Detailed Information on the
Perishable Agricultural Commodities Act Assessment

Develop an outcome based long-term performance measure.

Identify and correct strategic planning deficiencies.

Obtain a more independent review of the program that focuses on both annual and long-term performance goals and how progress in working towards these goals is measured.

Reevaluate the cost of services provided by the program (in advance of the appropriated dollars being depleted) and determine how best to adjust future fees.

Measure: Number of months to resolve commercial disputes.

Explanation:The program's long-term goal is to reduce handling time for disputed formal complaints within 5 years, to an average of 6 months after completion of the investigation.

Measure: Average processing time for enforcement actions (in months).

Explanation:The program's long-term efficiency goal is to reduce, within 5 years, the average time needed to file administrative action to 6 months from the discovery of unfair trade violations.

Measure: Average processing time for license approvals (in days).

Explanation:The program intends to improve customer service by reducing the time needed for the completion of the liscense process to 3 days by the end of FY 2008.

Measure: Completion timeframe for processing informal complaints (in months).

Explanation:Maintaining the timeframe for resolving informal commercial disputes helps to ensure expedited financial recovery for sellers. Goal: process 85% of informal complaints within 4 months.

Measure: Percentage of reports completed within 30 days of field investigation.

Explanation:Faster enforcement actions against fraudulent activities will increase protection for sellers. AMS investigation and analysis are part of the enforcement process; procedural and technical improvements will be used to shorten the timeframe.

Measure: Processing time for license applications (in days).

Explanation:Licensing enables traders to conduct business and provides credit assurance. Goal: improve customer service and facilitate trading of perishable commodities by processing 90% of license applications within specified number of working days.

Is the program purpose clear?

Explanation: The Perishable Agricultural Commodities Act (PACA) and the Produce Agency Act are designed to: (1) protect producers, shippers, distributors, and retailers from loss due to unfair and fraudulent practices in the marketing of perishable agricultural commodities; and (2) prevent the unwarranted destruction or dumping of farm products handled for and on behalf of others. The program is described by Objective 2.4 of the AMS Strategic Plan and is reported annually in budget documentation.

Evidence: The Perishable Agricultural Commodities Act of 1930 (a) prohibits unfair conduct by commission merchants, dealers, and brokers; (b) requires that persons engaged in these businesses have a valid and effective license issued by the Secretary of Agriculture; (c) creates additional liability in damages to persons injured by the unfair conduct of a commission merchant, dealer, or broker; (d) provides for administrative action to establish the injury and its extent as well as a sanction in the form of suspension of license for failure to obey Secretary's order for payment of money; (e) provides for appeal of separation orders to district courts; (f) authorizes investigations by the Secretary including inspection and certification of commodities as to class, quality, and condition; (g) provides for suspension and revocation of license for flagrant or repeated violations of the Act; and (h) provides for civil, and monetary penalties for certain violations of the Act. The Produce Agency Act prohibits destruction or dumping by commission merchants.

Does the program address a specific and existing problem, interest or need?

Explanation: Fruit and vegetable traders in the produce industry continue to need more protection than traders in other industries because the product is perishable and a 1-2 day delay can mean the difference between profit and loss. Sellers must ship the quantity and quality of produce specified in their contracts, and buyers must accept shipments that meet contract specifications. PACA protections benefit not only growers who are generally sellers, but also a range of parties who are both buyers and sellers, including truckers, packers, processors, wholesalers, brokers, grocery wholesalers, and food service firms. PACA also provides procedures for resolving disputes outside the civil court system, and establishes a trust consisting of a buyer's produce-related assets. If a buyer becomes bankrupt, produce suppliers that have preserved their trust rights can recover money owed to them before trust assets are made available to general creditors.

