6450 Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / Rules and Regulations 

(2) Report of acreage identifying the 

geographic location and number of acres 

in the disaster-affected stand of claimed 

trees, bushes, and vines according to 

part 718 of this title; 

(3) A written estimate of the number 

of acres of trees, bushes or vines lost or 

damaged which is prepared by the 

owner or someone who is a qualified 

expert, as determined by the county 

committee; 

(4) Sufficient evidence of the loss to 

allow the county committee to calculate 

whether an eligible loss occurred. 

(c) Before requests will be approved, 

the county committee: 

(1) Must verify actual qualifying 

losses and the number of acres involved 

by on-site visual inspection of the land 

and trees, bushes or vines. 

(2) May request additional 

information and may consider all 

relevant information in making their 

determination, including their members’

own knowledge about the applicant’s 

normal operations. 

§ 1416.704 Payment calculation. 

(a) An approved eligible producer 

shall be reimbursed in an amount not to 

exceed 75 percent of the eligible costs 

for the qualifying practice. The payment 

shall be the lesser of the 75% of actual 

costs for the practice or the amount 

calculated using rates established by the 

Deputy Administrator. The costs 

permitted shall only be approved for: 

(1) Seedlings or cuttings, for trees, 

bushes or vine replanting; 

(2) Site preparation and debris 

handling within normal cultural 

practices for the type of individual 

stand being re-established and necessary 

to ensure successful plant survival; 

(3) Chemicals and nutrients necessary 

for successful establishment; 

(4) Labor to plant seedlings or cuttings 

as determined reasonable by the county 

committee; 

(5) Replacement, rehabilitation, and 

pruning; and 

(6) Labor used to transplant existing 

seedlings established through natural 

regeneration into a productive tree 

stand. 

(b) Costs for fencing, irrigation, 

irrigation equipment, protection of 

seedlings from wildlife, general 

improvements, re-establishing 

structures, windscreens and other costs 

as determined by the Deputy 

Administrator are not eligible for 

reimbursement benefits. 

(c) When lost stands are replanted, the 

types planted may be different than 

those originally planted if the new types 

have the same general end use, as the 

county committee determines and 

approves. Payments will be based on the 

lesser of rates established to plant the 

types actually lost or the cost to 

establish the eligible alternative type 

used. If the species of plantings, 

seedlings or cuttings differs significantly 

from the species lost then, except as the 

county committee determines, the costs 

may not be reimbursed. 

(d) Eligible producers may elect not to 

replant or rehabilitate the entire eligible 

stand. If so, the county committee shall 

calculate payment based on the number 

of qualifying trees, bushes or vines 

actually replanted or rehabilitated. 

(e) In addition to the prohibition in 

§ 1416.6(g), and the payment limitation 

in § 783.6(f) of this title, producers 

cannot receive duplicate benefits under 

this subpart and subpart D of this part, 

the Hurricane Citrus Disaster Program, 

for the same loss. 

§ 1416.705 Obligations of a participant. 

(a) Eligible producers must execute all 

required documents and complete the 

2005 Hurricane TAP funded practice 

within 12 months of application 

approval. 

(b) If a person was erroneously 

determined to be eligible or becomes 

ineligible for all or part of a 2005 

Hurricane TAP benefit, the person and 

successor shall refund any payment 

paid under this part together with 

interest from the date of disbursement at 

a rate in accordance with part 1403 of 

this chapter. 

(c) Participants must allow 

representatives of FSA to visit the site 

for the purpose of certifying compliance 

with 2005 Hurricanes TAP 

requirements. 

Subpart I—2005 Catfish Grant Program 

§ 1416.800 General. 

(a) CCC will administer a limited 

program to provide assistance to catfish 

producers in eligible counties. Under 

the Catfish Grant Program, CCC will 

provide grants to the State governments 

of States where eligible counties are 

located. The amount of each grant will 

be based on the total value of the catfish 

feed loss suffered in every eligible 

county in the subject state as 

determined by CCC. Available grant 

funds under this subpart and funds 

under subpart B of this part will be 

uniformly prorated to ensure that 

available funding is not exceeded. 

Catfish producers in eligible counties 

who suffered at least a 30-day catfish 

feed loss may be eligible for these funds. 

Among other conditions of these grants, 

assistance provided by a State under 

such a grant to an applicant shall not 

exceed $80,000, except for general 

partnerships and joint ventures, in 

which case assistance shall not exceed 

$80,000 times the number of members 

that constitute the general partnership 

or joint venture. 

(b) No producer may receive duplicate 

payments under this subpart and any 

other Federal programs for the same 

loss. 

Signed in Washington, DC, February 2, 

2007. 

Thomas B. Hofeller, 

Acting Executive Vice President, Commodity 

Credit Corporation. 

[FR Doc. 07–590 Filed 2–9–07; 8:45 am] 

BILLING CODE 3410–05–P 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1496 

RIN 0560–AH39 

Procurement of Commodities for 

Foreign Donation 

AGENCY: Commodity Credit Corporation, 

USDA. 

ACTION: Final rule. 

SUMMARY: This rule adopts new 

procedures to be used by the 

Commodity Credit Corporation (CCC) in 

the evaluation of bids in connection 

with the procurement of commodities 

for foreign donation. CCC is amending 

the existing regulations to provide for 

the simultaneous review of commodity 

and ocean freight offers when evaluating 

lowest-landed cost options in 

connection with the procurement of 

commodities for foreign donation. This 

rule will enhance bidding opportunities 

for potential vendors while allowing 

CCC to more efficiently acquire 

commodities. 

DATES: Effective Date: February 12, 

2007. 

