[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR250.14]



[Page 458-461]

 

                          TITLE 7--AGRICULTURE

 

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

 

PART 250_DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS TERRITORIES 

AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION--Table of Contents

 

                 Subpart B_General Operating Provisions

 

Sec. 250.14  Warehousing, distribution and storage of donated foods.



    (a) Standards for Warehousing and Distribution Systems--(1) Use of 

cost efficient and effective facilities. Distributing agencies shall use 

the most cost effective and efficient system for providing warehousing 

and distribution services to recipient agencies. For the purpose of this 

part, commercial facilities are defined as enterprises that provide 

commercial warehousing services or commercial delivery services, or 

those commercial enterprises that provide both warehousing and delivery 

services.

    (2) Timeframes for evaluation. All distributing agencies shall 

evaluate their current warehousing and distribution systems. Initial 

evaluations shall be submitted to the FNSRO by June 30, 1990. Subsequent 

evaluations of noncommercial systems shall, at a minimum, be submitted 

to FNS every three years by March 31.

    (3) Evaluation of current systems. The evaluation of the system in 

place shall, at a minimum, include the following information:

    (i) A description of the principal warehousing/delivery techniques 

used by the distributing agency. The description should include:

    (A) The frequency of delivery available;



[[Page 459]]



    (B) The timeframes for making deliveries;

    (C) The type of delivery service offered (to the loading dock or 

placement in the storeroom); and

    (D) The system for recipient agencies to order specific amounts of 

food from available inventory; and

    (ii) An estimate of all costs that will be incurred in administering 

the Food Distribution Program for the upcoming school year. These costs 

include transportation, storage and handling of donated foods (if the 

current distributing agency system does not include delivery to 

recipient agencies, identification of costs incurred by recipient 

agencies to pick up commodities at a warehouse and to deliver the food 

to a centralized storage facility or the individual preparation sites), 

salaries of persons directly connected with the administration of the 

program and other program related expenses. These expenses shall include 

fringe benefits, travel expenses, rent, utilities, accounting/auditing 

services to recipient agencies such as the costs for administering and 

monitoring the State's processing program, and technical assistance 

workshops.

    (4) Comparison of existing system with commercial systems. All 

distributing agencies which do not use commercial facilities for a basic 

level of warehousing and distribution services shall compare the cost of 

warehousing and distributing commodities under their current system with 

the cost of comparable services under a commercial system for the 

upcoming school year.

    (i) The cost comparison shall be made between the cost of providing 

a basic level of service under its current system and the cost of 

obtaining an equivalent level of service from commercial facilities. 

This basic level of service shall consist of the transportation, storage 

and handling of donated food from the time of delivery by the Department 

to a distributing agency until delivery to a recipient agency's 

centralized storage facility or individual preparation sites and shall 

include monthly deliveries of donated food to all recipient agencies 

except those that have agreed to less frequent deliveries.

    (ii) A distributing agency may base its cost comparison on a level 

of service in excess of the basic level and/or on services not currently 

provided. In all cases, the comparison must be made on the costs of 

providing a comparable level of service under the existing system (as 

identified in Sec. 250.14(a)(2)) versus a commercial system.

    (iii) If a distributing agency is unable to locate any commercial 

facilities expressing interest in providing the basic level of 

warehousing and distribution services, the distributing agency shall 

indicate this in its cost comparison submission, together with 

documentation of its efforts to obtain cost estimates from commercial 

facilities.

    (iv) All initial data regarding the cost of the current warehousing 

and distribution system and the cost for comparable commercial 

facilities shall be submitted to the FNSRO by June 30, 1990. Subsequent 

cost comparisons shall, at a minimum, be submitted to FNS once every 

three years by March 31.

    (5) Approval to use other systems. Distributing agencies that do not 

implement a commercial warehousing and distribution system shall apply 

to the FNSRO for approval to use other facilities and must demonstrate 

that other facilities are more cost effective and efficient. All 

requests for a waiver shall be accompanied with a full evaluation of the 

existing system complete with cost comparison data. Each request will be 

considered on a case by case basis. Initial requests for approval of 

alternative systems shall be submitted to the FNSRO by June 30, 1990. 

Subsequent requests shall, at a minimum, be submitted to the FNSRO once 

every three years by March 31.

    (6) System implementation. (i) Distributing agencies shall implement 

the most cost effective and efficient system for warehousing and 

distribution services to recipient agencies by July 1, 1991. Unless 

otherwise approved by the FNSRO, subsequent to July 1, 1991, a 

distributing agency shall convert to a commercial system within six 

months of:

    (A) The date of submission of evaluation and cost comparison data 

indicating that a commercial system is more cost effective and efficient 

(if no



[[Page 460]]



request for approval of an alternate system is made); or

    (B) The date of the denial of a request to use an alternative 

system.

    (ii) If at any time FNS determines that the warehousing and 

distribution system in place is not cost effective or efficient, the 

distributing agency will be required to reevaluate its system (including 

a cost comparison and request for continued approval to use an 

alternative system) in accordance with this subsection within 90 days of 

notification by the FNSRO.

