[Federal Register: March 26, 2009 (Volume 74, Number 57)]
[Rules and Regulations]
[Page 13062-13082]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr09-2]
[[Page 13062]]
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DEPARTMENT OF AGRICULTURE
48 CFR Part 470
Commodity Credit Corporation
7 CFR Parts 1496 and 1499
Foreign Agricultural Service
7 CFR Part 1599
RIN 0551-AA78
McGovern Dole International Food for Education and Child
Nutrition Program and Food for Progress Program
AGENCY: Foreign Agricultural Service and Commodity Credit Corporation,
USDA.
ACTION: Final rule.
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SUMMARY: This final rule amends the regulations to administer the Food
for Progress (FFPr) Program and the McGovern-Dole International Food
for Education and Child Nutrition Program (McGovern-Dole Program) by
making revisions to provide greater clarity with respect to all aspects
of the program, with specific emphasis on the eligibility requirements
that a participant must meet and the actions that must be undertaken by
a participant in order to receive assistance under these programs,
including the reports that are filed by program participants with the
Foreign Agricultural Service (FAS). This final rule also amends the
Agriculture Acquisition Regulation (AGAR), to specify the criteria that
is used in determining whether a commodity that is procured under these
programs and under domestic feeding programs administered by U.S.
Department of Agriculture (USDA) is considered to be a product of the
United States. The purpose of these amendments is to improve the
efficiency of the programs and make it clearer to participants what
they must do to meet eligibility requirements.
DATES: Effective Date: May 26, 2009.
FOR FURTHER INFORMATION CONTACT: Babette Gainor, Deputy Director, Food
Assistance Division, Foreign Agricultural Service, U.S. Department of
Agriculture, Stop 1034, 1400 Independence Avenue, SW., Washington, DC
20250-1034; telephone: (202) 720-4221; Fax: (202) 690-0251; E-Mail:
PPDED@fas.usda.gov and/or Babette.Gainor@fas.usda.gov.
The USDA prohibits discrimination in its programs on the basis of
race, color, national origin, sex, religion, age, disability, political
beliefs, and marital or familial status. Persons with disabilities who
require alternative means for communication of program information
(Braille, large print, audiotape, etc.) should contact the USDA Office
of Communications at (202) 720-5881 (voice) or (202) 720-7808 (TDD).
SUPPLEMENTARY INFORMATION:
Background
On October 24, 2008, FAS published a proposed rule (73 FR 63387) to
remove 7 CFR part 1496; revise 7 CFR parts 1499 and 1599, which contain
the general regulations governing the FFPr and the McGovern-Dole
Program; and add 48 CFR part 470, which governs the commodity
acquisition procedures of USDA. The proposed rule was intended to
accomplish the following objectives:
Improve the efficiency of the programs by providing
greater clarity to program participants on eligibility, reporting and
performance requirements;
Better define the criteria used to determine a product of
the United States;
Allow for the full utilization of all types of acquisition
contracts that are authorized under the Federal Acquisition Regulations
(FAR); and,
Restructure and rewrite the regulations, including new
subparts and sections, to make them easier to read and understand.
Analysis of Comments Received
Seventeen comments on the proposed rule were received from private
entities that are affected by these regulations, including: three
private voluntary organizations (PVOs), two PVO associations, seven
commodity organizations, four shipping and freight industry
representatives, and one Office of Inspector General (OIG). One comment
was received by an organization comprised of over 250 non-governmental
organizations that stated, ``Overall we believe FAS has done an
excellent job in revising part 1499 and that the changes will improve
the quality of the food aid programs and increase the ability of PVOs
to assist those in need.'' The comments are discussed below, except for
those dealing with issues outside of the scope of the proposed rule,
making editorial suggestions, or simply expressing support for the
proposed rule.
A. Eligibility Determination: 7 CFR Parts 1499.3(a)(1) and 1599.3(a)(1)
Comment: One commenter suggested that USDA should change ``grants''
to ``awards'' to be more inclusive since ``awards'' includes grants and
cooperative agreements.
Response: USDA accepts this suggestion and has made the changes
accordingly.
B. Agreements: 7 CFR Parts 1499.5(c) and 1599.5(c)
Comment: One commenter suggested that USDA allow a participant to
make 100 percent line item adjustments to the budget unless the
agreement specifies otherwise. The commenter further stated that this
is the norm for most Government regulations.
Response: The current language affords USDA the ability to provide
greater flexibility to participants' budgets other than just line item
adjustments. Additionally, due to various sources from which USDA
receives funds for grants governed under parts 1499 and 1599, USDA
cannot provide 100 percent flexibility between all budget line items as
it has the potential of inadvertently creating an Antideficiency Act
violation within the program. For example, FFPr operates under
statutory authority that limits the amount of funds that may be spent
each year for freight costs and administrative expenses. USDA only can
allow flexibility within a budget that would not allow for the
possibility of these limits being exceeded. This limitation is also
covered in 7 CFR 3019.25(f).
C. Payments: 7 CFR Parts 1499.6 and 1599.6
Comments: One commenter questioned whether survey costs noted in
sections 1499.6(a)(7) and 1599.6(a)(7) included load, discharge, and
delivery surveys. A comment was received that questioned the necessity
of an ``original'' bill of lading for payment, particularly given that
an original is required to take title of commodities. Additionally, a
commenter requested that all references to 7 CFR part 3019 be quoted
directly in the relevant sections of 7 CFR parts 1499 and 1599 rather
than referring the reader back to 7 CFR part 3019.
Response: Load survey costs are not included in sections
1499.6(a)(7) and 1599.6(a)(7). The determination whether a discharge
survey, a delivery survey, or both have been completed is dependent
upon multiple factors, including but not limited to destination country
and contract terms. To provide greater clarity in these sections, USDA
has replaced ``survey costs'' with ``survey costs other than those at
load port.'' In response to the comment about providing an original
bill of lading, USDA agrees that an original or ``true copy'' of the
bill of lading, such as a pdf version of the original bill of lading,
[[Page 13063]]
would be acceptable for payment purposes; this change has been made to
these sections. USDA cannot accede to the request to directly quote
applicable sections of 7 CFR part 3019 into the relevant sections of
the regulations. The provisions of 7 CFR part 3019 are applicable to
all USDA grant programs and refer to pertinent circulars released by
the Office of Management and Budget (OMB). This regulation is likely to
change more often than the FAS and the Commodity Credit Corporation
(CCC) grant program regulations. Quoting the applicable sections of 7
CFR part 3019 directly into parts 1499 and 1599 would multiply the
regulations requiring updates and notifications to the public that
otherwise could be limited to only 7 CFR part 3019.
D. Transportation of Goods: 7 CFR Parts 1499.7(b) and 1599.7(b)
Comments: Two comments were received on this section. The first
commenter encouraged USDA to implement direct ocean freight procurement
for its food aid programs. The other commenter objected to USDA
directly contracting for freight in accordance with the FAR on the
bases that the current process is not unlawful and has been upheld in a
previous court ruling, the change would preclude freight forwarders
from participating in the program, the proposed system would return to
a process that was ruled inefficient by the Grace Commission, and,
finally, USDA failed to provide sufficient factual detail and rationale
for the rule to permit interested parties to comment meaningfully on
this change.
Response: USDA is committed to providing an efficient and effective
acquisition process under its food donation programs. USDA is further
committed to ensuring transparency and fairness in this process.
Therefore, once the Final Rule is published, USDA will use the Food Aid
Consultative Group (FACG) to outline acquisition processes that USDA is
considering implementing under these regulations. The FACG is the
official consultative group that allows all organizations with an
interest in food aid programs to provide input to the U.S. Government.
With respect to the proposal to use the FAR to acquire freight,
this provision is primarily included to reflect the fact that under
this rule USDA would be directly contracting for freight in many
circumstances and program recipients would not have the burden of
obtaining such services. Further, under current practices, in most
instances the program recipient is not solely responsible for procuring
freight services; but rather, while such entities do a significant
portion of the work related to obtaining freight, decisions regarding
the acceptance of freight contracts also involve decisions of employees
of USDA. In order to alleviate any questions that exist concerning the
propriety of this activity, the determination has been made to follow
provisions of the FAR. To the extent that a program participant is
solely responsible for these activities without regard to any
involvement of employees of USDA, then the FAR provisions would not be
applicable.
With respect to the use of freight forwarders, the use of the FAR
to acquire freight does not preclude the use, by USDA, of the services
of a licensed freight forwarder, similar to the process currently used
in Title II of the Food for Peace Act, (Pub. L. 83-480, or referred to
as Pub. L. 480 Title II). In such a case, a licensed freight forwarder
would act as directed by USDA.
E. Transportation of Goods: 7 CFR Parts 1499.7(c) and 1599.7(c)
Comments: Four comments were received concerning the use of a
licensed freight forwarder rather than a shipping agent. Three
commenter's objected to the use of a licensed freight forwarder rather
than a shipping agent to facilitate the acquisition of transportation.
One commenter stated that sections 1499.7(c)(1)-(3) and 1599.7(c)(1)-
(3) go beyond USDA's authority and conflict with that of the Federal
Maritime Commission's (FMC) application requirements. Another comment
was received asking to clarify the intention of sections 1499.7(c) and
1599.7(c) as to preclude the use of entities other than licensed
freight forwarders or to govern only licensed freight forwarders within
these sections.
Response: USDA agrees with the comments concerning sections
1499.7(c)(1)-(3) and 1599.7(c)(1)-(3) being in conflict with the FMC's
application process and has removed these provisions. USDA further
agrees with the comments concerning sections 1499.7(c)(4) and
1599.7(c)(4) and has removed this requirement since proof of financial
responsibility is required in the FMC application process. As to the
comments requesting the continued use of shipping agents, USDA does not
agree with this comment and will adopt the proposed change set forth in
the proposed rule. Currently, there is no definition of ``shipping
agent'' and there are no services of a shipping agent identified that a
licensed freight forwarder could not provide. In fact, an unlicensed
freight forwarder may not book or arrange vessel space for others,
process shipping documentation or collect freight forwarder
compensation from the ocean carriers. Further information regarding
this issue is found at the Web site maintained by FMC at http://
www.fmc.gov/home/faq/index.asp. In addition, FMC has a regulated
process for licensing freight forwarders that will remove this
duplicative process from USDA. Lastly, USDA has provided further
clarification on the intention of sections 1499.7(c) and 1599.7(c) to
allow only licensed freight forwarders to be used by participants in
arranging transportation.
F. Damage to and Loss of Commodities: 7 CFR Parts 1499.9 and 1599.9
Comment: One commenter expressed concern regarding the number of
times a notification of loss or damage to commodities may be required
during the commodity voyage.
Response: USDA agrees with the concern expressed by the commenter
but also notes that timely notification of damages to and losses of
commodities are necessary to protect the assets of the program. USDA
has removed the word ``immediately'' from this section and inserted the
provision for a timeframe of notification to be outlined in the program
agreement.
G. Claims for Damage to or Loss of Commodities: 7 CFR Parts 1499.10 and
1599.10
Comments: Three comments were received on this section. One
commenter asked if funds arising from a claim could cover the cost of
services from a third party sub-contract who settled the claims
process, and if so, would this arrangement have to be stipulated in the
program agreement or could ``advance approval'' for such a use of these
funds be obtained in another manner. The second commenter recommended
USDA to require program participants to purchase marine cargo insurance
as this requirement would lend itself to the goal of timely resolution
of cargo claims. This commenter also suggested that USDA adopt a
percentage threshold for establishing claim value levels. The third
commenter suggested that USDA allow the participant to determine
whether or not to file a claim for losses under $10,000 rather than
$20,000. This commenter also asked for clarification on who would
provide funds for marine cargo insurance if such insurance were
required.
Response: USDA agrees that, if such a situation were to arise, it
should be handled outside the program agreement. The current regulation
allows for advance approval and does not stipulate
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that such approval must be stipulated in the program agreement;
therefore, no changes are made to the regulations. However, USDA will
include procedures on this subject matter in applicable program
documents and in the guidance provided to participants, which will be
developed once the final rule is in effect. Regarding the required
purchase of marine cargo insurance, USDA will consider this provision
on an agreement basis as USDA assesses the risk involved in moving the
commodities. If USDA determines that it is in the best interest of the
programs, USDA will require and provide funding for marine cargo
insurance. As to the value for requiring a claim to be filed, USDA does
not agree with either suggestion and therefore has not made any changes
to these sections. The current language allows participants to file a
claim at any level. In setting the $20,000 value level, USDA determined
that a benefit to the program could be reached while factoring in the
amount of resources necessary to administer the claims process.
H. Subrecipients: 7 CFR Parts 1499.12 and 1599.12
Comment: One commenter questioned the need for USDA to receive
copies of subrecipient contracts. The commenter suggested that the
participant retain copies of the subrecipient contracts and make them
available upon request by USDA.
Response: USDA understands the concern expressed by the commenter;
however, USDA has had recent experiences with subrecipient contracts
either not being in place or not providing adequate assurances to
protect the integrity of the donation programs. Further, OIG also
recommends that these contracts receive oversight by FAS and CCC.
Therefore, USDA is retaining the current language in this section.
I. Recordkeeping and Reporting Requirements: 7 CFR Parts 1499.13 and
1599.13
Comment: One commenter recommended the following: require USDA to
make the annual Single Audit Act and OMB Circular A-133 mandatory,
regardless of funding availability; provide specific timeframes for
participants to submit reports and evaluations; and clarify how the new
evaluation requirement will complement FAS's current system of close-
out reviews.
Response: USDA agrees that participants must conduct an annual
audit in accordance with the Single Audit Act (31 U.S.C. 7501-7507) and
revised OMB Circular A-133. In support of this, 7 CFR 3019.26(a), that
is referenced in sections 1499.13(d) and 1599.13(d), contains the
reference to the Single Audit Act and OMB Circular A-133. Regarding the
timeframe for report submissions, USDA intends to provide a specific
timeframe for participants to submit reports and evaluations within the
agreements. At this time, USDA does not foresee a change in reporting
timeframes but has moved this provision into the agreements to afford
flexibility in managing the programs. Evaluating activities conducted
under USDA food aid programs will provide insight to USDA in developing
more effective programs as well as enable USDA to highlight program
outcomes rather than program outputs that are currently captured in
semi-annual reports. These evaluations will complement FAS's current
system of close-out reviews by using a third party neutral evaluator
and, in the case of mid-period evaluations, afford more transparency on
program short-comings prior to the actual closure process so that USDA
can determine the best course of action to remedy the short-comings.
