Applying Geographic Preference in Procurement

Nutrition Services Division Management Bulletin

Purpose: Policy, Beneficial Information

This management bulletin consolidates guidance and notifies Child Nutrition Program (CNP) operators of the U.S. Department of Agriculture (USDA) Policy Memorandum SP 22-2024 issued on May 22, 2024, and related USDA policy memo SP 24-2024 issued on June 26, 2024. Both policy memos inform CNP operators about the option to use geographic preference to procure unprocessed, locally grown and locally raised agricultural products. This management bulletin provides general background, final rule update to geographic preference, definitions for local and unprocessed foods, California procurement preference, and local specification and defined scoring advantage guidance, as well as resources and contact information.

Background

In 2008, Congress amended the Richard B. Russel National School Lunch Act, 42 United States Code 1758(j), to encourage CNP operators to purchase unprocessed, locally grown, and locally raised agricultural products and authorized the use of geographic preference in procuring these products. In 2011, USDA published the Geographic Preference Option for the Procurement of Unprocessed Agricultural Products in Child Nutrition Programs – Final Rule. The 2011 final rule clarified that the geographic preference option applies to “unprocessed, locally grown, or locally raised agricultural products”. In addition, federal regulations give CNP operators the discretion to apply geographic preference, and award additional points or credit to products from a specified geographic area during the evaluation of proposals or bids received in response to a solicitation. However, in 2022 California Food and Agriculture Code (FAC) 58595(c) was established to ensure that local educational agencies (LEAs) provide procurement preference of California-grown agricultural food products. Additional information about the California procurement preference is provided in this management bulletin.

Final Rule Update to Geographic Preference

Under a new final rule titled, Child Nutrition Program: Meal Patterns Consistent With the 2020-2025 Dietary Guidelines for Americans, CNP operators may now include the term “local” in specifications for procurement (which was previously prohibited). The final rule was effective July 1, 2024, applies to all CNPs, and updated the following federal regulations: 7 CFR, sections 210.21(g)(1), 215.14(a)(e); 220.16(f)(1), 225.17(e)(1).

Definition of Local

CNP operators are allowed to define "local" and determine the amount of preference or credit awarded to products that meet this criterion. The geographic preference option allows CNP operators to include terms such as “locally grown,” “locally raised,” or “locally caught” as procurement specifications. Although there is no singular definition of "local" in federal regulations, CNP operators may determine the term local for geographic preference within California to adhere to the procurement preference provided the section below. CNP operators can require that unprocessed agricultural products meet the solicitation requirements and may exclude products or bids that do not meet this standard.

However, it is important to note that federal procurement regulations Title 2 CFR, section 200.319, requires competitive procurement processes. CNP operators must ensure full and open competition when procuring goods. To promote open competition CNPs operators are encouraged to plan and research solicitations so that an appropriate number of vendors compete for contracts.

California Procurement Preference

Federal regulations do not require the use of geographic preference. However, FAC 58595(c) requires LEAs to accept a bid or price for agricultural food product when it is grown in California before accepting a bid or price for a domestic agricultural food product that is grown out of state. This applies when both the quality is comparable, and the bid price of the California product does not exceed the price of agricultural food products grown out of state. Therefore, at a minimum, CNP operators’ definition of “local” should include California-grown agricultural products. To ensure fair and open competition, LEAs should include the California procurement preference in their solicitations. LEAs may further refine a geographic area within California when defining local for solicitations.   

Additional information for the California state requirements can be found on the California Department of Education’s (CDE) Senate Bill 490 and Assembly Bill 778 web page https://www.cde.ca.gov/ls/nu/chngsbuyamericanfoodact.asp. 

Definition Unprocessed Local Foods

In accordance with title 7 CFR 210.21(g)(2), for purposes of geographic preference, “unprocessed locally grown or locally raised agricultural products” means only those products that retain their inherent character. USDA policy SP 30-2008 further specifies unprocessed agricultural products as those that have not been cooked, seasoned, frozen, canned, combined with any other products, and do not have significant value-added components. The following food handling and preservation techniques shall not be considered as changing an agricultural product into a product of a different kind or character:

• Washing vegetables, bagging greens, butchering livestock and poultry, pasteurizing milk (required for CNPs), and putting eggs in a carton
• Using a minimal number of preservatives on locally grown produce, which may be needed for the purpose of preventing spoilage
• Cooling, refrigerating, freezing, size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding, forming ground products into patties without any additives or fillers, drying/dehydration, and packaging 

Local Specification and Defined Scoring Advantage

CNP operators may choose to include geographic preference as part of their evaluation criteria. USDA policy memo Geographic Preference Option Questions and Answers: SP 24-2024, provides two strategies for implementation:

1. Local as a specification, (i.e., the written description of a product or service that a vendor must meet to be considered responsive to a solicitation).
2. Defined scoring advantage while scoring bids in response to a solicitation. This means giving additional points or credit to bids for local unprocessed agricultural products that meet a CNP operator’s definition of local.

Federal regulations do not prescribe a specific or preferred method for applying a defined scoring advantage in a solicitation. However, the CDE recommends defining local specifications to ensure fair and open competition. Also, when using a defined scoring advantage, CNP operators must clearly define and describe the scoring method in the solicitation and ensure it does not unreasonably limit competition. Below is an example of how a scoring advantage for geographic preference can be incorporated in the evaluation criteria of solicitation responses: