[Federal Register: December 16, 2005 (Volume 70, Number 241)]
[Proposed Rules]
[Page 74717-74721]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16de05-21]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1496
RIN 0560-AH39
Procurement of Commodities for Foreign Donation
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would adopt new procedures to be used by
the Commodity Credit Corporation (CCC) in the evaluation of bids in
connection with the procurement of commodities for donation overseas.
In general, CCC proposes to amend the existing regulations to provide
for the simultaneous review of commodity and ocean freight offers when
evaluating lowest-landed cost options in connection with the
procurement of commodities. This proposed rule would enhance bidding
opportunities for potential vendors while allowing CCC to more
efficiently acquire commodities.
DATES: Comments on this proposed rule must be received on or before
January 17, 2006 in order to be assured consideration. Comments on the
information collections in this proposed rule must be received by
February 14, 2006 in order to be assured consideration.
ADDRESSES: CCC invites interested persons to submit comments on this
proposed rule and on the collection of information. Comments may be
[[Page 74718]]
submitted by any of the following methods:
E-Mail: Send comments to Richard.Chavez@USDA.gov.
Fax: Submit comments by facsimile transmission to: (202)
690-2221.
Mail: Send comments to: Director, Commodity Procurement
Policy & Analysis Division, Farm Service Agency, United States
Department of Agriculture (USDA), Rm. 5755-S, 1400 Independence Avenue,
SW., Washington, DC 20250-0512.
Hand Delivery or Courier: Deliver comments to the above
address.
Federal Rulemaking Portal: Go to http://www.regulations.gov.
Follow the online instructions for submitting
comments.
Comments on the information collection requirements of this rule
must also be sent to the addresses listed in the Paperwork Reduction
Act section of this Notice. Comments may be inspected in the Office of
the Director, Commodity Procurement Policy & Analysis Division, Rm.
5755-S, 1400 Independence Avenue, SW., Washington, DC, between 8 a.m.
and 4:30 p.m., Monday through Friday, except holidays.
FOR FURTHER INFORMATION CONTACT: Richard Chavez, phone: (202) 690-0194;
E-Mail: Richard.Chavez@USDA.gov.
SUPPLEMENTARY INFORMATION:
Background
The Kansas City Commodity Office (KCCO), within the Farm Service
Agency, U.S. Department of Agriculture, procures agricultural
commodities on behalf of CCC for donation overseas under various food
aid authorities. These authorities include Title II of the Agricultural
Trade Development and Assistance Act of 1954 (Pub. L. 480), which is
administered by the U.S. Agency for International Development (USAID),
and the Food for Progress and the McGovern-Dole International Food for
Education and Child Nutrition Programs, which are administered by the
Foreign Agricultural Service within USDA. Currently, KCCO follows a
two-step ocean freight bid evaluation process in connection with the
purchase of commodities for these programs. First, KCCO issues a public
invitation soliciting bids for the sale of commodities and requests
that ocean carriers provide indications of available freight rates to
KCCO. These ``indications'' of rates are not offers to KCCO. In fact,
KCCO does not contract for ocean transportation for the donated
commodities. Ocean transportation contracting is done by the
Cooperating Sponsors (grantee organizations or foreign governments
receiving the commodities) or by USAID in the case of some Title II,
P.L. 480 shipments.
At this point, KCCO evaluates commodity bids together with the
freight rate indications to identify the combination which would most
likely result in the lowest-landed cost, i.e., the lowest combined cost
of commodities and freight to destination. CCC will purchase the
commodities to be donated overseas on that basis. Lowest-landed cost is
calculated on the basis of U.S.-flag rates for that quantity of the
commodities being purchased that is determined necessary and practical
to meet cargo preference requirements, i.e., the tonnage required to be
shipped on U.S.-flag vessels. Although KCCO does not contract for
freight, the freight costs are borne by the U.S. government from the
same accounts as the commodity costs. Therefore, purchasing on the
basis of lowest-landed cost will reduce outlays and maximize the use of
funds.
