    Biobased Products: Improved USDA Management Would Help Agencies
    Comply with Farm Bill Purchasing Requirements (07-APR-04,
    GAO-04-437).

    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.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-437
        ACCNO:   A09690
      TITLE:     Biobased Products: Improved USDA Management Would Help
    Agencies Comply with Farm Bill Purchasing Requirements
         DATE:   04/07/2004
      SUBJECT:   Federal procurement
    	     Federal procurement policy
    	     Procurement law
    	     Procurement planning
    	     Procurement practices
    	     Performance measures
    	     Prioritizing
    	     Strategic planning
    	     Commercial products
    	     Stakeholder consultations

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    GAO-04-437

    United States General Accounting Office

     GAO Report to Ranking Democratic Member, Committee on Agriculture, Nutrition,
                               and Forestry, U.S. Senate

    April 2004

                                        BIOBASED
                                        PRODUCTS

     Improved USDA Management Would Help Agencies Comply with Farm Bill Purchasing
                                      Requirements

    GAO-04-437

    Highlights of GAO-04-437, a report to the Ranking Democratic Member,
    Committee on Agriculture, Nutrition, and Forestry, U.S. Senate

    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.

    To ensure USDA's timely implementation of the farm bill biobased
    purchasing requirements, USDA should (1) execute a management plan for
    completing the work, (2) identify and allocate the staff and financial
    resources needed, and (3) clearly state the priority for the work's
    completion. USDA disagreed with the need for a management plan, but
    indicated it will draw on our review results and recommendations in future
    work.

    www.gao.gov/cgi-bin/getrpt?GAO-04-437.

    To view the full product, including the scope and methodology, click on
    the link above. For more information, contact Lawrence J. Dyckman at (202)
    512-3841 or dyckmanl@gao.gov.

    April 2004

    BIOBASED PRODUCTS

    Improved USDA Management Would Help Agencies Comply with Farm Bill Purchasing
    Requirements

    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.

    Biobased Products Made from Soybeans, Corn, Citrus, or Other Plant
    Materials

    Contents

      Letter

    Results in Brief
    Background
    USDA Delay in Issuing Biobased Purchasing Guidelines Has

    Slowed Other Agencies' Efforts

    USDA Could Accelerate Implementation of the Biobased
    Procurement Program by Developing a Comprehensive
    Management Plan and Assigning Adequate Resources

    Stakeholders Generally Agree That Some Testing of Biobased
    Products Is Necessary, but They Question the Need For Life-
    Cycle Analysis

    Conclusions
    Recommendations
    Agency Comments and Our Evaluation

                                           1

                                          5 8

    14

    24

    32 38 38 39

    Appendix I Objectives, Scope, and Methodology

    Appendix II Sources for Information on Biobased Products

    Appendix III Key Provisions of USDA's Proposed Guidelines

    Appendix IV	Chronology of Steps Completed or Planned by USDA to Comply
    with the Farm Bill Requirements

    Appendix V	Comments from the U.S. Department of Agriculture 54
    GAO Comments 59

      Appendix VI GAO Contacts and Staff Acknowledgments 65

    GAO Contacts 65
    Acknowledgments 65

                                Related GAO Products 66

      Tables

    Table 1: Common Biobased Industrial and Consumer Products 9 Table 2:
    Proposed Biobased Product Categories and Related Items as Listed in the
    Preamble 48 Table 3: Other Key Provisions of USDA's Proposed Guidelines
    and Future Plans as Indicated in the Preamble 50

      Figures

    Figure 1: Biobased Products Made from Corn Grain 9 Figure 2: Biobased
    Cutlery 18 Figure 3: Application of a Biobased Deicer by Interior Employee
    19 Figure 4: Display of Biobased Products Used by Interior 20 Figure 5:
    Biobased Cleaning Products Used at USDA's Beltsville

    Agricultural Research Center 22 Figure 6: Tractor Run with Biobased
    Lubricants and Fuels at Beltsville Agricultural Research Center 23

    Abbreviations

    BEES Building for Environmental and Economic Sustainability
    DLA Defense Logistics Agency
    DOD Department of Defense
    DOE Department of Energy
    EPA Environmental Protection Agency
    GSA General Services Administration
    NASA National Aeronautics and Space Administration
    NIST National Institute of Standards and Technology
    OFPP Office of Federal Procurement Policy
    OMB Office of Management and Budget
    USDA U.S. Department of Agriculture

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States General Accounting Office Washington, DC 20548

    April 7, 2004

    The Honorable Tom Harkin Ranking Democratic Member Committee on
    Agriculture,

    Nutrition, and Forestry United States Senate

    Dear Senator Harkin:

    The federal government spends more than $230 billion annually for products
    and services to conduct its operations. Through its purchasing decisions,
    the government has the opportunity to affirm its agricultural and
    environmental policies and goals, including its goals for federal
    purchases of biobased products. A biobased product is a commercial or
    industrial product, other than food or feed, that is composed in whole or
    significant part of biological products, renewable domestic agricultural
    materials (including plant, animal, and marine materials), or forestry
    materials. For example, these products include corn-based plastics,
    soybean-based lubricants, and citrus-based cleaners.1 Competing products
    are generally petroleum-based. The Congress recognized the potential of
    the federal government's buying power in the Farm Security and Rural
    Investment Act of 2002 (the farm bill) and required the U.S. Department of
    Agriculture (USDA) to develop guidelines for the federal procurement of
    biobased products to create new markets for these products and to
    stimulate their production.2 In particular, the biobased procurement
    provision is expected to promote the purchase of biobased products made
    from sustainable, raw agricultural materials in order to create economic
    opportunities in rural communities, give farmers more value for their

    1Biobased products-also known as bioproducts-may include adhesives,
    building materials, carpet backing, cleaners, degreasers, insulation, fuel
    additives, inks, lubricants, paints, plastics, and solvents. Corn,
    soybeans, vegetable (plant) oils, and wood are the commodities most often
    used in the manufacture of biobased products.

