Section 7CFR246.16a

[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR246.16a]

[Page 351-359]

TITLE 7--AGRICULTURE

CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN--Table of Contents

Subpart E--State Agency Provisions

Sec. 246.16a Infant formula cost containment.

(a) Who must use cost containment procedures for infant formula? All
State agencies must continuously operate a cost containment system for
infant formula that is implemented in accordance with this section
except:

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(1) State agencies with home delivery or direct distribution food
delivery systems;
(2) Indian State agencies with 1,000 or fewer participants in April
of any fiscal year, which are exempt for the following fiscal year;
(3) State agencies granted a waiver under paragraph (e) of this
section; and
(4) State agencies granted a postponement under paragraph (f) of
this section.
(b) What cost containment procedures must be used? State agencies
must use either a single-supplier competitive system as outlined in
paragraph (c) of this section, or an alternative cost containment system
as outlined in paragraph (d) of this section.
(c) What is the single-supplier competitive system? Under the
single-supplier competitive system, a State agency solicits sealed bids
from infant formula manufacturers to supply and provide a rebate for
infant formulas. The State agency must conduct the procurement in a
manner that maximizes full and open competition consistent with the
requirements of this section.
(1) How must a State agency structure the bid solicitation? (i)
Single solicitation. Under the single solicitation system, the State
agency's bid solicitation must require the winning bidder to supply and
provide a rebate on all infant formulas it produces that the State
agency chooses to issue, except exempt infant formulas. Rebates must
also be paid on any new infant formulas that are introduced after the
contract is awarded. The solicitation must require bidders that do not
produce a soy-based infant formula to subcontract with another
manufacturer to supply a soy-based infant formula under the contract. In
this case, the bid solicitation must require that the winning bidder pay
the State agency a rebate on the soy-based infant formula supplied by
the subcontractor that is issued by the State agency. The bid
solicitation must require all rebates (including those for soy-based
infant formula supplied by a subcontractor) to be calculated in
accordance with paragraph (c)(5) of this section. All of these infant
formulas are called contract brand infant formulas.
(ii) Separate solicitations. Under the separate solicitation system,
a State agency issues two bid solicitations. The first solicitation must
require the winning bidder to supply and provide a rebate on all milk-
based infant formulas it produces that the State agency chooses to
issue, except exempt infant formulas. Rebates must also be paid on any
new milk-based infant formulas that are introduced by the manufacturer
after the contract is awarded. These infant formulas are considered to
be contract brand infant formulas. The second bid solicitation must
require the winning bidder to supply and provide a rebate on all soy-
based infant formulas it produces that the State agency chooses to
issue. Rebates must also be paid on any new soy-based infant formulas
that are introduced by the manufacturer after the contract is awarded.
These infant formulas are also considered to be contract brand infant
formulas.
(2) On what types and physical forms of infant formula must bids be
solicited? The bid solicitation must require bidders to specify a rebate
for each of the types and physical forms of infant formulas specified in
the following chart. These rebates apply proportionally to other infant
formulas produced by the winning bidder(s) (see paragraph (c)(5) of this
section). For purposes of this section the infant formula on which bids
are solicited is the primary contract brand infant formula.

------------------------------------------------------------------------
Physical forms of Infant formula
Type of infant formula infant formula requirements
------------------------------------------------------------------------
(i) For a single solicitation, the solicitation must require bidders to
specify a rebate amount for the following:
------------------------------------------------------------------------
A single milk-based infant Concentrated Meets requirements
formula (primary contract liquid, under Sec.
brand infant formula); powdered, and 246.10(c)(1)(i) and
bidders must specify the ready-to-feed. suitable for routine
brand name of the milk-based issuance to the
infant formula for which the majority of
rebate is being specified. generally healthy,
full-term infants.
------------------------------------------------------------------------

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(ii) For separate solicitations, the solicitation must require bidders
to specify a rebate amount for the following:
------------------------------------------------------------------------
(A) A single milk-based infant Concentrated Meets requirements
formula (primary milk-based liquid, under Sec.
contract brand infant powdered, and 246.10(c)(1)(i) and
formula); bidders must ready-to-feed. suitable for routine
specify the brand name of the issuance to the
milk-based infant formula for majority of
which the rebate is being generally healthy,
specified. full-term infants.
------------------------------------------------------------------------
(B) A single soy-based infant Concentrated Meets requirements
formula (primary soy-based liquid, under Sec.
contract brand infant powdered, and 246.10(c)(1)(i).
formula); bidders must ready-to-feed.
specify the brand name of the
soy-based infant formula for
which the rebate is being
specified.
------------------------------------------------------------------------

