Food Assistance

The U.S. Department of Agriculture (USDA) has declined to suspend or exclude from participating in school milk contracts a number of dairies and individuals convicted of bid-rigging because the Food and Nutrition Service lacks investigators and lawyers with expertise in such matters. Although both the Justice Department and USDA oversee agricultural cooperatives, currently no formal process is in place for sharing information on cooperatives' pricing. Instead, officials have relied on an informal ad hoc method for sharing information on bid-rigging. USDA has yet to suspend or disbar any of the 16 dairies or the 35 individuals convicted of bid-rigging from participating in federally funded child nutrition programs. Big-rigging awareness training for contracting officials has proven effective in deterring improper collusion. USDA has provided such instruction for school procurement officials in areas in which bid-rigging is known to have occurred and is expanding this training to other jurisdictions.

GAO found that: (1) milk contract bid rigging can be attributed to illegal business practices, but not legal deficiencies; (2) the Justice Department considers antitrust and bid-rigging legislation adequate; (3) federal price setting may facilitate collusion and bid-rigging; (4) limited exemptions under the Capper-Volstead Act create difficulties in prosecuting bid-rigging among dairy cooperatives; (5) federal dairy policy objectives include price and income supports, consumption expansion, quality control of the milk supply, and dairy price and market stabilization; (6) two programs which carry out federal dairy policy are the Milk Marketing Order Program and the price support program; (7) the Justice Department and the Department of Agriculture (USDA) have responsibility for oversight of agricultural cooperatives; (8) both Justice and USDA lack a formal process for sharing information and must rely on ad hoc methods for sharing bid-rigging information; (9) parties guilty of bid-rigging or collusion may be suspended or excluded from participating in federal contracts or federally funded programs; (10) USDA has failed to suspended any of the violators convicted of bid-rigging offenses; (11) bid-rigging awareness training for contracting officials can effectively identify and deter collusion and bid-rigging on a nationwide scale; and (12) USDA has provided bid-rigging awareness training for school procurement authorities and would like to expand training to other jurisdictions.

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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