[Federal Register Volume 64, Number 114 (Tuesday, June 15, 1999)]
[Proposed Rules]
[Pages 32156-32165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15111]



[[Page 32155]]

_______________________________________________________________________

Part IV





Department of Agriculture





_______________________________________________________________________



Foreign Agricultural Service



_______________________________________________________________________



7 CFR Part 1550



Programs to Help Develop Foreign Markets for Agricultural Commodities 
(Foreign Market Development Cooperator Program); Proposed Rule

  Federal Register / Vol. 64, No. 114 / Tuesday, June 15, 1999 / 
Proposed Rules  

[[Page 32156]]



DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1550

RIN 0551-AA26


Programs to Help Develop Foreign Markets for Agricultural 
Commodities (Foreign Market Development Cooperator Program)

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This rule proposes to revise regulations applicable to the 
Foreign Market Development Cooperator (Cooperator) Program. The 
revisions would provide more detailed regulations concerning program 
administration, including participant eligibility, the application 
review process, allocation criteria, strategic planning and goal 
setting requirements, reimbursement rules and procedures, financial 
reporting and program evaluation requirements, appeal procedures, and 
program controls. The intent of this proposal is to improve the 
effective administration of the Cooperator Program by formalizing the 
existing Cooperator Program guidelines.

DATES: Written comments must be received by July 14, 1999, to be 
assured of consideration.

ADDRESSES: Comments should be submitted to: Kent Sisson, Director, 
Marketing Operations Staff, Foreign Agricultural Service, United States 
Department of Agriculture, 1400 Independence Avenue SW, Ag Box 1042, 
Room 4932S, Washington, DC 20250-1042. Fax: (202) 720-9361, e-mail: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Kent Sisson or Denise Huttenlocker by 
phone at (202) 720-4327, by fax at (202) 720-9361, or by e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule is issued in conformance with Executive Order 
12866. It has been determined that this proposed rule would not have an 
annual economic effect in excess of $100 million; would not cause a 
major increase in costs to consumers, individual industries, Federal, 
State, or local government agencies, or geographic regions; and would 
not have an adverse effect on competition, employment, investment, 
productivity, innovation, or the ability of U.S.-based enterprises to 
compete with foreign-based enterprises in domestic or foreign markets.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. The rule would have preemptive 
effect with respect to any State or local laws, regulations or policies 
which conflict with such provisions or which otherwise impede their 
full implementation; would not have retroactive effect; and would 
require administrative proceedings before suit may be filed.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372 which requires intergovernmental consultation with State and 
local officials (see the Notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115).

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule because the Foreign Agricultural 
Service (FAS) is not required by any provision of law to publish a 
notice of proposed rulemaking with respect to the subject matter of 
this proposed rule.

Paperwork Reduction Act

    In accordance with section 3507(j) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection and 
recordkeeping requirements included in this proposed rule have been 
submitted for emergency reinstatement to the Office of Management and 
Budget (OMB). OMB has previously assigned control number 0551-0026 to 
the information collection and recordkeeping requirements. There are no 
new information collection requirements associated with this proposed 
rule. Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to penalty for 
failure to comply with a collection of information, subject to the 
requirements of the Paperwork Reduction Act, unless that collection of 
information displays a currently valid OMB Control Number. Please send 
written comments to the Office of Information and Regulatory Affairs, 
OMB, Attention: Desk Officer for Agriculture, Washington, DC 20503. 
Please also send a copy of your comments to Kent Sisson, director, 
Marketing Operations Staff, Foreign Agricultural Service, United States 
Department of Agriculture, 1400 Independence Avenue SW, Ag Box 1042, 
Room 4932S, Washington, DC 20250-1042. Fax: (202) 720-9361, e-mail: 
[email protected].
    The reporting and recordkeeping requirements associated with the 
Foreign Market Development Cooperator Program include information 
necessary to apply for the program and determine eligibility as well as 
program performance information such as financial reporting and program 
evaluation reports. FAS uses this information to manage, plan, evaluate 
and account for the proper and judicious use of public funds disbursed 
to private trade organizations. We are soliciting comments from the 
public (as well as affected agencies) concerning our information 
collection and recordkeeping requirements. We need this outside input 
to help us accomplish the following:

    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of our agency's functions, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of our estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information 
to be collected; and
    (4) Minimize the burden of the information collection on those 
who are to respond (such as through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., 
permitting electronic submission responses).

    Estimate of burden: Public reporting burden for this collection of 
information is estimated to average 20.5 minutes per response.
    Respondents: not for profit institutions and state, local, or 
tribal governments.
    Estimated number of respondents: 30.
    Estimated number of responses per respondent: 2134.
    Estimated total annual burden on respondents: 43,748 hours.
    Copies of this information collection can be obtained from: 
Information Clearance Officer, OCIO, USDA, Room 404-W, 1400 
Independence Avenue, Washington, DC 20250.

Background

General Background

    The Foreign Market Development Cooperator Program's first 
participants (known as Cooperators) entered into agreements with FAS in 
1954. The Cooperator program is currently authorized by Title VII of 
the Agricultural Trade Act of 1978, which directs the Secretary of 
Agriculture to ``establish and, in cooperation with

[[Page 32157]]

eligible trade organizations, carry out a foreign market development 
cooperator program to maintain and develop foreign markets for United 
States agricultural commodities and products.'' FAS implements this 
provision by entering into agreements with non-profit U.S. agricultural 
trade organizations that have the broadest possible producer 
representation of the commodity being promoted and gives priority to 
those organizations that are nationwide in membership and scope. A 
program participant may not, during the term of an agreement with FAS, 
make export sales of the agricultural commodity being promoted or 
charge fees for facilitating an export sale if promotional activities 
designed to result in that specific sale are supported by Cooperator 
program funds.
    Project Agreements involve the promotion of agricultural 
commodities on a generic basis and, therefore, do not involve 
activities targeted directly toward individual consumers. Approved 
activities contribute to the maintenance or growth of demand for the 
agricultural commodities and generally address long-term foreign import 
constraints by focusing on matters such as:
     Reducing infra-structural or historical market 
impediments;
     Improving processing capabilities;
     Modifying codes and standards; and
     Identifying new markets or new applications or uses for 
the agricultural commodity or product in the foreign market.