(3) How are contracts awarded? A State agency must award the
contract(s) to the responsive and responsible bidder(s) offering the
lowest total monthly net price for infant formula or the highest monthly
rebate (subject to paragraph (c)(3)(ii) of this section) for a
standardized number of units of infant formula. The State agency must
calculate the lowest net price using the lowest national wholesale cost
per unit for a full truckload of the infant formula on the date of the
bid opening.
(i) Calculating the standardized number of units of infant formula.
The State agency must specify a standardized number of units (e.g.,
cans) of infant formula by physical form (e.g., concentrated liquid,
powdered, and ready-to-feed) to be bid upon. The standardized number of
units must contain the equivalent of the total number of ounces by
physical form needed to give the maximum allowance to the average
monthly number of infants using each form. The number of infants does
not include infant participants who are exclusively breastfed and those
who are issued exempt infant formula. The average monthly number of
infant using each physical form must be based on at least 6 months of
the most recent participation and issuance data. In order to calculate
the standardized number of units of infant formula by form to be bid
upon, the average monthly number of infants using each physical form is
multiplied by the maximum monthly allowable number of ounces for each
form (as allowed under Sec. 246.10(c)(1)(vi)), and divided by the
corresponding unit size (i.e., number of ounces per unit being bid). In
order to compare bids, total cost is calculated by multiplying this
standardized number of units by the net price for each physical form.
Alternative calculations that arrive at a mathematically equivalent
result are acceptable.
(ii) Determining the lowest total monthly net price or highest
rebate. To determine the lowest total monthly net price a State agency
must multiply the net price per unit by the established standardized
amount of infant formula to be bid upon as calculated in paragraph
(c)(3)(i) of this section. If the bid evaluation is based on highest
rebate offered, the State agency must multiply the rebate offered by the
established amount of infant formula to be bid upon as calculated in
paragraph (c)(3)(i) of this section.
(iii) Highest rebate limitation. Before issuing the bid
solicitation, a State agency that elects to evaluate bids by highest
rebate must demonstrate to FNS' satisfaction that the weighted average
retail prices for different brands of infant formula in the State vary
by 5 percent or less. The weighted average retail price must take into
account the prices charged for each type and physical form of infant
formula by authorized vendors or, if a State agency elects, it may
include stores that do not participate in the WIC program in the State.
The State agency must also base calculations on the proportion of each
type and physical form of infant formula the State agency issues based
on the data provided to bidders pursuant to paragraph (c)(4) of this
section.
(4) What data must be provided to bidders? The State agency must
provide as part of the bid solicitation the participation and infant
formula usage data and the standardized number of ounces

[[Page 354]]

