Local and Regional Food Aid Procurement Program, 43006-43019 [2016-15537]

Agencies

• DEPARTMENT OF AGRICULTURE
• Foreign Agricultural Service

[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)]
[Rules and Regulations]
[Pages 43006-43019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15537]


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DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1590

RIN 0551-AA87


Local and Regional Food Aid Procurement Program

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Final rule with request for comments.

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SUMMARY: This document establishes rules to govern the award of funds 
by the Foreign Agricultural Service (FAS) to recipients under the USDA 
Local and Regional Food Aid Procurement Program (USDA LRP Program). 
Section 3206 of the Food, Conservation, and Energy Act of 2008, as 
amended by the Agricultural Act of 2014, provides that the Secretary of 
Agriculture will provide grants to, or enter into cooperative 
agreements with, eligible organizations to implement field-based 
projects that consist of local or regional procurements of eligible 
commodities in developing countries to provide development assistance 
and respond to food crises and disasters. The intended effects of the 
USDA LRP Program are to support development activities aimed at 
strengthening the trade capacity of food-insecure developing countries 
and to address the cause of chronic food insecurity. The regulation 
also addresses how emergency programming will be addressed.

DATES: Effective July 1, 2016.
    Comment Dates: Written comments must be received by FAS or carry a 
postmark or equivalent no later than August 30, 2016.

ADDRESSES: Submit comments to:
     Federal Rulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments.
     Director, Food Assistance Division, Office of Capacity 
Building and Development, Foreign Agricultural Service, 1400 
Independence Ave. SW., STOP 1034, Washington, DC 20250.

FOR FURTHER INFORMATION CONTACT: Director, Food Assistance Division, 
Office of Capacity Building and Development, Foreign Agricultural 
Service, 1400 Independence Ave. SW., STOP 1034, Washington, DC 20250. 
Telephone: (202) 720-4221; Fax: (202) 690-0251; Email: 
FAD_Contact@fas.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

Overview

    Section 3206 of the Food, Conservation, and Energy Act of 2008 (the 
``2008 Farm Bill''), as amended by the Agricultural Act of 2014 (the 
``2014 Farm Bill''), provides that the Secretary of Agriculture will 
establish a program to provide grants to, or enter into cooperative 
agreements with, eligible organizations to procure locally or 
regionally produced commodities to respond to food crises and 
disasters. International nongovernmental organizations (NGOs) and 
intergovernmental organizations, like the World Food Program (WFP), 
have successfully utilized local and regional procurement over the last 
decade. Local and regional procurement, which has increasingly become a 
key element in the multilateral food aid response, is used to purchase 
food in countries affected by disasters and food crises or in a 
different country within the same region.
    Currently many bilateral food assistance donors have shifted from 
commodity-based in-kind food aid to a cash-based food assistance 
program. The World Food Program has cited that the use of cash-based 
programs enables NGOs and intergovernmental organizations to purchase 
food locally or regionally in order to deliver assistance to 
beneficiaries quickly and cost-effectively, while also providing 
development benefits to local communities by strengthening agricultural 
markets where the food is purchased.
    Several academic and other studies have cited significant cost and 
time savings for certain commodities and in certain areas.\1\ For 
example, GAO found that in Sub-Saharan Africa, local procurement cost 
about 34 percent less than similar in-kind U.S. food aid shipments. 
Some studies cited by the Government Accountability Office noted that 
large cash purchases in some developing countries could have 
detrimental effects on local market conditions if not carefully done. 
In cases where local purchases might substantially raise local market 
prices, in-kind donations of commodities may be more beneficial. 
Similarly, GAO and others have noted that in-kind donations can also 
have detrimental effects depending on local market conditions, 
depressing local farmers' prices if not carefully done. As the largest 
international food aid donor, contributing over half of all global food 
aid supplies to alleviate hunger and support development, the United 
States plays an important role in responding to

[[Page 43007]]

food assistance needs and ensuring global food security. U.S. 
international food assistance programs must maintain flexibility and 
use the approach that best serves the in-country food security 
situation.
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    \1\ See, for example, Erin C. Lentz, Simone Passarelli, 
Christopher B. Barrett, ``The Timeliness and Cost-Effectiveness of 
the Local and Regional Procurement of Food Aid,'' World Development, 
Available online 1 March 2013, ISSN 0305-750X, 10.1016/
j.worlddev.2013.01.017; Barrett, Christopher B., Samuel D. Bell, 
Teevrat Garg, Miguel I. Gomez, Aur[eacute]lie P. Harou, Erin C. 
Lentz, Simone Passarelli, Joanna B. Upton and William J. Violette. 
``Final Report: A Multidimensional Analysis of Local and Regional 
Procurement of US Food Aid,'' January 2012. Cornell University; and 
General Accountability Office, Local and Regional Procurement Can 
Enhance the Efficiency of U.S. Food Aid, but Challenges May 
Constrain Its Implementation, GAO-09-570: Published: May 29, 2009. 
Publicly Released: Jun 4, 2009, https://www.gao.gov/products/GAO-09-570. Appendix VI of the GAO report includes a review of literature 
on local and regional procurement.
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    The USDA LRP Program adds another mechanism to deliver food 
assistance to the federal programs currently providing assistance, 
including Title II of the Food for Peace Act and International Disaster 
Assistance under the Foreign Assistance Act of 1961, both of which 
currently utilize local and regional procurement and are administered 
by the U.S. Agency for International Development, and USDA's Food for 
Progress Program and McGovern-Dole International Food for Education and 
Child Nutrition (``McGovern-Dole'') Program. The USDA LRP Program aims 
to support development activities to strengthen the capacity of food-
insecure developing countries and address the cause of chronic food 
insecurity. Other objectives of the USDA LRP Program are to support the 
consumption of locally produced food and strengthen local value chains 
and all associated procurement activities. The USDA LRP Program will 
focus primarily on development programs, although the rule also 
provides for the furnishing of food assistance through an emergency 
response. Given the role of the United States Agency for International 
Development (USAID) as the lead agency in the provision of U.S. 
emergency humanitarian assistance, any emergency response will be 
determined in consultation with the USAID Administrator, as provided 
for in section 3206(b)(2) of the 2008 Farm Bill, as amended, to ensure 
programs address the highest priority needs only and are not 
duplicative.

Lessons From Pilot Program

    The 2008 Farm Bill, as enacted on June 18, 2008, authorized and 
funded a pilot program (the USDA LRP pilot program) to test different 
approaches and study practical lessons regarding the timeliness, cost 
effectiveness, impacts on market, and quality and other benefits of 
locally procured food assistance. Twenty-one local and regional 
procurement pilot projects were funded in nineteen countries. An 
independent evaluation that examined the activities of the final twenty 
projects in eighteen countries (due to the cancellation of one project) 
demonstrated that locally procured food assistance can provide food 
assistance at lower cost, with a shorter delivery time, and in some 
cases has other development benefits. The full evaluation can be viewed 
at https://www.fas.usda.gov/newsroom/local-and-regional-food-aid-procurement-pilot-project-independent-evaluation-report.
    To address food safety and quality and market sensitivities, the 
USDA LRP Program will build capacity to meet quality standards and 
product specifications to ensure food safety and nutritional content 
within each project and with its beneficiaries. To address market 
sensitivities around local and regional purchases, the USDA LRP Program 
will work with its recipients to improve the reliability and utility of 
market intelligence in areas where the USDA LRP Program is implemented, 
seeking to ensure that the USDA LRP Program minimizes potential adverse 
impacts and maximizes potential benefits.

Program Essentials

    The 2008 Farm Bill, as amended by the 2014 Farm Bill, authorizes 
the Secretary to provide grants to, or enter into cooperative 
agreements with, eligible organizations to implement international 
field-based projects that consist of local or regional procurements of 
eligible commodities to fill nutritional gaps for targeted populations 
and respond to food availability gaps generated by unexpected 
emergencies. The USDA LRP program will use the local or regional 
procurement of commodities for distribution in developing countries to 
complement existing food aid programs, giving preference to the 
McGovern-Dole Program. The Food and Agricultural Organization of the 
United Nations states that there is global consensus recognizing child 
nutrition as an essential element to improve not only the health and 
well-being of children around the world, but also the social and 
economic development of communities and countries. Under the USDA LRP 
Program, FAS will provide grants to, or enter into cooperative 
agreements with, private voluntary organizations, cooperatives, and the 
World Food Program to undertake activities such as strengthening value 
chains and other procurement activities.
    The USDA LRP Program will be used for development projects, and 
focus on supplementing U.S. commodity purchases through the McGovern-
Dole Program. The USDA LRP Program will focus on developing appropriate 
supply chains for the procurement of commodities from local producers. 
School meals using locally purchased foods will add locally known 
varieties to the meals, which may make them more appealing to the 
children and help increase nutrition. In cases where supply chains need 
to be strengthened in order to support a workable and reliable supply 
of food for the McGovern-Dole Program, the USDA LRP Program can work 
with producers, school authorities, and local municipalities in 
communities around schools to provide technical and management 
expertise to build reliable supply systems, as well as to procure 
commodities.
    The USDA LRP Program will aim to strengthen rural farm communities 
economically and incentivize school attendance in order to improve 
education, while at the same time work with host country governments to 
build a type of safety net for those populations in great need. For 
example, this type of programing can address multiple issues in many 
developing countries, of which many have large, agricultural based 
economies with rural populations in need of education and market 
opportunities.