    2See 7 U.S.C. S: 8102.

    commodities, and help the environment.3 In addition, according to
    proponents of the biobased procurement provision, the purchase of these
    biobased products may reduce the nation's dependence on imported oil,
    which is currently used in many commercial and industrial products.
    However, others note that the initial purchase cost of biobased products
    is usually higher than alternatives; and consumers, businesses, and
    government agencies are generally unfamiliar with these products.

    In developing the guidelines for the procurement of biobased products, the
    farm bill requires USDA to take three major actions: (1) designate those
    items which are or can be produced with biobased products and whose
    procurement by agencies will meet the objectives of the legislation;4 (2)
    recommend practices for the procurement of biobased products and items
    containing such materials and for certification by vendors of the
    percentage of biobased products used; and (3) provide information on the
    availability, relative price, performance, and environmental and public
    health benefits of such materials and items, and where appropriate
    recommend the level of biobased material to be contained in a product. In
    designating items, USDA is, at a minimum, to consider the availability of
    such items and the economic and technological feasibility of using such
    items, including life-cycle costs. USDA was to issue these guidelines by
    November 2002, or 180 days after the farm bill was enacted. In addition,
    within 1 year after publication of these guidelines, each federal agency
    is required to develop a procurement program that will assure that items
    composed of biobased products will be purchased to the maximum extent
    practicable, consistent with federal procurement law. Furthermore, the
    farm bill requires federal agencies purchasing items above a certain price
    to give preference to items composed of the highest percentage of biobased
    products practicable, consistent with maintaining a satisfactory

    3Biobased products are generally considered environmentally preferable
    products. Such products may have a lesser or reduced adverse effect on
    human health and the environment when compared with competing products.
    For example, biobased products are manufactured from renewable biological
    resources and are generally biodegradable when disposed. In contrast,
    products made from nonrenewable fossil resources, such as petroleum,
    generally create more adverse environmental impacts such as air and water
    pollution and global warming.

    4According to USDA, a designated "item" will consist of similar biobased
    products made by one or more manufacturers. For example, a designated item
    could be hydraulic fluid that is described by certain characteristics,
    such as a minimum biobased content. The biobased products associated with
    this item would include branded hydraulic fluids that have similar
    characteristics.

    level of competition, unless there is a price, performance, or
    availability reason not to do so.5

    The farm bill also requires USDA to establish a voluntary program for
    authorizing producers of biobased products to use the label "U.S.D.A.
    Certified Biobased Product" and requires USDA to issue criteria for
    determining which products qualify for this label. The labeling criteria
    were to be established within 1 year of farm bill enactment. In addition,
    the legislation requires USDA to establish a voluntary program to
    recognize federal agencies and private entities that use a substantial
    amount of biobased products. Furthermore, the farm bill authorizes USDA to
    use $1 million of the Commodity Credit Corporation's funds for each fiscal
    year-2002 through 2007-to support testing of biobased products to gather
    information necessary for the designation of items.6 The legislation does
    not specify what testing should be done. To leverage federal funds
    available for biobased product testing, USDA plans to invite manufacturers
    or vendors of biobased products to voluntarily provide test results on the
    content, performance characteristics, and life-cycle costs of their
    products to assist USDA in amassing sufficient baseline information to
    designate items.7 Subsequent to the designation of an item, USDA will
    allow manufacturers to self-certify that their products meet this baseline
    data in order to include these products in the preferred procurement
    program.

    You asked us to evaluate the federal government's progress in implementing
    the biobased purchasing provisions of the farm bill. Specifically, as
    agreed with your office, we examined the (1) actions that USDA and other
    federal agencies have taken to carry out the farm bill requirements for
    purchasing biobased products, (2) additional actions that may be needed to
    enhance implementation of these requirements, and (3)

    5Federal agencies must comply with the biobased procurement requirements
    for any purchase of an item costing more than $10,000 or where the
    quantity of such items or similar items purchased or acquired in the
    preceding fiscal year was $10,000 or more. The farm bill provides that an
    agency may decide not to procure a biobased item if the agency determines
    that the item (1) is not reasonably available within a reasonable period
    of time, (2) fails to meet the performance standards set forth in the
    applicable specifications or fails to meet the reasonable performance
    standards of the procuring agency, or (3) is available only at an
    unreasonable price.

    6The Commodity Credit Corporation is a government-owned corporation within
    USDA.

    7Life-cycle analysis includes the determination of the costs of producing,
    using, and disposing of a product as well as its environmental impact.

    views of agencies, manufacturers, and testing organizations on the need
    for and costs of testing biobased products.