Significant Provisions

    The proposed rule describes the current program and incorporates 
the majority of the guidelines and procedures currently in effect under 
the Cooperator program. The proposed regulation would, among other 
things:

    1. Describe procedures for establishing project agreements;
    2. List eligible and ineligible Cooperator contributions and the 
consequences of a Cooperator failing to meet its required 
contribution level;
    3. List reimbursable and non-reimbursable Cooperator 
expenditures;
    4. Explain the procedures followed in the submission and payment 
of reimbursement claims;
    5. Detail required Cooperator employment practices;
    6. Provide financial management guidelines for Cooperators;
    7. Identify the reports FAS requires of Cooperators;
    8. Explain FAS'' position on program evaluation and the 
associated requirements of Cooperators;
    9. Detail the steps a Cooperator should follow to appeal 
compliance findings;
    10. List the standards of ethical conduct required of 
Cooperators;
    11. Describe contracting procedures to be used by Cooperators; 
and
    12. Outline the travel restrictions placed on Cooperators by 
FAS, including the Federal Travel Regulation and the Fly America 
Act.

List of Subjects in 7 CFR Part 1550

    Agricultural commodities, Exports, Grant programs--agriculture, 
Reporting and recordkeeping requirements.

    Accordingly, FAS proposes to revise part 1550 of chapter XV of 
title 7 of the Code of Federal Regulations to read as follows:

PART 1550--PROGRAMS TO HELP DEVELOP FOREIGN MARKETS FOR 
AGRICULTURAL COMMODITIES

Sec.

Subpart A--General Information

1550.10  What is the effective date of this part?
1550.11  Has the Office of Management and Budget reviewed the 
paperwork and record keeping requirements contained in this part?
1550.12  What is the Cooperator program?
1550.13  What special definitions apply to the Cooperator program?
1550.14  Is my organization eligible to participate in the 
Cooperator program?

Subpart B--Application and Fund Allocation

1550.20  How can my organization apply to the Cooperator program?
1550.21  How does FAS determine which Cooperator program 
applications are approved?
1550.22  How are Cooperator program funds allocated?

Subpart C--Program Operations

1550.30  How does FAS formalize its working relationship with 
approved Cooperators?
1550.31  Who acts on behalf of each Cooperator?
1550.32  Must Cooperators follow specific employment practices?
1550.33  Must Cooperators follow certain financial management 
guidelines?
1550.34  Must Cooperators adhere to specific standards of ethical 
conduct?
1550.35  Must Cooperators follow specific contracting procedures?
1550.36  How do Cooperators dispose of disposable capital goods?
1550.37  Must Cooperators adhere to Federal Travel Regulations?
1550.38  Can a Cooperator keep proceeds generated from an activity?

Subpart D--Contributions and Reimbursements

1550.50   What cost share contributions are eligible?
1550.51  What are ineligible contributions?
1550.52  What are the guidelines for computing the value of non-cash 
contributions?
1550.53  What are the requirements for documenting and reporting 
contributions?
1550.54  What expenditures may FAS reimburse under the Cooperator 
program?
1550.55  What expenditures may not be reimbursed under the 
Cooperator program?
1550.56  How are Cooperators reimbursed?
1550.57  Will FAS make advance payments to a Cooperator?

Subpart E--Reporting, Evaluation, and Compliance

1550.70  Must Cooperators report to FAS?
1550.71  Are Cooperator documents subject to the provisions of the 
Freedom of Information Act?
1550.72  How is program effectiveness measured?
1550.73  Are Cooperators penalized for failing to make required 
contributions?
1550.74  How is Cooperator program compliance monitored?
1550.75  How does a Cooperator respond to a compliance report?
1550.76  Can a Cooperator appeal the determinations of the Deputy 
Administrator?

    Authority: 7 U.S.C. 5721-5723.

Subpart A--General Information


Sec. 1550.10  What is the effective date of this part?

    This part applies to activities that are conducted in accordance 
with the Cooperators' FY 2000 and subsequent marketing plan years.


Sec. 1550.11  Has the Office of Management and Budget reviewed the 
paperwork and record keeping requirements contained in this part?

    The paperwork and record keeping requirements imposed by this part 
have been submitted to the Office of Management and Budget (OMB) for 
emergency review and reinstatement under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.). OMB has previously assigned control 
number 0551-0026 for this information collection.


Sec. 1550.12  What is the Cooperator program?

    (a) Under the Foreign Market Development Cooperator (Cooperator) 
Program, FAS enters into project agreements with eligible nonprofit 
U.S. trade organizations to share the costs of certain overseas 
marketing and promotion activities that are intended to create, expand, 
or maintain foreign markets for U.S. agricultural commodities and 
products. FAS does not provide brand promotion assistance to 
Cooperators under this program.
    (b) FAS enters into project agreements with those eligible 
nonprofit U.S. trade organizations that have the broadest

[[Page 32158]]

possible producer representation of the commodity being promoted and 
gives priority to those organizations that are nationwide in membership 
and scope. Project agreements involve the promotion of agricultural 
commodities on a generic basis and, therefore, do not involve 
activities targeted directly toward individual consumers. Activities 
must contribute to the maintenance or growth of demand for the 
agricultural commodities and generally address long-term foreign import 
constraints by focusing on matters such as reducing infra-structural or 
historical market impediments; improving processing capabilities; 
modifying codes and standards; and identifying new markets or new 
applications or uses for the agricultural commodity or product in the 
foreign market.
    (c) The Cooperator program generally operates on a reimbursement 
basis.
    (d) FAS policy is to ensure that benefits generated by Cooperator 
agreements are broadly available throughout the relevant agricultural 
sector and no one entity gains an undue advantage or sole benefit from 
program activities.


Sec. 1550.13  What special definitions apply to the Cooperator program?