FOR FURTHER INFORMATION CONTACT: 

Richard J. Chavez, United States 

Department of Agriculture (USDA), 

Farm Service Agency (FSA), Commodity 

Procurement Policy & Analysis Division 

(CPPAD), Room 5741–S, 1400 

Independence Avenue, SW., 

Washington, DC 20250; Telephone: 

(202) 690–0194; Facsimile: (202) 690–

2221; E Mail: 

Richard.Chavez@USDA.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

CCC procures agricultural 

commodities for donation overseas 

under various food aid authorities. 

These authorities include Title II of the 

Agricultural Trade Development and 


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Assistance Act of 1954 (Pub. L. 480), 

which is administered by the U.S. 

Agency for International Development 

(AID), and the Food for Progress and the 

McGovern-Dole International Food for 

Education and Child Nutrition 

Programs, which are administered by 

the Foreign Agricultural Service (FAS) 

within USDA. 

Currently, CCC follows a two-step 

ocean freight bid evaluation process in 

connection with the procurement of 

commodities for foreign donations. 

First, CCC issues a public invitation 

soliciting bids for the sale of 

commodities and requests that ocean 

carriers provide indications of available 

freight rates to CCC. These 

‘‘indications’’ of rates are not offers to 

CCC. In fact, CCC does not contract for 

ocean transportation for the donated 

commodities. Ocean transportation 

contracting is done by the Cooperating 

Sponsors (grantee organizations or 

foreign governments receiving the 

commodities) or by AID in the case of 

some Title II, Pub. L. 480 shipments. 

At this point, CCC evaluates 

commodity bids together with the 

freight rate indications to identify the 

combination which would most likely 

result in the lowest-landed cost, i.e., the 

lowest combined cost of commodities 

and freight to destination. CCC will 

purchase the commodities to be donated 

overseas on that basis. Lowest-landed 

cost is calculated on the basis of U.S.- 

flag rates for that quantity of the 

commodities being purchased that is 

determined necessary and practical to 

meet cargo preference requirements, i.e., 

the tonnage to be shipped on U.S.-flag 

vessels. Although CCC does not contract 

for freight, the freight costs are borne by 

the U.S. Government from the same 

accounts as the commodity costs. 

Therefore, purchasing on the basis of 

lowest-landed cost will reduce outlays 

and maximize the use of funds. 

CCC’s commodity purchase 

determines the point at which the 

commodity is delivered to the carriers. 

However, as stated above, the freight 

rates used for this lowest-landed cost 

evaluation are not firm, fixed offers. 

Therefore, a second step is necessary 

that involves the Cooperating Sponsor 

or AID issuing invitations for firm 

freight offers. CCC will notify the 

Cooperating Sponsor(s) or AID of the 

location of the commodity as 

determined in its commodity bid 

evaluation and the Cooperating Sponsor 

or AID will issue ocean freight 

invitations that will lead to actual 

freight bookings by the Cooperating 

Sponsor or AID on firm, fixed ocean 

rates. 

This two-step process has been in 

place for many years and was designed 

at the time that processed commodities 

were shipped at ocean carrier tariff rates 

that could be readily identified. Now, as 

rates are ‘‘submitted rates’’ and not tied 

to tariffs the process is exceedingly 

cumbersome and time-consuming, 

typically requiring 80 hours each month 

to analyze the first-step indications. 

Additionally, the process does not 

guarantee that commodities will be 

actually purchased and shipped on the 

basis of lowest-landed cost. One reason 

for this is that the U.S. Maritime 

Administration (MARAD), within the 

Department of Transportation, 

prioritizes U.S.-flag ocean service for 

purposes of cargo preference and 

assigns a higher priority to service that 

uses only U.S.-flag vessels to the final 

discharge point. 

The current two-step process often 

results in commodities being purchased 

at locations based upon indications of 

service available from U.S.-flag carriers 

that have a lower priority. These port 

locations may not be cost-effective for 

the higher priority vessels, which can 

then displace the lower priority vessels 

and secure the cargo, often at a higher 

rate. 

This rule will add clarity to the 

commodity bid evaluation process by 

eliminating the two-step process. A 

major constraint to revising this twostep process has been that computer 

resources available to CCC have been 

unable to analyze the large number of 

variables that comprise modern 

government commodity procurements 

and the complexities of cargo preference 

compliance. These include the many 

contract priorities that are mandated by 

law as well as the volume of possible 

commodity and freight cost variables 

that result from a national bidding 

system. CCC is now updating its 

computer bid-evaluation system to be 

able to accommodate a more unified 

one-step bid evaluation. The 

procurement for commodities using 

firm, fixed ocean rates to determine 

lowest-landed cost would be the most 

efficient method of procurement. Under 

such a system, the cargo preference 

requirements would be determined 

initially and not subject to a change of 

carriers. This should reduce the ocean 

freight costs considerably because the 

tonnage would be consolidated by the 

carriers’ bids and by allowing lowestlanded cost and cargo preference 

requirements to determine the U.S. 

delivery points. The delivery time from 

call forward issuance to delivery abroad 

could be reduced because the current 

freight evaluation process would be 

streamlined. 

The new procedures would apply to 

processed and bulk commodities and 

cover the assistance programs identified 

above. Under the one-step process, CCC 

would issue invitations for commodity 

bids and Cooperating Sponsors or AID 

would issue separate invitations for 

freight offers at approximately the same 

time. Freight invitations may call for 

bids to be submitted to the donee 

organization or AID via an Internetbased bid entry system maintained by 

CCC approximately 3 days prior to the 

time for receipt of commodity bids. 

