2 Operations Purchasing/ Procurement 2400 1 » to your credit Nutrition Communications & Marketing F Fifty-two years after the Richard B. Russell National School Lunch Act (NSLA) was signed into law, a section was added requiring school food authorities (SFAs) to purchase domestic commodities and/or commercial products; it became known as the Buy American provision. The addition of this regulation was intended to serve as a reminder of the original two-fold mis- sion of the National School Lunch Program (NSLP): to improve the nutrition intake of school-age children and to support American agriculture. Buy American; Eat American By Beth Roessner www.schoolnutrition.org | SN | 71 www.schoolnutrition.org | SN | 71 Making the grade in your profession 3 Administration » The Buy American requirement for federal school meal programs doesn’t seem all that complicated on the surface—until you’re ready to buy bananas or do business with a multinational corporation. This primer should help you master the Buy American basics. 4 Earn 1 CEU in the designated Key area and Key Topic Code noted above While the provision has been around for two decades, it has received renewed attention in recent years, especially as school nutrition operations seek to offer greater variety, add more ethnic cuisines and transition to less-processed menus. Mandated increases in fruit and vegetable servings meant new complications, as some popular produce items are not grown domestically at all or only in limited volumes at high prices. USDA began receiving a number of inquiries related to the compliance and enforcement of the Buy American rule. To that end, it released guidance in 2016 and again in 2017. Policy memo SP 38-2017, issued June 30, 2017, revisits the history, reviews the rules, suggests contract language for procurement solicitations, defines monitoring by state agencies and reinforces the economic importance of the Buy American provision, particularly in supporting local businesses. But let’s be honest: Even with this guidance, the Buy American provision, and K-12 school meal procurement in general, can be downright headache-inducing. In this article, SN will attempt to distill its complexities to the fundamentals. It’s a rule that must be followed, so this overview may prove helpful to school menu developers, district purchasing professionals, site managers and vendor partners alike.
Transcript
Operations, Professional
2OperationsPurchasing/
Procurement2400
1» to your credit
Nutrition Communications & Marketing
FFifty-two years after the Richard B. Russell National School Lunch Act (NSLA) was signed into law, a section was added requiring school food authorities (SFAs) to purchase domestic commodities and/or commercial products; it became known as the Buy American provision. The addition of this regulation was intended to serve as a reminder of the original two-fold mis-sion of the National School Lunch Program (NSLP): to improve the nutrition intake of school-age children and to support American agriculture.
Buy American; Eat AmericanBy Beth Roessner
www.schoolnutrition.org | SN | 71www.schoolnutrition.org | SN | 71
Making the grade in your profession
3Administration
» The Buy American requirement for federal school meal programs doesn’t seem all that complicated on the surface—until you’re ready to buy bananas or do business with a multinational corporation. This primer should help you master the Buy American basics.
4
Earn 1 CEU in the
designated Key area and Key
Topic Code noted above
While the provision has been around for two decades, it has received renewed attention in recent years, especially as school nutrition operations seek to offer greater variety, add more ethnic cuisines and transition to less-processed menus. Mandated increases in fruit and vegetable servings meant new complications, as some popular produce items are not grown domestically at all or only in limited volumes at high prices. USDA began receiving a number of inquiries related to the compliance and enforcement of the Buy American rule.
To that end, it released guidance in 2016 and again in 2017. Policy memo SP 38-2017, issued June 30, 2017, revisits the history, reviews the rules, suggests contract language for procurement solicitations, defines monitoring by state agencies and reinforces the economic importance of the Buy American provision,
particularly in supporting local businesses. But let’s be honest: Even with this guidance, the Buy
American provision, and K-12 school meal procurement in general, can be downright headache-inducing. In this article, SN will attempt to distill its complexities to the fundamentals. It’s a rule that must be followed, so this overview may prove helpful to school menu developers, district purchasing professionals, site managers and vendor partners alike.
is making pear fruit cups, for example, grape or apple juices are often used to help preserve the fruit. But, most of the juice used is imported because of limit-ed domestic juice production. If 51% or more of the fruit cup is domestic pears and 49% juice, the product would be ac-ceptable. On the other hand, let’s s say you are buying commercially-cooked beef patties. If the processor uses 60% imported beef and cuts it with 40% do-mestic beef, this item does not comply.
It’s important to recognize that the Buy American provision applies to SFAs in all of the 48 contiguous states. SFAs in Alaska, Hawaii and U.S. territories are exempt from the rule, although SFAs in the Aloha State are required to purchase food products produced in their state when sufficient quantities are available.
In addition to the NSLP, the rule also applies to foods purchased for the School Breakfast Program. However, the Buy American provision applies only to food products and not to equipment, supplies or technology.
EXCEPTIONS TO THE RULEMost school foodservice operations have need of a little wiggle room to pur-chase items and ingredients to deliver the meals their students want. The Buy American provision provides flexibility in two areas: product availability and cost. SFAs do not need to comply with the Buy American provision:• for a food item that is not produced
or manufactured in the United States in sufficient and reasonably available quantities of a satisfactory quality; and
• when competitive bids reveal the cost of the domestic food is significantly higher than the non-domestic food. Given the rising costs of food and
labor—and reimbursement rates that don’t keep up—most SFAs are contin-ually on the hunt for the lowest-price alternative. But even with these stipulated exceptions, USDA makes SFAs jump through some bureaucratic hoops to make non-domestic purchases something that’s done at the last resort, rather than as a matter of standard practice.
