DEPARTMENT OF HEALTH WIC SERVICES

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.31 Effective Date: November 6, 2017 Functional Area: I. VENDOR MANAGEMENT Subject:

Vendor Authorization Process

A. POLICY:

1. Vendor Authorization Process

a. Vendor authorization shall refer to the process by which the State Agency (SA) assesses, selects, and enters into agreements with stores that apply or subsequently reapply to be authorized as vendors as referenced in 7 CFR §246.2.

b. The SA shall authorize an appropriate number of WIC retailers to ensure adequate participant access and convenience, to ensure cost containment through vendor competitive prices and allowable reimbursement levels, and to ensure that authorized WIC retail stores can be properly trained, monitored, and evaluated for program compliance and integrity.

c. The SA shall establish minimum stock requirements for the variety and quantity of allowable supplemental foods that a vendor applicant must stock to be authorized. To meet the needs of all types of WIC participants, WIC retail stores are required to maintain minimum stock standards of all available WIC foods and have them available from the time the New Jersey WIC Application for Vendor Authorization Packet is submitted and throughout the authorization period. (Attachment 1.31B, NJ WIC Vendor Minimum Stock Requirements). d. The SA will incur the cost for the Point of Sale (POS) systems for vendors who are authorized prior to Electronic Benefit Transfer (EBT) implementation. All vendors becoming authorized after statewide implementation must pay for their POS systems (if they want to participate as an authorized WIC vendor). e. The SA shall ensure that all authorized WIC vendors are trained, monitored and evaluated in accordance with Federal Regulations. f. The SA shall enter a two-party agreement with vendors. Authorized vendors must adhere to the terms and conditions of the Vendor Selection Criteria (Attachment 1.30A) and the Vendor Agreement (Attachment 1.31H).

g. The SA may reassess an authorized vendor for program compliance at any time during the vendor’s authorization period using the vendor selection criteria in effect at the time of the reassessment. The SA may terminate the agreements with those vendors that fail to meet the selection criteria.

h. Retailers can be authorized as vendors at any point during the authorization period but their authorization will end at the same time as all other vendors in the current authorization period.

2. Vendor Responsibility/ Integrity

a. The SA shall not authorize a vendor applicant if the SA determines the store has been sold by its previous owner in an attempt to circumvent a WIC sanction. The State agency shall consider such factors as whether the store was sold to a relative by blood or marriage of the previous owner(s) or sold to any individual or organization for less than its fair market value.

b. At the time of application, the SA shall collect the vendor applicant's SNAP authorization number to verify the authorization status of the retailer. The vendor must be SNAP authorized prior to and during the WIC authorization period.

c. The SA shall not authorize a vendor applicant or any of the vendor applicant’s current owners, officers, or managers if they have been convicted of or had civil judgment entered against them for any activity indicating a lack of business integrity during the last six years of date of application. Activities indicting a lack of business integrity include fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims or obstruction of justice. B. PROCEDURE: 1. Submission of Application a. Retailers who are deemed eligible to participate in the WIC program as determined by the SA’s review of the Initial Vendor Assessment Form will be provided a New Jersey WIC Application for Vendor Authorization Packet.

b. Currently authorized and new applicant vendors seeking consideration as authorized Vendors for the WIC Program must submit a completed New Jersey WIC Application for Vendor Authorization Packet. The application packet shall include the following: i. Initial Retailer Assessment Questions (Attachment 1.31A) ii. New Jersey WIC Vendor Minimum Stock Requirements (Attachment 1.31B) iii. Preparing for a WIC Vendor Monitoring Visit (Attachment 1.31C) iv. Application for WIC Vendor Authorization (Attachment 1.31D) v. New Jersey WIC Vendor Application Packet Checklist (Attachment 1.31E) vi. Department of Treasury Authorization for Release of Tax Return Information Form (Attachment 1.31F) vii. Commodity Price List Survey (CPL) (Attachment 1.31G) viii. Vendor Agreement (without Signature Page) (Attachment 1.31H-a) ix. Authorization Agreement for Direct Deposit (ACH) Credits form (Attachment 1.39A) x. Vendor Selection Criteria (Attachment 1.30A)

xi. Designation of Infant Formula Manufacturer, Retailer, Wholesaler and Distributor form (Attachment 1.31J) xii. New Jersey WIC Program Authorized WIC Foods (Attachment 2.12A) xiii. Other applicable announcements/promotions/programs working with the NJ WIC Program. xiv. Vendor Application Packet Cover Letter (Attachment 1.31N)

2. Initial Review of Application a. Upon receipt of the application packet, the SA will review the submission to determine if the vendor has established the capability to fulfill the responsibilities of a WIC vendor. The SA shall review the submitted application to ensure for accuracy and completeness. The SA shall verify SNAP authorization through the FNS STARS (Food and Nutrition Service, Store Tracking and Redemption System), a Federal Agency database. The SA shall verify submission of a satisfactory Sanitary Inspection Report. Meeting these qualifications does not constitute authorization for food instrument and Cash Value Voucher redemption. If the vendor passes initial review, and onsite visit will be conducted to complete an assessment and verify submitted information. b. If the retailer submits an incomplete application packet, the SA shall notify the retailer, via mail and/or email, of the incomplete sections. The SA shall utilize the Incomplete Submission of an Application for WIC Vendor Authorization Packet (Attachment 1.31K) letter. The retailer shall have 10 business days from the date on the letter to provide the SA with a completed Application for WIC Vendor Authorization Packet. c. A returned application packet must be postmarked within 10 business days from the date on the Incomplete Submission of Application for WIC Vendor Authorization Packet (Attachment 1.31K) or it will be denied. d. Returned applications to the SA that are determined to be incomplete a second time will be denied. (Attachment 1.31L) e. The SA shall notify the retailer in writing whether the retailer’s application for authorization is granted or denied. f. NJ does not authorize above 50% vendors. Current vendors deriving more that 50% of the store’s annual food sales revenue from WIC food instruments shall be terminated. Vendor applicants expecting to derive more than 50% of the store’s annual food sales from WIC food instruments shall receive a denial letter. 3. State Agency On-Site Review a. The SA shall visit and complete the Vendor Assessments Selection Check List on vendors who pass the initial review. The Commodity Price List (CPL)/Minimum Stock Inventory shall be used to verify the vendor’s current shelf prices and determine if a Vendor meets WIC minimum stock requirements of supplemental foods authorized by the SA for WIC participants.

4. Notification to Vendors

a. The SA will notify existing authorized vendors about the expiration of the authorization period no later than 120 days prior to September 30th.

b. Existing authorized vendors must complete and return all required New Jersey WIC Application for Vendor Authorization Packet materials within 30 days of the notification date.

c. New Applicants will have 30 days to complete and return all required New Jersey WIC Application for Vendor Authorization Packet materials.

d. During the reauthorization period SA will notify existing authorized vendors about their eligibility to reauthorize for the next authorization period no later than 120 days prior to September 30th. Any Vendor who fails to meet the Vendor Selection Criteria (Attachment 1.30A) will receive a notification indicating the reason for their ineligibility (Attachment 1.31P).

