the past 12 months (this requirement can be satisfied by having the institutions' representatives visit the State Agency Distribution Center; explaining the donation program at group meetings, conferences, or seminars conducted by donation personnel; personal letters or telephone conversations with, or visits to the institutions for the purpose of explaining the program); (ii) the periodic circularization of information about the donable property program to all eligible donees at least once each year; and (iii) a continuing review of the records of property distributed to donees to insure that all such property is distributed on an equitable basis and that such property is useful and needed by the recipient.

(9) Procedure for obtaining the certifications and agreements required by §§ 13.6(b) (1), (2) and (3), 13.9, and 13.10 of this subtitle.

(10) Procedure for utilization surveys at educational and health institutions to ascertain that property with a single item acquisition cost of $2,500 or more, donated to them, is being used in accordance with their certifications and agreements. This procedure shall include provision for reports on such surveys.

(11) Samples of all forms used by the State Agency.

(c) [Reserved]

[32 F.R. 9167, June 28, 1967, as amended at 33 F.R. 17787, Nov. 28, 1968]

§ 14.6 Books and records.

(a) The fiscal accounting of the State Agency shall be accomplished by a double entry system. The system shall contain a chart of accounts, a general ledger with accounts for all assets, liabilities, income, and expense, and journals, or their equivalent, for the original record of transactions. Accounting records shall be maintained in a manner that will identify and separately account for funds accumulated from service charges against donee institutions and organizations.

(b) Financial records and all other books and records of the State Agency shall be subject to inspection by representatives of the Department.

(c) Each State Agency shall maintain accurate accountability records of all donable property approved for transfer to the State Agency and donable property received, warehoused, and distributed by it. Accountability records of all single items having an acquisition cost of

36-099-704

$2,500 or more shall be kept separate from those of lesser amounts.

(d) Records and documents pertaining to the eligibility of donee institutions and organizations shall be maintained in the form and manner prescribed by the Department.

(e) All official records of the State Agency shall be kept for a minimum period of 5 years. However, records pertaining to property containing restrictions for more than 4 years shall be kept 1 year beyond the specified periods of restrictions. In those cases where property is in compliance status at the expiration of the period of restriction the records will be retained for at least 1 year after the compliance case has been closed.

§ 14.7 Service charges and funds.

(a) Service charges, as a whole, for the care and handling of donable surplus property shall be limited to the amount necessary to pay actual expenses of current operations and to purchase necessary equipment, plus the accumulation and maintenance of a working capital reserve. The service charge assessed by a State agency for the transfer of donable surplus property shall be reasonable in relation to costs incident to transfers. (b) A State Agency's working capital reserve shall be computed as follows: (1) Add together the following items of current assets:

(i) Cash on hand and in depositories; (ii) Investments (readily convertible into cash);

(iii) Accounts receivable.

(2) From the total of the above described current assets, deduct all liabilities that are due (including installments that fall due) within 1 year, and any obligations represented by funds not accumulated from service charges which are required to be returned eventually to the source from which they were derived.

(c) The working capital reserve shall not exceed an amount equivalent to the actual cost of operation during the immediate past fiscal year except with the written approval of the Department.

(d) Integrity of funds accumulated from service charges against donee institutions and organizations, including income accruing from their investments shall be maintained, and such funds shall be used only for the operations of the Surplus Property Utilization Program and shall not be available for any other

purpose. Records and accounts shall be maintained by the State agency of monies expended for the construction of warehouses, the purchase of fixtures, equipment, trucks, etc., for State agency operations from service charge funds. When any of this property is no longer needed it shall be disposed of by trading the item for a like item, by public bid sale or under other arrangements approved by the Department. All monies received from sale of such property shall be deposited in the service charge fund. Service charge funds may be used to purchase replacement parts for the purpose of rehabilitating Federal surplus property. Service charge funds may not be used to purchase property solely for donation purposes. No property, equipment, or facilities procured by the State agency through expenditure of service charge funds shall be transferred to or used, part-time or otherwise, by any agency or instrumentality of the State other than the State agency, unless such use is compensated for on a reasonable charge basis and the proceeds deposited to the service charge account.

(e) A State Agency shall accept payment of service charges only in the form of warrants, checks, or other official instruments drawn or issued by, and in the name of, the respective donee institutions or organizations.

(f) Funds accumulated by a State Agency from service charges against donee institutions and organizations, over and above the working capital reserve as provided for in this part, shall be refunded to donee institutions and organizations (1) on a pro rata basis (based upon total charges collected during the preceding fiscal year) or (2) by reduced service charges during the current and the next ensuing fiscal year.