by physical form of infant formula to be used in evaluating bids as
described in paragraph (c)(3) of this section. The State agency must
notify bidders that the participation and infant formula usage data does
not necessarily reflect the actual issuance and redemption that will
occur under the contract.
(5) How is the rebate to be calculated on all other contract brand
infant formulas? All bids must specify the rebates offered by each
bidder for the primary contract brand infant formula(s). After the
contract is awarded, the State agency must calculate the percentage
discount for all other contract brand infant formulas (i.e., all other
infant formulas produced by the bidder other than exempt infant
formulas) approved for issuance by the State agency. The State agency
must use the following method in calculating the rebates:
(i) Calculation of percentage discounts. Rebates for contract brand
infant formulas, other than the primary contract brand infant formula(s)
for which bids were received, must be calculated by first determining
the percentage discount for each physical form (e.g., concentrated
liquid, powdered, and ready-to-feed) of the primary contract brand
infant formula(s). The percentage discount must be calculated by
dividing the rebate for the primary contract brand infant formula by the
manufacturer's lowest national wholesale price per unit, as of the date
of the bid opening, for a full truckload of the primary contract infant
formula. The percentage discounts must be used to determine the rebate
for all other contract brand infant formulas approved for issuance by
the State agency.
(ii) Calculation of rebate amount. The rebate for each type and form
of all other contract brand infant formulas must be calculated by
multiplying the percentage discount by the manufacturer's lowest
national wholesale price per unit, as of the date of the bid opening,
for a full truckload of the other contract brand infant formula. The
percentage discount used for each of the other contract brand infant
formulas depends on the physical form of the infant formula. For
example, if the percentage discount provided for the primary contract
brand powdered infant formula is 80 percent of its wholesale price, the
same percentage discount must be applied to all other contract brand
powdered infant formulas. The rebate for any types or forms of contract
brand infant formulas that are introduced during the contract period
must be calculated using the wholesale prices of these new contract
brand infant formulas at the time the infant formulas are approved for
issuance by the State agency.
(iii) Calculation of rebates during contract term. The rebates
resulting from the application of the percentage discount must remain
the same throughout the contract period except for the inflation
adjustments required in paragraph (c)(5)(iv) of this section.
(iv) Inflation provisions. Bid solicitations must require the
manufacturer to adjust for price changes subsequent to the bid opening.
The inflation provision may require either a cent-for-cent increase in
the rebate amounts whenever there is any change in the lowest national
wholesale price for a full truckload of the particular infant formula,
or may require another equally effective cost adjustment mechanism for
inflation as established by the State agency in the bid solicitation.
(6) Does a State agency have to approve the issuance of all contract
brand infant formulas? No, the State agency may choose to approve for
issuance, in addition to the primary contract brand infant formula(s),
none, some, or all of the winning bidder's other infant formula(s). In
addition, the State agency may require medical documentation before
issuing any contract brand infant formula (see Sec. 246.10(c)(1)(i)) and
must require medical documentation before issuing any WIC formula
covered by Sec. 246.10(c)(1)(iii).
(d) What is an alternative cost containment system? Under an
alternative cost containment system, a State agency elects to implement
an infant formula cost containment system of its choice. The State
agency may only implement an alternative system if such a system
provides a savings equal to or greater than a single-supplier
competitive system. A State agency must conduct a cost comparison
demonstrating such savings as described in paragraphs (d)(1) and (d)(2)
of this section.

[[Page 355]]

(1) How must the State agency structure the bid solicitation? The
State agency must solicit bids simultaneously using the single-supplier
competitive system described in paragraph (c) of this section and the
alternative cost containment system(s) the State agency has selected.
The State agency may prescribe standards of its choice for the
alternative cost containment system(s), provided that conditions
established for each system addressed in the bid solicitation include
identical bid specifications for the contract period length and the
types and forms of infant formula(s) to be included in the systems. In
addition, the alternative cost containment system must cover the types
and forms of infant formulas routinely issued to the majority of
generally healthy, full-term infants. The State agency must use the
procedure outlined in paragraph (d)(2) of this section in conducting a
cost comparison to determine which system offers the greatest savings
over the entire contract period specified in the bid solicitation.
(2) How does the State agency conduct the cost comparison? (i)
Establishing infant formula cost containment savings. (A) Savings under
the single-supplier competitive system. The State agency must project
food cost savings in the single-supplier competitive system based on the
lowest monthly net price or highest monthly rebate, as described in
paragraph (c)(3) of this section.
(B) Savings under an alternative cost containment system. The State
agency must project food cost savings under alternative cost containment
systems based on the lowest monthly net cost or highest monthly rebate,
as described in paragraph (c)(3) of this section. Food cost savings must
be based on the standardized amount of infant formula expected to be
issued as calculated for a single-supplier competitive system, prorated
by the percentage of anticipated total infant formula purchases
attributable to each manufacturer. The State agency must use the
aggregate market share of the manufacturers submitting bids in
calculating its cost savings estimate.
(C) General. In establishing the potential food cost savings under
each system, the State agency must take into consideration in its
estimate of savings any inflation factors which would affect the amount
of savings over the life of the contract. Further, the State agency must
not subtract any loss of payments which would occur under the terms of a
current contract as a result of any State agency action to be effective
after expiration of the contract.
(ii) Nutrition services and administration cost adjustment. The
State agency must deduct from the food cost savings projected for each
system under this paragraph (d) the nutrition services and
administration costs associated with developing and implementing--but
not operating--each cost containment system. This includes any
anticipated costs for modifying its automated data processing system or
components of its food delivery system(s), and of training participants,
local agencies, vendors, and licensed health care professionals on the
purpose and procedures of the new system. For contracts of two years or
less, such costs must be proportionately distributed over at least a two
year period. The State agency must not deduct any costs associated with
procurement. The State agency must itemize and justify all nutrition
services and administration cost adjustments as necessary and reasonable
for the development and implementation of each system.
(iii) Final cost comparison. The State agency must calculate the
food costs savings and deduct the appropriate nutrition services and
administration costs for each system for which bids were received. The
State agency must implement the single-supplier competitive system,
unless its comparative cost analysis shows that, over the length of the
contract stipulated in the bid solicitation, an alternative cost
containment system offers savings at least equal to, or greater than,
those under the competitive single-supplier system. If the comparative
cost analysis permits selection of the alternative cost containment
system and the State agency wishes to implement that system, it must
first submit a State Plan amendment with the calculations and supporting
documentation for this cost analysis to FNS for approval. Only after the
calculations are approved by FNS may the State agency award the contract
or contracts