    To conduct this work, we interviewed officials and reviewed the
    documentation they provided at USDA's Agricultural Research Service,
    Cooperative State Research, Education, and Extension Service, Office of
    Energy Policy and New Uses (New Uses office), and Office of Procurement
    and Property Management (Procurement office); the four agencies that
    account for about 85 percent of all federal procurements- the Department
    of Defense (DOD), the Department of Energy (DOE), the General Services
    Administration (GSA), and the National Aeronautics and Space
    Administration (NASA);8 the Office of Management and Budget's (OMB) Office
    of Federal Procurement Policy (OFPP); the White House's Office of the
    Federal Environmental Executive; the Environmental Protection Agency
    (EPA); the Biobased Manufacturers Association; commodity groups such as
    the National Corn Growers Association and the United Soybean Board;
    environmental organizations such as Green Seal; consumer groups such as
    the Consumer's Choice Council; and two testing entities-the Department of
    Commerce's National Institute of Standards and Technology (NIST) and Iowa
    State University-that have entered into agreements with USDA to develop
    testing protocols for biobased products.9 We also interviewed
    representatives of 15 biobased manufacturing companies and reviewed the
    documentation they provided. We selected these companies to provide a mix
    of biobased product types and raw materials used to manufacture these
    products. In general, our work focused on biobased products other than
    biofuels such as ethanol, biodiesel, and biogas because provisions to
    promote the production of biofuels are addressed elsewhere in the farm
    bill.10 We conducted our review from May 2003 through February 2004 in
    accordance with generally accepted government auditing standards. Appendix
    I provides additional information on our scope and methodology.

    8Two of these agencies, DOD and GSA, have dual roles-first, as procuring
    agencies subject to the farm bill biobased purchasing requirements and
    second, as major suppliers of goods and services to other federal
    agencies. Specifically, Defense Logistics Agency and GSA maintain central
    stock inventories and vendor supply lists for use by all federal agencies.

    9The agreement between NIST and USDA is an interagency agreement. The one
    between Iowa State University and USDA is a cooperative agreement.

    10Farm bill biobased procurement requirements exclude the procurement of
    motor vehicle fuels and electricity.

      Results in Brief

    While farm bill provisions for purchasing biobased products present USDA
    with a formidable challenge, its actions to implement the bill's
    requirements have fallen short and have slowed other agencies' efforts.
    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, as called for in the
    legislation. According to USDA officials, although the agency 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 items 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. USDA anticipates that the model procurement
    program will serve two purposes: to guide its purchases of biobased
    products and to assist other agencies in developing their biobased
    procurement programs required by the legislation. 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 more
    readily biodegradable or composted.

    USDA could accelerate its implementation of the farm bill biobased
    purchasing requirements by developing a comprehensive management plan for
    how it will implement these requirements and by making its compliance with
    them a higher priority. The lack of a comprehensive plan, including
    defined tasks and milestones, identification of available staff and
    financial resources, and a description of how the work will be
    coordinated, has contributed to USDA's slow progress in issuing the
    biobased procurement guidelines. For example, during the course of our
    work we found confusion among USDA officials about when various aspects of
    the farm bill biobased requirements should be completed. USDA developed a
    list of milestones for fulfilling these requirements only after we
    requested such a list in May 2003; and even then, this list was informal,
    reflecting primarily the thinking of a few officials without

    coordinating the list with another concerned office. Without a
    comprehensive plan, including clearly defined tasks and milestones, it is
    difficult to set priorities, use resources efficiently, measure progress,
    and provide agency management a means to monitor this progress. According
    to a number of officials representing USDA, other agencies, commodity
    groups, or manufacturers, USDA should also make its compliance with the
    farm bill biobased requirements a higher priority to speed the agency's
    completion of this work. At present, without this sense of priority, USDA
    has not devoted adequate resources to fulfilling these requirements. For
    example, the USDA office responsible for developing most aspects of the
    guidelines has limited staff and has not received funding for this effort.
    As a result, this office assigned two staff on a part-time basis to
    develop the guidelines. In addition, these staff have found it difficult
    to compete with higher-priority projects for the resources they need to
    develop the guidelines. For example, these staff waited several months to
    receive assistance from staff in another USDA office with experience in
    rules preparation to help them draft the Federal Register notice
    containing the proposed guidelines. Given these problems, we are
    recommending that USDA develop a comprehensive, written plan for
    completing the work to fulfill the farm bill requirements and make clear
    the staff and financial resources and the priority to be assigned to this
    work so that it is completed as expeditiously as possible.

    Most federal agencies, testing organizations, commodity associations, and
    manufacturers we spoke with believe that testing biobased products for
    content and performance is generally appropriate; but they question the
    usefulness and costs of life-cycle analysis, which under the proposed
    guidelines, manufacturers would be required to provide to procurement
    officials upon request. 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 process.
    Regarding life-cycle analysis, most of the agencies and manufacturers
    questioned the need for doing this analysis. USDA must consider life-cycle
    costs in designating items 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. The agencies
    generally did not believe that the information would be useful for
    purchasing decisions because procurement staff would find the life-cycle
    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.
    However, USDA officials note that they believe such information would be
    helpful to procurement officials and that manufacturers could choose not
    to participate in the procurement if they did not want to provide
    life-cycle cost information.

    In commenting on a draft of this report, USDA said the report does not
    present a complete and balanced view of the progress made in implementing
    the biobased provisions of the farm bill, adding that the report
    emphasizes negative interpretations without fully reflecting the progress
    achieved. 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. USDA also indicated that it disagrees with our
    recommendation on the need to develop and execute a comprehensive
    management plan. Specifically, USDA said that 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 necessary. 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. 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.

