Source: https://www.federalregister.gov/documents/2016/09/12/2016-21347/mcgovern-dole-international-food-for-education-and-child-nutrition-program
Timestamp: 2017-10-22 08:42:25
Document Index: 388355542

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A Rule by the Foreign Agricultural Service on 09/12/2016
This rule is effective September 12, 2016. Written comments must be received by FAS or carry a postmark or equivalent no later than October 12, 2016.
62614-62626 (13 pages)
0551-AA88
https://www.federalregister.gov/d/2016-21347 https://www.federalregister.gov/d/2016-21347
The McGovern-Dole International Food for Education and Child Nutrition Program helps support food security, child development, and education in low-income, food-deficit countries around the world. The program Start Printed Page 62615provides for the donation of U.S. agricultural commodities, as well as financial and technical assistance, to support school feeding and maternal and child health and nutrition projects. The McGovern-Dole Program is authorized in section 3107 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 1736o-1).
FAS uses the regulations in 7 CFR part 1599, McGovern-Dole International Food for Education and Child Nutrition Program, in the administration of the McGovern-Dole Program. The previous version of the regulations was published as a final rule on March 26, 2009 (74 FR 13062).
FAS is revising the McGovern-Dole Program regulations in 7 CFR part 1599 through this final rule. Many of the changes to the regulations are technical in nature and intended to improve the efficiency and effectiveness of the McGovern-Dole Program. Some of the detail that was previously included in the program regulations will now be included in the applicable notice of funding opportunity.
The more significant changes to 7 CFR part 1599 include:
(1) Updating 7 CFR part 1599 to make it clear that the guidance in 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1599, applies to awards under the McGovern-Dole Program other than awards to foreign public entities. Applicants for, and recipients of, awards under the McGovern-Dole Program must consult all three parts to be informed of all regulatory requirements. Because 7 CFR part 1599 deals specifically with the McGovern-Dole Program, the provisions of 7 CFR part 1599 will apply if they differ from the provisions of 2 CFR part 200 or part 400.
(2) Clarifying the types of entities eligible for awards under the McGovern-Dole Program and the applicability of the regulations in 7 CFR part 1599 to each type of eligible entity (7 CFR 1599.1(d)-(g) and 1599.3(a)).
In accordance with 7 U.S.C. 1736o-1(e), assistance under the McGovern-Dole Program may be provided to private voluntary organizations, cooperatives, intergovernmental organizations, governments of developing countries and their agencies, and other organizations. However, the regulations do not apply to all of these entities. The guidance in 2 CFR part 200 does not generally apply to for-profit entities, foreign public entities, or foreign organizations. According to 2 CFR 200.101(c), Federal awarding agencies may apply subparts A through E of 2 CFR part 200 to for-profit entities, foreign public entities, or foreign organizations, except where the Federal awarding agency determines that the application of these subparts would be inconsistent with the international obligations of the United States or the statutes or regulations of a foreign government.
FAS has determined not to apply 2 CFR parts 200 and 400 and 7 CFR part 1599 to foreign public entities. Therefore, they do not apply to foreign governments or their agencies or to intergovernmental organizations (such as the World Food Program), because these entities are included within the definition of a foreign public entity in 2 CFR 200.46.
FAS has determined to apply subparts A through E of 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1599, to for-profit entities and foreign organizations. Accordingly, they apply to applicants for, and recipients of, awards under the McGovern-Dole Program that are private voluntary organizations, including those that are foreign organizations; cooperatives, including those that are for-profit entities or foreign organizations; and other organizations, including those that are for-profit entities or foreign organizations, but not including intergovernmental organizations.
FAS has determined to apply subparts A through E of 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1599, to all subawards to all subrecipients under this part, except where the subrecipient is a foreign public entity or where FAS determines that the application of these provisions to a subrecipient that is a foreign organization would be inconsistent with the international obligations of the United States or the statutes or regulations of a foreign government or would not be in the best interest of the United States.
