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Report to Ranking Democratic Member, Committee on Agriculture, 
Nutrition, and Forestry, U.S. Senate:

United States General Accounting Office:

GAO:

April 2004:

Biobased Products:

Improved USDA Management Would Help Agencies Comply with Farm Bill 
Purchasing Requirements:

GAO-04-437:

GAO Highlights:

Highlights of GAO-04-437, a report to the Ranking Democratic Member, 
Committee on Agriculture, Nutrition, and Forestry, U.S. Senate 

Why GAO Did This Study:

The federal government spends more than $230 billion annually for 
products and services to conduct its operations. Through its purchasing 
decisions, it has the opportunity to affirm its policies and goals, 
including those related to purchases of biobased products, as set out 
in the 2002 farm bill. A biobased product is a commercial or industrial 
product, other than food or feed that is composed of, in whole or part, 
biological products, renewable domestic agricultural materials, or 
forestry materials. GAO examined (1) actions the U.S. Department of 
Agriculture (USDA) and other agencies have taken to carry out farm bill 
requirements for purchasing biobased products, (2) additional actions 
that may be needed to implement the requirements, and (3) views of 
stakeholders on the need for and costs of testing biobased products. 
GAO interviewed officials from USDA, major procuring agencies, testing 
entities, interested associations, and 15 manufacturers of biobased 
products.

What GAO Found:

USDA and other federal agencies actions to implement the farm bill 
requirements for purchasing biobased products have been limited. USDA 
issued proposed procurement guidelines in December 2003more than 1 
year past the deadline for final guidelines; however, these guidelines 
do not fully address the farm bill requirements for designating items 
for purchase and recommending procurement practices. USDA expects to 
issue final guidelines by April 2004 and a blueprint for the model 
procurement program by September 2004; but it anticipates that 
designation of existing items will take years to complete, possibly 
until 2010. In addition, new items will enter the market requiring 
further designations. Meanwhile, purchasing agencies do not yet have a 
basis for planning their own procurement programs and, as a result, 
have made only limited purchases of biobased products. 

USDA could accelerate its implementation of the farm bill requirements 
by developing a comprehensive management plan for this work and by 
making the work a higher priority. The lack of a management plan 
describing the tasks, milestones, resources, coordination, and 
reporting needed to complete this work has slowed USDA in issuing the 
procurement guidelines. For example, USDA developed a list of 
milestones only after GAO requested such a list; even then, this list 
was informal, primarily reflecting the thinking of a few officials. 
Without a plan, USDA will find it difficult to set priorities, use 
resources efficiently, measure progress, and provide agency management 
a means to monitor this progress. According to stakeholders, USDA 
should make this work a higher priority to speed its completion. 
Without a sense of priority, USDAs efforts to fulfill farm bill 
requirements have not had adequate staff and financial resources. 

Stakeholders GAO spoke with generally believed that USDAs proposals 
for testing a biobased products content and performance are 
appropriate and that manufacturers should bear at least some of the 
costs. However, stakeholders generally questioned the need for doing 
life-cycle analysis of a products long-term costs and environmental 
impacts. 
 
What GAO Recommends:

To ensure USDAs timely implementation of the farm bill biobased 
purchasing requirements, USDA should (1) execute a management plan for 
completing the work, (2) identify and allocate the staff and financial 
resources needed, and (3) clearly state the priority for the works 
completion. USDA disagreed with the need for a management plan, but 
indicated it will draw on our review results and recommendations in 
future work.

www.gao.gov/cgi-bin/getrpt?GAO-04-437.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Lawrence J. Dyckman at 
(202) 512-3841 or dyckmanl@gao.gov.

[End of section]

Contents:

Letter1:

Results in Brief:

Background:

USDA Delay in Issuing Biobased Purchasing Guidelines Has Slowed Other 
Agencies' Efforts:

USDA Could Accelerate Implementation of the Biobased Procurement 
Program by Developing a Comprehensive Management Plan and Assigning 
Adequate Resources:

Stakeholders Generally Agree That Some Testing of Biobased Products Is 
Necessary, but They Question the Need For Life-Cycle Analysis:

Conclusions:

Recommendations:

Agency Comments and Our Evaluation:

Appendix I: Objectives, Scope, and Methodology:

Appendix II: Sources for Information on Biobased Products:

Appendix III: Key Provisions of USDA's Proposed Guidelines:

Appendix IV: Chronology of Steps Completed or Planned by USDA to Comply 
with the Farm Bill Requirements:

Appendix V: Comments from the U.S. Department of Agriculture:

GAO Comments:

Appendix VI: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Acknowledgments:

Related GAO Products:

Tables:

Table 1: Common Biobased Industrial and Consumer Products:

Table 2: Proposed Biobased Product Categories and Related Items as 
Listed in the Preamble:

Table 3: Other Key Provisions of USDA's Proposed Guidelines and Future 
Plans as Indicated in the Preamble:

Figures:

Figure 1: Biobased Products Made from Corn Grain:

Figure 2: Biobased Cutlery:

Figure 3: Application of a Biobased Deicer by Interior Employee:

Figure 4: Display of Biobased Products Used by Interior:

Figure 5: Biobased Cleaning Products Used at USDA's Beltsville 
Agricultural Research Center:

Figure 6: Tractor Run with Biobased Lubricants and Fuels at Beltsville 
Agricultural Research Center:

Abbreviations:

BEES: Building for Environmental and Economic Sustainability: 
DLA: Defense Logistics Agency: 
DOD: Department of Defense: 
DOE: Department of Energy:  
EPA: Environmental Protection Agency: 
GSA: General Services Administration:  
NASA: National Aeronautics and Space Administration:  
NIST: National Institute of Standards and Technology:
OFPP: Office of Federal Procurement Policy: 
OMB: Office of Management and Budget: 
USDA: U.S. Department of Agriculture:

United States General Accounting Office:

Washington, DC 20548:

April 7, 2004:

The Honorable Tom Harkin: 
Ranking Democratic Member: 
Committee on Agriculture, Nutrition, and Forestry: 
United States Senate:

Dear Senator Harkin:

The federal government spends more than $230 billion annually for 
products and services to conduct its operations. Through its purchasing 
decisions, the government has the opportunity to affirm its 
agricultural and environmental policies and goals, including its goals 
for federal purchases of biobased products. A biobased product is a 
commercial or industrial product, other than food or feed, that is 
composed in whole or significant part of biological products, renewable 
domestic agricultural materials (including plant, animal, and marine 
materials), or forestry materials. For example, these products include 
corn-based plastics, soybean-based lubricants, and citrus-based 
cleaners.[Footnote 1] Competing products are generally petroleum-
based. The Congress recognized the potential of the federal 
government's buying power in the Farm Security and Rural Investment Act 
of 2002 (the farm bill) and required the U.S. Department of Agriculture 
(USDA) to develop guidelines for the federal procurement of biobased 
products to create new markets for these products and to stimulate 
their production.[Footnote 2] In particular, the biobased procurement 
provision is expected to promote the purchase of biobased products made 
from sustainable, raw agricultural materials in order to create 
economic opportunities in rural communities, give farmers more value 
for their commodities, and help the environment.[Footnote 3] In 
addition, according to proponents of the biobased procurement 
provision, the purchase of these biobased products may reduce the 
nation's dependence on imported oil, which is currently used in many 
commercial and industrial products. However, others note that the 
initial purchase cost of biobased products is usually higher than 
alternatives; and consumers, businesses, and government agencies are 
generally unfamiliar with these products.

In developing the guidelines for the procurement of biobased products, 
the farm bill requires USDA to take three major actions: (1) designate 
those items which are or can be produced with biobased products and 
whose procurement by agencies will meet the objectives of the 
legislation;[Footnote 4] (2) recommend practices for the procurement of 
biobased products and items containing such materials and for 
certification by vendors of the percentage of biobased products used; 
and (3) provide information on the availability, relative price, 
performance, and environmental and public health benefits of such 
materials and items, and where appropriate recommend the level of 
biobased material to be contained in a product. In designating items, 
USDA is, at a minimum, to consider the availability of such items and 
the economic and technological feasibility of using such items, 
including life-cycle costs. USDA was to issue these guidelines by 
November 2002, or 180 days after the farm bill was enacted. In 
addition, within 1 year after publication of these guidelines, each 
federal agency is required to develop a procurement program that will 
assure that items composed of biobased products will be purchased to 
the maximum extent practicable, consistent with federal procurement 
law. Furthermore, the farm bill requires federal agencies purchasing 
items above a certain price to give preference to items composed of the 
highest percentage of biobased products practicable, consistent with 
maintaining a satisfactory level of competition, unless there is a 
price, performance, or availability reason not to do so.[Footnote 5]

The farm bill also requires USDA to establish a voluntary program for 
authorizing producers of biobased products to use the label "U.S.D.A. 
Certified Biobased Product" and requires USDA to issue criteria for 
determining which products qualify for this label. The labeling 
criteria were to be established within 1 year of farm bill enactment. 
In addition, the legislation requires USDA to establish a voluntary 
program to recognize federal agencies and private entities that use a 
substantial amount of biobased products. Furthermore, the farm bill 
authorizes USDA to use $1 million of the Commodity Credit Corporation's 
funds for each fiscal year--2002 through 2007--to support testing of 
biobased products to gather information necessary for the designation 
of items.[Footnote 6] The legislation does not specify what testing 
should be done. To leverage federal funds available for biobased 
product testing, USDA plans to invite manufacturers or vendors of 
biobased products to voluntarily provide test results on the content, 
performance characteristics, and life-cycle costs of their products to 
assist USDA in amassing sufficient baseline information to designate 
items.[Footnote 7] Subsequent to the designation of an item, USDA will 
allow manufacturers to self-certify that their products meet this 
baseline data in order to include these products in the preferred 
procurement program.

You asked us to evaluate the federal government's progress in 
implementing the biobased purchasing provisions of the farm bill. 
Specifically, as agreed with your office, we examined the (1) actions 
that USDA and other federal agencies have taken to carry out the farm 
bill requirements for purchasing biobased products, (2) additional 
actions that may be needed to enhance implementation of these 
requirements, and (3) views of agencies, manufacturers, and testing 
organizations on the need for and costs of testing biobased products.

To conduct this work, we interviewed officials and reviewed the 
documentation they provided at USDA's Agricultural Research Service, 
Cooperative State Research, Education, and Extension Service, Office of 
Energy Policy and New Uses (New Uses office), and Office of Procurement 
and Property Management (Procurement office); the four agencies that 
account for about 85 percent of all federal procurements--the 
Department of Defense (DOD), the Department of Energy (DOE), the 
General Services Administration (GSA), and the National Aeronautics and 
Space Administration (NASA);[Footnote 8] the Office of Management and 
Budget's (OMB) Office of Federal Procurement Policy (OFPP); the White 
House's Office of the Federal Environmental Executive; the 
Environmental Protection Agency (EPA); the Biobased Manufacturers 
Association; commodity groups such as the National Corn Growers 
Association and the United Soybean Board; environmental organizations 
such as Green Seal; consumer groups such as the Consumer's Choice 
Council; and two testing entities--the Department of Commerce's 
National Institute of Standards and Technology (NIST) and Iowa State 
University--that have entered into agreements with USDA to develop 
testing protocols for biobased products.[Footnote 9] We also 
interviewed representatives of 15 biobased manufacturing companies and 
reviewed the documentation they provided. We selected these companies 
to provide a mix of biobased product types and raw materials used to 
manufacture these products. In general, our work focused on biobased 
products other than biofuels such as ethanol, biodiesel, and biogas 
because provisions to promote the production of biofuels are addressed 
elsewhere in the farm bill.[Footnote 10] We conducted our review from 
May 2003 through February 2004 in accordance with generally accepted 
government auditing standards. Appendix I provides additional 
information on our scope and methodology.

Results in Brief:

While farm bill provisions for purchasing biobased products present 
USDA with a formidable challenge, its actions to implement the bill's 
requirements have fallen short and have slowed other agencies' efforts. 
USDA issued proposed guidelines in the Federal Register on December 19, 
2003, more than a year later than the farm bill requirement for final 
guidelines. These guidelines take only limited steps toward meeting the 
requirements of the farm bill. While the guidelines recommend some 
procurement practices and practices for vendor certification, they do 
not identify items designated for preferred procurement, or provide 
information on their availability, relative price, performance, and 
environmental and public health benefits, as called for in the 
legislation. According to USDA officials, although the agency hopes to 
have some items designated before the end of calendar year 2004, the 
process for designating other items discussed in the preamble to the 
proposed guidelines will take years, possibly until 2010. In addition, 
as new biobased items are developed and enter the market, these items 
will also need to be designated. Regarding other biobased-related 
requirements of the farm bill, USDA has not yet developed a labeling or 
recognition program or completed its work on preferred procurement 
practices known as the model procurement program. USDA anticipates that 
the model procurement program will serve two purposes: to guide its 
purchases of biobased products and to assist other agencies in 
developing their biobased procurement programs required by the 
legislation. In the meantime, as the top four procuring agencies await 
USDA's fulfillment of these requirements--particularly the designation 
of items for preferred procurement--they have taken only limited steps 
to procure biobased products. For example, some agencies are purchasing 
biobased cleaners, lubricants, deicers, and/or dining ware because 
these products are more readily biodegradable or composted.