    Regarding our recommendations that USDA clearly identify and allocate the
    staff and financial resources to be made available for implementing these
    requirements and clearly state the priority to be assigned to this work,
    USDA said it would draw on our review and recommendations as it approaches
    development of subsequent proposed rules for designating items and the
    labeling program. We believe that USDA should be more

    proactive in this regard and make clear the staff and resources to be made
    available for completing this work and the priority to be assigned to the
    work. These matters could also be addressed in a comprehensive, written
    plan for completing the work.

                                       Background

        Description of Biobased Products

    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.11 Corn, soybeans,
    vegetable (plant) oils, and wood12 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.

    11The farm bill defines "biomass" as any organic material that is
    available on a renewable or reoccurring basis, including agricultural
    crops; trees grown for energy production; wood waste and wood residues;
    plants (including aquatic plants and grasses); residues; fibers; animal
    wastes and other waste materials; and fats, oils, and greases (including
    recycled fats, oils, and greases).

    12USDA's proposed guidelines exclude biobased products originating from a
    mature market. Therefore, wood products such as lumber or plywood made
    from traditionally harvested forest materials are excluded from the
    preferred procurement program. However, other biobased products made from
    wood waste or wood residues are included in the procurement program.

               Table 1: Common Biobased Industrial and Consumer Products

    Biobased source Products

    Corn 	Solvents, pharmaceuticals, adhesives, starch, resins, binders,
    polymers, cleaners, and ethanol

    Soybeans 	Paints, toiletries, solvents, inks, pharmaceuticals, lubricants,
    biodiesel, carpet backing, and foam insulation

    Vegetable oils	Surfactants in soaps and detergents, pharmaceuticals, inks,
    paints, resins, cosmetics, fatty acids, and lubricants

    Wood 	Paper, cellulose for fibers and polymers, resins, binders,
    adhesives, coatings, paints, inks, fatty acids, and road and roofing pitch

    Source: Energetics, Incorporated for the U.S. Department of Energy,
    Industrial Bioproducts: Today and Tomorrow, July 2003.

    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.

                    Figure 1: Biobased Products Made from Corn Grain

        Importance of Biobased Products

    Biomass resources are naturally abundant and renewable, unlike fossil
    resources.13 According to the DOE,14 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.15 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.16 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

    13Fossil resources, such as oil, coal, and natural gas, are formed in the
    earth from plant and animal remains through natural processes that take
    millions of years. In contrast, biomass is a renewable resource that can
    be replenished with each new growing season.

    14In general, our references to DOE in this section of the report can be
    attributed to Industrial Bioproducts: Today and Tomorrow, July 2003, a
    study prepared by Energetics, Incorporated under contract to DOE. This
    study was co-authored by DOE staff and draws on a number of sources,
    including prior studies issued by DOE.

    15Currently, the United States imports about 65 percent of the oil it
    uses. According to DOE, this heavy dependence on imported oil negatively
    affects the U.S. trade balance and exposes our economy to potential
    disruptions in supply. About 16 percent of all petroleum used in the
    United States is used in producing industrial and consumer products. The
    remainder is used in producing various fuels and distillates.

    16According to remarks made by the President in 1999, if the nation's use
    of biobased products, including biofuels such as ethanol and biodiesel,
    triples by 2010, this growth would create as much as $20 billion annually
    in new income for farmers and rural communities by that year. In addition,
    according to DOE, this growth would create about 50,000 new high
    technology jobs in small processing plants in rural America and up to
    130,000 such jobs in biopower, bioproducts, and biofuels industries.

    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.17 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.18 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

    17Photosynthesis is the chemical process by which carbohydrates are formed
    in the chlorophyll-containing tissues of plants exposed to light.
    Carbohydrates are compounds consisting of carbon, hydrogen, and oxygen
    that include sugars, starches, and celluloses. In general, plants utilize
    carbon dioxide from the atmosphere and water from the ground in the
    photosynthesis process.

    18According to DOE, the potential for reducing carbon released to the
    atmosphere through the substitution of biobased products for
    petroleum-based products is about 3.5 million metric tons of carbon
    equivalents annually by 2010. In essence, this switch includes
    substituting the energy stored in carbohydrate molecules from a renewable
    source (plants) for the energy stored in hydrocarbon molecules from a
    nonrenewable source (fossil resources such as petroleum) and would
    represent an increasing reliance on biology in lieu of geology to meet the
    nation's resource needs.

    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.

        Federal Efforts to Promote the Use 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 1998,19 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 2010.20 Regarding legislation, the Biomass Research
    and Development Act of 2000 directs DOE and USDA to closely coordinate

    19Executive Order 13101, Greening the Government Through Waste Prevention,
    Recycling, and Federal Acquisition (Sept. 14, 1998).

    20Executive Memorandum to the Secretary of Agriculture issued with
    Executive Order 13134, Developing and Promoting Biobased Products and
    Bioenergy, (Aug. 12, 1999).

    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
    1999.21 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 2001,22 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,23 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.

    21Executive Order 13101, S: 504.

    22U.S. General Accounting Office, Federal Procurement: Better Guidance and
    Monitoring Needed to Assess Purchases of Environmentally Friendly
    Products, GAO-01-430 (Washington: D.C.: June 22, 2001).