J. Definitions: 48 CFR Part 470.101
Comments: Three comments were received that outlined the ability
for some commodities to be maintained in a non-commingled manner, and,
therefore, requested that USDA consider either excluding some
commodities from this definition, removing the definition, and thereby
the allowance for commingling in its entirety, or modifying it to
conform more closely to the domestic commodity donation programs.
Response: USDA recognizes that commodities are maintained and
stored in various manners. USDA further agrees with protecting the U.S.
origin integrity of commodities when this is the normal commercial
practice. Accordingly, 48 CFR 470.101 has been revised to provide that
in those instances in which it has been determined by USDA that a
commodity that is stored in a commingled manner but which is one that
can be reasonably stored on an identity preserved basis with respect to
its origin, USDA will require such commodity that is being procured to
originate from the United States.
K. United States Origin of Agricultural Products: 48 CFR Part
470.103(b)
Comments: USDA received three comments concerning USDA's attempt to
harmonize the use of additives in international programs with those
used in domestic programs. The commenter's suggest replacing ``or''
with ``and'' at the end of section 470(b)(1).
Response: Section 402(2) of Public Law 480 provides, in relevant
part, that with respect to the administration of Title II of that Act,
``* * * a product of an agricultural commodity shall not be considered
to be produced in the United States if it contains any ingredient that
is not produced in the United States, if that ingredient is produced
and is commercially available at fair and reasonable prices. This
provision is also made applicable to the FFPr Program by section
1110(e)(4) of the FFPr Act. With respect to the McGovern-Dole Program,
section 3107(a) of the Farm Security and Rural Investment Act of 2002
defines an agricultural commodity to be ``an agricultural commodity, or
a product of an agricultural commodity, that is produced in the United
States.''
Based upon the review of the issues raised by this comment, since
procurements of commodities for use in Public Law 480 and the FFPr
Program must follow the requirements of section 402(2) of Public Law
480, the definition of ``additive'' has been modified to refer to
``ingredient'' and the cited statutory provision has been incorporated
into the definition of ``ingredient''. With respect to the McGovern-
Dole Program, in order to ensure consistency with these other two
programs and in recognition of the fact that often procurements of
commodities are done simultaneously for two or more of these programs,
USDA will use the same definition of ``ingredient.''
USDA concurs with the comment since it is desirable to harmonize
the manner in which ingredients are treated for this purpose. USDA has
revised 48 CFR 470.103(b) to reflect the statutory provision regarding
ingredients as found in Public Law 480 with regard to procurements made
for FAS and the U.S. Agency for International Development (USAID)
programs. Accordingly, for these international programs, the
procurement of commodities with ingredients will be handled in the same
manner as procurements relating to programs administered by the Food
and Nutrition Service except as may otherwise be required by statute.
L. United States Origin of Agricultural Products: 48 CFR Part
470.103(c)
Comments: USDA received four comments concerning the use of
commingled products as a product of the United States. Two of the
comments expressed concern that non-U.S. origin products may be
provided under USDA food assistance programs, while two
[[Page 13065]]
other comments suggested modifications related to the timing of the
commodity procurement to bring the language into commercial norms.
Response: USDA agrees that this section does not adequately take
into consideration the situation in which a vendor has procured U.S.
agricultural products prior to the issuance of a solicitation.
Accordingly, this provision has been revised to provide that a
commingled product shall be considered to be a product of the United
States, if the offeror can establish that the offeror has in inventory
at the time the contract for the commodity or product is awarded to the
offeror, or obtains during the contract performance period specified in
the solicitation, or a combination thereof, a sufficient quantity of
the commodity or product that was produced in the United States to
fulfill the contract being awarded, and all unfulfilled contracts that
the offeror entered into to provide such commingled product to the U.S.
Government.
In addition, this section has been revised with respect to the
domestic origin requirements for products of animals. Upon further
consideration, USDA has determined that rather than to attempt to set
forth in this section a generic provision regarding domestic origin,
that the specific requirements applicable to the country in which the
animal from which the product was obtained was bred, raised,
slaughtered and processed should be set forth in individual
solicitations. Under this process, USDA can take into account the
differences that exist with respect to various animals, e.g., poultry,
pork or beef, and the various types of products that are obtained,
e.g., full cuts of meat or poultry and processed products.
M. Issuance of Invitations: 7 CFR Part 1496.4
Comment: One commenter pointed out that the removal of the
provision requiring a one day turnaround of supplier bids would impose
immense new market risks for suppliers.
Response: Regarding the turnaround time for the acceptance of
offers (referred to as ``bids''), the process would follow the
practices prescribed by the FAR, 48 CFR Chapter 4. These are standard
solicitation methods prescribed government-wide. Offerors would be
given the opportunity to propose prices for a specific period of time,
for example, 24, 36 or 48 hours. This would be the offer acceptance
period. After that time, offers would expire and would no longer be
valid, thereby preventing the imposition of new market risks for
suppliers.
N. Miscellaneous Points of Clarification
Comments: One comment was received recommending that FAS continue
to monitor agreements entered into under Section 416(b) of the
Agricultural Act of 1949 (Section 416(b)) in the same manner and
subject to the same regulations as the McGovern-Dole Program and FFPr.
Another comment was received that recommended USDA create and attach
reporting forms to the agreements. A commenter asked a question about
the relevant application of OMB A-122 Circular to 7 CFR parts 1499 and
1599.
Response: In response to the comment on monitoring Section 416(b),
USDA intends to monitor Section 416(b) in a manner consistent with 7
CFR parts 1499 and 1599 as relevant to the purpose and scope of Section
416(b). Under Section 416(b), CCC makes available commodities that it
has acquired in its normal operations for use in international
programs. No commodities are procured for use under this provision. By
using the Federal Register to announce and administer Section 416(b),
USDA will have the flexibility to apply the relevant sections of 1499
and 1599 to this donation program while taking into account any unique
requirements for this program. In response to the comment on reporting
forms, USDA may reference the reporting form number and revision date
within the agreement but attaching the reporting forms will only add to
the volume of the agreement. With regard to OMB A-122 Circular, this
circular, as well as others, has been incorporated into 7 CFR 3019,
entitled ``Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals, and Other
Non-Profit Organizations''.
In reviewing the language in 48 CFR part 470, we have determined
that while changes to the actual provisions of 48 CFR 470.202(e)(3) are
not needed, USDA does wish to make clear that with respect to the
lowest landed cost determination, as the programs have evolved over
many years, the program participant obtains potential bids from
prospective carriers and these bids are provided to the Farm Service
Agency (FSA) which utilizes a sophisticated computer program to analyze
the freight bids in conjunction with the various bids obtained in the
procurement of commodities to ascertain which combination of carrier
bids and commodity bids produces the lowest landed cost of delivery of
the commodity to foreign destinations. Prior to the computer system
running a lowest landed cost analysis, the grantees and/or USAID
determine if each offeror's service and rates are responsive to their
needs. Once the grantee and/or USAID provides their acceptance of the
offers of service, USDA then runs an analysis to determine lowest
landed cost. USAID and grantee organizations will have full discretion
over carrier responsiveness determinations in accordance with the
procedures identified in 22 CFR 211.
Changes to the AGAR have been reviewed and approved by the Acting
Deputy Assistant Secretary for Departmental Administration as
authorized in 48 CFR Chapter 4, subpart 401.601(a)(1).
Executive Order 12866
The final rule has been determined to be non-significant under E.O.
12866 and has not been reviewed by the Office of Management and Budget.
Regulatory Flexibility Act
This rule is not subject to the Regulatory Flexibility Act because
FAS is not required by 5 U.S.C. 553 or any other law to publish a
notice of proposed rulemaking and as such under Section 601(2) of the
Act it is exempt.
Environmental Assessment
FAS has determined that this rule does not constitute a major State
or Federal action that would significantly affect the human or natural
environment consistent with the National Environmental Policy Act
(NEPA), 40 CFR part 1502.4, Major Federal actions requiring the
preparation of Environmental Impact Statements; and Compliance with
NEPA implementing the regulations of the Council on Environmental
Quality, 40 CFR parts 1500-1508. Therefore no environmental assessment
or environmental impact statement will be prepared.
Executive Order 12988
This rule has been reviewed under E.O. 12988. This rule is not
retroactive and it does not preempt State or local laws, regulations,
or policies unless they present an irreconcilable conflict with this
rule. This rule would not be retroactive.
Executive Order 12372
This program is not subject to E.O. 12372, which requires
intergovernmental consultation with State and local officials. See the
notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115
(June 24, 1983).
[[Page 13066]]
Executive Order 13132
The policies contained in this rule do not have any substantial
direct effect on states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on state and local
governments. Therefore, consultation with the states is not required.
Unfunded Mandates
This rule contains no unfunded mandates as defined in sections 202
and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA).
Paperwork Reduction Act of 1995
In accordance with the Paperwork Reduction Act of 1995, FAS has
previously received approval from OMB with respect to the information
collection required to support these programs. The Information
Collection is described below:
Title: Food Donation Programs (Food for Progress, Section 416(b))
and McGovern-Dole International Food for Education and Child Nutrition.
OMB Control Number: 0551-0035.
E-Government Act Compliance
FAS is committed to complying with the E-Government Act, to promote
the use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes. The forms, regulations, and other
information collection activities required to be utilized by a person
subject to this rule are available at http://www.fas.usda.gov.
List of Subjects
7 CFR Part 1496
Agricultural commodities, Food assistance programs, Foreign aid,
Government procurement.
7 CFR Part 1499
Agricultural commodities, Food assistance programs, Foreign aid.
7 CFR Part 1599
Agricultural commodities, Food assistance programs, Exports,
Foreign aid.
48 CFR Part 470
Government procurement, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, under the authority of 5
U.S.C. 553: 15 U.S.C. 714b and 714c, 7 CFR parts 1496, 1499, 1599 and
48 CFR part 470 are amended as follows:
Title 7--Agriculture
PART 1496--[REMOVED]
0
1. 7 CFR part 1496 is removed.
0
2. Revise part 1499 to read as follows:
PART 1499--FOOD FOR PROGRESS PROGRAM
Sec.
1499.1 General statement.
1499.2 Definitions.
1499.3 Eligibility determination.
1499.4 Application process.
1499.5 Agreements.
1499.6 Payments.
1499.7 Transportation of goods.
1499.8 Entry and handling of commodities.
1499.9 Damage to or loss of commodities.
1499.10 Claims for damage to or loss of commodities.
1499.11 Use of commodities and sales proceeds.
1499.12 Subrecipients.
1499.13 Recordkeeping and reporting requirements.
1499.14 Noncompliance with an agreement.
1499.15 Suspension, termination, and closeout of agreements.
1499.16 Appeals.
1499.17 Paperwork Reduction Act.
Authority: 7 U.S.C. 1736o; and 15 U.S.C. 714b and 714c.
Sec. 1499.1 General statement.
(a) This part sets forth the general terms and conditions governing
the donation of commodities by the Commodity Credit Corporation (CCC)
to participants in the Food for Progress Program (FFPr). Under FFPr,
participants use the donated commodities or proceeds from the sale of
such commodities to implement activities in a foreign country pursuant
to an agreement with CCC. The Foreign Agricultural Service (FAS) of the
Department of Agriculture (USDA) administers FFPr on behalf of CCC.
(b) In addition to the provisions of this part, other regulations
of general application issued by USDA, including the regulations set
forth in Chapter 30 of this title, are applicable to the FFPr. All
provisions of the CCC Charter Act (15 U.S.C. 714 et seq.) and any other
statutory provisions that are generally applicable to CCC are
applicable to FFPr and the regulations set forth in this part.
(c) This part shall not apply to a donation by CCC to a foreign
government or an intergovernmental agency or organization (such as the
United Nations' World Food Program) under FFPr.
Sec. 1499.2 Definitions.
The following definitions are applicable to this part:
Activity means a project to be carried out by a participant,
directly or through a subrecipient, to fulfill the objectives of an
agreement.
Agreement means a legally binding agreement entered into between
CCC and a participant to implement activities under FFPr.
CCC means the Commodity Credit Corporation and includes any
official of the United States delegated the responsibility to act on
behalf of CCC.
CCC-provided funds means U.S. dollars provided under an agreement
to a participant for expenses for the internal transportation, storage
and handling of the donated commodities, expenses involved in the
administration and monitoring of the activities under the agreement,
and technical assistance related to the monetization of donated
commodities.
Commodities mean U.S. agricultural commodities or products of U.S.
agricultural commodities.
Donated commodities means the commodities donated by CCC to a
participant under an agreement. The term may include donated
commodities that are used to produce a further processed product for
use under the agreement.
FAS means the Foreign Agricultural Service acting on behalf of CCC.
FFPr means the Food for Progress Program.
Force majeure is a common clause in contracts, exempting the
parties for non-fulfillment of their obligations as a result of
conditions beyond their control, such as earthquakes, floods or war.
Income means interest earned on sale proceeds and other resources
received by a participant, other than sale proceeds, as a result of
carrying out an agreement. The term may include resources from VAT
refunds, activity fees, interest on loans, and other sources.
Participant means an entity with which CCC has entered into an
agreement.
Subrecipient means a legal entity that receives donated
commodities, income, sale proceeds or other resources from a
participant for the purpose of implementing in the targeted country
activities described in a FFPr agreement and that is accountable to
such participant for the use of such commodities, funds, or resources.
The term may include foreign or international organizations (such as
agencies of the United Nations) at the discretion of FAS.
Sale proceeds mean funds received by a participant from the sale of
donated commodities.
[[Page 13067]]
Targeted country means the country in which activities are
implemented under an agreement.
Sec. 1499.3 Eligibility determination.
