Buy American Provision

Nutrition Services Division Management Bulletin

Purpose: Policy, Action Required, Beneficial Information

Background

In 1998 Congress added Section 12(n) to the National School Lunch Act (Public Law 105-336), which required SFAs to purchase, to the maximum extent practicable, domestic commodities or products. This is known as the Buy American provision. The USDA established Buy American regulations, policy guidance, and oversight requirements for SFAs and state agencies administering the School Nutrition Programs (SNP).

On April 25, 2024, the USDA published the final rule titled Child Nutrition Programs: Meal Patterns Consistent With the 2020-25 Dietary Guidelines for Americans. The rule established new requirements and codified requirements previously included in policy guidance. Specifically, 7 CFR, sections 210.21(d) and 220.16(d) requires SFA procurements to include Buy American, allows for limited exceptions to the provision, creates a phased-in cap on non-domestic products, establishes documentation and reporting requirements for exceptions, defines “substantially” for domestic agricultural products, and clarifies requirements for fish and fish products.

Buy American Provision Requirements

The Buy American provision is a procurement standard that SFAs must comply with when purchasing food products served in SNPs. SFAs are required to purchase domestic commodities or products to the maximum extent practicable. Please note, the Buy American provision applies to all SFA procurements for food, even if purchased on SFA behalf through a Food Service Management Company or procurement agent.

Title 7 CFR, sections 210.21(d) and 220.16(d) define “domestic commodity or product” as an agricultural commodity that is produced in the United States (U.S.), and a food product that is processed in the U.S. substantially using agricultural commodities produced in the U.S. USDA policy memorandum SP 38-2017 specifies that a product’s food component (defined in 7 CFR, section 210.2) is considered the agricultural product.

Regulations define substantially to mean that food products must consist of over 51 percent of agricultural commodities that were grown domestically. USDA policy further clarifies foods that are unprocessed must be domestic, and foods that are processed must be 1) processed domestically, and 2) comprised of over 51 percent domestically grown items by weight or volume.

While USDA Foods are purchased from 100 percent domestic origin, it is important to note that processed end products that contain USDA Foods, must meet the requirement of over 51 percent domestically grown, by weight or volume to comply with the Buy American provision.

In addition, the USDA established regulations for harvested fish (7 CFR 210.21(d)(6)). To meet the definition of a domestic commodity or product, harvested fish must meet the following requirements: 1) Farmed fish must be harvested within the U.S. or any territory possession of the U.S.; 2) Wild caught fish must be harvested within the Exclusive Economic Zone of the U.S. or by a U.S. flagged vessel.

SFA Procurement Practices and Monitoring

All SFA food procurements that are paid with the nonprofit school food service account (cafeteria fund) must comply with the Buy American provision. SFAs must include language requiring the purchase of foods to meet the Buy American requirement in all procurement procedures, solicitations, and contracts. SFAs should include in their procurement process a requirement for contractors to certify the domestic percentage of the agricultural food product or component.

In addition, California has a specific Food and Agriculture Codes (FAC) that strengthen the Buy American provision and requires procurement preference for California-grown agricultural products. California FAC Section 58595(c) requires Local Educational Agencies (LEA) 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. Additional information for the California procurement preference can be found on the California Department of Education’s (CDE) Senate Bill 490 and Assembly Bill 778 web page at https://www.cde.ca.gov/ls/nu/chngsbuyamericanfoodact.asp.

The CDE has included Buy American language and FAC requirements in both the sample procurement procedures and the sample Request for Proposal for Food Service Management Company Contract. Both documents are available for SFA use in the Child Nutrition Information and Payment System (CNIPS) Download Forms; Form ID PRU-08b and PRU-07, respectively.

Also, SFAs are required to monitor contractor performance with the terms, conditions, and specifications of their contracts (Title 2 CFR, section 200.318(b)). This includes compliance with the Buy American provision. USDA policy SP 39-2017 states that SFAs should confirm the domestic content received from contractors. This can be accomplished by reviewing the products, and the delivery receipts and invoices to ensure the domestic food was received as specified in the solicitation and contract. Also, SFAs should ask contractors, for specific information about the percentage of U.S. content in any processed end product, and SFAs should conduct a periodic review of food storage to ensure the products received comply with the Buy American provision.

Cap on Non-Domestic Food Purchases

Regulations have established a phased-in thresholds (cap) for SFAs that purchase non-domestic food. Specifically, the regulations established limits on the percent of total commercial food costs from non-domestic foods, and SFAs are required to track to ensure compliance with the related cap. The phased-in caps on Non-Domestic Food Purchases are the following:

• School Year (SY) 2025–26, the non-domestic food purchases cap will be 10 percent

• SY 2028–29, the non-domestic food purchases cap will be 8 percent

• SY 2031–32, the non-domestic food purchases cap will be 5 percent

Limited Exceptions and Documentation Requirement

There are two limited exceptions for non-domestic purchases. The following are exceptions to the requirement to purchase domestic products:

1. The product is listed on the Federal Acquisitions Regulations Nonavailable Articles list found at 48 Code of Federal Regulations (CFR), Section 25.104 and/or is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality https://www.ecfr.gov/current/title-48/chapter-1/subchapter-D/part-25/subpart-25.1/section-25.104.
2. Competitive bids reveal the costs of a domestic product are significantly higher than the non-domestic product.

The USDA codified in regulations the requirement for SFAs to maintain documentation to demonstrate the use of exceptions. Items found on the Federal Acquisitions Regulations Nonavailable Articles list are exempt from the documentation requirement, but these items must be counted toward the cap on non-domestic purchases. The USDA developed a Buy American Exceptions Standard Tracking Form for SFAs to track use of exceptions and the cap on non-domestic food purchases. The Buy American Standard Tracking Form is available in the CNIPS Download Forms; Form ID PRU-10. Although tracking of exceptions is required, the use of this form is not mandatory but encouraged by CDE.

