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Contracting Out for Management Functions

Nutrition Services Division Management Bulletin
Purpose: Policy, Beneficial Information

To: Child and Adult Care Food Program

Number: NSD-CACFP-05-2013

Attention: Food Program Director

Date: April 2013

Subject: Contracting Out for Management Functions in the Child and Adult Care Food Program

Reference: Title 7, Code of Federal Regulations, Sections 226.14 and 226.15(c); U.S. Department of Agriculture, Food and Nutrition Service Instruction 792-2, Revision 1; Section 362 of the Healthy, Hunger-Free Kids Act of 2010
Supersedes: Management Bulletin NSD-CACFP-04-2011

This Management Bulletin (MB) reminds all agencies participating in the Child and Adult Care Food Program (CACFP) that agencies may not contract with another company for all management functions. This MB supersedes MB NSD-CACFP-04-2011: Contracting Out for Management Functions in the CACFP. The Nutrition Services Division (NSD) has added language to ensure all agencies participating in the CACFP are aware that the consequences for termination in one federal child nutrition program impacts participation in all other child nutrition programs.


Pursuant to Title 7, Code of Federal Regulations (7 CFR) Section 226.15(c), all institutions participating in the CACFP must maintain sole administrative and financial responsibility for their food program and may not contract for management functions. The U.S. Department of Agriculture, Food and Nutrition Service Instruction 792-2, Revision 1 provides the following interpretation of this regulation:

The regulation prohibits an institution from contracting out for all of its management functions. Management functions which institutions may not contract out under any circumstances include monitoring, corrective action, and preparation of application materials. However, institutions may contract out for specific management tasks, such as bookkeeping (but not claims submission), data processing, or the service of a nutritionist…

Action Needed

In order to ensure compliance with the regulations, all agencies should submit any contracts that the agency enters into relating to their food service program to the NSD for review.

Contracting for Unallowable Management Functions May Lead to Termination

If the NSD determines that an agency participating in the CACFP has contracted with a third party for management functions, the NSD may find the participating agency seriously deficient and terminate the institution’s agreement to participate in the CACFP. In addition, the NSD is required by 7 CFR 226.14 to recover any payment to an agency that it did not properly spend on its food program in compliance with the regulations. This means that if a participating agency used program funds to pay for a third party contractor performing management functions, the NSD will require the participating agency to pay back these funds.

Consequences for Agencies and Individuals on the National Disqualified List

Federal law [Section 362 of the Healthy, Hunger-Free Kids Act of 2010 (HHFKA) which updated the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 (CNA)], now prohibits any school, institution, service institution, facility, or individual that has been terminated from any federal child nutrition program, and is on a list of disqualified institutions and individuals, from participating in or administering any program authorized by the HHFKA or the CNA.

This means that if an agency is terminated from the CACFP and placed on the National Disqualified List, they will no longer be eligible to participate in the Summer Food Service Program or the School Nutrition Programs (SNP). The CDE would be required to terminate the agency’s current participation in all federal child nutrition programs, including the SNPs (the National School Lunch Program, the School Breakfast Program, the Special Milk Program, Meal Supplements or Snacks, the Seamless Summer Feeding Option, and the Fresh Fruit and Vegetable Program).

If you have any questions regarding this MB, please contact the CACFP specialist assigned to your agency in the Child Nutrition Information and Payment System (CNIPS). Contact information for specialists is located in the Download Forms section of the CNIPS.

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Friday, October 6, 2017
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