Client Alert- February 3, 2016
New Forest Service Stewardship Regulations; A Few, but not Many, Surprises.
Although stewardship contracts and agreements have existed since 1999, in the wake of Congress having made the authority to enter into stewardship projects permanent in the 2014 Farm Bill, without notice and the opportunity for comment, the Forest Service has just issued regulations regarding the award and administration of these instruments.
As stated in the preamble to the regulations, they "generally follow the Forest Service policy and processes that have been in place for some time." That is, they reiterate the fact that (a) stewardship contracts and agreements are to be used to achieve land management goals for the national forests and the public lands that meet local and rural community needs, and (b) that under such instruments the Forest Service may apply the value of timber or other forest products removed from the project site as an offset against the cost of services received.
That said, the regulations do, however, contain a few new twists on stewardship contracting.
The regulations provide that the entity to perform a given stewardship agreement or stewardship contract is to be selected on a best-value basis and that such instruments may be entered notwithstanding the sections of the National Forest Management Act that require formal advertising of timber sales and the designation of timber to be harvested by persons employed by the Forest Service.
They also require that both stewardship agreements and contracts contain a provision which limits the contractor's liability for fires caused by the contractor's operations.(That limit does not apply to fires caused by the negligence or fault of the contractor.)
Stewardship Contracts
The regulations provide that stewardship contracts shall be for a period not to exceed 10 years.
They also formalize the Forest Service's practice of determining whether a particular project should be considered a procurement of services or the sale of property (i.e., timber or other forest products) on the basis of the relationship between the estimated cost of services to be rendered and the estimated value of timber to be removed. That is:
* When the estimated value of timber to be removed is less than the estimated value of the service work items to be performed, the project will be considered the procurementof services, and conversely
* When the estimated value of timber to be removed is greater than the estimated value of the service work items to be performed, the project will be considered a sale of property (e.g., a timber sale).
Contracts for the Procurement of Service (Integrated Resource Service Contracts)
The regulations make quite clear that in the case of a procurement of services, the Forest Service will utilize the Federal Acquisition Regulations, as supplemented by the Department of Agriculture's procurement regulations, both in awarding and administering the contract. They go on to indicate, for the first time ever, that such service contracts shall, among other things, also utilize existing Forest Service timber sale regulations relating to:
* Volume Determination -- i.e., the volume of timber removed may be determined by scaling or measuring the trees before cutting.
* Cancellation for environmental protection or inconsistency with plans - the contract may be canceled, in which case the contractor is entitled to reasonable compensation for unrecovered costs incurred under the contract plus the difference between the current price of the remaining timber in excess of the average value of comparable timber sold in the last six months. (The cancellation would also trigger the Termination for Convenience clause of the contract and would entitle the contractor to additional compensation.)
* Establishment of minimum stumpage rates - except in accordance with a clause related to catastrophically-affected timber (a clause not included in IRTCs), "no timber may be sold ... under timber sale contracts for less than base rates."
Contracts for the Sale of Property (i.e., timber or other forest products) (Integrated Resource Timber Contracts (IRTC))
The regulations indicate that these contracts shall include all existing Forest Service timber sale regulations, except, among other things, the ones concerning:
* Downpayments
* Bidding Methods
* Award to highest bidder
* Small Business set-asides
The regulations also provide that, at the time of a rate redetermination on an IRTC, both the cost of any service work included in the contract and stumpage values will be re-evaluated. Lastly, the regulations also allow the Forest Service to require a payment and performance bond, if it is determined to be necessary to protect the interests of the United States.
For more information contact Alan I. Saltman at (202)452-2140 or via email at