Foreign Assistance:

Donation of U.S. Planting Seed to Russia in 1999 Had Weaknesses

NSIAD-00-91: Published: Mar 9, 2000. Publicly Released: Apr 10, 2000.

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Pursuant to a congressional request, GAO provided information on weaknesses in the donation of U.S. planting seed to Russia in 1999, focusing on: (1) how the seed was procured in the United States; (2) how seeds were distributed and monitored in Russia; and (3) what the process was for selling the seed and distributing the proceeds to agricultural development institutions.

GAO noted that: (1) under time pressure to buy and ship the seed to Russia to meet planting dates, Department of Agriculture (USDA) officials procured the seed through a noncompetitive, sole source contract for $21.7 million; (2) this decision forced the United States to donate the seed to Russia rather than finance its sale with a concessional loan; (3) procurement officials in USDA did not have time to develop expertise on the technical aspects of international seed shipments nor did they have access to independent sources of price information before entering into negotiations with the sole source contractor; (4) seed distribution in Russia did not follow the original plans, and reasons for changes were not fully documented; (5) some deliveries of corn and pea seed were verified by U.S. government monitors, but the regional distribution of the other vegetable seeds was not confirmed, and there is conflicting information about what happened to these seeds; (6) also, some seed arrived in the regions too late to be planted; (7) monitoring reports show that two common complaints from Russian producers were a lack of technical information on seed types and delivery of seed that was not appropriate for local growing conditions; (8) the sale of the donated seed to regional wholesalers and government agencies in Russia raised about $2.6 million (about one-eighth of what was paid to the sole source contractor that procured and shipped the seed to Russian ports); (9) according to USDA officials, they used a methodology for determining fair, wholesale market prices for U.S. food aid commodities in Russia, but GAO found scant documentation of how this methodology was used to set prices for the donated U.S. planting seed; (10) also, the prices for the donated U.S. seed were substantially lower than prices for corn and vegetable seed reported by some private companies in Russia; (11) the distribution of the proceeds from the sale of seeds generally followed the original plan; and (12) while there were some delays in the payment for seeds, all the expected proceeds have been deposited into a special account in Russia, and most of the funds were distributed to four seed research institutions and a rural credit cooperative fund.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Agriculture in its June 27, 2000, statement of action reiterates its position that the Bilateral Working Group made pricing determinations after a review of pricing information presented by the Russian Ministry of Agriculture and Food and Russian Ministry of Trade. The Department adds that, in the fiscal year 2000 seed food aid program to Russia, a public auction approach was used to set prices. It said that this produced mixed results that, while providing more transparency and market-oriented pricing, some seeds were delayed and others were not sold. In its statement of actions, the Department of Agriculture did not address the issue of documentation as it relates to pricing. This was a fundamental part of GAO's recommendation. Without adequate documentation, it is difficult not impossible to assess pricing decisions.

    Recommendation: To improve the management of the distribution and sale of future donations of seed to Russia, the Secretary of Agriculture should direct the Foreign Agricultural Service to fully document the price discovery process for U.S. seed in Russia.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: The Department of Agriculture's Statement of action dated June 27, 2000, indicated that because of short turnaround time in the fiscal year 1999 food aid seed program, the U.S. Supplier was unable to print and affix Russian language labels to the bags of donated U.S. seeds. The Department noted that in the fiscal 2000 seed program Russian language labels are attached to the bags of donated U.S. seeds. It also informed us that English and Russian language information on the seed varieties has been provided to the Russian agent handling the seeds under the fiscal year 2000 agreement who, in turn, provides it to the prospective buyers of seeds.

    Recommendation: To improve the management of the distribution and sale of future donations of seed to Russia, the Secretary of Agriculture should direct the Foreign Agricultural Service to put Russian language labels on seed packages and include more information about the seed to producers at the time of distribution.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Not Implemented

    Comments: The Department of Agriculture's statement of actions asserts that the method of distribution of U.S. seeds matched to the extent possible the growing conditions in the recipient regions of Russia. It further stated that the seeds provided met the maturity qualifications for recipient regions as the Russians had specified in the Food Aid Agreement. The Department noted that if the seeds arrived late or were not available for planting according to schedule, they could be stored until the next planting season instead of being planted late and not reaching maturity before harvest. It added that the U.S. obligation under the agreement was to monitor delivery of seeds to the point of delivery to the first buyer. GAO believe that USDA could have developed a more balanced and coordinated effort to provide seeds appropriate to a particular region in a timely manner.