    23The Federal Acquisition Regulation specifies rules that agencies must
    follow in their procurement actions. On June 6, 2000, the Civilian Agency
    Acquisition Council and the Defense Acquisition Regulations Council
    published a final rule amending the Federal Acquisition Regulation to
    implement Executive Order 13101. 65 Fed. Reg. 36016 (2000).

      USDA Delay in Issuing Biobased Purchasing Guidelines Has Slowed Other
      Agencies' Efforts

    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, 2003,24 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 Initial Efforts Have Only Partially Met the Farm Bill Requirements

    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

    24Guidelines for Designating Biobased Products for Federal Procurement, 68
    Fed. Reg. 70730 (proposed Dec. 19, 2003).

    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.25 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

    25USDA groups the items discussed in the preamble in the following
    categories: (1) adhesives; (2) construction materials and composites; (3)
    fibers, paper, and packaging; (4) fuel additives; (5) landscaping
    materials, compost, and fertilizer; (6) lubricants and functional fluids;
    (7) plastics; (8) paints and coatings; (9) solvents and cleaners; (10)
    sorbents; and (11) plant and vegetable inks. According to the preamble,
    the items and the indicated biobased content of items contained within the
    categories are based on a study conducted in 2002 by the Concurrent
    Technologies Corporation for USDA's Agricultural Research Service.

    few items before the end of calendar year 2004.26 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.27 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.28 USDA officials explained that this

    26In January 2004, USDA officials, including a New Uses official directly
    involved in the guidelines preparation, expressed doubt as to whether the
    agency can meet the anticipated issuance date-April 2004-for the final
    guidelines. These officials cited factors such as to the number and
    complexity of comments made on the proposed guidelines and the continued
    controversy and confusion as to what testing should be done for biobased
    products as reasons that may delay the final guidelines issuance.

    27As part of the model procurement program, USDA also plans to develop a
    framework for measuring the use of biobased products within USDA and for
    determining related benefits. This framework, if it is adopted by other
    procuring agencies, may provide a tracking mechanism for OFPP's required
    biennial reports to Congress on agencies' progress in purchasing biobased
    products.

    28According to the farm bill, agency procurement programs must contain, at
    a minimum, (1) a biobased products preference program, (2) an agency
    promotion program to promote this preference program, and (3) an annual
    review and monitoring of the effectiveness of the agency's procurement
    program.

    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.29 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.

        Federal Agencies Have Procured Small Quantities 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:

    29The Civilian Agency Acquisition Council and the Defense Acquisition
    Regulations Council publish rulemakings in the Federal Register amending
    the Federal Acquisition Regulation.

    o  	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.

    Figure 2: Biobased Cutlery

    o  	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.

    Figure 3: Application of a Biobased Deicer by Interior Employee

    Figure 4: Display of Biobased Products Used by Interior

    o  	In addition to its research activities to develop new uses of
    agricultural commodities for producing biobased products,30 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

    30In fiscal year 2003, the Agricultural Research Service received
    appropriations of $19 million for bioenergy research and $50 million for
    biobased products research.

    far less expensive than the petrochemical alternatives because the

    biobased products are readily biodegradable.31 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.

    31According to a senior official in the Office of the Federal
    Environmental Executive, USDA has not coordinated with EPA regarding how
    spills of biobased hydraulic fluids and lubricants should be handled,
    including whether the clean up of these spills should be done any
    differently than spills of petroleum-based alternatives. The Director of
    EPA's Oil Spill Staff confirmed in February 2004 that USDA had not
    contacted his office to discuss this matter. According to this official,
    EPA has not made a specific ruling regarding how spills of biobased
    hydraulic fluids and lubricants should be handled. However, absent such a
    ruling, EPA does not make a distinction between spills of these biobased
    products and their petroleum-based alternatives: both leave a sheen on top
    of water and must be cleaned up.

    Figure 5: Biobased Cleaning Products Used at USDA's Beltsville
    Agricultural Research Center

    Figure 6: Tractor Run with Biobased Lubricants and Fuels at Beltsville
    Agricultural Research Center

      USDA Could Accelerate Implementation of the Biobased Procurement Program by
      Developing a Comprehensive Management Plan and Assigning Adequate Resources

    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.

        Need for Better Planning and Coordination

    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 [for the proposed guidelines] 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.32 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.33
    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

    32At a meeting with USDA staff in February 2004, a New Uses official
    indicated that if given time, he could probably find examples of old
    e-mails discussing coordination meetings. However, we noted that we had
    requested written documentation of these meetings during our work and that
    this official said these meetings were not documented in writing.

    33The New Uses office is placed organizationally under the Office of the
    Chief Economist.

    conducting its portion of the work.34 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.35 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,36 the document

    34Management Plan for Design, Development and Deployment of USDA's Federal
    Biobased Product Preferred Procurement Program, January 9, 2004.

    35In general, a comprehensive plan also would discuss the goals or
    expected outcomes of an initiative. In this case, the farm bill makes
    clear these goals or outcomes: recommend procurement practices, designate
    items for procurement, and establish programs for labeling and
    recognition.

    36While USDA did not hire a consulting firm to implement the biobased
    provisions under the New Uses office's direction, it used funds authorized
    by the farm bill for testing to enter into cooperative agreements with two
    testing organizations to develop testing guidance and an information Web
    site for biobased products.

    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 1993,37 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.