Notice and Comment

    This rule is being issued as a final rule without prior notice and 
opportunity for comment. The Administrative Procedure Act exempts rules 
``relating to agency management or personnel or to public property, 
loans, grants, benefits, or contracts'' from the statutory requirement 
in 5 U.S.C. 553, which includes the requirement for prior notice and 
opportunity for comment (5 U.S.C. 553(a)(2)). However, members of the 
public may participate in this rulemaking by submitting written 
comments, data, or views. FAS will consider the comments received and 
may conduct additional rulemaking based on the comments. Written 
comments must be received by FAS or carry a postmark or equivalent no 
later than 60 days after publication of this rule in the Federal 
Register.

Effective Date

    The Administrative Procedure Act (5 U.S.C. 553) provides generally 
that before rules are issued by Government agencies, the rule must be 
published in the Federal Register, and the required publication of a 
substantive rule is to be not less than 30 days before its effective 
date. However, noted above, one of the exceptions is that section 553 
does not apply to rulemaking that involves a matter relating to 
benefits. Therefore, because this rule relates to benefits, this final 
rule is effective when published in the Federal Register. This will 
allow us to provide greater access to local and regional procured food 
aid as soon as possible during the 2016 school year.

[[Page 43008]]

Catalog of Federal Domestic Assistance

    The program covered by this regulation is listed in the Catalog of 
Federal Domestic Assistance (CFDA) under the following FAS CFDA number: 
10.612, USDA LRP Program.

Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction Act of 1995, the 
following new information collection request that supports USDA's Local 
and Regional Food Aid Procurement Program was submitted to OMB for 
emergency approval. FAS is requesting comments from interested 
individuals and organizations on the information collection activities 
related to USDA's Local and Regional Food Aid Procurement application 
process and reporting requirements.
    Title: USDA's Local and Regional Food Aid Procurement Program.
    OMB Control Number: 0551-New.
    Type of Request: New Collection.
    Abstract: Under the USDA Local and Regional Food Aid Procurement 
Program, information will be gathered from applicants desiring to 
receive grants or enter into cooperative agreements under the USDA LRP 
Program to determine the viability of requests for resources to 
implement activities in foreign countries. Recipients of grants or 
cooperative agreements under the USDA LRP Program must submit 
performance and financial reports until funds provided by FAS and 
commodities purchased with such funds are utilized. Documents are used 
to develop effective grant or cooperative agreements and assure that 
statutory requirements and program objectives are met.
    Estimate of Burden: The public reporting burden for each respondent 
resulting from information collection under the USDA Local and Regional 
Food Aid Procurement Program varies in direct relation to the number 
and type of agreements entered into by such respondent. The estimated 
average reporting burden for USDA Local and Regional Food Aid 
Procurement Program is 78 hours per response.
    Type of Respondents: Private voluntary organizations, cooperatives, 
and intergovernmental organizations.
    Estimated Number of Respondents: 22 per annum.
    Estimated Number of Responses per Respondent: 17 per annum.
    Estimated Total Annual Burden of Respondents: 29,172 hours.
    Copies of this information collection can be obtained from Connie 
Ehrhart, the Agency Information Collection Coordinator, at (202) 690-
1578 or email at Connie.Ehrhart@fas.usda.gov.
    Request for Comments: Send comments regarding (a) whether the 
proposed 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 estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility and clarity of 
the information to be collected; and (d) ways to minimize the burden of 
the collection of information on those who are to respond, including 
through the use of automated, electronic, mechanical, or other 
technological collection techniques or other forms of information 
technology. Comments may be sent to:
     Federal Rulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments.
     Director, Food Assistance Division, Office of Capacity 
Building and Development, Foreign Agricultural Service, 1400 
Independence Ave. SW., STOP 1034, Washington, DC 20250.

All comments received in response to this notice, including names and 
addresses when provided, will be a matter of public record. Comments 
will be summarized and included in the submission for Office of 
Management and Budget approval.
    On February 16, 2016, FAS published in the Federal Register a 
notice entitled ``Notice of Request for Approval of a New Information 
Collection'' at 81 FR 7742. This notice included a 60 day comment 
period for interested individuals to provide comments on the 
information collection burden of the USDA LRP Program. As such, the 
notice duplicates the request for comments above pertaining to the 
information collection burden of the USDA LRP Program. Interested 
parties may provide comments on the information collection burden 
either by providing comments on this rule or on the Federal Register 
notice that was published on February 16, 2016. It is not necessary to 
provide comments on both documents.

E-Government Act Compliance

    FAS is committed to complying with the E-Government Act of 2002 (44 
U.S.C. chapter 36), to promote the use of the Internet and other 
information technologies to provide increased opportunities for 
citizens' access to Government information and services, and for other 
purposes.

Executive Orders 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility.
    The Office of Management and Budget (OMB) designated this rule as 
significant under Executive Order 12866, ``Regulatory Planning and 
Review,'' and therefore, OMB has reviewed this rule. The costs and 
benefits of this final rule are summarized below. The full cost benefit 
analysis is available on regulations.gov.

Summary of Economic Impacts

    The economic benefits of local and regional procurement have been 
identified in a number of studies \2\ in addition to the USDA LRP pilot 
program during the period of 2009-2012, the results of which are 
documented in an independent evaluation report (https://www.fas.usda.gov/newsroom/local-and-regional-food-aid-procurement-pilot-project-independent-evaluation-report). For example, the results 
of the USDA LRP pilot program included: Cost savings in transport, 
shipping, and handling; better match between recipients' needs and 
program commodity availability; and time savings between the 
procurement and delivery of food, which is especially important in 
emergency situations. Since commodities purchased under the USDA LRP 
pilot program did not need to be shipped across oceans and were 
purchased nearer the final destination, the transport, shipping, and 
handling costs were on average lower than in-kind food assistance. In 
projects where recipients were children, improved commodity match 
resulted in more of the food provided being consumed, yielding 
nutritional gains. Delivery times for emergency food aid under the USDA 
LRP pilot program yielded faster delivery than in-kind food aid shipped 
from the United States. As a result of the USDA LRP pilot program, 
small-scale producers and suppliers began pooling resources to achieve 
economies of scale to increase their profitability. The USDA LRP 
Program is intended to maximize the impact of food assistance, 
consistent with the positive results achieved under the USDA LRP pilot 
program.
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    \2\ See, for example, the references included in footnote 1.

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Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988. This rule does not preempt State or local laws, regulations, or 
policies unless they present an irreconcilable conflict with this rule. 
This rule will not be retroactive.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with officials of State and local 
governments that would be directly affected by the proposed Federal 
financial assistance. The objectives of the Executive Order are to 
foster an intergovernmental partnership and a strengthened federalism 
by relying on State and local processes for the State and local 
government coordination and review of proposed Federal financial 
assistance and direct Federal development. This rule will not directly 
affect State or local officials and, for this reason, it is excluded 
from the scope of Executive Order 12372.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally requires an agency to prepare a regulatory flexibility 
analysis of any rule that is subject to notice and comment rulemaking 
under the Administrative Procedure Act (APA) or any other law, unless 
the agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The Regulatory 
Flexibility Act does not apply to this rule because FAS is not required 
by the APA or any other law to publish a notice of proposed rulemaking 
with respect to the subject matter of the rule. FAS is unaware of any 
possible negative effects for U.S. small entities as a result of the 
USDA LRP Program.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' This rule will not have any substantial direct effect 
on States, on the relationship between the Federal government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, except as required by law. This rule does 
not impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States was not required.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes. FAS does not expect 
this rule to have any effect on Indian tribes.

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because it does not impose any enforceable duty 
or contain any unfunded mandate as described under the UMRA.

List of Subjects in 7 CFR Part 1590

    Food assistance programs, Grant programs--agriculture, Technical 
assistance, Local and regional procurement.