72 | SN | October 2018
(Guam, American Samoa, Virgin Islands, Puerto Rico and the Northern Mariana Islands); and
• a commercially available food product that is processed substantially within this country. In this context, “substantially” means that 51% or more of the final processed food product (by weight or volume) must contain agricultural commodities that were grown domestically and that the processing itself is domestic. Frozen fruit cups are a good exam-
ple of an item that is “substantially processed.” When a domestic packer
THE BASICSEven before the Buy American provision was added, the original NSLA created the statutory basis for the rule with language that details, “the Sec-retary shall require that a school food authority (SFA) purchase, to the maximum extent practicable, domestic commodities or products.” But what does that mean?
Let’s try to break down the government-speak: The definition of a “domestic commodity or product” is:• an agricultural commodity that is
grown and harvested in the United States and its inhabited territories
MEET DAN AND NINA: A WHAT-IF STORY
Dan the Distributor is based out of Maine and works with a variety of foodservice organizations, including Nina the Nutrition Director of a New England school district. Say “hello,” Dan.
“Hello.”Dan has an upcoming order from Nina for strawberries. He has
regularly fulfilled previous orders with product from a Califor-nia-based farmer. Dan knows Nina requires American-grown products, as it is in their contract.
Dan discovers that, thanks to intense drought and wildfires, this year’s California strawberry crop is ruined. There will not be a shipment anytime soon. He has many retailers and foodservice clients that expect deliveries of strawberries, including Nina. So, Dan simply turns to a grower in Mexico. He doesn’t give Nina any advanced notice—after all, she needs the strawberries and there isn’t any domestic alternative. He delivers the specified quantity of strawberries on time, but in packaging that clearly identifies the product is from south of the border.
With a menu that relies on those berries, Nina finds herself caught between a rock and a hard place. The shipment has been received by a warehouse manager who had no reason to question or check the origin of the strawberries. It’s far too late to refuse the order—indeed, they’ve already been portioned into parfaits for tomorrow’s breakfast before she’s been made aware of the discovery on the packaging.
Certainly Dan the Distributor should have been more transparent about the emergency substitution. But Nina the Nutrition Director still risks being called on the carpet when she has her Administrative Review next summer. Nina should make notes on the production worksheet to demonstrate that she became aware of the problem and made a conscious decision to serve the imported berries in the best interest of her program. What would you do?
With such complexities in K-12 procurement, similar scenarios may be playing themselves out in communities across the country. Whether you are the director, a procurement specialist, a site man-ager or a staffer responsible for checking in product deliveries, your job is to raise your awareness. Always read labels. Have open and honest conversations with distributors and manufacturers. Ask your state agency for advice and technical assistance.
To earn 1 Continuing Education Credit (CEU) toward SNA’s Certificate/Credentialing programs for this professional development article (PDA) test, you must achieve a passing score and the issue date (October 2018) must not be older than five (5) years from your Certificate/Credentialing period. A maxi-mum of three (3) PDAs per year is allowable for SNA’s Certificate in School Nutrition program. There is no maximum of passing PDAs for those with the SNS Credential, submitted within the three-year period.
To pay by check: Mail this completed form before your expiration date. Include $11 (SNA Members) or $17 (non-members) for processing to: SNA, Attn: PDA, PO Box 759297, Baltimore, MD 21275-9297. Do not send cash!
To pay by credit card: Pay for and take the test online at www.schoolnutrition.org/OnlinePDAs. Processing fees for tests completed online are $9 (SNA Members) or $15 (non-members).
Due to administrative costs, refunds will not be made for any reason.
“Buy American; Eat American”
Completion of this test, with a passing score,
will count as 1 Continuing Education Unit (CEU) in
Key Area 2, Operations, Purchasing/Procurement, Code 2400
2OperationsPurchasing/
Procurement2400
Go to: www.schoolnutrition.org/OnlinePDAs
» the test
1. The Buy American provision was part of the original National School Lunch Act signed in 1946.n True n False
2. The most recent guidance from USDA about Buy American is a policy memo released in ___.n 1938
n 1998
n 2017
n last month
3. The U.S. territories include ___.n Hawaii
n Puerto Rico
n Virgin Gorda
n All of the above
4. For processed items, ___ of the final product must have been domestically grown.n 100%
n 75%
n 50%
n None of the above
5. The percentage of the final processed product is calculated by weight alone.n True n False
6. Schools in ___ are exempt from the Buy American provision. n Alaska
n Boston
n California
n All of the above
7. Exceptions to the Buy American rule are made on the basis of ___. n sufficient quantity
n reasonable availability
n price
n all of the above
8. All vendors serving the K-12 market are well aware of the Buy American rule. n True n False
9. Buy American compliance is monitored as part of an SFA’s Administrative Review.n True n False
10. The Buy American rule benefits ___.n multinational corporations
n China
n the environment
n none of the above
You can take this test online and pay by credit card.
