amounts and thereby fall under the small  purchase threshold?

A: SFAs cannot intentionally split purchases in order to fall below the Federal, State, or local small purchase threshold in an effort to avoid more rigorous procurement practices. However, there may be some instances in which the characteristics of a product or market  support the need to separate selected products from the overall food procurement. For example,  milk and bread are commonly procured separately because there are fundamental differences between them and other food products, such as shorter shelf­life, specialized pricing  mechanisms, and durability. Similarly, an SFA may find that fresh produce may be considered a separate market given that it shares similar characteristics as bread and milk, and may want to  separate this procurement from their overall food procurement.

Q9: An SFA would like to conduct a procurement under the small purchase threshold. Can  the SFA procure unprocessed locally grown or locally raised agricultural products directly from  a local farmer?

A: Yes; however, the procurement must be conducted in a manner that maximizes full and  open competition. According to the Federal regulations, the SFA can conduct a procurement  under the small purchase threshold if the procurement is under $100,000 in value. States or localities may set a lower small purchase threshold and thereby impose more formal procedures. The SFAs should put the number, quality and type of goods in writing before contacting any  potential offerors. When using the small purchase threshold, we recommend that at least three sources be contacted who are eligible, able and willing to provide the unprocessed locally grown  or locally raised agricultural product. Contacting a minimum of three sources ensures that an  adequate number of potential offerors will be afforded the opportunity to respond to the  solicitation.

Q10: An SFA would like to conduct a procurement under the small purchase threshold. Can  the SFA procure unprocessed locally grown or locally raised agricultural products directly from  a teacher that works for one of the schools in the SFA’s school district?

A: The procurement must be conducted in a manner that maximizes full and open  competition. The Federal regulations prohibit an employee, officer or agent of the grantee or subgrantee (i.e., SA or SFA) to participate in the selection, award or administration of a contract  if a conflict of interest, real or apparent, would be involved. A contract award to a teacher in an  SFA’s school district creates an appearance of impropriety and generates the question of whether  or not free and open competition has been circumvented. Therefore, a conflict of interest, real or apparent, may be involved if a teacher that works for one of the schools in the SFA’s school  district is awarded a contract.

Q11: May an SFA give geographic preference to farmers in a neighboring country (i.e., Mexico  or Canada) for foreign unprocessed agricultural products when procuring unprocessed locally  grown or locally raised agricultural products?

A: An SFA must adhere to the Buy American clause which requires SFAs to purchase  domestically grown foods to the maximum extent possible. An SFA may purchase foreign  goods only if the two rare exceptions to the Buy American provision are met:  (1) the product is not produced or manufactured in the U.S. in sufficient and reasonable available quantities of a  satisfactory quality; and (2) competitive bids reveal the costs of a U.S. product is significantly  higher than the foreign product.

Q12: A State regulation requires State governmental entities to give geographic preference to  local State farmers and prescribes a method on how geographic preference can be incorporated in  the State governmental entities’ solicitation. Is an SFA required to follow the State’s regulation  on geographic preference?

A: No. Under the principles of federalism, a State has the right to create a regulation of this nature; however, the application of the State’s regulation to the Federal Child Nutrition Programs is an entirely different matter. Please keep in mind that States cannot mandate through law or policy that institutions apply a geographic preference when conducting procurements for the  Federal Child Nutrition Programs, because the National School Lunch Act (NSLA) grants this authority directly to the purchasing institution (i.e., SFA or SA making purchases on behalf of the SFA).

Q13: Where does an SFA go to obtain help in developing bid sheets that use geographic  preference? Does USDA have examples of solicitations that use geographic preference?

A: An SFA should start by contacting its SA for assistance in developing bid sheets and for examples of solicitations that use geographic preference. USDA is in the process of creating tools that will assist in this area.  USDA has created an online training on procurement, State  Agency Guidance on Procurement, that can be found at http://www.nfsmi.org. Additionally, the  USDA Farm to School website ( https://www.fns.usda.gov/cfs/farm-school-grant-program ) provides information on the  procurement requirements, as well as Q&As directly related to local food purchases.

Unprocessed Agricultural Product

Q14: Can an SFA apply the geographic preference option in the procurement of ground beef?

