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activities. FAS retains little control over the funds provided 

 to the private- for-profit companies. In the past, we have 

 identified a number of management problems in the administration 

 of this program, including funding "additionality" and 

 participant "graduation." 



First, concerning funding additionality, FAS has no assurance 

 that MPP funds actually increase the overseas promotional 

 activities of participants in the program. FAS does not require 

 participants to demonstrate that funds under the program will be 

 used to increase promotional activities. The lack of such a 

 requirement affords participants the opportunity to substitute 

 government funds for promotional expenditures that they would 

 possibly have undertaken with their own funds. FAS has no way of 

 knowing the extent of this practice. In our past work, we found 

 some examples that suggest that this situation exists. We 

 believe that the participation of firms in the progreun with 

 significant prior export experience and with multimillion-dollar 

 advertising budgets suggests that the opportunity to substitute 

 government funds for their own exists, and greater controls are 

 needed over the use of these program funds to ensure increased 

 promotional activity. 



An example of potential funding substitution may be found by 

 looking at the federally authorized commodities research and 

 promotion programs, commonly known as "check-off" programs. 

 Under check-off programs, designated producer organizations 

 collect millions of dollars from producers and growers of 

 agricultural commodities such as cotton, beef, and soybeans. The 

 bulk of check-off funds are used to promote the product in the 

 United States, while relatively small amounts of check-off funds 

 are used to promote overseas sales. Because FAS pays for 

 overseas market promotions for these commodities through the 

 Market Promotion and Cooperator programs, the producer 

 organizations have less need to use their own check-off funds for 



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