COVID-19, Farmers to Families Food Box Program Administration — Inspection Report 01801-0001-22

Summary

Office of Inspector General, U.S. Department of Agriculture, Inspection Report 01801-0001-22, dated August 15, 2023, on COVID-19—Farmers to Families Food Box Program Administration, addressed to Bruce Summers, Administrator of the Agricultural Marketing Service (AMS). The report addresses the fourth objective, the controls AMS developed and implemented to ensure awardees fulfilled the obligations of their contracts. It states that AMS spent more than $951.5 million for Round 1, covering May 15, 2020 through June 30, 2020, and that AMS did not develop and implement adequate internal controls. It recommends that AMS establish a policy on assessing risks and implementing controls in national emergencies, and states that AMS agreed.

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         OFFICE OF INSPECTOR GENERAL
         U. S. DEPARTMENT OF AGRICULTURE




COVID-19—Farmers to Families Food Box Program Administration




Inspection Report 01801-0001-22
August 2023
                               IMPORTANT NOTICE
This report contains sensitive information that has been redacted for public release due to
privacy concerns.
COVID-19—Farmers to Families Food Box
Program Administration

Inspection Report 01801-0001-22
In our final report, we assessed the controls AMS developed and implemented to
ensure awardees fulfilled the obligations of their contracts.



OBJECTIVE                            WHAT OIG FOUND
In June 2022, we issued Interim      The United States Department of Agriculture’s (USDA)
Inspection Report                    Agricultural Marketing Service (AMS) administers
01801-0001-22(1) describing          programs that create domestic and international
our results and findings related
                                     marketing opportunities for United States producers
to our first three inspection
objectives: AMS’ design of the
                                     of food, fiber, and specialty crops. In response to the
program’s solicitation, award        coronavirus disease 2019 (COVID-19) pandemic, the
process, and funding allocation      Department—under AMS—established the Farmers to
for Round 1 contracts.               Families Food Box Program (Food Box Program) on
                                     April 17, 2020, to connect food to non-profits through
This report is on the fourth and     regional and local distributors. As the responsible agency,
final objective of our inspection,   AMS released a solicitation requesting proposals from
which was to determine what          regional and local distributors to supply the following
controls AMS developed and           food box types: fresh fruits and vegetables; pre-cooked
implemented to ensure awardees
                                     meat (chicken and pork); dairy products; and fluid
fulfilled the obligations of the
contract.
                                     milk. For the period of performance from May 15, 2020,
                                     through June 30, 2020 (hereafter referred to as “Round
                                     1”), AMS spent more than $951.5 million for Round 1 for
REVIEWED                             this program.

We assessed AMS procedures to        We found that AMS did not develop and implement
review invoices and ensure food      adequate internal controls to ensure that the Food Box
box deliveries prior to paying       Program awardees fulfilled contract obligations, such as
Round 1 awardees.
                                     delivering food boxes to recipients. Without performing a
                                     risk assessment and developing adequate controls, AMS
RECOMMENDS                           had reduced assurance that awardees fulfilled contract
                                     obligations—particularly as AMS rapidly implemented
We recommend AMS establish           the program.
and implement a policy that
includes assessing risks and         AMS agreed with our finding and recommendation,
implementing effective controls      and we accepted management decision on the
when responding to national          recommendation.
emergencies.
                        OFFICE OF INSPECTOR GENERAL
                        United States Department of Agriculture

DATE:          August 15, 2023

INSPECTION
NUMBER: 01801-0001-22


TO:            Bruce Summers
               Administrator
               Agricultural Marketing Service

ATTN:          Kenneth Robinson
               Branch Chief
               Internal Controls and Audit Branch

FROM:          Janet Sorensen                        JANET    Digitally signed by JANET
                                                              SORENSEN
               Assistant Inspector General for Audit SORENSEN Date: 2023.08.15
                                                                        11:09:46 -05'00'


SUBJECT:       COVID-19—Farmers to Families Food Box Program Administration

This report presents the results of the subject review. Your written response to the official draft is
included in its entirety at the end of the report. We have incorporated excerpts from your
response, and the Office of Inspector General’s (OIG) position, into the relevant sections of the
report. Based on your written response, we are accepting management decision for all inspection
recommendations in the report, and no further response to this office is necessary. Please follow
your internal agency procedures in forwarding final action correspondence to the Office of the
Chief Financial Officer (OCFO).