USDA could accelerate its implementation of the farm bill biobased 
purchasing requirements by developing a comprehensive management plan 
for how it will implement these requirements and by making its 
compliance with them a higher priority. The lack of a comprehensive 
plan, including defined tasks and milestones, identification of 
available staff and financial resources, and a description of how the 
work will be coordinated, has contributed to USDA's slow progress in 
issuing the biobased procurement guidelines. For example, during the 
course of our work we found confusion among USDA officials about when 
various aspects of the farm bill biobased requirements should be 
completed. USDA developed a list of milestones for fulfilling these 
requirements only after we requested such a list in May 2003; and even 
then, this list was informal, reflecting primarily the thinking of a 
few officials without coordinating the list with another concerned 
office. Without a comprehensive plan, including clearly defined tasks 
and milestones, it is difficult to set priorities, use resources 
efficiently, measure progress, and provide agency management a means to 
monitor this progress. According to a number of officials representing 
USDA, other agencies, commodity groups, or manufacturers, USDA should 
also make its compliance with the farm bill biobased requirements a 
higher priority to speed the agency's completion of this work. At 
present, without this sense of priority, USDA has not devoted adequate 
resources to fulfilling these requirements. For example, the USDA 
office responsible for developing most aspects of the guidelines has 
limited staff and has not received funding for this effort. As a 
result, this office assigned two staff on a part-time basis to develop 
the guidelines. In addition, these staff have found it difficult to 
compete with higher-priority projects for the resources they need to 
develop the guidelines. For example, these staff waited several months 
to receive assistance from staff in another USDA office with experience 
in rules preparation to help them draft the Federal Register notice 
containing the proposed guidelines. Given these problems, we are 
recommending that USDA develop a comprehensive, written plan for 
completing the work to fulfill the farm bill requirements and make 
clear the staff and financial resources and the priority to be assigned 
to this work so that it is completed as expeditiously as possible.

Most federal agencies, testing organizations, commodity associations, 
and manufacturers we spoke with believe that testing biobased products 
for content and performance is generally appropriate; but they question 
the usefulness and costs of life-cycle analysis, which under the 
proposed guidelines, manufacturers would be required to provide to 
procurement officials upon request. According to officials from the top 
four purchasing agencies and the two testing organizations, content 
testing is important to ensure that products meet minimum biobased 
content specifications, and performance testing is a key factor in 
making purchasing decisions. These officials generally believe that 
manufacturers should bear the costs of these tests if they want to sell 
to the federal government. Biobased manufacturers generally agree with 
the need for these tests and with their responsibility for bearing at 
least some of the associated costs. However, some manufacturers said 
that they should be able to self-certify the biobased content of their 
products in lieu of content testing, based on their knowledge of their 
manufacturing process. Regarding life-cycle analysis, most of the 
agencies and manufacturers questioned the need for doing this analysis. 
USDA must consider life-cycle costs in designating items and has 
indicated that if manufacturers voluntarily provide life-cycle cost 
information it may help speed the designation process. Manufacturers 
would only be required to provide this information under the rule as 
proposed if a procurement official requested the information. The 
agencies generally did not believe that the information would be useful 
for purchasing decisions because procurement staff would find the life-
cycle analysis too detailed to follow and generally not useful without 
comparative information on petroleum-based products; USDA does not 
expect to provide such comparative information. Manufacturers generally 
agreed with this view, noting that the cost of life-cycle analysis is 
high--as much as $8,000 for a single product--and they questioned 
whether they alone should bear this cost in order to make sales to the 
federal government. However, USDA officials note that they believe such 
information would be helpful to procurement officials and that 
manufacturers could choose not to participate in the procurement if 
they did not want to provide life-cycle cost information.

In commenting on a draft of this report, USDA said the report does not 
present a complete and balanced view of the progress made in 
implementing the biobased provisions of the farm bill, adding that the 
report emphasizes negative interpretations without fully reflecting the 
progress achieved. We believe the report provides a fair and accurate 
description of the farm bill requirements and USDA's efforts to comply 
with these requirements to date. USDA also indicated that it disagrees 
with our recommendation on the need to develop and execute a 
comprehensive management plan. Specifically, USDA said that it does not 
believe such a plan would have accelerated its work on the proposed 
rule issued in December 2003, given the complexity of the issues that 
had to be resolved and the substantial amount of consultation across 
federal agencies and within USDA that was necessary. We disagree and 
continue to believe that USDA should develop a comprehensive, written 
plan that discusses, among other things, the tasks, milestones, 
resources, coordination, and reporting needed for completing the work 
necessary to fulfill the farm bill requirements. Furthermore, we 
believe that factors such as the complexity and breadth of the issues 
to be considered, the internal and external consultation necessary, and 
the farm bill's ambitious time frames for the completion of this work 
underscore the need for a comprehensive, written plan.

Regarding our recommendations that USDA clearly identify and allocate 
the staff and financial resources to be made available for implementing 
these requirements and clearly state the priority to be assigned to 
this work, USDA said it would draw on our review and recommendations as 
it approaches development of subsequent proposed rules for designating 
items and the labeling program. We believe that USDA should be more 
proactive in this regard and make clear the staff and resources to be 
made available for completing this work and the priority to be assigned 
to the work. These matters could also be addressed in a comprehensive, 
written plan for completing the work.

Background:

Description of Biobased Products:

Biobased products are industrial and consumer goods composed wholly, or 
in significant part, of biological products, renewable domestic 
agricultural materials (including plant, animal, and marine materials), 
or forestry materials. These biological products and agricultural and 
forestry materials are generally referred to as biomass.[Footnote 11] 
Corn, soybeans, vegetable (plant) oils, and wood[Footnote 12] are the 
primary sources used to create biobased products. In some cases, these 
biobased sources are combined with other materials such as 
petrochemicals or minerals to manufacture the final product. For 
example, soybean oil is blended with other components to produce 
paints, toiletries, solvents, inks, and pharmaceuticals. However, some 
biobased products, such as corn starch adhesives, are derived entirely 
from the plant feedstock. Table 1 provides further information on 
biobased products made from plant-based resources. Appendix II lists 
sources for additional information on these and other biobased 
products.

Table 1: Common Biobased Industrial and Consumer Products:

Biobased source: Corn; 
Products: Solvents, pharmaceuticals, adhesives, starch, resins, 
binders, polymers, cleaners, and ethanol.

Biobased source: Soybeans; 
Products: Paints, toiletries, solvents, inks, pharmaceuticals, 
lubricants, biodiesel, carpet backing, and foam insulation.

Biobased source: Vegetable oils; 
Products: Surfactants in soaps and detergents, pharmaceuticals, inks, 
paints, resins, cosmetics, fatty acids, and lubricants.

Biobased source: Wood; 
Products: Paper, cellulose for fibers and polymers, resins, binders, 
adhesives, coatings, paints, inks, fatty acids, and road and roofing 
pitch. 

Source: Energetics, Incorporated for the U.S. Department of Energy, 
Industrial Bioproducts: Today and Tomorrow, July 2003.

[End of table]

The many derivatives of corn illustrate the diversity of products that 
can be obtained from a single plant-based resource. As well as an 
important source of food and feed, corn serves as a source for ethanol 
and sorbitol, industrial starches and sweetners, citric and lactic 
acid, and many other products. Figure 1 shows the many uses of corn, 
including its industrial uses.

Figure 1: Biobased Products Made from Corn Grain:

[See PDF for image]

[End of figure]

Importance of Biobased Products:

Biomass resources are naturally abundant and renewable, unlike fossil 
resources.[Footnote 13] According to the DOE,[Footnote 14] in the 
continental United States, about 500 to 600 million tons of plant 
matter can be grown and harvested annually in addition to our food and 
feed needs. These abundant resources can be used in the growing 
biobased products industry to help meet the nation's demand for energy 
and products while reducing its dependence on imported oil.[Footnote 
15] In addition, supplementing petroleum resources with biomass can 
provide other important benefits such as growth in rural economies and 
lower emissions of greenhouse gases and pollutants.

According to DOE, the impacts of the growing biobased products industry 
on rural economies have yet to be quantified, but these impacts could 
be very positive.[Footnote 16] Expanding this industry will require an 
increase in production and processing of biomass that could provide a 
boost to rural areas. For example, expansion could create new cash 
crops for farmers and foresters, many of whom currently face economic 
hardship. In essence, this growth could move the agricultural and 
forestry sectors beyond their traditional roles of providing food, 
feed, and fiber to providing feedstock for the production of fuels, 
power, and industrial products--making these sectors an integral part 
of the transportation and industrial supply chain. In addition, 
development of a larger biobased products industry would require new 
processing, distribution, and service industries. In general, these 
industries would likely need to be located in rural communities close 
to the feedstock and could potentially result in positive impacts on 
rural communities through increased investment, income, taxes, and 
employment opportunities.

Regarding environmental benefits, biomass is carbon-fixing, and 
represents a way to produce fuels, power, and products without 
contributing to global warming, according to DOE. Although some fossil 
resource inputs may be needed for the production of biomass and 
biobased products--such as fuel to run farm equipment, petrochemical 
fertilizers and pesticides to produce the biomass, and the energy 
needed to manufacture the biobased products made from this biomass--
biomass removes carbon dioxide, a significant greenhouse gas, from the 
atmosphere through photosynthesis.[Footnote 17] The carbon component is 
then fixed, or bound up, in the biomass and stays in the biobased 
product made from this biomass for a relatively long period of time 
before it is released through biological decay. According to DOE, when 
petroleum is used as the feedstock to manufacture many products, such 
as plastics, up to 25 percent of the carbon in the petroleum is lost to 
the atmosphere during production. However, producing these products 
directly from biomass reduces the carbon released during production and 
increases carbon-fixing plant matter.[Footnote 18] In addition, as a 
renewable resource, biomass represents a way to recycle carbon in the 
environment; in contrast, the use of fossil resources results in a net 
release of carbon to the environment. Finally, many biobased products 
are readily biodegradable, meaning they can be safely placed into a 
landfill, composted, or recycled and do not emit hazardous volatile 
organic compounds or toxic air pollutants.

According to DOE, the potential for biobased products to move into 
entirely new and nonconventional markets is substantial. New biobased 
products with improved economic and/or environmental performance could 
make significant inroads in markets historically dominated by other 
materials. For example, according to the Biobased Manufacturers 
Association, about 300 companies are now producing nearly 800 biobased 
products to replace other materials. These companies include a number 
of major corporations or their subsidiaries. In addition, increasing 
environmental consciousness has created "green consumerism"--a segment 
of consumers who are willing to pay more for products that are less 
harmful to the environment. Currently, many of those "green" products 
are biobased, such as corn-based plastic ware, soy-based engine 
lubricants, and citrus-based household cleaners.

Perhaps the greatest factor driving the growth of biobased products 
will be their acceptance by the public, business enterprises, and 
government as a solution to some of the nation's most pressing resource 
problems. However, according to USDA, it often takes 15 to 20 years for 
a new material to be accepted and adopted by industry; and consumers, 
businesses, and government procurement officials are often reluctant to 
switch from familiar products to new ones. Thus, to make significant 
inroads, biobased products will need to be environmentally sound and 
competitive with traditional products in both performance and cost. The 
increased use of these products will also require favorable government 
policies, such as continued support for biobased research and 
development and affirmative procurement programs that emphasize 
biobased purchases for government needs. In addition, their increased 
use will depend on the nation's continued desire to reduce its 
dependence on imported oil and further technology improvements that 
will lead to new applications and more efficient production of biobased 
products.

Federal Efforts to Promote the Use of Biobased Products:

In the last 10 years, the federal government has taken steps to promote 
the use of biobased products. For example, the President issued an 
executive order in 1998,[Footnote 19] replacing a similar executive 
order issued in 1993, to encourage federal agencies to buy products 
that are environmentally preferable and/or biobased. A subsequent 
executive order was issued in 1999 with the aim of tripling the 
nation's use of biobased fuels and products by 2010.[Footnote 20] 
Regarding legislation, the Biomass Research and Development Act of 2000 
directs DOE and USDA to closely coordinate their research and 
development efforts on new technologies for the use of biomass in the 
production of biobased industrial products. The 2002 farm bill 
reauthorized the biomass act, continued funding for biomass research 
and development programs, and set forth federal agency purchasing 
requirements for biobased products. The legislative history of the farm 
bill states that Congress enacted the biobased provisions to energize 
new markets for these products and to stimulate their production.

With respect to promoting federal purchases of biobased products, the 
1998 executive order required USDA to issue a Biobased Products List by 
March 1999.[Footnote 21] Once the list was published, federal agencies 
were encouraged to modify their procurement programs to give 
consideration to biobased products. USDA published a notice in the 
Federal Register on August 13, 1999, to solicit public comments on a 
process for considering items for inclusion on this list and on 
criteria for identifying these items. As we reported in June 
2001,[Footnote 22] USDA expected to complete this list by fiscal year 
2002--3 years later than the executive order required. However, USDA 
did not complete the list because the 2002 farm bill set out new 
biobased purchasing requirements for USDA to implement. In the 
meantime, although the Federal Acquisition Regulation was amended to 
implement the executive order,[Footnote 23] federal agencies generally 
were waiting for USDA to publish a list before making any final 
decisions or modifications to their procurement programs. Whereas the 
executive order encouraged, but did not require, federal agencies to 
purchase biobased products, the farm bill generally requires that 
agencies give preference to these products.