    For the reasons stated in the preamble, the Foreign Agricultural 
Service amends 7 CFR chapter XV by adding part 1590 to read as follows:

PART 1590--UNITED STATES DEPARTMENT OF AGRICULTURE LOCAL AND 
REGIONAL FOOD AID PROCUREMENT PROGRAM

Sec.
1590.1 Purpose and applicability.
1590.2 Definitions.
1590.3 Eligibility and conflicts of interest.
1590.4 Application process.
1590.5 Agreements.
1590.6 Procurement of eligible commodities.
1590.7 Payments.
1590.8 Transportation of procured commodities.
1590.9 Entry, handling, and labeling of commodities and notification 
requirements.
1590.10 Damage to or loss of procured commodities.
1590.11 Claims for damage to or loss of procured commodities.
1590.12 Use of procured commodities, FAS-provided funds, and program 
income.
1590.13 Monitoring and evaluation requirements.
1590.14 Reporting and record keeping requirements.
1590.15 Subrecipients.
1590.16 Noncompliance with an agreement.
1590.17 Suspension and termination of agreements.
1590.18 Opportunities to object and appeals.
1590.19 Audit requirements.
1590.20 Paperwork Reduction Act.

    Authority: 7 U.S.C. 1726c.


Sec.  1590.1  Purpose and applicability.

    (a)(1) This part sets forth the general terms and conditions 
governing the award of funds by the Foreign Agricultural Service (FAS) 
to recipients under the U.S. Department of Agriculture (USDA) Local and 
Regional Food Aid Procurement Program (USDA LRP Program). Under the 
USDA LRP Program, recipients use FAS-provided funds to purchase 
eligible commodities in developing countries and pay for associated 
administrative and operational costs related to the implementation of 
field-based projects in a foreign country pursuant to an agreement with 
FAS.
    (2) Funds provided by FAS under the USDA LRP Program may be used to 
provide food assistance in the form of development assistance, an 
emergency response, or both through a field-based project. Field-based 
projects intended to provide development assistance will be implemented 
for a period of not less than one year. Food assistance may be provided 
under the USDA LRP Program through local and regional procurement, food 
vouchers, and cash transfers.
    (3) FAS will consult with the United States Agency for 
International Development in the development and implementation of 
field-based projects that will provide food assistance in the form of 
an emergency response.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards at 2 CFR part 200. In 2 CFR 400.1, USDA 
adopted OMB's guidance in subparts A through F of 2 CFR part 200, as 
supplemented by 2 CFR part 400, as USDA's policies and procedures for 
uniform administrative requirements, cost principles, and audit 
requirements for federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and by this part, applies to the USDA LRP Program, except as 
provided in paragraph (e) of this section.
    (c) Except as otherwise provided in this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the USDA LRP Program.

[[Page 43010]]

    (d) In accordance with 7 U.S.C. 1726c(a)(4), assistance under the 
USDA LRP Program may be provided to a private voluntary organization or 
a cooperative that is, to the extent practicable, registered with the 
Administrator of the U.S. Agency for International Development or to an 
intergovernmental organization, such as the World Food Program.
    (e)(1) The OMB guidance at subparts A through E of 2 CFR part 200, 
and the corresponding provisions of 2 CFR part 400 and of this part, 
apply to all awards by FAS under the USDA LRP Program to all recipients 
that are private voluntary organizations or cooperatives, including a 
private voluntary organization that is a foreign organization, as 
defined in 2 CFR 200.47, and a cooperative that is a for-profit entity 
or a foreign organization. Subpart F of 2 CFR part 200, and the 
corresponding provisions of 2 CFR part 400 and this part, apply only to 
awards by FAS to recipients that are private voluntary organizations or 
non-profit cooperatives but that are not foreign organizations. The OMB 
guidance at 2 CFR part 200, and the provisions of 2 CFR part 400 and of 
this part, do not apply to an award by FAS under the USDA LRP Program 
to a recipient that is a foreign public entity, as defined in 2 CFR 
200.46, and, therefore, they do not apply to an intergovernmental 
organization.
    (2) The OMB guidance at subparts A through E of 2 CFR part 200, and 
the corresponding provisions of 2 CFR part 400 and of this part, apply 
to all subawards to all subrecipients under this part, except in cases:
    (i) Where the subrecipient is a foreign public entity; or
    (ii) Where FAS determines that the application of these provisions 
to a subaward to a subrecipient that is a foreign organization would be 
inconsistent with the international obligations of the United States or 
the statutes or regulations of a foreign government or would not be in 
the best interest of the United States.


Sec.  1590.2  Definitions.

    These are definitions for terms used in this part. The definitions 
in 2 CFR part 200, as supplemented in 2 CFR part 400, are also 
applicable to this part, with the exception that, if a term that is 
defined in this section is defined differently in 2 CFR part 200 or 
part 400, the definition in this section will apply to such term as 
used in this part.
    Activity means a discrete undertaking within a project to be 
carried out by a recipient, directly or through a subrecipient, that is 
specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant or cooperative agreement 
entered into between FAS and a recipient to implement a field-based 
project under the USDA LRP Program.
    Codex Alimentarius means the program of the United Nations Food and 
Agriculture Organization and the World Health Organization that was 
created to develop food standards, guidelines, and related texts, such 
as codes of practice to protect the health of consumers, ensure fair 
trade practices in the food trade, and promote the coordination of all 
food standards work undertaken by international governmental and 
nongovernmental organizations.
    Cooperative means a private sector organization whose members own 
and control the organization and share in its services and its profits 
and that provides business services and outreach in cooperative 
development for its membership.
    Cost sharing or matching means the portion of project expenses, or 
necessary goods and services provided to carry out the project, not 
paid or acquired with Federal funds. The term may include cash or in-
kind contributions provided by recipients, subrecipients, foreign 
public entities, foreign organizations, or private donors.
    Country of origin means the country in which the procured 
commodities were produced.
    Developing country means a country that has a shortage of foreign 
exchange earnings and has difficulty meeting all of its food needs 
through commercial channels.
    Development assistance means an activity or activities that will 
enhance the availability of, access to, or the utilization of adequate 
food to meet the caloric and nutritional needs of populations suffering 
from chronic food insecurity, or enhance the ability of such 
populations to build assets to protect against chronic food insecurity.
    Disaster means an event or a series of events that creates a need 
for emergency food assistance by threatening or resulting in 
significantly decreased availability of, or access to, food or the 
erosion of the ability of populations to meet food needs. Disasters 
include, but are not limited to, natural events such as floods, 
earthquakes, and drought; crop failure; disease; civil strife and war; 
and economic turmoil. Disasters can be characterized as slow or rapid-
onset. The situation caused by a disaster is a ``food crisis.''
    Disburse means to make a payment to liquidate an obligation.
    Eligible commodity means an agricultural commodity, or the product 
of an agricultural commodity, that is produced in and procured from a 
developing country, and that meets each nutritional, quality, and 
labeling standard of the target country, as determined by the Secretary 
of Agriculture, as well as any other criteria specified in section 
Sec.  1590.6(b).
    Emergency response means an activity that is designed to meet the 
urgent food and nutritional needs of those affected by acute or 
transitory food insecurity as a result of a disaster.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FAS-provided funds means U.S. dollars provided under an agreement 
to a recipient, or through a subagreement to a subrecipient, for 
expenses for the purchase, ocean and overland transportation, and 
storage and handling of the procured commodities; expenses involved in 
the administration, monitoring, and evaluation of the activities under 
the agreement; and operational costs related to the implementation of 
the field-based project under the agreement.
    Field-based project or project means the totality of the activities 
to be carried out by a recipient, directly or through a subrecipient, 
to fulfill the objectives of an agreement. It can either stand alone or 
be an add-on component to another program that provides other forms of 
assistance to the food insecure.
    Food assistance means assistance that is provided to members of a 
targeted vulnerable group to meet their food needs.
    Local procurement means the procurement of food by a recipient, 
directly or through a subrecipient, in the target country to assist 
beneficiaries within that same country. The use of food vouchers to 
obtain food under an agreement is a form of local procurement.
    Overland transportation means any transportation other than ocean 
transportation. It includes internal transportation within the target 
country and regional transportation within the target region.
    Private voluntary organization means a not-for-profit, 
nongovernmental organization (in the case of a United States 
organization, an organization that is exempt from Federal income taxes 
under section 501(c)(3) of the Internal Revenue Code of 1986) that 
receives funds from private sources, voluntary contributions of money, 
staff time, or in-kind support from the public, and that is engaged in 
or is planning to engage in voluntary, charitable, or development

[[Page 43011]]

assistance activities (other than religious activities).
    Procured commodities means the eligible commodities that are 
procured by a recipient, directly or through a subrecipient, under an 
agreement.
    Program Income means funds received by a recipient or subrecipient 
as a direct result of carrying out an approved activity under an 
agreement. The term includes but is not limited to income from fees for 
services performed, the use or rental of real or personal property 
acquired under a Federal award, the sale of items fabricated under a 
Federal award, license fees, and royalties on patents and copyrights, 
and principal and interest on loans made with Federal award funds. 
Program income does not include FAS-provided funds or interest earned 
on such funds; or funds provided for cost sharing or matching 
contributions, refunds or rebates, credits, discounts, or interest 
earned on any of them.
    Purchase country means a developing country in which the procured 
commodities are purchased.
    Recipient means an entity that enters into an agreement with FAS 
and receives FAS-provided funds to carry out activities under the 
agreement. The term recipient does not include a subrecipient.
    Regional procurement means the procurement of food by a recipient, 
directly or through a subrecipient, in a developing country that is 
located on the same continent as the target country. Regional 
procurement does not include the purchase of food in the target 
country.
    Subrecipient means an entity that enters into a subagreement with a 
recipient for the purpose of implementing in the target country 
activities described in an agreement. The term does not include an 
individual that is a beneficiary under the agreement.
    Target country means the developing country in which activities are 
implemented under an agreement.
    Target region means the continent on which the target country is 
located or nearby.
    USDA means the United States Department of Agriculture.
    Voluntary committed cost sharing or matching contributions means 
cost sharing or matching contributions specifically pledged on a 
voluntary basis by an applicant in its proposal, which become binding 
as part of an agreement. Voluntary committed cost sharing or matching 
contributions may be provided in the form of cash or in-kind 
contributions.