(g) Advance approval of the Department is required for the obligation or expenditure of service charge funds to acquire office or distribution center facilities, for making advance rental payments to acquire or improve the same, or for capital improvements to such facilities. State agencies desiring to utilize service charge funds for capital expenditures to acquire or improve office or distribution center facilities shall submit a written proposal describing and justifying the proposed expenditure to the Department. The proposal must specify terms and conditions which would protect the equities of the donees who con

tributed service charges to the fund. The following circumstances will be considered in the Department's determination that the protection is afforded by the proposal:

(1) If title to the property in which the funds are invested will be vested in the State Agency for Surplus Property, and provision is made for refund to the donees of any amount received from the ultimate sale or other disposition of the property;

(2) If provision is made for a refund to the donees of any unamortized portion of funds advanced or expended in event occupancy by the State Surplus Property Agency is terminated; or

(3) In the case of advance rental payments, if the charges for occupancy of State-owned space are limited to the reasonable cost of maintenance and depreciation, unless it can be demonstrated that other State agencies are required to pay higher rentals under established State policy and practice.

[32 F.R. 9167, June 28, 1967, as amended at 33 F.R. 17787, Nov. 28, 1968]

The operations and financial affairs of the State agency shall be audited at least every 2 years in accordance with generally accepted auditing standards by an appropriate State authority or by independent certified public accountants or independent licensed public accountants, certified or licensed by a regulatory authority of a State or other subdivision of the United States. Guidelines furnished by the Department shall be followed in conducting the audit.

[33 F.R. 17787, Nov. 28, 1968]

§ 14.9 Handling of property.

(a) All acquisition, warehousing, and distribution functions shall be a direct part of the State Agency's operation and shall be under the direction and control of a single executive officer.

(b) All distribution of donable property to eligible civil defense organizations will be made only in accordance with pertinent regulations of the Office of Civil Defense.

(c) Donable surplus property shall be compared with the respective Standard Form 123 and pertinent shipping documents immediately upon receipt, and any shortage or overage shall be reported to the agency from which the property was obtained and a copy of the report

shall be transmitted to the appropriate regional office of the Department, in accordance with procedures set forth in the Surplus Property Utilization Manual issued by the Department.

(d) State Agencies shall maintain adequate provision for protecting property in their custody, including reasonable protection against the hazards of fire, theft, vandalism, and weather.

(e) State Agencies shall, at least annually, report to the appropriate Regional Representative all surplus property which has been in their custody longer than 12 months. Such reports shall be made within 60 days following periodic verification of property on hand as required by the Plan of Operation.

§ 14.10 Eligibility.

Findings by State Agencies as to the eligibility of applicants to acquire donable property in accordance with the requirements of section 203 (j) of the Act and regulations issued thereunder shall be based upon applications by the governing bodies of the applicant institutions stating the nature and purpose of the institutions and shall be recorded and such record preserved in accordance with the provisions of § 14.6(d). However, the foregoing requirement does not apply to tax-supported, approved, and/or accredited public schools, colleges, universities, and school systems which were participating in the donable property program prior to January 1, 1968. [33 FR. 5875, Apr. 17, 1968]

§ 14.11 Utilization and compliance responsibility.

(a) Each State Agency shall assist the Department in effecting utilization and compliance by health and educational donees with the terms and conditions established for any single item of donated property having an acquisition cost of $2,500 or more, and shall make an on-site investigation of the use of such item as least once during the period of Federal restrictions. The SASP shall fully document its investigations and make its report of investigation available for review by any authorized Federal official.

(b) State Agencies shall take reasonable measures to assure that single items of personal property with an acquisition cost of less than $2,500 that are donated under the provisions of the Act

for health or educational purposes are actually used for such purposes.

(c) Where information received by a State Agency indicates fraud or misuse of surplus property donated for health, educational or civil defense purposes, the circumstances pertaining thereto shall be reported immediately to the Department. Upon request by the appropriate Regional Representative, State Agencies shall make appropriate investigations of alleged fraud or misuse of surplus personal property donated for health and educational purposes.

(d) State Agencies shall report immediately to the appropriate law enforcement authorities and to the respective Regional Representative any theft, fraud or indication of fraud in connection with any donable property in its custody and shall investigate and/or settle any such case only with the concurrence of the Regional Representative. § 14.12 Assistance to the Department.

Each State Agency shall cooperate with the Department by releasing property from its custody upon request, and will assist the Department in obtaining voluntary release by donee institutions of property needed for defense or emergency use.

If the Department determines that a State Agency is not operating in accordance with its approved Plan of Operation or these Minimum Standards, allocation of property to the State Agency may be suspended until the nonconformance is corrected to the satisfaction of the Department.

§ 14.14 Amendments.

The Department reserves the right at any time to modify or amend these Minimum Standards. Upon issuance of amendments hereto requiring State Agencies to modify their operations, reasonable opportunity will be afforded the State Agencies to conform their operations to such amended standards. § 14.15 Temporary suspension.

Compliance with the requirements imposed by the first sentence in each of §§ 14.6(c) and 14.11(a), is temporarily suspended until notice of their effective dates shall hereafter be published. State Plans of Operation shall, nevertheless, contain appropriate provision to meet such suspended requirements. [32 F.R. 16100, Nov. 23, 1967]

Congress has directed that blind persons licensed by State Agencies under the provisions of the Randolph-Sheppard Vending Stand Act, be authorized, and, so far as feasible, be given preference to operate vending stands on any Federal property where such vending stands may be properly and satisfactorily operated by blind persons. Section 4(a), Public Law 565, 68 Stat. 663 (20 U.S.C. 107). That law further directs the head of each department or agency in control of the maintenance, operation, and protection of Federal property to prescribe regulations, with the approval of the President, to assure that preference including assignment of vending machine income to achieve and protect that preference.

