Competition Among Suppliers in the P.L. 480 Concessional Food Sales Program

ID-81-6: Published: Dec 19, 1980. Publicly Released: Jan 19, 1981.

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Concerning government-financed grain sales under P.L. 83-480, GAO was asked to determine: (1) whether other firms and farmer cooperatives successfully competed against seven major grain firms for the sales since fiscal year (FY) 1969; (2) if the Department of Agriculture (USDA) has actively and effectively promoted competition by other suppliers; and (3) what changes in the legislation or management of the program might increase supplier competition and make the program more effective and efficient. In order to answer these questions, available sales statistics for FY 1969 through 1978 were analyzed, as well as bid data for FY 1978 and 1969.

GAO found that, in several years, other firms and export cooperatives supplied significantly more grain or rice than several of the seven major firms. But the seven major firms have collectively supplied 70 to 90 percent of the grain for the 11 fiscal years from 1969 through 1979. For a variety of reasons, other firms and cooperatives only bid sporadically for the sales, whereas the seven major firms bid aggressively for most of the commodities. USDA has acted to encourage greater participation by other suppliers, and GAO believes that USDA policy and regulations basically meet the requirements of the existing legislation. Grain firms are experiencing problems with certain legislative procedures and requirements. The problems are acting as barriers to greater industry participation, particularly by smaller firms or cooperatives.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Agriculture should direct the General Sales Manager of USDA to take appropriate action to (1) develop standardized invitations for bids; and (2) limit the size of individual sales and seek to develop a more orderly sales distribution.

    Agency Affected: Department of Agriculture

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Agriculture should direct the General Sales Manager of USDA to take appropriate action to (1) standardize performance bond requirements; (2) improve procedures to provide earlier payment to suppliers; (3) simplify bond requirements; and (4) standardize the letter-of-credit procedures.

    Agency Affected: Department of Agriculture

 

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