oversight

Road Construction Costs in Montana National Forests

Published by the Government Accountability Office on 1977-06-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REVIEW OF ROAD CONSTRUCTION                               BD'1-25053.
COSTS IN/MONTANA NATIONAL                                  CED-77-83
FORESTS--FOREST SERVICE /                                  6-10-77
DEPARTMENT OF AGRICULTURE/
                                 RESTRICTED

    le~atter report to Senator Lee Metcalf, pursuant to his request, on

our review of Forest Service's costs to have roads constructed into

timber sales areas in Montana national forests.   The scope of our work

was limited because, since January 1972, only seven Forest Service

contracts were awarded for new road construction in Montana national

forests.   Three of these roads were in the two forests we reviewed, but

only one was designed to standards similar to roads built by timber

purchasers.

     We reported that it cost the Service more in cases where it contracted

for such roads directly, using appropriated funds (public works contracts),

than it did in cases where timber purchasers were allowed a credit against

the sale price of timber to build the roads or to have them built.      This

is primarily because the Service has more stringent contracting and contract

administration procedures for public works roads and wages paid under

public works contracts are higher.

     Service officials agreed with our observations and said they were

in the process of revising their engineering requirements, contracting

procedures, and road design specifications.   This should help to

eliminate some of the cost and engineering differences now existing under

the two methods of building roads.

     No--index preparadL


                                  Uia.FD
                 COMPTROLLER GENERAL OF THE UNITED STATES
                            WASHINGTON, D.C. 20548                         -




B-125053                                                    JUN 1 0 1977

The Honorable Lee Metcalf
United States Senate

Dear Senator Metcalf:

     In your letter of March 11, 1977, you requested that
we review the Forest Service's costs to have roads constructed
into timber sales areas in Montana national forests.  You
asked us to compare the Service's costs in cases where it
contracted for such roads directly, using appropriated funds
(public works contracts), with the Service's costs in cases
where timber sale contracts included an allowance for timber
purchasers to build the rbads or to have them built. You
also asked us to obtain data that might indicate the effects
of road building requirements on timber sales competition.

     We selected the Flathead and Lolo National Forests for
our work because they had the most road construction activity
in Montana in recent years. We contacted Service officials,
timber purchasers, and road contractors in the area of these
forests.  The scope of our work was limited because, since
January 1972, only seven Service contracts were awarded for
new road construction in Montana national forests. Three of
these roads were in the two forests we reviewed, but only
one was designed to standards similar to roads built by
timber purchasers.

     In a meeting with your office on May 5, 1977, we said
that our limited review in the two Montana national forests
showed that it costs the Service more to have roads con-
structed under a public works contract than it does when
timber purchasers are allowed a credit against the sale price
of timber to offset road construction costs. This is!pri-
marily because of two factors:

     -- The Service has more stringent contracting and con-
        tract administration procedures for public works roads.

     -- Wages paid under public works contracts are higher.

     Service contracting procedures require its engineers to
provide a higher quality of engineering service for public
works contracts. The Service pays for most public works
roads in increments based on actual work accomplished. Serv-
ice officials told us that determining the amount of work

                                                               CED-77-83
B-1 2 5 0 5 3


                                                        a
scheduled and the amount actually accomplished requires
greater degree of accuracy in the survey and design proc-
esses of preconstruction engineering and more precise
staking and continuous inspection during the construction
engineering phase.

      The Service incurs costs for preconstruction and con-
 struction engineering under both methods of road construc-
 tion. However, the Service does not usually identify
 these costs on an individual project basis. We therefore
                                                       En-
 requested Service officials to estimate these costs.
 closures I and II demonstrate how much higher the estimated
 costs are to the Service for public works contracts than
 for a road constructed under the timber price reduction
 method.

      We could not determine the actual costs of timber   us
 purchaser road building because company cost data given
                                           road credits allowed
 could not be verified. Timber purchaser
 by the Service may not accurately reflect actual construc-
                                     based on estimates, and
 tion costs because the credits are adjusted
 the amounts bid for timber may be           to absorb inade-
 quacies in the timber purchaser sale credit.

