ADE Director's Communication Memo Form

Memo Number : IA-99-010

Date Created : 11/09/1998


Co-op Directors
other: Child Nutrition Directors

Type of Memo: Regulatory
Response Required: Optional
Section:   Internal Administration - Dr. Bobbie Davis
Exclusive Beverage Contracts

Regulatory Authority:
7CFR 210.21; 7CFR Part 3015, Subpart S and Attachment O, of Circular A-102

Contact Person:
Barbara Smith or Wanda Shockey

Phone Number:


The following is a very IMPORTANT and TIME SENSITIVE message.
Several questions have been raised recently concerning exclusive contracts with beverage companies in relation to the federally funded Child Nutrition programs. If the school district's Child Nutrition programs are included in a contract, all federal procurement requirements must be met. Federal procurement procedures are found in 7 CFR 210.21, 7 CFR Part 3015, Subpart S and Attachment O, of circular A-102.

These regulations require: "All procurement transactions… without regard to dollar value shall be conducted in a manner that provides maximum open and free competition." Documentation must be maintained to prove that the appropriate procurement procedures were used and that the final selection is the most efficient and economical for the Child Nutrition programs. In addition, that portion of all commissions, considerations, donations (including scholarship funds) or any other funds received by the district that is based on the participation of the Child Nutrition programs in this contract must be deposited in the Child Nutrition account for Child Nutrition programs use only.

The following are additional excerpts from Attachment O, Circular A-102 and 7 CFR 3015, which must be followed during the procurement process.

Code of Conduct

A-102, attachment O.7. "…a written code of conduct… shall govern the performance of the..employees …engaged in the award and administration of the contract… No employee …shall participate in selection or in the award or administration of a contract ..if a conflict or interest, real or apparent would be involved."

7 CFR 3015.181.a.2. states: "…employees…shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or proposed contractors."

Selection Procedures

A-102, attachment O.10.b.1.a. The request for proposal (RFP) or invitation to bid shall: "incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not… contain features, which unduly restrict competition."

A-102, attachment O.10.b.1.b. The RFP or invitation to bid shall: "..clearly set forth all requirements which offerors (vendors) must fulfill and all other factors to be used in evaluating bids."

Access to Contractor Records

3015.183 "requires recipients (school districts) to include in … contracts a provision for access to the contractor's records by the recipient and the federal government."

3015.183 (b) "requires retention of records for three years after the final payment is made…"

When a school district agrees to participate in the United States Department of Agriculture (USDA) Child Nutrition programs, an agreement is signed by the district. This School Food Authority Agreement between the Arkansas Department of Education and the local education agency, the school district agrees to make all accounts and records pertaining to its school food service available to both the state and federal audit or review.

There are several other very specific requirements in the regulations based on the method selected to procure products. If a district includes Child Nutrition programs in an exclusive beverage contract, and the district does not have copies of 7 CFR 210.21,
7 CFR 3015 and Attachment O of circular A-102, please contact this office.

If the exclusive beverage contract does not include the federal Child Nutrition programs, the contract does not have to comply with the USDA procurement regulations cited above, but it must still comply with the appropriate state procurement requirements.

A response to this memorandum is required if the district has an exclusive contract that includes federal Child Nutrition programs (Breakfast or Lunch). If a district has questions, please contact Barbara Smith or Wanda Shockey at 501-324-9502.


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