KCCO's commodity purchase determines the point at which the
commodity is delivered to the carriers. However, as stated above, the
freight rates used for this lowest-landed cost evaluation were not
firm, fixed offers. Therefore, a second step is currently necessary
that involves the Cooperating Sponsors or USAID issuing invitations for
firm freight offers. KCCO will notify the Cooperating Sponsors or USAID
of the location of the commodity as determined in its commodity bid
evaluation and the Cooperating Sponsors or USAID will issue ocean
freight invitations that will lead to actual freight bookings by the
Cooperating Sponsors or USAID on firm, fixed ocean rates.
This two-step process has been in place for many years and was
designed at the time that processed commodities were shipped at ocean
carrier tariff rates that could be readily identified. Now, as rates
are ``submitted rates'' and not tied to tariffs the process is
exceedingly cumbersome and time-consuming, typically requiring 80 man
hours each month to analyze the first-step indications. Additionally,
the process does not guarantee that commodities will be actually
purchased and shipped on the basis of lowest-landed cost. One reason
for this is that the Maritime Administration, within the Department of
Transportation, prioritizes U.S.-flag ocean service for purposes of
cargo preference and assigns a higher priority to service that uses
only U.S.-flag vessels to the final discharge point. The current two-
step process often results in commodities being purchased at locations
based upon indications of service available from U.S.-flag carriers
that have a lower priority. These port locations may not be cost-
effective for the higher priority vessels, which can then ``trump,'' or
displace, the rate of the lower priority vessels and secure the cargo
at a substantially higher rate.
CCC proposes to add clarity to the commodity bid evaluation process
by eliminating the two-step process. A major constraint to revising
this two-step process has been that computer resources available to
KCCO have been unable to analyze the large number of variables that
comprise modern government commodity procurements and the complexities
of cargo preference compliance. These include the many contract
priorities that are mandated by law as well as the shear volume of
possible commodity and freight cost variables that result from a
national bidding system. KCCO is now in the process of updating its
computer bid-evaluation systems that would be able to accommodate a
more unified one-step bid evaluation. The procurement for commodities
using firm, fixed ocean rates to determine lowest-landed cost would be
the most efficient method of procurement. Under such a system, the
cargo preference requirements would be determined initially and not
subject to a change of carriers. This should reduce the ocean freight
costs considerably because the tonnage would be consolidated by the
carriers' bids and by allowing lowest-landed cost and cargo preference
requirements to determine the U.S. delivery points. The delivery time
from call forward issuance to delivery abroad could be reduced because
the current freight evaluation process would be streamlined.
The new procedures would apply to processed and bulk commodities
and cover the assistance programs identified above. Under the proposed
system, KCCO would issue invitations for commodity bids and Cooperating
Sponsors or USAID would issue separate invitations for freight offers
at approximately the same time. Freight invitations may call for bids
to be submitted to the donee organizations or USAID via an Internet-
based bid entry system maintained by CCC approximately 3 days prior to
the time for receipt of commodity bids. Such a process would speed data
input and evaluation as compared to the transmittal of written offers.
Offers of commodities and freight would be invited on a ``bid-point''
basis, i.e., a point where the transfer of care and custody of the
commodity from the vendor to the ocean carrier takes place. This point
of transfer may include one or more terminals included under the
specific bid point designation. CCC
[[Page 74719]]
believes this specificity is desirable because a more general offer
that designates a port area can have additional transfer costs once a
specific terminal is named. CCC should be able to identify these extra
costs at the time the bids are evaluated as it may impact on true
lowest-landed cost calculations. The submitted freight offers will be
reviewed by the donee organization, AID, and/or USDA prior to bid
evaluation in order to determine the availability of service for
commodities and destinations. Furthermore, this proposed bid evaluation
process will be more efficient because ocean carriers are expected to
offer quantity increments that are the most economical for them.