(a) An entity will be eligible to become a participant only after
FAS determines that the entity has:
(1) Organizational experience in implementing and managing awards,
and the capability and personnel to develop, implement, monitor, report
on, and provide accountability for activities in accordance with this
part;
(2) Experience working in the proposed targeted country;
(3) An adequate financial framework to implement the activities the
entity proposes to carry out under FFPr. In order to determine whether
the entity is financially responsible, FAS may require it to submit
corporate policies and financial materials that have been audited or
otherwise reviewed by a third party;
(4) A person or agent located in the United States with respect to
which service of judicial process may be obtained by FAS on behalf of
the entity; and
(5) An operating financial account in the proposed targeted
country, or a satisfactory explanation for not having such an account
and a description of how a FFPr agreement would be administered without
such an account.
(b) In determining whether an entity will be eligible to be a
participant, FAS may consider the entity's previous compliance or
noncompliance with the provisions of this part and part 1599 of this
title. FAS may consider matters such as whether the entity corrected
deficiencies in the implementation of an agreement in a timely manner
and whether the entity has timely and accurately filed reports and
other submissions that are required to be filed with FAS and other
agencies of the United States.
Sec. 1499.4 Application process.
(a) An entity seeking to enter into an agreement with CCC shall
submit an application, in accordance with this section, that sets forth
its proposal to carry out activities under FFPr in the proposed
targeted country. An application shall contain the items specified in
paragraph (b) of this section and shall be submitted electronically to
FAS at the address set forth at http://www.fas.usda.gov. An entity that
has not yet met the eligibility requirements in Sec. 1499.3 may submit
an application, but FAS will not enter into an agreement with an entity
until FAS had made a determination of eligibility under Sec. 1499.3.
(b) An applicant shall include the following items in its
application:
(1) A completed Form SF-424, which is a standard application for
Federal assistance;
(2) An introduction that contains the elements specified in
paragraph (c) of this section; and
(3) A plan of operation that contains the elements specified in
paragraph (d) of this section.
(c) The introduction shall include:
(1) An explanation of the need for the food aid in the targeted
country and how the applicant's proposed activities would address that
need;
(2) Information regarding the applicant's ability to become
registered and operate in the targeted country;
(3) Information about the applicant's past food aid projects; and
(4) A budget that details the amount of any sale proceeds, income,
and CCC-provided funds that the applicant proposes to use to fund:
(i) Administrative costs;
(ii) Inland transportation, storage and handling costs; and
(iii) Activity costs.
(d) A plan of operation shall include:
(1) The name of the targeted country where the proposed activities
would be implemented;
(2) The kind, quantity, and proposed use of the commodities
requested, and any commodities that would be acceptable substitutions
therefor, and the proposed delivery schedule;
(3) If monetization or barter is proposed:
(i) The quantity of the requested commodities that would be sold or
bartered;
(ii) The amount of sale proceeds anticipated;
(iii) The amount of income expected to be generated;
(iv) The anticipated monetization completion date;
(v) The goods or services to be generated from the barter of the
requested commodities; and
(vi) The value of the goods or services anticipated to be generated
from the barter of the requested commodities.
(4) A list of each of the activities that would be implemented,
with a brief statement of the objectives to be accomplished under each
activity;
(5) For each proposed activity, the targeted geographic area,
anticipated beneficiaries, and methods that the applicant would use to
choose such beneficiaries, including obtaining and considering
statistics on poverty levels, food deficits, and any other required
items set forth on the FAS Web site at http://www.fas.usda.gov.
(6) For each proposed activity:
(i) An explanation of whether the activity would be carried out
through the distribution or barter of the requested commodities or
funded by sale proceeds, income, or a combination thereof; and
(ii) The amount of commodities requested and of any sale proceeds
and income expected to be generated to carry out such activity; and
(iii) A detailed description of the activity, including the steps
involved in its implementation and the anticipated completion date;
(7) Any cash or non-cash contributions that the applicant expects
to receive from non-CCC sources that:
(i) Are critical to the implementation of the proposed activities;
or
(ii) Enhance the implementation of the activities;
(8) Any subrecipient that would be involved and a description of
each subrecipient's responsibilities and its capability to perform
responsibilities;
(9) Any governmental or nongovernmental entities that would be
involved and the extent to which FFPr will strengthen or increase the
capabilities of such entities to further economic development in the
targeted country;
(10) The method by which the applicant intends to inform
beneficiaries of an activity about the source of the requested
commodities or funding for the activity and, where the beneficiaries
will be receiving the commodities directly, how to prepare and use them
properly;
(11) Established baselines, a timeline, and proposed outcomes that
would enable FAS to measure the applicant's progress towards achieving
the objectives of the proposed activities;
(12) If the proposed activities would involve the use of sale
proceeds or income:
(i) The process that the applicant would use to sell the requested
commodities, including steps the applicant would take to use, to the
extent possible, the private sector in the monetization process; and
(ii) The procedures that the applicant would use to assure that
sale proceeds and income are received and deposited into a separate,
interest-bearing account and disbursed from such account for use only
in accordance with the agreement;
(13) A description of any port, transportation, storage, and
warehouse facilities that would be used with sufficient detail to
demonstrate that they would be adequate to handle the requested
commodities without undue spoilage or waste, and, in cases where the
applicant proposes to distribute some or all of the requested
[[Page 13068]]
commodities, a description of how they would be transported from the
receiving port to the point at which distribution would be made to the
beneficiaries;
(14) Any reprocessing or repackaging of the requested commodities
that would take place prior to the distribution, sale or barter by the
applicant;
(15) The action the applicant would take to ensure that any
commodities to be distributed to beneficiaries, rather than sold, would
be imported and distributed free from all customs, duties, tolls, and
taxes;
(16) A plan that shows how the requested commodities could be
imported and distributed without a disruptive impact upon production,
prices and marketing of the same or like products in the country where
they will be delivered, and the extent to which any sale or barter of
the requested commodities would displace or interfere with any sales
that may otherwise be made by the applicant or any other entity in the
country where they will be delivered; and
(17) Any additional required items set forth on the FAS Web site at
http://www.fas.usda.gov.
Sec. 1499.5 Agreements.
(a) After FAS approves an applicant's proposal, FAS will develop an
agreement in consultation with the applicant. The agreement will set
forth the obligations of CCC and the participant. A participant must
comply with the terms of the agreement to receive assistance.
(b) A participant shall not use donated commodities, sale proceeds,
income or CCC-provided funds for any activity or any expenses incurred
by the participant prior to the date of the agreement or after the
agreement is suspended or terminated, except as approved by FAS.
(c) The agreement will include a budget that sets forth the maximum
amounts of sale proceeds and CCC-provided funds that may be expended
for various purposes under the agreement. A participant may make
adjustments to this budget without prior approval from FAS only as
specified in the agreement.
(d) Prior to providing any donated commodities or CCC-provided
funds to a participant under an agreement, FAS may require the
participant to complete a training program administered by FAS that is
designed to ensure that the participant is aware of, and has the
capacity to complete, all required reporting and audit functions set
forth in this part.
(e) A participant will be prohibited from using CCC-provided funds
to acquire goods and services, either directly or indirectly through
another party, from certain countries that will be specified in the
agreement. Any violation of this provision of the agreement will be a
basis for immediate termination by CCC of the agreement, in addition to
the imposition of any other applicable civil and criminal penalties.
(f) The agreement will prohibit the sale or transshipment of the
donated commodities to a country not specified in the agreement for as
long as such donated commodities are controlled by the participant.
(g) CCC may enter into a multicountry agreement in which donated
commodities are delivered to one country and activities are carried out
in another.
(h) CCC may provide donated commodities and CCC-provided funds
under a multiyear agreement contingent upon the availability of
commodities and funds.
Sec. 1499.6 Payments.
(a) If the participant arranges for transportation in accordance
with Sec. 1499.7(b)(2), and the participant seeks payment directly,
the participant shall, as specified in the agreement, either submit to
FAS, or maintain on file and make available to FAS, the following
documents:
(1) A signed copy of the completed Form CCC-512;
(2) The original, or a true copy of, each on-board bill of lading
indicating the freight rate and signed by the originating carrier;
(3) For all non-containerized cargoes:
(i) A signed copy of the Federal Grain Inspection Service (FGIS)
Official Stowage Examination Certificate (Vessel Hold Certificate);
(ii) A signed copy of the National Cargo Bureau Certificate of
Readiness (Vessel Hold Inspection Certificate); and,
(iii) A signed copy of the National Cargo Bureau Certificate of
Loading;
(4) For all containerized cargoes, a copy of the FGIS Container
Condition Inspection Certificate;
(5) A signed copy of the liner booking note or charter party
covering ocean transportation of the cargo;
(6) In the case of charter shipments, a signed notice of arrival at
the first discharge port, unless FAS has determined that circumstances
of force majeure have prevented the vessel's arrival at the first port
of discharge;
(7) A request by the participant for reimbursement of freight,
survey costs other than at load port, and other expenses approved by
CCC, indicating the amount due and accompanied by a certification from
the carrier or other parties that payments have been received from the
participant; and
(8) A document on letterhead and signed by an officer or agent of
the participant specifying the name of the entity to receive payment;
the bank ABA number to which payment is to be made; the account number
for the deposit at the bank; the participant's taxpayer identification
number; and the type of the account into which the payment will be
deposited.
(b) If the participant arranges for transportation in accordance
with Sec. 1499.7(b)(2), and the participant has used a freight
forwarder, the participant shall cause the freight forwarder to submit
the documents specified in Sec. 1499.6(a) in order to receive payment
from CCC.
(c) In no case will CCC reimburse a participant for demurrage costs
or pay demurrage to any other entity.
(d) If FAS has agreed to pay the costs of transporting, storing,
and distributing the donated commodities from the designated port or
point of entry, the participant will be reimbursed in the manner set
forth in the agreement.
(e) If the agreement authorizes the payment of CCC-provided funds,
CCC will pay these funds to the participant on a reimbursement for
expenses basis, except as provided in paragraph (f)(1) of this section.
The participant shall request the payment of CCC-provided funds to
reimburse it for authorized expenses in the manner set forth in the
agreement.
(f)(1) A participant may request an advance of the amount of funds
specified in the agreement. FAS will not approve any request for an
advance if:
(i) It is received earlier than 60 days after the date of a
previous advance made in connection with the same agreement; or
(ii) Any required reports, as specified in Sec. 1499.13 and in the
agreement, are more than six months in arrears.
(2) Except as may otherwise be provided in the agreement, the
participant shall deposit and maintain in a bank account located in the
United States all funds advanced by CCC. The account shall be interest-
bearing, unless the exceptions in Sec. 3019.22(k) of this title apply,
or FAS determines that this requirement would constitute an undue
burden. The participant shall remit semi-annually to CCC any interest
earned on the advanced funds. The participant shall, no later than 10
days after the end of each calendar quarter, submit a financial
statement to FAS
[[Page 13069]]
accounting for all funds advanced and all interest earned.
(3) The participant shall return to CCC any funds that are advanced
by CCC if such funds have not been obligated as of the 180th day after
the advance was made. Such funds and interest shall be transferred to
FAS within 30 days of such date.
(g) If a participant is required to pay funds to CCC in connection
with an agreement, the participant shall make such payment in U.S.
dollars, unless otherwise approved in advance by FAS.
(h) Suppliers of commodities shall seek payment according to the
purchase contract with CCC.
Sec. 1499.7 Transportation of goods.
(a) Shipments of donated commodities are subject to the
requirements of 46 U.S.C. 55305 and 55314, regarding carriage on U.S.-
flag vessels.
(b) Transportation of donated commodities and other goods such as
bags that may be provided by CCC under FFPr will be acquired under a
specific agreement in the manner determined by FAS. Such transportation
will be acquired by:
(1) CCC in accordance with the Federal Acquisition Regulations
(FAR), USDA's procurement regulations set forth in chapter 4 of title
48 of the Code of Federal Regulations (the AGAR), and directives issued
by the Director, Office of Procurement and Property Management, USDA;
or
(2) The participant, with reimbursement by CCC, in the manner
specified in the agreement.
(c) A participant that acquires transportation in accordance with
paragraph (b)(2) of this section may only use the services of a freight
forwarder that is licensed by the FMC and that would not have a
conflict of interest in carrying out the freight forwarder duties. To
assist FAS in determining whether there is a potential conflict of
interest, the participant must submit to FAS a certification indicating
that the freight forwarder:
(1) Is not engaged in, and will not engage in, supplying
commodities or furnishing ocean transportation or ocean transportation-
related services for commodities provided under any FFPr agreement to
which the participant is a party; and
(2) Is not affiliated with the participant and has not made
arrangements to give or receive any payment, kickback, or illegal
benefit in connection with its selection as an agent of the
participant.
(d) A participant that is responsible for transportation under
paragraph (b)(2) of this section shall declare in the transportation
contract the point at which the ocean carrier will take custody of
commodities to be transported.
Sec. 1499.8 Entry and handling of commodities.
(a) The participant shall make all necessary arrangements for
receiving the donated commodities in the targeted country, including
obtaining appropriate approvals for entry and transit. The participant
shall store and maintain the donated commodities in good condition from
the time of delivery at the port of entry or the point of receipt from
the originating carrier until their distribution, sale or barter.
(b) The participant shall, as provided in the agreement, arrange
for transporting, storing, and distributing the donated commodities
from the designated point and time where title to the commodities
passes to the participant by contracting directly with suppliers of
services, as set forth in the agreement.
(c)(1) If a participant arranges for the packaging or repackaging
of donated commodities that are to be distributed, the participant
shall ensure that the packaging:
(i) Is plainly labeled in the language of the targeted country;
(ii) Contains the name of the donated commodities;
(iii) Includes a statement indicating that the donated commodities
are furnished by the people of the United States of America; and,
(iv) Includes a statement indicating that the donated commodities
shall not be sold, exchanged or bartered.
(2) If a participant arranges for the reprocessing and repackaging
of donated commodities that are to be distributed, the participant
shall ensure that the packaging:
(i) Is plainly labeled in the language of the targeted country;
(ii) Contains the name of the reprocessed product;
(iii) Includes a statement indicating that the reprocessed product
was made with commodities furnished by the people of the United States
of America; and,
(iv) Includes a statement indicating that the reprocessed product
shall not be sold, exchanged or bartered.