In accordance with Departmental Regulation 1720-1, final action needs to be taken within 1 year
of each management decision to prevent being listed in the Department’s annual Agency
Financial Report. For agencies other than OCFO, please follow your internal agency procedures
in forwarding final action correspondence to OCFO.

We appreciate the courtesies and cooperation extended to us by members of your staff during our
inspection fieldwork and subsequent discussions. This report contains publicly available
information and only publicly available information will be posted to our website (https://
usdaoig.oversight.gov) in the near future.
Table of Contents
Background and Objectives ....................................................................................1
   Background ...........................................................................................................1
Objective 4: What controls did AMS develop and implement to ensure
awardees fulfilled the obligations of the contract? ...............................................4
   Recommendation ..................................................................................................6
Scope and Methodology ...........................................................................................7
Abbreviations ...........................................................................................................8
Agency’s Response ...................................................................................................9
Background and Objectives

Background
The United States Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS)
administers programs that create domestic and international marketing opportunities for United
States producers of food, fiber, and specialty crops. AMS’ mission is to facilitate marketing
agricultural products in domestic and international markets while ensuring fair trading practices
and promoting a competitive and efficient marketplace for producers, traders, and consumers of
these crops.

In response to the coronavirus disease 2019 (COVID-19) pandemic, Congress enacted the
Families First Coronavirus Response Act 1 and the Coronavirus Aid, Relief, and Economic
Security Act. 2 These acts provided more than $35.8 billion to USDA to use for relief efforts
through its agencies and programs. On April 17, 2020, USDA exercised its authority under the
Families First Coronavirus Response Act to create the Farmers to Families Food Box Program
(Food Box Program) under AMS to purchase and distribute agricultural products to people
impacted by the COVID-19 pandemic. According to AMS, the Food Box Program sought to
address three critical needs simultaneously: to provide markets for farmers faced with declining
demand and the crisis of food rotting in fields and animals being euthanized; to provide for the
food needs of newly unemployed Americans; and to help put suppliers and distributors back to
work. The purpose of the Food Box Program was to connect food—which would have been sold
to restaurants, hotels, schools, and other food service entities that were closed due to COVID-
19—to regional and local distributors (referred to here as “awardees” or “contractors”) 3 for them
to purchase and deliver fresh produce, dairy, and meat products to non-profit and governmental
organizations serving those in need. Through partnerships with regional and local awardees,
AMS anticipated purchasing $100 million per month for each of the following food box types:
fresh fruits and vegetables; pre-cooked meat (chicken and pork); dairy products; and fluid milk.

The Federal Acquisition Regulation (FAR) Part 18, Emergency Acquisitions, provides agencies
with flexibilities to streamline the acquisition process under certain circumstances, such as when
the President of the United States issues an emergency declaration. The former Secretary of
Agriculture used this authority to procure commodities to deliver to non-profit and governmental
organizations to assist with distributing food to Americans during the pandemic. The Department
created the Food Box Program and released a solicitation requesting proposals that would supply
food boxes from a pre‑approved portfolio of fresh fruit, vegetables, dairy, and/or meat products. 4
AMS established an evaluation panel to review received proposals and, on May 8, 2020, AMS
issued awards for the first round of purchases for the period of performance from May 15, 2020,
through June 30, 2020 (hereafter referred to as “Round 1”).