Sec.  1590.3  Eligibility and conflicts of interest.

    (a)(1) A private voluntary organization or a cooperative is 
eligible to submit an application under this part to become a recipient 
under the USDA LRP Program if it is either registered with the 
Administrator of the U.S. Agency for International Development or FAS 
has determined that such registration is impracticable. FAS will set 
forth specific eligibility information, including any factors or 
priorities that will affect the eligibility of an applicant or 
application for selection, in the full text of the applicable notice of 
funding opportunity posted on the U.S. Government Web site for grant 
opportunities.
    (2) FAS may give preference for funding to eligible entities that 
have, or are working toward, projects under the McGovern-Dole 
International Food for Education and Child Nutrition Program 
established under section 3107 of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 1736o-1).
    (b) Applicants, recipients, and subrecipients must comply with 
policies established by FAS pursuant to 2 CFR 400.2(a), and with the 
requirements in 2 CFR 400.2(b), regarding conflicts of interest.


Sec.  1590.4  Application process.

    (a) An applicant seeking to enter into an agreement with FAS must 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the USDA LRP Program in a 
proposed target country(ies). An application must contain the items 
specified in paragraph (b) of this section and any other items required 
by the notice of funding opportunity and must be submitted 
electronically to FAS at the address set forth in the notice of funding 
opportunity.
    (b) An applicant must include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction and impact analysis, as specified in the notice 
of funding opportunity;
    (3) A plan of operation that contains the elements specified in the 
notice of funding opportunity;
    (4) A summary line item budget and a budget narrative that 
indicate:
    (i) The amount(s) of any FAS-provided funds, program income, and 
voluntary committed cost sharing or matching contributions that the 
applicant proposes to use to fund:
    (A) Administrative costs;
    (B) Commodity procurement costs, including costs for locally and 
regionally procured commodities, and food vouchers;
    (C) Transportation, storage, and handling costs; and
    (D) Activity costs;
    (ii) Where applicable, how the applicant's indirect cost rate will 
be applied to each type of expense; and
    (iii) The amount of funding that will be provided to each proposed 
subrecipient under the agreement;
    (5) A project-level results framework that outlines the changes 
that the applicant expects to accomplish through the proposed project 
and is based on the USDA LRP Program-level results framework;
    (6) Unless otherwise specified in the notice of funding 
opportunity, an evaluation plan that describes the proposed design, 
methodology, and time frame of the project's evaluation activities, and 
how the applicant intends to manage these activities, and that will 
include a baseline study, interim evaluation, final evaluation, and any 
applicable special studies; and
    (7) Any additional required items set forth in the notice of 
funding opportunity.
    (c) Each applicant (unless the applicant has an exception approved 
by FAS under 2 CFR 25.110(d)) is required to:
    (1) Be registered in the System for Award Management (SAM) before 
submitting its application;
    (2) Provide a valid unique entity identifier in its application; 
and
    (3) Continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding 
agency.


Sec.  1590.5  Agreements.

    (a) After FAS approves a proposal by an applicant, FAS will 
negotiate an agreement with the applicant. The agreement will set forth 
the obligations of FAS and the recipient.
    (b) The agreement will specify the general information required in 
2 CFR 200.210(a), as applicable.
    (c) The agreement will incorporate general terms and conditions, 
pursuant to 2 CFR 200.210(b), as applicable.
    (d) To the extent that this information is not already included in 
the agreement pursuant to paragraphs (b) and (c) of this section, the 
agreement will also include the following:
    (1) A plan of operation, which will include the following:
    (i) The objectives to be accomplished under the project;

[[Page 43012]]

    (ii) A detailed description of each activity to be implemented;
    (iii) The target country(ies) and the areas of the target 
country(ies) in which the activities will be implemented;
    (iv) The method(s) and criteria for selecting the beneficiaries of 
the activities;
    (v) Any contributions for cost sharing or matching, including cash 
and non-cash contributions, that the recipient expects to receive from 
non-FAS sources that:
    (A) Are critical to the implementation of the activities; or
    (B) Enhance the implementation of the activities;
    (vi) Any subrecipient that will be involved in the implementation 
of the activities, and the criteria for selecting a subrecipient that 
has not yet been identified;
    (vii) Any other governmental or nongovernmental entities that will 
be involved in the implementation of the activities; and
    (viii) Any additional items specified by FAS during the negotiation 
of the agreement;
    (2) Requirements relating to the procurement of the eligible 
commodities, as set forth in Sec.  1590.6;
    (3) A budget, which will set forth the maximum amounts of FAS-
provided funds, program income, and voluntary committed cost sharing or 
matching contributions that may be used for each line item; and
    (4) Performance goals for the agreement, including a list of 
results to be achieved by the activities and corresponding indicators, 
targets, and time frames.
    (e) The agreement will also include specific terms and conditions, 
and certifications and representations, including the following:
    (1) The agreement will prohibit the use of the procured 
commodities, food vouchers, or cash transfers for any purpose other 
than food assistance;
    (2) The agreement will prohibit the resale or transshipment of the 
procured commodities by the recipient to a country other than the 
target country specified in the agreement for so long as the recipient 
has title to such commodities;
    (3) The recipient will assert that it has taken action to ensure 
that any eligible commodities that will be procured regionally will be 
imported free from all customs, duties, tolls, and taxes. The recipient 
must submit information to FAS to support this assertion;
    (4) The recipient will assert that, to the best of its knowledge, 
the eligible commodities can be procured locally or regionally without 
a disruptive impact on farmers located in, or the economy of, the 
target country or any country in the target region. The recipient will 
also assert that, to the best of its knowledge, the eligible 
commodities can be procured without unduly disrupting world prices for 
agricultural commodities or normal patterns of commercial trade with 
foreign countries. The recipient must submit information to FAS to 
support these assertions; and
    (5) The recipient will assert that adequate transportation and 
storage facilities are available in the target country to prevent 
spoilage or waste of the eligible commodities. The recipient must 
submit information to FAS to support these assertions.
    (f) FAS may enter into a multicountry agreement.
    (g) FAS may provide funds under a multiyear agreement contingent 
upon the availability of funds.


Sec.  1590.6  Procurement of eligible commodities.

    (a)(1) When using funds provided by FAS under the USDA LRP Program 
to make a local or regional procurement of food, including through the 
use of food vouchers, the recipient, or a subrecipient, must procure 
eligible commodities.
    (2) The agreement will specify the types of eligible commodities 
approved for procurement; the approved purchase country(ies); and the 
approved method(s) of procurement (local procurement, regional 
procurement, food vouchers, or a combination of these methods). The 
agreement will prohibit the recipient from procuring eligible 
commodities from any country not specified in the agreement or 
utilizing methods of procurement that differ from those approved in the 
agreement.
    (b) In carrying out an agreement, the recipient must comply with 
the following requirements, as applicable, relating to the procurement 
of eligible commodities under the agreement:
    (1) The recipient must procure eligible commodities at a reasonable 
market price with respect to the economy of the purchase country, as 
determined by FAS.
    (2) If the recipient procures eligible commodities that are grains, 
legumes, and pulses, the commodities must meet the food safety 
standards of the target country; provided, however, that if the target 
country does not have food safety standards for grains, legumes, and 
pulses, then the recipient must ensure that such commodities meet the 
Codex Alimentarius Recommended International Code of Practice: General 
Principles of Food Hygiene CAC/RCP 1-1969 Rev 4-2003, including Annex 
Hazard Analysis and Critical Control Point (HACCP) System and 
Guidelines.
    (3) If the recipient procures eligible commodities that are food 
products other than grains, legumes or pulses, such as processed foods, 
fortified blended foods, and enriched foods, the commodities must 
comply, in terms of raw materials, composition, or manufacture, unless 
otherwise specified in the agreement, with the Codex Alimentarius 
Recommended International Code of Practice: General Principles of Food 
Hygiene CAC/RCP 1-1969 Rev 4-2003 including Annex Hazard Analysis and 
Critical Control Point (HACCP) System and Guidelines.
    (4) If the recipient procures eligible commodities that are 
cereals, groundnuts, or tree nuts, or food products derived from or 
containing cereals, groundnuts, or tree nuts, the commodities must be 
tested for aflatoxin and have their moisture content certified. The 
maximum acceptable total aflatoxin level is 20 parts per billion, the 
U.S. Food and Drug Administration action level for aflatoxin in human 
foods.
    (5) If the recipient procures an unprocessed commodity, it must 
ensure that the commodity has been produced either in the target 
country or in another developing country within the target region.
    (6) If the recipient purchases a processed commodity, it must 
ensure that the processing took place, and the primary ingredient has 
been produced, either in the target country or in another developing 
country within the target region. The primary ingredient is determined 
on the basis of weight in the case of solid foods, or volume in the 
case of liquids.
    (7) If the recipient purchases eligible commodities through a 
competitive tender, the recipient must specify the minimally acceptable 
commodity specifications and food safety and quality assurance 
standards in the tender. Purchases that are made from commercial 
wholesalers in a local or regional market must meet the food safety and 
quality assurance standards specified in paragraphs (b)(2), (3) and (4) 
of this section.
    (8) The recipient must enter into a contract that complies with 
this paragraph for every local or regional procurement of eligible 
commodities, other than through food vouchers, from a commodity vendor. 
The recipient must ensure that the contract between the recipient and 
the commodity vendor clearly specifies the country of origin and 
specific market(s) in which the procurement will take place, commodity