(3) If a participant distributes donated commodities that are not
packaged, the participant shall, to the extent practicable, display:
(i) Banners, posters or other media informing the public of the
name and source of the donated commodities; and
(ii) A statement that the donated commodities may not be sold,
exchanged, or bartered.
(d) A participant shall arrange with the government of the targeted
country that all donated commodities to be distributed will be imported
and distributed free from all customs, duties, tolls, and taxes. A
participant is encouraged to make similar arrangements, where possible,
with the government of the country where donated commodities to be sold
or bartered are delivered.
Sec. 1499.9 Damage to or loss of commodities.
(a) FAS will be responsible for the donated commodities prior to
the transfer of title to the commodities to the participant. The
participant will be responsible for the donated commodities following
the transfer of title to the commodities to the participant. The title
will transfer as specified in the agreement.
(b) A participant shall inform FAS, in the manner and within the
time period set forth in the agreement, of any damage to or loss of the
donated commodities that occurs following the transfer of title to the
commodities to the participant. The participant shall take all steps
necessary to protect its interests and the interests of CCC with
respect to any damage to or loss of the donated commodities that occurs
after title has been transferred to the participant. The agreement will
specify whether the participant is responsible for obtaining a survey
in the event that the donated commodities are damaged or lost following
the transfer of title to the commodities to the participant.
(c) If the donated commodities are damaged or lost during the time
that they are in the care of the carrier:
(1) And either FAS or the participant engages the services of an
independent cargo surveyor, the surveyor will provide to FAS and the
participant any report, narrative chronology or other commentary that
it prepares;
(2) FAS and the participant will provide to each other the names
and addresses of any individuals known to be present at the time of
discharge or during the survey who can verify the quantity of damaged
or lost commodities;
(3) And the participant engages the services of the surveyor, CCC
will reimburse the participant for the reasonable costs, as determined
by FAS, of the survey, unless:
(i) The participant was required by the agreement to pay for the
survey;
[[Page 13070]]
(ii) The survey was a delivery survey and the surveyor did not also
prepare a discharge survey; or
(iii) The survey was not conducted contemporaneously with the
discharge of the vessel, unless FAS determines that such action was
justified under the circumstances;
(4) Any survey obtained by the participant shall, to the extent
practicable, be conducted jointly by the surveyor, the participant, and
the carrier, and the survey report shall be signed by all parties;
(5) And the damage or loss occurred with respect to a bulk grain
shipment, if the agreement provides that the participant is responsible
for survey and outturn reports, the participant shall engage the
services of an independent cargo surveyor to:
(i) Observe the discharge of the cargo;
(ii) Report on discharging methods, including scale type,
calibrations and any other factor that may affect the accuracy of scale
weights, and, if scales are not used, state the reason therefor and
describe the actual method used to determine weight;
(iii) Estimate the quantity of cargo, if any, lost during discharge
through carrier negligence;
(iv) Advise on the quality of sweepings;
(v) Obtain copies of port or vessel records, if possible, showing
the quantity discharged; and
(vi) Notify the participant immediately if the surveyor has reason
to believe that the correct quantity was not discharged or if
additional services are necessary to protect the cargo; and
(6) And the damage or loss occurred with respect to a container
shipment, if the agreement provides that the participant is responsible
for survey and outturn reports, the participant shall engage the
services of an independent cargo surveyor to list the container numbers
and seal numbers shown on the containers, indicate whether the seals
were intact at the time the containers were opened, and note whether
the containers were in any way damaged.
(d) If the participant has title to the donated commodities, and
the value of any damaged donated commodities is in excess of $1,000,
the participant shall immediately arrange for an inspection by a public
health official or other competent authority approved by FAS and
provide to FAS a certification by such public health official or other
competent authority regarding the exact quantity and condition of the
damaged commodities. The value of damaged donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by CCC with respect to such commodities. The
participant shall inform FAS of the results of the inspection and
indicate whether the damaged commodities are:
(1) Fit for the use authorized in the agreement and, if so, whether
there has been a diminution in quality; or
(2) Unfit for the use authorized in the agreement.
(e)(1) If the participant has title to the donated commodities, the
participant shall arrange for the recovery of that portion of the
donated commodities designated as suitable for the use authorized in
the agreement. The participant shall dispose of donated commodities
that are unfit for such use in the following order of priority:
(i) Sale for the most appropriate use, i.e., animal feed,
fertilizer, industrial use, or another use approved by FAS, at the
highest obtainable price;
(ii) Donation to a governmental or charitable organization for use
as animal feed or for other non-food use; or
(iii) Destruction of the commodities if they are unfit for any use,
in such manner as to prevent their use for any purpose.
(2) The participant shall arrange for all U.S. Government markings
to be obliterated or removed before the donated commodities are
transferred by sale or donation.
(f) A participant may retain any proceeds generated by the disposal
of the donated commodities in accordance with paragraph (e)(1) of this
section and shall use the proceeds for expenses related to the disposal
of the donated commodities and for activities specified in the
agreement.
(g) The participant shall notify FAS immediately and provide
detailed information about the actions taken in accordance with
paragraph (e)(1) of this section, including the quantities, values, and
dispositions of commodities determined to be unfit.
Sec. 1499.10 Claims for damage to or loss of commodities.
(a) FAS will be responsible for claims arising out of damage to or
loss of a quantity of the donated commodities prior to the transfer of
title to the commodities to the participant.
(b) If the participant has title to the donated commodities, and
the value of the damaged or lost donated commodities is estimated to be
$20,000 or greater, the participant will be responsible for:
(1) Initiating a claim arising out of such damage or loss,
including actions relating to collections pursuant to commercial
insurance contracts; and
(2) Notifying FAS immediately and providing detailed information
about the circumstances surrounding such damage or loss, the quantity
of damaged or lost donated commodities, and the value of the damage or
loss.
(c) If the participant has title to the donated commodities, and
the value of the damaged or lost donated commodities is estimated to be
less than $20,000, the participant will be responsible for providing
detailed information about the damage or loss in the next report
required to be filed under Sec. 1499.13(c)(1) or (2) and shall not be
required to initiate a claim collection action.
(d)(1) The value of a claim for lost donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by CCC with respect to such commodities.
(2) The value of a claim for damaged donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by CCC with respect to such commodities,
less any funds generated if such commodities are sold in accordance
with Sec. 1499.9(e)(1).
(e) If FAS determines that a participant is not exercising due
diligence in the pursuit of a claim, FAS may require the participant to
assign its rights to pursue the claim to FAS.
(f)(1) The participant may retain any funds obtained as a result of
a claims collection action initiated by it in accordance with this
section, or recovered pursuant to any insurance policy or other similar
form of indemnification, but such funds shall only be expended for
purposes approved in advance by FAS.
(2) FAS will retain any funds obtained as a result of a claims
collection action initiated by it under this section; provided,
however, that if the participant paid for the freight or a portion
thereof, FAS will use a portion of such funds to reimburse the
participant for such expense on a prorated basis.
Sec. 1499.11 Use of commodities and sale proceeds.
(a) A participant must use the donated commodities in accordance
with the agreement.
(b) A participant shall not permit the distribution, handling, or
allocation of donated commodities on the basis of political
affiliation, geographic location, or the ethnic, tribal or religious
identity or affiliation of the potential consumers or beneficiaries.
(c) A participant shall not permit the distribution, handling, or
allocation of
[[Page 13071]]
donated commodities by the military forces or any government or
insurgent group without the specific authorization of FAS.
(d) A participant may sell or barter donated commodities only if
such sale or barter is provided for in the agreement or the participant
is disposing of damaged commodities as specified in Sec. 1499.9. The
participant shall sell the donated commodities at a reasonable market
price in the economy where the sale occurs. The participant shall use
any sale proceeds, income, or goods or services derived from the sale
or barter of the donated commodities only as provided in the agreement.
(e) The participant shall deposit all sale proceeds and income into
a separate, interest-bearing account unless the exceptions in Sec.
3019.22(k) of this title apply, the account is in a country where the
laws or customs prohibit the payment of interest, or FAS determines
that this requirement would constitute an undue burden.
(f) A participant may use sale proceeds or income to purchase real
or personal property only if local law permits the participant to
retain title to such property. However, the participant shall not use
sale proceeds or income to pay for the acquisition, development,
construction, alteration or upgrade of real property that is:
(1) Owned or managed by a church or other organization engaged
exclusively in religious pursuits; or
(2) Used in whole or in part for sectarian purposes, except that a
participant may use sale proceeds or income to pay for repairs to or
rehabilitation of a structure located on such real property to the
extent necessary to avoid spoilage or loss of donated commodities, but
only if such structure is not used in whole or in part for any
religious or sectarian purposes while the donated commodities are
stored in it. If such use is not specifically provided for in the
agreement, such use may only occur after receipt of written approval
from FAS.
(g) A participant shall endeavor to comply with Sec. Sec. 3019.41
through 3019.43 of this title when procuring goods and services and
when engaging in construction work to implement the agreement. The
participant shall also establish procedures to prevent fraud. As
provided for in the agreement, the participant shall enter into a
written contract with each provider of goods, services or construction
work that requires the provider to maintain adequate records to account
for all donated commodities or funds or both provided to the provider
by the participant and to submit periodic reports to the participant.
The participant shall submit a copy of the signed contracts to FAS.
Sec. 1499.12 Subrecipients.
(a) If provided for in the agreement, a participant may utilize the
services of a subrecipient to implement activities under this
agreement. The participant shall enter into a written subagreement with
the subrecipient, and provide a copy of such subagreement to FAS, in
the manner set forth in the agreement, prior to the transfer of any
donated commodities, sale proceeds, income or CCC-provided funds to the
subrecipient. Such written subagreement shall require the subrecipient
to pay to the participant the value of any donated commodities, sale
proceeds, income, or CCC-provided cash funds that are not used in
accordance with the subagreement or are lost, damaged, or misused as a
result of the subrecipient's failure to exercise reasonable care.
(b) If a participant demonstrates to FAS that it is not feasible to
enter into a subagreement with a subrecipient, FAS may grant approval
to proceed without a subagreement; provided, however, that the
participant must obtain such approval from FAS prior to transferring
any donated commodities, sale proceeds, income, or CCC-provided funds
to the subrecipient.
(c) The participant shall monitor the actions of a subrecipient as
necessary to ensure that donated commodities or funds provided to the
subrecipient are used for authorized purposes in compliance with
applicable laws and regulations and the agreement and that performance
goals are achieved. The participant shall provide in the subagreement
that the subrecipient must comply with applicable provisions of the
regulations set forth in Chapter XXX of this title.
Sec. 1499.13 Recordkeeping and reporting requirements.
(a) A program participant shall retain records and permit access to
records in accordance with the requirements of Sec. 3019.53 of this
title. The date of submission of the final expenditure report, as
referenced in Sec. 3019.53(b) of this title, shall be the final date
of submission of the forms required by paragraphs (c)(1) and (2) of
this section as prescribed by FAS.
(b) A participant shall, within 30 days after export of all or a
portion of the donated commodities, submit evidence of such export to
FAS, in the manner set forth in the agreement. The evidence may be
submitted through an electronic media approved by FAS or by providing
the carrier's on board bill of lading. The evidence of export must show
the kind and quantity of commodities exported, the date of export, and
the country where commodities were delivered.
(c)(1) A participant shall submit to FAS information, using a form
as prescribed by FAS, covering the receipt, handling and disposition of
the donated commodities. Such report shall be submitted to FAS, by the
dates and for the reporting periods specified in the agreement, until
all of the donated commodities have been distributed, sold or bartered
and such disposition has been reported to FAS.
(2) If the agreement authorizes the sale or barter of donated
commodities, the participant shall submit to FAS information, using a
form as prescribed by FAS, covering the receipt and use of sale
proceeds and income, and, in the case of bartered commodities, covering
the services and goods derived from the barter of donated commodities.
Such reports shall be submitted to FAS, by the dates and for the
reporting periods specified in the agreement, until all of the sale
proceeds and income have been disbursed and reported to FAS. When
reporting financial information, the participant shall include the
amounts in U.S. dollars and the exchange rate.
(3) The participant shall report, in the manner specified in the
agreement, its progress, measured against established baselines,
towards achieving the objectives of the activities under the agreement.
(4) The participant shall retain copies of and make available to
FAS all barter receipts, contracts or other documents related to the
barter of the donated commodities and the services or goods derived
from such barter, for a minimum of two years after the agreement has
been closed out.
(5) The participant shall provide to FAS additional information or
reports relating to the agreement if requested by FAS.
(d) A participant shall submit to FAS, in the manner specified in
the agreement, an annual audit in accordance with Sec. 3019.26 of this
title. If FAS requires an annual financial audit with respect to a
particular agreement, and CCC provides funds for this purpose, the
participant shall arrange for such audit and submit it to FAS, in the
manner specified in the agreement.
(e)(1) A participant shall, as provided in the agreement, submit to
FAS interim and final evaluations of the implementation of the
agreement. Unless otherwise provided in the agreement, the evaluations
shall be submitted at the mid-point and end-
[[Page 13072]]
point of the implementation period. The participant shall arrange for
the evaluations to be conducted by an independent third party that:
(i) Is financially and legally separate from the participant's
organization;
(ii) Has staff with demonstrated knowledge, analytical capability,
language skills and experience in conducting evaluations of development
programs involving agriculture, education, and nutrition;
(iii) Uses acceptable analytical frameworks such as comparison with
non-project areas, surveys, involvement of stakeholders in the
evaluation, and statistical analyses;
(iv) Uses local consultants, as appropriate, to conduct portions of
the evaluation; and,
(v) Provides a detailed outline of the evaluation, major tasks, and
specific schedules prior to initiating the evaluation.
(2) Receipt by FAS of the evaluations referred to in paragraph
(e)(1) of this section is a condition for the participant to retain any
funds provided by CCC to carry out the evaluations.
(f) A participant shall submit to FAS the financial reports and
information outlined in Sec. 3019.52 of this title. The agreement will
specify the acceptable forms and time requirements for submission.
Sec. 1499.14 Noncompliance with an agreement.
If a participant fails to comply with a term of an agreement, FAS
may take one or more of the enforcement actions set forth in Sec.