5. Vendor Authorization Training a. New applicant vendors and currently active vendors will be provided a Training Notification Letter (Attachment 1.43A) which will designate the date and time of the scheduled authorization training to be held at an identified location. b. At least one representative of the Vendor location must participate in training annually. c. The SA will provide Vendor applicants and currently active vendors with at least one alternative date on which to attend such training. d. Failure of a currently authorized Vendor to attend training shall result in the Vendor not being awarded a new Vendor Agreement to act as an authorized Vendor at the end of their current and existing Agreement period. Failure of an applicant Vendor to attend training will result in the new Vendor not being awarded a Vendor Agreement to act as a new authorized New Jersey WIC Vendor. e. Upon successful completion of the Vendor Authorization Training, applicant vendors will be provided the Vendor Agreement (Attachment 1.31H) to sign. 6. Vendor Agreement a. Vendors who sign the Vendor Agreement will be awarded authorization. b. The Vendor Agreement shall specify the conditions under which the Vendor must operate. c. The sole proprietor or an authorized representative who has legal authority to contract for the sole proprietor of the store shall sign the Vendor Agreement and

return it to the State Office. d. An authorized representative of the New Jersey WIC Program shall sign the Agreement upon receipt of a signed Agreement. e. Currently active vendors shall be provided a new Vendor Agreement extending their authorization for another three (3) years provided that the Vendor has met and continues to meet selection criteria. 7. Final Decision a. Vendors receiving a denial letter (Attachment 1.31M) from their submission of the New Jersey WIC Application for Vendor Authorization Packet shall have the right to request a fair hearing. b. Vendors who have been denied must wait one year from the date of the original submission of the New Jersey WIC Application for Vendor Authorization Packet before submitting a new online Initial Vendor Assessment Form. 8. Termination of Agreement

a. For Convenience

i. Notwithstanding any provision or language in this policy to the contrary, the SA may terminate the Agreement at any time, in whole or in part, for the convenience of the State, upon no less than fifteen (15) days written notice to the Vendor or as specified by the SA.

ii. The Vendor may terminate their Vendor Agreement at any point during the authorization period upon no less than fifteen (15) days written notice to the SA.

b. For Cause

i. Where a WIC Vendor fails to perform, or comply with a policy, regulation, criteria, or any portion thereof, and/or fails to attend or satisfactorily complete the mandatory Vendor training, the SA may terminate the Vendor Agreement, upon no less than fifteen (15) days written notice to the Vendor or as specified by the SA with an opportunity to respond.

ii. The SA will immediately terminate the Agreement if it determines that the Vendor has provided false information in connection with its application for authorization. In cases of emergency, the SA may shorten the time periods of notification and may dispense with an opportunity to respond.

c. Vendors who do not meet the Selection Criteria and are disqualified must wait at least one year from their ineligibility date to be reassessed for eligibility through the Initial Retailer Assessment Form via the online portal.

------------------------------------- Attachment(s):

1.31A Initial Retailer Assessment Questions 1.31B New Jersey WIC Vendor Minimum Stock Requirements 1.31C Preparing for a WIC Vendor Monitoring Visit 1.31D Application for WIC Vendor Authorization 1.31E New Jersey WIC Vendor Application Packet Checklist

1.31F Department of Treasury Authorization for Release of Tax Return Information Form 1.31G Commodity Price List Survey (CPL) 1.31H Vendor Agreement 1.31H-a Vendor Agreement (without Signature Page) 1.31J Designation of Infant Formula Manufacturer, Retailer, Wholesaler and Distributor Form 1.31K Incomplete Submission of an Application for WIC Vendor Authorization 1.31L Denial Letter, Incomplete Application 1.31M Denial Letter, Failure of Vendor Applicant to meet Selection Criteria 1.31N Vendor Application Packet Cover Letter 1.31P Ineligibility to Reauthorize based on Vendor Selection Criteria Notification 1.39A Authorization Agreement for Direct Deposit (ACH) Credits Form 1.30A Vendor Selection Criteria 2.12 A-1 New Jersey WIC Authorized Food List English 1.43A Mandatory Interactive Training Notification Letter

NEW JERSEY DEPARTMENT OF HEALTH WIC SERVICES

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.32 Effective Date: March 25, 2022 Functional Area: I. VENDOR MANAGEMENT Subject: Inadequate Participant Access

A. POLICY:

1. To provide adequate participant access, the State Agency (SA), in accordance with 7 CFR, §246.12, must ensure denying authorization of a vendor location or disqualifying a vendor does not result in inadequate participant access to WIC supplemental foods.

2. Participant Access means the determination by the SA as to the availability of authorized vendors within a geographic area, thus creating a hardship for WIC participant access. Participant hardship shall not be taken to mean participant inconvenience or preference.

3. The SA will assess the Vendor Selection Criteria (P&P 1.30-A) for any vendor prior to denying authorization or disqualifying a vendor to ensure the action does not result in inadequate participant access.

4. The SA shall consider whether there is inadequate participant access following the process set forth in Section B below, prior to rendering a final determination to disqualify a Vendor pursuant to this policy or denying authorization to the Vendor.

5. The SA reserves the right to disqualify vendors determined to not be serving participant access need in accordance with federal regulations 7 CFR, §246.12(g)(3) and (g)(4).

6. In accordance with 7 CFR 246.12(l)(8), the validity or appropriateness of the SA’s participant access criteria and the SA’s determination regarding participant access is not subject to administrative review.

B. PROCEDURE:

1. Inadequate Participant Access - Assessment

a. The SA will collect and securely maintain documentation for use of the Inadequate Participant Access Assessment tool (P&P 1.32-A) resulting in the final determination, in addition to any supporting documentation, as needed.

b. The analysis for Participant Access determination includes the assessment of the following factors:

1. There are less than 4 other authorized WIC vendors within a 1-mile radius of this store. 2. There are geographic barrier(s) or conditions, that would significantly restrict participants access to using other NJ WIC authorized vendors in the area; impeding on a WIC participants ability to reach the destination of a store. The SA defines a geographic barrier for participants as an inaccessible area to a NJ WIC authorized store location. • Geographic barriers include, but are not limited to, bridges or interstate highways not open to foot traffic, or steep terrain not accessible by roadways. Geographic barriers as a result of natural disaster conditions that impede on the ability to access an authorized WIC Vendor can also be considered.

3. The need of a vendor to accommodate a participant that has physical disability that cannot be accommodated by other authorized vendors.