After commodity offers are received, KCCO would evaluate the offers
on the basis of lowest-landed cost by a comparison with offered freight
rates. KCCO would award the commodity bid on that basis and notify the
Cooperating Sponsor of the bid accepted. The Cooperating Sponsor would
be required to book freight at the rate KCCO used for the lowest-landed
cost determination, or a lower rate, except in circumstances where, in
the opinion of the Contracting Officer and the applicable program
agency's representative, extenuating circumstances (such as internal
strife at the foreign destination or urgent humanitarian conditions
threatening the lives of persons at the foreign destination) preclude
such awards, or efficiencies and cost-savings lead to the use of
different types of ocean services such as multi-trip voyage charters,
indefinite delivery/indefinite quantity (IDIQ), delivery Cost and
Freight (C & F), delivery Cost Insurance and Freight (C I F), and
indexed ocean freight costs.
Executive Order 12866
This proposed rule is issued in conformance with Executive Order
12866. This rule has been determined to be not significant and,
therefore, it has not been reviewed by the Office of Management and
Budget.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this rule because CCC is not required by 5 U.S.C. 553 or
any other provision of law to publish a notice of proposed rulemaking
with respect to the subject matter of this rule.
Environmental Evaluation
The environmental impacts of this rule have been considered
consistent with the provisions of the National Environmental Policy Act
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council
on Environmental Quality (40 CFR parts 1500-1508), and the FSA
regulations for compliance with NEPA, 7 CFR part 799. FSA concluded
that the rule requires no further environmental review because it is
categorically excluded. No extraordinary circumstances or other
unforeseeable factors exist which would require preparation of an
environmental assessment or environmental impact statement.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988. The provisions of this rule preempt State laws to the
extent such laws are inconsistent with the provisions of this proposed
rule.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require intergovernmental consultation with State and
local officials. See the notice related to 7 CFR part 3014, subpart V,
published at 48 FR 29115 (June 24, 1983).
Unfunded Mandates Reform Act of 1995
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995
(UMRA) for State, local, and tribal governments or the private sector.
Thus, this rule is not subject to the requirements of sections 202 and
205 of the UMRA.
Paperwork Reduction Act
Title: Procurement of Processed Agricultural Commodities for
Donation.
OMB Control Number: 0560-NEW.
Type of Request: New Information Collection Package.
Abstract: The information collected under OMB Control Number 0560-
NEW is needed in the evaluation of bids in connection with the
procurement of commodities for donation overseas. This information is
submitted by steamship lines, or their respective agents, and collected
by the Kansas City Commodity Office (KCCO). This reporting requirement
imposed on the public by the regulations at 7 CFR part 1496 is
necessary to effectively administer the Title II, Pub. L. 480 program.
This proposed rule will reduce information requirements which are
imposed on the public by eliminating the need for steamship lines, or
their respective agents, to provide indications of available freight
rates to KCCO before submitting a final fixed ocean freight offer. The
procurement of commodities using firm fixed ocean rates to determine
the lowest-landed cost would be the most efficient method of
procurement. The revisions to 7 CFR part 1496 proposed in this rule
will adopt new procedures to be used by the Commodity Credit
Corporation (CCC) in the evaluation of bids in connection with the
procurement of commodities for donation overseas.
Estimate of Burden:
Respondents: Steamship Lines an/or their agents.
Estimated Number of Respondents: Approximately 15.
Estimated Number of Responses per Respondent: Approximately 8.
Estimated Total Annual Burden on Respondents: 15 hours.
Topics for comments include but are limited to the following: (a)
Whether the collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information will have practical utility; (b) the accuracy of the
agency's estimated burden including the validity of the methodology and
assumptions used; (c) ways to enhance the quality, utility and clarity
of the information to be collected; (d) ways to minimize the burden of
the collection of information on those who are to respond, including
through the use of appropriate automated, electronic, mechanical, or
other technological collection techniques or other forms of information
technology. Comments regarding these issues should be sent to the Desk
Officer for Agriculture, Office of Information and Regulatory Affairs,
Office of Management and Budget, Washington, DC 20503 and to the
Director, Commodity and Procurement Policy & Analysis Division, Farm
Service Agency, United States Department of Agriculture (USDA), Rm.
5755-S, 1400 Independence Avenue, SW., Washington, DC 20250-0512.
Comments regarding paperwork burden will be summarized and included
in the request for OMB approval. All comments will also become a matter
of public record.
