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Section 3000

    Program Agreement

Table of Contents

3000 TEXCAP Agreement

     3010 TEXCAP Agreement and Application

     3020 Agreements Between Contractor and Sub-Distributing Agencies

3100 Financial Management System

    3110 Administrative Costs

    3120 Allowable Administrative Costs

    3130 Unallowable Costs

    3140 Adding or Deleting Allowable Costs

    3150 Special Transportation Funds

    3160 Reimbursing Non-USDA-Donated Commodities Costs

    3170 Allocation by a “60/40” Formula

    3170.1 Allocation by Usage Rates

    3170.2 Alternate Allocation Methods

     3180 Shared Maintenance Fees

3200 Reimbursement Limits: “Letters of Credit”

     3210 Reimbursement Rates

     3220 Annual TEXCAP Budgets

    3221 Actual Reimbursement Rate

    3222 Notification of Change in Reimbursement Rate

    3223 Claims for Reimbursement

Texas Department of Agriculture January 2009 Program Agreement 1

    Texas Commodity Assistance Program Handbook

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2 Program Agreement Texas Department of Agriculture January 2009

Texas Commodity Assistance Program Handbook

    3000

    TEXCAP Agreement

3010 TEXCAP Agreement and Application

    The Texas Department of Agriculture (TDA) will complete and sign Form H1523, Application for Participation/Plan of Operation, which stipulates that you will perform according to your Texas

    Department of Agriculture, Food and Nutrition Division (FND) Commodity Agreement , Form

    H1523, supporting documents, and approved amendments. The FND Commodity Agreement

    provides the terms and conditions for participation in the TEXCAP. These terms and conditions

    relate to:

? Use, storage, and disposition of USDA-donated commodities

    ? Accountability

    ? Certification

    ? Debarment, suspension, ineligibility, or voluntary exclusion for covered contracts

    ? Federal lobbying

    ? Subcontracts for goods and services

    ? Civil rights

    ? Program payments

    Note: TDA may terminate your Form H1523, Application for Participation/Plan of Operation, as provided by federal regulations, state rules, and the terms and conditions of the agreement.

    Additionally, the agreement may be terminated immediately by mutual consent or by TDA,

    without mutual consent, for material breach of the agreement.

After TDA has approved your Form H1523, it can only be amended with our consent.

Note: It has come to the attention of TDA that a private company, Federal Publishing Limited,

    Inc. (aka Federal Publication), of Miramar, Florida, is marketing a publication entitled “USDA United States Department of Agriculture and FDA Food and Drug Administration Compliance Journal 2007”.

This publication is not issued or approved by USDA, nor is it required for contractors’

    participation in the TEXCAP. FND has available materials and guidance regarding compliance

    with the TEXCAP at no cost on our website at www.snptexas.org. Additionally, the USDA

    provides at no cost materials and guidance on their websites at www.fns.usda.gov/cnd/ or www.fns.usda.gov/fns/food_safety.htm.

    Texas Department of Agriculture January 2009 Program Agreement 3 Texas Commodity Assistance Program Handbook

3020 Agreements between Contractor and Sub-Distributing Agencies

If you are unable to fulfill one or more of the requirements identified in your Texas Department

    of Agriculture, Food and Nutrition Division Commodity Agreement, and Form H1523,

    Application for Participation/Plan of Operation, you may be able to enter into a written agreement

    with a sub-distributing agency to fulfill these requirements. These agreements are subject to

    TDA approval. TDA will approve or deny these agreements during the application process.

3100 Financial Management System

Your organization must maintain a financial management system that provides accurate,

    current and complete disclosure of the financial status of your TEXCAP operation. This system

    must ensure that:

    ? Accounting records are supported by source documentation, including canceled checks,

    paid bills, payroll, and contract and subcontract award documents. ? Records identify the source and application of funds and contain information about

    program reimbursement claimed and paid by TDA, authorization, obligations, unobligated

    balances, assets, liabilities, outlays, and income.

    ? Records include accurate, current, and complete reports concerning program participation

    and the financial results of the program.

    ? Audits are completed at least every other year to determine, at a minimum, the fiscal

    integrity of financial transactions and reports and compliance with laws, regulations, and

    TDA guidelines.

    ? A systematic method is maintained to resolve audit and review findings and

    recommendations.

    ? Requests for claim adjustments are submitted to TDA within 60 days of the claim month.

3110 Administrative Costs

TDA determines the necessity and acceptability of administrative cost incurred by your

    organization in accordance with federal regulations and state rules. You can reference these

    requirements in the:

? Code of Federal Regulations (CFR) at 7 CFR Part 251

    ? Texas Administrative Code (TAC) at Title 4, Part 1, Chapter 24

    ? Office of Management and Budget Circular A-87, Cost Principles for State, Local, and Indian

    Tribal Governments.