Evidence: Unfair trade practices addressed by PACA include: rejection of produce without probable cause, failure to pay an agreed price promptly, discarding or destroying produce by an agent, misbranding or misrepresentation of fruits and vegetables, making false or misleading statements on the sale, and altering inspection certificates. Fruit and vegetable industry support for the program is clearly demonstrated in trade meetings and by the activities of the Fruit and Vegetable Advisory Committee, which is working with AMS to ensure that the program maintains or strengthens its effectiveness while undertaking efficiency improvements.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The PACA program does not overlap with other Federal efforts and there are no significant private sector or State or local government equivalents.

Evidence: AMS is the only agency with responsibility for enforcing the Act's requirements. The Act also supports AMS grading programs by helping to ensure that USDA quality labels are properly applied to fresh fruits and vegetables. One of the components of the larger PACA program is mediation and arbitration. Although private organizations offer mediation and arbitration services, the PACA Program is unique from private mediation services in that decisions issued are enforceable through suspension of the PACA license.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There are no design flaws that prevent the program from meeting its defined objectives and performance goals. PACA is in fact a more effective and less costly alternative to civil courts for resolving trade disputes. Since the program is license and user fee funded, the government could not expend fewer tax resources through a different mechanism. The program monitors its effectiveness and efficiency through interaction with the Fruit and Vegetable Industry Advisory Committee and by undertaking periodic benchmarking studies against a range of government and commercial organizations.

Evidence: The PACA program provides the produce industry a faster and less expensive alternative to civil court action in resolving financial disputes. The program regularly performs benchmarking studies to exchange and evaluate business process ideas with other firms. The purpose of these studies is to examine ways in which the program can increase its efficiency. The most recent study was completed in March 2004. Furthermore, the Fruit and Vegetable Industry Advisory Committee is currently studying the PACA program organizational structure and processes to determine if changes could be made that would reduce costs without reducing program services or the protection it provides.

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: Under PACA, anyone buying or selling commercial quantities of fruit and vegetables must be licensed by the U.S. Department of Agriculture. PACA beneficiaries are sellers of perishable fruits and vegetables, which include growers, shippers, growers' agents, wholesalers, processors, jobbers, brokers, and retailers. AMS ensures that all beneficiaries have access to information concerning the program via the Internet and educational outreach to growers and small businesses through 1) seminars and increased participation at growers' meetings; 2) publishing articles in publications directed at growers and small farmers; and 3) examining how the PACA program can be used to protect the rights of small farmers, small busineeses, and other growers.

Evidence: Trained marketing specialists receive hundreds of telephone calls each week from trade members requesting assistance in resolving contractual disputes. In most cases, the program's mediation efforts result in an amicable settlement, thus enabling the disputing parties to avoid costly litigation. However, if an informal settlement is not possible, the program has established formal complaint procedures under which USDA may award damages against a licensee who fails to meet its contractual obligations. The PACA program works diligently with the fruit and vegetable grading program to educate the produce industry about the law's fair trading practices and industry member's rights and responsibilities under the law. The program's website offers a PACA Internet Training Program, as well as detailed information such as licensing, protection of trust rights, unfair practices, damage claims, violators, and more. In addition, the PACA Program has established business partnerships with grower groups such as the Western Growers Association, and works within these partnerships targeting small businesses to educate them about PACA services through industry seminars and trade articles.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: AMS has identified several long-term goals, including 1) Mediation and arbitration--improving the mediation process allows commercial disputes to be resolved more quickly. 2) Enforcement--to strengthen enforcement of the Act, the program seeks to reduce the time involved in filing enforcement actions. More timely processing of PACA enforcement actions better protects sellers from unfair or unscrupulous practices. 3) Licensing--improving the licensing process decreases the time needed to apply, renew or reinstate a PACA license. Buyers and sellers of perishable fruits and vegetables are required to be licensed before they conduct business. 4) The program works with industry trade associations and grower groups to identify and educate program beneficiaries such as small farmers, organic producers, and exporters as to their rights under the Act. Comment: Does the program track the value of commodities that are lost year to year as a result of fraud?

