Title 7
SECTION 250.38
250.38 Provisions of agreements.
§ 250.38 Provisions of agreements.(a) National Processing Agreement. A National Processing Agreement includes provisions to ensure that a multi-State processor complies with all of the applicable requirements in this part relating to the processing of donated foods.
(b) Required provisions for State Participation Agreement. A State Participation Agreement with a multi-State processor must include the following provisions:
(1) Contact information for all appropriate parties to the agreement;
(2) The effective dates of the agreement;
(3) A list of recipient agencies eligible to receive end products;
(4) Summary end product data schedules, with end products that may be sold in the State;
(5) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the distributing or recipient agency from which the foods were received;
(6) Any applicable labeling requirements;
(7) Other processing requirements implemented by the distributing agency, such as the specific method(s) of end product sales permitted;
(8) A statement that the agreement may be terminated by either party upon 30 days' written notice;
(9) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions; and
(10) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).
(c) Required provisions of the In-State Processing Agreement. An In-State Processing Agreement must include the following provisions or attachments:
(1) Contact information for all appropriate parties to the agreement;
(2) The effective dates of the agreement;
(3) A list of recipient agencies eligible to receive end products, as applicable;
(4) In the event that subcontracting is allowed, the specific activities that will be performed under subcontracts;
(5) Assurance that the processor will provide a performance bond or irrevocable letter of credit to protect the value of donated foods it is expected to maintain in inventory, in accordance with § 250.32;
(6) End product data schedules for all end products, with all required information, in accordance with § 250.33(a);
(7) Assurance that the processor will meet processing yields for donated foods, in accordance with § 250.33;
(8) Assurance that the processor will compensate the distributing or recipient agency, as appropriate, for any loss of donated foods, in accordance with § 250.33(c);
(9) Any applicable labeling requirements;
(10) Assurance that the processor will meet requirements for the substitution of commercially purchased foods for donated foods, including grading requirements, in accordance with § 250.34;
(11) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the recipient agency from which the foods were received, as applicable;
(12) Assurance that the processor will provide for the safe and effective storage of donated foods, meet inspection requirements, and maintain an effective quality control system at its processing facilities;
(13) Assurance that the processor will report donated food inventory activity and maintain inventories within approved levels;
(14) Assurance that the processor will return, transfer, or pay for, donated food inventories remaining upon termination of the agreement, in accordance with § 250.35(f);
(15) The specific method(s) of end product sales permitted, in accordance with § 250.36;
(16) Assurance that the processor will credit recipient agencies for the value of all donated foods, in accordance with § 250.36;
(17) Assurance that the processor will submit performance reports and meet other reporting and recordkeeping requirements, in accordance with § 250.37;
(18) Assurance that the processor will obtain independent CPA audits and will correct any deficiencies identified in such audits, in accordance with § 250.20;
(19) A statement that the distributing agency, subdistributing agency, or recipient agency, the Comptroller General, the Department of Agriculture, or their duly authorized representatives, may perform on-site reviews of the processor's operation to ensure that all activities relating to donated foods are performed in accordance with the requirements in 7 CFR part 250;
(20) A statement that the agreement may be terminated by either party upon 30 days' written notice;
(21) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions;
(22) A statement that extensions or renewals of the agreement, if applicable, are contingent upon the fulfillment of all agreement provisions; and
(23) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).
(d) Required provisions for Recipient Agency Processing Agreement. The Recipient Agency Processing Agreement must contain the same provisions as an In-State Processing Agreement, to the extent that the distributing agency permits the recipient agency to perform activities normally performed by the distributing agency under an In-State Processing Agreement (e.g., approval of end product data schedules, review of performance reports, or management of the performance bond). However, a list of recipient agencies eligible to receive end products need not be included unless the Recipient Agency Processing Agreement represents more than one (e.g., a cooperative) recipient agency.
(e) Noncompliance with processing requirements. If the processor has not complied with processing requirements, the distributing or recipient agency, as appropriate, may choose to not extend or renew the agreement and may immediately terminate it.