USDA Delay in Issuing Biobased Purchasing Guidelines Has Slowed Other 
Agencies' Efforts:

While USDA was faced with an ambitious task, its actions and 
consequently those of other agencies to implement the farm bill 
requirements for purchasing biobased products have been limited. USDA 
issued proposed guidelines in the Federal Register on December 19, 
2003,[Footnote 24] more than a year later than the farm bill 
requirement for final guidelines. These guidelines take only limited 
steps toward meeting the requirements of the farm bill. While the 
guidelines recommend some procurement practices and practices for 
vendor certification, they do not identify items designated for 
preferred procurement or provide information on their availability, 
relative price, performance, and environmental and public health 
benefits. Although USDA hopes to have some items designated before the 
end of calendar year 2004, the process for designating other items 
discussed in the preamble to the proposed guidelines will take years, 
possibly until 2010. In addition, as new biobased products are 
developed and enter the market, these items will also need to be 
designated. Regarding other biobased-related requirements of the farm 
bill, USDA has not yet developed a labeling or recognition program or 
completed its work on preferred procurement practices known as the 
model procurement program to guide both its own biobased purchases and 
those of other agencies. In the meantime, as the top four procuring 
agencies await USDA's fulfillment of these requirements--particularly 
the designation of items for preferred procurement--they have taken 
only limited steps to procure biobased products. For example, some 
agencies are purchasing biobased cleaners, lubricants, deicers, and/or 
dining ware because these products are readily biodegradable and 
composted.

USDA's Initial Efforts Have Only Partially Met the Farm Bill 
Requirements:

USDA's proposed guidelines only partially meet the requirements of the 
farm bill. While the guidelines recommend some procurement practices 
and practices for vendor certification, they do not identify items 
designated for preferred procurement or provide information on their 
availability, relative price, performance, and environmental and public 
health benefits. However, in the preamble to the guidelines, USDA 
discusses possible items for future designation. In the preamble, USDA 
has grouped these items by category, with each category consisting of 
one or more items and each item consisting of one or more branded 
biobased products. For example, "Lubricants and Functional Fluids" is 
one suggested category, hydraulic fluids is an item within that 
category subject to designation, and "ABC Hydraulic Fluid" made by the 
ABC company is a branded biobased product related to that item. At 
present, the preamble discusses 11 categories of items and suggests a 
minimum biobased content for the items in these categories.[Footnote 
25] Appendix III provides a complete list of these categories and the 
items listed under each, as well as additional information on 
provisions of the proposed guidelines. However, the proposed guidelines 
do not designate any items for preferred procurement given that USDA 
has not yet considered the availability of these items or the economic 
or technological feasibility, including life-cycle costs, of these 
items as required by the farm bill.

Under the proposed rule, once an item is designated, manufacturers will 
be able to certify that their biobased products meet the 
characteristics of a designated item. USDA has established a biobased 
information Web site for this purpose. USDA anticipates that federal 
procuring agencies will use this Web site to obtain current information 
on designated items, contact information on manufacturers and vendors, 
and access to information on product characteristics relevant to 
procurement decisions. In addition, USDA anticipates that as the 
biobased product industry develops, new items and associated products 
will enter the market. Thus, new items will be designated, as 
necessary.

In addition, USDA has only minimally provided information on 
recommended procurement practices pending completion of its model 
procurement program. For example, the proposed guidelines discuss the 
tests that should be used to establish the content, performance 
characteristics, and/or life-cycle costs of a product, including the 
standards or specifications applicable. However, USDA officials said 
the model procurement program, when complete, will contain considerably 
more guidance on recommended procurement practices. USDA expects to 
issue the final version of these proposed guidelines by April 2004, but 
it does not expect to have adequate information for designating more 
than a few items before the end of calendar year 2004.[Footnote 26] 
USDA estimates that it will complete the overall blueprint for a 
comprehensive, model procurement program by September 2004, and will 
have many of the specific components of the program under development 
or tested and implemented by that time.

The process for designating items will be time consuming. For example, 
to designate the items discussed in the preamble to USDA's proposed 
guidelines, USDA will likely initiate a number of rulemakings over a 
period of years. According to the timeline provided by New Uses staff, 
this process will likely not be completed until early 2010. USDA 
officials noted that these rulemakings may not correspond to the 11 
product categories discussed in the preamble; the agency's ability to 
move forward with designating individual items will depend on the 
availability of information needed for this purpose. As a result, a 
given rulemaking may address items that span two or more categories. 
For each rulemaking, a proposed rule would be developed and published 
first, followed by a 30-or 60-day comment period, the time needed to 
consider these comments, and then publication of the final rule.

USDA must also complete its work on its recommended procurement 
practices (the model procurement program), the voluntary recognition 
program, and the voluntary labeling program. According to USDA 
officials, the model procurement program serves two purposes.[Footnote 
27] First, it will constitute USDA's biobased procurement program. All 
federal agencies, including USDA, are required to develop such a 
program. Second, the model program will serve as a guide to other 
agencies in developing their own preferred procurement 
programs.[Footnote 28] USDA officials explained that this will fulfill 
the farm bill requirement placed on USDA to recommend procurement 
practices. USDA plans to incorporate the voluntary recognition program 
into its model procurement program. In addition, once the model 
procurement program is complete, USDA plans to seek a change to the 
Federal Acquisition Regulation to reflect these procurement practices. 
Changes to this regulation also require a rulemaking.[Footnote 29] 
Finally, USDA plans to address requirements for the labeling program in 
a future rulemaking.

Considering the amount of work that remains to be done to fulfill the 
farm bill requirements, it seems likely that USDA's fulfillment of 
these requirements will take years, particularly for the designation of 
items for preferred procurement that were discussed in the preamble of 
USDA's proposed rule. Thus, although the farm bill required USDA to 
promulgate guidelines, including the designation of items for 
procurement, within 180 days of the legislation's enactment--by 
November 2002--it is not likely that the designation of all of the 
items discussed in the preamble to the proposed guidelines will be 
completed until the spring of 2010, according to USDA estimates. 
However, the agency hopes to have at least some of these items 
designated by the end of calendar year 2004. In addition, as the farm 
bill recognizes by allowing USDA to revise its guidelines from time to 
time, the process of designating items is a continual one as new 
biobased items will continue to enter the market. Appendix IV provides 
a timeline showing the chronology of steps USDA plans to fulfill the 
farm bill requirements for the federal procurement of biobased 
products.

Federal Agencies Have Procured Small Quantities of Biobased Products:

Without final USDA guidelines designating items for preferred 
procurement, the top four procuring agencies generally are reluctant to 
undertake an agencywide biobased procurement program. Officials from 
these agencies indicated that until they clearly understand whether a 
product meets USDA's definition of a biobased product, it would not be 
advantageous to establish a purchasing program agencywide. However, 
even though these agencies have not implemented their own biobased 
procurement programs, we found that some of them have procured limited 
quantities of biobased products. For example:

* The Defense Logistics Agency (DLA)--the supplier for DOD and several 
civilian agencies--has procured and is now testing such biobased 
products as food service cutlery for service personnel overseas and 
hydraulic fluid for military helicopters. According to DLA officials, 
these products are appealing--assuming they meet necessary performance 
specifications--because they are readily biodegradable, which may make 
them easier to dispose of. These officials indicated that they are 
working closely with USDA to ensure that the products tested will 
ultimately be products that will meet USDA's criteria for biobased 
products. However, these officials stated that their agency could test 
more products if USDA would publish guidance designating biobased 
products for purchase. Figure 2 shows wheat starch-based plastic 
cutlery that DLA is testing for field use.

Figure 2: Biobased Cutlery:

[See PDF for image]

[End of figure]

* The Department of the Interior (Interior) purchases biobased products 
directly from manufacturers and has requested that their contractors 
use biobased products in some services. In an effort to promote the use 
of biobased products in national parks, the National Park Service 
Facilities Management Division has covered the incremental costs for 
park purchases of biobased products over the use of traditional 
products; in 2003, they provided $42,000 towards this promotion. For 
example, a wildlife reserve located in Alaska purchased a biobased 
deicer, made from corn and other agricultural products, to clear roads 
and sidewalks. Unlike deicers that rely on salt or petrochemicals, 
biobased deicers can be formulated to have less impact on surface 
waters and vegetation. Several national parks also are buying biobased 
fuels and additives for their snowmobiles because they produce less 
toxic emissions. In addition, biobased hydraulic oils are being used in 
construction equipment at many park sites because spills of these 
lubricants pose less environmental risk and are less costly to clean 
up. Furthermore, the cafeteria-service contractor in Interior's 
headquarters building in Washington, D.C. uses biobased plates and 
bowls, made primarily of potato starch and limestone. A pilot project 
undertaken with USDA's Beltsville Agricultural Research Center 
demonstrated the ability to compost the plates and bowls along with 
cafeteria food waste. Figure 3 shows the application of a biobased 
deicer by an Interior employee. Figure 4 shows other biobased products 
used by Interior.

Figure 3: Application of a Biobased Deicer by Interior Employee:

[See PDF for image]

[End of figure]

Figure 4: Display of Biobased Products Used by Interior:

[See PDF for image]

[End of figure]

* In addition to its research activities to develop new uses of 
agricultural commodities for producing biobased products,[Footnote 30] 
USDA's Agricultural Research Service is taking steps to use biobased 
products as well. For example, the agency's Beltsville Agricultural 
Research Center in Maryland (the Center) spent about $8,500 in fiscal 
year 2003 for biobased products--primarily cleaners, hydraulic fluids, 
and lubricants used in its farm machinery. In addition, the Center uses 
biobased fuels, such as soy-based biodiesel, in this type of machinery. 
In fiscal year 2003, the Center purchased about $523,000 in biobased 
fuels. Center officials noted that the clean-up of accidental spills of 
biobased hydraulic fluids and lubricants is far less expensive than the 
petrochemical alternatives because the biobased products are readily 
biodegradable.[Footnote 31] These officials also expressed their belief 
that maintenance costs for equipment using these products has dropped, 
compared with the costs associated with using petroleum-based 
alternatives, although they noted that they have not thoroughly studied 
and documented this anecdotal observation. According to these 
officials, the Center hopes to increase biobased purchases by 70 
percent in fiscal year 2004. In addition to the Center's direct 
purchases of biobased products, some of its service contractors use 
biobased products when performing work at Beltsville. Center officials 
were unable to tell us how much their contractors spend on biobased 
products. Figure 5 shows some of the biobased products used at the 
Center. Figure 6 shows Center farm equipment in which biobased 
lubricants and fuels are used.

Figure 5: Biobased Cleaning Products Used at USDA's Beltsville 
Agricultural Research Center:

[See PDF for image]

[End of figure]

Figure 6: Tractor Run with Biobased Lubricants and Fuels at Beltsville 
Agricultural Research Center:

[See PDF for image]

[End of figure]

USDA Could Accelerate Implementation of the Biobased Procurement 
Program by Developing a Comprehensive Management Plan and Assigning 
Adequate Resources:

USDA could more effectively marshal its resources to fulfill the farm 
bill biobased procurement requirements in a timely manner with a 
written, comprehensive management plan. Such a plan would define tasks 
and set milestones, identify available resources and expected outcomes, 
and describe how the department will coordinate its efforts to 
implement the plan. USDA did not have such a plan to guide its 
preparation of the proposed guidelines issued in December, and we 
believe that this lack of a plan may have contributed to delays in 
completing this segment of the work. Furthermore, except for the 
development of the model procurement program and voluntary recognition 
program, the agency does not have a comprehensive plan to guide its 
work to fulfill the farm bill's other biobased requirements. Finally, 
USDA's implementation of the biobased provisions could be accelerated 
if the department assigned more staff and financial resources to this 
work and gave it a higher priority.

Need for Better Planning and Coordination:

USDA assigned primary responsibility for implementing the farm bill 
biobased procurement provisions to its Office of Energy Policy and New 
Uses (New Uses office), located within the Office of the Chief 
Economist. The conference report for the farm bill encouraged USDA to 
carry out these provisions under the aegis of the New Uses office. 
Among other things, this office is responsible for developing the 
procurement guidelines, including designating items for procurement, 
recommending practices for procurement and for certification by vendors 
of the percentage of biobased content in their products, and providing 
information on the availability, relative price, performance, and 
environmental and public health benefits of the items designated. The 
New Uses office also is primarily responsible for establishing the 
voluntary labeling program. In addition, USDA charged its Office of 
Procurement and Property Management (Procurement office) with 
developing the model procurement program and the voluntary recognition 
program.

When we asked New Uses officials in May 2003--a year after farm bill 
enactment and 6 months after the legislation deadline for USDA's 
completion of the biobased procurement guidelines--for their written 
management plan to implement the farm bill requirements, they indicated 
that they did not have a plan. At our request for the agency's timeline 
for complying with these requirements, these officials indicated that 
they did not have a timeline either, but offered to create one, which 
they provided to us several weeks later in June 2003.

While the timeline is a start, it falls short of being a comprehensive 
plan in a number of respects. First, the timeline provides for delays 
in meeting milestones, stating "this is an optimistic schedule; various 
delays could push this date [for the proposed guidelines] back as much 
as 6 months or more, which would similarly push back all following 
milestones." Indeed, there have been delays. For example, the timeline 
states that the proposed guidelines will be published in the Federal 
Register on October 1, 2003, but they were not published until December 
19, 2003. According to USDA officials, additional delays, not 
anticipated in the timeline, could postpone some of the expected 
completion dates by as much as a year. These officials noted that these 
delays may result from the difficulty of working through the various 
concerns and conflicting views of the many stakeholders to this effort, 
a process that one New Uses official said was akin to "swimming in 
molasses." A comprehensive plan would discuss possible sources of delay 
and how they might be mitigated.

Second, New Uses staff developed the timeline without consulting with 
the USDA office responsible for developing the model procurement 
program and the voluntary recognition program--the Procurement office. 
When we met with officials from the Procurement office in September 
2003, they said that they had not seen the timeline we received from 
the New Uses office in June 2003. When we showed these officials the 
timeline, they indicated disagreement with some of the dates related to 
their portion of the work. A comprehensive plan would discuss how the 
work should be coordinated among interested offices to avoid these 
types of misunderstandings.