Evidence: The program works to decrease the time frame for resolving commercial disputes through the use of new computer technology and process improvements and by encouraging increased use of different forms of alternative dispute resolution. These efforts increase the percentage of commercial disputes that are settled quickly. Through the use of computer technology, the program intends to cut in half the processing time that it takes to file USDA administrative action from the determination that a firm has violated the law's fair trade provisions. AMS provides beneficiaries with several different options they can use in applying for and renewing licenses in order to reduce time, including online access. Comment: The purpose of this question is to determine if the program is outcome oriented, and how it's long term measures relate to the program's intended outcome(s). To sustain a "Yes" please provide additional information explaining the rationale for using output measures, and how these measures meaningfully support the program.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The program reviews its goals and progress semi-annually to update and improve its targets and timeframes for its long-term measures. The plan includes standards for timeliness, rates of settlement of commercial disputes, and overall customer service. The program has benchmarked these time frames against business leaders in private industry and the government.

Evidence: Mediation/Arbitration--The program will encourage increased use of alternative dispute resolution and process improvements. Within 5 years, the program will reduce the handling time of informal disputes from the current 8 months to 6 months, a 25 percent improvement. Enforcement--through a greater use of computer technology and increased cooperation with USDA's OGC, the program believes that the time frame for filing enforcement actions can be cut in half--reduced from 12 months in FY 2003 to 6 months--within the next 5 years. Licensing--the PACA program is beginning work on an online issuance/ renewal/ reinstatement licensing process to be fully implemented in 5 years to reduce licensing processing time from 5 to 3 days.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The PACA program has identified annual efficeincy measures that indicate its progress toward the program's long-term goals. To reduce the timeframe for commercial dispute resolution, the program must ensure that its informal resolution process proceeds quickly. The program's goal for completion of the informal process is 4 months for 85% of the complaints. Part of the enforcement process is the compilation and analysis of evidence from a field investigation and the resulting report. The program plans to reduce processing time by increasing the percentage of completion within 30 days. AMS is working toward a faster licensing process that will provide better services by providing applicants with electronic access. The annual licensing goal directly corresponds to the long-term goal.

Evidence: The program tracks its progress toward meeting these annual performance measures monthly. At the end of each fiscal year its results are analyzed in the program's annual report. Enforcement: the program tracks the timeliness of reparation complaint handling from the perspective of informal settlements and age of the cases. Licensing: the program tracks the timeliness of processing license application and renewals. Education: the program also records the number of seminars given to trade groups by PACA employees throughout the year for an internal measure of its education efforts. The program's performance goals are included in the AMS Strategic Plan and its measures are reported in AMS budget materials.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The purpose of the question is to determine whether the program has targets for its annual measures. The program does not have targets that demonstrate increased efficiency and progress towards its annual measures.

Evidence: The program's annual goals aresimilar to its long term measures: to maintain a baseline completion rate of 85% or more of its informal complaint handling within 4 months; to increase the percentage of all reports of investigation and evidence submitted within 30 working days of completion of the field investigation from the current baseline of 60 percent to 90 percent; and to reduce the number of working days needed to process 90% of license applications from the current baseline of 5 days to the goal of 3 days.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The PACA program works diligently with the fresh products grading program in its outreach efforts to educate the produce industry about the law's fair trading practices and industry member's rights and responsibilities under the law. The program also works very closely with USDA's Office of General Counsel and the Justice Department to resolve formal commercial disputes. These partners recognize the need for program activities and the program's long-term goals, particularly in the areas of dispute resolution and enforcement.