4. The need of a vendor to accommodate ten or more participants that can only be served by a particular vendor because of language barrier or religious dietary needs.

c. Exceptions to the criteria may be granted if the SA determines there is inadequate participant access (P&P 1.30-A, Vendor Selection Criteria). However, the following two criteria are required and must remain mandatory, with no exceptions: • A vendor applicant must maintain all SA established minimum stock inventory for all categories of WIC foods. • A vendor applicant must purchase infant formula only from the list provided by the State Agency of infant formula wholesalers, distributors and retailers licensed in New Jersey. The State Agency provides an updated list to all authorized vendors during authorization, re-authorization and on the NJ DOH WIC website found here: https://www.state.nj.us/health/fhs/wic/vendors/

2. Determination of Participant Access

a. The Participant Access analysis will be completed using the 1.32-A Inadequate Participant Access Assessment tool. The analysis must include a minimum of one factor, from the Participant Access Assessment tool, to determine the need for a store to remain NJ WIC Authorized.

b. If any of the responses are "Yes", the determination indicates the store location may remain as authorized based on NJ WIC Participant Access Analysis.

c. If the SA determines the Vendor is necessary for participant access, based on the Participant Access Assessment results, the SA will maintain the store location as WIC authorized.

d. If the Participant Access Assessment tool determines that the Vendor does not meet any of the 3 criteria, the SA will terminate the store location as WIC authorized.

Attachment(s) 1.32-A Inadequate Participant Access Assessment tool 1.30-A Vendor Selection Criteria (found within 1.31H Vendor Agreement)

This P&P Supersedes P&P 1.07 dated April 1995

Page 1 of 4 NEW JERSEY DEPARTMENT OF HEALTH WIC PROGRAM

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.33 Effective Date: January 9, 2018 Functional Area: I. FOOD DELIVERY SERVICES SUBJECT:

COMPLAINTS

A. POLICY:

The State Agency (SA) shall maintain a system of handling complaints. The complaints may be made by and/ or against Retail Vendors, Commodity Supplemental Food Programs, Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors, Local Agencies (LA), Participants or an Anonymous source.

B. PROCEDURE:

Local Agency (LA):

1. The LA shall provide a Complaint Reports (Attachment 1.33A) to anyone who would like to address serious concerns related to:

a. the misconduct or neglect toward Retail Vendors, Commodity Supplemental Food Programs, Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors, Local Agencies and/ or Participants. b. a programmatic policy, procedure or practice is not being adhered to. c. the standard of service was not received at a Retail Vendor, Commodity Supplemental Food Programs, Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors or Local Agency.

2. All Complaints must be documented on the Complaint Report Attachment 1.33A (also known as WIC-32). Instructions that appear on the form must be followed.

3. All Sections (I-V) on the Complaint Report must be completed to ensure the SA can accurately conduct follow up.

4. Complaint Reports (Attachment 1.33A) made by a Retail Vendors, Commodity Supplemental Food Programs, Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors, Local Agencies and/ or Participants must be reported to the SA within 24-48 hours.

5. If the complainant discusses a concern which violates Federal Regulations and / or State Policy, and chooses not to complete the Complaint Report, the LA/ SA representative must complete and submit the form on their behalf.

6. The LA must complete the form on behalf of the complainant should the complainant telephone the LA or the LA may provide an alternate method for submission.

7. The LA shall assist a Retail Vendor, Commodity Supplemental Food Programs,

This P&P Supersedes P&P 1.07 dated April 1995

Page 2 of 4 Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors, Local Agencies and/ or Participants in completing the Complaint Report if needed. The complainant shall not be required to sign and shall remain anonymous, if he/she prefers not to do so.

State Agency (SA):

1. The SA shall conduct follow up on all complaints forwarded by USDA, Retail Vendors, NJ DOH Feedback, Commodity Supplemental Food Programs, Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors, Local Agencies, other stattes and/ or Participants and anonymous sources.

2. The SA must complete the form on behalf of the complainant should the complainant telephone the SA or provide an alternate method for submission.

3. All Complaints must be documented on the Complaint Report Attachment 1.33A (also known as WIC-32). Instructions that appear on the form must be followed.

4. All Sections (I-V) on the Complaint Report must be completed to ensure the SA can accurately conduct follow up.

5. The LA must submit all Complaint Reports (Attachment 1.33A) made by a Retail Vendors, Commodity Supplemental Food Programs, Farmers Market Nutrition Program- Senior Farmers Market Nutrition Program Vendors, Local Agencies and/ or Participants within 24-48 hours to the SA.

6. The SA shall initiate an investigation within 14 business days for all Complaints.

7. All complaints received at the SA will be logged in the Food Delivery Services electronic complaint log.

a. All complaints will be identified by the Federal Fiscal Year (FFY) followed by a unique identifying complaint number. The following abbreviations will be used along with the unique identifying complaint number to identify the SA unit conducting the investigation:

i. Retail Vendor (V) ii. Commodity Supplemental Food Programs (CSFP) iii. Farmers Market Nutrition Program-Senior Farmers Market Nutrition Program Vendors (FM) iv. Local Agencies (FD) and/ or Participants (FD) b. The internal SA Food Delivery Services electronic complaint log will capture the following information:

This P&P Supersedes P&P 1.07 dated April 1995

Page 3 of 4 i. Date Received, Complaint Source ii. Complaint Against, Vendor Id# (if applicable) iii. Peer Group (if applicable) iv. Agency (if applicable) v. Name & title of Agency Staff (if applicable) vi. SA Staff Assigned to complaint vii. Secondary SA Staff Assigned to complaint (if applicable) viii. Date Complaint Assigned ix. Date Complaint Due x. Date Complaint Completed xi. Participant Name (if applicable) xii. Type of Complaint and the outcome

8. A designated SA staff will communicate with the LA via email to confirm the receipt of the Complaint Report. The SA will provide the LA the assigned complaint number for the Complaint Report submitted.

9. The SA unit supervisor/manager will assign a SA staff to investigate the complaint along with a due date.

10. The assigned SA staff must make attempts to conduct follow up with all parties noted on the complaint. Follow up activities may include, but are not limited, telephone communication, email, follow up letter, participant counseling, a onsite agency visit(s), Vendor monitoring, Compliance Buy(s) and /or training.

11. The SA staff must document all investigative activities on the State Agency Complaint Follow up Form (Attachment 1.33B).

a. The name and title of the SA staff who makes the call b. The name and title of the vendor staff who is interviewed c. The date(s) and time(s) of the conversation d. Outcome of investigation e. The policy, procedure or practices discussed with the complainant.

12. The SA staff must reference, reinforce and document the applicable Federal Regulations, programmatic policy, procedures and practices for corrective action and technical support.

13. The SA will determine the follow-up action required and will initiate such action, including, but not limited to, a Vendor monitoring and/ or Compliance Buy investigation, training, sanction levied against the vendor, and referral of the complaint to USDA for a civil rights compliance investigation.

This P&P Supersedes P&P 1.07 dated April 1995

Page 4 of 4

-------------------- Attachment(s): 1.33A Complaint Report 1.33B State Agency Complaint Follow up Form

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DEPARTMENT OF HEALTH WIC SERVICES

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.34 Effective Date: April 24, 2024 Functional Area: I. VENDOR MANAGEMENT Subject: Vendor Peer Group System

A. POLICY:

1. Vendor peer group system means a classification of authorized vendors into groups based on common store characteristics or criteria that affect food prices, for the purpose applying appropriate competitive price criteria to Vendors at authorization and limiting payments for food to competitive levels as established in 7 CFR 246.12(g)(4).