[[Page 43013]]

safety and quality assurance standards, product specifications, price 
per metric ton, and delivery terms. Recipients will be required to make 
such contracts available to FAS upon request.
    (9) The recipient must enter into a contract with an established 
inspection service to survey and report on the safety, quality, and 
condition of all procured commodities, other than those procured 
through food vouchers, prior to their shipment and distribution. The 
recipient will be required to submit any survey reports or certificates 
issued by such inspection service to FAS upon request.
    (10) The recipient must enter into a contract with each vendor 
expected to redeem food vouchers distributed under an agreement that 
specifies the conditions under which the vouchers will be redeemed for 
food. The recipient must ensure that beneficiaries use food vouchers to 
purchase eligible commodities that meet the food safety and quality 
assurance standards specified in paragraphs (b)(2), (3) and (4) of this 
section.
    (c) The agreement will require the recipient to submit a 
procurement plan for FAS's approval within the time period specified in 
the agreement. The procurement plan will include time periods, broken 
down by month, for commodity procurement, delivery, and distribution 
and, where applicable, the distribution of food vouchers. The agreement 
will require the recipient to comply with the procurement plan, as 
approved by FAS, and will prohibit the recipient from making any 
changes to the procurement plan without obtaining the prior written 
approval of FAS.


Sec.  1590.7  Payments.

    (a) If the agreement authorizes the payment of FAS-provided funds, 
FAS will generally provide the funds to the recipient on an advance 
payment basis, in accordance with 2 CFR 200.305(b). In addition, the 
following procedures will apply to advance payments:
    (1) A recipient may request advance payments of FAS-provided funds, 
up to the total amount specified in the agreement. When making an 
advance payment request, a recipient must provide, for each agreement 
for which it is requesting an advance, total expenditures to date; an 
estimate of expenses to be covered by the advance; total advances 
previously requested, if any; the amount of cash on hand from the 
preceding advance; and, if necessary, a request to roll over any unused 
funds from the preceding advance to the current request period. The 
advance payment request must take into account any program income 
earned since the preceding advance.
    (2) Whenever possible, the recipient should consolidate advance 
payment requests to cover anticipated cash needs for all food 
assistance program awards made by FAS to the recipient. A recipient may 
request advance payments with no minimum time required between 
requests.
    (3) A recipient must minimize the amount of time that elapses 
between the transfer of funds by FAS and the disbursement of funds by 
the recipient. A recipient must fully disburse funds from the preceding 
advance before it submits a new advance request for the same agreement, 
with the exception that the recipient may request to retain the balance 
of any funds that have not been disbursed and roll it over into a new 
advance request if the new advance request is made within 90 days after 
the preceding advance was made.
    (4) FAS will review all requests to roll over unexpended funds from 
the preceding advance that have not been disbursed and make a decision 
based on the merits of the request. FAS will consider factors such as 
the amount of funding that the recipient is requesting to roll over, 
the length of time that the recipient has been in possession of the 
funds, any unforeseen or extenuating circumstances, the recipient's 
history of performance, and findings from recent financial audits or 
compliance reviews.
    (5) FAS will not approve any request for an advance or rollover of 
funds if the most recent financial report, as specified in the 
agreement, is past due, or if any required report, as specified in any 
open agreement between the recipient and FAS or the Commodity Credit 
Corporation (CCC), is more than three months in arrears.
    (6)(i) A recipient must return to FAS any funds advanced by FAS 
that have not been disbursed as of the 91st day after the advance was 
made; provided, however, that paragraphs (a)(6)(ii) and (iii) of this 
section will apply if the recipient submits a request to FAS before 
that date to roll over the funds into a new advance.
    (ii) If a recipient submits a request to roll over funds into a new 
advance, and FAS approves the rollover of funds, such funds will be 
considered to have been advanced on the date that the recipient 
receives the approval notice from FAS, for the purposes of complying 
with the requirement in paragraph (a)(6)(i) of this section.
    (iii) If a recipient submits a request to roll over funds into a 
new advance, and FAS does not approve the rollover of some or all of 
the funds, such funds must be returned to FAS.
    (iv) If the recipient must return funds to FAS in accordance with 
paragraph (a)(6) of this section, the recipient must return the funds 
on the later of five business days after the 91st day after the funds 
were advanced, or five business days after the date on which the 
recipient receives notice from FAS that it has denied the recipient's 
request to roll over the funds; provided, however, that FAS may specify 
a different date for the return of funds in a written communication to 
the recipient.
    (7) Except as may otherwise be provided in the agreement, the 
recipient must deposit and maintain in an insured bank account located 
in the United States all funds advanced by FAS. The account must be 
interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) 
applies, or FAS determines that this requirement would constitute an 
undue burden. A recipient will not be required to maintain a separate 
bank account for advance payments of FAS-provided funds. However, a 
recipient must be able to separately account for the receipt, 
obligation, and expenditure of funds under each agreement.
    (8) A recipient may retain, for administrative purposes, up to $500 
per Federal fiscal year of any interest earned on funds advanced under 
an agreement. The recipient must remit to the U.S. Department of Health 
and Human Services, Payment Management System, any additional interest 
earned during the Federal fiscal year on such funds, in accordance with 
the procedures in 2 CFR 200.305(b)(9).
    (b) If a recipient is required to pay funds to FAS in connection 
with an agreement, the recipient must make such payment in U.S. 
dollars, unless otherwise approved in advance by FAS.


Sec.  1590.8  Transportation of procured commodities.

    (a) The recipient must acquire all transportation of procured 
commodities under the USDA LRP Program. FAS will pay for the 
transportation, as provided for in the agreement, through an advance 
payment or reimbursement to the recipient.
    (b) A recipient that acquires ocean transportation in accordance 
with paragraph (a) of this section must comply with the requirements of 
46 U.S.C. 55305, regarding carriage on U.S.-flag vessels.
    (c) The recipient may only use the services of a transportation 
company that is legally operating in the target country or another 
country within the target region, and that would not have a conflict of 
interest in transporting the commodities.

[[Page 43014]]

    (d) The recipient must declare in the transportation contract the 
point at which the ocean carrier or overland transportation company 
will take custody of the eligible commodities to be transported.


Sec.  1590.9  Entry, handling, and labeling of procured commodities and 
notification requirements.

