Local Industry Capacity Necessary for Implementation

In many areas of the country, such as the West, industry relies on timber products from Federal lands. Industry participants in some areas said they relied on Forest Service timber products to stay open. In Excerpt 17.1, an industry participant discusses the importance of a steady flow of timber from public lands. In her area, contractors and purchasers have embraced stewardship contracts because they rely on federal timber. They have and have built the capacity to bid on and perform the services required in those contracts.

Excerpt 17.1

Um – if we don’t – get Forest Service timber, then we don’t exist. I mean, even if it’s xx% of our consumption. It- it needs to be more than that. I mean, we’re- we’re sitting here with – if we had more timber, and could keep our log prices in check, which we should be able to do, … we would be happy to invest millions in our facility … And – um – that’s a frustration … [T320]

However, in other parts of the country, industry procures timber products from their own forests, private forests, or state forests. In these areas, the Forest Service is unable to generate interest in stewardship contracts because industry does not require Forest Service projects to remain

economically viable.

Another reason for lack of interest by industry is that they have lost the capacity to perform the types of service work the Forest Service wants completed. In Excerpt 17.2, the participant explains that the capacity that once existed in her area has disappeared as a result of changes in the timber industry.

Excerpt 17.2

[If] stewardship had come about as a big push 15 years ago here, and we still had industrial owners bidding… they were all set up, all set up to, to, to knock out the planting, to knock out … you know, a lot of your [xxx]-type work. [They were] all set up to do that work. Because at that time, you didn’t have your TIMOs, and forest industry was managing their lands like they were going to be hanging onto them for a long time, like the forests, like the Forest Service. But… now that’s changed and they’ve gradually transitioned away from that type of flavor, that sort of investment in the land. And so there aren’t a lot of players out there to do some of the things that, that we need to do, that we should be doing or could be doing, on stewardship. [T70]

Two industry participants who serve units in Case Studies 6, 7, and 8 confirmed what agency employees in those areas had said; Industry in that area had no interest in stewardship contracts for the simple reason that their business model focused on self-owned, private, and state lands, and they had no need or interest in Forest Service projects or products.

Without industry participants capable of meeting the needs identified as appropriate for a stewardship contract, the tool may not be viable. Local contractors must have the capacity to complete the requested service. Several participants said that, for stewardship contracting to be successful, the needed services must be within the capabilities of a winning bidder. In Excerpt 17.3, a participant says that awareness of the external environment is, thus, important to success with the tool.

Excerpt 17.3

I think initially there was some concern – on the timber industry – that – ‘Wait a minute. Look guys, we know how to build roads, put in culverts, fix roads, cut timber, and all that kind of stuff.

Now you want us to also go and … ’ – Let’s use an example of, uh – … making sure these noxious weeds get treated for the next five or eight years -? ‘That’s not normally what we do!’ [T91]

Even where the benefits to industry are understood and potential purchasers have both the need for Forest Service timber and the capacity to meet Federal requirements, potential bidders may not have the capacity to prepare a bid for a stewardship contract. Responding to a Federal RFP can be complicated. In Excerpt 17.4, an industry participant describes the challenges of preparing a stewardship contracting proposal. The agency’s creation of two separate contract forms – the Integrated Resource Timber Contract (IRTC) and the Integrated Resource Service Contract (IRSC) – adds a further layer of complication. In Excerpt 17.5, an industry participant estimates how long it takes her organization and how many people are required to put together a bid.

Excerpt 17.4

Industry Participant: So, the IRTCs – generally take – require a little less work than an IRSC. Just because… it seems to take more time – to write a proposal – involving a lot of service work … It seems to. And initially the Forest Service said, this is exactly what you’re going to do – now writing a proposal is – telling us what you’re going to do. And my thought was… well – here you go. You usually said, we’ll do this. And then you said, well, this isn’t very creative. (Laughs) But - we needed to go through that. Now this latest one, well – here’s the area – here are the units we’re thinking we’d log this way, but – you tell us. And – that’s what we suggested they do.

