Values-based public food procurement

International public food procurement

Coming soon…

New York City public food procurment

Authors: Aiden Irish and Tia Schwab
Reviewers: Michael Hurwitz, Milagros de Hoz, Becca Jablonski
Date: October 15, 2024
Acknowledgements: Thank you to everyone whose input informed the research and development of this report, including Mark Izeman, Natural Resources Defense Council, as well as everyone involved in food procurement on behalf of the City of New York who contributed their expertise to this document.
Funding: This work was supported by the Foundation for Food and Agriculture Research, the Rockefeller Foundation, the Colorado State University Office of Vice President for Research, the NYS Agricultural Experiment Station, and the NY Farm Viability Institute.

Introduction

Food purchasing and consumption choices play a central role not only in the individual health of people, but also the economic, social, and environmental wellbeing of society. Beyond nutrition’s role in public health, food impacts the environment through its production, processing, and transportation, all of which significantly contribute to greenhouse gas emissions, soil, water, and air quality. Additionally, over 10 percent of U.S. employment is in food and agriculture sectors, and labor practices in these industries play important roles in the economic well-being of people and communities that rely on those jobs. Because food impacts so many aspects of our lives, cities around the world are beginning to leverage their public food procurement dollars to influence food system transformation. Among these cities, New York City (NYC) has a large share of municipal food procurement, spending about $500 million per year on food and meals for public agencies, including schools, correctional facilities, hospitals, older adult centers, pantries, shelters, and more.

Due to the scale of NYC’s food procurement and the potential public value of food systems change, NYC is developing plans for values-based procurement policies that will help the city to leverage its food spending towards a variety of public goals. In 2018, NYC worked with the Center for Good Food Purchasing to conduct a baseline assessment of public procurement and set a path forward for agencies to adopt the GFP framework, while adapting it to the NYC reality. Later, in 2021, NYC MOFP released Food Forward NYC, the city’s first ever 10-year food policy plan. The plan includes the goal of using food purchasing to advance values including transparency, local economies, environmental sustainability, valued workforce, animal welfare, and nutrition. Finally, in 2022, through an executive order, NYC institutionalized these efforts, as a way to foster vendor and agency cooperation in improving health and nutrition through public food procurement and the NYC food standards.

Using public spending to advance broader public goals beyond the direct intent of the expenditure is not a new practice. In recent decades, practices such as divestment from fossil fuel companies have grown in popularity as a way to meet the direct needs of the purchasing entity but also the needs of the broader public. Values-based food procurement, however, represents a significant advancement in the use and impact of such procurement mechanisms for advancing social change. Public food procurement is governed by critical federal, state, and local laws that guide – and sometimes limit – how public dollars can be spent. These policies, guidelines, and regulations are meant to ensure that public dollars are spent responsibly and in ways that limit graft and corruption. Barring any legislative changes, effective values-based food procurement policies must be enacted within the legal framework of existing laws and policies.

Starting in 2023, NYC partnered with researchers at Colorado State University (CSU) and Cornell University on the City Food Policy Project (CFP Project) to empirically model the impacts of potential values-based procurement policies. The project aims to model a select number of values-based procurement policies and their potential, social, environmental, and economic implications for both NYC and New York State.

This report aims to enumerate the legal and political setting of the CFP Project in three sections. First, we summarize the proposed values-based procurement policies that are under consideration by NYC and the process by which these policies were selected. Second, we review key federal, New York State, and New York City laws and policies that influence municipal food procurement. Finally, we review each values-based procurement policy under consideration and specific laws and policies that guide their implementation. This report is an enumeration of relevant laws and policies and not an analysis of those laws. Moreover, this report does not represent the formal or legal opinion of the City of New York.

Values-based food procurement & policies

Guiding values

Cities have begun to leverage their part of this spending to advance impacts both for their residents and their regions. The values guiding NYC’s food procurement policies are as follows.