    For purposes of this part the following definitions apply:
    Activity--a specific market development effort undertaken by a 
Cooperator to address a constraint.
    Administrator--the Administrator, FAS, USDA, or designee.
    Agricultural Commodity--an agricultural commodity, food, feed, 
fiber, wood, livestock or insect, and any product thereof; and fish 
harvested from a U.S. aquaculture farm, or harvested by a vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    Attache/Counselor--the FAS employee representing USDA interests in 
the foreign country in which promotional activities are conducted.
    Commodity Division--the office within the Foreign Agricultural 
Service responsible for the commodity covered by the project agreement.
    Compliance Review Staff--the office within the Foreign Agricultural 
Service responsible for performing periodic reviews of Cooperators to 
ensure compliance with this part.
    Constraint--a condition in a particular country or region which 
needs to be addressed in order to develop, expand, or maintain exports 
of a specific U.S. agricultural commodity.
    Contribution--the cost-share expenditure made by a Cooperator or 
the U.S. industry in support of an activity; e.g., money, personnel, 
materials, services, facilities, or supplies.
    Cooperator or U.S. Cooperator--a nonprofit U.S. agricultural trade 
organization which has entered into a foreign market development 
agreement with FAS.
    Cooperator program--the Foreign Market Development Cooperator 
Program.
    Deputy Administrator--the Deputy Administrator, Commodity and 
Marketing Programs, FAS, USDA, or designee.
    Division Director--the director of a commodity division, Commodity 
and Marketing Programs, FAS, USDA.
    Eligible Commodity--an agricultural commodity that is comprised of 
at least 50 percent U.S. origin content by weight, exclusive of added 
water.
    Eligible Trade Organization--a United States trade organization 
that promotes the exports of one or more United States agricultural 
commodities or products and does not have a business interest in or 
receive remuneration from specific sales of agricultural commodities or 
products.
    FAS--Foreign Agricultural Service, USDA.
    Foreign Third Party--a foreign entity that assists, in accordance 
with this part, in promoting the export of a U.S. agricultural 
commodity.
    Generic Promotion--a promotion that does not involve the exclusive 
or predominant use of a single company name or logo(s) or brand name(s) 
of a single company.
    Market--a country or region in which an activity is conducted.
    Marketing Plan Year--the program year beginning on October 1 and 
ending on September 30, during which Cooperators can undertake 
activities, consistent with this part and their agreements with FAS, 
and seek reimbursement. For example, marketing plan year 2000 begins on 
October 1, 1999, and ends on September 30, 2000.
    Project Agreement--a contract between FAS and a Cooperator in which 
the basic working relationship is described including the program and 
financial obligations of each.
    Project Funds--the funds made available to a Cooperator by FAS 
under a project agreement, and authorized for expenditure in accordance 
with this part.
    STRE--sales and trade relations expenditures.
    Trade Team--a group of individuals engaged in an activity intended 
to promote the interests of an entire agricultural sector rather than 
to result in specific sales by any of its members.
    USDA--the United States Department of Agriculture.


Sec. 1550.14  Is my organization eligible to participate in the 
Cooperator program?

    (a) To participate in the Cooperator program, an entity must be a 
nonprofit U.S. agricultural trade organization and contribute at least 
50 percent of the value of resources provided by FAS for activities 
conducted under the project agreement.
    (b) FAS may require that a project agreement include a contribution 
level greater than that specified in paragraph (a) of this section. In 
requiring a higher contribution level, FAS will take into account such 
factors as past Cooperator contributions, previous Cooperator program 
funding levels, the length of time an entity participates in the 
program, and the entity's ability to increase its contribution.
    (c) FAS will enter into Cooperator agreements only for the 
promotion of eligible commodities.

Subpart B--Application and Fund Allocation


Sec. 1550.20  How can my organization apply to the Cooperator program?

    FAS will publish a Notice in the Federal Register that it is 
accepting applications for participation in the Cooperator program for 
a specified marketing plan year. Applications shall be submitted in 
accordance with the terms and requirements specified in the Notice. An 
application shall contain basic information about the applicant and the 
proposed program, a strategic plan, and performance measures. FAS may 
request any additional information which it deems necessary to evaluate 
a Cooperator program application.
    (a) Basic applicant and program information. All Cooperator program 
applications shall contain:
    (1) The name and address of the applicant;
    (2) The name of the Chief Executive Officer (or designee);
    (3) The name and telephone number of the applicant's primary 
contact person;
    (4) A description of management and administrative capability;
    (5) The name(s) of the person(s) responsible for managing the 
program;
    (6) A description of prior export promotion experience;
    (7) A description of the organization, its membership, and 
membership criteria;
    (8) A list of affiliated organizations;
    (9) The applicant's Federal Tax Identification Number;

[[Page 32159]]

    (10) The dollar amount of FAS resources requested under the 
Cooperator program;
    (11) The value of the applicant's contribution, stated in dollars 
or as a percentage of paragraph (a)(10) of this section;
    (12) The value of contributions from other sources, stated in 
dollars or as a percentage of paragraph (a)(10) of this section;
    (13) A description of the eligible commodity(s); the associated 
commodity aggregate code(s), obtained from FAS; and the percentage of 
U.S. origin content by weight, exclusive of added water; and
    (14) A certification statement, and, if requested by the Deputy 
Administrator, a written explanation supporting the certification, that 
any funds received will supplement, but not supplant, any private or 
third party funds or other contributions to program activities. The 
written explanation, if necessary, shall indicate why the Cooperator is 
unlikely to carry out the activities without Federal financial 
assistance. The certification shall also state that information 
contained in the application is true and accurate and that all records 
supporting the claim that project funds do not supplant other funds 
will be made available to authorized officials of the U.S. Government.
    (b) Strategic plan and performance measures. All Cooperator program 
applications shall also contain:
    (1) A description of the U.S. and world market situation for the 
eligible commodity;
    (2) Data summarizing historical and projected U.S. production, U.S. 
exports to the world, world trade, and U.S. market share;
    (3) A summary of proposed activity budgets by country or region;
    (4) A summary of proposed administrative budgets by country or 
region;
    (5) A list of all countries that define any designated region;
    (6) For each country or region for which activities are proposed:
    (i) A market assessment, including the constraint(s) impeding U.S. 
exports, the performance of competing suppliers, expected changes in 
demand, etc.;
    (ii) The long-term strategy that will be used to counteract the 
constraints and achieve additional U.S. exports;
    (iii) Previous activities, performance, and evaluation results;
    (iv) Projected export goals and U.S. market share; and
    (v) Performance indicators against which future success in 
addressing the constraint(s) may be measured;
    (7) A description of all proposed activities, including the 
requested FAS resources and the specific goals and benchmarks to be 
used to measure the effectiveness of each activity;
    (8) A justification for any new overseas office, including a list 
of job titles, corresponding position descriptions, salary ranges, and 
any request for approval of salaries above the Foreign Service National 
(FSN) salary plan. To request approval of a salary above the FSN salary 
plan, the Cooperator shall include a detailed description of both the 
duties and responsibilities of the position, and of the qualifications 
and background of the individual concerned. The Cooperator shall also 
justify, based on a verifiable local salary survey or other documented 
local salary information, why the highest FSN salary level is 
inappropriate.


Sec. 1550.21  How does FAS determine which Cooperator program 
applications are approved?