Third, the timeline does not describe how coordination will be done 
with other interested agencies. The farm bill requires that USDA 
consult with EPA, GSA, and NIST before developing the procurement 
guidelines. The legislation also requires USDA to consult with EPA in 
establishing the voluntary labeling program. As a practical matter, it 
would also be important for USDA to coordinate with the top four 
procuring agencies--DOD, DOE, NASA, and GSA---as well as other agencies 
such as the Office of the Federal Environmental Executive. During our 
work, we contacted relevant officials representing these agencies; most 
expressed concern about what they considered to be a lack of timely and 
effective coordination on USDA's part, although officials from some of 
the agencies seemed generally satisfied. Some of those who expressed 
concerns about coordination noted that USDA had been more attentive, 
relatively speaking, to interagency consultation in its earlier efforts 
to develop a list of biobased products for procurement under the 1998 
executive order. In addition, a senior official of the Office of the 
Federal Environmental Executive said that USDA has not effectively 
coordinated with EPA and DOE officials responsible for programs that 
promote government purchases of environmentally friendly, recycled 
content, or energy efficient products. Specifically, this official 
noted that USDA does not have a clear understanding of how its biobased 
guidelines will impact regulations related to these other programs. In 
addition, this official opined that USDA is missing the opportunity to 
incorporate the lessons learned from the development of these other 
programs. In light of these concerns, during our work we asked the New 
Uses staff for minutes or other written documentation of coordination 
meetings. These staff indicated that they had not documented internal 
or external coordination meetings in writing.[Footnote 32] A 
comprehensive plan would identify agencies with which coordination 
should occur, describe the frequency and manner of these contacts, and 
indicate how the results of these meetings would be documented.

Fourth, the timeline does not describe how progress reporting will be 
done, what form these reports will take, or to whom these reports will 
be made. New Uses officials told us that although they do not prepare 
regular progress reports, they do discuss the status of their work on 
the farm bill biobased provisions at weekly staff meetings with the 
Chief Economist and that this official periodically briefs the 
Secretary of Agriculture.[Footnote 33] In addition, these officials 
indicated that the status of their work is reported weekly to USDA's 
farm bill implementation team and that this team also reports to 
agency's subcabinet officers. However, without a comprehensive 
management plan, including clearly delineated tasks and associated 
milestones, we believe it would be difficult for managers to put into 
context the relative progress being made on this work, to identify 
needed adjustments, and to hold accountable the officials responsible 
for its completion. A comprehensive plan would describe who the 
officials responsible for implementing the farm bill requirements would 
report to and the frequency and manner of periodic progress reports.

In contrast to the New Uses office's lack of a management plan, the 
Procurement office prepared a detailed written management plan for 
conducting its portion of the work.[Footnote 34] This document contains 
the elements of a comprehensive plan, including identifying the work to 
be done, the associated tasks and milestones, available resources, 
anticipated costs, and the type and frequency of progress reporting. 
The plan also discusses the need for coordination with other USDA 
offices and federal agencies and how this coordination will be 
accomplished. Unfortunately, however, this plan applies only to limited 
aspects of the work USDA must complete to fulfill the farm bill 
requirements. The New Uses office is responsible for the majority of 
the work needed to fulfill these requirements; yet, as discussed, it 
lacks a comprehensive plan for completing this work.

We met with USDA officials, including New Uses staff, in February 2004 
to discuss further the lack of a comprehensive management plan and 
other issues identified in our work and their significance. At that 
meeting, the New Uses staff provided us a document entitled, 
"Implementing Section 9002 of the Farm Bill." This document was 
attached to an e-mail dated June 2002 that referred to the attachment 
as an "early draft implementation plan for Section 9002." New Uses 
staff indicated that this document was evidence of their planning. 
However, our analysis of this document reveals that it is not a 
comprehensive management plan for implementing the farm bill 
requirements. First, the e-mail refers to the document as an early 
draft; apparently it never advanced beyond this stage. Second, the 
document lacks most elements of a comprehensive plan, such as a 
description of specific tasks, associated milestones, and the 
frequency, manner, and documentation of coordination meetings and 
periodic progress reporting.[Footnote 35] Instead, the document 
generally restates the farm bill requirements and the related 
conference report language, discusses some options for addressing these 
requirements, and presents a rationale for hiring a contractor with the 
requisite skills to implement the farm bill provisions under the 
management oversight of the New Uses office. Interestingly, although a 
contractor was not hired,[Footnote 36] the document notes that, 
"Contractor performance would be evaluated on an annual basis against 
pre-agreed-upon achievement milestones, with an opportunity to re-
direct resources if necessary." Thus, although the New Uses office 
apparently planned to use a list of specific tasks and associated 
milestones to judge the contractor's progress and hold this firm 
accountable, the New Uses staff, who had to undertake this work without 
contractor assistance, did not develop a similar list of tasks and 
milestones to guide their work. As discussed, New Uses staff did not 
develop a list of milestones until the spring of 2003, and only at our 
request.

Furthermore, at our February 2004 meeting, USDA officials expressed the 
view that although they had missed the farm bill biobased-related 
deadlines and most farm bill biobased procurement requirements remain 
unfulfilled, they had made noteworthy progress in publishing the 
proposed guidelines in December 2003. These officials discussed and 
subsequently provided us with a document listing work activities they 
had undertaken leading up to the publication of these guidelines. Among 
other things, the list notes that during the summer and fall of 2002, 
USDA developed the aforementioned "implementation plan," held various 
internal meetings and external consultations, and began drafting the 
guidelines. Thereafter and throughout calendar year 2003, the list 
primarily shows that USDA went through several rounds of vetting and 
revising the guidelines, based on reviews done by the OMB and USDA's 
Office of General Counsel. In addition, USDA officials noted that 
throughout this process their collective thinking evolved as to the 
form and content of the guidelines and included considerations such as 
(1) whether the list of biobased products that was being developed by 
the agency under the 1998 executive order had relevance in light of 
farm bill criteria for designating items and (2) whether a more 
simplified, less-burdensome approach regarding the content of the 
guidelines would still satisfy the legislation's requirements. Finally, 
New Uses officials stated that the notice of proposed rulemaking 
containing the proposed guidelines was developed far more quickly--by a 
measure of years--than the rulemakings for two other programs that they 
view as relevant: the preferred procurement program for recycled 
products developed by EPA and the organic product labeling program 
developed by USDA.

In citing the lack of a management plan, we are not questioning whether 
New Uses staff have worked hard or whether the complexity and novelty 
of the issues they faced were challenging. Rather we are raising the 
question of whether the efficiency of this work has suffered because of 
a lack of a comprehensive plan to guide it. Clearly, the other USDA 
office involved in implementing the farm bill biobased requirements 
thought it was important to develop a thorough management plan to guide 
its portion of the work to ensure the efficient use of available 
resources and timely completion of the work. Furthermore, we are unable 
to comment on the relevance of comparing the development of various 
rulemakings cited by New Uses staff because such an analysis is outside 
the scope of our work. However, we believe there are probably lessons 
to be learned from EPA's experience in developing the procurement 
program for recycled products that would benefit USDA's efforts to 
develop a similar program for biobased products.

Careful planning for a major initiative is a recognized good business 
practice. Furthermore, the need for adequate planning in federal 
programs is established in legislation such as the Government 
Performance and Results Act of 1993,[Footnote 37] Presidential 
executive orders, circulars of OMB, and agency regulations to ensure 
that federal program managers know what they want to accomplish, how 
they are going to accomplish it, and when it will be accomplished. 
Without a comprehensive plan for implementing the farm bill 
requirements assigned to the New Uses office, including clearly defined 
tasks and milestones, it is difficult for USDA to set priorities, use 
resources efficiently, measure progress, and provide agency management 
a means to monitor this progress. Furthermore, the lack of a plan only 
serves to delay the agency's completion of legislatively required 
actions.

Need for Additional Resources:

USDA did not allocate the staff needed to expedite the biobased 
procurement effort. It assigned responsibility for this effort to two 
staff in the New Uses office who also had other responsibilities--in 
effect, they worked part-time on biobased procurement. While these New 
Uses officials had assistance from time-to-time from staff in other 
USDA offices, including staff who had been involved in the agency's 
earlier efforts under the executive order, the availability of these 
staff was more ad hoc, subject to the demands of other work to which 
they were assigned. In addition, according to these New Uses officials, 
no one in their office had experience in writing rules; and they had to 
wait several months before staff from another office with this 
experience could be assigned to help write the notice of proposed 
rulemaking containing the guidelines for publication in the Federal 
Register.[Footnote 38] However, New Uses officials said that while they 
were waiting for this assistance, they were able to continue with other 
aspects of the work. Nevertheless, although these New Uses officials 
stated that they do not believe that the guidelines could have been 
issued in any case by the farm bill deadline, they believe that the 
lack of adequate personnel assigned specifically to this effort was a 
source of delay.

Regarding funding, the farm bill did not specifically authorize any 
funds for developing the biobased procurement guidelines, and USDA did 
not provide any funds to the New Uses office for this effort from other 
programs. In essence, the New Uses office had to absorb these costs 
from its operating budget; and as a result, this office assigned only 
two staff to work part-time on meeting the farm bill requirements, as 
discussed.[Footnote 39] The New Uses office began its work soon after 
passage of the farm bill. However, the farm bill authorized $1 million 
annually for testing biobased products. To date, the New Uses office 
has used these funds to contract with Iowa State University and NIST to 
develop testing protocols for biobased products and an information Web 
site on biobased products.

Regarding development of a model procurement program and the voluntary 
recognition program, the Procurement office did not begin this work 
until the fall of 2003 because of a lack of identified funding for this 
purpose until that time. Specifically, in September 2003, USDA's Rural 
Development Mission Area transferred about $500,000 to the Procurement 
office for this purpose. In addition, the Procurement office added 
about $25,000 of its own funds to this sum. This office used these 
funds to contract with the DOE's Oak Ridge National Laboratory and a 
consulting firm to, among other things, assist in developing the 
office's comprehensive plan for implementing this portion of the work. 
Oak Ridge also will be involved in the plan's implementation under the 
Procurement office's direction. In addition, USDA transferred a staff 
member from its Office of Small and Disadvantaged Business Utilization 
to the Procurement office to oversee this effort. While Procurement 
office staff indicated that the funds identified to date should carry 
them through the end of fiscal year 2004, they said additional funding 
will be needed in the future to continue their work on the model 
procurement program. For example, the staff member who oversees this 
effort estimated that about $450,000 will be needed in fiscal year 2005 
and about $500,000 will be needed in fiscal year 2006.

Need for Assigning a Higher Priority:

According to USDA staff who worked on developing a biobased products 
list under the 1998 executive order, assigning responsibility for 
developing the farm bill biobased procurement guidelines to the New 
Uses office should have given this effort more agency attention because 
this office reports to the Chief Economist who in turn reports directly 
to the Secretary of Agriculture. Previously, work on developing a list 
of biobased products was split among several line agencies and offices, 
including the Agricultural Research Service, the Cooperative State 
Research, Education, and Extension Service, and the Procurement office, 
that do not enjoy this direct access to the Secretary. However, despite 
this expectation of greater agency attention, USDA has made limited 
progress in fulfilling the farm bill requirements; and several USDA 
officials indicated that this work is not a high priority, relative to 
other agency initiatives. In addition, stakeholders outside of USDA 
also believe that the agency has not given sufficient management 
attention to the fulfillment of the farm bill biobased provisions. For 
example, representatives of commodity associations and manufacturers 
stated that although they had hoped for timely and effective 
procurement guidelines from USDA, the issuance of guidelines has been 
delayed because this effort is not a priority for the agency.

In our earlier work, related to USDA's implementation of the 1998 
executive order,[Footnote 40] USDA officials indicated that they had 
made limited progress in publishing a list of biobased products for 
procurement because of a lack of dedicated resources and higher agency 
priorities. Although USDA's issuance of federal procurement guidelines 
for biobased products, as well as USDA's establishment of a voluntary 
labeling program and voluntary recognition program, is now 
legislatively required, this work still suffers from a lack of adequate 
resources and management attention.

Stakeholders Generally Agree That Some Testing of Biobased Products Is 
Necessary, but They Question the Need For Life-Cycle Analysis:

Most federal agencies, testing organizations, commodity associations, 
and manufacturers we spoke with generally believe that testing biobased 
products for content and performance is appropriate, but they question 
the usefulness and costs of life-cycle analysis. According to officials 
from the top four purchasing agencies and the two testing 
organizations, content testing is important to ensure that products 
meet minimum biobased content specifications, and performance testing 
is a key factor in making purchasing decisions. These officials 
generally believe that manufacturers should bear the costs of these 
tests, if they want to sell to the federal government. Biobased 
manufacturers generally agree with the need for these tests and with 
their responsibility for bearing at least some of the associated costs. 
However, some manufacturers said that they should be able to self-
certify the biobased content of their products in lieu of content 
testing, based on their knowledge of their manufacturing processes. 
Regarding life-cycle analysis, most of the agencies and manufacturers 
questioned the need for doing this analysis. USDA is required to 
consider life-cycle costs in determining whether to designate an item 
for preferred procurement and has indicated that if manufacturers 
voluntarily provide life-cycle cost information it may help speed the 
designation process. Manufacturers would only be required to provide 
this information under the rule as proposed if a procurement official 
requested the information.[Footnote 41] However, the agencies generally 
did not believe that life-cycle information would be useful for 
purchasing decisions because procurement staff would find the analysis 
too detailed to follow and generally not useful without comparative 
information on petroleum-based products; USDA does not expect to 
provide such comparative information. Manufacturers generally agreed 
with this view, noting that the cost of life-cycle analysis is high--as 
much as $8,000 for a single product--and they questioned whether they 
alone should bear this cost in order to make sales to the federal 
government.

