Stewardship End Result Contracting

Background: Experimental projects using some of the concepts now incorporated in stewardship end result contracting were conducted sporadically on federal lands beginning in the late 1970’s. Broad interest in the idea, however, did not develop until the mid-1990’s, when community-based forestry groups in the West started looking at it as a possible way to re­duce the contentious nature of public lands management. They wanted to encourage diverse stakeholders to collaborate in planning and monitoring restoration projects that would be carried out by contractors who focused on “what was left, not what was removed” from the forest. Some regional Forest Service managers also were advocating for stewardship contracting, seeing advantages both in the flexibility it offered and in potential improve­ment of operational effectiveness.

Purpose
Stand-alone legislation to establish a new demonstration program failed to generate widespread interest in Congress, so in 1998 some of the initiative’s supporters in the Senate attached it as a rider to an appropria­tions bill funding on-going government programs. Section 347 authorized the Forest Service to implement a limited number of “stewardship end result contracting” demonstration projects. Five years later, Congress lifted stewardship contracting’s demonstration status, removed the cap on the number of projects, and empowered the Bureau of Land Manage­ment (BLM) to also use the new tool. That legislation is effective through September 30, 2013. For the full text of the legislation and related Forest Service implementation guidance: http://www.fs.fed.us/forestmanagement/projects/stewardship/direction/ind.... There is a link to the BLM stewardship site as well.

The law provides that stewardship contracting be used by the agen­cies “to achieve land management goals…that meet local and rural com­munity needs,” and that such goals “may include, among other things --

1. road and trail maintenance or obliteration to restore or maintain water quality;
2. soil productivity, habitat for wildlife and fisheries, or other re­source values;
3. setting of prescribed fires to improve the composition, structure, condition, and health of stands or to improve wildlife habitat;
4. removing vegetation or other activities to promote healthy forest stands, reduce fire hazards or achieve other land management objectives;
5. watershed restoration and maintenance;
6. restoration and maintenance of wildlife and fish habitat; and
7. control of noxious and exotic weeds and reestablishing native plant species.”

The Forest Service Handbook says “the intent of stewardship contract­ing is to accomplish resource management with a focus on restoration,” and echoes the legislative proviso that “deriving revenue from the sale of products designated for removal through stewardship contracting projects is a secondary objective to achieving land management goals.”

Special authorities
Stewardship contracting provides special authorities for the agencies to use in pursuing their management goals. These include:

• Best value contracting – Rather than awarding a contract solely on the basis of price (as with conventional timber sales), agencies can consider both price and non-price factors (such as the contractor’s past performance, key employees’ qualifications, and planned utilization of local workforce). “Best value” is the standard that must be used in awarding all stewardship contracts or agreements.
• Goods for services – The agencies can exchange goods (timber or other forest prod­ucts such as biomass and forage) for services rendered by a contractor in doing restoration work in the project area.
• Residual receipts – If the value of the product removed through a stewardship con­tract exceeds the cost of the services provided by the contractor, the agencies may keep the excess revenue and use it for additional restora­tion. If the excess receipts are not used on the same project, but made available for transfer to another, they become “retained receipts.”
• Multi-year contracting – Stewardship contracts or agreements may have terms up to 10 years.

Stewardship contracting projects must comply with the National Environmental Policy Act and all other laws and regulations applicable to the management of National Forest System and BLM lands.

Collaboration
Although the word “collaboration” does not appear in the authorizing legislation for stewardship contracting, broad and meaningful participation in planning, implementing, and monitoring projects is intrinsic. Collaboration can increase understanding and trust, and bring a broader range of knowledge and experience to bear on the achievement of shared goals for res­toration. Agency personnel are encouraged to participate in but not lead collaborative groups.

Collaborative efforts supplement but do not replace existing NEPA-required public involve­ment processes. Collaborative groups offer ideas and recommend where and how steward­ship projects should be implemented, but fed­eral agencies retain decision making authority.