    (a) General. FAS allocates funds in a manner that effectively 
supports the strategic decision-making initiatives of the Government 
Performance and Results Act (GPRA) of 1993 (5 U.S.C. 306; 31 U.S.C. 
1105, 1115-1119, 3515, 9703-9704). In deciding whether a proposed 
project will contribute to the effective creation, expansion, or 
maintenance of foreign markets, FAS seeks to identify those projects 
that would demonstrate a clear, long-term agricultural trade strategy 
by market or product and a program effectiveness time line against 
which results can be measured at specific intervals using quantifiable 
product or country or region goals. These performance indicators are 
part of FAS' resource allocation strategy to fund applicants which can 
demonstrate performance based on a long-term strategic plan and address 
the performance measurement objectives of the GPRA.
    (b) Approval criteria. FAS will consider a number of factors when 
reviewing proposed projects, including:
    (1) The ability of the organization to provide an experienced U.S.-
based staff with technical and international trade expertise to ensure 
adequate development, supervision, and execution of the proposed 
project;
    (2) The organization's willingness to contribute resources, 
including cash and goods and services of the U.S. industry and foreign 
third parties;
    (3) The conditions or constraints affecting the level of U.S. 
exports and market share for the agricultural commodities and products;
    (4) The degree to which the proposed project is likely to 
contribute to the creation, expansion, or maintenance of foreign 
markets;
    (5) The degree to which the strategic plan is coordinated with 
other private or U.S. government-funded market development projects;
    (6) Past program results and evaluations, if applicable; and
    (7) Previous Cooperator program funding.


Sec. 1550.22  How are Cooperator program funds allocated?

    After determining which applications to recommend for approval, the 
Commodity Divisions recommend funding levels for the approved 
applicants within their respective divisions. Applications then compete 
for funds on the basis of the following allocation criteria (the number 
in parentheses represents a percentage weight factor). Data used in the 
calculations for contribution levels, past export performance and past 
demand expansion performance will cover not more than a 6-year period, 
to the extent such data is available. The method for applying the 
following criteria will be described in the Cooperator program 
announcement in the Federal Register:
    (a) Contribution Level (40%).
    (b) Past Export Performance (20%).
    (c) Past Demand Expansion Performance (20%).
    (d) Future Demand Expansion Goals (10%).
    (e) Accuracy of Past Demand Expansion Projections (10%).

Subpart C--Program Operations


Sec. 1550.30  How does FAS formalize its working relationship with 
approved Cooperators?

    FAS will notify each applicant in writing of the final disposition 
of its application. FAS will send a program agreement, allocation 
approval letter, and a signature card to each approved applicant. The 
allocation approval letter will specify any special terms and 
conditions applicable to a Cooperator's program, including the required 
level of Cooperator contribution. An applicant that accepts the terms 
and conditions contained in the program agreement and allocation 
approval letter should so indicate by having its Chief Executive 
Officer sign the program agreement and submit the signed agreement to 
the Director, Marketing Operations Staff, FAS, USDA. Final agreement 
shall occur when the Administrator signs the agreement on behalf of 
FAS. The application, the program agreement, the allocation approval 
letter, and this part shall establish the terms and conditions

[[Page 32160]]

of a Cooperator agreement between FAS and the approved applicant.


Sec. 1550.31  Who acts on behalf of each Cooperator?

    The Cooperator shall designate at least two individuals in its 
organization to sign program agreements, reimbursement claims, and 
requests. The Cooperator shall submit the signature card signed by 
those designated individuals and by the Cooperator's Chief Executive 
Officer to the Director, Marketing Operations Staff, FAS, USDA, prior 
to the start of the marketing plan year. The Cooperator shall 
immediately notify the Director of any changes in signatories (e.g., 
removal or addition of individuals, name changes, etc.), and shall 
submit a revised signature card accordingly.


Sec. 1550.32  Must Cooperators follow specific employment practices?

    (a) A Cooperator shall enter into written contracts with all 
overseas employees and shall ensure that all terms, conditions, and 
related formalities of such contracts conform to governing local law.
    (b) A Cooperator shall, in its overseas offices, conform its office 
hours, work week, and holidays to local law and to the custom generally 
observed by U.S. commercial entities in the local business community.
    (c) A Cooperator may pay salaries or fees in any currency (U.S. or 
foreign) in conformance with contract specifications. Cooperators are 
cautioned to consult local laws regarding currency restrictions.


Sec. 1550.33  Must Cooperators follow any financial management 
guidelines?

    (a) A Cooperator shall implement and maintain a financial 
management system that conforms to generally accepted accounting 
principles.
    (b) A Cooperator shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these provisions. Each Cooperator shall 
maintain all original records and documents relating to program 
activities for 5 calendar years following the end of the applicable 
marketing plan year and shall make such records and documents available 
upon request to authorized officials of the U.S. Government. A 
Cooperator shall also maintain all documents related to employment, 
such as employment applications, contracts, position descriptions, 
leave records, and salary changes; and all records pertaining to 
contractors. A Cooperator shall also maintain adequate documentation 
related to the proper disposition of all capital goods purchased by the 
Cooperator and for which the Cooperator is reimbursed with program 
funds.
    (c) A Cooperator shall maintain its records of expenditures and 
contributions in a manner that allows it to provide information by 
marketing plan year, country or region, activity number, and cost 
category. Such records shall include:
    (1) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (2) Original receipts for any other program related expenditure in 
excess of $25.00;
    (3) The exchange rate used to calculate the dollar equivalent of 
each expenditure made in a foreign currency and the basis for such 
calculation;
    (4) Copies of reimbursement claims;
    (5) An itemized list of claims charged to the Cooperator's FMD 
account;
    (6) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions, such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, and travel 
vouchers; and
    (7) Documentation supporting contributions including: the date(s), 
purpose, and location(s) of each activity for which cash or in-kind 
items were claimed as a contribution; who conducted the activity; the 
participating groups or individuals; and the method of computing the 
claimed contributions. Cooperators must retain, and make available for 
audit, documentation related to claimed contributions.
    (d) Upon request, a Cooperator shall provide to FAS the original 
documents which support the Cooperator's reimbursement claims. FAS may 
deny a claim for reimbursement if the claim is not supported by 
adequate documentation.


Sec. 1550.34  Must Cooperators adhere to specific standards of ethical 
conduct?

    (a) A Cooperator shall conduct its business in accordance with the 
laws and regulations of the country(s) in which each activity is 
carried out.
    (b) Neither a Cooperator nor its affiliates shall make export sales 
of agricultural commodities covered under the terms of a project 
agreement. Neither a Cooperator nor its affiliates shall charge a fee 
for facilitating an export sale. For the purposes of this paragraph, 
``affiliate'' means any partnership, association, company, corporation, 
trust, or any other such party in which the Cooperator has an 
investment, other than a mutual fund. A Cooperator may collect check-
off funds and membership fees that are required for membership in the 
Cooperator's organization.
    (c) The Cooperator shall not use program activities or program 
funds to promote private self interests or conduct private business, 
except as members of sales teams.
    (d) A Cooperator shall select U.S. agricultural industry 
representatives to participate in activities such as trade teams or 
trade fairs based on criteria that ensure participation on an equitable 
basis by a broad cross section of the U.S. industry. If requested, a 
Cooperator shall submit such selection criteria to FAS for approval.
    (e) All Cooperators should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result 
in cancellation or termination of a project agreement.
    (f) The Cooperator must report any actions or circumstances that 
have a bearing on the propriety of program activities to the Attache/
Counselor and the Cooperator's U.S. office shall report such actions in 
writing to the appropriate Division Director.