3019.62 of this title and, if appropriate, initiate a claim against the
participant. FAS may also initiate a claim against a participant if the
donated commodities are damaged or lost or the sale proceeds, income,
or CCC-provided funds are lost due to an action or omission of the
participant.
Sec. 1499.15 Suspension, termination, and closeout of agreements.
(a) An agreement may be suspended or terminated by CCC if it
determines that:
(1) The continuation of the assistance provided under the agreement
is no longer necessary or desirable; or
(2) Storage facilities are inadequate to prevent spoilage or waste,
or distribution of the donated commodities will result in substantial
disincentive to, or interference with, domestic production or marketing
in the targeted country.
(b) An agreement may be terminated in accordance with Sec. 3019.61
of this title. If an agreement is terminated, the participant shall:
(1) Be responsible for the safety of any undistributed donated
commodities and dispose of such commodities only as agreed to by FAS;
and
(2) Follow the closeout procedures in Sec. Sec. 3019.71 through
3019.73 of this title.
(c) An agreement will be considered completed when CCC and the
participant have fulfilled their responsibilities under the agreement
or the agreement has been terminated. The procedures in sections
Sec. Sec. 3019.71 through 3019.73 of this title will apply to the
closeout of a completed agreement.
Sec. 1499.16 Appeals.
A participant may appeal a determination arising under this part to
FAS. Such appeal will be in writing and submitted to the FAS official
and in the manner set forth in the agreement. The participant will be
given an opportunity to have a hearing before a final decision is made
regarding its appeal.
Sec. 1499.17 Paperwork Reduction Act.
The information collection requirements contained in this
regulation have been approved by the Office of Management and Budget
under provisions of 44 U.S.C. Chapter 35 and have been assigned OMB
Number 0551-0035.
0
3. Revise part 1599 to read as follows:
PART 1599--McGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD
NUTRITION PROGRAM
Sec.
1599.1 General statement.
1599.2 Definitions.
1599.3 Eligibility determination.
1599.4 Application process.
1599.5 Agreements.
1599.6 Payments.
1599.7 Transportation of goods.
1599.8 Entry and handling of commodities.
1599.9 Damage to or loss of commodities.
1599.10 Claims for damage to or loss of commodities.
1599.11 Use of commodities and sales proceeds.
1599.12 Subrecipients.
1599.13 Recordkeeping and reporting requirements.
1599.14 Noncompliance with an agreement.
1599.15 Suspension, termination, and closeout of agreements.
1599.16 Appeals.
1599.17 Paperwork Reduction Act.
Authority: 7 U.S.C. 1736o-1.
Sec. 1599.1 General statement.
(a) This part sets forth the general terms and conditions governing
the donation of commodities by the Foreign Agricultural Service (FAS)
of the U.S. Department of Agriculture (USDA) to participants in the
McGovern-Dole International Food for Education and Child Nutrition
Program (McGovern-Dole Program). Under the McGovern-Dole Program,
participants use the donated commodities, proceeds from the sale of
such commodities, or funds provided by FAS to implement activities in a
foreign country pursuant to an agreement with FAS. FAS administers the
McGovern-Dole Program and acts on behalf of the Commodity Credit
Corporation (CCC) in cases where the agreement is funded with CCC
resources.
(b) In addition to the provisions of this part, other regulations
of general application issued by the Department, including the
regulations set forth in Chapter 30 of this title, are applicable to
the McGovern-Dole Program. In cases where an agreement is funded with
CCC resources, provisions of the CCC Charter Act (15 U.S.C. 714 et
seq.) and any other statutory provisions that are generally applicable
to CCC are applicable to McGovern-Dole Program and the regulations set
forth in this part.
(c) This part shall not apply to a donation by FAS to a foreign
government or an intergovernmental agency or organization (such as the
United Nations' World Food Program) under the McGovern-Dole Program.
Sec. 1599.2 Definitions.
The following definitions are applicable to this part:
Activity means a project to be carried out by a participant,
directly or through a subrecipient, to fulfill the objectives of an
agreement.
Agreement means a legally binding agreement entered into between
FAS and a participant to implement activities under the McGovern-Dole
Program.
CCC means the Commodity Credit Corporation and includes any
official of the United States delegated the responsibility to act on
behalf of CCC.
Commodities mean U.S. agricultural commodities or products of U.S.
agricultural commodities.
Donated commodities mean the commodities donated by FAS to a
participant under an agreement. The term may include donated
commodities that are used to produce a further processed product for
use under the agreement.
FAS means the Foreign Agricultural Service of the United States
Department of Agriculture.
FAS-provided funds means U.S. dollars provided under an agreement
to a participant for expenses for the internal transportation, storage
and handling of the donated commodities,
[[Page 13073]]
expenses involved in the administration and monitoring of the
activities under the agreement, and the costs of activities conducted
in the targeted country that would enhance the effectiveness of the
activities implemented by the participant under the McGovern-Dole
Program.
Force majeure is a common clause in contracts, exempting the
parties for non-fulfillment of their obligations as a result of
conditions beyond their control, such as earthquakes, floods or war.
Income means interest earned on sale proceeds and other resources
received by a participant, other than sale proceeds, as a result of
carrying out an agreement. The term may include resources from VAT
refunds, activity fees, interest on loans, and other sources.
McGovern-Dole Program means the McGovern-Dole International Food
for Education and Child Nutrition Program.
Participant means an entity with which FAS has entered into an
agreement.
Subrecipient means a legal entity that receives donated
commodities, income, sale proceeds or other resources from a
participant for the purpose of implementing in the targeted country
activities described in a McGovern-Dole Program agreement and that is
accountable to such participant for the use of such commodities, funds,
or resources. The term may include foreign or international
organizations (such as agencies of the United Nations) at the
discretion of FAS.
Sale proceeds mean funds received by a participant from the sale of
donated commodities.
Targeted country means the country in which activities are
implemented under an agreement.
Sec. 1599.3 Eligibility determination.
(a) An entity will be eligible to become a participant only after
FAS determines that the entity has:
(1) Organizational experience in implementing and managing awards,
and the capability and personnel to develop, implement, monitor, report
on, and provide accountability for activities in accordance with this
part;
(2) Experience working in the proposed targeted country;
(3) An adequate financial framework to implement the activities the
entity proposes to carry out under McGovern-Dole Program. In order to
determine whether the entity is financially responsible, FAS may
require it to submit corporate policies and financial materials that
have been audited or otherwise reviewed by a third party;
(4) A person or agent located in the United States with respect to
which service of judicial process may be obtained by FAS on behalf of
the entity; and
(5) An operating financial account in the proposed targeted
country, or a satisfactory explanation for not having such an account
and a description of how a McGovern-Dole Program agreement would be
administered without such an account.
(b) In determining whether an entity will be eligible to be a
participant, FAS may consider the entity's previous compliance or
noncompliance with the provisions of this part and part 1499 of this
title. FAS may consider matters such as whether the entity corrected
deficiencies in the implementation of an agreement in a timely manner
and whether the entity has timely and accurately filed reports and
other submissions that are required to be filed with FAS and other
agencies of the United States.
Sec. 1599.4 Application process.
(a) An entity seeking to enter into an agreement with FAS shall
submit an application, in accordance with this section, that sets forth
its proposal to carry out activities under the McGovern-Dole Program in
the proposed targeted country. An application shall contain the items
specified in paragraph (b) of this section and shall be submitted
electronically to FAS at the address set forth at http://
www.fas.usda.gov. An entity that has not yet met the eligibility
requirements in Sec. 1599.3 may submit an application, but FAS will
not enter into an agreement with an entity until FAS had made a
determination of eligibility under Sec. 1599.3.
(b) An applicant shall include the following items in its
application:
(1) A completed Form SF-424, which is a standard application for
Federal assistance;
(2) An introduction that contains the elements specified in
paragraph (c) of this section; and
(3) A plan of operation that contains the elements specified in
paragraph (d) of this section.
(c) The introduction shall include:
(1) An explanation of the need for food aid in the targeted country
and how the applicant's proposed activities would address that need;
(2) An explanation of the need for a school feeding program in the
targeted country and information regarding:
(i) The country's current school feeding operations, if they exist,
the length and sessions of a typical school year, and current funding
resources; and
(ii) Teacher training, parent-teacher associations, community
infrastructure, and health, nutrition, water and sanitation conditions;
(3) Information regarding the applicant's ability to become
registered and operate in the targeted country;
(4) Information about the applicant's past food aid projects;
(5) Methods that the applicant proposes to use to involve
indigenous institutions as well as local communities and governments in
the development and implementation of the activities in order to foster
local capacity building and leadership;
(6) A budget that details the amount of any sale proceeds, income,
and FAS-provided funds that the applicant proposes to use to fund:
(i) Administrative costs;
(ii) Inland transportation, storage and handling costs; and
(iii) Activity costs;
(7) A statement verifying the commitment of the government of the
targeted country to work toward, through a national action plan, the
goals of the World Declaration on Education for All convened in 1990 in
Jomtien, Thailand, and the follow-up Dakar Framework for Action of the
World Education Forum, convened in 2000; and
(8) A description of:
(i) How the benefits of education, enrollment, and attendance of
children in schools in the targeted communities will be sustained when
the assistance under the McGovern-Dole Program terminates; and
(ii) The estimated period of time required until the targeted
country or the applicant would be able to sustain the program without
additional assistance under the McGovern-Dole Program.
(d) A plan of operation shall include:
(1) The name of the targeted country where the proposed activities
would be implemented;
(2) The kind, quantity, and proposed use of the commodities
requested, and any commodities that would be acceptable substitutions
therefor, and the proposed delivery schedule;
(3) If monetization or barter is proposed:
(i) The quantity of the requested commodities that would be sold or
bartered;
(ii) The amount of sale proceeds anticipated;
(iii) The amount of income expected to be generated;
(iv) The anticipated monetization completion date;
(v) The goods or services to be generated from the barter of the
requested commodities;
[[Page 13074]]
(vi) The value of the goods or services anticipated to be generated
from the barter of the requested commodities; and
(vii) A justification for monetizing the requested commodities that
discusses why monetization would provide a greater benefit than the
receipt of FAS-provided funds to carry out activities.
(4) A list of each of the activities that would be implemented,
with a brief statement of the objectives to be accomplished under each
activity;
(5) For each proposed activity, the targeted geographic area,
anticipated beneficiaries, and methods that the applicant would use to
choose such beneficiaries, including obtaining and considering
statistics on poverty levels, food deficits, literacy rates, and any
other required items set forth on the FAS Web site at http://
www.fas.usda.gov.
(6) For each proposed activity:
(i) An explanation of whether the activity would be carried out
through the distribution or barter of the requested commodities or
funded by FAS-provided funds, sale proceeds, income, or a combination
thereof; and
(ii) The amount of commodities and FAS-provided funds requested,
and of any sale proceeds and income expected to be generated, to carry
out such activity; and
(iii) A detailed description of the activity, including the steps
involved in its implementation and the anticipated completion date;
(7) Any cash or non-cash contributions that the applicant expects
to receive from non-FAS sources that:
(i) Are critical to the implementation of the proposed activities;
or
(ii) Enhance the implementation of the activities;
(8) Any subrecipient that would be involved and a description of
each subrecipient's responsibilities and its capability to perform
responsibilities;
(9) Any governmental or nongovernmental entities that would be
involved and the extent to which the McGovern-Dole Program will
strengthen or increase the capabilities of such entities to further
educational and economic development in the targeted country;
(10) The method by which the applicant intends to inform
beneficiaries of an activity about the source of the requested
commodities or funding for the activity and, where the beneficiaries
will be receiving the commodities directly, how to prepare and use them
properly;
(11) Established baselines, a timeline, and proposed outcomes that
would enable FAS to measure the applicant's progress towards achieving
the objectives of the proposed activities and the McGovern-Dole
Program, which include:
(i) Increased enrollment and attendance rates, especially for
girls;
(ii) Improved student achievement levels through improvements in
the learning environment;
(iii) Improved maternal, child and student health and nutrition;
(iv) Attracting non-FAS contributions to development activities;
(v) Enabling community support for infrastructure development; and
(vi) Increased government and community support in education;
(12) If the proposed activities would involve the use of sale
proceeds or income:
(i) The process that the applicant would use to sell the requested
commodities, including steps the applicant would take to use, to the
extent possible, the private sector in the monetization process; and
(ii) The procedures that the applicant would use to assure that
sale proceeds and income are received and deposited into a separate,
interest-bearing account and disbursed from such account for use only
in accordance with the agreement;
(13) A description of any port, transportation, storage, and
warehouse facilities that would be used with sufficient detail to
demonstrate that they would be adequate to handle the requested
commodities without undue spoilage or waste, and, in cases where the
applicant proposes to distribute some or all of the requested
commodities, a description of how they would be transported from the
receiving port to the point at which distribution is made to the
beneficiaries;
(14) Any reprocessing or repackaging of the requested commodities
that would take place prior to the distribution, sale or barter by the
applicant;
(15) The action the applicant would take to ensure that any
commodities to be distributed to beneficiaries, rather than sold, would
be imported and distributed free from all customs, duties, tolls, and
taxes;
(16) A plan that shows how the requested commodities could be
imported and distributed without a disruptive impact upon production,
prices and marketing of the same or like products in the country where
they will be delivered, and the extent to which any sale or barter of
the requested commodities would displace or interfere with any sales
that may otherwise be made by the applicant or any other entity in the
country where they will be delivered; and
(17) Any additional required items set forth on the FAS Web site at
http://www.fas.usda.gov.
Sec. 1599.5 Agreements.
(a) After FAS approves an applicant's proposal, FAS will develop an
agreement in consultation with the applicant. The agreement will set
forth the obligations of FAS and the participant. A participant must
comply with the terms of the agreement to receive assistance.
(b) A participant shall not use donated commodities, sale proceeds,
income or FAS-provided funds for any activity or any expenses incurred
by the participant prior to the date of the agreement or after the
agreement is suspended or terminated, except as approved by FAS.
(c) The agreement will include a budget that sets forth the maximum
amounts of sale proceeds and FAS-provided funds that may be expended
for various purposes under the agreement. A participant may make
adjustments to this budget without prior approval from FAS only as
specified in the agreement.