    (a) The recipient must make all necessary arrangements for 
receiving regionally procured commodities in the target country, 
including obtaining appropriate approvals for entry and transit. The 
recipient must make arrangements with the target country government for 
all regionally procured commodities to be imported and distributed free 
from all customs duties, tolls, and taxes, unless otherwise specified 
in the agreement.
    (b) The recipient must, as provided in the agreement, arrange for 
transporting, storing, and distributing the procured commodities from 
the designated point and time where title to the commodities passes to 
the recipient.
    (c) The recipient must store and maintain all of the procured 
commodities in good condition from the time of delivery at the port of 
entry or the point of receipt from the commodity vendor(s) until their 
distribution.
    (d)(1) If a recipient arranges for the packaging or repackaging of 
the procured commodities, the recipient must ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the procured commodities;
    (iii) Contains the name of the country of origin;
    (iv) Includes a statement indicating that the procured commodities 
are being furnished through a project funded by the United States 
Department of Agriculture; and
    (v) Includes a statement indicating that the procured commodities 
must not be sold, bartered, or exchanged.
    (2) If a recipient distributes procured commodities that are 
prepackaged or not packaged, the recipient must display a sign at the 
distribution site that includes the name of the procured commodities, 
the country of origin, a statement indicating that the procured 
commodities are being furnished through a project funded by the United 
States Department of Agriculture, and a statement indicating that the 
procured commodities must not be sold, bartered, or exchanged.
    (3) If a recipient distributes food vouchers or cash transfers, the 
recipient must display a sign at the distribution site that includes a 
statement indicating that the food vouchers or cash transfers are being 
furnished through a project funded by the United States Department of 
Agriculture. The recipient must ensure that all paper vouchers or 
receipts for electronic vouchers are printed with a statement 
indicating that the vouchers are being furnished through a project 
funded by the United States Department of Agriculture. The vouchers 
must also include a statement indicating that they must not be sold, 
bartered, or exchanged.
    (e) The recipient must ensure that signs are displayed at all 
activity implementation and commodity, food voucher, or cash transfer 
distribution sites to inform beneficiaries that funding for the project 
was provided by the United States Department of Agriculture.
    (f) The recipient must also ensure that all public communications 
in relation to the project, the activities, or the procured 
commodities, whether made through print, broadcast, digital, or other 
media, include a statement acknowledging that funding was provided by 
the United States Department of Agriculture.
    (g) FAS may waive compliance with one or more of the labeling and 
notification requirements in paragraphs (d), (e) and (f) of this 
section if a recipient demonstrates to FAS that the requirement 
presents a safety or security risk in the target country. If a 
recipient determines that compliance with a labeling or notification 
requirement poses an imminent threat of destruction of property, 
injury, or loss of life, the recipient must submit a waiver request to 
FAS as soon as possible. The recipient will not have to comply with 
such requirement during the period prior to the issuance of a waiver 
determination by FAS. A recipient may submit a written request for a 
waiver at any time after the agreement has been signed.
    (h) In exceptional circumstances, FAS may, on its own initiative, 
waive one or more of the labeling and notification requirements in 
paragraphs (d), (e) and (f) of this section for programmatic reasons.


Sec.  1590.10  Damage to or loss of procured commodities.

    (a) The recipient will be responsible for the procured commodities 
following the transfer of title to the procured commodities from the 
commodity vendor(s) to the recipient. FAS may require the recipient to 
purchase transportation insurance against commodity loss or damage.
    (b) A recipient must inform FAS, in the manner and within the time 
period set forth in the agreement, of any damage to or loss of the 
procured commodities that occurs following the transfer of title to the 
procured commodities to the recipient. The recipient must take all 
steps necessary to protect its interests and the interests of FAS with 
respect to any damage to or loss of the procured commodities that 
occurs after title has been transferred to the recipient.
    (c) The recipient will be responsible for arranging for an 
independent cargo surveyor to inspect any procured commodities 
transported by ocean upon discharge from the vessel and to prepare a 
survey or outturn report. The report must show the quantity and 
condition of the procured commodities discharged from the vessel and 
must indicate the most likely cause of any damage noted in the report. 
The report must also indicate the time and place when the survey took 
place. All discharge surveys must be conducted contemporaneously with 
the discharge of the vessel, unless FAS determines that failure to do 
so was justified under the circumstances. For procured commodities 
shipped on a through bill of lading, the recipient must also obtain a 
delivery survey. All surveys obtained by the recipient must, to the 
extent practicable, be conducted jointly by the surveyor, the 
recipient, and the carrier, and the survey report must be signed by all 
three parties. The recipient must obtain a copy of each discharge or 
delivery survey report within 45 days after the completion of the 
survey. The recipient must make each such report available to FAS upon 
request, or in the manner specified in the agreement. FAS will 
reimburse the recipient for the reasonable costs of these services, as 
determined by FAS, in the manner specified in the agreement.
    (d) When procured commodities are transported overland, the 
recipient will ensure that overland transportation contracts include a 
requirement that a loading and offloading report be prepared and 
provided to the recipient. The report must show the quantity and 
condition of the procured commodities loaded on the overland 
conveyance, as well as the time and place that the loading and 
offloading occurred. The recipient must obtain a copy of the report 
from the overland transportation company within 45 days after the 
completion of the commodity delivery. The recipient must make each such 
report available to FAS upon request, or in the manner specified in the 
agreement. FAS will reimburse the recipient for the reasonable costs of 
these services, as determined by FAS, in the manner specified in the 
agreement.

[[Page 43015]]

    (e) If procured commodities are damaged or lost during the time 
that they are in the care of an ocean carrier or overland 
transportation company:
    (1) The recipient must ensure that any reports, narrative 
chronology, or other commentary prepared by the independent cargo 
surveyor, and any such documentation prepared by a port authority, 
stevedoring service, or customs official, or an official of the transit 
or target country government or the transportation company, are 
provided to FAS;
    (2) The recipient must provide to FAS the names and addresses of 
any individuals known to be present at the time of discharge or 
unloading, or during the survey, who can verify the quantity of damaged 
or lost procured commodities;
    (3) If the damage or loss occurred with respect to a bulk shipment 
on an ocean carrier, the recipient must ensure that the independent 
cargo surveyor:
    (i) Observes the discharge of the cargo;
    (ii) Reports on discharging methods, including scale type, 
calibrations, and any other factors that may affect the accuracy of 
scale weights, and, if scales are not used, states the reason therefor 
and describes the actual method used to determine weight;
    (iii) Estimates the quantity of cargo, if any, lost during 
discharge through carrier negligence;
    (iv) Advises on the quality of sweepings;
    (v) Obtains copies of port or vessel records, if possible, showing 
the quantity discharged; and
    (vi) Notifies the recipient immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if 
additional services are necessary to protect the cargo; and
    (4) If the damage or loss occurred with respect to a container 
shipment on an ocean carrier, the recipient must ensure that the 
independent cargo surveyor lists the container numbers and seal numbers 
shown on the containers, indicates whether the seals were intact at the 
time the containers were opened, and notes whether the containers were 
in any way damaged.
    (e) If the recipient has title to the procured commodities, and 
procured commodities valued in excess of $5,000 are damaged at any time 
prior to their distribution under the agreement, regardless of the 
party at fault, the recipient must immediately arrange for an 
inspection by a public health official or other competent authority 
approved by FAS and provide to FAS a certification by such public 
health official or other competent authority regarding the exact 
quantity and condition of the damaged commodities. The value of damaged 
procured commodities must be determined on the basis of the commodity 
acquisition, transportation, and related costs incurred by the 
recipient and paid by FAS with respect to such commodities. The 
recipient must inform FAS of the results of the inspection and indicate 
whether the damaged procured commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (f)(1) If the recipient has title to the procured commodities, the 
recipient must arrange for the recovery of that portion of the procured 
commodities designated as suitable for the use authorized in the 
agreement. The recipient must dispose of procured commodities that are 
unfit for such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or another non-food use; or
    (iii) Destruction of the procured commodities if they are unfit for 
any use, in such manner as to prevent their use for any purpose.
    (2) The recipient must arrange for all U.S. Government markings to 
be obliterated or removed before the procured commodities are 
transferred by sale or donation under paragraph (f)(1) of this section.
    (g) A recipient may retain any proceeds generated by the disposal 
of the procured commodities in accordance with paragraph (f)(1) of this 
section and must use the retained proceeds for expenses related to the 
disposal of the procured commodities and for activities specified in 
the agreement.
    (h) The recipient must notify FAS immediately and provide detailed 
information about the actions taken in accordance with paragraph (f) of 
this section, including the quantities, values, and dispositions of 
procured commodities determined to be unfit.


Sec.  1590.11  Claims for damage to or loss of procured commodities.

    (a) The recipient will be responsible for claims arising out of 
damage to or loss of a quantity of the procured commodities after the 
transfer of title to the procured commodities from the commodity 
vendor(s) to the recipient.
    (b) If the recipient has title to procured commodities that have 
been damaged or lost, and the value of the damaged or lost procured 
commodities is estimated to be in excess of $20,000, the recipient 
must:
    (1) Notify FAS immediately and provide detailed information about 
the circumstances surrounding such damage or loss, the quantity of 
damaged or lost procured commodities, and the value of the damage or 
loss;
    (2) Promptly upon discovery of the damage or loss, initiate a claim 
arising out of such damage or loss, including, if appropriate, 
initiating an action to collect pursuant to a commercial insurance 
contract;
    (3) Take all necessary action to pursue the claim diligently and 
within any applicable periods of limitations; and
    (4) Provide to FAS copies of all documentation relating to the 
claim.
    (c) If the recipient has title to procured commodities that have 
been damaged or lost, and the value of the damaged or lost procured 
commodities is estimated to be $20,000 or less, the recipient must 
notify FAS in accordance with the agreement and provide detailed 
information about the damage or loss in the next report required to be 
filed under Sec.  1590.14(e).
    (d)(1) The value of a claim for lost procured commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by the recipient and paid by FAS with 
respect to such commodities.
    (2) The value of a claim for damaged procured commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by the recipient and paid by FAS with 
respect to such commodities, less any funds generated if such 
commodities are sold in accordance with Sec.  1590.10(f)(1).
    (e) If FAS determines that a recipient has not initiated a claim or 
is not exercising due diligence in the pursuit of a claim, FAS may 
require the recipient to assign its rights to pursue the claim to FAS. 
Failure by the recipient to initiate a claim or exercise due diligence 
in the pursuit of a claim will be considered by FAS during the review 
of proposals for subsequent food assistance awards.
    (f)(1) The recipient may retain any funds obtained as a result of a 
claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds must be expended as provided 
for in the

[[Page 43016]]

agreement or for other purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, 
however, that if the recipient paid for the transportation of the 
procured commodities or a portion thereof, FAS will use a portion of 
such funds to reimburse the recipient for such expense on a prorated 
basis.


