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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: January 11, 2005

SUBJECT: Department of Agriculture; Guidelines for Designating Biobased Products for Federal Procurement

SOURCE: Federal Register, January 11, 2005, Vol. 70, No. 7, page 1792

AGENCIES: Office of Energy Policy and New Uses, U.S. Department of Agriculture (USDA)

ACTION: Final Rule

SYNOPSIS: USDA is establishing guidelines for designating items made from biobased products that will be given federal procurement preference.

EDITOR’S NOTE: For more on the notice of proposed rulemaking (NPRM), see the December 19, 2003, FEDERAL CONTRACTS DISPATCHDepartment of Agriculture; Guidelines for Designating Biobased Products for Federal Procurement.”

EFFECTIVE DATE: February 10, 2005.

FOR FURTHER INFORMATION CONTACT: Marvin Duncan, USDA, Office of the Chief Economist, Office of Energy Policy and New Uses, Room 361, Reporters Building, 300 Seventh Street, SW., Washington, DC 20024; e-mail: mduncan@oce.usda.gov; 202-401-0532. Information on the Federal Biobased Products Preferred Procurement Program is available at http://www.biobased.oce.usda.gov.

SUPPLEMENTAL INFORMATION: Section 9002 of the Farm Security and Rural Investment Act of 2002 (Public Law 107-171) (FSRIA) requires federal agencies to purchase biobased products for all items costing over $10,000, or when the quantities of functionally equivalent items purchased over the preceding fiscal year equaled $10,000 or more, unless the items are not reasonably available, fail to meet applicable performance standards, or are available only at an unreasonable price.

In this final rule, USDA is establishing guidelines addressing the designation process, how to determine the biobased content and other attributes of specific products, and cost sharing for product testing. In addition, these guidelines include the Section 9002 requirement that federal agencies have in place, within one year of the publication of final guidelines (that is, by January 11, 2006), a procurement program that assures biobased products within designated items will be purchased to the maximum extent practicable, an agency promotion program, and provisions for the annual review and monitoring of the agency's procurement program. USDA and the Office of Federal Procurement Policy (OFPP) will work in cooperation to ensure implementation of the requirements of Section 9002 in the Federal Acquisition Regulation (FAR).

In designating items (generic groupings of specific products such as crankcase oils or synthetic fibers) for preferred procurement, USDA will consider the availability of such items and the economic and technological feasibility of using such items, including life cycle costs. Federal agencies will be required to purchase products that fall within an item only after that item has been designated for preferred procurement. In addition, USDA will provide information to federal agencies on the availability, relative price, performance, and environmental and public health benefits of such items and, where appropriate, will recommend the level of biobased content to be contained in the procured product. Manufacturers and vendors will be able to offer their products to Federal agencies for preferred procurement under the program when their products fall within the definition of an item that has been designated for preferred procurement and the biobased content of the products meets the standards set forth in the guidelines.

The legislative history of Title IX of FSRIA suggests that Congress had in mind three primary objectives when enacting Section 9002:

  1. Improve demand for biobased products. This would increase domestic demand for many agricultural commodities that can serve as feedstocks for production of biobased products, and encourage substitution of products with a more benign or beneficial environmental impact, as compared to the use of fossil energy-based products.

  2. Spur the development of value-added agricultural processing and manufacturing in rural communities. Since biobased feedstocks are largely produced in rural settings and, because of their bulk, require pre-processing or manufacturing close to where they are grown, increased dependence on biobased products appears likely to increase the amount of pre-processing and manufacturing of biobased products in rural regions. This trend would help to create new investment, job formation, and income generation in these rural regions.

  3. Enhance the nation's energy security by substituting domestically produced biobased products for fossil energy-based products derived from imported oil and natural gas.

On December 19, 2003, USDA published an NPRM to implement Section 9002 by establishing guidelines in Title 7 of the Code of Federal Regulations, Part 2902, Guidelines for Designating Biobased Products for Federal Procurement (7 CFR Part 2902). USDA received 271 comments from 64 commenters on the NPRM -- from private citizens, consultants, companies, industry organizations and trade groups, nonprofit organizations, universities, a member of Congress, and state and federal agencies. Most of the commenters supported the goals of Section 9002 and the proposed guidelines, although nearly all of the commenters either had specific suggestions for changes to the proposed guidelines or raised issues related to the implementation of the program. Because many comments displayed confusion regarding how the program would work, USDA has completely reorganized the final rule into a more reader-friendly format, has used section titles that are more descriptive, and added paragraph headings throughout to help readers to locate information more efficiently.

The final 7 CFR Part 2902 consists of Subpart A, General, which explains the Section 9002 requirements and procedures, and Subpart B, Designated Items, which is “reserved” for now. The following are the sections that constitute Subpart A:

2902.1, Purpose and Scope
2902.2, Definitions
2902.3, Applicability to Federal Procurements
2902.4, Procurement Programs
2902.5, Item Designation
2902.6, Providing Product Information to Federal Agencies
2902.7, Determining Biobased Content
2902.8, Determining Life Cycle Costs, Environmental and Health Benefits, and Performance
2902.9, Funding for Testing

The following are the primary provisions of CFR Part 2902:

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

Copyright 2005 by Panoptic Enterprises. All Rights Reserved.

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