SAVE A STAMP!
Before being granted the exemption, SFAs must demonstrate that they’ve taken the following into consideration:• Is there another domestic source of
a food or food product that can be substituted?
• Is this the best time of the year to solicit bids for a specific product?
• How can I access a third-party verifi-cation for cost and availability?Take, for example, bananas and
pineapples. Neither fruit is grown in the lower 48 states at all. So, the Buy American restrictions do not apply to these items. Nonetheless, USDA will “suggest” that SFAs change their menus to include domestically grown alterna-tives instead.
It’s also important to note that the definition for a “significantly higher” price for a domestic food is very sub-jective. USDA has not set a threshold or provided guidance on such prices, deferring to the local authority to make determinations. This leaves operators in a difficult position. As always, ask your state agency for assistance.
If you choose to work with USDA through your state agency to be granted an exception, you must keep ample and accurate documentation that jus-tifies your case. An exception request must include the (higher) price of the domestic option, the (limited) availabil-ity of said item and a stated reason for pursuing the exception.
KEYS TO COMPLIANCEThe easiest way to comply with the Buy American provision is to rely completely on USDA Foods. This is not a practical course of action, howev-er—and menu items that have been processed from your USDA Foods allot-ment still must meet the 51% domestic weight or volume requirement. Refer to the pear fruit cups example from earlier. You may divert USDA pears to a packer to make individual fruit cups. Imported juices may still be used for these, so long as 51% of the content of the cup is USDA Foods pears.
Since you will have to purchase food items beyond the USDA Foods Available List, the key to Buy American
1998 Reauthorization came at a particularly fortuitous time: In the early 2000s, there was a general decline in the U.S. production of various agricultural products, along with an increase in competition from imported goods. The rising de-mand for real estate gobbled up farmland and taxes increased on what was left. Many farmers faced labor shortages. The Buy American provision gave farmers a much-needed boost and continues to help them today.
In addition to the federal Buy American rule, many indi-vidual SFAs have implemented policies to prioritize procure-ment of locally sourced items. When local growers and pro-ducers partner with school nutrition operators, it can lead to enhanced educational opportunities for students, while also building greater awareness of the value of school meals in the community. FNS encourages the expansion of farm to school initiatives and local sourcing policies. Ultimately, these inter-actions can help secure future jobs in U.S. agriculture, which employs more than 24 million Americans. An emphasis on local sourcing also benefits the environment, reducing the damaging effects associated with cross-country and overseas shipping, including emissions and fuel consumption.
While the Buy American provision can make procurement a bit trickier—especially for small districts where a director has little staff support—you can find outside help. Start with your state agency. In addition, both USDA and SNA have a number of online resources, including webinars, fact sheets, conference presentations and other tools. Finally, when frus-tration threatens to overwhelm, remember the good inten-tions and benefits of this rule. SN
Beth Roessner is SN’s senior editor. She can be reached at [email protected]. Thanks to Barry Sackin, SNS, a consultant specializing in K-12 procurement issues, for his assistance with this article.
compliance is in the consistency of implementation and be-ing sure that you and your vendors are fully aware of the law. Make sure the Buy American language is included in all• documented procurement procedures;• procurement solicitations and contracts; and• bid specifications.
When soliciting suppliers and drawing up contracts, include this requirement. Don’t be afraid to require informa-tion on domestic content from distributors and manufactur-ers. Language can also be included to require certification of the domestic percentage of the agricultural product during the procurement process. It is important to continually mon-itor contracts to ensure compliance and to help verify cost and availability. You can find helpful data through USDA Agricultural Marketing Service’s weekly market report at www.marketnews.usda.gov.
Although USDA had not (at press time) identified formal penalties for non-compliance, Buy American compliance is a part of the Administrative Review process. State agen-cies will issue a finding and require corrective action in any cases of non-compliance with the provision. These actions could include requiring contract amendments with language stipulations, new contracts and mandatory attendance at procurement training. In addition, fiscal action for repeat or egregious findings will be enacted on a case-by-case basis, with approval by the appropriate FNS Regional Office.
THE BENEFITSThe Buy American provision provides trickle-down benefits for everyone from local farmers and U.S. food manufacturers to the students eating in school cafeterias. Its addition in the
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Buy American; Eat AmericanFor more advice and examples about the complicated Buy American provision,
check out this month’s online extras.
Visit www.schoolnutrition.org/snmagazinebonus to access.
BONUS WEB CONTENT
• Just because a company is headquartered in the United States does not mean that all (or any) of its products comply with the Buy American requirement. Remember that the definitions apply to the product and its processing.
• Read labels and other manufacturer’s documents carefully to identify the country of origin. If you’re unsure, reach out to a company representative and ask.
• Be cautious of labeling that says “processed/packed” in the United States versus “grown/produced.”
• Be aware that such product labels as “USDA Approved” or “California-Style” does not automatically mean the item is “American-grown.”