Sec. 1550.35  Must Cooperators follow specific contracting procedures?

    (a) Cooperators have full and sole responsibility for the legal 
sufficiency of all contracts and assume financial liability for any 
costs or claims resulting from suits, challenges, or other disputes 
based on contracts entered into by the Cooperator. Neither FAS nor any 
other agency of the United States Government or any official or 
employee of FAS or the United States Government has any obligation or 
responsibility with respect to Cooperator contracts with third parties.
    (b) Cooperators are responsible for ensuring to the extent possible 
that the terms, conditions, and costs of contracts constitute the most 
economical and effective use of project funds.
    (c) All fees for personnel and professional services paid in any 
part with project funds must be covered by contracts.
    (d) A Cooperator shall:
    (1) Ensure that all expenditures for goods and services reimbursed, 
in excess of $25.00, by FAS are documented by a purchase order, 
invoice, or contract;
    (2) Ensure that no employee or officer participates in the 
selection or award of a contract in which such employee or officer, or 
the employee's or officer's family or partners has a financial 
interest;
    (3) Conduct all contracting in an open manner. Individuals who 
develop or draft specifications, requirements,

[[Page 32161]]

statements of work, invitations for bids, or requests for proposals for 
procurement of any goods or services shall be excluded from competition 
for such procurement;
    (4) Base each solicitation for professional or technical services 
on a clear and accurate description of the requirements for the 
services to be procured;
    (5) Perform some form of price or cost analysis, such as a 
comparison of price quotations to market prices or other price indicia, 
to determine the reasonableness of the offered prices; and
    (6) Document the decision-making process.


Sec. 1550.36  How do Cooperators dispose of disposable capital goods?

    (a) Capital goods purchased by the Cooperator and for which the 
Cooperator is reimbursed by FAS that are unusable, unserviceable, or no 
longer needed for project purposes shall be disposed of in one of the 
following ways. The Cooperator may:
    (1) Exchange or sell the goods, provided that it applies any 
exchange allowance, insurance proceeds, or sales proceeds toward the 
purchase of other property needed in the project;
    (2) With FAS approval, transfer the goods to other Cooperators for 
their activities, or to a foreign third party; or
    (3) Upon Attache/Counselor approval, donate the goods to a local 
charity, or convey the goods to the Attache/Counselor, along with an 
itemized inventory list and any documents of title.
    (b) A Cooperator shall maintain an inventory of all capital goods 
valued at $100 or more which were acquired in furtherance of program 
activities. The inventory shall list and number each item and include 
the date of purchase or acquisition, cost of purchase, replacement 
value, serial number, make, model, and electrical requirements.
    (c) The Cooperator shall insure all capital goods which were 
acquired with program funds and safeguard such goods against theft, 
damage, and unauthorized use. The Cooperator shall promptly report any 
loss, theft, or damage of such property to the insurance company.
    (d) The Cooperator is responsible for reimbursing FAS for the value 
of any uninsured property at the time of the loss or theft of the 
property.


Sec. 1550.37  Must Cooperators adhere to Federal Travel Regulations?

    All travel shall conform to the U.S. Federal Travel Regulation (41 
CFR chapters 300 through 304) and air travel shall conform to the 
requirements of the ``Fly America Act'' (49 U.S.C. 1517). The 
Cooperator shall notify the Attache/Counselor in the destination 
countries in writing in advance of any proposed travel. The timing of 
such notice should be far enough in advance to enable the Attache/
Counselor to schedule appointments, make preparations, or otherwise 
provide any assistance being requested. Failure to provide advance 
notification of travel may result in disallowance of the expenses 
related to the travel.


Sec. 1550.38  Can a Cooperator keep proceeds generated from an 
activity?

    Any income or refunds generated from an activity, i.e., 
participation fees, proceeds of sales, refunds of value added taxes 
(VAT), the expenditures for which have been wholly or partially 
reimbursed, shall be repaid by submitting a check payable to FAS or by 
offsetting the Cooperator's next reimbursement claim.

Subpart D--Contributions and Reimbursements


Sec. 1550.50  What cost share contributions are eligible?

    (a) The Cooperator shall pay all costs necessary for the operation 
of the Cooperator's U.S. office.
    (b) In calculating the amount of contributions that it will make, 
and the contributions it will receive from a U.S. industry or a State 
agency, a Cooperator program applicant may include the costs (or such 
prorated costs) listed under paragraph (c) of this section if:
    (1) Expenditures will be made in furtherance of the Cooperator's 
overall foreign market development program;
    (2) The contributor has not been or will not be reimbursed by any 
other source for such costs; and
    (3) The contribution is made during the period covered by the 
project agreement.
    (c) Subject to paragraph (b) of this section, eligible 
contributions are:
    (1) Cash;
    (2) Compensation paid to personnel;
    (3) The cost of acquiring materials, supplies, or services;
    (4) The cost of office space;
    (5) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (6) Payments for indemnity and fidelity bond expenses;
    (7) The cost of business cards;
    (8) The cost of seasonal greeting cards;
    (9) Fees for office parking;
    (10) The cost of subscriptions to publications;
    (11) The cost of activities conducted overseas;
    (12) Credit card fees;
    (13) The cost of any independent evaluation or audit that is not 
required by FAS to ensure compliance with program requirements;
    (14) The cost of giveaways, awards, prizes and gifts;
    (15) The cost of product samples;
    (16) Fees for participating in U.S. government activities;
    (17) The cost of air and local travel in the United States;
    (18) Transportation and shipping costs;
    (19) The cost of displays and promotional materials;
    (20) Advertising costs;
    (21) Reasonable travel costs and expenses related to undertaking a 
foreign market development activity;
    (22) Payment of employee's or contractor's share of personal taxes; 
and
    (23) The cost associated with trade shows, seminars, entertainment 
and STRE conducted in the United States.


Sec. 1550.51  What are ineligible contributions?