Government Paperwork Elimination Act
FSA is committed to compliance with the Government Paperwork
Elimination Act, which requires Federal Government agencies to provide
the public the option of submitting information or transacting business
electronically to the maximum extent possible. The KCCO is now in the
process of updating its computer bid-evaluation systems that would
accommodate a more unified one step bid evaluation. Freight invitations
would call for bids to be submitted through a web-based entry system.
[[Page 74720]]
Most of the information collections required by this rule are fully
implemented for the public to conduct business with FSA electronically.
However, a few may be completed and saved on a computer, but must be
printed, signed and submitted to FSA in paper form.
Executive Order 12612
This rule does not have sufficient Federalism implications to
warrant the preparation of a Federalism Assessment. The provisions
contained in this rule will not have a substantial direct effect on
States or their political subdivisions, or on the distribution of power
and responsibilities among the various levels of government.
List of Subjects in 7 CFR Part 1496
Agricultural commodities, Exports, Foreign aid.
Accordingly, CCC proposes to amend 7 CFR part 1496 as follows:
PART 1496--PROCUREMENT OF PROCESSED AGRICULTURAL COMMODITIES FOR
DONATION UNDER TITLE II, PUB. L. 480
1. The authority citation for part 1496 is revised to read as set
forth above:
Authority: 7 U.S.C. 1431(b); 1721-1726a; 1731-1736g-2; 1736o;
1736o-1; 15 U.S.C. 714b and 714c; 46 U.S.C. App. 1241(b), and
1241(f).
2. The heading for part 1496 is revised to read as set forth above:
PART 1496--PROCUREMENT OF COMMODITIES FOR FOREIGN DONATION
3. Section 1496.1 is revised to read as follows:
Sec. 1496.1 General statement.
This subpart sets forth the policies, procedures and requirements
governing the procurement of agricultural commodities by CCC to be
donated for assistance overseas under title II of the Agricultural
Trade Development and Assistance Act of 1954 (Pub. L. 480); the Food
for Progress Act of 1985; the McGovern-Dole International Food for
Education and Child Nutrition Program; and any other program under
which CCC is authorized to provide agriculture commodities for
assistance overseas.
4. In Sec. 1496.2, paragraph (a) is amended by removing the last
sentence and paragraph (b) is revised to read as follows:
Sec. 1496.2 Administration.
* * * * *
(b) Purchases are made to fulfill commodity requests received from
AID in the administration of Public Law 480 and from a grantee
organization receiving commodities under the other authorities set
forth in Sec. 1496.1 of this part.
5. In Sec. 1496.4, the first sentence is revised to read as
follows:
Sec. 1496.4 Issuance of invitations.
From time to time, CCC will issue invitations to purchase or
process agricultural products for utilization in the foreign assistance
programs enumerated in Sec. 1496.1 of this part. * * *
6. In Sec. 1496.5, paragraph (b) is revised, paragraph (c) is
removed and reserved, and paragraph (d) is revised as follows:
Sec. 1496.5 Consideration of bids.
* * * * *
(b) Availability of ocean service.
(1) In determining lowest-landed cost as specified in paragraph (a)
of this section, CCC will use vessel rates offered in response to
invitations issued by AID or grantee organizations receiving
commodities under the authorities set forth in section 1496.1 of this
part. If CCC or AID, in the case of title II, Public Law 480,
determines that it is not practicable to evaluate lowest-landed cost on
the basis of a competitive ocean freight bid process, CCC may use other
methods of soliciting freight rates that CCC or AID may approve for the
foreign assistance programs that they respectively administer.
(2) In order to be considered in lowest-landed cost commodity bid
evaluations, ocean freight rates must be submitted to grantee
organizations or AID in response to an invitation for bids issued by
grantee organizations or AID. All such freight invitations for bids
must:
(i) Specify a closing time for the receipt of offers and state that
late offers will not be considered;
(ii) Provide that offers are required to have a canceling date no
later than the last contract lay day specified in the invitation for
bids;
(iii) Provide the same deadline for receipt of offers from both
U.S. flag vessel and non-U.S. flag vessels; and
(iv) Must be received and opened prior to receipt of offers for the
sale of commodities to CCC. The extent to which offered rates may be
made public will depend upon regulations or guidelines applicable to
the specific foreign assistance program involved.