The farm bill authorized USDA to use $1 million per year of the 
Commodity Credit Corporation's funds from fiscal year 2002 through 
fiscal year 2007 for testing of biobased products. Initially, as 
discussed in its proposed guidelines, USDA plans to use these funds to 
focus on gathering the necessary test information on a sufficient 
number of products within an item (generic grouping of products) to 
support regulations to be promulgated to designate an item or items for 
preferred procurement. However, the farm bill also allows that these 
funds may be used to support contracts or cooperative agreements with 
entities that have experience and special skills to conduct such 
testing. The $1 million for fiscal year 2002 was used for agreements 
with testing organizations to establish standardized tests for 
determining the biobased content and life-cycle analysis 
characteristics of biobased products. Part of this money also was used 
to develop a biobased products information Web site. USDA views the 
establishment of this Web site as integral to fulfilling the farm bill 
requirement for providing information on products. USDA is using the $1 
million for fiscal year 2003 to evaluate selected products using the 
standardized tests to establish benchmarks for designating items for 
preferred procurement. The agency is also using some of this money to 
complete and maintain the information Web site. USDA anticipates that 
$1 million for fiscal year 2004 will be used to cost-share with 
manufacturers some of the expenses associated with testing products in 
order to develop the information needed to designate items for 
preferred procurement.

In general, USDA plans to bear the cost of any testing that may be 
needed to establish baseline information for designating items. 
Regarding this testing, in its proposed guidelines USDA indicates that 
it may accept cost sharing from manufacturers or vendors for this 
testing to the extent consistent with USDA product testing decisions. 
However, during this period, USDA will not consider cost sharing in 
deciding what products to test. When USDA has concluded that a critical 
mass of items has been designated, USDA will exercise its discretion, 
in accordance with competitive procedures outlined in the proposed 
guidelines, to allocate a portion of the available USDA testing funds 
to give priority to testing products for which private firms provide 
cost sharing for the testing. At that point, cost-sharing proposals 
would be considered first for small and emerging private business 
enterprises.[Footnote 42] If funds remain to support further testing, 
proposals from larger firms would also be considered.

USDA's proposed guidelines would require manufacturers and vendors to 
provide relevant product characteristics information to federal 
procuring agencies on request. For example, under the proposed 
guidelines, manufacturers would have to be able to verify the biobased 
content of their products using a specified standard. In addition, 
federal agencies would have to rely on third-party test results showing 
the product's performance against government or industry standards. 
Furthermore, manufacturers would have to use NIST's Building for 
Environmental and Economic Sustainability (BEES) analytical tool to 
provide information on life-cycle costs and environmental and health 
benefits to federal agencies, when asked. USDA recommends that federal 
agencies affirmatively seek this information.

Most Stakeholders Agree that Content and Performance Testing Are 
Necessary:

According to officials we contacted from the top four purchasing 
agencies and the two testing organizations--Iowa State University and 
NIST--content and performance testing are necessary to help federal 
agencies make purchasing decisions. Content testing is necessary to 
ensure that products meet the biobased content specifications for 
designated items.[Footnote 43] Furthermore, the results of performance 
testing are a key consideration, along with product availability and 
price, for federal procurement officials when selecting a product for 
purchase, whether the product is biobased or not.[Footnote 44] These 
agency and testing organization officials also believe that 
manufacturers should bear the costs of content and performance testing 
because these tests are considered normal business costs associated 
with marketing products.

Ten of the 15 biobased manufacturers we contacted agree that content 
and performance testing are necessary. Two other manufacturers agreed 
that one of these tests was necessary, but they did not agree on which 
test. Most of these manufacturers also acknowledged their 
responsibility for bearing at least some of the costs for these tests. 
However, some of the manufacturers believe that they should self-
certify content, based on their knowledge of their manufacturing 
process, including the feedstock used. These manufacturers suggested 
that USDA could conduct random content testing to verify these 
certifications. Similarly, representatives from the Biobased 
Manufacturers Association stated that they believe, based on input from 
their member companies, that manufacturers should self-certify the 
content of their products. These association officials suggested that 
content testing should only be required when there is a challenge to 
these certifications. Most of the manufacturers believed that the 
requirement for providing performance testing information is reasonable 
and that, because the cost of this testing is an expected cost of doing 
business, they should bear this expense.

Stakeholders Generally Question the Need for Life-Cycle Analysis:

Officials representing the top four procurement agencies, manufacturing 
companies, the Biobased Manufacturers Association, and commodity 
associations generally questioned the need for life-cycle analysis of 
biobased products.[Footnote 45] Under USDA's proposed guidelines, 
manufacturers are invited to voluntarily submit their product to a 
life-cycle analysis using the BEES analytical tool developed by NIST, 
so that USDA can obtain information it is required to consider in 
designating items for preferred procurement. However, once an item has 
been designated, the manufacturer would have to provide information on 
life-cycle costs, if asked to do so by a procuring agency, using BEES 
for their particular product. While some manufacturers indicated that 
they do not object to performing life-cycle analysis per se, and a few 
even indicated that they have done such an analysis already to use the 
results in marketing their product(s), these stakeholders questioned 
USDA's decision to rely solely on one analytical tool--BEES--to perform 
this analysis.[Footnote 46] Other stakeholders pointed out that any 
life-cycle analysis results for biobased products would be of limited 
usefulness without comparable results for similar products that are 
petroleum based.

Stakeholders voiced the following opinions regarding whether life-cycle 
analysis results are, in general, useful and/or whether USDA should 
rely solely on the BEES analytic tool for doing this analysis:

* Many of the officials representing manufacturers and commodity 
associations believe that federal purchasers will not find life-cycle 
analysis results for biobased products to be useful unless they have 
comparable results for competing petroleum-based products. For example, 
if federal purchasing officials have information on the economic and 
environmental impacts of a biobased product, but do not have similar 
information for its petroleum-based alternative, these officials will 
not be able to determine if the higher initial purchase cost of the 
biobased product is offset by its lower maintenance and disposal costs 
and/or lower environmental impacts. Even officials from USDA and the 
testing organizations acknowledged that the usefulness of BEES results 
for biobased products would be greater if similar results were 
available for petroleum-based alternatives. These officials said that 
although the farm bill does not address life-cycle analysis for 
petroleum-based products, they hope that manufacturers of these 
products will submit them to BEES analysis voluntarily so that 
comparable data are available. However, other stakeholders questioned 
why a manufacturer of a petroleum-based product would incur this 
expense voluntarily, especially if the BEES results could cast the 
manufacturer's product in an unfavorable light. USDA officials added 
that procuring agencies could, if they choose, also require 
manufacturers of petroleum-based products to provide this information 
in order to make sales to the agencies, but other stakeholders opined 
that the agencies are not likely to do so because they do not now seek 
this type of information. USDA officials also noted that to ensure a 
level playing field it is important that manufacturers and vendors use 
the same life-cycle analysis tool to ensure consistent and comparable 
results.

* Many manufacturer and commodity association officials stated that the 
cost of the life-cycle analysis was too expensive for most small 
manufacturers to bear. According to NIST, the cost of testing a product 
using the BEES analytic tool is about $8,000. The cost of subsequent 
testing of related products from the same manufacturer is about $4,000 
per product tested. For small manufacturers with fewer than 500 
employees, the cost of testing is $4,000 for the first product and 
$2,000 for each additional product, assuming similar processing steps 
and the continued availability of federal cost-share 
assistance.[Footnote 47] Some USDA officials expressed the view that 
these costs are not exorbitant, adding that the costs of content 
testing is even cheaper, falling in the range of a few hundred dollars.

* Federal procurement officials indicated that life-cycle analysis is 
generally not an important factor in procurement decisions. A product's 
price, availability when needed, and ability to meet performance 
specifications are the most important considerations, according to 
these officials. In addition, a number of manufacturer and commodity 
association stakeholders questioned whether procurement officials 
would even understand the significance of the results of a life-cycle 
analysis. However, USDA officials noted that the impetus to purchase 
biobased products also should come from the agency program officials 
who generate the requirements for the goods and supplies that 
procurement staff purchase. With this in mind, the Procurement office's 
plan for developing the model procurement program includes major tasks 
related to training and outreach to groups other than just the 
procurement staff. If these other groups who generate the purchase 
requirements also understand the potential benefits of biobased 
products and the legislative requirements for giving these products 
preference in federal purchasing, then they may stipulate in their 
purchase requests that procurement staff buy biobased alternatives. 
Similarly, these groups may stipulate in service contracts that firms 
purchase and use biobased products.

* Some manufacturers, citing the detailed nature of the BEES analysis, 
expressed concerns that trade secrets related to their product could be 
compromised. However, according to a NIST official primarily 
responsible for adapting the BEES analytic tool for evaluating biobased 
products, the information submitted for BEES analysis will not be 
subject to Freedom of Information Act requests. This official also 
indicated that contracts made with third-party testing organizations 
for conducting BEES analysis will include language imposing penalties 
for improperly divulging product information. In addition, this 
official said that life-cycle information generated for designating 
items through the testing of branded products will be aggregated in 
such a way so as not to reveal the "recipe" (contents and structure) of 
a given product.

Conclusions:

USDA has yet to fulfill many of the farm bill biobased procurement 
requirements. Among other things, USDA has not issued final procurement 
guidelines that designate items for preferred procurement. USDA's work 
has been slowed by the lack of a comprehensive management plan 
outlining the tasks, milestones, resources, coordination, and reporting 
needed for its completion. In addition, USDA has not assigned 
sufficient staff and financial resources or given sufficient priority 
to this effort to ensure its timely completion. Because other federal 
agencies' procurement of biobased products largely hinges on USDA's 
fulfillment of these farm bill requirements, USDA action is critical.

Recommendations:

To ensure USDA's timely implementation of the farm bill biobased 
purchasing requirements, we recommend that the Secretary of Agriculture 
carry out the following three recommendations:

* Direct the Office of Energy Policy and New Uses to develop and 
execute a comprehensive management plan for completing this work. Among 
other things, such a plan should discuss the tasks, milestones, 
resources, coordination, and reporting needed for completing this work.

* Clearly identify and allocate the staff and financial resources to be 
made available for completing this work.

* Clearly state the priority to be assigned to this work.

Agency Comments and Our Evaluation:

We provided a draft of this report to USDA for review and comment. We 
received written comments from the agency's Chief Economist, which are 
presented in appendix V. USDA also provided us with suggested technical 
corrections, which we have incorporated into this report as 
appropriate.

USDA indicated that it believes the report does not present a complete 
and balanced view of the progress it has made in implementing the farm 
bill biobased procurement provisions. Specifically, USDA said that the 
report emphasizes negative interpretations without reflecting the very 
considerable progress achieved, or how favorably that progress compares 
with other government efforts to develop preference programs, such as 
the EPA's program for the purchase of recycled products. We believe the 
report provides a fair and accurate description of the farm bill 
requirements and USDA's efforts to comply with these requirements to 
date. The scope of our work did not include a comparison of USDA's 
efforts to implement these requirements to the efforts of other 
agencies to implement other procurement preference programs. However, 
we have previously reported on EPA's efforts to implement legislative 
requirements for the purchase of recycled products, and in doing so we 
raised issues similar to those we are raising with USDA in this 
report.[Footnote 48] Namely, we reported that EPA lacked a 
comprehensive, written strategy for completing the work and had not 
given the work adequate staffing and resources and priority.

Regarding our recommendation that the New Uses office develop and 
execute a comprehensive management plan for completing the work needed 
to fulfill the farm bill biobased purchasing requirements, USDA 
indicated disagreement. Specifically, USDA said it does not believe 
such a plan would have accelerated its work on the proposed rule issued 
in December 2003, given the complexity of the issues that had to be 
resolved and the substantial amount of consultation across federal 
agencies and within USDA that was a necessary component of developing 
this rule. We disagree and continue to believe that USDA should develop 
a comprehensive, written plan that discusses, among other things, the 
tasks, milestones, resources, coordination, and reporting needed for 
completing the work necessary to fulfill the farm bill requirements. 
Such a plan would also serve as a basis for communicating USDA's 
progress with the Congress and others, including the department's 
senior management. Furthermore, we believe that factors such as the 
complexity and breadth of the issues to be considered, the internal and 
external consultation necessary, and the farm bill's ambitious time 
frames for the completion of this work underscore the need for a 
comprehensive, written plan or strategy for the completion of this 
work. Finally, we note that another USDA office, the Office of 
Procurement and Property Management, developed a comprehensive, written 
plan for the completion of its limited portion of the biobased work. 
Among other things, this plan discusses the need for consultation, 
identifies the internal and external stakeholders to consult with, and 
enumerates specific tasks related to this consultation.

Regarding our recommendations that USDA clearly identify and allocate 
the staff and financial resources to be made available for implementing 
the farm bill biobased purchasing requirements and clearly state the 
priority to be assigned to this work, USDA did not address these 
recommendations directly. However, USDA said that it would draw on 
GAO's review and recommendations as it approaches the development of 
subsequent proposed rules for designating items and for development of 
the labeling program. We believe that USDA should be more proactive in 
this regard and make clear the staff and financial resources to be made 
available for completing this work and the priority to be assigned to 
this work. These matters could also be addressed in a comprehensive, 
written plan or strategy for completing the work.

