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Federal Register Notices
[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]
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.
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,
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
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
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).
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.
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 therefore, 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
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
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;
(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 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-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, 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,
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 therefore, 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;
(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
(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.
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.
(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 therefore
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) 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, 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 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 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. 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 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 Hale,
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
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