    Recommendation: To improve the management of the distribution and sale of future donations of seed to Russia, the Secretary of Agriculture should direct the Foreign Agricultural Service to establish methods of distributing U.S. seed to match (to the extent possible) the growing conditions in the recipient regions in Russia.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Not Implemented

    Comments: The Department of Agriculture statement of actions reflects its satisfaction with its current monitoring system for donated seeds in Russia. GAO's report reflects that, while some monitoring by U.S. and Russian officials as well by technical experts occurred, those efforts were limited and in need of significant improvement. GAO found that the entire seed donation and food aid distribution process was impaired by major internal control weaknesses that included inadequate documentation and reporting and thus did not minimize the potential for fraud or abuse, one of the Department's key goals in the food aid program.

    Recommendation: To improve the management of the distribution and sale of future donations of seed to Russia, the Secretary of Agriculture should direct the Foreign Agricultural Service to establish an effective monitoring system to verify receipt of seed to the regions and the status of unplanted seed (to ensure it is stored in appropriate conditions to maintain its quality.)

    Agency Affected: Department of Agriculture

  5. Status: Closed - Implemented

    Comments: The Department of Agriculture in its statement of action indicates that the Farm Service Agency (FSA) accessed the American Seed Trade Association (ASTA) for advice on the U.S. seed industry and for technical assistance and related information. The Department describes improvements in this process by identifying the following changes made for the Fiscal Year 2000 U.S. seed donation program to Russia: (1) all seeds purchases are being conducted using open tenders; (2) invitations soliciting supplier bids are sent to a large list of potential vendors provided by the national seed trade association (ASTA) and supplemented through efforts by FSA; (3) information on variety descriptions and characteristics has been obtained from various non-supplier-sources; (4) information on certain patented varieties has been obtained from non-supplier sources and shared within USDA and the Russian Government; and (5) FSA has identified a number of seed experts, both in research agencies of the USDA and in private industry, to provide technical expertise and to advise on future program purchases. The implementation of these revised processes is ongoing and should be evaluated after the Fiscal Year 2000 program is completed.

    Recommendation: In order to more effectively prepare for future government sales or donations of U.S. planting seed, the Secretary of Agriculture should direct the Farm Service Agency to identify independent and reliable sources of technical expertise to provide assistance in evaluating seed varieties, and testing, and to provide information on the U.S. seed industry.

    Agency Affected: Department of Agriculture

  6. Status: Closed - Implemented

    Comments: The Department of Agriculture in its June 27, 2000, statement of action on this recommendation stated that the Foreign Agricultural Service did share information on bilateral discussions of seed sales or donations in a timely manner with the Farm Service Agency in order to facilitate open and competitive procurement of seed. The Department's response did not provide specific details on how it has improved the process for the Fiscal Year 2000 U.S. Donation of Planting Seeds to Russia.

    Recommendation: In order to more effectively prepare for future government sales or donations of U.S. planting seed, the Secretary of Agriculture should direct the Foreign Agricultural Service to share information on bilateral discussions of seed sales or donations in a timely manner with the Farm Service Agency in order to facilitate open and competitive procurement of seed.

    Agency Affected: Department of Agriculture

  7. Status: Closed - Not Implemented

    Comments: The Department of Agriculture statement of actions contends that FAS, ASTA, and seed experts did carry out an evaluation of seed performance for the fiscal year 1999 program. GAO's report acknowledges limited reviews made by these groups. However, these efforts either individually or collectively represent compliance with the provision of the Food For Progress agreement that USDA and Russian officials carry out an assessment of the performance of planting seed, including germination and yields. As stated in the GAO report, a formal report has not been produced, and there has been no attempt to systematically gather information on yields or other performance measures. USDA sent a team to Russia in September of 1999 to assess Russian food needs for the coming year. No assessment was made of performance under the 1999 seed donation program despite numerous weaknesses and problems encountered in the program.

    Recommendation: To improve the management of the distribution and sale of future donations of seed to Russia, the Secretary of Agriculture should direct the Foreign Agricultural Service to carry out an evaluation of seed performance with the goal of analyzing the results to improve future seed donation programs.

    Agency Affected: Department of Agriculture

 

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