§ 20.2 Department policy on permits for vending stands.

(a) Pursuant to these responsibilities and subject to paragraph (b) of this section, it will be the policy of this Department with respect to property of which it is in control of the maintenance, operation, and protection, to issue a permit authorizing the operation of such vending stands (which

term includes vending machines) without charge for space or necessary utili– ties as, in the opinion of the State licensing agency, are suitable for operation by a licensed blind person and for which the State licensing agency makes application.

(b) The application of a State licensing agency for a permit may be denied or revoked if the Secretary determines that the interest of the United States would be adversely affected or this Department unduly inconvenienced by its issuance or continuance. Loss of revenue by reason of granting a rent-free permit for operation of a vending stand by a licensed blind person shall not be a basis for denying such permit as unduly inconveniencing this Department or adversely affecting the interest of the United States. If a constituent believes factors other than loss of revenue justify denial or revocation of a permit for the operation of a vending stand by a licensed blind person, it shall refer the matter to the Secretary, together with the recommendation of the Director of the Office of Vocational Rehabilitation.

(c) No permit, lease, or other arrangement for the operation of a vending stand (which term includes vending machines) on property, the maintenance operation, and protection of which is in a constituent, shall be entered into or renewed without first consulting the State licensing agency, unless express permission is given therefor by the head of the constituent after consultation with the Director of the Office of Vocational Rehabilitation.

(d) After a permit to operate a vending stand is in effect, no article shall be offered for sale on the property (through over the counter sales, by vending machine, or otherwise) which competes with articles approved for sale under the permit, except that this regulation shall not prevent a cafeteria or restaurant from selling articles of a type considered as food and usually sold as part of a meal, nor shall it prevent the sale of articles by vending machines. However, the income from any vending machines which are located within reasonable proximity to and are in direct competition with a vending stand for which a permit has been issued shall be assigned to the operator of such stand. If a vending machine vends articles of a type authorized by the permit and is so located that it attracts customers who would otherwise patronize the vending

stand, such machine is in reasonable proximity to and direct competition with the stand.

(e) In the exercise of any function of this Department in connection with planning for the construction, alteration, or remodeling of buildings which are, or will become, Federal property (including those to be leased or otherwise acquired under Public Law 519, 83d Congress, 68 Stat. 518), provision shall be made for suitable space for a vending stand or stands, if the operation of one on such property will be feasible This shall include the facilities which will be necessary to the operation of such a stand, such as adequate electrical wiring and outlets, heating, plumbing, and ventilation. The constituent will consult with the State licensing agency in carrying out this subsection.

§ 20.3 Provisions of the permit.

(a) The permit will be conditioned upon the vending stand meeting specified standards, including standards relating to appearance, safety, sanitation, and efficiency of operation. Due regard shall be given to provisions of laws and regulations for the public welfare which are applicable, or would be applicable, if the property involved were not under the jurisdiction of the Federal Government.

(b) The permit will specify the types of articles which may be sold. The types of articles specified in section 4(b) (4) of the act (newspapers, periodicals, confections, tobacco products, articles dispensed automatically or in containers or wrapping in which they are placed before receipt by the vending stand) and such related articles as the State 11censing agency asks to be included, will be permitted to be sold, unless such factors as the inadequacy of the facilities which are or can reasonably be made available, or safety, health, or legal requirements demand otherwise. Due regard shall be given to provisions of laws and regulations for the public welfare which are applicable, or would be applicable, if the property involved were not under the jurisdiction of the Federal Government. The permit shall also contain adequate provisions to prevent material defacement or damage to property, including a provision that when alterations are to be made by other than the United States, they will be made with the approval of and under the supervision of the appropriate official of the Federal Government. The permit may

The permit together with the applicable rules, regulations, and policies of the State licensing agency shall govern the operation of a vending stand, and all officials and employees of this Department shall encourage conduct and operation in accordance with such permit, rules, regulations, and policies. The constituent shall cooperate with the State licensing agency with respect to the foregoing and report to it any significant violations or other relevant matters which come to its attention. If a constituent believes that the State licensing agency is not taking proper action in such matters, it shall inform the Director of the Office of Vocational Rehabilitation.

(a) If a constituent and the State licensing agency fail to reach agreement concerning the granting of a permit for a vending stand, the denial or modification of a permit, the suitability of the stand location, the assignment of vending machine proceeds, the methods of operation of the stand, or other terms of the permit (including articles which may be sold), the State licensing agency shall have the right to appeal to the Secretary. The constituent shall give the State licensing agency written notice of its decision and the State licensing agency shall, within fifteen days from the date of such notice, give the constituent and the Secretary written notices of its appeal.

(b) Upon appeal, full investigation shall be undertaken. The State licensing agency shall be given opportunity to present information; a full report shall be obtained from the constituent;