der Part 250 of this chapter; and (3) meeting expenses of local distribution functions which are performed by the State for participating Units for reasons of economy or effectiveness.

§ 251.5 Agreements.

(a) With the Department. The Department shall enter into a written agreement with each State agency covering its responsibility for the administration of the Program in participating Units or its responsibility for participation in the Program as a recipient of financial assistance, or both. No agreement for participation of a State agency in the Program will be executed until a Program Plan, when required by C&MS, has been approved. The Department shall also enter into written agreement with each Unit whose Program Plan has been approved by C&MS where C&MS administers the Program. The agreements entered into under this paragraph shall incorporate by reference or otherwise the provisions set forth in this part, and shall include such other provisions as may be required by law or may be determined to be appropriate for the conduct of the Program within the State. When requested by C&MS, State agencies and Units shall present evidence of their authority to enter into such agreements.

(b) Between State agencies and Units. Each State agency shall enter into written agreements with Units whose Program Plans it has approved. Such agreements shall contain such terms and conditions as will insure that (1) the funds provided by C&MS are used in accordance with this part, (2) Units account to the State agency for all funds paid to them, (3) Units return any unobligated funds upon termination of participation in the Program, and (4) participation in the Program may be terminated immediately for failure to comply with provisions of the Program or on 30 days written notice by either party to the agreement. Such agreements shall contain such additional terms and conditions as required by the State agency's agreement with the Department and may contain such terms and conditions, not inconsistent with this part, as the State agency deems desirable to carry out the Program.

(c) Term of agreements. Agreements entered into under this part shall not extend financial assistance beyond the Federal fiscal year in which executed but the Department may renew agreements for each fiscal year thereafter by giving no

tice in writing. Provisions for termination upon written notice shall be included in the agreements.

(d) State agencies and Units now under agreement. Notwithstanding any other provision of this part, State agencles and Units, which prior to the effective date of this part have executed an Agreement for Financing Distribution of Donated Commodities during the Federal fiscal year 1968, may continue to operate under such Agreement until it is expressly terminated according to the terms thereof or until the end of the Federal fiscal year 1968, whichever is earlier. Such State agencies and Units shall be eligible to enter into new agreements under this part upon the termination of the existing agreements without obtaining further designation or approval under section 251.4.

§ 251.6 Program Plan.

Each Unit, and each State agency desiring financial assistance under this part shall formulate and set forth on Form CFP 109 a Program Plan consisting of three parts:

(a) Part 1: General information of a nature which will enable C&MS to evaluate applicant's eligibilty for participation, including a statement of applicant's need for financial assistance and a justification of the level of assistance requested from C&MS.

(b) Part 2: A plan of operation setting forth the procedures and methods to be used in certifying households as in need of food assistance and in making distribution of commodities to them, and including the requirements set forth in paragraph 250.6(e) of Part 250 of this chapter which are relevant to the Program under this part.

(c) Part 3: A budget showing the items of expense and the amount of expenses to be incurred, the contribution to be made by the State agency or the Unit, or both, or from any source within the State, in cash or in kind, to the proposed budget, and the maximum amount of expenditures in connection therewith for which C&MS is requested to make payment.

§ 251.7 Submission of Program Plans.

(a) By State agency. Each eligible State agency desiring financial assistance shall submit its proposed Program Plan to C&MS for approval. A State agency's Program Plan may be amended or a new Program Plan adopted with the written

approval of C&MS. A Program Plan shall be amended or a new Program Plan adopted at the direction of C&MS.

(b) By Units. Each eligible Unit shall submit to the State agency, or to C&MS where C&MS administers the Program, its proposed Program Plan. The State agency shall submit the Unit Program Plans approved by it to C&MS for approval. A Unit Program Plan may be amended or a new plan adopted with the written approval of C&MS where C&MS administers the Program, or with the written approval of both the State agency and C&MS. A Unit Program Plan shall be amended or a new Program Plan adopted at the direction of C&MS.

§ 251.8 Payments.

(a) Maximum obligation. The maximum amount which C&MS shall be obligated to pay to any State or Unit is the smaller of (1) its approved budgeted expenses or (2) the expenses actually incurred by it in connection with approved budgeted items.

