This case involves an appeal by Appellant of a request for overclaim by the Bureau of Food & Nutrition in regards to the Child and Adult Care Food Program. Appellant is a child daycare institution and participates in this program. A letter dated December 11, 1995, indicated certain items would be disallowed for reimbursement, and the corrected claims indicated a refund in the amount of $7,688.15 was due. On January 23, 1996, Appellant mailed its Notice of Appeal of the overclaim.

Appellant's participation in the program is governed by a contract which was executed on August 9, 1994, and approved by the Department of Education on August 15, 1994. This contract imposes at least 50 specific requirements that Appellant must comply with to maintain its part of the contract. Appellant's participation in the program is also subject to an annual audit.

As a result of a management evaluation, the Department determined that Appellant was not entitled to reimbursement for any of the meals and snacks served during 16 days in June and July 1995. There was substantial evidence to suggest that it had been the routine practice of Appellant to prepare and maintain menu records for the program. The termination provisions also provide, however, that "the State agency shall afford an institution every reasonable opportunity to correct problems before terminating the institution for being seriously deficient." 7 CFR S226.6(c). To fail to provide the institution with every reasonable opportunit to correct recordkeeping problems before enforcing an overclaim may well result in an "inequitable and oppressive" situation ... ."U.S. v. Haynes Sch. Dist #6, 102 F.Supp. 845,852 (E.D. Ark 1951).

It was determined that all of the overclaims based on Appellant's failure to have meal menu records available for inspection in June and July 1995 were overruled. The overclaims based on Appellant's failure to provide sufficient quantities of food for the lunch and afternoon snack on July 6, 1995, were overruled.

The overclaims based on Appellant's failure to provide sufficient quantities of food for the breakfast and morning snack served on July 6, 1995 and August 1, 1995 were affirmed.