        Need for Additional Resources

    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.38 However, New Uses
    officials said that while they were waiting for this assistance, they were
    able to continue

    37Pub. L. No. 103-62, 107 Stat. 285 (1993). 38Staff from USDA's Animal and
    Plant Health Inspection Service provided this assistance.

    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.39
    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

    39According to USDA's Office of Budget and Program Analysis and relevant
    documents, the President's budget proposals for USDA for fiscal years 2003
    and 2004 did not request funds specifically for developing the biobased
    procurement guidelines. However, the President's budget proposal for USDA
    for fiscal year 2005 seeks, among other things, an increase of $2.5
    million to be used for the biobased procurement program. Specifically,
    these funds are to be used to designate specific groupings of biobased
    products for procurement by federal agencies, establish and maintain a
    products database, develop a product labeling system, and allow for the
    continued operation and maintenance of the procurement program, once
    established, on a governmentwide basis.

    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.

        Need for Assigning a Higher Priority

    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,40 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.

    40U.S. General Accounting Office, Federal Procurement: Better Guidance and
    Monitoring Needed to Assess Purchases of Environmentally Friendly
    Products, GAO-01-430 (Washington, D.C.: June 22, 2001).

      Stakeholders Generally Agree That Some Testing of Biobased Products Is
      Necessary, but They Question the Need For Life-Cycle Analysis

    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.41 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

    41According to the preamble to USDA's proposed guidelines, USDA is
    considering requiring the analysis of the life-cycle costs and health
    benefits of a product in order for the product to qualify for use of the
    "U.S.D.A. Certified Biobased Product" label.

    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.42 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

    42As defined in USDA's proposed guidelines, small and emerging private
    business enterprises include any private business that employs 50 or fewer
    employees and has less than $1 million in projected annual gross revenues.

    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.

        Most Stakeholders Agree that Content and Performance Testing Are Necessary

    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.43
    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.44 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

    43Content is determined by doing carbon testing. This testing, done by an
    accredited laboratory, is able to differentiate between "new" carbon
    derived from plant materials (carbohydrates) and "old" carbon derived from
    fossil resources (hydrocarbons). The biobased content is determined by the
    amount of carbon derived from plant materials.

    44Performance testing, done by accredited testing organizations, assesses
    a product's performance against standards provided by the American Society
    for Testing and Materials; the International Standards Organization;
    Federal civilian or military specifications; or other industry sources.
    For example, such testing may be done on a biobased engine or gear oil to
    determine if it meets relevant standards for lubricity under a variety of
    potential operating conditions, including extreme heat or cold.

    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.

        Stakeholders Generally Question the Need for Life-Cycle Analysis

    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.45 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

    45A life-cycle analysis (or assessment) of a product includes a "cradle to
    grave" examination of the product's economic and environmental
    performance. Regarding economic performance, the costs of initial
    investment, replacement, operation, maintenance and repair, and disposal
    are generally included. Regarding environmental performance, the
    environmental and public health impacts of all stages in a product's life
    are usually examined, including raw material acquisition, manufacture,
    transportation, installation, use, and recycling and waste management.

    on one analytical tool-BEES-to perform this analysis.46 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:

    o  	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

    46BEES is an analytic software tool for performing life-cycle analysis
    that was developed by NIST. Its initial application was for the evaluation
    of building products. BEES relies on standards promulgated by the American
    Society for Testing and Materials for determining economic impacts and by
    the International Standards Organization for determining environmental
    impacts. Economic impacts are expressed as total dollar costs and
    environmental impacts are indicated as an aggregate environmental
    performance score. BEES can be used to determine trade-offs between
    competing products. For example, BEES can be used to demonstrate that a
    short-lived, low initial-cost product is often not the cost-effective
    alternative. Instead, the purchase of a higher initial cost product may be
    justified if it is more durable and maintenance-free and less costly to
    dispose. Recently, under contract with USDA, NIST adapted BEES to perform
    life-cycle analysis on biobased products. For example, NIST has updated
    its database to include performance data for eight major biomass inputs
    used in manufacturing biobased products: soybeans, corn, wheat, rice,
    cotton, canola, potatoes, and wool.

    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.

    o  	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.47 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.

    o  	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.

    47According to USDA's proposed guidelines, the agency could provide up to
    50 percent of the cost of testing a small manufacturer's product using
    BEES.

      Conclusions

    Recommendations

    o  	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:

    o  	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.

    o  	Clearly identify and allocate the staff and financial resources to be
    made available for completing this work.

    o  Clearly state the priority to be assigned to this work.

      Agency Comments
      and Our Evaluation

    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.48 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.

    48U.S. General Accounting Office, Solid Waste: Federal Program to Buy
    Products With Recovered Materials Proceeds Slowly, GAO/RCED-93-58
    (Washington, D.C.: May 17, 1993).

    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.

    Sincerely yours,

    Lawrence J. Dyckman Director, Natural Resources and Environment

    Appendix I: Objectives, Scope, and Methodology

    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

    Appendix I: Objectives, Scope, and Methodology

    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:

    o  	Federal agencies: DOD, DOE, EPA, GSA, NASA, OFPP, and White House's
    Office of the Federal Environmental Executive.

    o  Testing organizations: Iowa State University and NIST.

    o  	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.

    o  	Environmental groups: Environmental and Energy Study Institute and
    Green Seal.

    o  	Consumer groups: Center for the New American Dream and Consumer's
    Choice Council.

    o  Advocacy group: New Uses Council.

    o  	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

    Appendix I: Objectives, Scope, and Methodology

    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.

