Opportunities for Greater Cost Effectiveness in Public Law 480, Title I Food Purchases

GAO discussed opportunities to improve the effectiveness of subsidized food purchases by recipient, developing countries under the Public Law 480, title I program.

Under the program, the Department of Agriculture's (USDA) Foreign Agricultural Service in fiscal year (FY) 1982 financed about $722 million worth of purchases of agricultural commodities by developing countries. GAO examined 54 of the 86 purchases made in FY 1982 and found that opportunities exist to better control or reduce program costs. In 26 percent of the cases GAO reviewed, buyer purchasing practices were not conducive to achieving the full benefits of open competitive tendering or obtaining the lowest prices. Delays in signing title I agreements and overlapping of purchases with the title II program caused prices to rise. GAO found that the Foreign Agricultural Service is financing price premiums for individualized and nonstandard specifications when lower cost alternatives are available. GAO noted that the legal requirement that the United States receive a fair share of the increase in recipients' commercial imports over time is not monitored or emphasized. Finally, GAO concluded that: (1) the credibility of the price evaluation system is questionable; (2) the Foreign Agricultural Service price reviewers routinely approved sales prices that exceeded the market price as determined by the Stabilization and Conservation Service; and (3) the Stabilization and Conservation Service needs to survey a broader cross-section of the industry to better establish market prices for certain commodities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Allan I. Mendelowitz Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-4812