[[Page 356]]

under the alternative cost containment system.
(e) How does a State agency request a waiver of the requirement for
a single-supplier competitive system? A State agency which, after
completing the cost comparison in paragraphs (d)(2)(i) through
(d)(2)(iii) of this section, is required to implement the single-
supplier competitive cost containment system for infant formula
procurement, may request a waiver from FNS to permit it to implement an
alternative system. State agencies must support all waiver requests with
documentation in the form of a State Plan amendment as required under
Sec. 246.4(a)(14)(xi) and may submit such requests only in either of the
following circumstances:
(1) The difference between the single-supplier competitive system
and the alternative cost containment system is less than 3 percent of
the savings anticipated under the latter system and not more than
$100,000 per annum.
(2) The single-supplier competitive system would be inconsistent
with the efficient or effective operation of the program. Examples of
justifications FNS will not accept for a waiver, include, but are not
limited to: preservation of participant preference for otherwise
nutritionally equivalent infant formulas; maintenance of health care
professionals' prerogatives to prescribe otherwise nutritionally
equivalent infant formulas for non-medical reasons; potential loss of
free or otherwise discounted materials to WIC clinics and other health
care facilities; potential inability of a manufacturer selected in
accordance with applicable State procurement procedures to supply
contractually-specified amounts of infant formula; and the possibility
of interrupted infant formula supplies to retail outlets as a
consequence of entering into a contract with a single manufacturer.
(f) How does a State agency request a postponement of the
requirement for a continuously operated cost containment system for
infant formula? A State agency may request a postponement of the
requirement to continuously operate a cost containment system for infant
formula that has been implemented in accordance with this section.
However, a State agency may only request a postponement when it has
taken timely and responsible action to implement a cost containment
system before its current system expires but has been unable to do so
due to procurement delays, disputes with FNS concerning cost containment
issues during the State Plan approval process or other circumstances
beyond its control. The written postponement request must be submitted
to FNS before the expiration of the current system. The postponement
period may be no longer than 120 days. If a postponement is granted, the
State agency may extend, renew or otherwise continue an existing system
during the period of the postponement.
(g) May a State agency implement cost containment systems for other
supplemental foods? Yes, when a State agency finds that it is
practicable and feasible to implement a cost containment system for any
WIC food other than infant formula, the State agency must fully
implement that system in accordance with the time frames established by
the State agency and notification must be given to FNS by means of the
State agency's State Plan.
(h) What are the implementation time frames for Indian State
agencies that lose their exemption from the infant formula cost
containment requirement? If an Indian State agency operating a retail
food delivery system expands its program participation above 1000 and
thereby loses its exemption from the requirements of paragraph (a) of
this section regarding the method of cost containment for infant
formula, then the Indian State agency must begin compliance with
paragraph (a) of this section in accordance with time frames established
by FNS.
(i) What are the penalties for failure to comply with the cost
containment requirements? Any State agency that FNS determines to be out
of compliance with the cost containment requirements of this part must
not draw down on or obligate any Program grant funds, nor will FNS make
any further Program funds available to such State agency, until it is in
compliance with these requirements.
(j) What provisions are prohibited to be included in cost
containment contracts? A

