[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