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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. The following list provides the names, addresses, and Web sites for sources of information on biobased products used in our work. 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. The following are GAO’s comments on the U.S. Department of Agriculture’s letter dated March 23, 2004. 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. 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. 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.

Summary: 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. 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.