Subpart F of 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1599, applies only to awards by FAS to recipients that are private voluntary organizations, cooperatives or other organizations, but that are not for-profit entities or foreign organizations. Subpart F of 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1499, applies to subawards to subrecipients, except where the subrecipient is a for-profit entity, foreign public entity, or foreign organization. In 7 CFR part 1599, FAS sets forth other audit requirements that apply to recipients and subrecipients that are for-profit entities or foreign organizations (7 CFR 1599.18).
(3) Adding and updating definitions of terms used in the regulations and removing definitions of terms that are no longer needed (7 CFR 1599.2).
(4) Including a requirement for an applicant to include in its application the amount of funding that will be provided to each proposed subrecipient under the agreement (7 CFR 1599.4(b)(4)(iii)).
(5) Adding new and modifying existing provisions relating to cash advances and reimbursements for expenses (7 CFR 1599.6(f)).
(6) Adding new and modifying existing labeling and notification requirements applicable to the packaging, identification, source, funding, and use of the donated commodities, while allowing for the waiver of these labeling and notification requirements in exceptional circumstances (7 CFR 1599.8(d)-(h)).
(7) Updating and clarifying language requiring recipients to report on the loss of or damage to donated commodities and pursue claims in the event of loss or damage (7 CFR 1599.9 and 1599.10).
(8) Incorporating new performance monitoring and evaluation requirements (7 CFR 1599.12).
(9) Updating reporting requirements (7 CFR 1599.13).
(10) Adding a section setting forth audit requirements for recipients and subrecipients (7 CFR 1599.18). Although the audit requirements in subpart F of 2 CFR part 200 do not apply to recipients or subrecipients that are for-profit entities or foreign organizations, FAS has determined to require such recipients and subrecipients to obtain an audit, provided that they expend, during the fiscal year, a total of at least the audit requirement threshold in 2 CFR 200.501 in Federal awards. The regulations lay out two options for satisfying this audit requirement.
This rule is being issued as a final rule without prior notice and opportunity for comment. The Start Printed Page 62616Administrative Procedure Act exempts rules “relating to agency management or personnel or to public property, loans, grants, benefits, or contracts” from the statutory requirement for prior notice and opportunity for comment (5 U.S.C. 553(a)(2)). Accordingly, this rule may be made effective less than 30 days after publication in the Federal Register. However, members of the public may participate in this rulemaking by submitting written comments, data, or views. FAS will consider the comments received and may conduct additional rulemaking based on the comments. Written comments must be received by FAS or carry a postmark or equivalent no later than October 12, 2016.
Use of donated commodities, sale proceeds, FAS-provided funds, and program income.
(b)(1) The Office of Management and Budget (OMB) issued guidance on Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 Start Printed Page 62617CFR part 200. In 2 CFR 400.1, the United States Department of Agriculture (USDA) adopted OMB's guidance in subparts A through F of 2 CFR part 200, as supplemented by 2 CFR part 400, as USDA policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards.
(3) Audit requirements for recipients and subrecipients that are for-profit entities or foreign organizations are set forth in § 1599.18.
Recipient means an entity that enters into an agreement with FAS and Start Printed Page 62618receives donated commodities and FAS-provided funds to carry out activities under the agreement. The term recipient does not include a subrecipient.
(4) Performance goals for the agreement, including a list of results, with long-term benefits where applicable, to be achieved by the Start Printed Page 62619activities and corresponding indicators, targets, and time frames.
(a) If a recipient arranges for transportation in accordance with § 1599.7(b)(2), FAS will, as specified in the agreement, pay the costs of such transportation to the ocean carrier or to the recipient. The recipient must, as specified in the agreement, submit to FAS, arrange to be submitted to FAS, or maintain on file and make available to FAS, the following documents:
(c) If a recipient arranges for transportation in accordance with § 1599.7(b)(2), and the recipient uses a freight forwarder, the recipient must ensure that the freight forwarder is registered in the SAM and require the freight forwarder to submit the documents specified in paragraph (a) of this section. The recipient will ensure that the total commission or fees paid to intermediaries in the transportation procurement process will not exceed two and a half percent of the total transportation costs.