(d) Prior to providing any donated commodities or FAS-provided
funds to a participant under an agreement, FAS may require the
participant to complete a training program administered by FAS that is
designed to ensure that the participant is aware of, and has the
capacity to complete, all required reporting and audit functions set
forth in this part.
(e) A participant will be prohibited from using FAS-provided funds
to acquire goods and services, either directly or indirectly through
another party, from certain countries that will be specified in the
agreement. Any violation of this provision of the agreement will be a
basis for immediate termination by FAS of the agreement in addition to
the imposition of any other applicable civil and criminal penalties.
(f) The agreement will prohibit the sale or transshipment of the
donated commodities to a country not specified in the agreement for as
long as such donated commodities are controlled by the participant.
(g) FAS may enter into a multicountry agreement in which donated
commodities are delivered to one country and activities are carried out
in another.
(h) FAS may provide donated commodities and FAS-provided funds
under a multiyear agreement contingent upon the availability of
commodities and funds.
[[Page 13075]]
Sec. 1599.6 Payments.
(a) If the participant arranges for transportation in accordance
with Sec. 1599.7(b)(2), and the participant seeks payment directly,
the participant shall, as specified in the agreement, either submit to
FAS, or maintain on file and make available to FAS, the following
documents:
(1) A signed copy of the completed Form CCC-512;
(2) The original, or a true copy of, each on-board bill of lading
indicating the freight rate and signed by the originating carrier;
(3) For all non-containerized cargoes:
(i) A signed copy of the Federal Grain Inspection Service (FGIS)
Official Stowage Examination Certificate (Vessel Hold Certificate);
(ii) A signed copy of the National Cargo Bureau Certificate of
Readiness (Vessel Hold Inspection Certificate); and
(iii) A signed copy of the National Cargo Bureau Certificate of
Loading;
(4) For all containerized cargoes, a copy of the FGIS Container
Condition Inspection Certificate;
(5) A signed copy of the liner booking note or charter party
covering ocean transportation of the cargo;
(6) In the case of charter shipments, a signed notice of arrival at
the first discharge port, unless FAS has determined that circumstances
of force majeure have prevented the vessel's arrival at the first port
of discharge;
(7) A request by the participant for reimbursement of freight,
survey costs other than at load port, and other expenses approved by
FAS indicating the amount due and accompanied by a certification from
the carrier or other parties that payments have been received from the
participant; and
(8) A document on letterhead and signed by an officer or agent of
the participant specifying the name of the entity to receive payment;
the bank ABA number to which payment is to be made; the account number
for the deposit at the bank; the participant's taxpayer identification
number; and the type of the account into which the payment will be
deposited.
(b) If the participant arranges for transportation in accordance
with Sec. 1599.7(b)(2), and the participant has used a freight
forwarder, the participant shall cause the freight forwarder to submit
the documents specified in Sec. 1599.6(a) in order to receive payment
from FAS.
(c) In no case will FAS reimburse a participant for demurrage costs
or pay demurrage to any other entity.
(d) If FAS has agreed to pay the costs of transporting, storing,
and distributing the donated commodities from the designated port or
point of entry, the participant will be reimbursed in the manner set
forth in the agreement.
(e) If the agreement authorizes the payment of FAS-provided funds,
FAS will pay these funds to the participant on a reimbursement for
expenses basis, except as provided in paragraph (f)(1) of this section.
The participant shall request the payment of FAS-provided funds to
reimburse it for authorized expenses in the manner set forth in the
agreement.
(f)(1) A participant may request an advance of the amount of funds
specified in the agreement. FAS will not approve any request for an
advance if:
(i) It is received earlier than 60 days after the date of a
previous advance made in connection with the same agreement; or
(ii) Any required reports, as specified in Sec. 1499.13 and in the
agreement, are more than six months in arrears.
(2) Except as may otherwise be provided in the agreement, the
participant shall deposit and maintain in a bank account located in the
United States all funds advanced by FAS. The account shall be interest-
bearing, unless the exceptions in Sec. 3019.22(k) of this title apply,
or FAS determines that this requirement would constitute an undue
burden. The participant shall remit semi-annually to FAS any interest
earned on the advanced funds. The participant shall, no later than 10
days after the end of each calendar quarter, submit a financial
statement to FAS accounting for all funds advanced and all interest
earned.
(3) The participant shall return to FAS any funds that are advanced
by FAS if such funds have not been obligated as of the 180th day after
the advance was made. Such funds and interest shall be transferred to
FAS within 30 days of such date.
(g) If a participant is required to pay funds to FAS in connection
with an agreement, the participant shall make such payment in U.S.
dollars, unless otherwise approved in advance by FAS.
(h) Suppliers of commodities shall seek payment according to the
purchase contract.
Sec. 1599.7 Transportation of goods.
(a) Shipments of donated commodities are subject to the
requirements of 46 U.S.C. 55305 and 55314, regarding carriage on U.S.-
flag vessels.
(b) Transportation of donated commodities and other goods such as
bags that may be provided by FAS under the McGovern-Dole Program will
be acquired under a specific agreement in the manner determined by FAS.
Such transportation will be acquired by:
(1) FAS in accordance with the Federal Acquisition Regulations
(FAR), the Department's procurement regulations set forth in chapter 4
of title 48 of the Code of Federal Regulations (the AGAR) and
directives issued by the Director, Office of Procurement and Property
Management, U.S. Department of Agriculture; or
(2) The participant, with reimbursement by FAS, in the manner
specified in the agreement.
(c) A participant that acquires transportation in accordance with
paragraph (b)(2) of this section may only use the services of a freight
forwarder that is licensed by the Federal Maritime Commission (FMC) and
that would not have a conflict of interest in carrying out the freight
forwarder duties. To assist FAS in determining whether there is a
potential conflict of interest, the participant must submit to FAS a
certification indicating that the freight forwarder:
(1) Is not engaged, and will not engage, in supplying commodities
or furnishing ocean transportation or ocean transportation-related
services for commodities provided under any McGovern-Dole Program
agreement to which the participant is a party; and
(2) Is not affiliated with the participant and has not made
arrangements to give or receive any payment, kickback, or illegal
benefit in connection with its selection as an agent of the
participant.
(d) A participant that is responsible for transportation under
paragraph (b)(2) of this section shall declare in the transportation
contract the point at which the ocean carrier will take custody of
commodities to be transported.
Sec. 1599.8 Entry and handling of commodities.
(a) The participant shall make all necessary arrangements for
receiving the donated commodities in the targeted country, including
obtaining appropriate approvals for entry and transit. The participant
shall store and maintain the donated commodities in good condition from
the time of delivery at the port of entry or the point of receipt from
the originating carrier until their distribution, sale or barter.
(b) The participant shall, as provided in the agreement, arrange
for transporting, storing, and distributing the donated commodities
from the designated point and time where title to the commodity passes
to the participant by contracting directly with suppliers of services,
as set forth in the agreement.
[[Page 13076]]
(c)(1) If a participant arranges for the packaging or repackaging
of donated commodities that are to be distributed, the participant
shall ensure that the packaging:
(i) Is plainly labeled in the language of the targeted country;
(ii) Contains the name of the donated commodities;
(iii) Includes a statement indicating that the donated commodities
are furnished by the people of the United States of America; and
(iv) Includes a statement indicating that the donated commodities
shall not be sold, exchanged or bartered.
(2) If a participant arranges for the reprocessing and repackaging
of donated commodities that are to be distributed, the participant
shall ensure that the packaging:
(i) Is plainly labeled in the language of the targeted country;
(ii) Contains the name of the reprocessed product;
(iii) Includes a statement indicating that the reprocessed product
was made with commodities furnished by the people of the United States
of America; and
(iv) Includes a statement indicating that the reprocessed product
shall not be sold, exchanged or bartered;
(3) If a participant distributes donated commodities that are not
packaged, the participant shall, to the extent practicable, display:
(i) Banners, posters or other media informing the public of the
name and source of the donated commodities; and
(ii) A statement that the donated commodities may not be sold,
exchanged, or bartered.
(d) A participant shall arrange with the government of the targeted
country that all donated commodities to be distributed will be imported
and distributed free from all customs, duties, tolls, and taxes. A
participant is encouraged to make similar arrangements, where possible,
with the government of the country where donated commodities to be sold
or bartered are delivered.
Sec. 1599.9 Damage to or loss of commodities.
(a) FAS will be responsible for the donated commodities prior to
the transfer of title to the commodities to the participant. The
participant will be responsible for the donated commodities following
the transfer of title to the commodities to the participant. The title
will transfer as specified in the agreement.
(b) A participant shall inform FAS, in the manner and within the
time period set forth in the agreement, of any damage to or loss of the
donated commodities that occurs following the transfer of title to the
commodities to the participant. The participant shall take all steps
necessary to protect its interests and the interests of FAS with
respect to any damage to or loss of the donated commodities that occurs
after title has been transferred to the participant. The agreement will
specify whether the participant is responsible for obtaining a survey
in the event that the donated commodities are damaged or lost following
the transfer of title to the commodities to the participant.
(c) If the donated commodities are damaged or lost during the time
that they are in the care of the carrier:
(1) And either FAS or the participant engages the services of an
independent cargo surveyor, the surveyor will provide to FAS and the
participant any report, narrative chronology or other commentary that
it prepares;
(2) FAS and the participant will provide to each other the names
and addresses of any individuals known to be present at the time of
discharge or during the survey who can verify the quantity of damaged
or lost commodities;
(3) And the participant engages the services of the surveyor, FAS
will reimburse the participant for the reasonable costs, as determined
by FAS, of the survey, unless:
(i) The participant was required by the agreement to pay for the
survey;
(ii) The survey was a delivery survey and the surveyor did not also
prepare a discharge survey; or
(iii) The survey was not conducted contemporaneously with the
discharge of the vessel, unless FAS determines that such action was
justified under the circumstances;
(4) Any survey obtained by the participant shall, to the extent
practicable, be conducted jointly by the surveyor, the participant, and
the carrier, and the survey report shall be signed by all parties;
(5) And the damage or loss occurred with respect to a bulk grain
shipment, if the agreement provides that the participant is responsible
for survey and outturn reports, the participant shall obtain the
services of an independent cargo surveyor to:
(i) Observe the discharge of the cargo;
(ii) Report on discharging methods, including scale type,
calibrations and any other factor that may affect the accuracy of scale
weights, and, if scales are not used, state the reason therefor and
describe the actual method used to determine weight;
(iii) Estimate the quantity of cargo, if any, lost during discharge
through carrier negligence;
(iv) Advise on the quality of sweepings;
(v) Obtain copies of port or vessel records, if possible, showing
the quantity discharged; and
(vi) Notify the participant immediately if the surveyor has reason
to believe that the correct quantity was not discharged or if
additional services are necessary to protect the cargo; and
(6) And the damage or loss occurred with respect to a container
shipment, if the agreement provides that the participant is responsible
for survey and outturn reports, the participant shall engage the
services of an independent cargo surveyor to list the container numbers
and seal numbers shown on the containers, indicate whether the seals
were intact at the time the containers were opened, and note whether
the containers were in any way damaged.
(d) If the participant has title to the donated commodities, and
the value of any damaged donated commodities is in excess of $1,000,
the participant shall immediately arrange for an inspection by a public
health official or other competent authority approved by FAS and
provide to FAS a certification by such public health official or other
competent authority regarding the exact quantity and condition of the
damaged commodities. The value of damaged donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by CCC with respect to such commodities. The
participant shall inform FAS of the results of the inspection and
indicate whether the damaged commodities are:
(1) Fit for the use authorized in the agreement and, if so, whether
there has been a diminution in quality; or
(2) Unfit for the use authorized in the agreement.
(e)(1) If the participant has title to the donated commodities, the
participant shall arrange for the recovery of that portion of the
donated commodities designated as suitable for the use authorized in
the agreement. The participant shall dispose of donated commodities
that are unfit for such use in the following order of priority:
(i) Sale for the most appropriate use, i.e., animal feed,
fertilizer, industrial use, or another use approved by FAS, at the
highest obtainable price;
(ii) Donation to a governmental or charitable organization for use
as animal feed or for other non-food use; or
(iii) Destruction of the commodities if they are unfit for any use,
in such
[[Page 13077]]
manner as to prevent their use for any purpose.
(2) The participant shall arrange for all U.S. Government markings
to be obliterated or removed before the donated commodities are
transferred by sale or donation.
(f) A participant may retain any proceeds generated by the disposal
of the donated commodities in accordance with paragraph (e)(1) of this
section and shall use the proceeds for expenses related to the disposal
of the donated commodities and for activities specified in the
agreement.
(g) The participant shall notify FAS immediately and provide
detailed information about the actions taken in accordance with
paragraph (e) of this section, including the quantities, values and
dispositions of commodities determined to be unfit.
Sec. 1599.10 Claims for damage to or loss of commodities.
(a) FAS will be responsible for claims arising out of damage to or
loss of a quantity of the donated commodities prior to the transfer of
title to the commodities to the participant.
(b) If the participant has title to the donated commodities, and
the value of the damaged or lost donated commodities is estimated to be
$20,000 or greater, the participant will be responsible for:
(1) Initiating a claim arising out of such damage or loss,
including actions relating to collections pursuant to commercial
insurance contracts; and
(2) Notifying FAS immediately and providing detailed information
about the circumstances surrounding such damage or loss, the quantity
of damaged or lost donated commodities, and the value of the damage or
loss.
(c) If the participant has title to the donated commodities, and
the value of the damaged or lost donated commodities is estimated to be
less than $20,000, the participant will be responsible for providing
detailed information about the damage or loss in the next report
required to be filed under Sec. 1599.13(c)(1) or (2) and shall not be
required to initiate a claim collection action.
(d)(1) The value of a claim for lost donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by FAS with respect to such commodities.
(2) The value of a claim for damaged donated commodities shall be
determined on the basis of the commodity acquisition, transportation,
and related costs incurred by FAS with respect to such commodities,
less any funds generated if such commodities are sold in accordance
with Sec. 1599.9(e)(1).
(e) If FAS determines that a participant is not exercising due
diligence in the pursuit of a claim, FAS may require the participant to
assign its rights to pursue the claim to FAS.