2. The State Agency (SA) shall establish a vendor peer group system, with distinct competitive price criteria and allowable reimbursement levels for each peer group. (P&P 1.35 Competitive Pricing) 3. The SA will inform all vendors of the criteria for peer groups, and shall inform each individual Vendor of its peer group assignment upon initial authorization and at the beginning of each reauthorization period. 4. The SA shall evaluate the effectiveness of the peer groups, allowable reimbursement levels, and competitive price criteria once every three (3) years. 5. The SA may change a Vendor's peer group designation whenever it is determined that placement in an alternate peer group is warranted with written notice to the Vendor. (Attachment 1.34-B Notification of Change to Peer Group Designation - Letter) B. PROCEDURE:

1. To determine a Vendor’s peer group assignment, the SA will consider the number of cash registers, geographic locations, and unique populations served.

2. The SA will assign Vendors into a peer group system consisting of four (4) different store types and three (3) regional classifications. The criteria for store type is described in Attachment 1.34A (Description of Vendor Peer Group System). a. Large/Chain Stores: Corporations which own 10 or more stores, or owner of 1 or more stores with 3 or more registers. This also includes online fulfillment centers and commissaries. b. Small Independent Stores: Owner of 1 or more stores; each has 1-2 cash registers. c. Nutritional Specialty Stores: Stores may be of any size but must specialize in serving individuals with specific dietary requirements. This includes Kosher and Halal stores. (Regional classifications are not applicable for these stores)

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d. Pharmacy* – Only Exempt Infant Formula/Nutritionals: This entity operates as a Statewide distribution center to ensure WIC participants have access to supplemental foods (i.e., only exempt infant formula/nutritionals). Regional classifications are not applicable to this Peer Group. a. *Direct Distribution Center: CAP of Lancaster e. eWIC Farmers Redeeming CVB only / Farmers Market Redeeming Farmers Market Nutrition Program (FMNP) benefits: Farmer is defined as an individual that sells eligible produce to WIC and senior participants and have five acres or more of land that grows food for human consumption. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized or be an enrollee. Farmers Market is defined as an association of local Farmers and/or Growers authorized by New Jersey Department of Health (NJDOH) who assemble at a defined location for selling their produce directly to consumers.

3. Peer group regional classifications are based on geographic identifiers (with the exception of Nutritional Specialty Stores). a. North: Bergen, Essex, Hudson, Hunterdon, Morris, Passaic, Somerset, Sussex and Warren b. Central: Mercer, Middlesex, Monmouth, Ocean, and Union c. South: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester and Salem

------------------------------------- Attachment(s): 1.34A Description of Vendor Peer Group System 1.34B Notification of Change to Peer Group Designation - Letter 1.48A Welcome Letter with Vendor ID, Peer Group and E-Mail Address Confirmation P&P 1.35 Competitive Pricing

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NEW JERSEY DEPARTMENT OF HEALTH WIC SERVICES

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.35 Effective Date: April 24, 2024 Functional Area: I. VENDOR MANAGEMENT Subject: Competitive Price Selection Criteria

A. POLICY:

1. The State Agency (SA) shall collect and monitor shelf prices for all vendors upon initial authorization and during the triennial authorization period.

2. The SA evaluates all authorized vendors for Price Competitiveness at the end of each calendar quarter using a data analytical software. The software produces a report (Tableau Average prices for top 10 items) of redemption dollars for 10 of the most purchased WIC food subcategories for the prior quarter, all required per the minimum stock requirements (see 1.31-B NJ Vendor WIC Vendor Minimum Stock Requirements).

3. The SA shall compare the shelf prices of the vendor applicant’s online Commodity Price List (CPL) Survey to the prices charged by other comparable authorized vendors. The online CPL Survey is a list of shelf prices submitted by the vendor during the initial and reauthorization period and/or as requested (see New Jersey WIC Program - Online Commodity Price List Survey (nj.gov)). This survey is analyzed to ensure that vendor applicant’s prices are competitive amongst their peer group (see 1.34 Vendor Peer Group System and 1.34-A Description of Vendor Peer Group System).

4. The SA must establish a vendor peer group system and distinct competitive price criteria and allowable reimbursement levels for each peer group (see 1.31-H/I Vendor Agreement, Vendor Selection Criteria).

5. The SA’s WIC Electronic Benefits Transfer (EBT) system gathers cost/requested redemption at the Universal Product Code (UPC) level for every product purchased with eWIC benefits. As a result, the SA utilizes extensive pricing data and Not to Exceed (NTE) levels available daily to ensure cost containment.

6. The SA must establish procedures to ensure that a vendor selected for participation in the program does not, subsequent to selection, increase prices to levels that would make the vendor ineligible for authorization (see 1.31-H/I Vendor Agreement, Vendor Selection Criteria).

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B. PROCEDURE:

1. Online CPL Survey

a. The SA shall maintain an online system for vendors to enter their shelf prices during initial and triennial authorization. The online CPL will require shelf prices for specific food items from minimum stock requirements and infant formulas.

b. Vendors can access the online system by following the link provided by the SA within the WIC application (see New Jersey WIC Program - Online Commodity Price List Survey (nj.gov)). This link will be available during the timeframe indicated in the notification. The vendor must complete the CPL by the specified deadline (see 1.31-G Commodity Price List Survey (Price Survey) Cover Letter). i. The Vendor must provide shelf prices for the store brand and national brand names, sizes, and prices that are carried in the store location for all categories as they appear. Prices must be reasonable and comparable to the prices of other stores of similar size and type in the same area.

2. Determining Competitive Price and Competitive Price Selection Criteria

a.

b.

3. Determining Average and Not to Exceed (NTE) Prices a.

b.

c. Interested retailer’s shelf prices are collected by way of the Online CPL Survey(see 1.31-G Commodity Price List Survey (Price Survey)) and are compared against redemptions of current vendors from the new store’s Vendor Peer Group.

d. EBT redemptions are paid up to the NTE level. NTE amounts adjust for market

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changes through collection and analysis of UPC level redemption data to ensure vendors remain competitive. The SA’s Management Information System (MIS) automatically calculates NTE level adjustments weekly.

e.