Such a process would speed data input 

and evaluation as compared to the 

transmittal of written offers. Offers of 

commodities and freight would be 

invited on a ‘‘bid-point’’ basis, i.e., a 

point where the transfer of care and 

custody of the commodity from the 

vendor to the ocean carrier takes place. 

This point of transfer may include one 

or more terminals included under the 

specific bid point designation. CCC 

believes this specificity is desirable 

because a more general offer that 

designates a port area can have 

additional transfer costs once a specific 

terminal is named. CCC should be able 

to identify these extra costs at the time 

the bids are evaluated as it may impact 

on true lowest-landed cost calculations. 

The submitted freight offers will be 

reviewed by the donee organization, 

AID, and/or USDA prior to bid 

evaluation in order to determine the 

availability of service for commodities 

and destinations. Furthermore, the onestep bid evaluation process will be more 

efficient because ocean carriers are 

expected to offer quantity increments 

that are the most economical for them. 

After commodity offers are received, 

CCC would evaluate the offers on the 

basis of lowest-landed cost by a 

comparison with offered freight rates. 

CCC would award the commodity bid 

on that basis and notify the Cooperating 

Sponsor of the bid accepted. The 

Cooperating Sponsor would be required 

to book freight at the rate CCC used for 

the lowest-landed cost determination, or 

a lower rate, except in circumstances 

where, in the opinion of the Contracting 

Officer and the applicable program 

agency’s representative, extenuating 

circumstances (such as internal strife at 

the foreign destination or urgent 

humanitarian conditions threatening the 

lives of persons at the foreign 

destination) preclude such awards, or 

efficiencies and cost-savings lead to the 

use of different types of ocean services 

such as multi-trip voyage charters, 

indefinite delivery/indefinite quantity 

(IDIQ), delivery Cost and Freight (C & 


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F), delivery Cost Insurance and Freight 

(CIF), and indexed ocean freight costs. 

Summary of Public Comments 

On December 16, 2005, CCC 

published a proposed rule, Procurement 

of Commodities for Foreign Donation, in 

the Federal Register (70 FR 74717–

74721). The proposed rule proposed 

new procedures to be used by CCC in 

the evaluation of bids in connection 

with the procurement of commodities 

for foreign donation. The rule provided 

a 30-day public comment period ending 

January 17, 2006. 

In response to public requests, CCC 

reopened and extended the comment 

period for 45 days to March 9, 2006, via 

a document published in the Federal 

Register January 23, 2006 (71 FR 3442). 

Further, CCC determined that a public 

meeting would be held at USDA on 

February 21, 2006, to provide for open 

discussion on the proposed rule. The 

notice of a public meeting was 

published in the Federal Register on 

February 8, 2006 (71 FR 6399–6400). 

On April 7, 2006, a supplemental to 

the proposed rule was published in the 

Federal Register to clarify two points 

(71 FR 17767–17768). First, CCC 

specifically recognized its obligations 

under the cargo preference legislation of 

the Merchant Marine Act, 1936. 

Secondly, CCC clarified the 

‘‘extenuating circumstances’’ that may 

preclude awards on the basis of lowest 

landed cost. CCC also reopened and 

extended the comment period to May 8, 

2006, to accord interested parties to 

comment thereon. 

CCC received a total of 46 responses 

on the proposed rule, including the 

supplemental to the proposed rule. 

Among the respondents were steamship 

lines or their legal representatives, 

ports, vendors of commodities, and 

trade and industry groups. A few of the 

respondents submitted more than one 

response, reiterating their points made 

from an earlier submission or 

addressing new points. Many of the 

responses received addressed multiple 

points; therefore, the number of 

comments discussed in this rule 

exceeds the number of actual responses 

received. 

The public comments received in 

response to the proposed rule, and 

CCC’s response, are discussed below. 

While we considered the comments and 

suggestions received and understand the 

concerns and opinions expressed by the 

respondents, CCC did not change the 

final rule. This rule gives CCC necessary 

flexibility and is consistent with 

statutory requirements. Therefore, the 

proposed rule, including the 

supplemental to the proposed rule, is 

adopted as final, without change. 

General Comments 

Fourteen of the comments received 

requested an extension of the original 

30-day public comment period. CCC 

believed that the requests for additional 

time to comment on the proposed rule 

were reasonable and therefore on 

January 23, 2006, reopened and 

extended the comment period to March 

9, 2006 (71 FR 3442). Two of the 

comments received after January 23, 

2006, supported the extended comment 

period. Another comment was grateful 

for the extension in that it permitted 

time for a public meeting to discuss the 

proposed rule. On April 7, 2006, CCC 

again reopened and extended the 

comment period to May 8, 2006 (71 FR 

17767–17768). 

Nine of the comments received 

supported the proposed rule. Many of 

these agreed that the one-step 

procurement process, using firm, fixed 

freight rates, would streamline CCC’s 

procurement process making the actual 

purchases more cost efficient. CCC 

agrees. 

One respondent noted that they were 

very pleased with the outcome of an 

interagency meeting on the proposed 

rule and that a consensus would be 

reached among the agencies before 

publication of the final rule. The 

agencies involved have met and have 

agreed that the one-step process will 

work efficiently for all interested 

parties. 

Three comments stated that the 

proposed rule warranted a significant 

designation under Executive Order (EO) 

12866 due to the expected economic 

impacts. However, the proposed rule 

was issued in conformance with EO 

12866 and was determined to be not 

significant; therefore, it was not 

reviewed by the Office of Management 

and Budget (OMB). The projected 

economic impact from the 

implementation of a one-step bid 

evaluation process will arise, in part, 

from the savings that are derived from 

a truly ‘‘lowest landed’’ cost solution to 

commodity procurement. Under the 

current two-step process, as described 

in the background section of the rule, 

the indicative rates provided by the 

carriers are not firm—and the actual 

rates offered firm once the commodity is 

already purchased at a location, may 

bring into that procurement entirely 

different economics. This usually 

results in higher overall costs in the 

combination of freight and commodity. 

