STATE FORESTS PROGRAM

CONTRACT ADMINISTRATION HANDBOOK

Introduction

The State Forests Division sells 200-300 million board feet of timber each fiscal year. The majority is sold by preparing and selling timber sales through competitive bid processes. Timber sale contracts are prepared during the sale preparation process, and for timber sales over $25,000 in value, these contracts follow a standard formatapproved by the Attorney General’s office. This handbook is intended to provide instruction and guidance for effectively administering these timber sale contracts. Smaller sales of forest products utilize a different contract format, which is not addressed in this handbook. This handbook also does not address contracts for services, such as tree planting, or professional services. Questions regarding administration of these other types of contracts should be referred to State Forests Division Asset Management Unit staff.

Timber sales are the primary mechanism by which stand management activities are carried out on StateForest lands. They are also the primary mechanism for the construction and maintenance of the forest road access systems on these lands. Most of the revenue generated from state forest lands comes from timber sales. Timber sale operations are key to managing stand conditions for a variety of other benefits, including wildlife habitat, riparian and aquatic habitats, and recreational uses. The unique mix of contract provisions included in a timber sale are intended to guide operations towards a desired outcome that typically contributes to several, if not all, of these many resource benefits. Thus, every timber sale contributes to the broader goals and objectives of the applicable forest management plan. Understanding these underlying goals and objectives, and how a specific timber sale is designed to contribute to meeting them is a critical element of effective contract administration.

Each timber sale contract consists of a number of “standard provisions” (these appear in all contracts), and “special” or optional provisions, which are included to address unique characteristics or requirements for specific timber sales. For example, a timber sale sold on a cash or lump sum basis contains different provisions than one sold on a recovery basis. Thus, the number of contract provisions in any given timber sale varies. Additionally, a number of provisions have optional language that may be included depending on specific characteristics of the sale and decisions made during the sale preparation process. Each timber sale contract is therefore unique, and must be carefully reviewed by those administering the contract to identify the specific requirements for that timber sale.

Successful contract administration requires an understanding of what the contract says, understanding what was intended, and effective communication with a variety of players to assure that it is achieved. This requires establishing and maintaining good working relationships with timber sale preparation personnel, engineering and roads personnel, reforestation foresters, resource specialists from ODF and other agencies, District administrative staff, State Forests Division staff, and a variety of Purchasers and sub-contractors.

This handbook is intended to provide many of the tools needed to be successful at administering the timber sale contract. However, it cannot provide the interpersonal communication skills and abilities that are fundamental to building the relationships necessary to be an effective Contract Administrator. The Department offers a variety of training and development opportunities that do foster those skills and abilities. Contract Administrators are advised to review the KSAs (Knowledge, Skills, and Abilities) for this important job, and work with their supervisors to acquire the training needed to further develop and hone these skills.

Contract Administration – The Process

The process of contract administration can span a period of several years, and begins as soon as a timber sale bid opening is complete and a successful bidder has been determined. It concludes when all requirements have been completed by the Purchaser, and accepted by the State, and the contract has been terminated. Roles and responsibilities for contract administration are shared between Program Staff in Salem and District personnel. The process overview that follows describes the contract administration process chronologically, with references to contract provisions where applicable, and to primary roles and responsibilities.

  1. Contract Award and Execution

Contract administration begins when a successful high bidder for a sale has been identified after a bid opening or auction has taken place at a District office. Information and documentation is forwarded from the District to the Asset Management Unit in Salem. The Asset Management Unit is responsible for carrying out the key steps involved in assuring that a prospective Purchaser is qualified to purchase the sale, and has provided all the required submittals. The Asset Management Unit utilizes two key notices during this process. A Notice of Intent to Award is sent to the successful bidder, and details the information and submittals required to finalize a contract. After all requirements have been met, including the Purchaser signing the contract, the contract is signed by the Chief of State Forests, and a Notice of Contract Award is issued. This process and the key submittals required are described in the guidance for Section 1110, Commencement of Work. Issuance of the Notice of Contract Award is the key action that must take place before District level contract administration activities can start with the Purchaser.

In addition to the timber sale contract itself, a number of other documents prepared before the timber sale bid opening also become binding parts of the contract entered into with a Purchaser. These include the Notice of Timber Sale, and any instructions provided to bidders (See Section 1380, Entire Agreement; No Modification). As contract administration proceeds, other documents also become part of the contract. Examples of these additional documents are the Operations Plan (Exhibit B), the Scaling Instructions on recovery sales (Exhibit C), and any adjustments or modifications agreed to between the parties along the way.