    Appendix II: Sources for Information on Biobased Products

    The following list provides the names, addresses, and Web sites for
    sources of information on biobased products used in our work.

    American Soybean Association
    12125 Woodcrest Executive Drive, Suite 100
    Creve Coeur, MO 63141-5009
    Web site: www.soygrowers.com

    Biobased Manufacturers Association
    11701 Borman Drive, Suite 300
    St. Louis, MO 63146-4193
    Web site: www.biobased.com

    Biomass Research & Development Initiative (DOE/USDA)
    U.S. Department of Energy
    1000 Independence Avenue, SW, Mail-Code EE-1
    Washington, D.C. 20585
    Web site: www.bioproducts-bioenergy.gov

    Biotechnology Industry Organization
    1225 Eye Street, NW, Suite 400
    Washington, D.C. 20005
    Web site: www.bio.org

    Consumer's Choice Council
    1367 Connecticut Avenue, NW, Suite 300
    Washington, D.C. 20036
    Web site: www.consumerscouncil.org

    Environmental and Energy Study Institute
    122 C Street, NW, Suite 630,
    Washington, D.C. 20001
    Web site: www.eesi.org

    Green Seal
    1001 Connecticut Avenue, NW, Suite 827
    Washington, D.C. 20036-5525
    Web site: www.greenseal.org

    National Corn Growers Association
    632 Cepi Drive
    Chesterfield, MO 63005
    Web site: www.ncga.com

    Appendix II: Sources for Information on Biobased Products

    New Uses Council
    c/o Doane Agricultural Services
    11701 Borman Drive, Suite 300
    St. Louis, MO 63146-4193
    Web site: www.newuses.org

    Office of the Federal Environmental Executive
    1200 Pennsylvania Ave, NW, Mail 1600S
    Washington, D.C. 20460
    Web site: www.ofee.gov

    The Center for a New American Dream
    6930 Carroll Avenue, Suite 900
    Takoma Park, MD 20912
    Web site: www.newdream.org

    United Soybean Board
    16640 Chesterfield Grove Road, Suite 130
    Chesterfield, MO 63005-1429
    Web site: www.unitedsoybean.org

    USDA Office of Energy Policy and New Uses
    300 7th Street, SW, Room 361
    Washington D.C. 20024-0130
    Web site: www.biobased.oce.usda.gov

    USDA Biobased Products and Bioenergy Coordination Council
    Office of Technology Transfer
    Agricultural Research Service
    5601 Sunnyside Avenue, Room 4-1152
    Beltsville, MD 20705-5131
    Web site: www.ars.usda.gov/bbcc/

    U.S. Department of Energy
    Industrial Technologies Program, EE-2F
    1000 Independence Ave., SW
    Washington, D.C. 20585
    Web site: www.oit.doe.gov/agriculture

    Appendix II: Sources for Information on Biobased Products

    U.S. Environmental Protection Agency
    Comprehensive Procurement Guidelines
    Office of Solid Waste (5305W)
    1200 Pennsylvania Avenue, NW
    Washington, D.C. 20460
    Web site: www.epa.gov/cpg

    Appendix III: Key Provisions of USDA's Proposed Guidelines

    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.

    Table 2: Proposed Biobased Product Categories and Related Items as Listed
    in the Preamble

    Product categories Types of items

    Adhesives  o  adhesive products

    o  adhesive additives

    o  finished products with biobased adhesives

    Construction materials and composites  o  construction material

    o  composite panels

    o  molded reinforced composites

    o  insulating foams and films

    o  components of mixed system products

                              Fibers, paper, and packaging

    o   o   o   o   o   o   o   o   o   o   o   o

    fibers
    fibers composites
    composite packaging materials
    woven fiber products
    packaging materials
    uncoated printing and writing papers
    coated printing and writing papers
    bristols
    newsprint
    sanitary tissues
    paperboard and packaging products
    other paper products

    Fuel additives  o  solid fuels

    o  liquid fuel additives

    Landscaping materials, compost, and fertilizer  o  landscaping materials

    o  compost

    o  fertilizer

    Appendix III: Key Provisions of USDA's Proposed Guidelines

                           Product categories Types of items

                            Lubricants and functional fluids

    o   o   o   o   o   o   o   o   o   o   o   o   o   o   o   o   o

    crankcase oils (water cooled engines)
    crankcase oils (air cooled engines)
    2-cycle engine oils
    fifth-wheel grease
    automotive and other metal complex grease
    total loss lubricants (wire rope, bar-chain, etc.)
    turbine and other industrial lubricants
    penetrating oils
    general purpose and other
    hydraulic, power steering, transmission fluids
    brake fluids
    cutting, drilling, and tapping oils (neat use)
    metal working concentrates (for dilution)
    forming pastes and extreme pressure stamping
    concrete and asphalt release
    metal foundry and mold release
    transformer oil and dielectric fluids

    Plastics	 o   o   o   o   o   o   o   o   o

    biodegradable foams
    durable foams
    biodegradable films
    durable films and coatings
    water-soluble polymers
    compostable molded products
    molded plastics and composites/biobased resins
    molded composites/biobased fibers
    synthetic fibers

    Paints and coatings  o  formulated product

    Solvents and cleaners  o  formulated product

    o  neat product (concentrate)

    Sorbents  o  sorbents

    o  sorbent systems

    Plant and vegetable inks  o  news inks-black

    o  news inks-color

    o  sheet-fed inks

    o  forms inks

    o  heat-set inks

    o  specialty inks

                    Source: Preamble to USDA's proposed guidelines.