We also obtained comments from the DLA, DOE, Interior, EPA, GSA, NASA, 
NIST, and the Office of the Federal Environmental Executive on excerpts 
of the report that were relevant to their agencies. Their clarifying 
comments were incorporated into this report, as appropriate.

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from the date of this letter. We will then send copies to interested 
congressional committees; the Secretary of Agriculture; the Secretary 
of Energy; the Director, OMB; and other interested parties. We will 
make copies available to others on request. In addition, the report 
will be available at no charge on GAO's Web site at http://www.gao.gov.

If you have any questions about this report, please contact me at (202) 
512-3841. Key contributors to this report are listed in appendix VI.

Sincerely yours,

Lawrence J. Dyckman:
Director, Natural Resources and Environment:

[End of section]

Appendix I: Objectives, Scope, and Methodology:

At the request of the Ranking Democratic Member of the Senate Committee 
on Agriculture, Nutrition, and Forestry, we reviewed issues related to 
the federal government's progress in implementing the biobased 
purchasing provisions of the Farm Security and Rural Investment Act of 
2002 (the farm bill). Specifically, we agreed to examine (1) actions 
that the U.S. Department of Agriculture (USDA) and other agencies have 
taken to carry out the farm bill requirement to purchase biobased 
products; (2) additional actions that may be needed to enhance 
implementation of this requirement; and (3) views of agencies, 
manufacturers, and testing organizations on the need for and costs of 
testing biobased products.

To determine the actions USDA has taken to carry out the farm bill 
requirement for purchasing biobased products and to determine the 
additional actions that may be needed to enhance implementation of this 
requirement, we conducted interviews with USDA officials in the Office 
of Energy Policy and New Uses (New Uses office) and analyzed documents 
they provided to us. We also contacted officials in other USDA offices, 
including the Agricultural Research Service; Cooperative State 
Research, Education, and Extension Service; Office of General Counsel; 
and the Office of Procurement and Property Management (Procurement 
office). In addition, we spoke with officials at Iowa State University 
and the Department of Commerce's National Institute of Standards and 
Technology (NIST) who are developing testing standards for biobased 
products under agreements with USDA. Furthermore, we reviewed USDA's 
Guidelines for Designating Biobased Products for Federal Procurement, a 
proposed rulemaking published in the Federal Register on December 19, 
2003. Related to this rulemaking, we attended two public meetings held 
by USDA in Washington, D.C.: a biobased workshop held on October 28, 
2003, to discuss USDA's use of biobased products and the status of the 
proposed rulemaking and a meeting on January 29, 2004, to allow the 
public an opportunity to comment on the proposed rule.

To determine the actions that other federal agencies have taken to 
carry out the farm bill requirement to purchase biobased products, we 
interviewed officials at the top four procuring agencies--the 
Department of Defense (DOD), the Department of Energy (DOE), the 
General Services Administration (GSA), and the National Aeronautics and 
Space Administration (NASA)--and analyzed the documents that they 
provided to us. These agencies account for the majority--about 85 
percent--of the federal government's purchasing; the DOD alone accounts 
for about 67 percent of federal purchasing. The officials we contacted 
included program staff who identify purchasing requirements and 
procurement staff who make the purchasing decisions, including the 
selection of vendors and products used. They also included 
environmental management or health officials who may be responsible for 
promoting the use of biobased products at their agencies. We also 
interviewed officials at DOE, the Defense Logistics Agency, the 
Environmental Protection Agency (EPA), GSA, NASA, the Office of 
Management and Budget's (OMB) Office of Federal Procurement Policy 
(OFPP), and the White House's Office of the Federal Environmental 
Executive to determine the extent to which USDA had coordinated with 
these agencies in implementing the farm bill biobased purchasing 
requirement.

To obtain the views of federal agencies, testing organizations, 
manufacturers, environmental groups, consumer groups, an advocacy 
group, and commodity associations on the need for and costs of testing 
biobased products, we contacted the following entities:

* Federal agencies: DOD, DOE, EPA, GSA, NASA, OFPP, and White House's 
Office of the Federal Environmental Executive.

* Testing organizations: Iowa State University and NIST.

* Manufacturers: Biobased Manufacturers Association and 15 biobased 
products manufacturers from a list of member companies provided by the 
association. The manufacturers chosen represent a cross section of 
biobased products--at least one producer in each of the 11 biobased 
item categories proposed by USDA--and feedstock (e.g., corn, soybeans, 
vegetable oils, etc.). They are also geographically dispersed: Arizona, 
California, Florida, Iowa, Illinois, Maryland, Massachusetts, 
Minnesota, Ohio, Texas, Washington, and Wisconsin.

* Environmental groups: Environmental and Energy Study Institute and 
Green Seal.

* Consumer groups: Center for the New American Dream and Consumer's 
Choice Council.

* Advocacy group: New Uses Council.

* Commodity associations: American Soybean Association, National Corn 
Growers Association, and the United Soybean Board.

Most of our contacts with these entities occurred prior to USDA's 
publication of its guidelines for designating biobased products for 
procurement in December 2003, although we also obtained information 
from some of these contacts after this document was published. In 
either case, in our interviews with these sources we sought their views 
on what the proposed guidelines should contain. In addition, for 
manufacturers of biobased products, we sought information on their 
experiences in selling to the government, including any impediments 
encountered. We also sought their views on the types of testing that 
should be done on biobased products; the associated costs of these 
tests; how testing costs should be paid; and how available federal 
funding for testing should be used. We summarized and contrasted the 
views of the various stakeholders.

In general, our work focused on biobased products other than biofuels 
such as ethanol, biodiesel, and biogas because provisions to promote 
the production of biofuels are addressed elsewhere in the farm bill. 
However, some mention of biofuels was unavoidable in discussing the 
nature and importance of biobased products, including their effect on 
carbon in the environment and on their potential economic impact on 
farms and rural communities.

We conducted our review from May 2003 through February 2004 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Sources for Information on Biobased Products:

The following list provides the names, addresses, and Web sites for 
sources of information on biobased products used in our work.

American Soybean Association 
12125 Woodcrest Executive Drive, Suite 100 
Creve Coeur, MO 63141-5009 
Web site: www.soygrowers.com. 

Biobased Manufacturers Association 
11701 Borman Drive, Suite 300 
St. Louis, MO 63146-4193 
Web site: www.biobased.com. 

Biomass Research & Development Initiative (DOE/USDA) 
U.S. Department of Energy 
1000 Independence Avenue, SW, Mail-Code EE-1 
Washington, D.C. 20585 
Web site: www.bioproducts-bioenergy.gov. 

Biotechnology Industry Organization 
1225 Eye Street, NW, Suite 400 
Washington, D.C. 20005 
Web site: www.bio.org. 

Consumer's Choice Council 
1367 Connecticut Avenue, NW, Suite 300 
Washington, D.C. 20036 
Web site: www.consumerscouncil.org. 

Environmental and Energy Study Institute 
122 C Street, NW, Suite 630, 
Washington, D.C. 20001 
Web site: www.eesi.org. 

Green Seal 
1001 Connecticut Avenue, NW, Suite 827 
Washington, D.C. 20036-5525 
Web site: www.greenseal.org. 

National Corn Growers Association 
632 Cepi Drive 
Chesterfield, MO 63005 
Web site: www.ncga.com. 

New Uses Council c/o Doane Agricultural Services 
11701 Borman Drive, Suite 300 
St. Louis, MO 63146-4193 
Web site: www.newuses.org. 

Office of the Federal Environmental Executive 
1200 Pennsylvania Ave, NW, Mail 1600S 
Washington, D.C. 20460 
Web site: www.ofee.gov. 

The Center for a New American Dream 
6930 Carroll Avenue, Suite 900 
Takoma Park, MD 20912 
Web site: www.newdream.org. 

United Soybean Board 
16640 Chesterfield Grove Road, Suite 130 
Chesterfield, MO 63005-1429 
Web site: www.unitedsoybean.org. 

USDA Office of Energy Policy and New Uses 
300 7th Street, SW, Room 361 
Washington D.C. 20024-0130 
Web site: www.biobased.oce.usda.gov. 

USDA Biobased Products and Bioenergy Coordination Council 
Office of Technology Transfer 
Agricultural Research Service 
5601 Sunnyside Avenue, Room 4-1152 
Beltsville, MD 20705-5131 
Web site: www.ars.usda.gov/bbcc/. 

U.S. Department of Energy 
Industrial Technologies Program, EE-2F 
1000 Independence Ave., SW 
Washington, D.C. 20585 
Web site: www.oit.doe.gov/agriculture. 

U.S. Environmental Protection Agency 
Comprehensive Procurement Guidelines 
Office of Solid Waste (5305W) 
1200 Pennsylvania Avenue, NW 
Washington, D.C. 20460 
Web site: www.epa.gov/cpg: 


[End of section]

Appendix III: Key Provisions of USDA's Proposed Guidelines:

This appendix summarizes key provisions of USDA's notice of proposed 
rulemaking, Guidelines for Designating Biobased Products for Federal 
Procurement, published in the Federal Register (69 Fed. Reg. 3533) on 
December 19, 2003. Specifically, table 2 describes proposed biobased 
product categories and the items to be included in each as discussed in 
the preamble to the proposed guidelines. Table 3 enumerates other key 
provisions proposed in the notice.

Table 2: Proposed Biobased Product Categories and Related Items as 
Listed in the Preamble:

Product categories: Adhesives; 
Types of items: 
* adhesive products; 
* adhesive additives; 
* finished products with biobased adhesives.

Product categories: Construction materials and composites; 
Types of items: 
* construction material; 
* composite panels; 
* molded reinforced composites; 
* insulating foams and films; 
* components of mixed system products.

Product categories: Fibers, paper, and packaging; 
Types of items: 
* fibers; 
* fibers composites; 
* composite packaging materials; 
* woven fiber products; 
* packaging materials; 
* uncoated printing and writing papers; 
* coated printing and writing papers; 
* bristols; 
* newsprint; 
* sanitary tissues; 
* paperboard and packaging products; 
* other paper products.

Product categories: Fuel additives; 
Types of items: 
* solid fuels; 
* liquid fuel additives.

Product categories: Landscaping materials, compost, and fertilizer; 
Types of items: 
* landscaping materials; 
* compost; 
* fertilizer.

Product categories: Lubricants and functional fluids; 
Types of items: 
* crankcase oils (water cooled engines); 
* crankcase oils (air cooled engines); 
* 2-cycle engine oils; 
* fifth-wheel grease; 
* automotive and other metal complex grease; 
* total loss lubricants (wire rope, bar- chain, etc.); 
* turbine and other industrial lubricants; 
* penetrating oils; 
* general purpose and other; 
* hydraulic, power steering, transmission fluids; 
* brake fluids; 
* cutting, drilling, and tapping oils (neat use); 
* metal working concentrates (for dilution); 
* forming pastes and extreme pressure stamping; 
* concrete and asphalt release; 
* metal foundry and mold release; 
* transformer oil and dielectric fluids.

Product categories: Plastics; 
Types of items: 
* biodegradable foams; 
* durable foams; 
* biodegradable films; 
* durable films and coatings; 
* water-soluble polymers; 
* compostable molded products; 
* molded plastics and composites/biobased resins; 
* molded composites/biobased fibers; 
* synthetic fibers.

Product categories: Paints and coatings; 
Types of items: 
* formulated product.

Product categories: Solvents and cleaners; 
Types of items: 
* formulated product; 
* neat product (concentrate).

Product categories: Sorbents; 
Types of items: 
* sorbents; 
* sorbent systems.

Product categories: Plant and vegetable inks; 
Types of items: 
* news inks--black; 
* news inks--color; 
* sheet-fed inks; 
* forms inks; 
* heat-set inks; 
* specialty inks. 

Source: Preamble to USDA's proposed guidelines.

[End of table]

Table 3: Other Key Provisions of USDA's Proposed Guidelines and Future 
Plans as Indicated in the Preamble:

Subject: Objectives of the guidelines; 
Key provisions: 
* Determine the minimum level of biobased material a designated item 
must contain; 
* Propose items available for designation under the guidelines; 
explain the factors to be considered in their designation 
(availability, economic and technological feasibility, and life-cycle 
costs); 
* Identify in the guidelines the information on availability, relative 
price, performance, and environmental and public health benefits that 
USDA will provide to federal agencies on items designated for preferred 
procurement; 
* Set forth recommended practices for procuring biobased products and 
designated items.

Subject: Biobased products proposed for exclusion; 
Key provisions: 
* Biobased products that have mature markets; 
* Garments, household items, and industrial or commercial products made 
from silk, cotton, or wool, unless made with a substantial amount of a 
biobased plastic product; 
* Wood products made from traditionally harvested forest material; 
* Products having significant national market penetration prior to 
1972.

Subject: Federal agencies' responsibilities; 
Key provisions: 
* Give a procurement preference, with certain exceptions, to designated 
items with the highest percentage of biobased content practicable; 
* Incorporate in procurement specifications biobased item preferences 
consistent with the USDA guidelines; 
* Establish an agency affirmative procurement program that includes a 
biobased products preference program, an agency promotion program to 
promote the preference program, and an annual review to monitor the 
effectiveness of the agency's procurement program.

Subject: Biobased Web site; 
Key provisions: USDA plans to; 
* gather information on price, performance, and environmental and 
public health benefits from manufacturers and vendors for products, and 
store this information on a Web site;; 
* invite manufacturers and vendors to voluntarily provide the noted 
information for the biobased products they intend to offer to federal 
agencies; 
and; 
* use the voluntary, Web-based information system as the principal 
clearinghouse of information on manufacturer and vendor contact 
information, currently available products, and relevant product 
characteristics.

