|DATE:||October 13, 2004|
|SUBJECT:||School Districts and Federal Procurement Regulations|
Special Nutrition Programs
In a memorandum, same subject, dated Oct. 4, 2001, we asked that you remind state agencies that the Department's regulations (7 CFR 2016.36(b)) prohibit awarding contracts to any entity that develops or drafts specifications, requirements, statements of work, invitations for bids, requests for proposals, contract terms and conditions, or other procurement documents. While schools have broad discretion in gathering information for use in connection with procurements, information from potential bidders must be appropriately modified to develop tailored specifications, otherwise these bidders must be excluded from competing for such procurements. We also asked that you advise state agencies to carefully review school district compliance with these federal regulations and take appropriate actions.
Based on recent complaints of noncompliance with Departmental regulations, we have reviewed 10 requests for proposals (RFPs) for school food service (SFA) software that have been issued within the last 2 years. The specifications in 8 of these 10 proposals bear a striking resemblance to a list of features offered to SFAs by Horizon Software LLC (Horizon). In more than one proposal, the specifications listed contain the same typographical errors contained on Horizon's features list.
Our October 2001 memorandum, copy enclosed, was issued because some SFAs were not drafting their own specifications and procurement documents for certain software acquisitions but instead used those written by Horizon. In response to our concerns, Horizon, in May 2002, provided us with a memorandum directed to school business and food service personnel. Horizon's memorandum accompanied a list of its software features. Horizon's memorandum, as well as its list of features, is enclosed. Horizon, in that cover memorandum, informs readers that its list of features "is not a Bid or RFP Specification form and should not be used as such."
Any action which diminishes open and free competition seriously undermines the integrity of the procurement process and may subject the SFA to bid protests. Further, in failing to fulfill its responsibilities to draft its own specifications and procurement documents, an SFA which copies a list of features drafted by a potential contractor has rendered that potential contractor ineligible to compete for the contract pursuant to 7 CFR part 2016.60(b).
We are also concerned that SFAs may not be properly responding to protests and concerns raised by potential contractors. Pursuance to 3016.30(b)(12). SFAs must have protest procedures in place to handle and resolve disputes relating to their procurements and must in all instances disclose information regarding a protest to their state agency.
Please notify your state agencies that any SFA that elects to use a potential contractor's information instead of developing its own procurement documents and processes cannot use nonprofit school food service funds for the resulting contract if that potential vendor is permitted to compete for the award, whether or not the contract is awarded to that potential vendor. In addition, please remind state agencies that SFAs must have protest procedures in place and disclose information regarding a protest to the state agency.
We are again requesting that state agencies monitor SFA procurement practices. including the SFA's protest procedures, and initiate corrective actions when violations of Department regulations are identified. In particular, state agencies should pay close attention to software acquisitions given the continuing level of noncompliance identified in this memorandum.
STANLEY C. GARNETT
Child Nutrition Division