A one-step process should result in 

freight savings, derived in a more 

efficient manner in which ocean carriers 

are selected, but not, however, in 

avoidance of cargo preference. In 

addition, while the proposed rule was 

designated not significant under EO 

12866, this final rule was designated 

significant and was reviewed by OMB. 

Two comments stated that the 

Regulatory Flexibility Act was 

applicable to the proposed rule. The 

Regulatory Flexibility Act (5 U.S.C. 603) 

only requires regulatory flexibility 

analysis when an agency is required to 

publish a proposed rule by the public 

notice and comment provisions of the 

Administrative Procedure Act (5 U.S.C. 

553). Section 553(a)(2) of the Act 

provides an exemption for matters 

relating to contracts. Therefore, by law, 

CCC was exempt from the Regulatory 

Flexibility Act provisions. Although not 

required by the APA to publish a 

proposed rule, CCC published the 

proposed rule because it is USDA policy 

under a memorandum published by the 

Secretary of Agriculture on July 24, 

1971 (36 FR 13804) to give notice of 

proposed rulemaking and invite the 

public to participate in rulemaking even 

where not required by law. In addition, 

CCC did conduct a Regulatory 

Flexibility Analysis for this final rule 

and it is available with the cost-benefit 

analysis from the contact person 

indicated above. 

One comment stated that the 

proposed rule would significantly alter 

the administration of small business and 

Javits-Wagner-O’Day programs in the 

Department. Commodity procurements 

under this rule will comply with 

Federal Acquisition Regulation (FAR) 

and Small Business Utilization 

requirements. 

One comment recommended that CCC 

incorporate Incoterms and other 

industry-standard terminology in food 

aid programs. The contract terms for 

ocean freight are determined by the 

booking agreement with the cooperating 

sponsor and not within the scope of this 

rule. 

Five comments requested that a 

working session and/or meeting be 

convened as soon as possible with 

member U.S. ship operating companies 

and other interested parties to learn 

more and share ideas about the 

proposed rule and its impact on the 

maritime industry. Two other comments 

added that the proposed rule and the 

Freight Bid Entry System (FBES) should 

be made part of a cooperative effort that 

involves all interested parties, including 

AID and MARAD. Over the past few 

years as the one-step procurement 

process was under development, USDA 

held numerous public meetings to share 

information on the one-step 

procurement process, including FBES. 


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These included five meetings in 2005, 

starting with two in March, followed by 

a meeting in April, May and June. On 

February, 21, 2006, CCC held a public 

meeting to discuss the proposed rule 

with all interested parties. Additionally, 

a prototype of FBES was presented at 

the International Food Aid Conference 

(IFAC) held in Kansas City in March, 

2006. During that time, all interested 

parties were given the opportunity to 

view the system and ask questions. CCC 

and AID have had numerous meetings 

with MARAD over the past several years 

as they have moved toward a one-step 

procurement process. These meetings 

have focused in great detail on how the 

software would work. Meetings are 

scheduled and agencies are working 

cohesively to achieve consensus on the 

new system implementation. 

One comment stated that the 

proposed rule change had not been 

analyzed and/or explained in enough 

detail to allow stakeholders to assess the 

impact on their business, including 

changes in commodity port distribution 

and overall program cost benefits. Five 

other comments stated that not enough 

information was provided on the onestep procurement process, including but 

not limited to mechanical, 

programmatic and administrative 

changes and limitations, making it 

difficult to provide meaningful 

comments. Another comment, while 

supportive of a modernized system, 

stated that the proposed change in the 

procurement process deserves a full and 

open review by all interested parties 

prior to its implementation. This was 

shared and supported by another 

comment. 

CCC has held numerous public 

meetings to share information on the 

one-step procurement process, 

including FBES, and has received 

extensive comments and 

recommendations from industry. Also, 

CCC intends to conduct FBES training 

for steamship lines and vendors in 

Washington, DC, and Kansas City, 

respectively. Training will be held to 

accommodate these parties during the 

testing period. 

One comment expressed concern that 

implementation of the FBES system 

could result in programmatic errors and 

procedural problems. Another comment 

added that the FBES system will need 

to be highly dependable. One other 

comment added that they were 

uncertain as to when FBES testing 

would take place and suggested that a 

working group be established to develop 

a protocol for the testing. CCC 

recognizes the importance of a highly 

dependable system. To help identify, 

resolve and prevent programmatic errors 

and procedural problems, CCC will 

continue to conduct system testing prior 

to implementation of the one-step 

procurement process. FBES testing is 

underway and will continue through 

late-2006. CCC is conducting system 

testing on small, medium, and large 

invitations. 

Four comments urged that a side-byside comparison of the current two-step 

procurement process versus the 

proposed one-step procurement process 

be run with results made available to 

the industry for evaluation and input 

prior to implementation. During agency 

meetings, it was agreed that CCC would 

conduct extensive internal testing 

followed by a period of training and 

opportunities for the external users of 

the system to gain experience using the 

system prior to implementation. 

One comment stated that it would be 

very helpful for the industry to view 

some kind of sensitivity analysis or 

report which addresses how the 

constraints placed in the transportation 

part of the bids impacted the solution. 