1
  Families First Coronavirus Response Act, Pub. L. No. 116-127 (Mar. 2020).
2
  Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 (Mar. 2020).
3
  Throughout this report, we refer to distributors as “awardees” or “contractors.”
4
  Solicitation AG-12-3J14-20-R-0377 (Apr. 24, 2020), and amendment 1 (Apr. 29, 2020).

                                                                  INSPECTION REPORT 01801-0001-22   1
As part of the Food Box Program, AMS required awardees to conduct food distribution
supply‑chain processes to get the procured food to people impacted by the COVID‑19 pandemic
through non-profit and governmental organizations. Specifically, each awardee had to construct
a commodity supply chain to obtain and distribute the food to a network of non-profit and
governmental recipient entities, as well as mechanisms to track and maintain evidence of the
food delivered to those recipients. The following AMS image illustrates the Food Box Program’s
food distribution process.




                              Figure 1: Infographic from AMS’ website:
     https://www.ams.usda.gov/sites/default/files/media/FarmerstoFamiliesFoodBox.pdf. Last accessed
                                                Jan. 6, 2022.

Awardees and non-profit organizations arranged mutually agreeable quantities, delivery
locations, and delivery schedules. AMS required awardees to submit an invoice package for
payment that indicated the number of boxes delivered, contents of the boxes, and proof of
delivery to a non-profit or other organization as described in the contract. Awardees received
more than $951.5 million delivering food boxes during Round 1 of the program.

Objectives 5

On June 24, 2022, we issued an interim report addressing the following objective questions: 6

    1. Did AMS design the solicitation according to the requirements of the FAR and
       Departmental guidance?
    2. Did AMS award the contracts in accordance with the solicitation requirements?
    3. What methodology did AMS develop and use to equitably allocate funding to the
       contractors?


5
 Our inspection objective questions related to Round 1 of the AMS Food Box Program.
6
 Interim Inspection Report 01801-0001-22(1), COVID-19—Farmers to Families Food Box Program
Administration, June 2022.

2     INSPECTION REPORT 01801-0001-22
This report addresses our last objective question for this inspection:

   4. What controls did AMS develop and implement to ensure awardees fulfilled the
      obligations of the contract?




                                                            INSPECTION REPORT 01801-0001-22   3
Objective 4: What controls did AMS develop and implement to
ensure awardees fulfilled the obligations of the contract?
While we found that AMS implemented some oversight activities, the agency did not implement
effective controls to ensure that the Food Box Program awardees fulfilled contract obligations,
such as delivering food boxes to recipients. This occurred because AMS: (1) had not established
an enterprise risk management (ERM) process to identify and assess risks prior to operating the
Food Box Program; and (2) did not develop effective internal controls to mitigate risks related to
awardees fulfilling their obligations. Without performing a risk assessment and developing
effective controls, AMS had reduced assurance that awardees fulfilled contract obligations—
particularly as AMS rapidly implemented the program and spent more than $951.5 million for
Round 1 of the program.

According to the Office of Management and Budget (OMB) Circular A-123, management is
responsible for developing and maintaining effective internal controls that are consistent with its
established risk appetite and tolerance levels. 7 The circular also defines management’s
responsibilities for ERM and states that identifying risk is a continuous process and requires
establishing and integrating internal control into its operations in a risk-based and cost-beneficial
manner. 8 The Standards for Internal Control in the Federal Government state that changing
conditions often create new risks, or changes to existing risks can prompt management to
perform a risk assessment to identify, analyze, and respond to any new, resulting risks. 9

In September 2020, the Government Accountability Office (GAO) reported that according to
USDA, AMS did not have time to evaluate internal controls for its implementation efforts prior
to the first two rounds of the program. 10 During our fieldwork, we requested an AMS risk
assessment to determine what risks and associated controls AMS applied in Round 1 to mitigate
awardees’ not fulfilling their contract obligations. In response, AMS officials stated that the
agency had “not completed a risk assessment of the program given the [short] amount of time the
program had to be established.” While AMS officials stated that a risk assessment was not
performed and internal controls were not evaluated, they did share some oversight activities the
agency implemented to monitor awardees’ contract activities and payments.