A: As we stated in our policy memo dated November 13, 2009, we further amended the  previous guidelines regarding what is to be considered to be unprocessed locally grown or locally raised agricultural products. In our view, for the purpose of applying a geographic  procurement preference in the Child Nutrition Programs, unprocessed agricultural products means only those agricultural products that retain their inherent character. Size adjustment made by grinding does not change an agricultural product into a product of different kind or character. Therefore, an SFA can apply the geographic preference option in the procurement of ground beef if no other items such as additives or preservatives are added to the ground beef.

Q15: Can an SFA give geographic preference when procuring a frozen bag of combination  local vegetables (e.g., broccoli, cauliflower and carrots) from a bidder?

A: Yes, the inherent character of the vegetables is retained and not modified by freezing or combining vegetables in a bag.

Q16: Can an SFA give geographic preference when procuring fresh local vegetables in portion  sized or single serving bags (e.g., small bags of carrots) from a bidder?

A: Yes, the inherent character of the vegetables is retained and not modified by placing  vegetables in portion sized or single serving bags.

Q17: Can an SFA give geographic preference when procuring canned local vegetables from a  bidder?

A: No, the inherent character of the vegetables is not retained because the heating process involved in canning changes the agricultural product into a product of a different kind or character.

USDA Nondiscrimination Statement

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, sex, disability, age, or reprisal or retaliation for prior civil rights activity in any program or activity conducted or funded by USDA. 

Persons with disabilities who require alternative means of communication for program information (e.g. Braille, large print, audiotape, American Sign Language, etc.), should contact the Agency (State or local) where they applied for benefits. Individuals who are deaf, hard of hearing or have speech disabilities may contact USDA through the Federal Relay Service at (800) 877-8339.  Additionally, program information may be made available in languages other than English.

To file a program complaint of discrimination, complete the USDA Program Discrimination Complaint Form, (AD-3027) found online at: http://www.ascr.usda.gov/complaint_filing_cust.html, and at any USDA office, or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by:

(1)     mail: U.S. Department of Agriculture
         Office of the Assistant Secretary for Civil Rights
         1400 Independence Avenue, SW
         Washington, D.C. 20250-9410;

(2)     fax: (202) 690-7442; or

(3)     email: program.intake@usda.gov.

This institution is an equal opportunity provider.

 

For Nondiscrimination Statement translations, click here.

Los demás programas de asistencia nutricional del FNS, las agencias estatales y locales, y sus beneficiarios secundarios, deben publicar el siguiente Aviso de No Discriminación:

De conformidad con la Ley Federal de Derechos Civiles y los reglamentos y políticas de derechos civiles del Departamento de Agricultura de los EE. UU. (USDA, por sus siglas en ingles), se prohíbe que el USDA, sus agencias, oficinas, empleados e instituciones que participan o administran programas del USDA discriminen sobre la base de raza, color, nacionalidad, sexo, discapacidad, edad, o en represalia o venganza por actividades previas de derechos civiles en algún programa o actividad realizados o financiados por el USDA.

Las personas con discapacidades que necesiten medios alternativos para la comunicación de la información del programa (por ejemplo, sistema Braille, letras grandes, cintas de audio, lenguaje de seas americano, etc.), deben ponerse en contacto con la agencia (estatal o local) en la que solicitaron los beneficios. Las personas sordas, con dificultades de audición o discapacidades del habla pueden comunicarse con el USDA por medio del Federal Relay Service [Servicio Federal de Retransmisión] al (800) 877-8339. Además, la información del programa se puede proporcionar en otros idiomas.

Para presentar una denuncia de discriminación, complete el Formulario de Denuncia de Discriminación del Programa del USDA, (AD-3027) que está disponible en linea en:http://www.ocio.usda.gov/sites/default/files/docs/2012/Spanish_Form_508_Compliant_6_8_12_0.pdf. y en cualquier oficina del USDA, o bien escriba una carta dirigida al USDA e incluya en la carta toda la información solicitada en el formulario. Para solicitar una copia del formulario de denuncia, llame al (866) 632-9992. Haga llegar su formulario lleno o carta al USDA por:

(1)     correo: U.S. Department of Agriculture
         Office of the Assistant Secretary for Civil Rights
         1400 Independence Avenue, SW
         Washington, D.C. 20250-9410;

(2)     fax: (202) 690-7442; o

(3)     correo electrónicoprogram.intake@usda.gov.

Esta institución es un proveedor que ofrece igualdad de oportunidades.

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