Foreign Assistance

The United States donated 15,000 metric tons of planting seed--mainly corn and pea seed--to Russia in 1999. Under the Food for Progress agreement, the donated seeds were to be sold in Russia at market prices and the proceeds deposited in a special account and then disbursed to Russian seed institutes and a rural credit cooperative. Under pressure to meet planting dates in Russia, Agriculture Department officials bought the seed through a noncompetitive, sole-source contract for $21.7 million. This decision forced the United States to donate the seed to Russia rather than finance its sale with a concessional loan. Seed distribution in Russia did not follow the original plans, and reasons for changes were not fully documented. The regional distribution of some seeds was not confirmed, and there is conflicting information as to what happened to these seeds. Some seed arrived in the regions too late to be planted, and Russian producers complained about a lack of technical information on food types and about the delivery of seed that was inappropriate for local growing conditions. The sale of the donated seed to regional wholesalers and government agencies in Russia raised about $2.6 million--about one-eighth of what was paid to the sole source contractors that had shipped the seed to Russian ports.

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

Recommendations

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.

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