The constraints that will be entered by 

the commodity vendors in the 

commodity bids, by the ocean carriers 

in ocean freight bids, the ports for port 

capacity, and KCCO for small business 

utilization or the MSA–17 (Great Lakes) 

requirements are absolute. All of these 

constraints will likely affect the contract 

and ocean freight awards as the system 

reviews literally billions of calculations. 

One comment stated that FBES did 

not address two major concerns raised 

by cooperating sponsors. The first 

concern was the length of time required 

from the time the commodity is 

requested until it is available for 

shipment. The second concern was that 

the procurement process is built around 

a broad production schedule rather than 

the needs of the program for a timely 

arrival of the commodities in-country. 

The implementation of the one-step 

procurement process will immediately 

reduce the commodity time-line by two 

weeks. Additional improvements may 

be realized as we are able to take 

advantage of the system’s capabilities. 

The issue of production schedules is a 

reality the Agency acknowledges. The 

new system will allow requests for food 

aid commodities to be handled more 

efficiently, both for domestic operations 

and for transit to the destination. 

One comment stated that it was not 

clear how a forwarding agent would be 

able to access FBES, generate reports, 

download data, or determine if all offers 

submitted were reviewed for 

responsiveness. The system will be 

accessible to forwarding agents and 

information can be downloaded. An 

opportunity for training on the new 

system will be offered to freight 

forwarders. 

One comment stated that it would be 

improper for CCC to superimpose a new 

set of rules on the procurement process 

without identifying the terms and 

substance of the rule, its operational 

relationship to related regulations, and 

its impact on stakeholders. The 

preamble outlines the process and 

explains the efficiencies that are 

expected to be realized with the 

implementation of the rule. The desire 

to identify the impact on the 

stakeholders and to receive input on the 

design of the system was the impetus to 

hold the open meetings outlined in the 

preamble. The majority of suggestions 

and concerns expressed in these 

meetings were incorporated into the 

system, or are planned to be 

incorporated in future releases. 

One comment addressed the software 

development and testing process, 

recommending that a MARAD 

originated cargo preference flow chart 

be incorporated; MARAD be designated 

as sole authority to validate cargo 

preference requirements and to 

authorize related system software 

changes; linear programs provide the 

optimal solution and a sensitivity 

report; and system testing be open and 

transparent to all interested parties. All 

agencies involved will reach consensus 

prior to implementing the system. 

Further, all interested parties will have 

the opportunity to be trained and 

experiment with the system prior to 

implementation. 

Two comments noted that the 

proposed rule was only a piece of a 

much broader and complicated mosaic 

of statutes and regulations and must be 

considered in conjunction with these 

statutes and regulations. CCC intends to 

administer any new procurement 

system in a manner consistent with its 

obligations under the current laws and 

regulations governing the procurement 

of commodities for foreign donation, 

including meeting cargo preference 

requirements. 

One comment stated that the 

proposed rule did not explain how it 

would add clarity to the process, the 

basis for new incentives to 

consolidation of the carriers’ bids, the 

rationale behind the one-step process 

being more efficient due to ocean 

carriers expected to offer quantity 

increments most economical for them, 

and how elimination of one of the 

monthly load periods will reduce 

delivery times. The proposed rule adds 

clarity to the commodity bid evaluation 

process by allowing for the 

simultaneous review of commodity and 

ocean freight offers when evaluating 


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lowest-landed cost options in 

connection with the procurement of 

commodities for foreign donation. The 

consolidation of cargo will inherently 

achieve improved efficiencies due to 

economies of scale. There is the 

potential to reduce the delivery time by 

two weeks due to the elimination of the 

need for a second round of ocean freight 

solicitation, offering, and bid 

evaluation. 

Three comments concluded that the 

rule would not seem to accommodate 

the flexibility and transparency required 

by carriers to refine their bids. The new 

system, as with any procurement system 

that awards based on firm fixed offers, 

will require participants to make the 

offers as competitive as possible, and 

will maintain a firm equitable 

environment with all information stated 

in the solicitation stages. 

One comment expressed concerns 

that the new procedures may permit the 

return of negative business practices 

such as ‘‘blocking rates.’’ Further, the 

respondent suggested that a provision 

be adopted whereby only competitive 

rates, not cost constructed rates, be 

evaluated. The new system will evaluate 

ocean carrier offers based on the priority 

of service. Priority 1 carriers will 

compete with priority 1 carriers for such 

cargoes as necessary in order to obtain 

compliance with cargo preference 

requirements. This procurement method 

will eliminate the negative business 

practices. 

Another comment expressed concern 

that the new process would not permit 

U.S.-flag ocean carriers to link discharge 

ranges utilizing multiple Kansas City 

Commodity Office (KCCO) trade routes. 

Ocean carriers will be able to offer 

multiple discharge port ranges on one 

bid. Multiple bids may be entered if 

needed. 

Two comments express concern over 

the one-step procurement process and 

its impact on the Great Lakes set-aside. 

The one-step procurement process will 

comply with the Great Lakes mandate 

that up to 25 percent of commodities 

purchased for Title II will be considered 

for delivery to the Great Lakes. The new 

system will evaluate the same as the 

previous system with regard to the 

MSA–17 provisions for the Great Lakes. 

The bid evaluation system will calculate 

the lowest-landed cost without cargo 

preference consideration, and up to the 

25 percent maximum of the 

commodities purchased in the Great 

Lakes will be awarded to the Great 

Lakes. 