  • Animal welfare. NYC aims to use public food dollars to minimize harm to animals raised for food.
  • Environmental sustainability. NYC aims to use public food dollars to support a healthy and sustainable natural environment.
  • Local economies. NYC aims to use public food dollars to support New York State businesses, particularly those that are owned by women and minorities.
  • Nutrition. NYC aims to use its public food dollars on nutritionally dense foods like minimally processed vegetables, fruits, and whole grains.
  • Transparency. NYC aims to provide transparency in what food it is buying, where this food is coming from, and who provides this food.
  • Valued workforce. NYC aims to use its public food dollars to support businesses and supply chains that support the wellbeing of the workers and employees.

Policy actions

In support of these values, NYC – in collaboration with research partners at CSU and Cornell – identified six procurement policies for the research team to investigate. These policy actions were selected that could be administratively or legally feasible for NYC, align with existing Mayoral priorities, and have the potential of advancing the values outlined previously. The research team will work to model the social, environmental, and economic implications of adopting these policies, with particular attention to their impacts on the guiding values listed above. These actions are summarized below.

  • Price premium or purchasing requirement for USDA-certified Organic foods and food products (“Organic preference”). Under this policy, NYC would incorporate Organic status into the evaluation of best value bids and solicitations, awarding extra points to certified organic products that fall within10 percent of the lowest bid.

  • Price premium or purchasing requirement for grown and/or processed in New York State (“local preference”). Under this policy, NYC agencies would incorporate local status into the evaluation of best value bids, awarding extra points to products from New York State that fall within 10 percent of the lowest bid.

  • Price premium or purchasing requirement for proposals from companies that engage in community hiring (“community hiring preference”). Under this policy, NYC would evaluate bids or solicitations from small businesses and/or companies employing a substantial percentage of economically disadvantaged candidates as if those bids were 10 percent lower than their submitted bid.

  • Price premium or purchasing requirement for proposals from companies that are certified minority and women-owned business enterprises (“MWBE preference”). Under this current policy, NYC can evaluate best value bids or solicitations from companies that are certified as a Minority- or Women-Owned Business Enterprise (M/WBE) as if those bids were 10 percent lower than their submitted bid.

  • Public investments in middle food supply chain infrastructure (“Infrastructure investments”). Under this policy, NYC and/or NY State would provide direct public investments in supply chain infrastructure, such as processing and cold storage sites in the city or region. Investments could take the form of direct grants, loans, and/or technical assistance.

  • Increasing the percentage of plant-based proteins and fruits and vegetables in agency-provided meals and food (“Menu changes”). Under this policy, NYC would require changes to agency menus that would result in increased purchases of fruits, vegetables, and/or plant based proteins.

The following sections begin by reviewing relevant laws/policies at the Federal, state, and city levels that are either generally applicable across all proposed policy actions and/or specific to a given policy action. Table 1 summarizes all laws/policies reviewed in this document and associated policy actions that may be impacted by each.

Table 1. Laws/policies reviewed in this document and associated policy actions

General enabling and constraining legislation

The following highlights federal, state, and city legislation or policies that enable or constrain NYC values-based procurement initiative as a whole, regardless of the specific policy action. These generally applicable laws/policies are enumerated before reviewing laws/policies specific to each proposed values-based procurement policy action.

Key laws & definitions for individual policy actions

The following section summarizes relevant laws/policies specific to each proposed policy action, excluding those already summarized in the previous section. Where relevant, the following sections identify and define key terms relevant to the policy action. These definitions are noted as sub-bullets under the policy/law wherein they are defined/described. Relevant laws/policies under each policy action are organized starting from the Federal level and concluding with local.

