Biobased Products: Improved USDA Management Would Help Agencies Comply with Farm Bill Purchasing Requirements
Published: 2004-04-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 2003--more 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, USDA's efforts to fulfill farm bill requirements have not had adequate staff and financial resources. Stakeholders GAO spoke with generally believed that USDA's proposals for testing a biobased product's 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 product's long-term costs and environmental impacts.

section_title: Letter
paragraphs: 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. 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. 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. 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; (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.
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. 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. 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); 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. 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. 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.
subsections: section_title: Background
subsections: section_title: Description of Biobased Products
paragraphs: 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. Corn, soybeans, vegetable  (plant) oils, and wood 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.
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.
section_title: Importance of Biobased Products
paragraphs: Biomass resources are naturally abundant and renewable, unlike fossil  resources. According to the DOE, 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. 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. 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. 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. 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.
section_title: Federal Efforts to Promote the Use of Biobased Products
paragraphs: 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, 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. 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. 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, 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, 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.
section_title: USDA Delay in Issuing Biobased Purchasing Guidelines Has Slowed Other Agencies’ Efforts
paragraphs: 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, 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.
subsections: section_title: USDA’s Initial Efforts Have Only Partially Met the Farm Bill Requirements
paragraphs: 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. 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. 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. 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. 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. 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.
section_title: Federal Agencies Have Procured Small Quantities of Biobased Products
paragraphs: 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.
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.
In addition to its research activities to develop new uses of agricultural  commodities for producing biobased products, 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. 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.
section_title: USDA Could Accelerate Implementation of the Biobased Procurement Program by Developing a Comprehensive Management Plan and Assigning Adequate Resources
paragraphs: 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.
subsections: section_title: Need for Better Planning and Coordination
paragraphs: 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  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. 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. 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. 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. 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, 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, 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.
section_title: Need for Additional Resources
paragraphs: 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. 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. 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.
section_title: Need for Assigning a Higher Priority
paragraphs: 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, 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.
section_title: Stakeholders Generally Agree That Some Testing of Biobased Products Is Necessary, but They Question the Need For Life-Cycle Analysis
paragraphs: 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. 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. 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.
subsections: section_title: Most Stakeholders Agree that Content and Performance Testing Are Necessary
paragraphs: 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.  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. 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.
section_title: Stakeholders Generally Question the Need for Life- Cycle Analysis
paragraphs: 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. 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. 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. 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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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. 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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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.
section_title: Appendix II: Sources for Information on Biobased Products
paragraphs: The following list provides the names, addresses, and Web sites for  sources of information on biobased products used in our work.
section_title: Appendix III: Key Provisions of USDA’s Proposed Guidelines
paragraphs: 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.
section_title: Appendix IV: Chronology of Steps Completed or Planned by USDA to Comply with the Farm Bill Requirements
section_title: Appendix V: Comments from the U.S. Department of Agriculture
paragraphs: The following are GAO’s comments on the U.S. Department of  Agriculture’s letter dated March 23, 2004.
subsections: section_title: GAO Comments
paragraphs: 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, 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. 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.
section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: 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.
section_title: Related GAO Products
paragraphs: 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.