Evidence: AMS can take action against the misuse of quality labeling on fresh fruits, vegetables, and specialty products under the Perishable Agricultural Commodities Act. Fresh products grading personnel are responsible for notifying the PACA program when they suspect violations of the Act to help ensure fair trading. The program plans to strengthen its cooperative relationship with USDA OGC as part of its strategy to reduce the timeframe for filing of enforcement actions.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The program meets regularly with the Fruit and Vegetable Industry Advisory Committee to review PACA activities. The Advisory Committee is an independent group of individuals comprised of all segments of the fruit and vegetable industry, including wholesalers, distributors, retailers, processors, and shippers. The Committee is familiar with the mission and goals of the PACA program and is able to provide independent and sound recommendations for program improvement. Furthermore, the Advisory Committee's recommendations are made to the Secretary of Agriculture, not to program officials.

Evidence: The program contracted with a private consulting firm, Holistic Solutions (HSI), to conduct a review focused on the organizational structure of the program in July of 2003. The review examined work flow, work load, staffing, regional boundaries, field office structure, and office location from the perspective of how these factors impact efficient mission delivery. After completing this review HSI submitted short term, mid-term and long-term recommendations to agency management. The review contained a range of recommendations designed to make operations more cost effective by consolidating and centralizing license functions and streamlining handling of complaint, enforcement actions, and licenses. The suggestions have been analyzed by AMS management. The recommended changes have now been submitted to the Fruit and Vegetable Industry Advisory Committee prior to the implementation of any major changes to the program.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: For this program, budget requests are in the form of license fee proposals. AMS reviews the financial state of the program each fiscal quarter to ensure that anticipated revenue and operating reserve balances will be adequate to recover all direct and indirect costs the program is projected to incur for the current and at least two subsequent years. During those quarterly reviews, AMS also verifies that the program's operating reserves (authorized under the legislation) are adequate to fund unliquidated liabilities and unanticipated variances in service demand. If fee rates are not expected to recover projected costs, program managers are expected to consider ways to reduce costs or increase fees. Proposed fee increases are reviewed by USDA and OMB, and then published for public comment before they are put into effect. Budget documentation clearly identifies the full costs and performance goals of the program.

Evidence: This program must recover the cost of providing services while maintaining resource and customer service levels. AMS prepares an annual and legislatively mandated biennial review of fees. In addition, the agency monitors the programs' revenue, expenses, and operating reserve balances on a quarterly basis to ensure that fees are adequate to maintain program activities and whether cost reduction measures must be considered and/or implemented. Program costs include direct and indirect costs such as salary and related personnel costs, travel, rent, postage, equipment purchase and maintenance, and a proportionate share of division and agency administrative and supervisory costs.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The branch's benchmarking projects in 2001 and 2004 led to: the creation of a formal branch wide training program that has increased employee productivity in the area of complaint handling and conducting investigations, streamlined procedures for processing disciplinary cases, and the implementation of several initiatives to increase the quality of the communication between headquarters and field locations.

Evidence: The PACA Branch has undertaken numerous improvement measures directly related to its key program goals as the result of its strategic planning efforts. The branch's benchmarking projects in 2001 and 2004 have contributed to increased efficiency through the creation of a formal branch wide training program and streamlined procedures for processing disciplinary cases. In addition, strategic planning efforts led to improvements that made the branch's new database more user friendly.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: Monthly reports track performance in all key mission areas of the PACA program. Performance evaluations of all managers and a majority of other employees are tied to thier performance relative to those performance measures. In addition, AMS' PACA program has undertaken numerous benchmarking projects with a number of private industry and government agency partners. These efforts focus on the organizational structures of the benchmarking partners in order to determine if the PACA program can improve its businesses processes. AMS also solicits recommendations from the fruit and vegetable industry advisory committee for use in program management and performance improvement.

Evidence: The program monitors its performance by comparing the program's measures and results with other agencies and organizations in regularly-conducted benchmarking reviews. Benchmarking partners include Starbucks Coffee Company; Cisco Systems; Raytheon Missile Systems; American Society of Composers, Artists, and Performers; and the National Association of Securities Dealers, among others.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: AMS PACA program managers are held directly accountable for cost, schedule, and performance results. These factors are included in their performance standards.