Subject: Testing; 
Key provisions: 
* USDA is authorized to use $1 million of the Commodity Credit 
Corporation's funds per year for each of the fiscal years 2002 through 
2007 to support testing requirements; 
* USDA will consider cost-sharing for products of small and emerging 
private businesses for Building for Environmental and Economic 
Sustainability (BEES) and performance testing; 
* Collection of test results information will differ based on whether 
the items have been designated as part of the preferential purchasing 
program; 
* Manufacturers that want to participate in the initial designation 
stage of the program must submit data for content, performance, and 
BEES testing; 
* Manufacturers that do not participate in the designation stage have 
the responsibility to inform federal procurement officials that the 
items comply with the USDA guidelines, including the biobased content 
of the product. When asked for such information from federal agencies, 
manufacturers and vendors must provide performance and BEES data.

Subject: Voluntary labeling program; 
Key provisions: 
* Biobased products that qualify for preferred procurement will be 
eligible for the "U.S.D.A. Certified Biobased Product" label, when this 
program is developed; 
* Eligibility in this program requires BEES analysis and specific 
performance testing. 

Source: USDA's proposed guidelines and preamble to these guidelines.

[End of table]

[End of section]

Appendix IV: Chronology of Steps Completed or Planned by USDA to Comply 
with the Farm Bill Requirements:

[See PDF for image]

[End of figure]

[End of section]

Appendix V: Comments from the U.S. Department of Agriculture:

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix.

[See PDF for image]

The following are GAO's comments on the U.S. Department of 
Agriculture's letter dated March 23, 2004.

GAO Comments:

1. On page 29 of the draft report (now p. 28), we state USDA's view 
that their progress compares favorably to EPA's implementation of its 
program for the purchase of recycled products. We also state that a 
comparison of USDA's efforts to implement the biobased procurement 
provisions in section 9002 of the farm bill with government efforts to 
develop other preference programs, such as EPA's program for the 
purchase of recycled products,[Footnote 49] was outside the scope of 
our work. However, we have previously reported on EPA's efforts to 
implement this program. Specifically, in May 1993, we reported that 
EPA's efforts were slowed by a lack of a comprehensive, written 
strategy for completing this work.[Footnote 50] Among other things, we 
noted that such a strategy would lay out funding and staff needs, goals 
and milestones, information and coordination needs, and a systemic 
approach to selecting items for procurement guidelines. We also noted 
that this strategy would serve as a basis for communicating EPA's 
progress to the Congress and others, including the agency's senior 
management. In addition, we reported that EPA's efforts to fulfill the 
legislative provisions for the purchase of recycled products lacked 
priority and adequate staffing and resources, and because of the 
agency's slow progress in identifying recycled products for preferred 
procurement, other federal procuring agencies had made little progress 
in developing their own affirmative programs for the purchase of these 
products. The conference report for the farm bill notes that the new 
program for the purchase of biobased products by federal agencies is 
modeled on the existing program for the purchase of recycled materials. 
Presumably, there are lessons to be learned from EPA's experience in 
implementing the recycled program. However, more than 10 years after 
the issuance of our earlier report, we are now raising similar concerns 
regarding USDA's implementation of the farm bill biobased procurement 
provisions.

2. USDA is correct in stating that we do not offer an opinion on 
whether the farm bill time frame for full implementation of the 
biobased procurement program is realistic. This is a matter that USDA 
must address with the Congress. However, we do offer our views on how 
this implementation process might be accelerated. Regarding the 
specific factors that USDA cites as slowing this process, we believe 
these factors are adequately discussed in the draft report. On page 29 
(now p. 28), we acknowledge that the complexity and novelty of the 
issues that USDA faces are challenging. On page 26 (now p. 25), we 
state that the farm bill requires USDA to consult with other agencies, 
including EPA, GSA, and NIST. On page 28 (still p. 28), we also state 
that USDA provided us a list of work activities indicating that it 
conducted external consultations with other agencies during the summer 
and fall of 2002. On page 30 (still p. 30), we state that the farm bill 
did not specifically authorize funds for developing the biobased 
procurement guidelines. And on page 17 (now p. 16), we note that a 
number of rulemakings will be necessary to fulfill the farm bill 
biobased purchasing requirements and that the issuance of these 
rulemakings will take years to complete. We also describe on that page 
the steps in the rulemaking process. Furthermore, we make other 
statements in the draft report that reflect the difficulties USDA 
faces. For example, on page 4 (now p. 5) we state that USDA faces a 
formidable challenge in implementing the farm bill provisions for 
purchasing biobased products. On page 14 (still p. 14), we state that 
USDA was faced with an ambitious task regarding these provisions. And 
on page 25 (still p. 25), we note that USDA officials said that delays 
may result from having to work through the various concerns and 
conflicting views of the many stakeholders to this effort, a process 
that one official described as akin to swimming in molasses.

3. We believe that factors such as the complexity and breadth of the 
issues to be considered, the internal and external consultation 
necessary, and the ambitious time frames for completing the work 
underscore the need for a comprehensive, written plan or strategy for 
the completion of this work was and is necessary.

4. We did not ask for "a particular style of plan." Beginning with our 
entrance meeting with USDA officials in May 2003, we asked for a copy 
of any written plan these officials had prepared that described how 
they intended to complete the work necessary to fulfill the farm bill 
biobased requirements. At that meeting, officials from the Office of 
Energy Policy and New Uses (New Uses office) stated that they did not 
have a written plan for this work, although the work had been ongoing 
for nearly a year. Approximately 9 months later, at our exit meeting 
with USDA officials in February 2004, officials from the New Uses 
office provided us a draft document dated June 2002 as evidence of 
their planning. In our view, this document falls far short of being a 
comprehensive plan for completing this work, as discussed on pages 27 
to 28 of the draft report (still pp. 27 to 28). New Uses staff neither 
mentioned the existence of an "adaptive plan composed of several parts" 
during our work--May 2003 through February 2004--nor did they provide 
us documentation of this plan. In contrast, another USDA office, the 
Office of Procurement and Property Management (Procurement office), 
developed a comprehensive, written plan for the completion of its 
limited portion of the biobased work, which it provided to us in 
January 2004, soon after it identified funds to begin this work.

5. After officials of the New Uses office told us in May 2003 that they 
did not have a written plan, we asked these officials if they had 
developed a list of tasks and associated milestones for their work. 
These staff indicated they had not done so, but would create this list 
for us. At the time, these staff indicated it would take them 2-3 weeks 
to develop this information. We received this timeline about 3 weeks 
later, in early June 2003.

6. Other than the plan prepared by the Procurement office for its 
limited portion of the work, we have seen no evidence that USDA--
specifically the New Uses office--has a comprehensive, written plan for 
completing this work.

7. We agree that in developing a plan it is not possible to anticipate 
every exigency. However, agencies frequently prepare "formal 
definitive" plans without being able to anticipate every possible 
exigency, including planning documents related to the Government 
Performance and Results Act, such as strategic and annual performance 
plans, and planning documents related to the day-to-day activities of 
agencies, such as the implementation of programs, legislative 
initiatives, and other activities. USDA appears to draw a distinction 
between consultations and planning--that consultations must precede 
planning. We believe that the need for consultations, including how 
these consultations will be done and documented, should be addressed 
along with other considerations in a comprehensive, written plan for 
completing the work needed to fulfill the farm bill biobased 
requirements. We note that the Procurement office addressed the need 
for consultations in the management plan it prepared for completing its 
portion of the biobased work.

8. On page 28 of the draft report (still p. 28), we state that USDA 
provided us a list of work activities indicating that it conducted 
external consultations with other agencies during the summer and fall 
of 2002. During our work, we discussed coordination issues with the 
agencies cited by USDA, as noted on page 26 of the draft report (now 
pp. 25 to 26). In light of comments received from these other agencies 
on relevant excerpts of the draft report, the report has been clarified 
to identify some of the concerns these agencies cited.

9. On pages 26 to 27 of the draft report (now p. 26), we state that the 
New Uses staff reports to the Chief Economist in periodic staff 
meetings and that this official periodically briefs the Secretary of 
Agriculture. The report has been clarified to reflect the frequency of 
these meetings and other reporting cited by USDA. However, we continue 
to believe that without a comprehensive, written plan for completing 
the biobased work, it is difficult for managers to put into context the 
relative progress being reported, to identify needed adjustments, and 
to hold accountable the officials responsible for the work's 
completion.

10. The draft report does not suggest that there were long periods when 
work was not progressing on the implementation of the biobased 
procurement program. However, the draft report does raise issues on 
whether this work has progressed efficiently in the absence of a 
comprehensive, written plan for its completion and a commitment of 
sufficient staff and financial resources and management attention.

11. The report has been adjusted to make clear that the delay in 
receiving assistance from another office to help draft the Federal 
Register notice did not prevent other aspects of the work from 
proceeding.

12. On page 28 of the draft report (still p. 28), we state USDA 
provided us a list of work activities indicating that it conducted 
external consultations with other agencies during the summer and fall 
of 2002.

13. On page 44 of the draft report (now p. 43), we state that most of 
our audit work was done prior to USDA's publication of its proposed 
rule in December 2003. This was a function of our need to be responsive 
to our requester's time frames for completing the work and delays in 
USDA's issuance of the proposed rule. However, subsequent to the rule's 
publication, we also obtained relevant information and views from some 
contacts, including commentary on the proposed rule posted in 
newsletters or on Web sites of organizations such as the Biobased 
Manufacturers Association. In addition, we attended the public meeting 
held on January 29, 2004, at USDA headquarters in Washington, D.C., in 
which stakeholders orally offered comments on the rule.

14. The public comment period closed on February 17, 2004. USDA is 
currently analyzing and summarizing these comments. Eventually, USDA 
will discuss these comments in its final rulemaking for the biobased 
procurement guidelines.

15. The report does not criticize the testing of life-cycle cost 
analysis and environmental and health effects as part of the proposed 
rule. The report reflects the views of a variety of relevant 
stakeholders regarding this and other testing issues. In a number of 
cases, these stakeholders offered negative or critical views, or 
otherwise expressed concerns. The report accurately reflects these 
views.

16. In reviewing a copy of the Senator's letter, we also note that he 
expressed several concerns. For example, he stated that USDA is many 
months behind the schedule Congress laid out for biobased product 
purchasing in the farm bill. Regarding testing, the Senator said that 
the BEES model should probably not be the only model allowed or 
required for life-cycle analysis of biobased products; he noted that 
the statute does not require it and that agencies themselves could 
determine which tests are necessary and incorporate them into their 
procurement guidelines. In addition, the Senator said that this 
information would be of little value to procurement agents if they do 
not have comparable life-cycle analysis results for petroleum-based 
counterparts. Furthermore, the Senator expressed concerns about the 
potential cost of testing on small and large businesses, suggested that 
biobased content be self-certified, and noted that agencies could 
require BEES analysis or other third-party testing in the event it is 
warranted, such as when the veracity of a manufacturer's claim is in 
dispute.

17. The report accurately states that USDA has fallen short in 
implementing the farm bill biobased purchasing requirements. The report 
accurately describes the content of the proposed rule, including what 
is addressed specifically in the proposed guidelines or in the preamble 
to these guidelines. It is factual that the proposed guidelines do not 
designate any items for preferred procurement or include the voluntary 
labeling program.

18. The report states the time likely to be required to designate the 
items that USDA identified in the preamble to the proposed rule. This 
information is based on a timeline furnished by USDA.

19. On pages 18 to 22 of the draft report (now pp. 18 to 21), we 
accurately reflect the views of some agency officials who believe that 
the advantages of biobased hydraulic fluids and lubricants are (1) the 
reduced cost and effort of cleanups of product spills, as compared with 
fossil resource-based alternatives and/or (2) the ease of disposal 
because these products are biodegradable. However, as noted on page 22 
(fnt. 29) of the draft report (now p. 21, fnt. 31), we discussed these 
views with EPA. The Director of EPA's Oil Spill Staff stated that the 
agency had not made a specific ruling regarding how spills of biobased 
hydraulic fluids and lubricants should be handled; in the absence of a 
ruling, this official said that EPA does not make a distinction between 
spills of these biobased products and their petroleum-based 
alternatives.

[End of section]

Appendix VI: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Lawrence J. Dyckman (202) 512-3841 James R. Jones, Jr. (202) 512-9839:

Acknowledgments:

In addition to the individuals named above, Jeanne Barger, Rani 
Chambless, and Carol Herrnstadt Shulman made key contributions to this 
report. Important contributions were also made by Oliver Easterwood, 
Lynn Musser, Anne Stevens, Amy Webbink, and Linda Kay Willard.

[End of section]

Related GAO Products:

Federal Procurement: Government Agencies Purchases of Recycled-Content 
Products. GAO-02-928T. Washington, D.C.: July 11, 2002.

Federal Procurement: Better Guidance and Monitoring Needed to Assess 
Purchases of Environmentally Friendly Products. GAO-01-430. 
Washington, D.C.: June 22, 2001.

Solid Waste: Federal Program to Buy Products With Recovered Materials 
Proceeds Slowly. GAO/RCED-93-58. Washington, D.C.: May 17, 1993.

Solid Waste: Progress in Implementing the Federal Program to Buy 
Products Containing Recovered Materials. GAO/T-RCED-92-42. Washington, 
D.C.: Apr. 3, 1992.

FOOTNOTES

[1] Biobased products--also known as bioproducts--may include 
adhesives, building materials, carpet backing, cleaners, degreasers, 
insulation, fuel additives, inks, lubricants, paints, plastics, and 
solvents. Corn, soybeans, vegetable (plant) oils, and wood are the 
commodities most often used in the manufacture of biobased products. 