4 Program Agreement Texas Department of Agriculture January 2009

     Texas Commodity Assistance Program Handbook

TDA reimburses contractors from available federal funds, their allowable, direct, and indirect

    costs of processing, transporting, and distributing USDA-donated commodities. In addition, at

    the end of each federal fiscal year, after reimbursing all timely-received claims of costs of

    distributing USDA-donated commodities, TDA will reallocate remaining funds to reimburse

    the allowable costs of distributing non-USDA commodities.

3120 Allowable Administrative Costs

The following costs are specifically identified as allowable costs:

    ? Actual, direct, and indirect costs of transporting, processing, repackaging, storing, and

    handling; and

    ? As applicable, other costs that are reasonably attributable to distributing donated

    commodities, including cost of supplies, printing, record-keeping, auditing, and publishing

    commodity information, training material, and announcements of distributions.

Contractors may claim “direct” and “indirect” expenses. Except for the party who actually pays

    an expense, there is no difference between a direct and an indirect expense.

Example: A contractor “directly” pays the costs of storing TEXCAP commodities in its own

    warehouse, or in storage space it leases, and “indirectly” pays for the same expense when

    reimbursing a subagency for the subagency’s cost of storing TEXCAP commodities.

Allowable expenses, direct and indirect, are those incurred by a contractor in order to comply

    with the terms and conditions of the Form H1523, Application for Participation/Plan of Operation.

In broad categories, allowable expenses relate to receiving, handling, storing, and distributing

    TEXCAP commodities, such as:

? Salaries;

    ? Travel;

    ? Training;

    ? Transportation;

    ? Supplies;

    ? Office space;

    ? Warehouse; and

    ? Fringe benefits.

Expenses that are not reimbursable are capital expenditures for equipment, building, or

    remodeling. Though cost allocation methodologies are not mandated by TDA, such

    methodologies must be reasonable.

Texas Department of Agriculture January 2009 Program Agreement 5

    Texas Commodity Assistance Program Handbook

Examples: Determining salary costs of less than full-time employees may necessitate the

    ongoing use of time sheets. The cost of storage and office space in a multi-purpose facility can

    be determined using the percentage of square footage as the basis.

Examples of Allowable Expenses:

? Accounting services;

    ? Advertising program availability; ? Audits;

    ? Bonding costs;

    ? Depreciation and Use Allowance; ? Employee salary and fringe benefit; ? Legal expenses in contracting and subcontracting;

    ? Maintenance and supplies; ? Transportation (including costs of permits/licenses to transport commodities)

    ? Travel for program purposes; ? Cost of meals served to volunteers; ? Building and office space; and ? Commodity storage costs.

3130 Unallowable Costs

Expenditures by your organization that are not applicable to TEXCAP objectives are

    “unallowable costs.” Unallowable costs are identified in the Office of Management and Budget

    Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, and include:

? Bad debts because of uncollectible accounts and other claims and related costs including

    repayment of audit exceptions.

    ? Contributions to a contingency reserve or similar provisions for unforeseen events.

    ? Contributions and donations including USDA-donated commodities and other donated

    food, labor, and supplies.

    ? Entertainment including amusements, social activity, and related costs such as meals,

    beverages, lodging, rentals, transportation, and gratuities.

    ? Fines or penalties resulting from violations of or failure to comply with federal, state, or

    local laws and regulations.

    ? Salary and other expenses of the governor and state and local legislators.

    ? Costs resulting from non-reimbursement of costs under other programs.

    ? Value of in-kind donations.

    ? Administrative costs that are not included in your approved budget.

    ? Capital expenditures for:

    o Acquisition of land or interest in land

    o Acquisition or construction of buildings or facilities,

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     Texas Commodity Assistance Program Handbook

    o Alterations to existing buildings or facilities,

    o Nonexpendable equipment,

    o Repairs that increase the material value or the useful life of buildings, facilities, or

    nonexpendable equipment; and

    o Other capital assets including vehicles.

    ? Fund-raising expenses incurred to raise capital or to obtain contributions such as financial

    campaigns, endowment drives, and solicitation of gifts and bequests.

    ? Rental or lease of buildings, facilities, or equipment if the rental or lease agreement includes

    a purchase option or if the rental extends beyond the termination date for the program

    operations.

    ? Rental or use charges for equipment or space owned by your organization.

    ? Reimbursement for the distribution of commodities that exceeds your allocated caseload.

Additionally, the following items are also examples of unallowable costs:

    ? Costs incurred for rearrangement and alteration of facilities not required specifically for the

    program.