------------------------------------- Attachment(s): 1.31B NJ Vendor WIC Vendor Minimum Stock Requirements 1.31G Commodity Price List Survey (Price Survey) Cover Letter 1.31H/I Vendor Agreement, Vendor Selection Criteria 1.31R Online Commodity Price List Survey 1.34A Description of Vendor Peer Group System P&P 1.34 Vendor Peer Group System

1 | P a g e NEW JERSEY DEPARTMENT OF HEALTH WIC PROGRAM STATE POLICY Policy & Procedure Number: 1.38 Effective Date: April 24, 2024 Functional Area: I. VENDOR MANAGEMENT Subject: Vendor Compliance Investigations A. POLICY: 1. The SA must conduct compliance investigations of at least five percent of the number of high-risk vendors authorized by the SA as of October 1 of each fiscal year. a. If more than five percent of the State agency's vendors are identified as high-risk, the SA must prioritize such vendors to perform compliance investigations of those determined to have the most significant potential for program non-compliance and/or loss of funds. b. An investigation of a high-risk vendor conducted by a Federal, State, or local law enforcement agency may count toward this requirement. c. A compliance investigation conducted by another WIC State agency may count toward this requirement, provided that the SA implements mandatory sanctions. 2. High-risk vendor means a vendor identified as having a high probability of committing a vendor violation through the application of the criteria established in §246.12(j)(3) and any additional criteria established by the State agency (SA). (see P&P 1.50 Vendor Risk Criteria). 3. At the State Agency’s discretion, compliance investigations shall be accomplished by conducting undercover compliance buys or completing an inventory audit. a. A compliance buy is defined as a covert, on-site investigation in which a representative of the Program poses as a participant, parent or caretaker of an infant or child participant, or proxy, transacts one or more food instruments or cash-value vouchers, and does not reveal during the visit that he or she is a program representative. i. A good buy means a compliance buy with no program violation(s). ii. A bad buy means a compliance buy that results in program violation(s). b. An Inventory audit is defined as the examination of food invoices or other proofs of purchase to determine whether a vendor has purchased sufficient quantities of supplemental foods to provide participants the quantities specified on food instruments redeemed by the vendor during a given period of time.

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4. A compliance investigation of a vendor may be considered complete when: a. The SA determines that a sufficient number of compliance buys have been conducted to provide evidence of program non-compliance or b. when two compliance buys have been conducted in which no program violations are found. c. or when an Inventory Audit has been completed as per P&P 1.47 (Inventory Audits).

B. PROCEDURE:

1. Selection of Vendors for Compliance Investigations: a. A vendor may receive a compliance investigation at any time; however, the SA shall determine the minimum number of vendors that will receive an Inventory Audit by October 1 of each fiscal year to meet the cumulative federal requirement of five percent between Compliance Investigations and Inventory Audits. The SA may investigate any vendor at is discretion throughout the fiscal year. b. If more than five percent of the SA’s vendors are identified as high-risk, the SA must prioritize such vendors so as to perform compliance investigations of those determined to have the greatest potential for program noncompliance and/or loss of funds.

2. The SA shall select high-risk vendors based on risk factors defined in P&P 1.50 Vendor Risk Criteria.

3. Compliance investigations may also be performed on randomly selected vendors not designated as high-risk. The SA shall select vendors at random from the following: a. Vendor Database b. Participant Comment(s) c. Referrals

4. The Compliance Buy Investigator shall be thoroughly trained by the SA and produce evidence of training.

5. The SA investigator shall prepare a Compliance Investigation Report (see 1.38-A) and assign benefits to an eWIC card for each compliance buy.

6.

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7.

8.

9. When two (consecutive or nonconsecutive) compliance buys have been conducted in which no program violations are found, the investigation will be considered complete, all investigation details will be documented in the vendor’s file, and the SA will notify the vendor of the completed investigation in which no program violations were found.

10. When a compliance buy uncovers one or more program violations, the Vendor may be notified in writing (See 1.38-B, Compliance Investigation Training Letter) unless, in its discretion and on a case-by-case basis, the SA determines that notifying the vendor would compromise an investigation. a. Vendors receiving an inventory audit shall be notified in accordance with NJ P&P 1.47. b. Vendor retraining described in paragraph B 11 of this section will not be offered as part of an inventory audit.

11. Vendors that have received notice of a program violations resulting from a compliance buy may be required to attend a mandatory retraining covering the areas of non-compliance. A vendor’s failure to attend/complete the mandatory training shall be considered to be a program violation that is subject a sanction and/or termination of the vendor agreement.

Upon completion of the mandatory retraining, the vendor must submit a signed Training Agenda (see 1.38-C Mandatory Compliance Investigation Training Agenda) to the SA.

12. After completing the mandatory retraining, the Investigator will continue the compliance investigation until at least two good buys have occurred or until a pattern of violations (for the same violative incident) is established. a. For vendors not selected for retraining, the Investigator will continue the compliance investigation after the vendor has received notification of the initial program violation. The investigation will be considered completed once at least two

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good buys have occurred or until a pattern of violations (for the same violative incident) is established. 13. Vendors deemed to have committed a pattern of violations of the same violative incident shall be sanctioned in accordance with the Vendor Sanction Schedule (see 1.31-H/I Vendor Agreement, Appendix A).

------------------------------------- Attachment(s): 1.31H Vendor Agreement without Signature Page 1.31I Vendor Agreement with Signature Page 1.38A Compliance Investigation Report 1.38B Compliance Investigation Training Letter 1.38C Mandatory Compliance Investigation Training Agenda P&P 1.47 Inventory Audits P&P 1.50 Vendor Risk Criteria DRAFT

NEW JERSEY DEPARTMENT OF HEALTH WIC PROGRAM

STATE POLICY

Policy & Procedure Number: 1.45 Effective Date: May 20, 2022 Functional Area: I. VENDOR MANAGEMENT Subject: Vendor Violations, Vendor Sanctions and Administrative Reviews

A. POLICY: This policy is about Vendor Violations, Vendor Sanctions and Administrative Reviews:

1. A Vendor Violation means any intentional or unintentional action of a vendor's current owners, officers, managers, agents, or employees (with or without the knowledge of management) that violates the vendor agreement or Federal or State statutes, regulations, policies, or procedures governing the Program as defined in PP 1.31-I Vendor Agreement, Appendix A: Vendor Violations. 2. A Vendor Sanction means the specific action taken against a vendor in relation to violations or abuse as defined in PP 1.31-I Vendor Agreement, Appendix A: Vendor Violations. 3. An Administrative Review (also referred to as an Administrative Appeal) is the State Agency’s Administrative review procedures allowing affected Vendors who file an appeal concerning one of the actions listed in the Vendor Agreement, Appendix A an opportunity to have a review of the decision made by the WIC program. 4. An Impartial Decision-Maker means the person(s) designated for the purpose of conducting an administrative review. The decision-maker must be free of influence, ensuring no bias, real or perceived. The Impartial Decision-Maker’s decision is based solely on whether the State Agency has correctly applied NJ WIC program policies and procedures, according to the evidence presented at the review and the Federal statutory and regulatory provisions governing the Program. An Impartial Decision-Maker may be representative(s) of the Grant Appeal Board or another impartial party. 5. An Administrative Hearing is the process whereby the involved parties provide facts, evidence, and arguments toward a resolution. The administrative hearing involves disputes of Federal or State statutes, regulations, policies, or procedures governing the NJ WIC Program. The administrative hearing establishes a record of facts. 6. A Judicial Review means the power of the courts to examine the actions of the administrative appeal and to determine whether such actions are consistent with the WIC federal regulations and the NJ WIC Policies and Procedures and whether the administrative review decision was accurate. 7. A Civil Money Penalty (CMP) is a monetary fine issued as a penalty in lieu of disqualification or termination of a Vendor.