(f)(1) The participant may retain any funds obtained as a result of
a claims collection action initiated by it in accordance with this
section, or recovered pursuant to any insurance policy or other similar
form of indemnification, but such funds shall only be expended for
purposes approved in advance by FAS.
(2) FAS will retain any funds obtained as a result of a claims
collection action initiated by it under this section; provided,
however, that if the participant paid for the freight or a portion
thereof, FAS will use a portion of such funds to reimburse the
participant for such expense on a prorated basis.
Sec. 1599.11 Use of commodities and sale proceeds.
(a) A participant must use the donated commodities in accordance
with the agreement.
(b) A participant shall not permit the distribution, handling, or
allocation of donated commodities on the basis of political
affiliation, geographic location, or the ethnic, tribal or religious
identity or affiliation of the potential consumers or beneficiaries.
(c) A participant shall not permit the distribution, handling, or
allocation of donated commodities by the military forces or any
government or insurgent group without the specific authorization of
FAS.
(d) A participant may sell or barter donated commodities only if
such sale or barter is provided for in the agreement or the participant
is disposing of damaged commodities as specified in Sec. 1599.9. The
participant shall sell the donated commodities at a reasonable market
price in the economy where the sale occurs. The participant shall use
any sale proceeds, income, or goods or services derived from the sale
or barter of the donated commodities only as provided in the agreement.
(e) The participant shall deposit all sale proceeds and income into
a separate, interest-bearing account unless the exceptions in Sec.
3019.22(k) of this title apply, the account is in a country where the
laws or customs prohibit the payment of interest, or FAS determines
that this requirement would constitute an undue burden.
(f) A participant may use sale proceeds or income to purchase real
or personal property only if local law permits the participant to
retain title to such property. However, the participant shall not use
sale proceeds or income to pay for the acquisition, development,
construction, alteration or upgrade of real property that is:
(1) Owned or managed by a church or other organization engaged
exclusively in religious pursuits; or
(2) Used in whole or in part for sectarian purposes, except that a
participant may use sale proceeds or income to pay for repairs to or
rehabilitation of a structure located on such real property to the
extent necessary to avoid spoilage or loss of donated commodities, but
only if such structure is not used in whole or in part for any
religious or sectarian purposes while the donated commodities are
stored in it. If such use is not specifically provided for in the
agreement, such use may only occur after receipt of written approval
from FAS.
(g) A participant shall endeavor to comply with Sec. Sec. 3019.41
through 3019.43 of this title when procuring goods and services and
when engaging in construction work to implement the agreement. The
participant shall also establish procedures to prevent fraud. As
provided for in the agreement, the participant shall enter into a
written contract with each provider of goods, services or construction
work that requires the provider to maintain adequate records to account
for all donated commodities or funds or both provided to the provider
by the participant and to submit periodic reports to the participant.
The participant shall submit a copy of the signed contracts to FAS.
Sec. 1599.12 Subrecipients.
(a) If provided for in the agreement, a participant may utilize the
services of a subrecipient to implement activities under this
agreement. The participant shall enter into a written subagreement with
the subrecipient, and provide a copy of such subagreement to FAS, in
the manner set forth in the agreement, prior to the transfer of any
donated commodities, sale proceeds, income or FAS-provided funds to the
subrecipient. Such written subagreement shall require the subrecipient
to pay to the participant the value of any donated commodities, sale
proceeds, income, or FAS-provided cash funds that are not used in
accordance with the subagreement or are lost, damaged, or misused as a
result of the subrecipient's failure to exercise reasonable care.
(b) If a participant demonstrates to FAS that it is not feasible to
enter into a subagreement with a subrecipient,
[[Page 13078]]
FAS may grant approval to proceed without a subagreement; provided,
however, that the participant must obtain such approval from FAS prior
to transferring any donated commodities, sale proceeds, income, or FAS-
provided funds to the subrecipient.
(c) The participant shall monitor the actions of a subrecipient as
necessary to ensure that donated commodities or funds provided to the
subrecipient are used for authorized purposes in compliance with
applicable laws and regulations and the agreement and that performance
goals are achieved. The participant shall provide in the subagreement
that the subrecipient must comply with applicable provisions of the
regulations set forth in Chapter XXX of this title.
Sec. 1599.13 Recordkeeping and reporting requirements.
(a) A program participant shall retain records and permit access to
records in accordance with the requirements of Sec. 3019.53 of this
title. The date of submission of the final expenditure report, as
referenced in Sec. 3019.53(b) of this title, shall be the final date
of submission of the forms required by paragraphs (c)(1) and (2) of
this section, as prescribed by FAS.
(b) A participant shall, within 30 days after export of all or a
portion of the donated commodities, submit evidence of such export to
FAS, in the manner set forth in the agreement. The evidence may be
submitted through an electronic media approved by FAS or by providing
the carrier's on board bill of lading. The evidence of export must show
the kind and quantity of commodities exported, the date of export, and
the country where commodities were delivered.
(c)(1) A participant shall submit to FAS information, using a form
as prescribed by FAS, covering the receipt, handling and disposition of
the donated commodities. Such report shall be submitted to FAS, by the
dates and for the reporting periods specified in the program agreement,
until all of the donated commodities have been distributed, sold or
bartered and such disposition has been reported to FAS.
(2) If the agreement authorizes the sale or barter of donated
commodities, the participant shall submit to FAS information, using a
form as prescribed by FAS, covering the receipt and use of sale
proceeds and income, and, in the case of bartered commodities, covering
the services and goods derived from the barter of donated commodities.
Such reports shall be submitted to FAS, by the dates and for the
reporting periods specified in the agreement, until all of the sale
proceeds and income have been disbursed and reported to FAS. When
reporting financial information, the participant shall include the
amounts in U.S. dollars and the exchange rate.
(3) The participant shall report, in the manner specified in the
agreement, its progress, measured against established baselines,
towards achieving the objectives of the activities under the agreement.
(4) The participant shall retain copies of and make available to
FAS all barter receipts, contracts or other documents related to the
barter of the donated commodities and the services or goods derived
from such barter, for a minimum of two years after the agreement has
been closed out.
(5) The participant shall provide to FAS additional information or
reports relating to the agreement if requested by FAS.
(d) A participant shall submit to FAS, in the manner specified in
the agreement, an annual audit in accordance with Sec. 3019.26 of this
title. If FAS requires an annual financial audit with respect to a
particular agreement, and FAS provides funds for this purpose, the
participant shall arrange for such audit and submit to FAS, in the
manner specified in the agreement.
(e)(1) A participant shall, as provided in the agreement, submit to
FAS interim and final evaluations of the implementation of the
agreement. Unless otherwise provided in the agreement, the evaluations
shall be submitted at the mid-point and end-point of the implementation
period. The participant shall arrange for the evaluations to be
conducted by an independent third party that:
(i) Is financially and legally separate from the participant's
organization;
(ii) Has staff with demonstrated knowledge, analytical capability,
language skills and experience in conducting evaluations of development
programs involving agriculture, education, and nutrition;
(iii) Uses acceptable analytical frameworks such as comparison with
non-project areas, surveys, involvement of stakeholders in the
evaluation, and statistical analyses;
(iv) Uses local consultants, as appropriate, to conduct portions of
the evaluation; and
(v) Provides a detailed outline of the evaluation, major tasks, and
specific schedules prior to initiating the evaluation.
(2) Receipt by FAS of the evaluations referred to in paragraph
(e)(1) of this section is a condition for the participant to retain any
funds provided by FAS to carry out the evaluations.
(f) A participant shall submit to FAS the financial reports and
information outlined in Sec. 3019.52 of this title. The agreement will
specify the acceptable forms and time requirements for submission.
Sec. 1599.14 Noncompliance with an agreement.
If a participant fails to comply with a term of an agreement, FAS
may take one or more of the enforcement actions set forth in Sec.
3019.62 of this title and, if appropriate, initiate a claim against the
participant. FAS may also initiate a claim against a participant if the
donated commodities are damaged or lost or the sale proceeds, income,
or FAS-provided funds are lost due to an action or omission of the
participant.
Sec. 1599.15 Suspension, termination, and closeouts of agreements.
(a) An agreement may be suspended or terminated by FAS if it
determines that:
(1) The continuation of the assistance provided under the agreement
is no longer necessary or desirable; or
(2) Storage facilities are inadequate to prevent spoilage or waste,
or distribution of the donated commodities will result in substantial
disincentive to, or interference with, domestic production or marketing
in the targeted country.
(b) An agreement may be terminated in accordance with Sec. 3019.61
of this title. If an agreement is terminated, the participant shall:
(1) Be responsible for the safety of any undistributed donated
commodities and dispose of such commodities only as agreed to by FAS;
and
(2) Follow the closeout procedures in Sec. Sec. 3019.71 through
3019.73 of this title.
(c) An agreement will be considered completed when FAS and the
participant have fulfilled their responsibilities under the agreement
or the agreement has been terminated. The procedures in Sec. Sec.
3019.71 through 3019.73 of this title will apply to the closeout of a
completed agreement.
Sec. 1599.16 Appeals.
A participant may appeal a determination arising under this part to
FAS. Such appeal will be in writing and submitted to the FAS official
and in the manner set forth in the agreement. The participant will be
given an opportunity to have a hearing before a final decision is made
regarding its appeal.
Sec. 1599.17 Paperwork Reduction Act.
The information collection requirements contained in this
regulation have been approved by OMB under provisions of 44 U.S.C.
Chapter
[[Page 13079]]
35 and have been assigned OMB Number 0551-0035.
Title 48--Federal Acquisition Regulations System
CHAPTER 4--DEPARTMENT OF AGRICULTURE
0
4. Amend 48 CFR Chapter 4 by establishing subchapter I consisting of
part 470 to read as follows:
SUBCHAPTER I--FOOD ASSISTANCE PROGRAMS
PART 470--COMMODITY ACQUISITIONS
Sec.
470.000 Scope of part.
470.101 Definitions.
470.102 Policy.
470.103 United States origin of agricultural products.
470.200 [Reserved]
470.201 Acquisition of commodities and freight shipment for Foreign
Agricultural Service programs.
470.202 Acquisition of commodities for United States Agency for
International Development (USAID) programs.
470.203 Cargo preference.
Authority: 5 U.S.C. 301; 7 U.S.C. 1691 through 1726b; 1731
through 1736g-3; 1736o; 1736o-1; 40 U.S.C. 121(c); 46 U.S.C. 53305,
55314 and 55316.
470.000 Scope of part.
This part sets forth the policies, procedures and requirements
governing the procurement of agricultural commodities by the Department
of Agriculture for use:
(a) Under any domestic feeding and assistance program administered
by the Food and Nutrition Service; and
(b) Under Title II of the Food for Peace Act (7 U.S.C. 1721 et
seq.); the Food for Progress Act of 1985; the McGovern-Dole
International Food for Education and Child Nutrition Program; and any
other international food assistance program.
470.101 Definitions.
The following definitions are applicable to this part:
Commingled product means grains, oilseeds, rice, pulses, other
similar commodities and the products of such commodities, when such
commodity or product is normally stored on a commingled basis in such a
manner that the commodity or product produced in the United States
cannot be readily distinguished from a commodity or product not
produced in the United States.
Department means the Department of Agriculture.
Food and Nutrition Service means such agency located within the
Department of Agriculture.
Foreign Agriculture Service means such agency located within the
Department of Agriculture.
Free alongside ship (f.a.s.) (* * * named port of shipment) means a
term of sale which means the seller fulfills its obligation to deliver
when the goods have been placed alongside the vessel on the quay or in
lighters at the named port of shipment. The buyer bears all costs and
risks of loss of or damage to the goods from that moment.
Grantee organization means an organization which will receive
commodities from the United States Agency for International Development
under Title II of the Food for Peace Act (7 U.S.C. 1721 et seq.) or
from the Foreign Agricultural Service under the Food for Progress Act
of 1985; the McGovern-Dole International Food for Education and Child
Nutrition Program; and any other international food assistance program.
Ingredient means spices, vitamins, micronutrients, desiccants, and
preservatives when added to an agricultural commodity product.
Free carrier (FCA) (* * * named place) means a term of sale which
means the seller fulfills its obligation when the seller has handed
over the goods, cleared for export, into the charge of the carrier
named by the buyer at the named place or point. If no precise point is
indicated by the buyer, the seller may choose, within the place or
range stipulated, where the carrier should take the goods into their
charge.
Last contract lay day means the last day specified in an ocean
freight contract by which the carriage of goods must start for contract
performance.
Lowest landed cost means, as authorized by 46 U.S.C. 55314(c), with
respect to an agricultural product acquired under this part the lowest
aggregate cost for the acquisition of such product and the shipment of
such product to a foreign destination.
Multi-port voyage charter means the charter of an ocean carrier in
which the carrier will stop at two or more ports to discharge cargo.
470.102 Policy.
(a) Policy. It is the policy of the Department to follow the
policies and procedures set forth in the Federal Acquisition Regulation
(FAR) as supplemented by the Agriculture Acquisition Regulation,
including this part, in the procurement of agricultural commodities and
products of agricultural commodities that are used in domestic feeding
and international feeding and development programs.
(b) Electronic submission. To the maximum extent possible, the use
of electronic submission of solicitation-related documents shall be
used with respect to the acquisition of agricultural commodities and
related freight; however, to the extent that a solicitation allows for
the submission of written information in addition to information in an
electronic format and there is a discrepancy in such submissions, the
information submitted in a written format shall prevail unless the
electronic submission states that a specific existing written term is
superseded by the electronic submission.
(c) Freight. With respect to the acquisition of freight for the
shipment of agricultural commodities and products of agricultural
commodities, the provisions of the FAR, including Part 47, shall be
utilized and various types of services to be obtained may include
multi-trip voyage charters.
470.103 United States origin of agricultural products.
(a) Products of United States origin. As provided by 7 U.S.C.
1732(2) and 1736o-1(a) commodities and the products of agricultural
commodities acquired for use in international feeding and development
programs shall be products of United States origin. A product shall not
be considered to be a product of the United States if it contains any
ingredient that is not produced in the United States if that ingredient
is:
(1) Produced in the United States; and
(2) Commercially available in the United States at fair and
reasonable prices from domestic sources.