    (a) The following are not eligible contributions:
    (1) Any portion of salary or compensation of an individual who is 
the target of a promotional activity;
    (2) Any land costs other than allowable costs for office space;
    (3) Depreciation;
    (4) The cost of refreshments and related equipment provided to 
office staff;
    (5) The cost of insuring articles owned by private individuals;
    (6) The cost of any arrangement which has the effect of reducing 
the selling price of an agricultural commodity;
    (7) The cost of product development or product modifications;
    (8) Slotting fees or similar sales expenditures;
    (9) Funds, services, or personnel provided by any U.S. government 
agency;
    (10) Capital investments made by a third party, such as permanent 
structures, real estate, and the purchase of office equipment and 
furniture;
    (11) The value of any services generated by a Cooperator or third 
party which involve no expenditure by the Cooperator or third party, 
e.g., free publicity; and
    (12) Membership fees in clubs and social organizations.
    (b) The Deputy Administrator shall determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section may be included by the Cooperator as an eligible 
contribution.

[[Page 32162]]

Sec. 1550.52  What are the guidelines for computing the value of non-
cash contributions?

    (a) Computing the value of an individual's time. If an individual's 
salary is known, allocate the individual's salary on the basis of time 
spent on foreign market development activities. If the individual's 
salary is unknown, claim up to the equivalent of a step 10, GS-15 for 
professional personnel and up to the current estimated industry rate at 
the person's level of employment for nonprofessional personnel.
    (b) Computing the value of indirect expenditures. Allocate value on 
the basis of sound management and accounting procedures when 
considering indirect expenditures, such as overhead and facilities, 
which are furnished by the industry.


Sec. 1550.53  What are the requirements for documenting and reporting 
contributions?

    (a) Each claimed contribution must be documented by the Cooperator, 
showing the method of computing non-cash contributions, salaries, and 
travel expenses.
    (b) Each Cooperator must keep records of the methods used to 
compute the value of non-cash contributions, and:
    (1) Copies of invoices or receipts for expenses paid by the third 
party and not reimbursed by the Cooperator for the joint activity; or
    (2) If invoices are not available, an itemized statement from the 
third party as to what costs it incurred pursuant to the joint 
activity; or
    (3) If neither of the foregoing is available, a statement from the 
third party as to what goods and services it provided; or
    (4) If none of the foregoing are available, a memo to the files of 
the U.S. Cooperator's estimate of what contributions were made by the 
third party, item by item, and the method used to assign a value to 
each.
    (c) Each Cooperator must report its contributions as described in 
Sec. 1550.70(a).


Sec. 1550.54  What expenditures may FAS reimburse under the Cooperator 
program?

    (a) A Cooperator may seek reimbursement for an expenditure if:
    (1) An expenditure has been made in furtherance of a market 
development activity;
    (2) The Cooperator or third party has transferred funds to pay for 
the expenditure; and
    (3) The Cooperator has not been or will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section, FAS will reimburse, 
in whole or in part, the cost of:
    (1) Production and placement of advertising in print or electronic 
media or on billboards or posters;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers, and similar point of sale materials;
    (3) Direct mail advertising;
    (4) Food service promotions, product demonstrations to the trade, 
and distribution of promotional samples;
    (5) Temporary displays and rental of space for temporary displays;
    (6) Fees for participation in retail and trade exhibits and shows, 
and booth construction and transportation of related materials to such 
exhibits and shows;
    (7) Trade seminars, including space rental, equipment rental, and 
duplication of seminar materials;
    (8) Production and distribution of publications;
    (9) Part-time contractors, such as interpreters, translators, and 
receptionists, to help with the implementation of promotional 
activities, such as trade shows, food service promotions, and trade 
seminars;
    (10) Giveaways, awards, prizes, gifts, and other similar 
promotional materials, subject to the limitation that FAS will not 
reimburse more than $1.00 per item;
    (11) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to U.S. citizen employees or U.S. 
citizen contractors stationed overseas, subject to the limitation that 
FAS shall not reimburse that portion of:
    (i) The total of compensation and allowances that exceed 125 
percent of the level of a GS-15, Step 10 salary for U.S. Government 
employees; and
    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel;
    (12) Approved salaries or compensation for non-U.S. citizens and 
non-U.S. contractors. Generally, FAS will not reimburse any portion of 
a non-U.S. citizen employee's compensation that exceeds the 
compensation prescribed for the most comparable position in the Foreign 
Service National (FSN) salary plan applicable to the country in which 
the employee works. However, if the local FSN salary plan is 
inappropriate, a Cooperator may request a higher level of reimbursement 
for a non-U.S. citizen in accordance with Sec. 1550.20(b)(8);
    (13) A retroactive salary adjustment that conforms to a change in 
FSN salary plans, effective as of the date of such change;
    (14) Accrued annual leave at such time when employment is 
terminated or when required by local law;
    (15) Overtime paid to clerical staff;
    (16) Fees for personnel and professional services, subject to the 
limitation that project funds may only be used to pay consultant fees 
for actual work days and may not be used to pay consultant fees for 
travel and rest days;
    (17) Air travel, plus passports, visas, and inoculations, subject 
to the limitation that FAS will not reimburse any portion of air travel 
in excess of the full fare economy rate or when the Cooperator fails to 
notify the Attache/Counselor in the destination country in advance of 
the travel, unless the Deputy Administrator determines it was 
impractical to provide such notification;
    (18) Per diem, subject to the limitation that FAS will not 
reimburse per diem in excess of the rates allowed under the U.S. 
Federal Travel Regulation (41 CFR chapters 300 through 304);
    (19) Automobile mileage at the local U.S. Embassy rate, or rental 
cars while in travel status;
    (20) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulation (41 CFR chapters 300 
through 304);
    (21) An overseas office, including rent, utilities, communications 
originating overseas, office supplies, accident liability insurance 
premiums, and legal and accounting services;
    (22) The purchase, lease, or repair of, or insurance premiums for, 
capital goods that have an expected useful life of at least one year, 
such as furniture, equipment, machinery, removable fixtures, draperies, 
blinds, floor coverings, and computer hardware and software;
    (23) Premiums for health or accident insurance or other benefits 
for foreign national employees that the employer is required by law to 
pay;
    (24) Accident liability insurance premiums for facilities used 
jointly with third party participants for Cooperator program 
activities, or such insurance premiums for travel of non-Cooperator 
personnel;
    (25) Market research;
    (26) Evaluations, if not required by FAS to ensure compliance with 
program requirements;
    (27) Legal fees to obtain advice on the host country's labor laws;
    (28) Employment agency fees;
    (29) STRE, including breakfast, lunch, dinner, receptions, and 
refreshments at activities; miscellaneous courtesies such as checkroom 
fees, taxi fares, and tips; and decorations for a special promotional 
occasion;
    (30) Educational travel of dependent children, visitation travel, 
rest and

[[Page 32163]]

recuperation travel, home leave travel, and emergency visitation travel 
for U.S. overseas employees as allowed under the Foreign Affairs 
Manual;
    (31) Evacuation payments (safe haven), and shipment and storage of 
household goods and motor vehicles;
    (32) Demonstration projects;
    (33) Purchase of trade and business periodicals containing material 
related to market development activities for use by overseas staffs;
    (34) Training expenses in the U.S. for FSNs;
    (35) Language training for U.S. citizen employees at the foreign 
post of assignment;
    (36) Shipment of samples or other program materials from the U.S. 
to foreign countries; and
    (37) That portion of airtime for wireless phones that is devoted to 
program activities and monthly service fees.


