Welcome to the California Department of Education's, or CDE's, Procurement Guidance Video Series,
Part 7: Buy American Provision in School Nutrition Programs.
My name is Courtney Hardoin and I am a Nutrition Education Consultant in the Education and
Nutrition Policy Unit at the CDE.
I am joined by my colleague, Bart Lyszkiewicz, Program Analyst in the Resource Management Unit
The training objectives of this video are for school food authorities, or SFAs, to:
• Learn the definition of the Buy American provision
• Identify the two limited allowable exceptions to purchasing nondomestic products
• Determine how an SFA can ensure compliance, and
• Understand how CDE reviewers will monitor an SFA's compliance with the Buy American Provision.
Bart and I will refer to resources, accessible on the Internet, throughout this video.
To access the Web pages for the resources discussed in this video, select the "Show
More" tab directly below the video.
So, where in federal law and regulations is the Buy American requirement, and what is
the intent of the requirement?
The Buy American requirement was added to the National School Lunch Act, or NSLA, by
Section 104(d) of the William F. Goodling Child Nutrition Reauthorization Act of 1998
(Public Law 105-336).
The specifics of the requirement can be found in Title 7, Code of Federal Regulations,
( 7 CFR), parts 210.21(d) and 220.16(d).
These regulations require program operators purchasing agricultural food products that
are served in the National School Lunch Program and the School Breakfast Program to include
the Buy American provision in their solicitations and contracts.
The Buy American provision is intended to support the mission of child nutrition programs,
which are to serve children nutritious meals and support American agriculture.
Requiring compliance with the Buy American provision also supports SFAs working with
local, or small, minority, and women-owned businesses as required by Federal regulations
in 2 CFR, Section 200.321.
The USDA also encourages purchasing food products from local and regional sources when expanding
farm to school efforts.
Now that we know the why, we will now look at the exact language.
The Buy American provision, in Section 12(n) of the NSLA (42 U.S. Code 1760[n]), requires
SFAs to purchase, to the maximum extent practicable, domestic commodity or product.
Easy to understand? Probably not.
Why don't we break down some of the key words from this quote.
Let's begin with what is meant by "domestic commodity or product."
The term, domestic commodity, is defined as an agricultural commodity that is produced
(e.g., grown, raised, etc.) in the U.S. and a food product as a processed commodity; where
the finished product is substantially comprised of agricultural commodities that are produced
in the U.S. Confused?
I was after reading this quote.
To get a better understanding of the difference between the terms "commodity" and "product",
let's look at an example.
Think of domestic commodities like chicken or flour, and a domestic product like a breaded
chicken nugget.
If you are only purchasing chickens, then all the chickens must be raised in the U.S.;
however, if you are purchasing breaded chicken nuggets, then a substantial portion of the
chicken meat and flour used for breading must have been produced in the U.S.
Now that we have a better understanding of the terms commodity and product, we can move
on to what "substantial" means.
But before we continue, I would like to leave you with a couple of important facts to remember.
1. The food product can only be processed in the U.S.
This means that if the breaded chicken nuggets were comprised of chicken and grains to make
flour raised or grown in the U.S., but were processed in Mexico, then the food product
would not meet the Buy American requirements because the agricultural commodity was processed
outside of the U.S.
2. The Buy American provision does not apply to nonagricultural products, such as paper
products and water.
Now I will quantify the term "substantial" for you.
When the regulation indicates that the product (i.e., breaded chicken nugget) must be substantially
comprised of agricultural commodities, does it mean 100 percent? 75 percent? 50.1 percent?
As we know, many times these federal rules like to be vague, but in the specific instance
we received guidance on what "substantial" means.
The term substantial is defined as over 51 percent of the final processed product (by
weight or volume) consists of agricultural commodities that were grown domestically.
This means that foods that are unprocessed, must consist of domestic agricultural commodities
(100 percent American) and foods that are processed must contain domestic agricultural
food components, which are comprised of over 51% domestically grown items, by weight or
volume, as determined by the SFA.
It is important to note that while USDA Foods are domestic, processed end products that
contain USDA Foods need to meet the 51% domestic requirement, by weight or volume.
