Federal Regulations

For federal regulations, review this USDA memo about purchasing cooperatives for child nutrition:

• Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents and Third-Party Services

State Regulations

Some states have specific language around purchasing cooperatives and public schools while others give no further definition. Here are some examples of state regulations:

• Texas- State law mandates creation of cooperatives for schools be through interlocal agreements between schools and other governmental entities.
• Florida- State law spells out requirements for protest procedures and The Jessica Lunsford Act mandated requirements for background checks for contractors.

Local Regulations

Some municipalities have certain requirements around sustainability of packaging or delivery vehicles. Some school district procurement policies will add additional requirements. Make sure you review all local and district regulations.

Determine Cooperative Model

What model will best suit the needs of your school district and others you hope will join you? Being clear about the model at the time of formation will ensure appropriate recruitment of members and guide procurement practices to ensure compliance.

• CNP may only work well if there are numerous districts interested or a smaller number of larger sized districts.
• Agent or Third-Party co-op may be a more attractive option if the intent is to involve other organizations in your community/region.

Ensure Regulatory Compliance

Once the model has been determined the co-op will need to ensure it is compliant with federal tax laws and USDA regulations. If your co-op is being established as a non-profit organization, you’ll need to check federal and state laws. If hiring an agent or using the services of a third-party group, you will need to plan to release a solicitation if the cost of services exceeds the USDA minimum purchase threshold.

Draft Mission & Vision Statements

Like any organization, your new co-op will need a set of guiding principles to ensure its success. Take time to draft a mission and/or vision statement that clearly states to members and stakeholders what the purpose of your group is. Here are some examples of mission statements from school food cooperatives:

• P.O.W.E.R Buying Group (FL)
• Puget Sound Joint Purchasing Cooperative (WA)
• Texas Region 10- Multi-Region Purchasing Cooperative (TX)

Develop Potential Member List

Make a list of all the potential members to approach about forming the co-op, referring back to your notes from those you spoke with when gauging district interest. Here are some tips for success:

• Start with a smaller group of members to work out the operational details and then plan for expansion once systems (and personnel) are in place.
• Depending on the vision of your co-op, recruit a diverse group of members. You may want members from both rural and urban areas, those serving a primarily high free and reduced population and those serving lower free and reduced populations and so on.

Develop a Membership Application

In order to ensure the potential member will be a good food for the cooperative, it is best practice to have them complete a membership application to capture all the details about their operation. At a minimum, request the following information:

• Legal name of organization
• Contact Person
• Contact information (email, phone, FAX, website)
• Current student enrollment
• Average daily participation (ADP) and annual participation.
• Type of meal programs they offer: Breakfast, Lunch, Supper, Snack, etc.
• Annual dollar volume of food and supply purchases
• Number of delivery locations (For example, do they have one warehouse drop or does each school or group of schools need its own delivery)
• How often they prefer to receive deliveries and what times of day are acceptable
• Food service model (you’ll want to ensure that co-op participants have need of similar products)

Determine Membership Fee (if any)

If you plan to charge members a fee for their membership, you will want to disclose this information during the initial contact, if possible. Conversely, this may be an item of discussion for your first meeting. Remember that:

• Membership fees are an allowable expense under USDA program funds.
• Fees cannot be assessed as a percentage of purchases or by keeping rebates intended for disbursement to the individual schools.

Develop Standards of Conduct

USDA requires that Standards of Conduct be written and maintained for all co-ops involving schools. Standards should cover conflicts of interest and govern the actions of those involved in the procurement process, from selection to award to ongoing administration. The Standards of Conduct can exist as their own document or be part of a larger policy around procurement. (CDE-OSN)

The Standards of Conduct Must Include: (CDE-OSN)

• “Prohibit soliciting or accepting gratuities, favors, or anything of monetary value from contractors or parties of subcontracts;
• Include disciplinary actions for violations of the policy”

USDA provides guidance on what should be included in standards of conduct for those involved in the procurement process. See Memo: SP 09-2015, CACFP 03-2015, SFSP 02-2015