Cost Containment Measures


  1. 1. The State agency seeks FNS approval related to infant formula cost containment measures (check one):
  2. 2. Cost Containment Contracts for Infant Formula
  3. 3. The State agency's infant formula rebate solicitation/contract contains the following provisions (check all that apply):
  4. 4. For infant formula rebate solicitations issued on or after October 1, 2004, the following applies:
  5. 5. Cost Containment for Other Foods

1. The State agency seeks FNS approval related to infant formula cost containment measures (check one):

  • for a waiver of the requirement for a single-supplier competitive system. State agency must complete a cost comparison projecting food cost savings in the single-supplier competitive system based on the lowest monthly net price or highest monthly rebate (as required in Section 246.16a(c)(3)(iii)) and savings under an alternative cost containment system, Section 246.16a(d)(2)(B)
  • to issue an infant formula bid solicitation that evaluates bids by highest rebate. A State agency must demonstrate to FNS' satisfaction that the weighted average retail prices for different brands of infant formula in the State vary by 5% or less, Section 246.16a(c)(3)(iii)
  • not applicable - Checked

Please attach in the appendix supporting documentation for requests for FNS approval.

ADDITIONAL DETAIL: Food Funds Management Appendix and/or Procedure Manual citation:

2. Cost Containment Contracts for Infant Formula

  1. The State agency has a rebate contract/agreement for infant formula.
    • Yes If yes, attach contract in Appendix
    • No If no, check which applies:
      • granted waiver
      • ITO with participation under 1,000
  2. The State agency acquires infant formula through (check all that apply):
    • home food delivery system
    • direct distribution food delivery system
    • retail food delivery system
    • other (specify):
  3. The duration of the contract or rebate agreement(s) in effect is: For a single-supplier system or multi-supplier: Date contract/agreement:
    • Manufacturer Began Expires Extensions
      Ross Products 2-1-01 01-31-06 2-12 month
  4. Current fiscal year rebates and current net price per can paid (note the price should reflect current prices rather than original contract prices and rebate amounts):
    • Product Manufacturer Rebate/Unit Net price/Unit % Discount
      Liquid Concentrate (13 oz)
      Milk-Based See Attached
      Soy-based
      Other
      Powder (specify unit size)
      Milk-based
      Soy-based
      Other
      Ready to Feed (specify unit size)
      Milk-based
      Soy-based
      Other
      Exempt Formula (specify)
      None specified
  5. The percent of infants receiving each type of formula is estimated at:
    • Formula Percent
      Contract
      Milk-based liquid concentrate 18.03%
      Soy-based liquid concentrate 18.03%
      Milk-based powdered 67.03%
      Soy-based powder 67.03%
      Milk-based ready-to-feed 0.05%
      Soy-based ready-to-feed 0.05%
      Other contract infant formula
      (including lactosefree milk-based)
      Non-contract
      Exempt infant formula 5.55%
      Non-exempt infant formula 4.14%

ADDITIONAL DETAIL: Food Funds Management Appendix See Appendix E WIC Infant Formula Rebate Contract with Ross Products and/or Procedure Manual (citation):

3. The State agency's infant formula rebate solicitation/contract contains the following provisions (check all that apply):

  • Does not apply (granted waiver or ITO with participation under 1000)
  • Establishes the contractor's responsibility to provide sufficient quantities of products covered by contract to all authorized WIC vendors in the State.
  • Requires contractor to provide a rebate on all infant formulas it produces that the State agency chooses to issue, except exempt infant formulas
  • Specifies that the rebate reflects the same percentage discount on the manufacturer's lowest national wholesale cost as the corresponding physical form (i.e., liquid concentrate) for which bids were received.
  • Requires manufacturer to adjust for price changes subsequent to the bid opening. The provision requires a cent-for-cent increase and decrease (decrease applies only to solicitations released after 10/1/04) in the rebate amounts whenever there is any change in the lowest national wholesale price for a full truckload of a particular infant formula.
  • Specifies that the contractor shall pay the rebate in effect on the day the participant actually transacts the food instrument (regardless of the food instruments' issuance date).
  • Requires payment of rebates on all infant formula purchased while contract is in effect, even though the contract may be void at the time payment is due.
  • Requires advance payment of rebates, at least during the fourth quarter of each Federal fiscal year, to facilitate the State agency's cash flow situation.
  • Stipulates sanctions for unfulfilled contract obligations (e.g., if payment is not made within 30 days of the invoice date, the contractor will pay the State agency with interest, at a rate specified in the contract, on the unpaid balance until such time as payment is made over and above the amount due from infant formula rebate.)
  • Includes an extension option for a specified length of time. Terms and conditions of extension person(s) are specified in the request for bids and contract.
  • Addresses billing discrepancies. Prohibits contractor from withholding rebate payments due under any circumstances. All disputes must be settled by closeout of the fiscal year in which the dispute occurred.

4. For infant formula rebate solicitations issued on or after October 1, 2004, the following applies:

If single solicitation (for both milk- and soy-based formulas), State agency serves a monthly average of less than 100,000 infants during preceding 12-month period.

  • Yes
  • No
  • If no, requested separate bids for milk- and soy-based formulas.
    • Yes
    • No
  • Is solicitation for a State alliance?
    • Yes
    • No
  • If yes, the size of alliance must be no more than 100,000 infants as of October 1, 2003, unless:
    • Alliance existed prior to July 1, 2004 and has not added additional State agencies,
    • Alliance expanded to include an ITO, or
    • Alliance expanded to include a State agency(ies) that serves less than 5,000.

ADDITIONAL DETAIL: Food Funds Management Appendix and/or Procedure Manual (citation):

5. Cost Containment for Other Foods

  1. Rebates are also obtained on other WIC foods.
    • Yes (specify foods and attach contract in Appendix):
    • No
  2. The State agency intends to pursue rebates on other authorized foods.
    • Yes (specify):
    • No
  3. To contain food costs, the State agency has limited authorized foods/container sizes/types, etc..
    • Yes (If yes, note such limitations on the following table)
    • No

ADDITIONAL DETAIL: Food Funds Management Appendix and/or Procedure Manual (citation):

Specific brands are designated/ Disallowed Only certain container sizes are allowed Allowable types are limited Other
Exempt formula for women, infants & children X X Powder
Infant cereal X X
Infant juice X X
Whole fresh fluid milk "See Other" X X LEB
Lowfat fresh fluid milk "See Other" X LEB
Skim fresh fluid milk "See Other" X LEB
Cultured buttermilk
Whole dry milk X X
Lowfat dry milk X X
Nonfat dry milk X X
Other milks (e.g., UHT, Lactaid) (specify): X X
Cheese LEB X X
Fresh eggs X X
Dried egg mix
Hot cereal X X
Cold cereal X X
Single strength fruit/ vegetable juice X X X
Concentrated fruit/ vegetable juice X X X
Peanut butter LEB X X
Dry beans/peas X X
Tuna X X
Carrots