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State agency may not issue bid solicitations or enter into contracts
which:
(1) Prescribe conditions that would void, reduce the savings under
or otherwise limit the original contract if the State agency solicited
or secured bids for, or entered into, a subsequent cost containment
contract to take effect after the expiration of the original contract;
(2) Does not include the registration and certification requirements
in Sec. 246.10(f); or
(3) Require infant formula manufacturers to submit bids on more than
one of the systems specified in the invitation for bids.
(k) What are the requirements for the national cost containment bid
solicitation and selection for infant formula? FNS will solicit and
select bids for infant formula rebates on behalf of State agencies with
retail food delivery systems based on the following guidelines:
(1) FNS will solicit bids and select the winning bidder(s) for
infant formula cost containment contracts only if two or more State
agencies with retail food delivery systems request FNS to conduct bid
solicitation and selection on their behalf. FNS will conduct the bid
solicitation and selection process only and will not award or enter into
any infant formula cost containment contract on behalf of the individual
State agencies. Each State agency will individually award and enter into
infant formula cost containment contract(s) with the winning bidder(s).
State agencies must obtain the rebates directly from the infant formula
manufacturer(s). FNS will conduct the bid solicitation in accordance
with this paragraph (k) and the competitive bidding procurement
procedures of the State agency with the highest infant participation in
the bid group on whose behalf bids are being solicited. Any bid protests
and contractual disputes are the responsibility of the individual State
agencies to resolve.
(2) FNS will make a written offer to all State agencies to conduct
bid solicitation and selection on their behalf at least once every 12
months. FNS will send State agencies a copy of the draft Request for
Rebates when making the offer to State agencies. Only State agencies
that provide the information required by this paragraph (k)(2) in
writing, signed by a responsible State agency official, by certified
mail, return receipt requested or by hand delivery with evidence of
receipt within 15 days of receipt of the offer will be included in the
national bid solicitation and selection process. Each interested State
agency must provide:
(i) A statement that the State agency requests FNS to conduct bid
solicitation and selection on its behalf;
(ii) A statement of the State agency's minimum procurement
procedures applicable to competitive bidding (as defined in Sec. 246.2)
for infant formula cost containment contracts and supporting
documentation;
(iii) A statement of any limitation on the duration of infant
formula cost containment contracts and supporting documentation;
(iv) A statement of any contractual provisions required to be
included in infant formula cost containment contracts by the State
agency;
(v) The most recent available average monthly number of infant
participants less those infant participants who are exclusively
breastfed and those who are issued exempt infant formula. The average
monthly participation level must be based on at least 6 months of
participation data.
(vi) Infant formula usage rates by type (e.g., milk-based or soy-
based), form (e.g., concentrated, powdered, ready-to-feed), container
size, and supporting documentation;
(vii) A statement of the termination date of the State agency's
current infant formula cost containment contract; and
(viii) Any other related information that FNS may request.
(3) If FNS determines that the number of State agencies making the
request provided for in paragraph (k)(2) of this section so warrants,
FNS may, in consultation with such State agencies, divide such State
agencies into more than one group and solicit bids for each group. These
groups of State agencies are referred to as ``bid groups''. In
determining the size and composition of the bid groups, FNS will, to the
extent practicable, take into account the need to maximize the