One comment noted that references in 

the proposed rule to the possible use of 

alternative procurement procedures was 

confusing. On April 7, 2006, a 

supplemental to the proposed rule was 

published in the Federal Register (71 

FR 17767–17768). The supplemental to 

the proposed rule clarified the meaning 

of alternative procurement procedures 

and when they would be utilized. The 

supplemental to the proposed rule 

provided examples for utilizing other 

than ‘‘lowest-landed cost’’ to award 

contracts for the procurement of 

commodities. The examples were 

internal strife at the foreign destination, 

or urgent humanitarian conditions 

threatening the lives of persons at the 

foreign destination. 

One comment recommended that all 

factors be accommodated in the 

determination of courses of action, 

including a single bid process that may 

impose excessive bid submission 

windows. The new system will require 

ocean carriers to offer service in the 

future because of the transit times 

required to move the commodities from 

inland locations to the domestic 

delivery points. 

Several comments addressed specific 

sections of the proposed rule. 

Section 1496.5 Consideration of Bids 

One comment noted that CCC must 

require that all vessel carriers specify 

the maximum cargo that they can 

transport under a specific invitation for 

bid. Additionally, vessels must be 

required to offer freight rates for all bid 

points from which they can provide 

service and when a properly offered 

cargo preference freight rate is used to 

establish the lowest-landed cost for a 

particular cargo transport, the 

procedures must require that the cargo 

be shipped using the carrier that offered 

the applied rate. The FBES system will 

allow ocean carriers to enter minimum 

and maximum tonnage constraints to 

their bids. 

One comment expressed concern that 

port designations under the proposed 

one-step bid evaluation process would 

include ports that could not handle both 

containerized and bulk cargoes thereby 

urging USDA to only designate ports 

that could handle and load both types 

of cargo. No carrier will be required to 

move cargo out of a port for which they 

do not bid. Carriers bid the port they 

wish to use. 

One comment added that CCC should 

continue to require commodity 

suppliers to include bid-points within 

ocean ports. Under the proposed onestep process, offers of commodities and 

freight would be invited on a bid-point 

basis, which may include one or more 

ocean ‘‘port’’ terminals under the 

specific bid point designation. CCC will 

be using the same approved ports and 

terminals that we currently use. 

Section 1496.7 Final Contract 

Determinations 

Section 1496.7(b) Combination of Bids 

One of the comments received noted 

that the proposed rule included an 

unexplained reference to the use of 

other types of ocean services. On April 

7, 2006, a supplemental to the proposed 

rule was published in the Federal 

Register to clarify ‘‘extenuating 

circumstances’’ and, in which case, the 

Contracting Officer may determine that 

such circumstances preclude awards on 

the basis of lowest-landed cost, or 

efficiency and cost savings justify the 

use of types of ocean service that would 

not involve an analysis of freight bids 

for each of CCC’s commodity purchases 

(71 FR 17767–17768). Other types of 

services may include, but are not 

limited to, multi-trip voyage charters, 

indefinite delivery/indefinite quantity 

(IDIQ), delivery Cost and Freight (C&F), 

delivery Cost Insurance and Freight 

(CIF), and indexed ocean freight costs. 

One of the comments stated that only 

American ships should deliver 

American goods. Four other comments 

received found the proposed rule 

unclear as to CCC’s adherence to 

existing cargo preference requirements. 

Another comment added that the rule 

should be part of an effort that looks at 

all pieces of cargo preference 

requirements as well as the procurement 

of commodities for foreign donation. 

CCC will, of course, comply with cargo 

preference requirements, including the 

use of U.S.-flag ships, and administer 

any new procurement system in a 

manner consistent with its obligations 

under the cargo preference legislation of 

the Merchant Marine Act, 1936. 

Three other comments stated that CCC 

needed to explain how cargo preference 

requirements will be applied and 

complied with under the proposed 

system before a final rule is published. 

Another comment was not quite sure 

how lowest-landed cost and cargo 

preference mix. The proposed system is 

about improving efficiencies in the 

commodity procurement process to 

realize saving and not about cargo 

preference. All CCC is proposing is that 

vessels actually bid and that CCC base 

its lowest landed-cost calculation on 

that bid. The cargo preference 

legislation requires that CCC use a 

certain percentage of U.S.-flag vessels to 

the ‘‘extent such vessels are available at 

fair and reasonable rates * * *.’’ CCC 

consults with MARAD as to ‘‘fair and 

reasonable rates’’ after we have vessel 

and offers and a tentative vessel fixture. 

This will not change. The proposed rule 

addresses only the process of 


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Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / Rules and Regulations 6455 

procurement up to a determination of 

‘‘lowest-landed cost.’’

Section 1496.7(c) Notification of 

Awards 

One of the comments stated that the 

new CCC procedures should require that 

commodity prices and freight rates for 

each invitation be made publicly 

available within seven days after the bid 

award and freight fixtures. The party 

submitting the accepted commodity 

procurement bid will be notified of the 

acceptance of the bid by CCC. Also, 

CCC’s Purchase Contract Awards (PCAs) 

for foreign food aid donations are 

published within seven days of an 

award on the Internet at http:// 

www.fsa.usda.gov/daco/. AID or the 

grantee organization, or its shipping 

agent, will be notified of the vessel 

freight rate used in determining the 

commodity contract award. Both FAS 

and AID publish freight awards for 

foreign food aid donations at http:// 

www.fas.usda.gov/food-aid.asp and 

http://www.AID.gov/business/ocean/ 

solicitation.logon.html, respectively. 

Executive Order 12866 

This final rule was issued in 

conformance with Executive Order 

12866. This final rule was determined to 

be significant under Executive Order 

12866 and was reviewed by OMB. A 

cost-benefit analysis was completed and 

is available from the contact person 

shown above. 

