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 [email protected].

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.

Related GAO Products

Federal Procurement: Government Agencies Purchases of Recycled- Content
Products. GAO-02-928T. Washington, D.C.: July 11, 2002.

Federal Procurement: Better Guidance and Monitoring Needed to Assess
Purchases of Environmentally Friendly Products. GAO-01-430. Washington,
D.C.: June 22, 2001.

Solid Waste: Federal Program to Buy Products With Recovered Materials
Proceeds Slowly. GAO/RCED-93-58. Washington, D.C.: May 17, 1993.

Solid Waste: Progress in Implementing the Federal Program to Buy Products
Containing Recovered Materials. GAO/T-RCED-92-42. Washington, D.C.: Apr.
3, 1992.

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