The following contract provisions, and associated guidance, address contract award and execution requirements and processes:

  • Section 1000. Signatures of Contract Parties
  • Section 1110. Commencement of Work
  • Section 1210. Performance Bond
  • Section 1230. Payment Bond
  • Section 1240. Insurance
  • Section 1380. Entire Agreement; No Modification.
  1. Pre-Operations Requirements and Processes

Following sale award and prior to a Purchaser beginning work on a timber sale, there are several key actions that need to occur, involving the District and the Purchaser. Section 1130, Pre-Operations Meeting, requires the Purchaser to meet with State within 30 days following execution of the contract. In many cases, this meeting does not need to take place within the 30 day timeframe unless the Purchaser intends to begin work immediately. However, it should be required and scheduled before operations begin. The Purchaser is also required to submit an Operations Plan not less than fifteen days prior to commencement of operations (See Section 1140, Operations Plan). This can be prepared and submitted during the Pre-Operations meeting, or following the meeting. Section 1140 also gives the State authority to require an on-site meeting with the Purchaser and subcontractors prior to approving the Operations Plan.

This initial set of meetings and initial Operations Plan may be limited to project work requirements and subcontractors. If that is the case, subsequent meetings and Operations Plans will be necessary before other timber sale activities commence. The District has the responsibility for administering these requirements, the authority to require the meetings as provided for in these contract sections, and the authority to approve Operations Plans. The guidance for Section 1130 and 1140 provides a more detailed discussion of these requirements and the issues that can arise.

The following contract provisions, and associated guidance, address Pre-Operations requirements and processes, or contain Purchaser obligations that must be met before operations can commence:

  • Section 1130. Pre-Operations Meeting
  • Section 1140. Operations Plan
  • Section 1310. Authorized Representatives
  • Section 1325. Subcontracting
  • Section 1610. Permits; Licenses; Safety
  • Section 1620. Workers Compensation Insurance
  • Section 2455. Seasonal Restrictions
  1. Administration Processes on Active Timber Sales

Once all contract award requirements have been met, necessary Pre-Operations meetings have taken place, and an Operations Plan has been submitted and approved, there are several key activities that take place to administer an active timber sale.

  1. Log Accountability and Billing Processes

The overall intent of the log accountability and billing requirements of the timber sale contract are three-fold. First, they assure that the Purchaser removes the required material from the timber sale area. Second, they assure that the State receives the full compensation due for that material under the terms of the contract. Third, they assure that State logs are not exported, in violation of State law. Log accountability and billing processes differ depending on whether a timber sale is sold on a cash or recovery basis. Billing schedules also differ based on whether a sale involves Board of Forestry owned timber or Common School Land timber.

Responsibilities for administration of log accountability processes are shared between the District and staff in the Asset Management Unit. The District typically initiates the process with a Purchaser by issuing log branding hammers from their inventory of log brands registered for use by State Forests. Purchasers are required to provide notification and information on log delivery destinations, and in the case of recovery sales, obtaining approval for locations at which logs will be scaled. Asset Management Unit Log Accountability Specialists are responsible for maintaining a list of approved third-party scaling locations, and for approving any new locations as requested by Purchasers. Districts are responsible for issuing log load receipt books to Purchasers, and for ongoing monitoring and inspections to assure they are properly used.

Billing Purchasers for payments due is the responsibility of the Asset Management Unit in Salem. However, District Contract Administrators play a key role in monitoring timber removal, and notifying the Asset Management Unit when additional installments should be billed. This is particularly critical when operations are removing large volumes quickly, and there is a risk of the Purchaser removing more material than they have paid for. It is also critical as operations are nearing completion, so that “over-payment” by Purchasers is limited, and the need for refunds reduced.

The following contract provisions, and associated guidance, address the sale of timber to the Purchaser, including billing, payments and related processes:

  • Section 1020. Sale of Timber
  • Section 1030. Title to Timber
  • Section 1230. Payment Bond
  • Section 1710. Purchase Price (Cash Sales)
  • Section 1720. Payment Schedule (Cash Sales)
  • Section 1730. Payments and Interest (Cash Sales)
  • Section 1740. Log Prices (Recovery Sales)
  • Section 1750. Payment Schedule (Recovery Sales)
  • Section 1760. Payments and Interest (Recovery Sales)

The following provisions, and associated guidance, address log accountability and measurement, and related processes:

  • Section 2010. Log Accountability (Cash Sales)
  • Section 2015. Log Accountability and Log Load Receipts (Recovery Sales)
  • Section 2020. Log Measurement (Recovery Sales)
  • Section 2025. Log Measurement (Recovery Sales – On-Site Scaling)
  • Section 2030. Log Branding
  • Section 2035. Hauling and Operating Time Restrictions (Recovery Sales)
  • Section 2040. Log Removal (Cash Sales)
  • Section 2045. Log Removal (Recovery Sales)
  • Section 2050. Route of Haul (Recovery Sales – except for on-site scaling)
  • Section 2055. Utilization Scale (Recovery Sales)
  • Section 2060. Special Products
  1. Inspections and Documentation

Once operations on a timber sale commence, the key to successful contract administration is regular inspections and consistent communication with the Purchaser and/or subcontractors to resolve any problems that are discovered.