Formerly PP 1.46 Vendor Violations and Administrative Reviews

B. PROCEDURE:

1. Vendor Violations a. The State Agency (also referred to as SA) may sanction a Vendor for program abuse and failure to adhere to Federal and State rules and regulations. The SA will make a determination of actions when the Vendor has committed a vendor violation.

b. Federally Mandated and State Violations with corresponding sanctions and/or disqualifications are contained in Appendix A. Federally mandated sanctions are in 7 CFR Part 246.

c. For violations requiring a pattern of occurrences to impose a sanction, the SA must notify the Vendor after investigation establishes the pattern of occurrences necessary to impose a sanction for the violation, unless notification would compromise an investigation.

d. The SA must notify the Vendor of an initial violation in writing.

2. Vendor Sanctions a. The SA will impose Sanctions to the Vendor based on the violation committed by the Vendor as defined in accordance with the Vendor Agreement, Appendix A, Vendor Violations.

b. The SA will notify the Vendor in writing of the details of the committed violation and the sanction to be imposed.

c. The Vendor shall be responsible for the actions of its owners, officers, managers and employees and/or independent contractors in the handling of electronic benefits and the selling of authorized foods and shall be liable for any actions of his/her employees, agents or representatives that violate the terms and conditions of this Agreement or State Agency rules, regulations, policies and procedures, as amended and supplemented.

d. As an alternative sanction and when the State Agency determines there to be a WIC participant access issue, a civil money penalty (CMP) may be assessed against a Vendor in lieu of disqualification to allow the Vendor to continue to serve an otherwise uncovered participant group. (Policy and Procedure 1.46 Vendor Termination)

3. Administrative Reviews a. The Vendor has the right to request an administrative appeal as described in CFR 246.18 (Refer to Appendix B, C and D of the Vendor Agreement).

b. A request for a hearing must be made by the Vendor or his/her representative in writing or in person to the Grants Appeal Board stating the reasons for the request within fifteen (15) business days of the date of notification of adverse action. The

address to which the Vendor may file its appeal shall be provided by the State Agency on the Notice of Termination. See Appendix B of the Vendor Agreement, Administrative Appeal of State Agency Decisions against Vendors, incorporated herein by reference.

c. The SA may appoint a reviewing official (impartial decision-maker), such as a chief hearing officer or judicial officers to review appeal decisions to ensure that they conform to approved policies and procedures.

d. All parties will be provided adequate advance notice of the time and place of the hearing to provide all parties involved sufficient time to prepare for the hearing. Also, all parties will be provided an opportunity to examine, prior to and during the hearing, the documents and records presented to support the decision under appeal. For example: pertinent regulations, policy or specific section of the Vendor Agreement.

e. All parties will be provided an opportunity to present their case and advance arguments without undue interference.

f. All parties have at least one opportunity to reschedule the hearing date upon request. The SA may allow more than the minimum of two hearing dates based extenuating circumstances.

g. All parties will have the opportunity to be represented by counsel, bring witnesses, question or refute any testimony or evidence, including an opportunity to confront and cross-examine adverse witnesses. 4. Types of Administrative Reviews

a. There are two types of Administrative Reviews: • A full administrative review consists of a hearing with impartial decision- makers. During a full administrative review, the SA claims against the Vendor will be presented by WIC representatives and or their designees.

• An abbreviated administrative review is based on written documentation and other materials submitted to an official by both parties. Abbreviated reviews do not include a hearing.

b. The SA must provide a full administrative review for Vendors that appeal the following adverse actions: 1. Denial of authorization based on the Vendor Selection Criteria for competitive price or for minimum variety and quantity of authorized supplemental foods, or on a determination that the Vendor is attempting to circumvent a sanction. (See Vendor Selection Criteria, Appendix E)

2. Denial of authorization based on the Vendor Selection Criteria for minimum stock requirements, (See Vendor Selection Criteria, Appendix E)

Formerly PP 1.46 Vendor Violations and Administrative Reviews

3. Termination of an agreement for cause

4. Disqualification

5. The imposition of a fine or a civil money penalty in lieu of a disqualification

c. The SA must provide abbreviated administrative reviews for Vendors that appeal the following adverse actions, unless the State agency decides to provide full administrative reviews for any of these types of adverse actions: 1. Denial of authorization based on the Vendor Selection Criteria for business integrity or for a current SNAP disqualification or civil money penalty for hardship (§246.12(g)(3)(ii) and (g)(3)(iii))

2. Denial of authorization based on the application of the Vendor Selection Criteria for competitive price (§246.12(g)(4))

3. The application of the State agency's Vendor peer group criteria and the criteria used to identify vendors that are above-50-percent Vendors or comparable to above-50- percent Vendors

4. Denial of authorization based on a SA established Vendor Selection Criteria if the basis of the denial is a WIC Vendor sanction or a SNAP withdrawal of authorization or disqualification

5. Denial of authorization based on the State agency's Vendor Selection Criteria (§246.12(g)(2))

6. Denial of authorization because a Vendor submitted or failed to complete its application outside the timeframes during which applications are being accepted and processed as established by the State agency under §246.12(g)(8) 7. Termination of an agreement because of a change in ownership or location or cessation of operations (§246.12(h)(3)(xvii))

8. Disqualification based on a trafficking conviction (§246.12(l)(1)(i))

9. Disqualification based on the imposition of a SNAP civil money penalty for hardship (§246.12(l)(2)(ii))

10. Disqualification or a civil money penalty imposed in lieu of disqualification based on a mandatory sanction imposed by another WIC State agency (§246.12(l)(2)(iii))

11. A civil money penalty imposed in lieu of disqualification based on a SNAP disqualification under §246.12(l)(1)(vii)

12. Disqualification of a Vendor because of disqualification from the SNAP and the State Agency’s determination regarding participant access are not subject to review.

d. The SA shall not provide administrative reviews pursuant to Vendors that appeal the following actions: 1. The validity of appropriateness of the State Agency's Vendor Selection Criteria.

2. The validity or appropriateness of the State Agency's participant access determinations.

3. The State Agency's determinations whether a Vendor had an effective policy and program in effect to prevent trafficking and that the ownership of the Vendor was not aware of, did not approve of, and was not involved in the conduct of the violation.

4. Denial of authorization if the State Agency's Vendor authorization is subject to the procurement procedures applicable to the State Agency.

5. The expiration of the Vendor’s NJ WIC Vendor Agreement.

6. Disputes regarding WIC transaction processing, settlements or eWIC claims.

7. Disqualification of a Vendor as a result of disqualification from SNAP and the SA determination regarding participant access are not subject to review.

8. The SA’s determination to include or exclude an infant formula manufacturer, wholesaler, distributor, or retailer from the list required pursuant to §246.12(g)(10)(i).

9. The SA’s determination whether to notify a Vendor in writing when an investigation reveals an initial violation for which a pattern of violations must be established in order to impose a sanction pursuant to §246.12(l)(3).