This definition of domestic product serves both the needs of schools and American agriculture.
Products from Guam, American Samoa, Virgin Islands, Puerto Rico, and the Northern Mariana
Islands are considered domestic products under this provision, as these products are from
the territories of the U.S.
We have now completed discussing our definition of what the Buy American requirement means,
now we are going to discuss who must adhere to this requirement.
Does the Buy American requirement apply to all child nutrition program operators?
According to Title 42, U.S. Code, Section 1760(n), SFAs that purchase a domestic commodity
or product for the school lunch program or the school breakfast program must adhere to
the Buy American provision.
This includes SFAs that also operate a Child and Adult Care Food Program or a Summer Food
Service Program.
Per 7 CFR, Part 210.14, all federal funds, all money received from children as payment
for program meals, all proceeds from the sale of competitive foods, and all other income
generated by the school food service must accrue to the food service account also known
as the cafeteria fund.
As a consequence, the entire nonprofit school food service account becomes subject to Federal
procurement standards, including the Buy American provision.
Entities purchasing foods or products on behalf of the SFA, such as food service management
companies, meal vendors, group purchasing organizations, cooperatives, and other SFAs
entering into inter-entity agreements must also comply with the Buy American provision.
Federal guidance provides for two limited exceptions to the Buy American provision.
These exceptions allow for an SFA to purchase food products that do not meet the domestic
standard in circumstances when use of domestic foods is truly not practicable.
We have provided you with both exceptions on this slide:
* The first exception is if the product is not produced or manufactured in the U.S. (and
other allowable territories) in sufficient and reasonable available quantities of a satisfactory quality.
* The second exception is when competitive bids reveal that the cost of the U.S. product
are significantly higher than non-domestic products.
The SFA must define what is considered "significantly higher".
There is no specific dollar amount or percentage triggering an exception and it is the SFA's
responsibility to determine the threshold.
For additional information concerning this issue, you should refer to question nine in
the USDA Policy Memo SP 38-2017.Most likely one of your first questions would be, to whom
do I request an exception?
Do I contact the CDE, the USDA, my senator?
There is no requirement to request a waiver to the Buy American provision from the CDE,
USDA, or Senator in order to purchase a non-domestic product.
However, SFAs are expected to maintain documentation, and provide documentation supporting their
use of the exception to a CDE reviewer during their next SNP administrative review (AR)
and procurement review.
SFAs are expected to provide documentation of communications with their food suppliers.
This can include e-mails and documentation of telephone communications.
Alternative considerations to approving an exception and reasons for the exception must
be provided to a reviewer as to why the domestic product is being substituted, using one of
the exceptions.
The CDE will review the documentation during the offsite procurement reviews of the SFA's
procurement practices.
You may also be asked for your documentation during your SNP AR.
While exceptions to the Buy American provision exist, SFAs should never use them as a standard
practice in their procurements.
Before using an exception, SFAs should determine whether:
1. There are other domestic sources available for the product than what the current vendor
has to offer.
2 .There are domestic products that could easily be substituted on the menu for the nondomestic product.
For example, can an SFA substitute domestic pears for non-domestic apples?
3.This is the best time of year to solicit bids for this product?
For example, if the SFA contracted earlier or later in the season, would prices or availability change?
And, 4.The cost and availability of domestic and
nondomestic foods was verified and documented through a third-party; for example, the USDA
Agricultural Marketing Service, or AMS.
More information and a link to the USDA AMS Web page is discussed later in this video.
There are two important axioms to remember when it comes to documentation:
1. If you do not document it, it did not happen, and
2. No one ever got into trouble for having too much documentation
Explaining why having documentation is good, but you may ask, can you provide me with a
sample of what you are looking for? Ask and you shall receive.
USDA Policy Memo SP 38-2017, dated June 30, 2017, includes sample language in question
5 of the Questions and Answers section that SFAs should use in solicitations and contracts
to comply with the requirement that the SFA retain records documenting any exceptions
to the Buy American provision.