    (7) Revisions in system. All distributing agencies (using either 

commercial or noncommercial systems) shall request approval from the 

FNSRO at least 90 days in advance of any planned reduction in the level 

of service provided or any increase in distribution charges beyond 

normal inflation. If FNS determines the proposed changes are 

inappropriate, FNS may require the distributing agency to submit 

additional justification, deny the request, or request a reevaluation of 

the system in accordance with paragraph (a)(6)(ii) of this section.

    (b) Standards for storage facilities. Distributing agencies, 

subdistributing agencies and recipient agencies shall provide facilities 

for the handling, storage and distribution of donated foods which:

    (1) Are sanitary and free from rodent, bird, insect and other animal 

infestation;

    (2) Safeguard against theft, spoilage and other loss;

    (3) Maintain foods at proper storage temperatures;

    (4) Excepting recipient agencies, stock and space foods in a manner 

so that USDA-donated foods are readily identified;

    (5) Store donated food off the floor in a manner to allow for 

adequate ventilation; and

    (6) Take other protective measures as may be necessary.



Distributing agencies, subdistributing agencies and recipient agencies 

shall ensure that storage facilities have obtained all required Federal, 

State and/or local health inspections and/or approvals and that such 

inspection/approvals are current.

    (c) Reviews. All distributing agency-level storage facilities shall 

be reviewed annually. Distributing agencies shall ensure that 

subdistributing and recipient agencies conduct annual reviews of their 

respective storage facilities. Documentation shall be maintained on file 

at the distributing agency or local level as appropriate to reflect 

compliance with this section, including documentation of corrective 

action in cases of noncompliance. Corrective action must be taken 

immediately on all deficiencies identified in the review and the result 

of the corrective action must be forwarded to the distributing agency. 

Where applicable, the distributing agency shall determine and pursue 

claims in accordance with Sec. 250.15(c).

    (d) Contracts. When contracting for storage facilities, distributing 

agencies and subdistributing agencies shall enter into written contracts 

to be effective for no longer than five years, including option years 

extending a contract. Before the exercise of option years, the storage 

facility shall update all pertinent information and demonstrate that all 

donated foods received during the previous contract period have been 

accounted for. The contract shall, at a minimum, contain the following:

    (1) Assurance that the storage facilities will be maintained in 

accordance with the standards specified in paragraph (b) of this 

section;

    (2) Evidence that donated food shall be clearly identified;

    (3) Assurance that an inventory system shall be maintained and an 

annual physical inventory will be conducted; and reconciled with the 

inventory records;

    (4) Beginning and ending dates of the contract;

    (5) A provision for immediate termination of the contract due to 

noncompliance on the part of the warehouse management;

    (6) A provision allowing for termination of the contract for cause 

by either party upon 30 days written notification;

    (7) The amount of any insurance coverage, which has been purchased 

to protect the value of food items which are being stored; and



[[Page 461]]



    (8) Express written consent for inspection and inventory by the 

distributing agency, subdistributing agency, recipient agency, the 

Comptroller General, the Department or any of their duly authorized 

representatives.

    (e) Physical inventory. During the annual review required by 

paragraph (c) of this section, distributing agencies and subdistributing 

agencies shall take a physical inventory of their storage facilities. 

The physical inventory shall be reconciled with each storage facility's 

book inventory. The reconciliation records shall be maintained by the 

agency that contracted for or maintained the storage facility. Food 

items that have been lost, stolen, or found to be out of condition, 

shall be identified and recorded. Potential excessive inventory, as 

described in paragraph (f) of this section, shall be reported by the 

subdistributing agency to the distributing agency. Corrective action on 

each deficiency noted during these inventories shall be initiated 

immediately, and a written report of those corrective actions shall be 

forwarded to the distributing agency. Where applicable, the distributing 

agency shall pursue claims in accordance with Sec. 250.15(c).

    (f) Excessive inventories. (1) The distributing agency shall 

determine if a subdistributing agency's inventories are excessive based 

on:

    (i) The rate of distribution;

    (ii) Anticipated distribution; and

    (iii) Other concerns such as logistical and economic considerations.

    (2) In no case may the inventory level of each donated food in 

storage exceed a six-month supply unless sufficient justification for 

additional inventory has been submitted and approved. Subdistributing 

agencies shall submit justification to the distributing agency in 

instances where more than a six-month inventory is needed. Justification 

shall be submitted by the distributing agency to the FNSRO for approval 

in instances where more than a six-month inventory is needed at the 

distributing agency level.

    (3) The distributing agency shall take corrective action to ensure 

that excess inventories at all levels are eliminated and shall document 

actions taken to reduce excessive inventories.



[53 FR 20426, June 3, 1988, as amended at 54 FR 42475, Oct. 17, 1989; 62 

FR 53730, Oct. 16, 1997; 67 FR 65015, Oct. 23, 2002]