Although we acknowledge the following examples of activities, AMS did not demonstrate
effective oversight of the Food Box Program, specifically how the agency confirmed that
awardees fulfilled their contract obligations.




7
  OMB, Management’s Responsibility for Enterprise Risk Management and Internal Control, Circular A-123 (July
2016).
8
  OMB defines ERM as “an effective Agency-wide approach to addressing the full spectrum of the organization’s
external and internal risks by understanding the combined impact of risks as an interrelated portfolio, rather than
addressing risks only within silos.”
9
  GAO, Standards for Internal Control in the Federal Government, GAO-14-704G (Sept. 2014).
10
   GAO, COVID-19: Federal Efforts Could Be Strengthened by Timely and Concerted Actions, GAO-20-701 (Sept.
21, 2020).

4     INSPECTION REPORT 01801-0001-22
        Internal Program Review and Audit

        AMS officials stated that the agency provided oversight throughout the contract period
        and conducted robust audits to ensure food safety plans were followed, that only
        domestic produce was provided, and that quality products were delivered, among other
        contract administration matters. Furthermore, AMS officials stated that USDA also
        tracked contractor performance in several ways, including daily and cumulative totals of
        the number and type of boxes delivered, recipient organizations, and location, among
        other factors. Prior to being paid, the contractor must have submitted delivery
        confirmation from the recipient organization along with the invoice details. However, we
        found that AMS did not effectively verify that food boxes were delivered to non-profit
        organizations.

        AMS conducted an internal review to verify that non-profit organizations received the
        food boxes purchased through awardees, and that those awardees submitted appropriate
        invoices to AMS for payment. Completed in October 2020, AMS’ review was unable to
        verify deliveries for 77 of 366 (21 percent) of the recipient organizations for various
        reasons, such as disconnected phone numbers, or because recipients did not respond to
        calls, voicemails, or emails. When AMS reviewers could not reach the recipient
        organizations, they did not follow up with awardees to verify that these recipient
        organizations existed or to request additional information from awardees to support their
        invoices. Thus, we determined that AMS had not established effective controls to verify
        that the invoices awardees submitted supported the non-profit organizations’ receipt of
        food boxes.

        Responding to Complaints

        AMS had informal processes for responding to issues or complaints in the Food Box
        Program. Procurement, operations, and compliance offices in the agency were
        responsible for responding to issues or complaints, but they lacked written policy or
        procedure to process, monitor, or resolve complaints in the Food Box Program. AMS
        stated that there was no time to develop a customized complaint process for the Food Box
        Program given the urgency to implement the new program. Instead, the agency
        informally adapted procedures it used to process complaints received in acquiring or
        distributing products for USDA nutrition programs for the Food Box Program. 11

        Further, AMS lacked a formal policy to account for and monitor disposition of Food Box
        Program complaints received by email. AMS established a specific email address to
        receive inquiries or complaints about the program. According to AMS, over 18,000
        emails were stored after the program had ended, but staff lacked access to the email
        because storage was controlled by the Department. 12 Because only one address received
        all program email, complaints were not separately identified or stored from other email.

11
   The complaint process for USDA nutrition programs was established in the AMS Customer Feedback Review
Process, CPP [Commodity Procurement Program] Procedure 1000 (Feb. 11, 2020).
12
   During our fieldwork, AMS stated that it no longer had access to the emails and that the emails were archived
with the Department’s Office of the Chief Information Officer.

                                                                     INSPECTION REPORT 01801-0001-22               5
       Consequently, neither AMS nor OIG could identify how many email complaints AMS
       received, processed, and resolved related to awardees not fulfilling their obligations.

