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Food aid program for women, kids fails to weed out bad vendors

By Phillip Swarts

Monday - 4/22/2013, 2:18pm  ET

A federal program that provides food to impoverished mothers and young children has continued paying vendors that have been caught overcharging the government or handing out spoiled foods, an investigation found.

The U.S. Agriculture Department's inspector general reported its spot check of the Women, Infants and Children (WIC) program in three states identified more than three dozen vendors that were continuing to collect federal funds even though they should have been disqualified for violations of federal and state rules.

The vendors have already collected $3 million in payments and are in line for even more money unless the program's state partners take action, the internal watchdog found. 

"We identified 42 WIC vendors that continued to be authorized to redeem food instruments after committing violations that should have led to their disqualification, such as overcharging the program and/or selling expired foods to the participants," the inspector general said.  "These vendors could, if allowed to continue their authorization, redeem an estimated $6.6 million in WIC benefits."

The Agriculture Department's Food and Nutrition Service (FNS) provides the funds to state agencies to pay for food and other nutritional costs for mothers and children in the WIC program.  In turn, the states perform "management evaluations" to make sure the tax dollars entrusted to them are being spent wisely.  

Investigators reviewed only three states, and found that Florida alone could be wasting $6.6 million with poor management and little oversight.  The state lacked "a process for tracking vendor violations to ensure that vendors who committed patterns of violations received the proper sanctions," investigators said.

The vendors committed various violations including selling expired food, overcharging for food and claiming to have sold more food than they actually did, mistakes that should have led to between six months and three years disbarment from the program, the inspector general said.

Instead, Florida kept paying the companies, which racked up $3.2 million during time they should have been disqualified between 2007 and 2011, investigators said.  And if quick action isn't taken to correct the problem, another $3.4 million could be wasted on current and upcoming payments.

Florida also did not closely monitor the 35 businesses it labeled as high-risk and prone to fraud, the inspector general said.  Despite requirements that all the high-risk companies must be closely watched, state officials only investigated 11, and wound up recouping $71,000 that shouldn't have been paid to the businesses in the first place.

"In response, state agency officials could not explain why none of these 24 high-risk vendors received compliance investigations," the IG said.  "Although the agency vendor manager believed that he was authorized to use his own discretion regarding monitoring, the regulations specifically require that compliance investigations be conducted on high-risk vendors."

The Women, Infants and Children (WIC) is a special subset of the federal government's Supplemental Nutrition Assistance Program.  It "serves low-income pregnant, postpartum and breastfeeding women, and infants and children up to age five," according to USDA.  WIC served about 9 million people per month in fiscal year 2011, with $5 billion in food costs.

Florida state officials did not return calls seeking comment.

When the state did take disciplinary action, it disproportionately ignored large retail stores, investigators said.

"Enforcement actions were never taken against chain stores, regardless of either the severity or the frequency of the violations identified," investigators said, noting that because 80 percent of all vendors in Florida are large chain stores, this meant that few punishments were handed out.

Meanwhile, nine out of the ten non-chain stores that had serious violations were disqualified for three years, investigators said.

State officials argued that if a single store in a chain was disqualified, people could just take their SNAP benefits to a different store in the chain, which could cause confusion.  

A Florida official also told federal investigators it was believed that larger stores suffered from "unintentional cashier errors" instead of willful violations, an argument the inspector general rejected.

But investigators also warned that it's possible Florida's rules are too strict, and too many business are listed as being disqualified for minor infractions.  Rules are so stringent, for example, that a store which "had two incidences of a single expired cereal box on the shelf would be subject to mandatory disqualification," investigators said.  The inspector general said it was difficult to determine how much money might have gone to serious violators versus those with minor infractions.

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