This sample language notifies contractors of their requirement to request approval from
the SFA to allow an exception to the Buy American requirement.
The sample language states: "Exceptions to the Buy American provision are very limited;
however, an alternative or exception may be approved upon request.
To be considered for an alternative or exception, the request must be submitted in writing to
a designated official, a minimum of (insert number of days) in advance of delivery.
The request must include the: 1. Alternative substitutes that are domestic
and meet the required specifications: a) Price of the domestic food alternative
substitutes; and b) Availability of the domestic alternative
substitutes in relation to the quantity ordered 2. Reason for the exception: limited/lack of
availability of price (include price) a) Price of the domestic food product; and
b) Price of the non-domestic product that meets the required specification of the domestic product.
Just to quickly recap, we have covered what
the Buy American requirement is and where to find it.
We have also gone over when you can use exceptions to the requirements.
In addition, we gave you sample language to use in your procurement documents.
Now we are going to cover how you must implement the Buy American provision.
In order to ensure compliance with the Buy American provision, SFA's must:
1. Ensure solicitations and contracts include the requirement for domestic agricultural
commodities and products 2. Include the requirement in documented procurement
procedures 3. Retain records documenting any exceptions
4. Monitor contractor performance to ensure their compliance with all contractual requirements
These four requirements are outlined in 2 CFR, Section 200.318(b) and USDA Policy Memo SP-38-2017.
The link to the USDA Policy Memo is listed on the slide and is accessible by selecting
the Show More tab, directly below this video.
USDA Policy Memo 38-2017 includes additional ways the SFA can comply with the Buy American provision.
For instance, the SFA can: • Require suppliers to provide certification
of domestic origin of food products delivered and invoices submitted and document this in
the SFA's procurement procedures • Examine product packaging and delivery
invoices or receipts to ensure the domestic food that was solicited and awarded is the
food that is received • Require suppliers to identify the percentage
of U.S. content in food products (including processed end products)
• Conduct periodic review on storage facilities to ensure the products received are the ones
solicited and awarded, and that they comply with the Buy American provision.
• Include domestic requirements in bid specifications • And lastly, additional ways the SFA can
comply with the Buy American provision is to verify cost and availability of domestic
and nondomestic foods using data in the USDA AMS's Run a Custom Report Web page at the
link listed on this slide.
In addition to the USDA providing sample language for exceptions in USDA Policy Memo SP-38-2017,
they also provided sample specification language that SFAs can place in their solicitations
and contracts in question four of the Questions and Answers section.
Examples of Buy American language that the SFA may include within the specifications
for solicitations and contracts to comply with the Buy American provision include:
1. Utilizing the Buy American definitions in 7 CFR 210.21(d) in all food product specifications,
invitations for bids, and requests for proposals for food products, contracts, purchase orders,
and other procurement documents issued 2. Requiring a certification of domestic origin
for products which do not have country of origin labels
3. Including the following language: "The (agency name) participates in the National School
Lunch Program and School Breakfast Program and is required to use the nonprofit food
service funds, to the maximum extent practicable, to buy domestic commodities or products for
Program meals.
A domestic commodity or product is defined as one that is either produced in the U.S.
or is processed in the U.S. substantially using agricultural commodities that are produced
in the U.S. as provided in 7 CFR 210.21(d)."
Since the Buy American language must be present in all phases of the procurement process,
from solicitation to contract oversight, the USDA has provided sample language for contractors
and SFAs to use in their documents during the solicitation and bidding process.
Keep in mind that this language should be tailored to the needs of the contracting parties.
This slide lists the USDA recommended Buy American certification language for contractors
to include, to document their compliance with the Buy American requirement.
It states: "We certify that (product name) was processed in the U.S. and contains over
51% of its agricultural food component, by weight or volume, from the U.S."
This slide lists the language that SFAs should include in their solicitations during the
bidding process to document their compliance with the Buy American requirement.
1. "We require that suppliers certify the food product was processed in the U.S. and certify
the percentage of U.S. content, by weight or volume, in the food component of processed
food products supplied to us."
2. "We require bidders to certify that (product name) was processed in the U.S. and contains
over (% of weight or volume) of its agricultural food component from the U.S."