       Under public works road contracts, wages are required
  to be paid in accordance with provisions of the Davis-Bacon
  Act (40 U.S.C. 276a).   In the forests included in our review,
  a road builder, when  contracting with the Service, paid union
                                                            in
  wage rates which were higher than the Davis-Bacon rates pur-
  the area. However, in constructing a road for a timber
                                                            num-
  chaser, he could pay nonunion wage rates and reduce the
                                                   if the work
  ber of worker positions that would be required
  was under union contract.   As shown in enclosure III, Davis-
  Bacon and union wage rates can be 30 to 50 percent higher
  than nonunion rates.

       The number of Service-contracted public works Fpads
  may increase as a result of the National Forest Management
                                            2949).    The act
  Act of 1976 (Public Law 94-588, 90.Stat.         excess  of
  provides that, for roads estimated to cost in
  $20,000, the Secretary of Agriculture should afford     quali-
  fied small business timber purchasers the option of having
                                                          be built
  the Service contract for roads that wouldTheotherwise
                                                Service   is re-
  under a timber price reduction method.
  vising its regulations, manuals, and orders   to  implement
                                                              re-
  this provision. According to Service officials, these
  visions will streamline the preconstruction and construction

                                 2
B-125053



engineering procedures and possibly eliminate some of the
cost differences now existing under the two methods of build-
ing roads. In addition, the Service is developing a single
set of design specifications for public works and timber
purchaser roads. This should help eliminate some of the
differences in the amount of engineering required for each
type of road.

     We also analyzed timber sales in the two forests for
a 4-year period ending December 31, 1976, to see if there
were any clear relationships between the size of the purchase
credits for road construction and the numbers of bidders.
We found that there were more bidders on timber sale con-
tracts with credits for road construction work than on con-
tracts without such credits. The greater the credit, the
more bidders there were. -As shown in enclosure IV, contracts
with credits above $100,000 attracted an average of 4.8 bid-
ders compared with 2.6 bidders for contracts with credits un-
der $20,000. We noted that small businesses were awarded sales
contracts for 27 of the 77 sales with purchase credits over
$20,000, including 12 for which the credits exceeded $100,000.

     As requested, we informally discussed the content of this
report with Forest Service officials; they had no problem with
it.

     We trust the information furnished in this report and
enclosures will serve your needs.
                             S'y       yours




                             Comptroller General
                             of the United States

Enclosures - 4




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ENCLOSURE I                                                                   ENCLOSURE I




                              COMPARISON OF ESTIMATED COSTS

                     TO THE FOREST SERVICE FOR A ROAD CONSTRUCTED

                   UNDER THE TIMBER PURCHASER PRICE REDUCTION METHOD

                         VERSUS A PUBLIC WORKS CONTRACT (note a)


                                                                 Public
                                              Timber price       works
                                            reduction method    contract   Difference
PRECONSTRUCTION ENGINEERING (note b):
    Survey                                     $     865       $ 2,865      $ 2,000
    Design                                           254         3,100        2,846

                                                   1,119         5,965        4,846
CONSTRUCTION ENGINEERING (note b):
    (Includes staking, inspecting for
      compliance, and final calculations)            707         4,800        4,093
CONSTRUCTION:
    Clearing, slash disposal, etc.                 8,788         8,788
    Excavation                                     7,284         8,115          831
    Culverts                                       2,143         2,143
    Road materials                                 2,847         2,847
    Other (includes planting and seeding)            270           270         -
    Allowance for moving equipment to site            -          2,216        2,216
                                             c/21,332           24,379        3,047
        Total                                 $23,158          $35,144      $11,986

a/The road used for comparison was Spring Creek Road No. 2176, which was constructed under
  the timber price reduction method in the Lolo National Forest, Montana.  The 1.4-mile
  road was designed to 10-foot width and to handle speeds of 10 miles per hour.  The
  purchase credit was calculated in April 1976, and the road was constructed between
  September 1976 and February 1977.


b/The Forest Service incurs preconstruction and construction engineering costs under
  both methods of building roads.