Certified organic incentives
  • Organic Foods Production Act (OFPA), 7 U.S.C. §§ 6501–6522: The OFPA “authorized the U.S. Secretary of Agriculture to establish regulations, administered by the Agricultural Marketing Service (AMS) within the U.S. Department of Agriculture (USDA), for certifying products as organic under the National Organic Program (NOP).”
    • Organic: “Organic” products are those certified as such under the U.S. Department of Agriculture’s National Organics Program. See certification requirements at: USDA Organic | USDA
New York State grown and/or processed incentives
  • Federal Procurement Law: Public agencies and programs that use federal funds are not permitted to prefer locally produced products. However, there are specific exceptions for USDA-administered programs that explicitly encourage local purchasing, including the National School Lunch Act, the Child Nutrition Act, and the Child and Adult Care Food Program (“CACFP”).
  • NYS Executive Order 32 of 2023: New York State EO32 of 2023 established state agency food purchasing goals for NYS agricultural products. It includes the following definitions.
    • NYS Food Products: “Agricultural products and food items that are grown, harvested, produced, or processed in the State of New York. Processed food items that are composed of raw materials from both inside and outside the State may be deemed New York State Food Products when (i) their predominant value or quantity is derived from food grown, harvested, or produced in New York State and (ii) the processing of such food products takes place in facilities that are located in New York State.”
    • Agricultural products and food items: “All articles of food or drink, intended for human consumption that may be purchased using any funding stream managed by any State Agency, including any federally funded programs.”
  • New York State Grown and Certified Program: Agricultural products must be grown and produced in New York State, from farms that participate in third-party food safety verification programs (if applicable to the specific product), and from producers that participate in an environmental management program. Processed food/beverage products must contain 51% or more of ingredients from products grown, raised, or produced on farms certified under New York State Grown and Certified. The specific criteria for each product can be found at: Get Certified | New York State Grown & Certified (ny.gov).
  • General Municipal Law §103(8a): This general municipal law subsection allows city contracting agencies “to require provisions that mandate that the essential components of such food products are grown, produced or harvested in New York state, or that any processing of such food products take place in facilities located within New York state.”
  • Local Law 50 of 2011: This law requires the Mayor’s Office of Contract Services to establish guidelines for city agencies to increase the purchase of New York State food products through public food contracts. It includes the following definition.
    • New York State food products: “Food products whose essential components are grown, produced or harvested in New York state, and processed food that is processed in facilities located within New York state.”
  • Regional Local Economies: Per the Center for Good Food Purchasing Program Standards, food supporting regional local economies is food purchased from small scale and family or cooperatively-owned farms (per the USDA definition of farm size in the most recent USDA Census of Agriculture) AND located within 250 miles (or 500 miles for meat) of New York City.
    • Family Farm: As defined by the USDA, a majority of the business is owned by the operator and individuals related to the operator.
Community hiring incentives enabling legislation
  • Senate Bill S7387B: New York State legislation authorized the Office of Community Hiring (OCH) to establish certain rules to preference bidders who employ economically disadvantaged individuals. The Community Hiring Rules will go through the formal rulemaking process under the City Administrative Procedure Act (CAPA), which includes, among other things, notice and opportunity for public comment. The NYC Office of Community Hiring has not yet published rules governing this legislation.
    • Economically Disadvantaged Individual: an individual “(1) whose income or household income falls below an applicable quantitative threshold determined by the director, provided that such income shall not include any types of public benefits provided by the federal government or a state or local government and identified by the director; and (2) who is certified as meeting all applicable requirements.” While the rules are not final, this will likely mean following within 300% of the federal poverty level. This will only apply to service contracts, not goods.