For more guidance on how to ensure compliance, refer to Questions and Answers six and seven
in USDA Policy Memo SP-38-2017.
As we all know, the CDE is required to monitor compliance.
USDA Policy Memo SP-38-2017 details how state agencies will monitor the Buy American provision
during the off-site and on-site portions of both an AR and procurement review.
During the off-site Local Agency Procurement Review, the CDE will:
1. Determine if SFAs are purchasing domestic commodities as defined in 7 CFR 210.21(d)
2. Review a sample of supplier invoices or receipts to determine whether the solicited-for
domestic foods were provided by the awarded contractor
3. Check that solicitations and contracts contain the Buy American certification language
4. Coordinate with the AR reviewers on the on-site Buy American observations
Now we will review what the CDE is required to do during the on-site review.
During the on-site SNP AR, the CDE must review the labels on agricultural commodities of
the SFA's on-site and off-site storage facilities in four categories, (dry, canned, refrigerated,
and frozen), and review a sample of supplier invoices or receipts to ensure the country
of origin is the U.S. or its territories.
If, during the on-site review, the CDE finds that the information on the label is incomplete
(for example, the label only notes that a product was processed in the U.S. but does
not note the product's country of origin) or the CDE cannot otherwise determine from
the label where the product was produced and processed, the CDE reviewer must review the
SFA's solicitation and contractual documents for Buy American language.
The reviewer may assume the product is compliant with the Buy American requirements only if
the solicitation and contract documents contain the Buy American provision or language on
the requirement to provide domestic foods.
If the reviewer identifies exceptions, the SFA must provide documentation justifying the exception.
If nondomestic products are identified and there is no documentation justifying the exception,
the CDE must issue a finding and require corrective action.
Finally, we will briefly cover the types of review findings the CDE may need to issue.
This slide includes a partial list of corrective action that the CDE reviewer may issue if
he/she uncovers findings during the off-site or on-site review for compliance with the
Buy American provision.
Since the on-site review is part of the "General Area" in the AR, such findings will not result
in fiscal action.
Some potential corrective actions include requiring an SFA to:
• Amend procurement documents, or a contract, to include Buy American language or issue
a new solicitation if an amendment causes a material change to a contract
• Attend procurement training • Monitor food deliveries to ensure that
the correct domestic food components contracted for are delivered
• Fiscal action for repeat or serious findings on a case-by-case basis
Because the CDE believes that we exercise our greatest oversight when we provide our
program operators with tools to be successful, I will now provide you with a list of resources
to assist you as you navigate procurement.
To conclude this video, there are several resources on the Internet to support SFAs
with the Buy American provision in addition to those referenced in this video.
The CDE Procurement in Child Nutrition Programs Web page includes links to Buy American guidance
and the USDA Buy American Policy Memos.
The Institute of Child Nutrition has designed a comprehensive Procurement in the 21st Century
Web page, and the USDA has developed a Procuring Local Foods Web page.
Both Web pages include guides that cover a variety of procurement topics, including the
Buy American provision.
In addition, SFAs can locate Buy American guidance, CDE Management Bulletins, and USDA
Policy Memos by visiting the bottom two Web pages on this slide and typing "Buy American"
in the search function.
Links to these Web pages are also available by selecting the "Show More" tab directly
below this video.
The Nutrition Services Division Procurement Resources Unit has an e-mail address for SFAs
to send procurement questions.
Please send your questions by e-mail to NSDprocurementreview@cde.ca.gov or call 916-322-2498, option 7.
Other ways to receive NSD updates include accessing our Web site, following us on Twitter, and viewing
our other YouTube videos.
SFAs can print a certificate of completion for this video by accessing the link in the
Show More tab directly below this video.
Keep this certificate on file, as you may be asked to show it during an AR.
For SNP operators that must meet the professional standards requirements, this slide provides
the required information to track your training for today.
This concludes Part 7: Buy American Provision in School Nutrition Programs, in the CDE Procurement
Guidance Video Series.
This institution is an equal opportunity provider.
Have a great day!
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