In addition, neither regulations nor the USDA has defined a dollar amount or percentage triggering the significantly higher cost exception. However, California Senate Bill 490 (2022) established a significantly higher cost threshold for certain LEAs. Specifically, California FAC Section 58596.3 was established and requires LEAs that receive $1 million or more annually in federal SNP reimbursement to include in their solicitation that they will only purchase domestic food products, unless an exception applies, or the bid price of the non-domestic agricultural food product is more than 25 percent lower than the bid or price of the domestic agricultural food product. Additional information about Senate Bill 490 is available at CDE webpage Senate Bill 490 and Assembly Bill 778: https://www.cde.ca.gov/ls/nu/chngsbuyamericanfoodact.asp.

CDE Monitoring of the Buy American Provision

The CDE is required monitor SFA compliance with the Buy American provision (7 CFR 210.18(h)(2)(xi)). The CDE ensures SFAs included Buy American language in procurement procedures, solicitations, and contracts during the off-site Local Agency Procurement Review. The CDE will also review product compliance with the Buy American provision during the on-site portion of the Administrative Review (AR), which is detailed below.

On-site Administrative Review

As part of the AR, the CDE evaluates compliance with the Buy American provision by randomly selecting and reviewing food and beverage labels (excluding bottled water).

An SFA is compliant with the Buy American provision requirements if the following conditions exist: 1) the review of food and beverage labels does not identify any non-domestic food or processed food products, or; 2) if documentation exists to support an exception to the Buy American provision and the use of exceptions does not exceed the applicable nondomestic food cap. An SFA may be out of compliance if the food component’s packaging is non-domestic, does not identify its origin, or include processed food components that are not at least 51 percent domestic by weight or volume. In these cases, if the SFA lacks documentation to support exceptions to the requirement or if the non-domestic food cap is not followed, the CDE must issue a finding and require corrective action to ensure the SFA comes into compliance.

Corrective action or technical assistance resulting from an on-site SNP AR may require the SFA to:

• Develop policies and procedures for monitoring and ensuring compliance with the Buy American provision that include but are not limited to:
  • Reviewing all food deliveries to ensure contractor compliance
  • Monitoring all food deliveries to ensure the correct domestic food components contracted for are delivered
  • Ensuring that an alternative domestic food component, or an exception to purchase non-domestic prior to accepting food deliveries
  • Ensuring correct documentation is completed and retained for all exceptions
  • Developing a tracking system ensure total non-domestic food purchases meet the cap requirement

Failure to submit acceptable corrective action may result in the withholding of an SFA’s program payments (7 CFR 210.18(k)).

Implementation Best Practices

To ensure SFA compliance with the Buy American requirements, the CDE recommends the following implementation best practices:

• Include Buy American in procurement procedures for all procurement types
• Ensure Buy American is included in all procurement solicitations, bid specifications, and contracts
• Before using an exception, consider the following:
  • Are there other domestic sources of this product?
  • Are there other domestic products that can be substituted?
  • Is there a better time of year to solicit for domestic products to achieve lower price and availability?
  • Have I verified cost and availability of domestic products through USDA Agricultural Marketing Service’s weekly market report?: https://marketnews.usda.gov/mnp/fv-report-config-step1?type=termPrice
• Track exceptions using the USDA Buy American Standard Tracking Form for Local Agencies and retain records of exceptions (form available in CNIPS Download Forms; Form ID PRU-10)
• Monitor the use of exceptions to the non-domestic food cap
• Retain records for exceptions and other product origin certifications
• Monitor contractor performance by ensuring the following:
  • Food product packaging identifies country of origin
  • Food products components align with the terms and conditions of the purchase order or contract
  • Processed food product packaging or packing slips contain a certification that the components consist of 51 percent or more domestic products
  • Routine product origin certification by contractor
• Periodically review storage facilities, freezers, refrigerators, dry storage, and warehouses to ensure the products received are the ones solicited, and awarded, and comply with the Buy American provision
• Provide staff training about the Buy American provision
  

Resources

The following resources contain additional details about the Buy American provision and other procurement requirements.

• USDA Policy Memo SP 23-2024: Buy American Provisions Related to the Final Rule Titled: Child Nutrition Programs: Meal Patterns Consistent With the 2020-2025 Dietary Guidelines for Americans Buy American Provisions Related to the Final Rule - CNP Meal Patterns Consistent with the 2020-25 DGAs https://www.fns.usda.gov/cn/buy-american-provisions
• USDA Policy Memo SP 38-2017: Compliance with the Enforcement of the Buy American Provision in the National School Lunch Program (NSLP) Compliance with and Enforcement of the Buy American Provision in the NSLP https://www.fns.usda.gov/nslp/compliance-enforcement-buy-american
• CDE webpage: Senate Bill 490 and Assembly Bill 778 https://www.cde.ca.gov/ls/nu/chngsbuyamericanfoodact.asp
• CDE webpage: Procurement in School Nutrition Programs https://www.cde.ca.gov/ls/nu/sn/fsmcproc.asp
  

Contact Information

If you have any questions regarding the limited exceptions to Buy American requirement, cap on non-domestic food purchases, and exception documentation, please reach out to the Nutrition Services Division at NSDBuyAmericanProvision@cde.ca.gov.

If you have any questions regarding the inclusion of Buy American requirements in procurement procedures, solicitations, and contracts, please contact the Procurement Resources Unit at NSDProcurementReview@cde.ca.gov.