Multiparty Monitoring
During the demonstration phase, the Forest Service was required to establish a “multiparty monitoring and evaluation process” that as­sessed each of the 84 pilots. They contracted with the Pinchot Institute for Conservation (PIC), who from 1999-2004 worked with local, regional, and national monitoring teams to ana­lyze information from the demonstrations. The Forest Service then prepared annual reports to Congress addressing:

1. The status of development, execution, and administration of stewardship contracts;
2. Specific accomplishments that resulted;
3. The role of local communities in the de­velopment of those agreements and plans.

The 2003 legislation eliminated the require­ment for project level monitoring. The agencies now collect data on items #1 and #2 from all projects, and contract with PIC to address item #3. Regional multiparty teams are still facilitat­ed by PIC. Project level teams are discretionary, although managers are encouraged to provide for them when there is local support. The For­est Service allows retained receipts to be used to complete project level process monitoring.

Contracts and agreements
Stewardship projects may be implemented through either contracts or agreements with pri­vate contractors, non-profit organizations, and tribal, state, and local government entities. The Tribal Forest Protection Act of 2004 additionally authorizes the Forest Service and BLM to give “special consideration” to tribally-proposed stewardship contracting projects on federal lands bordering tribal trust lands. Until recently, few agreements had been used to implement stewardship projects, but in December 2006 the BLM and the Forest Service signed 10-year challenge cost-share agreements with the Rocky Mountain Elk Foundation for cooperative efforts to enhance and restore wildlife habitat on thou­sands of acres in Montana and Wyoming.

Using stewardship contracting
Many of the demonstration proj­ects took advantage of stewardship contracting’s special authorities to “bundle” a variety of management activities in a project area – stand improvement, stream restoration, road improvement or removal, noxious weed treatment, habitat en­hancement, etc. But priorities have shifted, and most new stewardship projects are now aimed solely or pri­marily at reducing wildfire risks in the wildland urban interface (WUI). Such projects usually involve removing large quantities of small, low- or no-value woody material, and – barring a readily accessible biomass market – the “goods” value often isn’t sufficient to pay for the “service” of removing it, let alone cover the cost of other restoration.

There is an “up” side to the current stewardship/fuels pairing. Work in the WUI is often less contentious than projects farther from populated areas, and can provide a good starting place for community collaboration.

Issues to be Resolved

1. Bonding. It is difficult for non-profits, communities, quasi-govern­mental organizations, and small contractors to meet the stringent bonding requirements for contracting with the Forest Service and BLM. With fewer bonding companies willing to issue bonds for forest work – particularly for non-harvest related activities with which they are unfamiliar – even some established contractors have a hard time obtaining coverage.
2. Payments to counties. Last year’s expiration of the Craig-Wyden “county payments” bill sounded an alarm for counties that had foregone receipt of their traditional “25% fund” payments (25% of the value of federal timber sales from within their counties) in order to receive annual payments based on an average of previous receipts. Stewardship contract­ing is exempt from making 25% payments from revenues it generates, and if the county payments bill is not reauthorized and funded, local govern­ment resistance to more stewardship contracting is likely.

Conclusion
There is growing support for a greater emphasis on and more invest­ment in forest ecosystem restoration. To many, that is the job for which stewardship contracting should be a valuable tool – with its focus on end results, its use of best value in selecting contractors, its capacity to incor­porate multiple activities over longer time frames and broader landscapes, and its ability to capture revenues as a by-product of the restoration work to help offset project costs. Moving on to multi-faceted restoration proj­ects, however, will require that agencies and other stakeholders develop a greater familiarity with the full suite of stewardship contracting’s special authorities and a willingness to use them to best advantage. Appropriate training and technical assistance will be essential. Agency personnel and contractors both will
have to learn new ways of doing business, overcom­ing individual reluctance, and sometimes institutional barriers, to change.

— Carol Daly is president of the Flathead Economic Policy Center, Columbia Falls, Montana, and has been engaged in regional and national multiparty monitoring of stewardship contracting projects since 1999. She is the author of the “Best Value and Stewardship Contracting Guidebook, recently published by Sustainable Northwest.