Section 1315, Inspection, obligates the Purchaser to provide access to all parts of the operation at all times so that the State can make complete and detailed inspections.

Active operations should be inspected at least weekly and a Timber Sale Inspection Report should be completed for each inspection. A more detailed discussion of inspections, and specific types of operations or circumstances which may required more frequent inspections can be found in the guidance for Section 1315.

During ongoing inspections of timber sale operations, the Contract Administrator should also make inspections for compliance with Forest Practices Act Statutes and Rules and Fire Protection Statutes and Rules. If the Contract Administrator is not qualified to enforce thesestatutes and rules, assistance should be requested from the local Stewardship Forester or Fire Protection Unit personnel when problems occur. (See later section on compliance and enforcement).

The Timber Sale Inspection Report should be used to document all instructions, current progress, non-compliance, and any time limits for completion of work. This report provides an on-going account of all activities on the sale area and provides a sale history which is used when considering contract extensions or adjustments. Any instructions documented in the inspection report should have been provided to the Purchaser and/or subcontractors verbally. Contract Administrators should not rely solely on written instructions to communicate requirements. More detailed information, and instructions for completing the Timber Sale Inspection Report can be found in Directive 3-4-3-410.

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To report completion and acceptance of projects and other contract requirements to the Asset Management Unit, use the Timber Sale Status Report, not the Timber Sale Inspection Report.

In addition to using the Timber Sale Inspection Report and Timber Sale Status Report to document contract administration activities, Contract Administrators should also maintain a log for each timber sale. This log should be used to provide a more detailed record of events and conversations related to administration of that sale. Information that is not captured on inspection or status reports can be documented in the log. Examples are conversations with resource specialists or Asset Management Unit staff, or log accountability checks that occur outside of regular inspections.

The “official” file for each timber sale is maintained by the Asset Management Unit in Salem. All original documents associated with the timber sale should be in the Salem file, with copies in District or Unit files. This becomes critically important in the event any litigation occurs over the timber sale. It is the Salem file that serves as the official record in any legal proceedings.

The following contract provisions, and associated guidance, address inspections, documentation, and related issues and processes:

  • Section 1310. Authorized Representatives
  • Section 1315. Inspection
  • Section 1325. Subcontracting
  • Section 1375. Notices
  • Section 2465. Inspection and Acceptance
  1. Oversight of Operations

A key aspect of successful contract administration is providing the right level of oversight and communication with the Purchaser and subcontractors as actual operations occur on the ground in timber sale areas to assure a good outcome. There are several main blocks of contract provisions that provide the standards and specifications for on-the-ground operations. The primary blocks are as follows:

  • Access and Road Maintenance – Sections 2110-2130
  • Timber Sale Area – Sections 2210-2260
  • Harvesting Operations – Sections 2310-2365
  • Protection During Operations – Sections 2410-2465
  • Protection From Fire – Sections 2510-2560
  • Projects – Sections 2610-2630

The focus of these “operational” contract provisions is two-fold. First, the standards and specifications are designed to achieve a particular outcome that either meets specific silvicultural goals and objectives on each timber sale area, or assures that improvements and infrastructure are properly constructed or maintained. If it is not clear what the intended outcome is, the Contract Administrator should consult with the Unit Forester and/or sale preparation personnel. Secondly, these provisions establish standards and practices that will provide protection to other resources, and to improvements and infrastructure as operations are conducted. This includes protection of resources such as water quality and fish habitat, cultural resources, and specific wildlife habitats, as well as improvement and infrastructure such as forest roads, recreational facilities, and land survey markers and monuments.

Many of these provisions also contain a variety of “optional” language, selected for inclusion during sale preparation to accomplish outcomes that may be unique to a particular timber sale. Detailed familiarity with the standards and specifications in these blocks of provisions, and clear communication with the Purchaser and subcontractors, will greatly increase the likelihood of a successful operation on a particular sale.

  1. Compliance and Enforcement Actions

There are two sets of standards with which Purchasers and subcontractors on a state timber sale must comply. First, they must comply with all the requirements and specifications of the timber sale contract. Second, they must comply with applicable state and federal laws related to forest operations and their potential affects on other resources. When problems of compliance arise, it is important for a Contract Administrator to determine if the situation constitutes a contract violation, a violation of law, or both. The enforcement tool (or tools) available depends on the answer to that question.

  1. Compliance with the Contract –

Purchasers and subcontractors are required to comply with all contract requirements and specifications. Section 1560; Violations; Defaults; Remedies, makes it clear that failure to do so is a violation of the contract. The only “remedy” described in Section 1560 is suspension of an operation. However, the language says that the State may suspend, and therefore, suspension is not required, or indeed advisable for all contract violations. Actions to gain compliance can range from issuing instructions to correct deficiencies, prohibiting certain activities for a period of time (such as log hauling to protect roads), suspending portions of an operation, to a complete suspension of all operations under the contract. The guidance for Section 1560 provides several examples of appropriate responses to different types of contract violations.