United States Department of Agriculture

Food and Nutrition Service

Southeast Region

 

Policy Memorandum 250.41-02:  Eligibility of Privately Owned or Managed Correctional Facilities

 

This memorandum is a restatement of policy previously issued as Food Distribution Policy Memorandum 93-3 on July 9, 1993. 

 

It has come to our attention that growing numbers of States are hiring private firms to manage the operation of their prison facilities as a cost-cutting measure.  Also, privately developed and owned correctional facilities are contracting their services to governmental entities.  Although the creation of privately owned correctional facilities is a relatively recent development, expansion of this industry has been rapid.  We anticipate that such facilities will generate increasing numbers of requests to receive donated foods as charitable institutions (CIs). 

 

To be eligible to receive donated food as a CI, a privately owned or managed prison facility must meet the same eligibility requirements as any State owned and operated facility.  To qualify, a prison must “conduct rehabilitation programs that are: (1) available to either a majority of the total inmate population (including inmates awaiting trial or sentencing) or to a majority of sentenced inmates; and (2) of sufficient scope to permit participation for a minimum of ten (10) hours per week per inmate by either a majority of the total inmate population or a majority of sentenced inmates.”  In addition, a privately owned or managed facility must be nonprofit and have Federal tax-exempt status under the Internal Revenue Code; therefore, private, for-profit firms cannot receive donated foods as a CI even though they are under contract with a State or local entity.

 

We have also been asked if it is possible for a privately owned or managed prison facility to assume the functions of a food service management company (FSMC). A FSMC is defined as a commercial enterprise or a nonprofit organization which is or may be contracted with by an eligible “recipient agency” to manage any aspect of its food service.  Thus, any CI that is authorized to receive donated foods can contract out the food service aspect of its operation with any company that meets the definition of a FSMC.  The written agreement must specifically provide that the full value of all donated foods must be used solely for the benefit of the employing agency’s food service operation.  In instances when a publicly owned facility contracted its entire operation to a private firm, the public entity can participate as a CI, provided it meets the eligibility criteria.  The donated foods could be made available to the private firm under the terms and conditions set forth for FSMCs.  State agencies shall ensure that FSMCs are in compliance with all regulations, specifically Part 250.19(b)(1) and 250.12(d).