(b) Use by the Food and Nutrition Service. Commodities and the
products of agricultural commodities acquired for use by the Food and
Nutrition Service shall be a product of the United States, except as
may otherwise be required by law, and shall be considered to be such a
product if it is grown, processed, and otherwise prepared for sale or
distribution exclusively in the United States except with respect to
ingredients. Ingredients from non-domestic sources will be allowed to
be utilized as a United States product if such ingredients are not
otherwise:
(1) Produced in the United States; and
(2) Commercially available in the United States at fair and
reasonable prices from domestic sources.
(c) Commingled product.
(1) Except as provided in paragraph (c)(2) of this section, a
commingled product shall be considered to be a product of the United
States if the offeror can establish that the offeror has in inventory
at the time the contract for the commodity or product is awarded to
[[Page 13080]]
the offeror, or obtains during the contract performance period
specified in the solicitation, or a combination thereof, a sufficient
quantity of the commodity or product that was produced in the United
States to fulfill the contract being awarded, and all unfulfilled
contracts that the offeror entered into to provide such commingled
product to the United States.
(2) To the extent the Department has determined a commodity is one
that is generally commingled, but is also one which can be readily
stored on an identity preserved basis with respect to its country of
origin, the Department may require that the commodity procured by the
Department shall be of 100 percent United States origin.
(d) Product derived from animals. With respect to the procurement
of products derived from animals, the solicitation will set forth any
specific requirement that is applicable to the country in which the
animal was bred, raised, slaughtered or further processed.
470.200 [Reserved]
470.201 Acquisition of commodities and freight shipment for Foreign
Agricultural Service programs.
(a) Lowest landed cost and delivery considerations.
(1) Except as provided in paragraphs (a)(3) and (4) of this
section, in contracts for the Foreign Agricultural Service for
commodities and related freight shipment for delivery to foreign
destinations, the contracting officer shall consider the lowest landed
cost of delivering the commodity to the intended destination. This
lowest landed cost determination will be calculated on the basis of
rates and service for that portion of the commodities being purchased
that is determined is necessary and practicable to meet 46 U.S.C.
55314(c)(3) and cargo preference requirements and on an overall
(foreign and U.S. flag) basis for the remaining portion of the
commodities being procured and the additional factors set forth in this
section. Accordingly, the solicitations issued with respect to a
commodity procurement or a related freight procurement will specify
that in the event an offer submitted by a party is the lowest offered
price, the contracting officer reserves the right to reject such offer
if the acceptance of another offer for the commodity or related
freight, when combined with other offers for commodities or related
freight, results in a lower landed cost to the Department.
(2) The Department may contact any port prior to award to determine
the port's cargo handling capabilities, including the adequacy of the
port to receive, accumulate, handle, store, and protect the cargo.
Factors considered in this determination may include, but not be
limited to, the adequacy of building structures, proper ventilation,
freedom from insects and rodents, cleanliness, and overall good
housekeeping and warehousing practices. The Department may consider the
use of another coastal range or port if a situation exists at a port
that may adversely affect the ability of the Department to have the
commodity delivered in a safe and timely manner. Such situations
include:
(i) A port is congested;
(ii) Port facilities are overloaded;
(iii) A vessel would not be able to dock and load cargo without
delay;
(iv) Labor disputes or lack of labor may prohibit the loading of
the cargo onboard a vessel in a timely manner; or
(v) Other similar situation that may adversely affect the ability
of the Department to have the commodity delivered in a timely manner.
(3) Use of other than lowest landed cost. In order to ensure that
commodities are delivered in a timely fashion to foreign destinations
and without damage, the contracting officer may award an acquisition
without regard to the lowest land cost process set forth in paragraph
(a)(1) of this section if:
(i) The solicitation specifies that the lowest land cost process
will not be followed in the completion of the contract; or
(ii) After issuance of the solicitation, it is determined that:
(A) Internal strife at the foreign destination or urgent
humanitarian conditions threatens the lives of persons at the foreign
destination;
(B) A specific port's cargo handling capabilities (including the
adequacy of the port to receive, accumulate, handle, store, and protect
commodities) and other similar factors may adversely affect the
delivery of such commodities through damage or untimely delivery. Such
similar factors include, but are not limited to: port congestion;
overloaded facilities at the port; vessels not being able to dock and
load cargo without delay due to conditions at the port; labor disputes
or lack of labor may prohibit the loading of the cargo onboard a vessel
in a timely manner; and the existence of inadequate or unsanitary
warehouse and other supporting facilities;
(C) The total transit time of a carrier, as it relates to a final
delivery date at the foreign destination may impair the timely delivery
of the commodity;
(D) Other similar situations arise that materially affect the
administration of the program for which the commodity or freight is
being procured; or
(E) The contracting officer determines that extenuating
circumstances preclude awards on the basis of lowest-landed cost, or
that efficiency and cost-savings justify use of types of ocean service
that would not involve an analysis of freight. However, in all such
cases, commodities would be transported in compliance with cargo
preference requirements. Examples of extenuating circumstances are
events such as internal strife at the foreign destination or urgent
humanitarian conditions threatening the lives of persons at the foreign
destination. Other types of services may include, but are not limited
to, multi-trip voyage charters, indefinite delivery/indefinite quantity
(IDIQ), delivery cost and freight (C & F), delivery cost insurance and
freight (CIF), and indexed ocean freight costs.
(4) If a contracting officer determines that action may be
appropriate under paragraph (a)(3) of this section, prior to the
acceptance of any applicable offer, the contracting officer will
provide to the Head of Contracting Activity Designee a written request
to obtain commodities and freight in a manner other than on a lowest
landed cost basis consistent with Title 48 Code of Federal Regulations.
This request shall include a statement of the reasons for not using
lowest landed cost basis. The Head of the Contracting Activity
Designee, or the designee one level above the contracting officer, may
either accept or reject this request and shall document this
determination.
(b) Multiple offers or delivery points. If more than one offer for
the sale of commodities is received or more than one delivery point has
been designated in such offers, in order to achieve a combination of a
freight rate and commodity award that produces the lowest landed cost
for the delivery of the commodity to the foreign destination, the
contracting officer shall evaluate offers submitted on a delivery point
by delivery point basis; however, consideration shall be given to
prioritized ocean transport service in determining lowest landed cost.
(c) Freight shipping and rates.
(1) In determining the lowest-landed cost, the Department shall use
the freight rates offered in response to solicitations issued by the
Department or, if applicable, the grantee organization.
(2) Freight rates offered must be submitted as specified in the
solicitation issued by the Department or, if applicable, the grantee
organization.
[[Page 13081]]
Any such solicitation issued by a grantee organization must contain the
following elements:
(i) If directed by the Department, include a closing time for the
receipt of written freight offers and state that late written freight
offers will not be considered;
(ii) Provide that freight offers are required to have a canceling
date no later than the last contract lay day specified in the
solicitation;
(iii) Provide the same deadline for receipt of written freight
offers from both U.S. flag vessel and non-U.S. flag vessels; and
(iv) Be received and opened prior to any related offer for
acquisition of commodities to be shipped.
(3) The Department may require organizations that will receive
commodities from the Department to submit information relating to the
capacity of a U.S. port, or, if applicable, a terminal, prior to the
acquisition of such commodities or freight.
(d) Freight rate notification. If the Department is not the party
procuring freight with respect to a shipment of an agricultural
commodity for delivery to a foreign destination, the organization that
will receive commodities from the Department, or its shipping agent,
shall be notified by the Department of the vessel freight rate used in
determining the commodity contract award and the organization will be
responsible for finalizing the charter or booking contract with the
vessel representing the freight rate.
470.202 Acquisition of commodities for United States Agency for
International Development (USAID) programs.
(a) Lowest landed cost and delivery considerations.
(1) Except as provided in paragraphs (a)(3) and (e)(2) of this
section, with respect to the acquisition of agricultural commodities
for delivery to foreign destinations and related freight to transport
such commodities under Title II of Public Law 480, contracts will be
entered into in a manner that will result in the lowest landed cost of
such commodity delivery to the intended destination. This lowest landed
cost determination shall be calculated on the basis of rates and
service for that portion of the commodities being purchased that is
determined is necessary and practicable to meet 46 U.S.C. 55314(c)(3)
and cargo preference requirements and on an overall (foreign and U.S.
flag) basis for the remaining portion of the commodities being procured
and the additional factors set forth in this section. Accordingly, the
solicitations issued with respect to a commodity procurement or a
freight procurement will specify that in the event an offer submitted
by a party is the lowest offered price, the contracting officer
reserves the right to reject such offer if the acceptance of another
offer for the commodity or freight, when combined with other offers for
commodities or freight, results in a lower landed cost to USAID.
(2) The Department may contact any port prior to award to determine
the port's cargo handling capabilities, including the adequacy of the
port to receive, accumulate, handle, store, and protect the cargo.
Factors which will be considered in this determination will include,
but not be limited to, the adequacy of building structures, proper
ventilation, freedom from insects and rodents, cleanliness, and overall
good housekeeping and warehousing practices. The Department may
consider the use of another coastal range or port if a situation exists
at a port that may adversely affect the ability of the Department to
have the commodity delivered in a safe and/or timely manner. Such
situations include:
(i) A port is congested;
(ii) Port facilities are overloaded;
(iii) A vessel would not be able to dock and load cargo without
delay;
(iv) Labor disputes or lack of labor may prohibit the loading of
the cargo onboard a vessel in a timely manner; or
(v) Other similar situation that may adversely affect the ability
of the Department to have the commodity delivered in a timely manner.
(3) Use of other than lowest landed cost. In order to ensure that
commodities are delivered in a timely fashion to foreign destinations
and without damage, the Department may complete an acquisition without
regard to the lowest land cost process set forth in paragraph (a)(1) of
this section, if:
(i) The solicitation specifies that the lowest land cost process
will not be followed in the completion of the contract; or
(ii) After issuance of the solicitation, it is determined that:
(A) Internal strife at the foreign destination or urgent
humanitarian conditions threatens the lives of persons at the foreign
destination;
(B) A specific port's cargo handling capabilities (including the
adequacy of the port to receive, accumulate, handle, store, and protect
commodities) and other similar factors will adversely affect the
delivery of such commodities without damage or in a timely manner. Such
similar factors include, but are not limited to: port congestion;
overloaded facilities at the port; vessels would not be able to dock
and load cargo without delay; labor disputes or lack of labor may
prohibit the loading of the cargo onboard a vessel in a timely manner;
and the existence of inadequate or unsanitary warehouse and other
supporting facilities;
(C) The total transit time of a carrier, as it relates to a final
delivery date at the foreign destination may impair the ability of the
Department to achieve timely delivery of the commodity; or
(D) Other similar situations arise that materially affect the
administration of the program for which the commodity or freight is
being procured.
(4) If the contracting officer determines that action may be
appropriate under paragraph (a)(3) of this section, prior to the
acceptance of any applicable offer, the contracting officer shall
provide to the head of contracting activity designee and to USAID, a
written request to obtain commodities and freight in a manner other
than on a lowest landed cost basis. This request shall include a
statement of the reasons for not using lowest landed cost basis. The
head of contracting authority designee, or one level above the
contracting officer, with the concurrence of USAID, shall, on an
expedited basis, either accept or reject this request and shall
document this determination in writing and provide a copy to USAID.
(b) Freight shipping and rates.
(1) In determining lowest-landed cost as specified in paragraph (a)
of this section, the Department shall use vessel rates offered in
response to solicitations issued by USAID or grantee organizations
receiving commodities under 7 U.S.C. 1731 et seq.
(2) USAID may require, or direct a grantee organization to require,
an ocean carrier to submit offers electronically through a Web-based
system maintained by the Department. If electronic submissions are
required, the Department may, at its discretion, accept corrections to
such submissions that are submitted in a written form other than by use
of such Web-based system.
(c) Delivery date. The contracting officer shall consider total
transit time, as it relates to a final delivery date, in order to
satisfy Public Law 480 Title II program requirements.
(d) Delivery points.
(1) Commodities offered for delivery free alongside ship Great
Lakes port range or intermodal bridge-point Great Lakes port range that
represent the overall (foreign and U.S. flag) lowest landed cost will
be awarded on a lowest landed cost basis. Tonnage allocated on this
basis will not be reevaluated on a lowest landed cost U.S.-flag basis
unless
[[Page 13082]]
the contracting officer determines that 25 percent of the total annual
tonnage of bagged, processed, or fortified commodities furnished under
7 U.S.C. 1731 et seq. has been, or will be, transported from the Great
Lakes port range during that fiscal year.
(2) The contracting officer shall consider commodity offers as
offers for delivery ``intermodal bridge-point Great Lakes port range''
only if:
(i) The offer specifies delivery at a marine cargo-handling
facility that is capable of loading ocean going vessels at a Great
Lakes port, as well as loading ocean going conveyances such as barges
and container vans, and
(ii) The commodities will be moved from one transportation
conveyance to another at such a facility.
(e) Multiple awards or delivery points.
(1) If more than one offer for the sale of commodities is received
or more than one delivery point has been designated in such offers, in
order to achieve a combination of a freight rate and commodity award
that produces the lowest landed cost for the delivery of the commodity
to the foreign destination, the contracting officer shall evaluate
offers submitted on a delivery point by delivery point basis; however,
consideration shall be given to prioritized ocean transport service in
determining lowest landed cost.
(2) The contracting officer may determine that extenuating
circumstances preclude awards on the basis of lowest landed cost.
However, in all such cases, commodities may be transported in
compliance with cargo preference requirements as determined by USAID.
(3) The contracting officer shall notify USAID or, if applicable,
the grantee organization, that its shipping agent will be notified of
the vessel freight rate used in determining the commodity contract
award. The grantee organization or USAID will be responsible for
finalizing the charter or booking contract with the vessel representing
the freight rate so used.
470.203 Cargo preference.
An agency having responsibility under this subpart shall administer
its programs, with respect to this subpart, in accordance with
regulations prescribed by the Secretary of Transportation.
Dated: March 19, 2009.
Suzanne Hall,
Acting Administrator, Foreign Agricultural Service, and Acting
Executive Vice President, Commodity Credit Corporation.
[FR Doc. E9-6487 Filed 3-25-09; 8:45 am]
BILLING CODE 3410-10-P