    ? Actual losses that could have been covered by permissible insurance (through an approved

    self-insurance program or otherwise).

3140 Adding or Deleting Allowable Costs

If necessary to ensure the equitable distribution of USDA-donated commodities, TDA may,

    after consulting with the affected contractors and other stakeholders identified by TDA, change

    policy to add or delete reimbursable costs of distributing USDA-donated commodities.

3150 Special Transportation Funds

According to the terms and conditions of individual TDA contracts and based on the

    availability of administrative funds, TDA may provide special transportation funds to

    contractors to offset the costs of distributing USDA-donated commodities to rural or difficult-to-

    serve commodity recipients.

    Note: TDA may limit special transportation funds reimbursements to the costs of distributing USDA-donated commodities. If TDA chooses to reimburse the costs of distributing non-USDA-

    donated commodities with special transportation funds, such reimbursements will occur only if

    funds are available during reallocation.

3160 Reimbursing Non-USDA-Donated Commodities Costs

At the end of a federal fiscal year, after reimbursing contractors their allowable costs of

    distributing USDA-donated commodities, TDA will reallocate available administrative funds

    and reimburse eligible contractors for costs of distributing non-USDA-donated commodities.

Texas Department of Agriculture January 2009 Program Agreement 7

    Texas Commodity Assistance Program Handbook

    3170 Allocation by a “60/40” Formula

Each year, after reserving funds needed for program operation, TDA allocates available

    administrative funds to food bank and alternate TEXCAP contractors by county, using a “60/40”

    formula. The “60/40” formula is based 60% on the number of county residents who live at or below the official poverty line, and 40% of the number of county residents who are unemployed.

    Exception: TDA allocates administrative funds to additional contractors and food bank

    contractors (whose service areas are the same or overlap) based on commodity usage

    information (see the following item, 3190.1 Allocation by Usage Rates).

3170.1 Allocation by Usage Rates

TDA may contract with food banks serving the same or overlapping areas. For service areas

    that are the same or overlap, TDA allocates a fair share of administrative funds based on

    commodity usage rates. Commodity usage rates are determined using historical and/or

    projected information on the number of meals and/or households served or using other

    information, as appropriate.

    3170.2 Alternate Allocation Methods

As necessary, TDA may elect an alternate method of allocating administrative funds to

    contractors. An alternate method may replace or complement the current allocating method, as

    necessary, to:

? Ensure that TEXCAP is available in areas where poor economic conditions are known to

    exist;

    ? Ensure that all recipient groups have access to commodities, and/or

    ? Distribute USDA-donated commodities in an equitable manner.

In addition, TDA may modify the terms of any commodity agreement or contract, as needed, to

    ensure that reimbursements from administrative funds are equitable. However, before changing

    allocation methods or modifying contracts, TDA will consult with affected contractors and will

    provide notification of the change.

3180 Shared Maintenance Fees

Shared maintenance fees are not an allowable administrative cost. TDA will not reimburse this

    expenditure. Contractors may directly charge Recipient Agencies (RAs) their usual and

    customary shared maintenance fees.

8 Program Agreement Texas Department of Agriculture January 2009

     Texas Commodity Assistance Program Handbook

3200 Reimbursement Limits: “Letters of Credit”

After USDA notifies TDA of Texas' share of federal administrative funds, TDA calculates each

    contractor's share of funds. Individual notices to contractors include “Letter of Credit” amounts,

    which are the reimbursement limits for the contract year.

TDA may divide a contractor's yearly reimbursement limit into monthly reimbursement limits.

Note: TDA may reimburse above “Letter of Credit” levels only if reallocated or if other funds

    become available.

    3210 Reimbursement Rates

    3220 Annual TEXCAP Budgets

During the contract approval process and as requested by TDA thereafter, contractors must

    submit budgets to project the costs of distributing USDA- donated commodities during a

    specified period.

Note: A budget is a planning document and is not the amount that TDA will reimburse the

    contractor.

3221 Actual Reimbursement Rate

Actual reimbursement rates or amounts depend on the amount of available administrative

    funds and the allocation method used.

3222 Notification of Change in Reimbursement Rate

TDA will provide prior notice to contractors of a change in the allocation and/or the reimburse-

    ment rate or amount.

3223 Claims for Reimbursement

TDA reimburses contractors for their actual, allowable costs of storing, transporting and

    distributing USDA-donated commodities, as administrative funds are available, according to

    the terms and conditions of the Form H1523, Application for Participation/Plan of Operation.

Texas Department of Agriculture January 2009 Program Agreement 9

    Texas Commodity Assistance Program Handbook

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