(3) CCC may require donee organizations or USAID to specify in
their freight invitations that the ocean carriers submit bids
electronically through a web based system maintained by CCC. In the
event of any discrepancy between information furnished to CCC
electronically and the written offers submitted to grantee
organizations or AID, the offers submitted to the grantee organization
or AID will prevail. Copies of all written freight offers received in
response to invitations for bids must be promptly furnished to CCC and
CCC may require the grantee organization or it shipping agent to submit
a written certification that all non-electronic offers received were
transmitted to CCC.
(c) [Reserved]
(d) Port performance.
(1) CCC may contact any port prior to bid evaluation to determine
the port's cargo handling capabilities including the adequacy of the
port to receive, accumulate, handle, store, and protect the cargo.
Factors which will be considered in this determination will include,
but not be limited to, the adequacy of building structures, proper
ventilation, freedom from insects and rodents, cleanliness, and overall
good housekeeping and warehousing practices. CCC will require that
capacity information be submitted electronically by the port and or the
terminal prior to bid evaluation.
(2) If CCC determines that: A port is congested; facilities are
overloaded; a vessel would not be able to dock and load cargo without
delay; labor disputes or lack of labor may prohibit the loading of the
cargo onboard a vessel in a timely manner; or other similar situation
exists that may adversely affect the ability of CCC to have the
commodity delivered in a timely manner, CCC may consider the use of
another coastal range or port. In considering another combination of
commodity offers and vessel rate offers, CCC will adhere as closely as
possible to the principal of lowest-landed cost.
* * * * *
7. Section 1496.7 is revised to read as follows:
Sec. 1496.7 Final contract determinations.
(a) Commodity awards. (1) Invitations for the procurement of
commodities and the evaluation of bids submitted in response to such
invitations shall be performed as provided in the Federal Acquisition
Regulations (FAR) and Department of Agriculture's procurement
regulations set forth in Title 48 of the Code of Federal Regulations
(the AGAR).
(2) If more than one bid for the sale of commodities is received
and more than one delivery point has been designated in such bids, in
order to achieve a combination of a freight rate and commodity award
that produces the lowest-landed cost for the delivery of the commodity
to the foreign
[[Page 74721]]
destination, CCC may evaluate bids submitted for the sale of
commodities on a delivery point by delivery point basis. In such cases,
all bids submitted with respect to a specific delivery point will be
evaluated under the provisions of the FAR, AGAR, and the solicitation,
and CCC will determine the lowest bid for each delivery point.
(b) Combination of bids. CCC will determine which combination of
commodity bids and bids for ocean freight rate result in the lowest-
landed cost of delivery of the commodity to the foreign destination.
CCC will award the contract for the purchase of the commodity that
results in the lowest-landed cost unless the Contracting Officer
determines that extenuating circumstances preclude such awards, or
efficiency and cost-savings justify use of a different type of ocean
service. Examples of extenuating circumstances may include, but are not
limited to, internal strife at the foreign destination or urgent
humanitarian conditions threatening the lives of persons at the foreign
destination. Other types of services may include, but are not limited
to, multi-trip voyage charters, indefinite delivery/indefinite quantity
(IDIQ), delivery Cost and Freight (C & F), delivery Cost Insurance and
Freight (C I F), and indexed ocean freight costs. Before contracts are
awarded for other than a lowest-landed cost, the Contracting Officer
shall consult with the applicable program agencies, and set forth, in
writing, the reasons the contracts should be awarded on other than a
lowest-landed cost.
(c) Notification of awards. (1) The party submitting the accepted
commodity procurement bid will be notified of the acceptance of the bid
by CCC.
(2) AID or the grantee organization, or its shipping agent, will be
notified of the vessel freight rate used in determining the commodity
contract award. The grantee organization or AID will be responsible for
finalizing the charter or booking contract with the vessel representing
the freight rate so used.
Signed at Washington, DC, on December 6, 2005.
Teresa C. Lasseter,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. E5-7460 Filed 12-15-05; 8:45 am]
BILLING CODE 3410-05-P