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number of potential bidders so as to increase competition among infant
formula manufacturers and the similarities in the State agencies'
procurement and contract requirements (as provided by the State agencies
in accordance with paragraphs (k)(2)(ii), (k)(2)(iii) and (k)(2)(iv) of
this section). FNS reserves the right to exclude a State agency from the
national bid solicitation and selection process if FNS determines that
the State agency's procurement requirements or contractual requirements
are so dissimilar from those of the other State agencies in any bid
group that the State agency's inclusion in the bid group could adversely
affect the bids.
(4) For each bid group formed pursuant to paragraphs (k)(2) and
(k)(3) of this section, FNS will use for soliciting bids the competitive
bidding procurement procedures of the State agency in the group with the
highest infant participation. To the extent not inconsistent with the
requirements of this paragraph (k), FNS will use that set of procedures
in soliciting the bids for that bid group of State agencies. FNS will
notify each State agency in the bid group of the choice and provide them
each a copy of the procurement procedures of the chosen State agency.
Each State agency must provide FNS a written statement, signed by a
responsible State agency official, by certified mail, return receipt
requested or by hand delivery with evidence of receipt stating whether
that State agency is legally authorized to award an infant formula cost
containment contract pursuant to that set of procedures within 10 days
of the receipt of the notification. If the State agency determines it is
not legally authorized to award an infant formula cost containment
contract pursuant to those procedures, that State agency may not
continue in that round of the national bid solicitation and selection.
(5) At a minimum, in soliciting bids FNS will address the following:
(i) Unless FNS determines that doing so would not be in the best
interest of the Program, bids will be solicited for either:
(A) A single contract for each State agency under which the winning
bidder will be required to supply and provide rebates on all infant
formulas produced by that manufacturer (except exempt infant formulas)
that are issued by the State agency. If that manufacturer does not
produce a soy-based infant formula, the winning bidder will be required
to subcontract with another manufacturer for a soy-based infant formula
and the winning bidder will be required to pay a rebate on the soy-based
infant formula; or
(B) Two separate contracts for each State agency. Under the first
contract, the winning bidder will supply and provide a rebate on all the
milk-based infant formulas the winning bidder produces (except exempt
infant formulas) that are issued by the State agency and under the
second contract the winning bidder will supply and provide a rebate on
all the soy-based infant formulas the winning bidder produces (except
exempt infant formulas) that are issued by the State agency.
(ii) The infant formula cost containment contract(s) to be entered
into by the State agencies and infant formula manufacturers must provide
for a constant net price for infant formula for the full term of the
infant formula cost containment contract(s).
(iii) The duration of the infant formula cost containment contracts
for each bid group will be determined by FNS in consultation with the
State agencies. The term will be for a period of not less than 2 years,
unless the law applicable to a State agency regarding the duration of
infant formula cost containment contracts is more restrictive than this
paragraph (k)(5)(iii). In such cases, the term of the contract for only
that State agency will be for one year, with the option provided to the
State agency to extend the contract for a specified number of additional
years (to be determined by FNS in consultation with the State agency).
The date on which the individual State agencies' current infant formula
cost containment contracts terminate may vary, so the infant formula
cost containment contracts awarded by the State agencies within a bid
group may begin on different dates.
(iv) FNS will not prescribe conditions that are prohibited under
paragraph (j) of this section.

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(v) FNS will solicit bids for rebates only from infant formula
manufacturers. FNS may limit advertising to contacting in writing each
infant formula manufacturer which has registered with the Secretary of
Health and Human Services under the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 321 et seq.).
(6) FNS will select the winning bidder(s). The winning bidder(s)
will be the responsive and responsible bidder(s) meeting the
specifications and all bid terms and conditions which offers the lowest
net price weighted to take into account infant formula usage rates and
infant participation. In all instances the winning bidder(s) will be
those which singly or in combination yield the greatest aggregate
savings based on the net price weighted to take into account the infant
formula usage rates. To break a tie between 2 equally low bids, FNS will
select the bidder to be awarded the infant formula cost containment
contract by a drawing by lot limited to the bidders which submitted
those bids.
(7) Once FNS has conducted bid selection, a State agency may decline
to award the infant formula cost containment contract(s) only if the
State agency determines that awarding the contract(s) would not be in
the best interests of its Program, taking into account whether the
national bid solicitation and selection would achieve a lower aggregate
savings.
(8) As soon as practicable after selecting the winning bid(s), FNS
will notify the affected State agencies in writing of the bid results,
including the name(s) of the winning bidder(s). If a State agency
chooses to request approval to decline to award the infant formula cost
containment contract(s) in accordance with paragraph (k)(7) of this
section, it must notify FNS in writing, signed by a responsible State
agency official, together with supporting documentation, by certified
mail, return receipt requested or by hand delivery with evidence of
receipt within 10 days of the State agency's receipt of this
notification of bid results.
(9) If FNS approves any State agency's request to decline to award
the infant formula cost containment contract(s) in accordance with
paragraphs (k)(7) and (k)(8) of this section, FNS will notify the
bidders of the decision. If two or more State agencies remain in the
group, FNS will require the bidders to indicate in writing whether they
wish to withdraw or modify their bids within 5 days of receipt of this
notification. FNS will again permit State agencies to decline to award
the infant formula cost containment contract(s) in accordance with
paragraphs (k)(7) and (k)(8) of this section. If FNS approves these
additional State agency requests to decline contract awards, FNS may
conduct a resolicitation of bids in accordance with this paragraph (k).

[65 FR 51224, Aug. 23, 2000]