But now we have to do it – it’s really a pain. Because we have to get out on the ground and walk the units, and – they know what they want, so we’re kind of having to try to guess – what we think they wanted to see ... [T131]

Excerpt 17.5

Industry Participant: [W]e spend a couple weeks. … Two or three of us. The logging manager, a forester, and me. … It’s probably about 80 hours. The three of us working on it part-time for probably a couple weeks. [T141]

These organizations have sufficient overhead to be able to devote this amount of time and money. Other potential bidders may not have the resources to prepare a complex stewardship contracting proposal. If potential bidders cannot devote the resources to prepare a proposal, then a Forest Service RFP will not receive bids. In Excerpt 17.6, a participant acknowledges that bidding on a Forest Service job can be burdensome.

Excerpt 17.6

[O]ur typical timber operators … were really opposed to us putting a lot in stewardship

contracting. They viewed it as a giant, extra headache. They threatened to not bid on our sales.

There was a lot of angst from the logging community about it. They don’t know how to do some of these other projects. They don’t know how to contract them. There is a sense sometimes from the loggers that, if they do a FS job, it’s unlike any other job. We have so many regulations, and clauses in the contract. It is so burdensome. [T204]

Smaller operators are not the only potential participants to shy away from stewardship contracts. In Excerpt 17.7, a participant says that even some large organizations will not bid on stewardship contracts.

Excerpt 17.7

[I]t was one particular forester that works for a TIMO, and he was going to bid on our first stewardship sale, but the TIMO wouldn’t support him in doing that. … But he didn’t have any support from [his] TIMO because of the complexity. [T]hey just want to cut wood and go. They don’t want to have to be on the string for anything else. [T71]

Stewardship contracting is predicated on having an industry partner willing to learn and collaborate on the process.

Even where local industry perceives the benefits and needs the products, contractors are available to provide the requested services, and someone can be found to manage the bidding and performance, there must be a mill – suitably tooled to use the harvested products – within viable transport distance. Many areas, especially parts of the West, no longer have mills close enough to the Forest to handle the harvested products. In Excerpt 17.8, a participant contrasts her unit, which has a good number of local mills tooled for the products that come off her unit, to two other forests who do not have the same quantity of infrastructure. In Excerpt 17.9, a different participant states that infrastructure is the key to successful implementation of stewardship contracting. She describes trying to use stewardship contracting at a previous duty station where there was not sufficient infrastructure, and her frustration that her unit was unable to offer stewardship contracts. She contrasts that with her present situation, where the unit has supported the local infrastructure, recognizing the importance of maintaining that infrastructure to achieving the unit’s land management goals. In the second half of this excerpt, she describes the haul distances that allow the industry to remain profitable. Haul distances and fuel costs are two aspects of the external environment that units must consider when preparing a stewardship project.

Excerpt 17.8

[W[e are lucky here – compared to some places … where they have little or no infrastructure.

We have a real good infrastructure here. [T81]

Excerpt 17.9

Int: So you have to have enough infrastructure?

There you go – there you go. That’s the key. Now, if you can solve the infrastructure problem, that’s the key … [T194]

It is not enough for the Forest Service to offer a stewardship contract, industry must have or be able to develop the necessary infrastructure.

Another challenge is posed by the types of timber products available from stewardship

contracts. Several participants, both inside the Forest Service and in industry, said stewardship contracts often yield low-value products, such as biomass. Mills may have difficulty using these low-value

products. In Excerpt 17.10, an industry participant says that competitors in her area are unwilling to bid on a stewardship contract when they cannot use all the products. Industry is frustrated by offers of

volume it cannot use. For a stewardship contract to be cost-effective for the purchaser, the product mix must be attractive to the purchaser. Contracts with unusable volume may not receive bids.

Excerpt 17.10

[T]he other mills want bigger logs, and generally, stewardship projects don’t have a high percentage of large logs … [The other mills in the area are] frustrated because the Forest Service isn’t putting out timber sales the way it used to, and they think they should… the way I think it should. Because for them [the other mills] to go through all the work of preparing a stewardship project proposal where it – there’s a significant portion of volume they can’t use, you know, that is – it isn’t worth it. [T135]

It is not enough for a Forest to have harvestable timber products. For stewardship contracting to be operationalized, local timber industry providers must perceive the benefits of stewardship contracts and rely on Forest Service projects and products; provide the land management services needed by the Forest Service; successfully bid on and perform to Federal requirements; and use and/or add value to the harvested products. Some of these obstacles have been surmounted. However, unless these obstacles are overcome, the lack of local capacity narrows the list of units for which stewardship contracting is possible.