  • Code of Federal Regulations Title 13 part 121: Outlines federal small business administration standards. See Definition of “small business,” below.
  • State Executive Law §28 (State Declaration of Disaster Emergency): See small business definition below.
  • State Finance Law §163 (see Section 3.0): Under State Finance Law, municipalities can apply a quantitative factor for small businesses using the definition outlined below.
    • Small Business: “A business which has a significant business presence in the state, is independently owned and operated, not dominant in its field and employs, based on its industry, a certain number of persons as determined by the director, but not to exceed three hundred, except during a declared state disaster emergency as defined pursuant to State Executive Law §28 (State Declaration of Disaster Emergency), not to exceed three hundred employees who work thirty or more hours per week over the period of fifty-two weeks for a total of one thousand five hundred sixty hours worked, taking into consideration factors which include, but are not limited to, Federal Small Business Administration standards pursuant to 13 CFR part 121 and any amendments thereto. The director may issue regulations on the construction of the terms in this definition. For purposes of this subdivision, an employee may break from employment for up to thirteen weeks without the fifty-two week lookback period resetting.”
    • Note: For the purpose of the CFPP, the modeling team will identify criteria for “small business” that makes sense in the context of the three food products.
Minority and women-owned business enterprise (M/WBE) incentives
  • New York City Minority and Women-Owned Business Enterprises (M/WBE) Program: This program expands opportunities for minority and women entrepreneurs to access government contracts and grow their businesses. When eligible businesses are certified with the City, they become more visible to prospective buyers, including City agencies and private contractors seeking to purchase goods and services. In order to become certified, businesses must meet the criteria outlined in the program pertaining to the business ownership, location, legal status and structure, and operation history.
  • Local Law 1 of 2013 This law established specific goals for M/WBE participation in NYC contracts based on industry and M/WBE categories.
  • M/WBE Price Preference Rule: Under NYC procurement policy board rules, “if an award will be made based on best value, a vendor that is an M/WBE or State-certified M/WBE must, except with the approval of the chief contracting procurement officer, be given a price preference of 10% and will be evaluated as if the bid price were 10% lower.”
  • M/WBE Procurement & Contract Method: This process rule by the City of New York allows agencies to contract directly with a M/WBE instead of going through formal competitive procurement method on contracts up to $1.5 million.
Public investments in middle food supply chain infrastructure
  • Resilient Food Systems Infrastructure Program. This State-level program, supported by U.S. Department of Agriculture funding, provides grant support for the development of aggregation, processing, manufacturing, storage, transport, wholesaling, or distribution of food products. More information available at https://agriculture.ny.gov/resilient-food-systems-infrastructure-program.
  • This analysis did not identify laws/policies providing definitional guidance. The following definitions are offered by the project team.
    • Middle Food Supply Chain Infrastructure – Middle Food Supply Chain Infrastructure refers to the aggregation, processing, and/or distribution infrastructure necessary to move agricultural products to their final market destination and/or to process raw agricultural products into a form usable by the end market destination. These may include, but are not limited to infrastructure such as cold storage facilities for produce aggregation and distribution, processing facilities for beef, cooking/processing facilities needed to create processed food products, etc.
    • Infrastructure Investments – This refers to the manner by which the City or State of New York will financially support the development of middle infrastructure both within City Limits and in the rest of New York State. Modes of investment may include providing grants, loans, other financial support or technical assistance to entities seeking to develop critical infrastructure.