Regulatory Flexibility Act 

It has been determined that the 

Regulatory Flexibility Act is not 

applicable to this rule because CCC is 

not required by 5 U.S.C. 553 or any 

other provision of law to publish a 

notice of proposed rulemaking with 

respect to the subject matter of this rule. 

Nonetheless, a Regulatory Flexibility 

Analysis was completed and is available 

from the contact person shown above. 

Environmental Evaluation 

The environmental impacts of this 

rule have been determined to be 

consistent with the provisions of the 

National Environmental Policy Act of 

1969 (NEPA), 42 U.S.C. 4321 et seq., the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and the FSA regulations for 

compliance with NEPA, 7 CFR part 799. 

FSA concluded that the rule requires no 

further environmental review because it 

is categorically excluded. No 

extraordinary circumstances or other 

unforeseeable factors exist which would 

require preparation of an environmental 

assessment or environmental impact 

statement. 

Executive Order 12988 

This final rule has been reviewed in 

accordance with Executive Order 12988. 

The provisions of this rule preempt 

State laws to the extent such laws are 

inconsistent with the provisions of this 

final rule. 

Executive Order 12372 

This program is not subject to the 

provisions of Executive Order 12372, 

which require intergovernmental 

consultation with State and local 

officials. See the notice related to 7 CFR 

part 3014, subpart V, published at 48 FR 

29115 (June 24, 1983). 

Unfunded Mandates Reform Act of 

1995 

This rule contains no Federal 

mandates under the regulatory 

provisions of Title II of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

for State, local, and tribal governments 

or the private sector. Thus, this rule is 

not subject to the requirements of 

sections 202 and 205 of the UMRA. 

Paperwork Reduction Act 

The information collection required 

by this rule has been approved by OMB 

under the Paperwork Reduction Act of 

1995 and assigned control number 

0560–0258. 

Government Paperwork Elimination 

Act 

FSA is committed to compliance with 

the Government Paperwork Elimination 

Act, which requires Federal 

Government agencies to provide the 

public the option of submitting 

information or transacting business 

electronically to the maximum extent 

possible. CCC is updating its computer 

bid-evaluation system that would 

accommodate a more unified one-step 

bid evaluation. Freight invitations 

would call for bids to be submitted 

through a web-based entry system. 

Most of the information collections 

required by this rule are fully 

implemented for the public to conduct 

business with FSA electronically. 

However, a few may be completed and 

saved on a computer, but must be 

printed, signed and submitted to FSA in 

paper form. 

Executive Order 12612 

This rule does not have sufficient 

federalism implications to warrant the 

preparation of a Federalism Assessment. 

The provisions contained in this rule 

will not have a substantial direct effect 

on States or their political subdivisions, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

List of Subjects in 7 CFR Part 1496 

Agricultural commodities, Exports, 

Food Assistance Programs, Foreign aid, 

Government procurement. 

■ Accordingly, CCC amends 7 CFR part 

1496 as follows: 

PART 1496—PROCUREMENT OF 

COMMODITIES FOR FOREIGN 

DONATION 

■ 1. The authority citation for part 1496 

is revised to read as follows: 

Authority: 7 U.S.C. 1431(b), 1721–1726a, 

1731–1736g–2, 1736o, 1736o–1; 15 U.S.C. 

714b and 714c; 46 U.S.C. 55305 and 55314. 

■ 2. The heading for part 1496 is revised 

to read as set forth above. 

■ 3. Section 1496.1 is revised to read as 

follows: 

§ 1496.1 General statement. 

This subpart sets forth the policies, 

procedures and requirements governing 

the procurement of agricultural 

commodities by CCC to be donated for 

assistance overseas under Title II of the 

Agricultural Trade Development and 

Assistance Act of 1954 (Pub. L. 480); the 

Food for Progress Act of 1985; the 

McGovern-Dole International Food for 

Education and Child Nutrition Program; 

and any other program under which 

CCC is authorized to provide 

agricultural commodities for assistance 

overseas. 

■ 4. In § 1496.2, paragraph (a) is 

amended by removing the last sentence 

and paragraph (b) is revised to read as 

follows: 

§ 1496.2 Administration. 

* * * * * 

(b) Purchases are made to fulfill 

commodity requests received from AID 

in the administration of Public Law 480 

and from a grantee organization 

receiving commodities under the other 

authorities set forth in § 1496.1 of this 

part. 

■ 5. In § 1496.4, the first sentence is 

revised to read as follows: 

§ 1496.4 Issuance of invitations. 

From time to time, CCC will issue 

invitations to purchase or process 

agricultural products for utilization in 

the foreign assistance programs 

enumerated in § 1496.1 of this part. 

* * * 

■ 6. In § 1496.5, paragraph (b) is revised, 

paragraph (c) is removed and reserved, 

and paragraph (d) is revised to read as 

follows: 

§ 1496.5 Consideration of bids. 

* * * * * 

(b) Availability of ocean service. (1) In 

determining lowest-landed cost as 


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6456 Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / Rules and Regulations 

specified in paragraph (a) of this 

section, CCC will use vessel rates 

offered in response to invitations issued 

by AID or grantee organizations 

receiving commodities under the 

authorities set forth in § 1496.1 of this 

part. If CCC or AID, in the case of Title 

II, Public Law 480, determines that it is 

not practicable to evaluate lowestlanded cost on the basis of a competitive 

ocean freight bid process, CCC may use 

other methods of soliciting freight rates 

that USDA or AID may approve for the 

foreign assistance programs that they 

respectively administer. 

(2) In order to be considered in 

lowest-landed cost commodity bid 

evaluations, ocean freight rates must be 

submitted to grantee organizations or 

AID in response to an invitation for bids 

issued by grantee organizations or AID. 