Sec.  1590.12  Use of procured commodities, FAS-provided funds, and 
program income.

    (a) A recipient must use the procured commodities, FAS-provided 
funds, interest, and program income in accordance with the agreement.
    (b) A recipient must not use procured commodities, FAS-provided 
funds, interest, or program income for any activity or any expense 
incurred by the recipient or a subrecipient prior to the start date of 
the period of performance of the agreement or after the agreement is 
suspended or terminated, without the prior written approval of FAS.
    (c) A recipient must not permit the distribution, handling, or 
allocation of procured commodities on the basis of political 
affiliation, geographic location, or the ethnic, tribal or religious 
identity or affiliation of the potential consumers or beneficiaries.
    (d) A recipient must not permit the distribution, handling, or 
allocation of procured commodities by the military forces of any 
government or insurgent group without the specific authorization of 
FAS.
    (e) A recipient must not use FAS-provided funds to acquire goods 
and services, either directly or indirectly through another party, in a 
manner that violates country-specific economic sanction programs, as 
specified in the agreement.
    (f) A recipient may sell the procured commodities only if the 
recipient is disposing of damaged procured commodities as specified in 
Sec.  1590.10.
    (g) A recipient must deposit and maintain all FAS-provided funds 
and program income in a bank account until they are used for a purpose 
authorized under the agreement or the FAS-provided funds are returned 
to FAS in accordance with Sec.  1590.7(a)(6). The account must be 
insured unless it is in a country where insurance is unavailable. The 
account must be interest-bearing, unless one of the exceptions in 2 CFR 
200.305(b)(8) applies or FAS determines that this requirement would 
constitute an undue burden. The recipient must comply with the 
requirements in Sec.  1590.7(a)(7) with regard to the deposit of 
advance payments by FAS.
    (h)(1) Except as provided in paragraph (h)(2) of this section, a 
recipient may make adjustments within the agreement budget between 
direct cost line items without further approval, provided that the 
total amount of adjustments does not exceed ten percent of the Grand 
Total Costs, excluding any voluntary committed cost sharing or matching 
contributions, in the agreement budget. Adjustments beyond these limits 
require the prior approval of FAS.
    (2) A recipient must not transfer any funds budgeted for 
participant support costs, as defined in 2 CFR 200.75, to other 
categories of expense without the prior approval of FAS.
    (i) A recipient may use FAS-provided funds or program income to 
purchase real or personal property only if local law permits the 
recipient to retain title to such property. However, the recipient must 
not use FAS-provided funds or program income to pay for the 
acquisition, development, construction, alteration or upgrade of real 
property that is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
recipient may use FAS-provided funds or program income to pay for 
repairs to or rehabilitation of a structure located on such real 
property to the extent necessary to avoid spoilage or loss of procured 
commodities, but only if the structure is not used in whole or in part 
for any religious or sectarian purposes while the procured commodities 
are stored in it. If the use of FAS-provided funds or program income to 
pay for repairs to or rehabilitation of such a structure is not 
specifically provided for in the agreement, the recipient must not use 
the FAS-provided funds or program income for this purpose until it 
receives written approval from FAS.
    (j) The recipient must comply with 2 CFR 200.321 when procuring 
goods and services in the United States. When procuring goods and 
services outside of the United States, the recipient should endeavor to 
comply with 2 CFR 200.321 where practicable.
    (k) As provided for in the agreement, the recipient must enter into 
a written contract with each provider of goods, services, or 
construction work that is valued in excess of the Simplified 
Acquisition Threshold. Each such contract must require the provider to 
maintain adequate records to account for all donated commodities, 
funds, or both furnished to the provider by the recipient. The 
recipient must submit a copy of the signed contracts to FAS upon 
request.


Sec.  1590.13  Monitoring and evaluation requirements.

    (a) The recipient will be responsible for designing a performance 
monitoring plan for the project, obtaining written approval of the plan 
from FAS before putting it into effect, and managing and implementing 
the plan, unless otherwise specified in the agreement.
    (b) The recipient must establish baseline values, annual targets, 
and life of activity targets for each performance indicator included in 
the recipient's approved performance monitoring plan, unless otherwise 
specified in the agreement.
    (c) The recipient must inform FAS, in the manner and within the 
time period specified in the agreement, of any problems, delays, or 
adverse conditions that materially impair the recipient's ability to 
meet the objectives of the agreement. This notification must include a 
statement of any corrective actions taken or contemplated by the 
recipient, and any additional assistance requested from FAS to resolve 
the situation.
    (d) The recipient will be responsible for designing an evaluation 
plan for the project, obtaining written approval of the plan from FAS 
before putting it into effect, and arranging for an independent third 
party to implement the evaluation, unless otherwise specified in the 
agreement. This evaluation plan will detail the evaluation purpose and 
scope, key evaluation questions, evaluation methodology, time frame, 
evaluation management, and cost. This plan will generally be based upon 
the evaluation plan that the recipient submitted to FAS as part of its 
application, pursuant to Sec.  1590.4(b)(6), unless the notice of 
funding opportunity specified that an evaluation plan was not required 
to be included in the application. The recipient must ensure that the 
evaluation plan:
    (1) Is designed using the most rigorous methodology that is 
appropriate and feasible, taking into account available resources, 
strategy, current knowledge and evaluation practices in the sector, and 
the implementing environment;
    (2) Is designed to inform management, activity implementation, and 
strategic decision-making;
    (3) Utilizes analytical approaches and methodologies, based on the 
questions to be addressed, project design, budgetary resources 
available, and level of rigor and evidence required, which may be 
implemented through methods such as case studies, surveys, quasi-
experimental designs, randomized field experiments, cost-effectiveness

[[Page 43017]]

analyses, implementation reviews, or a combination of methods;
    (4) Adheres to generally accepted evaluation standards and 
principles;
    (5) Uses participatory approaches that seek to include the 
perspectives of diverse parties and all relevant stakeholders; and
    (6) Where possible, utilizes local consultants and seeks to build 
local capacity in evaluation.
    (e)(1) Unless otherwise provided in the agreement, the recipient 
must arrange for evaluations of the project to be conducted by an 
independent third party that:
    (i) Is financially and legally separate from the recipient's 
organization; and
    (ii) Has staff with demonstrated methodological, cultural and 
language competencies, and specialized experience in conducting 
evaluations of international development programs involving 
agriculture, trade, education, and nutrition.
    (2) The recipient must provide a written certification to FAS that 
there is no real or apparent conflict of interest on the part of any 
recipient staff member or third party entity designated or hired to 
play a substantive role in the evaluation of activities under the 
agreement.
    (f) FAS will be considered a key stakeholder in all evaluations 
conducted as part of the agreement.
    (g)(1) The recipient is responsible for establishing the required 
financial and human capital resources for monitoring and evaluation of 
activities under the agreement. The recipient must maintain separate 
budgets for monitoring and evaluation, and separate budget line items 
for dedicated recipient monitoring and evaluation staff and independent 
third-party evaluation contracts.
    (2) Personnel at the recipient's headquarters offices and field 
offices with specialized expertise and experience in monitoring and 
evaluation may be used by the recipient for dedicated monitoring and 
evaluation. Unless otherwise specified in the agreement or approved 
evaluation plan, all evaluations must be managed by the recipient's 
evaluation experts outside of the recipient's line management for the 
activities.
    (h) FAS may independently conduct or commission an evaluation of a 
single agreement or an evaluation that includes multiple agreements. A 
recipient must cooperate, and comply with any demands for information 
or materials made in connection with any evaluation conducted or 
commissioned by FAS. Such evaluations may be conducted by FAS 
internally or by an FAS-hired external evaluation contractor.


Sec.  1590.14  Reporting and recordkeeping requirements.