Key considerations

This summary outlines legal and policy factors influencing the implementation of current and potential values-based procurement policies by the City of New York. In this final section, we outline two key lingering questions: definitions around community hiring and whether the Governor will sign the NYS Good Food Purchasing legislation.

Currently, two features – hiring economically disadvantaged individuals and supporting small businesses – are critical to the enactment of the proposed community hiring policy. State law does provide clarification of what constitutes an economically disadvantaged individual. Furthermore, federal and state law provide guidance on what constitutes a small business according to the Federal Small Business Administration and the State finance law. However, both core concepts require further clarification in order to effectively develop policies that advance these areas in values-based procurement.

Rules governing community hiring that employ the State-definition of economically disadvantaged individual must still go through a formal rule-making process outlined by the City Administrative Procedures Act (CAPA). This rule-making process will be essential to establishing actionable criteria and processes needed for implementation. Additionally, the public comment process may result in legal/political challenges to the proposed rules that may necessitate further revision to the definition, criteria, and processes. Similarly, while the Federal Small Business Administration and State finance law provide definitions of small business, these definitions are intended for business support programs and taxation and the definitions of small business may not be relevant to food procurement decision making. For example, the maximum of 300 employees noted in the State definition of small business is likely too high to provide useful guidance to procurement decisions seeking to support relevant small- and mid-scale farms. Industry-specific guidance on what constitutes a small business will be needed. In addition to these definitional clarifications under the community hiring policy proposal, further clarification is also needed regarding how these characteristics – community hiring and small business – will be weighed/considered when scoring product/service bids and proposals.

Finally, a notable piece of New York State policy that could impact implementation of NYC values-based procurement programs is the New York State Good Food Purchasing legislation that is pending delivery to, and final approval by Governor Hochul as of this writing (See State level legal considerations)

New York City food policy actions

In 2022, New York City formally established the Good Food Purchasing initiative, which guides City agencies in aligning food spending with six core values: nutrition, local economies, environmental sustainability, animal welfare, valued workforce, and transparency. These values shape how agencies design procurements, how vendors and supply chain stakeholders develop and price products, and how bids are evaluated and selected. The Food Policy Actions featured in this dashboard were identified in partnership with the Mayor’s Office of Food Policy. The first part of each Food Policy Action name reflects its Good Food Purchasing value alignment, while the second describes how New York City is advancing (or considering advancing) progress toward that value.

Business As Usual

Business as Usual represents our best estimate of current NYC purchasing practices for the selected commodities. It reflects what NYC agencies purchase, where those products come from, and how they move through the supply chain—from producers to City buyers. Under Business as Usual, vendors submit bids in response to NYC procurement requests, and agencies generally select the lowest-priced bid that meets their requirements. This scenario is built using multiple data sources, existing models, and input and validation from NYC and affected supply chain stakeholders. It serves as a baseline for comparing how alternative food policy actions may change outcomes.

Environmental Sustainability: Organic Purchasing

Bid allowance or requirement for organic certification by the producer, as defined by the U.S. Department of Agriculture’s National Organic Program.

Local Economies: M/WBE Purchasing

Bid allowance or requirement for purchasing from certified minority or women owned businesses as defined by New York City or New York State.

Local Economies: Local Purchasing

A bid allowance or requirement that products be grown, aggregated, processed, and/or distributed in New York State. Which stages of the supply chain must occur in New York State depends on the selected definition. Under this food policy action, local can be defined in five ways:
Producer: Only the producer that grew or raised the commodity must be located in the state of New York
Partial-supply chain: At least one of the producer, aggregator, primary or secondary processor must be located in the state of New York
Entire supply chain: Every supply chain stakeholder must be located in the state of New York
51% NY ingredients + processor in NY: This definition applies to processed products only. Under this definition, the processed product must include a processor from New York State and at least 51% of the raw ingredients must come from NYS producers.
51% NY ingredients + processor located anywhere This definition applies to processed products only. Under this definition, the processed product can be aggregated, processed, and distributed from anywhere, but at least 51% of the raw ingredients must come from NYS producers.

Local Economies: Community Hiring from Small Producers

Bid allowance or requirement for products grown or raised by small- or medium-sized farms. Farm size is measured by annual gross cash farm income (GCFI)—a measure of the farm’s revenue (before deducting expenses) that includes sales of crops and livestock, payments made under agricultural federal programs, and other farm-related cash income including fees from production contracts. The U.S. Department of Agriculture’s Economic Research Service Farm Typology defines small- and mid-sized farms as those with less that $1,000,000 in GCFI. Small- and medium-sized farms were selected as a proxy for “community hiring” as, on average, these operations have lower total household income.

Local Economies: Investment in Middle Supply Chain Infrastructure

An investment in a New York State aggregator, primary or secondary processor that expands the availability of New York-grown or -raised products and/or increases access to further processed items.

Nutrition: Menu Changes

A change in the number of meals per week that are plant-based. This decision changes the relative share of animal-based proteins and plant-based proteins purchased by NYC agencies.