250.19—Reviews.
(a) General.
Each distributing agency shall establish a review system in order to assess the effectiveness of its food distribution program in meeting the requirements of these regulations.
(b) Responsibilities of distributing agencies.
(1)
As part of its review system, each distributing agency must establish procedures to ensure compliance with the requirements of this part, and with other Federal regulations, as applicable. Such procedures must include, for example, requirements relating to eligibility of recipient agencies and recipients, ordering, storage, and inventory of donated foods, reporting and recordkeeping, and civil rights, as they apply to specific programs. They must also include:
(i)
An on-site review of all charitable institutions, or the food service management companies under contract with them, at a minimum, whenever the distributing agency identifies actual or probable deficiencies in the use of donated foods by such institutions, or by their contractors, through audits, investigations, complaints, or any other information.
(ii)
An on-site review at least once every 2 years of all processors except those that are multi-State processors as defined in § 250.3, with no fewer than 50 percent being reviewed each year;
(iii)
An annual on-site review of each storage facility utilized by the distributing agency. On-site reviews conducted by FNS may be considered as contributing to the fulfillment of the minimum coverage required by this paragraph; and
(2)
Each distributing agency shall design and implement a system to verify sales of end products to all recipient agencies under that distributing agency's authority in instances when a processor transfers end products to a distributor and the distributor sells the end product to the recipient agencies at a discount and the distributor receives a refund from the processor. At a minimum, such a system must:
(i)
At a minimum, provide for a semi-annual review of a statistically valid sample of sales for the previous six-month period for all processors which contract with the distributing agency or contracting agencies under the authority of the distributing agency, including multi-State processors. The sample size must ensure a 95 percent confidence level;
(ii)
Support the projection of a claim against the processor when, in the review of the sample, it is determined that the value of donated foods has not been passed on to recipient agencies or when end products have been improperly distributed; and
(iii)
Provide for the assessment of claims against the processor in accordance with FNS Instruction 410-1, Non-Audit Claims, Food Distribution Program, in instances when deficiences have been identified.
(iv)
Provide for the adjustment of performance reports and processing inventory reports to refect any invalid sales;
(v)
Provide for the development and submission by processors to the distributing agency of a corrective action plan designed to correct problems identified during the sales verification; and
(vi)
In instances in which the distributing agency has delegated the responsibility of sales verification to processors, the distributing agency must:
(A)
Establish guidelines which ensure that the criteria contained in paragraphs (b)(2)(i)-(v) are met;
(B)
Ensure that processors report their findings to the distributing agency on a semi-annaul basis in accordance with § 250.30(m) ;
(C)
Review the processor's findings and select a random sub-sample of at least 10 percent of all sales verified by the processor and reverify the sale by contacting the recipient agency by telephone or through written correspondence; and
(D)
Submit a copy of the processor's review report and findings and the results of the reverification efforts to the appropriate FNSRO. In instances of poor processor performance, the distributing agency shall require the processor to discontinue the abused value pass-through-system, initiate an audit or review to determine the extent to which sales are to be disallowed, establish a claim, and/or terminate the contract.
(3)
The distributing agency shall submit a report of review findings to each entity reviewed. The report shall include:
(iii)
Recommendations for needed corrective action, including timetables for completion and/or claims action to be pursued, if any; and
A copy of each processor review report shall be provided to the appropriate FNSRO.
(4)
Distributing agencies shall monitor progress toward completion and the effectiveness of corrective actions taken in eliminating program deficiences.
(5)
In addition to the review requirements of paragraph (b)(1) of this section, each distributing agency shall make a continuing evaluation of all recipient agencies, and processors by monitoring performance reports, food requests, participation data, and data regarding refunds and discounts to recipient agencies and distributors for the receipt of end products.
(6)
Distributing agencies shall, where applicable, require that subdistributing agencies monitor and review their operations in accordance with this paragraph.
(c) Corrective action plans.
Corrective action plans shall be submitted whenever a distributing agency is found by the FNSRO to be substantially out of compliance with a performance standard or any other provision of this part. The corrective action plan shall identify the corrective actions and the timeframes needed to correct the deficiencies found by the FNSRO. The plan shall be written, signed by the proper official in the State, and submitted to the FNSRO within 60 days after the distributing agency receives notification from the FNSRO of a deficiency. Extensions beyond 60 days may be made, for cause, with written justification to and approved by the FNSRO.