(6)(i) A recipient must return to FAS any funds advanced by FAS that have Start Printed Page 62620not been disbursed as of the 91st day after the advance was made; provided, however, that paragraphs (f)(6)(ii) and (iii) of this section will apply if the recipient submits a request to FAS before that date to roll over the funds into a new advance.
(e) A recipient must ensure that signs are displayed at all activity implementation and commodity distribution sites to inform beneficiaries that funding for the project was Start Printed Page 62621provided by the United States Department of Agriculture.
(2) A recipient must arrange for all U.S. Government markings to be obliterated or removed before the donated commodities are transferred by Start Printed Page 62622sale or donation under paragraph (f)(1) of this section.
(c) If a recipient has title to donated commodities that have been damaged or lost, and the value of the damaged or lost donated commodities is estimated to be $20,000 or less, the recipient must notify FAS in accordance with the agreement and provide detailed information about the damage or loss in the next report required to be filed under § 1599.13(f)(1) or (2).
(2) The value of a claim for damaged donated commodities will be determined on the basis of the commodity acquisition, transportation, and related costs incurred by FAS with respect to such commodities, as well as such costs incurred by the recipient and paid by FAS, less any funds generated if such commodities are sold in accordance with § 1599.9(f)(1).
(f) A recipient may sell or barter donated commodities only if such sale or barter is provided for in the agreement or the recipient is disposing of damaged donated commodities as specified in § 1599.9(f). The recipient must sell donated commodities at a reasonable market price. The recipient must obtain approval of its proposed sale price from FAS before selling donated commodities. The recipient must use any sale proceeds, interest, program income, or goods or services derived from the sale or barter of the donated commodities only as provided in the agreement.
(g) A recipient must deposit and maintain all sale proceeds, FAS-provided funds, and program income in a bank account until they are used for a purpose authorized under the agreement or the FAS-provided funds are returned to FAS in accordance with § 1599.6(f)(6). The account must be insured unless it is in a country where insurance is unavailable. The account must be interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) applies or FAS determines that this requirement would constitute an undue burden. The recipient must comply with the requirements in § 1599.6(f)(7) with regard to the deposit of advance payments by FAS.
(i) A recipient may use sale proceeds, FAS-provided funds, or program income to purchase real or personal property only if local law permits the recipient to Start Printed Page 62623retain title to such property. However, a recipient must not use sale proceeds, FAS-provided funds, or program income to pay for the acquisition, development, construction, alteration or upgrade of real property that is:
(a) A recipient must comply with the performance and financial monitoring and reporting requirements in the agreement and 2 CFR 200.327 through 200.329.Start Printed Page 62624
(4) In accordance with § 1599.18 and 2 CFR 200.501(h), a description of the applicable compliance requirements and the subrecipient's compliance responsibility. Methods to ensure compliance may include pre-award audits, monitoring during the agreement, and post-award audits.
(c) A recipient must monitor the actions of a subrecipient as necessary to ensure that donated commodities, sale proceeds, FAS-provided funds, and program income provided to the subrecipient are used for authorized purposes in compliance with applicable U.S. Federal laws and regulations and the subagreement and that performance indicator targets are achieved for both Start Printed Page 62625activities and results under the agreement.
(a) FAS will provide an opportunity to a recipient to object to, and provide information and documentation challenging, any action taken by FAS pursuant to § 1599.15. FAS will comply with any requirements for hearings, appeals, or other administrative proceedings to which the recipient is entitled under any other statute or regulation applicable to the action involved. For example, if the action taken by FAS pursuant to § 1599.15 is to initiate suspension or debarment proceedings as authorized under 2 CFR parts 180 and 417, then the requirements in 2 CFR parts 180 and 417 will apply instead of the requirements in this section. In the absence of other applicable statutory or regulatory requirements, the requirements set forth in this section will apply.
Start Printed Page 62626
[FR Doc. 2016-21347 Filed 9-9-16; 8:45 am]