All USDA commodities shipped to the warehouse from vendors are prepaid for the product and freight. The warehouse shall be financially responsible for shortages and damage to products, while in their possession, which make them unacceptable. Damaged product must be replace with like product. This shall be done by allowing the recipient agency to purchase the replacement product and billing the warehouse, or the warehouse may purchase the replacement product. Damage to a product may be caused by dropping or improperly stacking it, by a forklift or other mechanical equipment, or by other causes such as when water creates serious rust.
Damage also includes infestation of product due to improper storage conditions.
Hidden damage, such as exploded cans, damage, or shortages due to manufacturers negligence, etc., should be documented and reported to the State upon discovery. These shortages and damages may not be considered the financial responsibility of the contractor as long as they are reported promptly. All damaged product must be disposed of by some acceptable method and in accordance with all federal, state, and local laws and regulations. The warehouse shall take a monthly physical count of a sample of the inventory and verify it with the book inventory. The warehouse shall submit to ODE, not later than the 5th calendar day of the month following each month of transactions, a report of inventory on hand at the end of the month.