5. Administrative Review Decisions a. The impartial decision maker, whose decision as to the validity of the SA's action, shall rest solely on the evidence presented at the administrative review/hearing and the statutory and regulatory provisions governing the WIC Program. The basis for the decision shall be stated in writing.

b. The decision by the impartial decision maker shall summarize the facts of the

Formerly PP 1.46 Vendor Violations and Administrative Reviews

case, specify the reasons for the decision, and identify the supporting evidence and the documents and records presented to support the decision under appeal. The decision shall become a part of the appeal record.

c. The SA will provide written notification of the administrative review decision within 30 days of the completion of the administrative review.

d. If the Grant Appeal Board was found in favor of the retailer, the following will occur. • If the vendor requested an appeal based on denial of authorization, termination or disqualification, the Vendor will be authorized as soon as administratively feasible, after receipt of the review decision.

• If the vendor requested an appeal, based on violations and sanctions the adverse actions will be removed from the Vendor’s record.

e. If the Grant Appeal Board was found in favor of the SA, the following will occur. • If the vendor requested an appeal based on denial of authorization, termination or disqualification, the Vendor will be terminated as soon as administratively feasible, after receipt of the review decision.

• If the decision is regarding a Civil Money Penalty, efforts to collect the penalty will resume immediately as referenced in P&P 1.46, Vendor Terminations and Disqualifications.

f. The SA will notify FNS of SNAP reciprocal disqualifications.

g. The SA will notify WIC Local Agencies of the Vendor contract termination or disqualification from accepting NJ WIC benefits.

h. The Vendor will be required to return NJ WIC owned Stand Beside/Single function equipment, if applicable.

i. If the Vendor expresses an interest in pursuing a further review of the decision, the SA shall explain further State level review hearing processes. If further hearing processes are not available or have been exhausted, the SA shall explain the right to pursue judicial review of the decision.

j. The effective date of any disqualification, not including disqualification for the violations listed in 7 CFR 246.18(a)(iii)(k)(2), shall be twenty (20) days after the date of written notice and shall be designated in the letter of notification of disqualification. An administrative appeal of the disqualification by the Vendor shall automatically postpone the effective date of the disqualification until the Grant Appeal Board renders a final decision.

7. Judicial Review a. If the Administrative Review decision upholds the adverse action against the vendor, farmer or farmers' market or local agency, the State Agency must inform the vendor or local agency that it may be able to pursue judicial review of the decision.

b. The Administrative Review Outcome Notice must inform the Vendor that they may pursue Judicial review.

c. If the decision is reversed as a result of a judicial review the NJ WIC Program must implement the decision within the timeframe as specified within the final orders of the court or as soon as administratively feasible, after receipt of the review decision.

8. Withdrawal or Default of an Appeal a. A withdrawal of an appeal occurs when the Vendor states, in writing, that an appeal is no longer desired.

b. A default of an appeal occurs when: i. The Vendor fails to appear at the full administrative review without good cause as determined by the impartial decision makers. ii. The Vendor fails to submit written grounds for the appeal and documentation supporting the appeal by the deadline established in the appeal notification iii. The Vendor cannot be located through his or her last contact information on record.

9. Continuing Responsibilities a. Appealing an adverse action does not relieve a vendor from responsibility for continued compliance with the terms of the Vendor Agreement during the appeal pending process. The SA may impose sanctions for vendor violations, separate and apart from those of the standing appeal process.

b. If the Impartial Decision Maker’s determination of the first appeal was made in favor of the retailer this action will have no bearing subsequent Grant Appeal requests.

c. If the Impartial Decision Maker’s determination of the first appeal was made in favor of the SA for denial of authorization, termination or disqualification, no further appeal action will be permitted.

Formerly PP 1.46 Vendor Violations and Administrative Reviews

------------------------------------- Attachment(s):

PP 1.46 Vendor Terminations and Disqualifications PP 1.46 A-J Decision of Termination Letters PP 1.31 I Vendor Agreement, Appendix A: Vendor Violations PP 1.31 I Vendor Agreement, Appendix B: Full Administrative Appeal of State Agency Decisions against Vendors PP 1.31-I Vendor Agreement, Appendix C: Abbreviated Administrative Appeal of State Agency Decisions against Vendors PP 1.31-I Vendor Agreement, Appendix D: Administrative Review of State Agency Actions

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NEW JERSEY DEPARTMENT OF HEALTH WIC PROGRAM

POLICY AND PROCEDURE MANUAL

Policy & Procedure Number: 1.47 Effective Date: April 24, 2024 Functional Area: I. VENDOR MANAGEMENT Subject: Vendor Inventory Audits

A. POLICY:

1. The State Agency (SA) reserves the right to perform an Inventory Audit at any time on any WIC authorized vendor. A vendor that fails an inventory audit shall be sanctioned in accordance with the Vendor Sanction Schedule (NJ P&P 1.31H/I), which includes termination of the Vendor Agreement and the imposition of a vendor claim.

2. Inventory Audit means the examination of food invoices or other proofs of purchase to determine whether a vendor has purchased sufficient quantities of supplemental foods to provide participants with the quantities specified on the Electronic Benefit Account (EBA) redeemed by the vendor during a given period of time.

3. Selection of Vendors for Inventory Audits: a. The SA shall determine the minimum number of vendors that will receive an Inventory Audit by October 1 of each fiscal year to meet the cumulative minimum federal requirement of five percent between Compliance Investigations and Inventory Audits. b. If more than five percent of the SA’s vendors are identified as high-risk, the SA must prioritize such vendors so as to perform Inventory Audits of those determined to have the greatest potential for program noncompliance and/or loss of funds.

4. The SA will notify the vendor of the inventory audit and request invoices for a defined period of time. Invoices or purchase records must show the following: a. name and address of the supplier or wholesaler, b. date of the purchase, c. a list of the items purchased, including size, stock number, UPC code (if available), quantity, and unit price. d. sales receipts for WIC-approved foods purchased at retail grocers (for resale by the vendor) must include the name and address of the store, the date of purchase, a description of the exact items purchased, the unit price of the items, and the total quantity purchased.

5. The vendor submission/records must also adhere to the following: a. Receipts that do not entirely describe the actual item shall have computer codes, which can be verified by contacting the store at which the merchandise was purchased. b. All receipts from purchases at retail establishments must be machine-dated by the establishment. Hand-dated (written) retail store receipts are not acceptable. c. Affidavits, Statements of Fact, and oral statements shall not be accepted as evidence of inventory. Only purchase invoices or retail receipts, as described in this section, shall be accepted and constitute evidence of inventory.

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B. PROCEDURES:

1. The SA shall select high-risk vendors based on risk factors defined in P&P 1.50 Vendor Risk Criteria.

2.

3.

4. The owner or their representative has fourteen (14) calendar days to respond to the notification. Failure to respond may result in the imposition of a sanction in accordance with the vendor sanction schedule and termination of the vendor agreement. A claim for the amount of redemptions not validated for the period being audited may also be imposed.