Sec. 1550.55  What expenditures may not be reimbursed under the 
Cooperator program?

    (a) FAS will not reimburse any cost of:
    (1) Expenses, fines, settlements, or claims resulting from suits, 
challenges, or disputes emanating from employment terms, conditions, 
contract provisions, or related formalities;
    (2) Product development, product modification, or product research;
    (3) Product samples;
    (4) Slotting fees or similar sales expenditures;
    (5) The purchase, construction, or lease of space for permanent 
displays, i.e., displays lasting beyond one marketing plan year;
    (6) Office parking fees;
    (7) Coupon redemption or price discounts;
    (8) Refundable deposits or advances;
    (9) Giveaways, awards, prizes, gifts, and other similar promotional 
materials in excess of $1.00 per item;
    (10) Alcoholic beverages that are not an integral part of a 
promotional activity;
    (11) The purchase, lease (except for use in authorized travel 
status), or repair of motor vehicles;
    (12) Travel of applicants for employment interviews;
    (13) Unused non-refundable airline tickets or associated penalty 
fees, except where travel is restricted by U.S. government action or 
advisory;
    (14) Any arrangement which has the effect of reducing the selling 
price of an agricultural commodity;
    (15) Goods and services and salaries of third party personnel;
    (16) Membership fees in clubs and social organizations;
    (17) Indemnity and fidelity bonds;
    (18) Fees for participating in U.S. Government sponsored 
activities, other than trade fairs, shows, and exhibits;
    (19) Business cards;
    (20) Seasonal greeting cards;
    (21) Subscriptions to non-trade related publications;
    (22) Credit card fees;
    (23) Refreshments, or related equipment, for office staff;
    (24) Insurance on household goods and personal effects, including 
privately-owned automobiles, whether overseas or stored in the U.S., 
belonging to U.S. citizen employees;
    (25) Home office domestic administrative expenses, including 
communication costs;
    (26) Payment of U.S. or foreign employee's or contractor's share of 
personal taxes, except as legally required in a foreign country;
    (27) Wireless phone equipment, equipment repair, insurance, and 
other related charges;
    (28) STRE expenses incurred in the U.S;
    (29) Night club entertainment, cover charges, personal gifts, or 
tickets to theatrical or sporting events; or
    (30) Functions (including receptions and meals at Cooperator staff 
conferences) at which target groups, such as members of the overseas 
trade, opinion leaders, foreign government officials, and other similar 
groups, are not present.
    (b) The Deputy Administrator may determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section will be reimbursed.
    (c) FAS will reimburse for expenses incurred up to 30 calendar days 
beyond the conclusion of the marketing plan year.


Sec. 1550.56  How are Cooperators reimbursed?

    (a) A format for reimbursement claims is available from the 
Director, Marketing Operations Staff, FAS, USDA. Claims for 
reimbursement shall contain at least the following information:
    (1) Activity code;
    (2) Country code;
    (3) Cost category;
    (4) Amount to be reimbursed or credited;
    (5) If applicable, any reduction in the amount of reimbursement 
claimed to offset FAS demand for refund of amounts previously 
reimbursed, and reference to the relevant Compliance Report; and
    (6) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the 
Cooperator's U.S. office to the Director, Marketing Operations Staff, 
FAS, USDA.
    (c) FAS will not reimburse claims submitted later than 6 months 
after the end of a marketing plan year.
    (d) If FAS overpays a reimbursement claim, the Cooperator shall 
repay FAS within 30 days the amount of the overpayment either by 
submitting a check payable to FAS or by offsetting its next 
reimbursement claim.
    (e) If a Cooperator receives a reimbursement or offsets an advanced 
payment which is later disallowed, the Cooperator shall within 30 days 
of such disallowance repay FAS the amount owed either by submitting a 
check payable to FAS or by offsetting its next reimbursement claim.
    (f) The Cooperator shall report any actions having a bearing on the 
propriety of any claims for reimbursement to the Attache/Counselor and 
its U.S. office shall report such actions in writing to the Division 
Director(s).


Sec. 1550.57  Will FAS make advance payments to a Cooperator?

    (a) Policy. In general, FAS operates the Cooperator program on a 
reimbursable basis.
    (b) Exception. Upon request, FAS may make two types of advance 
payments to a Cooperator. The first is a revolving fund operating 
advance provided by FAS only to Cooperators with foreign offices 
supported with project funds. The second is a special advance payment 
used to pay an impending large cost item. FAS will provide this type of 
advance expense payment in lieu of direct payments by FAS to vendors or 
other third parties. All Cooperators, with or without project fund-
supported foreign offices, are eligible to request special advance 
payments. Normally, special advance payments received from FAS must be 
liquidated by the Cooperator within 90 days from the date of receipt. 
Prior to making an advance, FAS may require the participant to submit 
security in a form and amount acceptable to FAS to protect FAS' 
financial interests. FAS will not make any special advance payment to a 
Cooperator where a special advance is outstanding from a prior 
marketing plan year.
    (c) Refunds due FAS. A participant shall return any unexpended 
portion of the advance, plus any interest earned, either by submitting 
a check payable to FAS or by offsetting its next reimbursement claim. 
All checks shall be mailed to the Director, Marketing Operations Staff, 
FAS, USDA.

[[Page 32164]]

Subpart E--Reporting, Evaluation, and Compliance


Sec. 1550.70  Must Cooperators report to FAS?

    (a) End-of-year contribution report. Not later than January 31 of 
the year following the completion of the marketing plan year, a 
Cooperator shall submit two copies of a report which identifies 
contributions made by the Cooperator and the U.S. industry during that 
marketing plan year. A suggested format of a contribution report is 
available on the FAS home page (http://www.fas.usda.gov/mos/programs/
fnotice.html) on the Internet or from the Director, Marketing 
Operations Staff, FAS, USDA.
    (b) Trip reports. Not later than 45 days after completion of travel 
(other than local travel), a Cooperator shall submit a trip report. The 
report must include the name(s) of the traveler(s), purpose of travel, 
itinerary, names and affiliations of contacts, and a brief summary of 
findings, conclusions, recommendations, or specific accomplishments.
    (c) Research reports. Not later than 6 months after the end of its 
marketing plan year, a Cooperator shall submit a report on any research 
conducted in accordance with its application.
    (d) Submission of reports. A Cooperator shall submit the reports 
required by this section to the appropriate Division Director. Trip 
reports and research reports shall also be submitted to the appropriate 
Attache/Counselor(s). All reports shall be in English and include the 
Cooperator's agreement number, the countries and period covered, and 
the date of the report.
    (e) Additional reports. FAS may require the submission of 
additional reports.
    (f) Independent audit reports. A Cooperator shall provide to the 
FAS Compliance Review Staff, upon request, any audit reports by 
independent public accountants.