               Appendix III: Key Provisions of USDA's Proposed Guidelines

    Table 3: Other Key Provisions of USDA's Proposed Guidelines and Future Plans as
                    Indicated in the Preamble Subject Key provisions

    Objectives of the guidelines  o  Determine the minimum level of biobased
    material a designated item must contain.

    o  	Propose items available for designation under the guidelines; explain
    the factors to be considered in their designation (availability, economic
    and technological feasibility, and life-cycle costs).

    o  	Identify in the guidelines the information on availability, relative
    price, performance, and environmental and public health benefits that USDA
    will provide to federal agencies on items designated for preferred
    procurement.

    o  	Set forth recommended practices for procuring biobased products and
    designated items.

    Biobased products proposed for  o  Biobased products that have mature
    markets.

    exclusion  o  	Garments, household items, and industrial or commercial
    products made from silk, cotton, or wool, unless made with a substantial
    amount of a biobased plastic product.

    o  Wood products made from traditionally harvested forest material.

    o  Products having significant national market penetration prior to 1972.

    Federal agencies' responsibilities  o  	Give a procurement preference,
    with certain exceptions, to designated items with the highest percentage
    of biobased content practicable.

    o  	Incorporate in procurement specifications biobased item preferences
    consistent with the USDA guidelines.

    o  	Establish an agency affirmative procurement program that includes a
    biobased products preference program, an agency promotion program to
    promote the preference program, and an annual review to monitor the
    effectiveness of the agency's procurement program.

    Biobased Web site USDA plans to

    o  	gather information on price, performance, and environmental and public
    health benefits from manufacturers and vendors for products, and store
    this information on a Web site;

    o  	invite manufacturers and vendors to voluntarily provide the noted
    information for the biobased products they intend to offer to federal
    agencies; and

    o  	use the voluntary, Web-based information system as the principal
    clearinghouse of information on manufacturer and vendor contact
    information, currently available products, and relevant product
    characteristics.

    Testing  o  	USDA is authorized to use $1 million of the Commodity Credit
    Corporation's funds per year for each of the fiscal years 2002 through
    2007 to support testing requirements.

    o  	USDA will consider cost-sharing for products of small and emerging
    private businesses for Building for Environmental and Economic
    Sustainability (BEES) and performance testing.

    o  	Collection of test results information will differ based on whether
    the items have been designated as part of the preferential purchasing
    program.

    o  	Manufacturers that want to participate in the initial designation
    stage of the program must submit data for content, performance, and BEES
    testing.

    o  	Manufacturers that do not participate in the designation stage have
    the responsibility to inform federal procurement officials that the items
    comply with the USDA guidelines, including the biobased content of the
    product. When asked for such information from federal agencies,
    manufacturers and vendors must provide performance and BEES data.

               Appendix III: Key Provisions of USDA's Proposed Guidelines

                                 Subject Key provisions

    Voluntary labeling program  o  	Biobased products that qualify for
    preferred procurement will be eligible for the "U.S.D.A. Certified
    Biobased Product" label, when this program is developed.

    o  Eligibility in this program requires BEES analysis and specific
    performance testing.

          Source: USDA's proposed guidelines and preamble to these guidelines.

    Appendix IV: Chronology of Steps Completed or Planned by USDA to Comply with the
    Farm Bill Requirements

    Appendix IV: Chronology of Steps Completed or Planned by USDA to Comply
    with the Farm Bill Requirements

    Note: GAO comments supplementing those in the report text appear at the
    end of this appendix.

    See comment 1.

    See comment 2.

    See comment 3.

    See comment 4.

    See comment 5. See comment 6.

    See comment 7.
    See comments 4, 5, and

    6.

    See comment 8.

    See comment 9.

    See comment 10. See comment 11.

                                    See comment 12.

                                    See comment 13.

                            See comment 14. See comment 15.

                                    See comment 16.

                                    See comment 17.

                                    See comment 18.

                                    See comment 19.

              Appendix V: Comments from the U.S. Department of Agriculture

      GAO Comments

    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,1
    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.2 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.

    1Under the Resource Conservation and Recovery Act of 1976 (42 U.S.C. S:
    6962), the Congress directed federal procuring agencies to purchase items
    composed of recovered materials and directed EPA to designate the items
    agencies should purchase.

    2U.S. General Accounting Office, Solid Waste: Federal Program to Buy
    Products With Recovered Materials Proceeds Slowly, GAO/RCED-93-58
    (Washington, D.C.: May 17, 1993).

    Appendix V: Comments from the U.S. Department of Agriculture

    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

    Appendix V: Comments from the U.S. Department of Agriculture

    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.

    Appendix V: Comments from the U.S. Department of Agriculture

    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

    Appendix V: Comments from the U.S. Department of Agriculture

    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.

    Appendix V: Comments from the U.S. Department of Agriculture

    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.

    Appendix VI: GAO Contacts and Staff Acknowledgments

    GAO Contacts 	Lawrence J. Dyckman (202) 512-3841 James R. Jones, Jr. (202)
    512-9839

    Acknowledgments 	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.

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    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
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