5. After the SA has reviewed the documentation sent from the vendor utilizing the Inventory Audit Analysis form (NJ P&P Attachment 1.47D) and finds discrepancies, the SA will inform the vendor of the discrepancies and provide the vendor fourteen (14) calendar days to submit additional documentation.

6. Documentation must be received within fourteen (14) calendar days from receipt of the notification. Failure to respond to SA programmatic requests will result in a failed inventory audit. The vendor shall be sanctioned in accordance with the Vendor Sanction Schedule (NJ P&P 1.31H/I), which includes the termination of the vendor agreement and may include the imposition of a vendor claim for the amount of redemptions not validated for the period being audited.

7. Within sixty (60) calendar days, the SA shall review the documentation and make a determination utilizing the Inventory Audit Analysis form (NJ P&P Attachment 1.47D). If the documents received by the SA are determined not to be acceptable, the SA will send the vendor an Incomplete Inventory Audit Letter (NJ P&P Attachment 1.47C). The vendor must respond to the Inventory Audit Letter within ten (14) calendar days. Failure to respond shall be considered a failed inventory audit, and the vendor shall be sanctioned in accordance with the Vendor Sanction Schedule. A vendor claim for the amount of redemptions not validated for the period being audited shall also be imposed.

a. If the inventory audit results show that the amount of food items from the initial inventory count plus the amount of food item inventory documented during the audit period exceeds the total number of food items sold to WIC customers, or if any identified discrepancy amount totals less than $250, the vendor is deemed to have passed the audit. b. If the inventory audit results show that the total number of food items sold to WIC customers exceeds the amount of the food items from the initial inventory count plus the

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amount of food item inventory documented during the audit period, or if any discrepancy amount totals exceed $250, the vendor is deemed to have failed the audit. c. Vendors deemed to have failed an inventory audit will be subject to a 3-year disqualification per the State Agency WIC Sanction Schedule. If the State Agency determines that disqualifying the vendor would result in inadequate participant access, the State Agency will issue a Civil Money Penalty in accordance with 7 CFR 246.12(l)(1)(x) and the State Agency WIC Sanction Schedule.

8. The State Agency will establish a claim for the total dollar amount for any discrepancy identified during the audit, i.e., the cost for all food items not accounted for in the vendor’s invoice records.

9. If the audit is determined to be in compliance, the vendor will be notified via the Inventory Audit- In-compliance Letter (Attachment 1.47E).

10. If the audit is determined to not be in compliance, the vendor shall be sanctioned in accordance with the Vendor Sanction Schedule (NJ P&P 1.31H/I), which includes termination of the Vendor Agreement and the imposition of a vendor claim for the amount of redemptions not validated for the period being audited. The vendor will be notified of the failed audit via the Inventory Audit- Non-Compliance Letter (NJ P&P Attachment 1.47F).

------------------------------------- Attachment(s): 1.31H/I Vendor Agreement 1.47A Initial Formula Inventory Form 1.47B Inventory Audit Notification Letter 1.47C Incomplete Inventory Audit Letter 1.47D Inventory Audit Analysis Form 1.47E Inventory Audit - In-compliance Letter 1.47F Inventory Audit - Non-compliant Letter P&P 1.38 Vendor Compliance Investigations P&P 1.42 Routine Monitoring P&P 1.50 Vendor High-Risk Criteria DRAFT

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NEW JERSEY DEPARTMENT OF HEALTH WIC PROGRAM STATE POLICY Policy & Procedure Number: 1.50 Effective Date: April 24, 2024 Functional Area: I. VENDOR MANAGEMENT Subject: High-Risk Criteria A. POLICY: 1. High-risk vendor means a vendor identified as having a high probability of committing a vendor violation through the application of the criteria established in 7 CFR §246.12(j)(3) and any additional criteria established by the State agency (SA).

2. The SA must identify high-risk vendors at least once a year using criteria developed by FNS and/or other statistically based criteria developed by the State Agency.

3. The SA shall establish a methodology to recognize high-risk vendors with the aim of preventing, limiting, and sanctioning them to maintain WIC program integrity.

4. Program integrity activities include trainings, routine vendor monitoring, compliance investigations, and inventory audits (see P&P’s 1.38, 1.42, and 1.47).

5. The SA must conduct monitoring visits and compliance investigations (inclusive of inventory audits) on all high-risk vendors up to a minimum of five percent (5%).

a. If more than five percent of the State agency’s vendors are identified as high-risk, the State agency must prioritize such vendors to perform monitoring visits and compliance investigations of those determined to have the greatest potential for program non-compliance and/or loss of funds. b. If fewer than five percent (5%) of the State agency’s authorized vendors are identified as high-risk, the State agency must randomly select additional vendors on which to conduct compliance investigations sufficient to meet the five percent requirement.

B. PROCEDURE:

1. The SA shall utilize the following federally mandatory reports to identify high-risk vendors: a.

b.

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2. The SA may identify high-risk vendors from SA reports, but not limited to the reports found in attachment 1.50A State Agency Indicator Reports list. a. State Agency Indicator Reports: The Department uses statistically based reports to identify Vendors who are out of program compliance and/or have a high probability of having a vendor violation. i. These reports are produced, reviewed, and analyzed at least monthly and comply with USDA, FNS criteria for high-risk reports. ii. Vendors identified on these reports may receive a warning notice, sanction, monitoring visit, compliance buy and/or inventory audit. b. Complaints: The SA receives information about Vendor noncompliance from a variety of sources, including WIC participants, other Vendors, local agencies, federal, state or local agencies (including law enforcement agencies) and interested citizens. i. Follow-up on complaints may include investigations by the SA, monitoring visits, compliance buys or referral to federal, state or local law enforcement agencies. ii. Additional information on complaints is described in P&P 1.33 Complaints. iii. The SA may also identify high-risk Vendors through unusual WIC benefit redemptions or redemption patterns.

3. The SA may consider vendors designated as high-risk by the Supplemental Nutrition Assistance Program (SNAP) for program integrity activities.

4. Any vendor owner who has been disqualified from the program and granted reauthorization shall be designated a high-risk vendor for one year from the date of the new authorization. The vendor shall be reassessed after one year.

5. On an ongoing basis, the SA shall review the reports to identify vendors and assign high- risk status in the SA internal database. This is established by our Python program which is coded to automatically produce the report on a monthly basis. For the lists used to identify vendors for high risk please refer to 1.50A (Refer P&P 1.50A State Agency Indicator Reports list.

6. The vendor’s designation as high-risk will be updated to “no-risk” in the SA’s internal database after the completion of program integrity activities, provided that the vendor is found to be compliant according to the policies outlined in the program integrity activity policies P&P 1.38 Vendor Compliance Investigations, P&P 1.42 Routine Vendor Monitoring and P&P 1.47 Inventory Audits.

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------------------------------------- Attachment(s): 1.50A State Agency Indicator Reports list 1.33 Complaints1.38 Vendor Compliance Investigations 1.42 Routine Vendor Monitoring 1.47 Inventory Audits