Sec. 1550.71  Are Cooperator documents subject to the provisions of the 
Freedom of Information Act?

    (a) Documents submitted to FAS by Cooperators are subject to the 
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 
CFR part 1, Subpart A--Official Records, and, specifically, 7 CFR 
1.11--Handling Information from a Private Business.
    (b) If requested by a person located in the United States, a 
Cooperator shall provide to such person a copy of any document in its 
possession or control containing market information developed and 
produced under the terms of its agreement. The Cooperator may charge a 
fee not to exceed the costs for assembling, duplicating, and 
distributing the materials.
    (c) The results of any research conducted by a Cooperator under an 
agreement shall be the property of the U.S. Government.


Sec. 1550.72  How is program effectiveness measured?

    (a) The Government Performance and Results Act (GPRA) of 1993 (5 
U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires 
performance measurement of Federal programs, including the Cooperator 
program. Evaluation of the Cooperator program's effectiveness will 
depend on a clear statement by each Cooperator of the constraints 
impeding U.S. exports, goals to be met within a specified time, a 
schedule of measurable milestones for gauging success, a plan for 
achievement, and reports of activity results.
    (b) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan. The 
evaluation results guide the development and scope of a Cooperator's 
program, contribute to program accountability, and provide evidence of 
program effectiveness.
    (c) A Cooperator shall conduct periodic evaluations of its program 
and activities and may contract with an independent evaluator to 
satisfy this requirement. FAS reserves the right to have direct input 
and control over design, scope, and methodology of any such evaluation, 
including direct contact with and provision of guidance to the 
independent evaluator.
    (d) A Cooperator shall complete at least one program evaluation 
each year. Actual scope and timing of the program evaluation shall be 
determined by the Cooperator and the Division Director and specified in 
the Cooperator's application approval letter. A program evaluation 
shall contain:
    (1) The name of the party conducting the evaluation;
    (2) The activities covered by the evaluation;
    (3) A concise statement of the constraint(s) and the goals 
specified in the application;
    (4) A description of the evaluation methodology;
    (5) A description of additional export sales achieved, including 
the ratio of additional export sales in relation to Cooperator program 
funding received;
    (6) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (7) Recommendations for future programs.
    (e) A Cooperator shall submit, via a cover letter to the Division 
Director, an executive summary which assesses the program evaluation's 
findings and recommendations and proposes changes in program strategy 
or design as a result of the evaluation.


Sec. 1550.73  Are Cooperators penalized for failing to make required 
contributions?

    A Cooperator's contribution requirement is specified in the 
Cooperator program allocation letter. If a Cooperator fails to 
contribute the amount specified in its allocation approval letter, the 
Cooperator shall pay to FAS in U.S. dollars the difference between the 
amount it has contributed and the amount specified in the allocation 
approval letter. A Cooperator shall remit such payment by December 31 
following the end of the marketing plan year.


Sec. 1550.74  How is Cooperator program compliance monitored?

    (a) The Compliance Review Staff (CRS), FAS, performs periodic on-
site reviews of Cooperators to ensure compliance with this part.
    (b) In order to verify that federal funds received by a Cooperator 
do not supplant private or third party funds or contributions pursuant 
to Sec. 1550.20 (a)(14), CRS will consider the Cooperator's overall 
marketing budget from year to year, variations in promotional 
strategies within a country or region, and new markets.
    (c) The Director, CRS, will notify a Cooperator through a 
compliance report when it appears that FAS may be entitled to recover 
funds from that Cooperator. The compliance report will state the basis 
for this action.


Sec. 1550.75  How does a Cooperator respond to a compliance report?

    (a) A Cooperator shall, within 60 days of the date of the 
compliance report, submit a written response to the Director, CRS. This 
response shall include any money owed to FAS if the Cooperator does not 
wish to contest the compliance report. The Director, CRS, at the 
Director's discretion, may extend the period for response up to an 
additional 30 days. If the Cooperator does not respond to the 
compliance report within the required time period or, if after review 
of the Cooperator's response, the Director, CRS, determines that FAS 
may be entitled to recover funds from the Cooperator, the Director, 
CRS, will refer the compliance report to the Deputy Administrator.
    (b) If, after review of the compliance report and response, the 
Deputy Administrator determines that the Cooperator owes money to FAS, 
the

[[Page 32165]]

Deputy Administrator will so inform the Cooperator. The Deputy 
Administrator may initiate action to collect such amount pursuant to 7 
CFR Part 1403, Debt Settlement Policies and Procedures. Determinations 
of the Deputy Administrator will be in writing and in sufficient detail 
to inform the Cooperator of the basis for the determination. The 
Cooperator has 30 days from the date of the Deputy Administrator's 
initial determination to submit any money owed to FAS or to request 
reconsideration.


Sec. 1550.76  Can a Cooperator appeal the determinations of the Deputy 
Administrator?

    (a) The Cooperator may appeal the determinations of the Deputy 
Administrator to the Administrator. An appeal must be in writing and be 
submitted to the Office of the Administrator within 30 days following 
the date of the initial determination by the Deputy Administrator or 
the determination on reconsideration. The Cooperator may request a 
hearing.
    (b) If the Cooperator submits its appeal and requests a hearing, 
the Administrator, or the Administrator's designee, will set a date and 
time, generally within 60 days. The hearing will be an informal 
proceeding. A transcript will not ordinarily be prepared unless the 
Cooperator bears the cost of a transcript; however, the Administrator 
may have a transcript prepared at FAS's expense.
    (c) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after submission of the appeal, 
hearing, or receipt of any transcript, whichever is later. The 
determination of the Administrator will be the final determination of 
FAS. The Cooperator must exhaust all administrative remedies contained 
in this section before pursuing judicial review of a determination by 
the Administrator.

    Signed at Washington, DC, on June 10, 1999.
Timothy J. Galvin,
Administrator, Foreign Agricultural Service.
[FR Doc. 99-15111 Filed 6-14-99; 8:45 am]
BILLING CODE 3410-10-P