(b) To State agencies. C&MS shall, on a monthly basis, advance funds to each State agency for its use and for payment to participating units in an amount equal to the sum of the approved monthly expenses to be incurred by the State agency and units, as set forth in the respective approved budgets. If the amount advanced to the State agency by C&MS for use in any month exceeds the expenses actually incurred in connection with approved budgeted items for such month, the amount to be advanced by C&MS to the State Agency for a subsequent month shall be reduced by the amount of such excess.

(c) To Units. State agencies, and C&MS where C&MS administers the Program, shall, on a monthly basis, (1) pay to each participating Unit an amount equal to the distribution expenses actually incurred by it in connection with approved budgeted items, or (2) advance funds to each participating Unit in an amount equal to its approved budgeted monthly distribution expenses, if need for an advance is shown in the Program Plan. If the amount advanced by C&MS or by the State agency to a participating Unit for any month exceeds the expenses actually incurred in connection with the approved budgeted items, the amount to be advanced by C&MS or by the State agency to the participating Unit for a subsequent month shall be reduced by the amount of such excess.

(d) Unused funds. State agencies shall require each Unit to return to them for transmittal to C&MS any Federal funds paid to such Unit under the Program which are unobligated upon termination of the Program in the Unit. State agencies, and Units where C&MS administers the Program, shall return to C&MS any Federal funds paid to them under the Program which are unobligated at the termination of the Program in the State or Unit. Such return shall be made as soon as practicable but in any event no later than 30 days following demand made by C&MS. State agencies, and Units where C&MS administers the Program, shall also pay C&MS any interest paid or credited on Federal funds paid to them under the Program.

[32 F.R. 15948, Nov. 21, 1967, as amended by Amdt. 1, 34 F.R. 11181, July 3, 1969]

State agencies and Units shall (a) maintain, and retain for 3 years from the close of the Federal fiscal year to which they pertain, complete and accurate records of all amounts received from C&MS and of all amounts disbursed under the Program, and (b) permit representatives of the Department and of the General Accounting Office of the United States to inspect, audit, and copy such records at any reasonable time. Each participating Unit shall furnish to the State agency, or to C&MS where C&MS administers the Program, on Form CFP 110, a certified record of the monthly expenses incurred by such Unit under its approved Program Plan. Each State agency shall submit to C&MS, each month, on a form approved by C&MS, a certified record of all disbursements made under the Program for the preceding month and of the balance of funds on hand, and unobligated, at the end of such preceding month.

[32 F.R. 15948, Nov. 21, 1967, as amended by Amdt. 1, 34 F.R. 11181, July 3, 1969] § 251.10 Miscellaneous provisions.

(a) Defaults. Any State agency or any Unit may be disqualified from future participation in the Program if it fails to comply with the provisions of this part and of its agreement with the Department or the State agency. If any part of the money received by a State agency or by a Unit where C&MS administers the Program, by any improper or negligent action is diminished, lost, misapplied, or

diverted from the Program by the State agency or by the Unit, repayment shall be made to C&MS promptly upon demand. If any part of the money received by a Unit where a State agency administers the Program, by any improper or negligent action is diminished, lost, misapplied or diverted from the Program by the Unit, the State agency shall promptly take action to obtain restitution and shall pay to C&MS all money recovered. Until the money is repaid, no subsequent payment under the Program shall be made to the State agency or the Unit. The State agency or the Unit shall have full opportunity to submit evidence, explanation, or information concerning instances of diversion of funds before a final determination is made in such cases. Disqualification from participation or repayment of a claim does not preclude

the possibility of other action being taken through other means available where necessary, including prosecution for fraud under applicable Federal statutes. No provision of this part shall be construed as making the State agency liable in any respect for any default of any Unit if there exists no fault or negligence on the part of the State agency.

(b) Amendments. Any and all provisions of this part may be withdrawn or amended at any time by the Department, but no withdrawal or amendment shall be made without 30 days' prior written notice to State agencies, or to Units where C&MS administers the Program.

NOTE: The reporting and/or recordkeeping requirements contained herein have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.