[Federal Register Volume 59, Number 22 (Wednesday, February 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2301]


[[Page Unknown]]

[Federal Register: February 2, 1994]


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DEPARTMENT OF AGRICULTURE

Forest Service

36 CFR Part 223

 

Sale and Disposal of National Forest System Timber; Downpayment

AGENCY: Forest Service, USDA.

ACTION: Advance notice of proposed rulemaking; request for comment.

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SUMMARY: The Forest Service hereby gives notice of its intent to 
develop a proposed rule and related policy to address a number of 
financial security provisions related to National Forest System (NFS) 
timber sale contracts. Specifically, the proposals will address the 
following: Transfer or refund of the downpayment made pursuant to 
timber sale contract special provision C(T)4.220#--DOWNPAYMENT; 
criteria which the Chief will use for determining speculative bidding; 
and the need for reduction of the performance bond amount before all 
volume is removed. The proposed policy is needed to ensure that the 
government has an adequate level of financial security, to assure the 
timely completion of timber sale contracts by avoiding contract 
defaults resulting from speculative bidding, and to maintain 
competition between qualified bidders by monitoring for speculative 
bidding.

DATES: Comments regarding this advance notice must be received in 
writing by March 4, 1994.

ADDRESSES: Send written comments to Director, Timber Management Staff 
(2400), Forest Service, USDA, P.O. Box 96090, Washington, DC 20090-
6090. The public may inspect comments received on this policy in the 
office of the Director, Timber Management Staff, Third Floor, Northwest 
Wing, Auditors Building, 201 14th Street, SW. To facilitate entrance 
into the building, visitors are encouraged to call ahead (205-0893).

FOR FURTHER INFORMATION CONTACT:
Fred O. Walk, Timber Management Staff, (202) 205-0858.

SUPPLEMENTARY INFORMATION: The General Accounting Office (GAO), in 
testimony before the House Appropriations Subcommittee on Interior and 
Related Agencies on April 24, 1991, testified that the Forest Service's 
key contracting measures such as downpayments, periodic payments, 
performance bonds, and calculations of damages were similar to those of 
other timber sellers, with the exception that the Forest Service 
returns or credits the downpayment before the contract is substantially 
complete. GAO testified that, by crediting or returning the 
downpayment, the Forest Service has less security to protect the 
government's financial interest, in terms of access to funds in the 
event of a default. GAO's testimony included a recommendation that the 
Secretary of Agriculture direct the Chief of the Forest Service to 
retain the downpayment until the contract is substantially complete.

    The Department of Agriculture published a final rule in the Federal 
Register on July 31, 1991 (56 FR 36099), that implemented the 
downpayment requirements of Section 2(d) of the Federal Timber Contract 
Payment Modification Act of October 16, 1984 (98 Stat, 2213; 16 U.S.C. 
618(d)). In the final rule, the Secretary of Agriculture directed the 
Forest Service to develop and publish for comment a proposed rule that 
would eliminate transfer or refund of the downpayment and that would 
respond to GAO's concern that the downpayment be retained until the 
contract is substantially complete.
    Further, the Department, in responding to public comment in the 
July 31, 1991, final rule (56 FR 36100) agreed that additional and 
specific criteria are needed for determining speculative bidding and 
indicated that the Forest Service would develop proposed criteria and 
publish them in the Federal Register for public comment prior to 
adoption of any criteria.
    The timber sale contract requires a performance bond equal to 10 
percent of the total bid value of the timber sale. The current timber 
sale contract language, in Standard Provision B9.11 Bond Reduction, 
prohibition reduction of the performance bond until a purchaser has 
completed removal of timber, other than substandard timber form the 
sale area, under Standard Provision B2.12. However, retaining the full 
amount of the performance bond until all volume has been removed may 
result in the Government having an excessive amount of financial 
security. The agency is considering a revision of this provision to 
avoid retention of excessive security.
    The Forest Service invites comments on how the agency can best 
address the concerns of GAO, establish criteria which the Chief can use 
in determining speculative bidding, and avoid having an excessive 
amount of financial security when the performance bond is retained 
until all volume is removed. Comments received will be considered in 
the development of a proposed rule on downpayment and associated 
proposed policy related to performance bonds and speculative bidding 
criteria. The proposed rule and policies will be published in the 
Federal Register for comment.

    Dated: December 28, 1993.
David M. Unger,
Associate Chef.
[FR Doc. 94-2301 Filed 2-1-94; 8:45 am]
BILLING CODE 3410-11-M