[2] See 7 U.S.C.  8102. 

[3] Biobased products are generally considered environmentally 
preferable products. Such products may have a lesser or reduced adverse 
effect on human health and the environment when compared with competing 
products. For example, biobased products are manufactured from 
renewable biological resources and are generally biodegradable when 
disposed. In contrast, products made from nonrenewable fossil 
resources, such as petroleum, generally create more adverse 
environmental impacts such as air and water pollution and global 
warming. 

[4] According to USDA, a designated "item" will consist of similar 
biobased products made by one or more manufacturers. For example, a 
designated item could be hydraulic fluid that is described by certain 
characteristics, such as a minimum biobased content. The biobased 
products associated with this item would include branded hydraulic 
fluids that have similar characteristics. 

[5] Federal agencies must comply with the biobased procurement 
requirements for any purchase of an item costing more than $10,000 or 
where the quantity of such items or similar items purchased or acquired 
in the preceding fiscal year was $10,000 or more. The farm bill 
provides that an agency may decide not to procure a biobased item if 
the agency determines that the item (1) is not reasonably available 
within a reasonable period of time, (2) fails to meet the performance 
standards set forth in the applicable specifications or fails to meet 
the reasonable performance standards of the procuring agency, or (3) is 
available only at an unreasonable price. 

[6] The Commodity Credit Corporation is a government-owned corporation 
within USDA. 

[7] Life-cycle analysis includes the determination of the costs of 
producing, using, and disposing of a product as well as its 
environmental impact.

[8] Two of these agencies, DOD and GSA, have dual roles--first, as 
procuring agencies subject to the farm bill biobased purchasing 
requirements and second, as major suppliers of goods and services to 
other federal agencies. Specifically, Defense Logistics Agency and GSA 
maintain central stock inventories and vendor supply lists for use by 
all federal agencies. 

[9] The agreement between NIST and USDA is an interagency agreement. 
The one between Iowa State University and USDA is a cooperative 
agreement.

[10] Farm bill biobased procurement requirements exclude the 
procurement of motor vehicle fuels and electricity.

[11] The farm bill defines "biomass" as any organic material that is 
available on a renewable or reoccurring basis, including agricultural 
crops; trees grown for energy production; wood waste and wood residues; 
plants (including aquatic plants and grasses); residues; fibers; animal 
wastes and other waste materials; and fats, oils, and greases 
(including recycled fats, oils, and greases).

[12] USDA's proposed guidelines exclude biobased products originating 
from a mature market. Therefore, wood products such as lumber or 
plywood made from traditionally harvested forest materials are excluded 
from the preferred procurement program. However, other biobased 
products made from wood waste or wood residues are included in the 
procurement program.

[13] Fossil resources, such as oil, coal, and natural gas, are formed 
in the earth from plant and animal remains through natural processes 
that take millions of years. In contrast, biomass is a renewable 
resource that can be replenished with each new growing season.

[14] In general, our references to DOE in this section of the report 
can be attributed to Industrial Bioproducts: Today and Tomorrow, July 
2003, a study prepared by Energetics, Incorporated under contract to 
DOE. This study was co-authored by DOE staff and draws on a number of 
sources, including prior studies issued by DOE.

[15] Currently, the United States imports about 65 percent of the oil 
it uses. According to DOE, this heavy dependence on imported oil 
negatively affects the U.S. trade balance and exposes our economy to 
potential disruptions in supply. About 16 percent of all petroleum used 
in the United States is used in producing industrial and consumer 
products. The remainder is used in producing various fuels and 
distillates.

[16] According to remarks made by the President in 1999, if the 
nation's use of biobased products, including biofuels such as ethanol 
and biodiesel, triples by 2010, this growth would create as much as $20 
billion annually in new income for farmers and rural communities by 
that year. In addition, according to DOE, this growth would create 
about 50,000 new high technology jobs in small processing plants in 
rural America and up to 130,000 such jobs in biopower, bioproducts, and 
biofuels industries.

[17] Photosynthesis is the chemical process by which carbohydrates are 
formed in the chlorophyll-containing tissues of plants exposed to 
light. Carbohydrates are compounds consisting of carbon, hydrogen, and 
oxygen that include sugars, starches, and celluloses. In general, 
plants utilize carbon dioxide from the atmosphere and water from the 
ground in the photosynthesis process.

[18] According to DOE, the potential for reducing carbon released to 
the atmosphere through the substitution of biobased products for 
petroleum-based products is about 3.5 million metric tons of carbon 
equivalents annually by 2010. In essence, this switch includes 
substituting the energy stored in carbohydrate molecules from a 
renewable source (plants) for the energy stored in hydrocarbon 
molecules from a nonrenewable source (fossil resources such as 
petroleum) and would represent an increasing reliance on biology in 
lieu of geology to meet the nation's resource needs.

[19] Executive Order 13101, Greening the Government Through Waste 
Prevention, Recycling, and Federal Acquisition (Sept. 14, 1998).

[20] Executive Memorandum to the Secretary of Agriculture issued with 
Executive Order 13134, Developing and Promoting Biobased Products and 
Bioenergy, (Aug. 12, 1999).

[21] Executive Order 13101,  504.

[22] U.S. General Accounting Office, Federal Procurement: Better 
Guidance and Monitoring Needed to Assess Purchases of Environmentally 
Friendly Products, GAO-01-430 (Washington: D.C.: June 22, 2001). 

[23] The Federal Acquisition Regulation specifies rules that agencies 
must follow in their procurement actions. On June 6, 2000, the Civilian 
Agency Acquisition Council and the Defense Acquisition Regulations 
Council published a final rule amending the Federal Acquisition 
Regulation to implement Executive Order 13101. 65 Fed. Reg. 36016 
(2000). 

[24] Guidelines for Designating Biobased Products for Federal 
Procurement, 68 Fed. Reg. 70730 (proposed Dec. 19, 2003).

[25] USDA groups the items discussed in the preamble in the following 
categories: (1) adhesives; (2) construction materials and composites; 
(3) fibers, paper, and packaging; (4) fuel additives; (5) landscaping 
materials, compost, and fertilizer; (6) lubricants and functional 
fluids; (7) plastics; (8) paints and coatings; (9) solvents and 
cleaners; (10) sorbents; and (11) plant and vegetable inks. According 
to the preamble, the items and the indicated biobased content of items 
contained within the categories are based on a study conducted in 2002 
by the Concurrent Technologies Corporation for USDA's Agricultural 
Research Service. 

[26] In January 2004, USDA officials, including a New Uses official 
directly involved in the guidelines preparation, expressed doubt as to 
whether the agency can meet the anticipated issuance date--April 2004-
-for the final guidelines. These officials cited factors such as to the 
number and complexity of comments made on the proposed guidelines and 
the continued controversy and confusion as to what testing should be 
done for biobased products as reasons that may delay the final 
guidelines issuance. 

[27] As part of the model procurement program, USDA also plans to 
develop a framework for measuring the use of biobased products within 
USDA and for determining related benefits. This framework, if it is 
adopted by other procuring agencies, may provide a tracking mechanism 
for OFPP's required biennial reports to Congress on agencies' progress 
in purchasing biobased products.

[28] According to the farm bill, agency procurement programs must 
contain, at a minimum, (1) a biobased products preference program, (2) 
an agency promotion program to promote this preference program, and (3) 
an annual review and monitoring of the effectiveness of the agency's 
procurement program.

[29] The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council publish rulemakings in the Federal 
Register amending the Federal Acquisition Regulation. 

[30] In fiscal year 2003, the Agricultural Research Service received 
appropriations of $19 million for bioenergy research and $50 million 
for biobased products research. 

[31] According to a senior official in the Office of the Federal 
Environmental Executive, USDA has not coordinated with EPA regarding 
how spills of biobased hydraulic fluids and lubricants should be 
handled, including whether the clean up of these spills should be done 
any differently than spills of petroleum-based alternatives. The 
Director of EPA's Oil Spill Staff confirmed in February 2004 that USDA 
had not contacted his office to discuss this matter. According to this 
official, EPA has not made a specific ruling regarding how spills of 
biobased hydraulic fluids and lubricants should be handled. However, 
absent such a ruling, EPA does not make a distinction between spills of 
these biobased products and their petroleum-based alternatives: both 
leave a sheen on top of water and must be cleaned up. 

[32] At a meeting with USDA staff in February 2004, a New Uses official 
indicated that if given time, he could probably find examples of old e-
mails discussing coordination meetings. However, we noted that we had 
requested written documentation of these meetings during our work and 
that this official said these meetings were not documented in writing.

[33] The New Uses office is placed organizationally under the Office of 
the Chief Economist. 

[34] Management Plan for Design, Development and Deployment of USDA's 
Federal Biobased Product Preferred Procurement Program, January 9, 
2004. 

[35] In general, a comprehensive plan also would discuss the goals or 
expected outcomes of an initiative. In this case, the farm bill makes 
clear these goals or outcomes: recommend procurement practices, 
designate items for procurement, and establish programs for labeling 
and recognition.

[36] While USDA did not hire a consulting firm to implement the 
biobased provisions under the New Uses office's direction, it used 
funds authorized by the farm bill for testing to enter into cooperative 
agreements with two testing organizations to develop testing guidance 
and an information Web site for biobased products. 

[37] Pub. L. No. 103-62, 107 Stat. 285 (1993).

[38] Staff from USDA's Animal and Plant Health Inspection Service 
provided this assistance.

[39] According to USDA's Office of Budget and Program Analysis and 
relevant documents, the President's budget proposals for USDA for 
fiscal years 2003 and 2004 did not request funds specifically for 
developing the biobased procurement guidelines. However, the 
President's budget proposal for USDA for fiscal year 2005 seeks, among 
other things, an increase of $2.5 million to be used for the biobased 
procurement program. Specifically, these funds are to be used to 
designate specific groupings of biobased products for procurement by 
federal agencies, establish and maintain a products database, develop a 
product labeling system, and allow for the continued operation and 
maintenance of the procurement program, once established, on a 
governmentwide basis. 

[40] U.S. General Accounting Office, Federal Procurement: Better 
Guidance and Monitoring Needed to Assess Purchases of Environmentally 
Friendly Products, GAO-01-430 (Washington, D.C.: June 22, 2001). 

[41] According to the preamble to USDA's proposed guidelines, USDA is 
considering requiring the analysis of the life-cycle costs and health 
benefits of a product in order for the product to qualify for use of 
the "U.S.D.A. Certified Biobased Product" label.

[42] As defined in USDA's proposed guidelines, small and emerging 
private business enterprises include any private business that employs 
50 or fewer employees and has less than $1 million in projected annual 
gross revenues. 

[43] Content is determined by doing carbon testing. This testing, done 
by an accredited laboratory, is able to differentiate between "new" 
carbon derived from plant materials (carbohydrates) and "old" carbon 
derived from fossil resources (hydrocarbons). The biobased content is 
determined by the amount of carbon derived from plant materials.

[44] Performance testing, done by accredited testing organizations, 
assesses a product's performance against standards provided by the 
American Society for Testing and Materials; the International Standards 
Organization; Federal civilian or military specifications; or other 
industry sources. For example, such testing may be done on a biobased 
engine or gear oil to determine if it meets relevant standards for 
lubricity under a variety of potential operating conditions, including 
extreme heat or cold. 

[45] A life-cycle analysis (or assessment) of a product includes a 
"cradle to grave" examination of the product's economic and 
environmental performance. Regarding economic performance, the costs of 
initial investment, replacement, operation, maintenance and repair, and 
disposal are generally included. Regarding environmental performance, 
the environmental and public health impacts of all stages in a 
product's life are usually examined, including raw material 
acquisition, manufacture, transportation, installation, use, and 
recycling and waste management.

[46] BEES is an analytic software tool for performing life-cycle 
analysis that was developed by NIST. Its initial application was for 
the evaluation of building products. BEES relies on standards 
promulgated by the American Society for Testing and Materials for 
determining economic impacts and by the International Standards 
Organization for determining environmental impacts. Economic impacts 
are expressed as total dollar costs and environmental impacts are 
indicated as an aggregate environmental performance score. BEES can be 
used to determine trade-offs between competing products. For example, 
BEES can be used to demonstrate that a short-lived, low initial-cost 
product is often not the cost-effective alternative. Instead, the 
purchase of a higher initial cost product may be justified if it is 
more durable and maintenance-free and less costly to dispose. Recently, 
under contract with USDA, NIST adapted BEES to perform life-cycle 
analysis on biobased products. For example, NIST has updated its 
database to include performance data for eight major biomass inputs 
used in manufacturing biobased products: soybeans, corn, wheat, rice, 
cotton, canola, potatoes, and wool. 

[47] According to USDA's proposed guidelines, the agency could provide 
up to 50 percent of the cost of testing a small manufacturer's product 
using BEES.

[48] U.S. General Accounting Office, Solid Waste: Federal Program to 
Buy Products With Recovered Materials Proceeds Slowly, GAO/RCED-93-58 
(Washington, D.C.: May 17, 1993).

[49] Under the Resource Conservation and Recovery Act of 1976 (42 
U.S.C.  6962), the Congress directed federal procuring agencies to 
purchase items composed of recovered materials and directed EPA to 
designate the items agencies should purchase. 

[50] U.S. General Accounting Office, Solid Waste: Federal Program to 
Buy Products With Recovered Materials Proceeds Slowly, GAO/RCED-93-58 
(Washington, D.C.: May 17, 1993). 

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