    (a) A recipient must comply with the performance and financial 
monitoring and reporting requirements in the agreement and 2 CFR 
200.327 through 200.329.
    (b) The recipient must submit financial reports to FAS in 
accordance with the schedule provided in the agreement. Such reports 
must provide an accurate accounting of FAS-provided funds, interest 
earned, program income, and voluntary committed cost sharing or 
matching contributions.
    (c)(1) The recipient must submit performance reports to FAS, in the 
manner specified in the agreement. These reports must include the 
information required in 2 CFR 200.328(b)(2), including additional 
pertinent information regarding the recipient's progress, measured 
against established indicators, baselines, and targets, towards 
achieving the expected results specified in the agreement. This 
reporting must include, for each performance indicator, a comparison of 
actual accomplishments with the baseline and the targets established 
for the period. When actual accomplishments deviate significantly from 
targeted goals, the recipient must provide an explanation in the 
report.
    (2) The recipient must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
recipient's performance data to determine whether it is accurate and 
reliable. A recipient must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (d) Baseline, interim, and final evaluation reports are required 
for all agreements for development assistance projects, unless 
otherwise specified in the agreement. A rapid needs assessment and a 
final evaluation report are required for all agreements for emergency 
response projects, unless otherwise specified in the agreement. An 
interim evaluation report is not required for emergency response 
projects, unless otherwise specified in the agreement. The reports must 
be submitted in accordance with the timeline provided in the FAS-
approved evaluation plan. Evaluation reports submitted to FAS will be 
made public in an effort to increase accountability and transparency 
and share lessons learned and best practices.
    (e) A recipient must submit reports to FAS, using a form as 
prescribed by FAS, covering the receipt, handling, and disposition of 
the procured commodities and, if applicable, food vouchers and cash 
transfers. Such reports must be submitted to FAS, by the dates and for 
the reporting periods specified in the agreement, until all of the 
procured commodities and, if applicable, food vouchers and cash 
transfers have been distributed and such disposition has been reported 
to FAS.
    (f) If requested by FAS, the recipient must provide to FAS 
additional information or reports relating to the agreement.
    (g) If a recipient requires an extension of a reporting deadline, 
it must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and make a decision based on the merits of each 
request. FAS will consider factors such as unforeseen or extenuating 
circumstances and past performance history when evaluating requests for 
extensions.
    (h) A recipient must retain records and permit access to records in 
accordance with the requirements of 2 CFR 200.333 through 200.337. The 
date of submission of the final expenditure report, as referenced in 2 
CFR 200.333, will be the final date of submission of the reports 
required by paragraph (e) of this section, as prescribed by FAS. The 
recipient must retain copies of and make available to FAS all sales 
receipts, contracts, or other documents related to the procurement of 
eligible commodities, as well as records of dispatch received from 
ocean carriers or overland transportation companies.


Sec.  1590.15  Subrecipients.

    (a) A recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive procured commodities, FAS-
provided funds, program income, or other resources from the recipient 
for this purpose. The recipient must enter into a written subagreement 
with the subrecipient and comply with the applicable provisions of 2 
CFR 200.331. The recipient must provide a copy of each subagreement to 
FAS, in the manner set forth in the agreement, prior to the transfer of 
any procured commodities, FAS-provided funds, or program income to the 
subrecipient.

[[Page 43018]]

    (b) The recipient must include the following requirements in the 
subagreement:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400. The applicable 
provisions are those that relate specifically to subrecipients, as well 
as those relating to non-Federal entities that impose requirements that 
would be reasonable to pass through to subrecipients because they 
directly concern the implementation of one or more activities under the 
agreement. If there is a question about whether a particular provision 
is applicable, FAS will make the determination.
    (2) The subrecipient is prohibited from using FAS-provided funds to 
acquire goods and services, either directly or indirectly through 
another party, in a manner that violates country-specific economic 
sanction programs, as specified in the agreement.
    (3) The subrecipient must pay to the recipient the value of any 
procured commodities, FAS-provided funds, or program income that are 
not used in accordance with the subagreement, or that are lost, 
damaged, or misused as a result of the subrecipient's failure to 
exercise reasonable care.
    (4) In accordance with Sec.  1590.19 and 2 CFR 200.501(h), a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and 
post-award audits.
    (c) The recipient must monitor the actions of a subrecipient as 
necessary to ensure that procured commodities, FAS-provided funds, and 
program income provided to the subrecipient are used for authorized 
purposes in compliance with applicable U.S. Federal laws and 
regulations and the subagreement and that performance indicator targets 
are achieved for both activities and results under the agreement.


Sec.  1590.16  Noncompliance with an agreement.

    If a recipient fails to comply with a Federal statute or regulation 
or the terms and conditions of the agreement, and FAS determines that 
the noncompliance cannot be remedied by imposing additional conditions, 
FAS may take one or more of the actions set forth in 2 CFR 200.338, 
including initiating a claim as a remedy. FAS may also initiate a claim 
against a recipient if the procured commodities are damaged or lost, or 
the FAS-provided funds, interest, or program income are misused or 
lost, due to an action or omission of the recipient.


Sec.  1590.17  Suspension and termination of agreements.

    (a) An agreement or subagreement may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied;
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (3) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the procured commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the target country.
    (b) If an agreement is terminated, the recipient:
    (1) Is responsible for the security and integrity of any 
undistributed procured commodities and must dispose of such commodities 
only as agreed to by FAS; and
    (2) Must comply with the closeout and post-closeout procedures 
specified in the agreement and 2 CFR 200.343 and 200.344.


Sec.  1590.18  Opportunities to object and appeals.

    (a) FAS will provide an opportunity to a recipient to object to, 
and provide information and documentation challenging, any action taken 
by FAS pursuant to Sec.  1590.16. FAS will comply with any requirements 
for hearings, appeals, or other administrative proceedings to which the 
recipient is entitled under any other statute or regulation applicable 
to the action involved. In the absence of such other requirements, the 
requirements set forth in this section will apply.
    (b) The recipient must submit its objection in writing, along with 
any documentation, to the FAS official specified in the agreement 
within 30 days after the date that FAS notified the recipient that FAS 
was taking the action being challenged. This official will endeavor to 
notify the recipient of his or her determination within 60 days after 
the date that FAS received the recipient's written objection.
    (c) The recipient may appeal the determination of the official to 
the Administrator, FAS. An appeal must be in writing and be submitted 
to the Office of the Administrator within 30 days after the date of the 
initial determination by the FAS official. The recipient may submit 
additional documentation with its appeal.
    (d) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after the date that FAS received 
the appeal. The determination of the Administrator will be the final 
determination of FAS. The recipient must exhaust all administrative 
remedies contained in this section before pursuing judicial review of a 
determination by the Administrator.


Sec.  1590.19  Audit requirements.

    (a) Subpart F, Audit requirements, of 2 CFR part 200 applies to 
recipients and subrecipients under this part other than those that are 
for-profit entities, foreign public entities, or foreign organizations.
    (b) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
of at least the audit requirement threshold in 2 CFR 200.501 in Federal 
awards from FAS, is required to obtain an audit. Such a recipient or 
subrecipient has the following two options to satisfy this requirement:
    (1)(i) A financial related audit (as defined in the Government 
Auditing Standards, GPO Stock #020-000-00-265-4) of the agreement or 
subagreement, in accordance with Government Auditing Standards, if the 
recipient or subrecipient receives Federal awards under only one FAS 
program; or
    (ii) A financial related audit of all Federal awards from FAS, in 
accordance with Government Auditing Standards, if the recipient or 
subrecipient receives Federal awards under multiple FAS programs; or
    (2) An audit that meets the requirements contained in subpart F of 
2 CFR part 200.
    (c) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
that is less than the audit requirement threshold in 2 CFR 200.501 in 
Federal awards from FAS, is exempt from requirements for a non-Federal 
audit for that year, except as provided in paragraph (d) of this 
section, but it must make records available for review by appropriate 
officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subagreement when the audit requirement threshold in 2 CFR 200.501 is 
not met. In that case, FAS must provide funds under the agreement for 
this purpose, and the recipient or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a recipient or subrecipient that is a for-profit entity or 
a foreign

[[Page 43019]]

organization is required to obtain a financial audit under this 
section, it must provide a copy of the audit to FAS within 60 days 
after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or the U.S. 
Government Accountability Office may conduct or arrange for additional 
audits of any recipients or subrecipients, including for-profit 
entities and foreign organizations. Recipients and subrecipients must 
promptly comply with all requests related to such audits. If FAS 
conducts or arranges for an additional audit, such as an audit with 
respect to a particular agreement, FAS will fund the full cost of such 
an audit, in accordance with 2 CFR 200.503(d).

    Dated: June 24, 2016.
Suzanne Palmieri,
Acting Administrator, Foreign Agricultural Service.
[FR Doc. 2016-15537 Filed 6-30-16; 8:45 am]
BILLING CODE 3410-10-P