Although AMS did not have a risk assessment policy that included assessing risks when
responding to potential national emergencies (such as a pandemic), AMS stated that it was
working to enhance its existing risk and emergency management programs and procedures,
including drafting policies, procedures, and systems to identify potential emergencies and risks
and plan responses to them based on expected likelihood and impact. Also, AMS added that it
was enhancing its Emergency Management Program to align with recently updated Department
regulations and establishing a formal ERM Program. We agree that these actions may assist
AMS in future emergencies to mitigate the risk of fraud, which may be higher in disasters than
under normal circumstances because the need to provide services quickly can hinder the
effectiveness of existing controls and create additional opportunities for individuals to engage in
fraud.

Recommendation
Establish and implement a policy that includes assessing risks and developing effective controls
when responding to national emergencies.

       Agency Response

       AMS agrees with OIG’s recommendation, which is that AMS establish and implement a
       policy that includes assessing risks and implementing effective controls when responding
       to national emergencies. AMS plans to have the policy drafted by December 31, 2023.

       OIG Position

       We accept AMS’ management decision on this recommendation.




6    INSPECTION REPORT 01801-0001-22
Scope and Methodology
Our inspection scope covered AMS’ contracts awarded for Round 1 of the Food Box Program—
totaling up to $1.2 billion—for the period of performance from May 15, 2020, through June 30,
2020. We conducted our fieldwork with AMS’ Commodity Procurement Program officials from
July 2020 through June 2023.

To accomplish our inspection objectives, we:

   •   Interviewed agency officials (through videoconferencing and email communication).
   •   Reviewed laws, regulations, written policies, procedures, and other guidance to gain
       sufficient knowledge and understanding of the program and the award process.
   •   Reviewed procedures for addressing complaints and program issues.
   •   Reviewed procedures AMS implemented to review invoices and ensure food boxes were
       delivered prior to payment.

We conducted this inspection in accordance with the Council of the Inspectors General on
Integrity and Efficiency’s Quality Standards for Inspection and Evaluation. Those standards
require that we obtain sufficient, competent, and relevant evidence to provide a reasonable basis
for our findings, conclusions, and recommendations based on our inspection objectives. We
believe that the evidence obtained provides a reasonable basis for our findings, conclusions, and
recommendations.




                                                          INSPECTION REPORT 01801-0001-22       7
Abbreviations
AMS .......................................Agricultural Marketing Service
COVID-19..............................coronavirus disease 2019
ERM .......................................enterprise risk management
FAR ........................................Federal Acquisition Regulation
GAO .......................................Government Accountability Office
OIG ........................................Office of Inspector General
OMB ......................................Office of Management and Budget
USDA.....................................United States Department of Agriculture




8     INSPECTION REPORT 01801-0001-22
Agency’s Response




           Agricultural Marketing Service
             Response to Audit Report




                              INSPECTION REPORT 01801-0001-22   9
Subject: Agricultural Marketing Service’s Management Response to the Office of
         Inspector General Audit of the Farmers to Families Food Box Program
         (Number 01801-0001-22)
______________________________________________________________________________
To:          Janet M. Sorensen,                @oig.usda.gov
             Assistant Inspector General for Audit, Office of Inspector General

From:       Bruce Summers, Bruce.Summers@usda.gov
            Administrator, Agricultural Marketing Service
______________________________________________________________________________

The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) Commodity
Procurement Program agrees with the Office of Inspector General’s (OIG) Recommendation 4 in
the Farmers to Families Food Box audit report Number 01801-0001-22.

Please find AMS’ response to OIG’s recommendations below.

Recommendation 4: OIG recommends that AMS establish and implement a policy that
includes assessing risks and implementing effective controls when responding to National
emergencies.

Agency Response: AMS agrees with OIG’s Recommendation 4, which is that AMS establish
and implement a policy that includes assessing risks and implementing effective controls when
responding to National emergencies. AMS plans to have the policy drafted by
December 31, 2023.
Learn more about USDA OIG
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