All such freight invitations for bids 

must: 

(i) Specify a closing time for the 

receipt of written freight offers and state 

that late written freight offers will not be 

considered; 

(ii) Provide that written freight offers 

are required to have a canceling date no 

later than the last contract lay day 

specified in the invitation for bids; 

(iii) Provide the same deadline for 

receipt of written freight offers from 

both U.S. flag vessel and non-U.S. flag 

vessels; and 

(iv) Must be received and opened 

prior to receipt of written freight offers 

for the sale of commodities to CCC. The 

extent to which offered rates may be 

made public will depend upon 

regulations or guidelines applicable to 

the specific foreign assistance program 

involved. 

(3) CCC may require donee 

organizations or AID to specify in their 

freight invitations that the ocean carriers 

submit bids electronically through a 

web-based system maintained by CCC. 

In the event of any discrepancy between 

information furnished to CCC 

electronically and the written offers 

submitted to grantee organizations or 

AID, the offers submitted to the grantee 

organization or AID will prevail. Copies 

of all written freight offers received in 

response to invitations for bids must be 

promptly furnished to CCC and CCC 

may require the grantee organization or 

its shipping agent to submit a written 

certification that all non-electronic 

offers received were transmitted to CCC. 

(c) [Reserved]. 

(d) Port performance. (1) CCC may 

contact any port prior to bid evaluation 

to determine the port’s cargo handling 

capabilities, including the adequacy of 

the port to receive, accumulate, handle, 

store, and protect the cargo. Factors 

which will be considered in this 

determination will include, but not be 

limited to, the adequacy of building 

structures, proper ventilation, freedom 

from insects and rodents, cleanliness, 

and overall good housekeeping and 

warehousing practices. CCC will require 

that capacity information be submitted 

electronically by the port and or the 

terminal prior to bid evaluation. 

(2) If CCC determines that: A port is 

congested; facilities are overloaded; a 

vessel would not be able to dock and 

load cargo without delay; labor disputes 

or lack of labor may prohibit the loading 

of the cargo onboard a vessel in a timely 

manner; or other similar situation exists 

that may adversely affect the ability of 

CCC to have the commodity delivered in 

a timely manner, CCC may consider the 

use of another coastal range or port. In 

considering another combination of 

commodity offers and vessel rate offers, 

CCC will adhere as closely as possible 

to the principal of lowest-landed cost. 

* * * * * 

■ 7. Section 1496.7 is revised to read as 

follows: 

§ 1496.7 Final contract determinations. 

(a) Commodity awards. (1) Invitations 

for the procurement of commodities and 

the evaluation of bids submitted in 

response to such invitations shall be 

performed as provided in the Federal 

Acquisition Regulations (FAR) and 

Department of Agriculture’s 

procurement regulations set forth in 

chapter 4 of title 48 of the Code of 

Federal Regulations (the AGAR). 

(2) If more than one bid for the sale 

of commodities is received and more 

than one delivery point has been 

designated in such bids, in order to 

achieve a combination of a freight rate 

and commodity award that produces the 

lowest-landed cost for the delivery of 

the commodity to the foreign 

destination, CCC may evaluate bids 

submitted for the sale of commodities 

on a delivery point-by-delivery point 

basis. In such cases, all bids submitted 

with respect to a specific delivery point 

will be evaluated under the provisions 

of the FAR, AGAR, and the solicitation, 

and CCC will determine the lowest bid 

for each delivery point. 

(b) Combination of bids. CCC will 

determine which combination of 

commodity bids and bids for ocean 

freight rates result in the lowest-landed 

cost of delivery of the commodity to the 

foreign destination. CCC will award the 

contract for the purchase of the 

commodity that results in the lowestlanded cost and would be transported in 

compliance with cargo preference 

requirements under regulations 

prescribed by the Secretary of 

Transportation. The Contracting Officer 

may determine that extenuating 

circumstances preclude awards on the 

basis of lowest-landed cost, or efficiency 

and cost-savings justify use of types of 

ocean service that would not involve an 

analysis of freight bids for each of CCC’s 

commodity purchases; however, in all 

such cases, commodities would be 

transported in compliance with cargo 

preference requirements under 

regulations prescribed by the Secretary 

of Transportation. Examples of 

extenuating circumstances are events 

such as internal strife at the foreign 

destination or urgent humanitarian 

conditions threatening the lives of 

persons at the foreign destination. Other 

types of services may include, but are 

not limited to, multi-trip voyage 

charters, indefinite delivery/indefinite 

quantity (IDIQ), delivery Cost and 

Freight (C & F), delivery Cost Insurance 

and Freight (CIF), and indexed ocean 

freight costs. Before contracts are 

awarded for other than a lowest-landed 

cost, the Contracting Officer shall 

consult with the applicable program 

agencies, and set forth, in writing, the 

reasons the contracts should be awarded 

on other than a lowest-landed cost. 

(c) Notification of awards. (1) The 

party submitting the accepted 

commodity procurement bid will be 

notified of the acceptance of the bid by 

CCC. 

(2) AID or the grantee organization, or 

its shipping agent, will be notified of the 

vessel freight rate used in determining 

the commodity contract award. The 

grantee organization or AID will be 

responsible for finalizing the charter or 

booking contract with the vessel 

representing the freight rate so used. 

Signed at Washington, DC, on February 6, 

2007. 

Glen L. Keppy, 

Acting Executive Vice President, Commodity 

Credit Corporation. 

[FR Doc. 07–619 Filed 2–7–07; 4:13 pm] 

BILLING CODE 3410–05–P 


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