Evidence: Federal managers are evaluated semi-annually on their success in meeting cost, service, and program performance goals as reflected in their individual performance standards. Furthermore, AMS has undertaken a top-down review of individual performance standards for all of its managers to strengthen and clearly identify the linkage between the agency's strategic plan and annual performance.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: AMS fee programs have strict financial controls to track revenues and expenditures. AMS follows the requirements set out by OCFO and the FFIS accounting system. Requirements for program partners are included in cooperative and reimbursable agreements. AMS closely monitors revenue and expenditures at both the program and the agency level. Because the program depends on adequate revenue levels to maintain its existence, AMS is acutely aware that funds must be obligated in a timely manner and spent for the intended purpose.

Evidence: AMS reviews monthly, quarterly and annual financial reports, prepares quarterly status reviews, works with OIG auditors on annual financial audits, and prepares annual and biennial reviews of fees. Program employees and managers are responsible for obligating funds in a timely manner and verifying entries into the accounting system as required by the agency's Funds Control Directive. Program managers are held accountable by agency leadership through performance evaluation. AMS' budget office reviews the program's actual revenue, spending, and reserve balances on a quarterly basis and reports the status to the program managers and the agency Administrator.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program periodically visits other government agencies and private sector entities (such as companies and associations) to benchmark PACA processes. This procedure allows the program to measure, evaluate, and improve its processes to more effectively and efficiently serve buyers and sellers of perishable fruits and vegetables. As fees are set by rulemaking, the program undergoes detailed public review both through formal comments and through individual business decisions regarding the use of its services. In addition, the program's financial performance is individually reviewed by the Office of the Administrator at least quarterly.

Evidence: The PACA program's most recent benchmarking efforts examined ways that the program could become more efficient in the areas of management and oversight, organizational communication, employee job satisfaction, and customer service. The Benchmarking partners included Gaylord Entertainment, the Oregon Symphony Orchestra, Starbucks Coffee Company, and Raytheon Missile Systems.

Does the program collaborate and coordinate effectively with related programs?

Explanation: Within AMS, the PACA program regularly cross-trains employees with AMS' Fresh Fruits and Vegetable Grading program and Market News Service to maximize their employees' knowledge and understanding of the financial and business links between harvesting and shipping fresh fruits and vegetables to market. In addition, the PACA program collaborates with the Federal Mediation and Reconciliation Service.

Evidence: The PACA program works closely with other fruit and vegetable programs to train employees and industry members about fresh fruit and vegetable grade standards that can have a significant impact on prices, produce transactions, and potential contract disputes between industry members. Program employees cross-train with AMS Market News Reporters to increase employee awareness of marketplace issues. Additionally, the program works with the Federal Mediation and Reconciliation Service to train employees in Alternative Dispute Resolution techniques to help improve the program's process for resolving commercial disputes.

Does the program use strong financial management practices?

Explanation: AMS follows the financial management procedures established under the USDA accounting system FFIS, which requires documentation of entries into the accounting system. AMS also holds fee program managers accountable for the financial status of their programs by agency directive and personnel performance standards.

Evidence: The program has procedures to ensure that payments are proper and for the intended purpose. AMS completed an erroneous payment review in 2004 under the guidance of USDA's OCFO as a component of USDA's Department-wide review, from which the agency determined that significant erroneous payments were highly unlikely for this program. Financial information is verified by program employees for accuracy on a monthly basis as required by the AMS Funds Control Directive, and formally reviewed by agency management on a quarterly basis.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The program has systems in place for identifying and correcting program management deficiencies and uses this system to make necessary corrections.

Evidence: Benchmarking studies designed to review the program's processes are good, but do not address the question. The PACA program worked closely with the fresh fruit and vegetable grading program to significantly strengthen fair trading protection after problems were uncovered in the fruit and vegetable grading program in 1999; these programs continue to coordinate their activities to better support the management of both programs. Comment: Examples of specific systems and actions taken in response to these systems are needed to justify a "Yes".

