USDA could further enhance checkoff program integrity

GAO report makes five recommendations to prevent misuse of funds and promote transparency.

The U.S. Department of Agriculture could continue to build on existing efforts to further strengthen its oversight of the checkoff programs, according to a new Government Accountability Office (GAO) report. GAO made five recommendations, including that it consistently review subcontracts to prevent misuse of funds, ensure that documents are posted on program websites to promote transparency and ensure that stakeholders have access to information on program operations.

“Got Milk?” and “Pork: The Other White Meat” are examples of advertising campaigns undertaken by two of the 22 federal agricultural research and promotion programs, commonly known as commodity checkoff programs. In 2016, checkoff funds totaled more than $885 million. By law, funds cannot be used for lobbying or disparaging other commodities, among other things. USDA's Agricultural Marketing Service (AMS) has primary responsibility for overseeing the checkoff programs.

GAO previous conducted an investigation into the checkoff programs in 2012, and AMS developed and implemented standard operating procedures that outlined specific oversight responsibilities of AMS and began to conduct internal reviews of its oversight functions.

“GAO found that AMS does not consistently review subcontracts – a legal agreement between a contractor and a third party – or ensure that certain documents are shared with stakeholders on program websites,” the report said.

Independent economic evaluations of the effectiveness of checkoff programs, required by law to be conducted every five years, generally have shown positive financial benefits, GAO said. For the eight evaluations GAO reviewed, benefits ranged from an average of $2.14 to $17.40 for every dollar invested in the programs.

However, the evaluations varied in the methods used and had certain methodological limitations. For example, some evaluations did not account for the effects of promotion from competing commodities, which could overstate the programs’ benefits.

AMS’s standard operating procedures state that the agency should review the evaluations to ensure that there is a credible methodology, among other things; however, AMS did not consistently document reviews of the evaluations or have criteria by which to review the evaluations.

“Without developing criteria to assess the methodology and results of evaluations, the agency’s assessments of independent economic evaluations may be inconsistent across checkoff programs and misleading to stakeholders,” GAO pointed out.

Under the 2015 AMS guidelines for checkoff programs, which covered broad oversight activities, staff are to review a sample of subcontracts during agency reviews of program operations. However, AMS did not revise its standard operating procedures to match its guidelines with this responsibility, and GAO found that AMS reviewed subcontracts for only one checkoff program in its sample of eight. “Without revising the standard operating procedures to include a review of subcontracts, AMS’s ability to prevent misuse of funds is impaired,” the report said.

GAO found that four of the eight checkoff programs reviewed posted all key documents -- such as budget summaries and evaluations of effectiveness -- to program websites. GAO noted that AMS guidelines state that budget summaries should be posted on program websites, while the other key documents are to be available on the website or otherwise made available to stakeholders. Agency officials said boards would supply documentation if contacted by a stakeholder.

Industry representatives whom GAO interviewed said transparency of how funds are used and the effectiveness of programs are important to their members. “Without including in its guidelines and standard operating procedures that all key documents should be posted on a checkoff program’s website, AMS may miss an opportunity to ensure that stakeholders have access to information on program operations and effectiveness,” the report noted.

In total, GAO made five recommendations, including that USDA revise its standard operating procedures to include the review of subcontracts, include key documents on checkoff program websites and develop criteria to assess evaluations. USDA generally agreed with GAO’s recommendations.

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