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: PART guidance states that if the program receives a Yes in Question 2.3 and a No in Question 2.4, then the program cannot receive a rating higher than Small Extent.

Evidence: The current timeframe for filing enforcement actions is nearly one year after the determination has been made regarding a violation of the laws's fair trade provisions. The program's goal of utilizing computer technology to reduce the timeframe for filing actions in half--from 12 months in FY 2003 to 6 months--within the next 5 years should be given greater scrutiny to determine additional means to reduce this processing time.

Does the program (including program partners) achieve its annual performance goals?

Explanation: PART guidance states that if the program receives a Yes in Question 2.3 and a No in Question 2.4, then the program cannot receive a rating higher than Small Extent.

Evidence: The PACA program has teamed with the F&V Fresh Products Grading program to cross-train each other's employees as well as provide training to fruit and vegetable industry members at the Fresh Products Training Center in Fredericksburg, VA. The program reduced its backlog of formal reparation complaints awaiting decisions from 168 to less than 60 cases. In addition, the average time for the issuance of a formal decision after filing of a disputed formal complaint was reduced from 9 months to 8 months. New licenses are now issued within one day of receiving a completed application, and 90% of renewals are processed within one day of receiving the renewal application. Comment: PART guidance states that a "Yes" answer requires evidence of collaboration leading to meaningful actions. Please provide additional evidence in support of the outcome of the collaboration.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The purpose of this question is to determine whether management practices have resulted in efficiency gains over the past year. The program receives a Small Extent as recognition of its achievement in demonstrating increased levels of service to customers through improvements in technology, program reviews, and implementation of benchmarking recommendations.

Evidence: Between 2002 and 2003, the program reduced the case backlog of formal reparation complaints awaiting decision from 168 to 60. In addition, the average time for the issuance of a formal decision after filing a disputed formal complaint was reduced from 9 months to 8 months. The program also reduced the time needed to issue new licenses and renewals. New licenses are now issued within one day of receiving a completed application, and 90% of renewals are processed within one day of receiving the renewal application.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The PACA program was shown to be equal to its benchmarking partners which include Starbucks Coffee Company; Cisco Systems; Raytheon Missile Systems; American Society of Composers, Artists, and Performers; and the National Association of Securities Dealers, among others. Fruit and Vegetable Industry members have consistently favored the PACA program over other private programs offering mediation services.

Evidence: In fiscal year 2001 Secretary Veneman presented the PACA Internet Training Team with a USDA Honors Award recognizing the team 'For its innovative development of an interactive, Internet-based training course for its customers on the Perishable Agricultural Commodities Act which governs the produce industry.' The PACA Internet testing program was the cornerstone of the program's outreach efforts in fiscal year 2000. The results of benchmark studies reflects favorably on the PACA program.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: This question is designed to determine whether the program is effective in achieving results based upon independent and comprehensive evaluations. The PACA Branch has undergone independent reviews of various aspects of the program. For example, the General Accounting Office and Congressional review in 1995 determined that the program is effective in facilitating the marketing of perishable agricultural goods. With some improvements in the program, Congress continued the program in the face of a bill to repeal the law. In additon, in 2003 the program contracted with Holistic Solutions, Inc. (private sector consulting firm) to conduct a review of the program's organizational structure. The results of this review have been analyzed by AMS management, but have not been implemented pending a review of the Fruit and Vegetable Industry Advisory Committee. Changes to the program's organizational structure could lead to increased efficiencies; however, these changes have not yet been made and the findings of the report were not shared with OMB. As a result, the program receives a Small Extent.

Evidence: The Act was amended on November 15, 1995, based on the results of the GAO audit and requests by the fruit and vegetable industry. The Perishable Agricultural Commodities Act Amendments of 1995, (PL 104-48), restructured and strengthened the PACA program. AMS is poised to reorganize the PACA program again in the near future depending on the Fruit and Vegetable Industry Advisory Committee's recommendations to the Secretary.