c/This amount represents the timber purchase credit allowed by the Forest Servtce for
  road construction. A small contractor constructed the road for the timber purchaser for
  the timber credit plus an allowance for clearing and stacking merchantable timber from
  the road right-of-way.
ENCLOSURE II                                                                                                                                ENCLOSURE II
                                                        COMPARISON OF COSTS TO THE FOREST SERVICE

                                                           FOR SIMILAR TYPE ROADS CONSTRUCTED


                                                            UNDER A PUBLIC WORKS CONTRACT AND


                                                         UNDER THE TIMBER PRICE REDUCTION METHOD




                                                           Firefighter Road No. 896                              South Haskill timber sale road
                                                        (public workes contract (note a))                    (timberprice reduction method (note   b))
                                                    Estimated                           Actual                   I
                                            Total cost     Unit price        Total cost                              Unnit Erice (note c)


CONSTRUCTION ENGINEERING:
    (Includes staking, inspecting for
      compliance, and final calculations)    $ 25,000      $3,623 per mile     $ 27,622   $4,003 per mile              $2,205 per mile

CONSTRUCTION:
    Clearing, slash disposal, etc.           $ 62,850      $2,501 per acre     $ 82,929   $3,300 per acre              $798 per acre
    Excavation                                 41,509      $1.31 per cu. yd.     53,866   $1.70 per yd.                $.75 per cu. yd.
    Culverts:                                  16,168                            13,794
        15-inch diameter                                                                                               $ 7.89 per ft.
        18-inch diameter                                   $14 per ft.                    $12 per ft.                  $ 8.51 per ft.
        24-inch diameter                                   $18 per ft.                    $15 per ft.                  $10.38 per ft.

    Other (includes planting and
      seeding)                                  9,463                            14,722

               Total construction            $129,990      $18,839 per mile    $165,311   $23,958 per mile              $16,085 per mile


a/The purpose of this road is to provide access for thinning in the Flathead National Forest, Montana. The
  6.93 mile road is designed to a width of 10 feet and provides for a speed of 10 miles per hour. The Forest
  Service estimated the cost in April 1976. The Forest Service was unable to determine estimated and actual
  preconstruction engineering costs.



b/This road was included in the South Haskill timber sale of the Flathead National Forest, Montana. Its
  total length of 13.6 miles consists of four segments designed to a 12-foot width and a speed of 10 miles
  per hour and one segment designed to a 14-foot width to handle speeds of 20 miles per hour. The purchase
  credit was calculated in March 1975, and most construction took place between July 1975 and June 1976.



c/Unit price calculated based on timber purchaser credit.

                                                                                                                                        2
ENCLOSURE III                                    ENCLOSURE III


                     WAGE RATE COMPARISON (note a)


                         Union        Davis-Bacon      Nonunion
Job classification   rates (note b)     rates        rates (note b)

    General labor        $10.26         $ 8.80         $ 6.08
    Power saw             10.56           9.09           8.16
    Skidding cat          13.03          11.01           8.63
    Choker setter
      (note c)            10.45           8.98           -
    Scraper               13.18          11.16          8.63
    Dump trucks           11.61           9.92          6.29
    Crane                 13.22          11.19          8.52
    Oiler (note c)        12.55          10.52           -
    Dozer                 13.03          11.01          8.63
    Driller               10.56           9.09          6.57
    Chuck tender
       (note c)           20.26           8.80            -
    Mechanic              13.15          11.12           8.50
    Equipment serv-
       iceman (note c)    12.94          10.92

    Average              $11.91         $10.12         $ 7.78

    Percent above
      average nonunion
      rate                 53             30

a/The wage rates consist of hourly base pay plus fringe bene-
  fits and taxes according to the road contractor providing
  the data.

b/The union rates were paid in constructing a public works
  road in 1976. The nonunion rates were paid during the
  same period by the same contractor in constructing a com-
  parable road for a timber purchaser.

c/Union regulations require oilers or assistants for some
  equipment. These positions are not used for nonunidn jobs.




                                  3
                                                    ENCLOSURE IV
ENCLOSURE IV




                COMPARISON OF BIDDING INTENSITY FOR

                 FOREST SERVICE TIMBER SALES IN THE

                 FLATHEAD AND LOLO NATIONAL FORESTS

                             (1973 to 1976)


                                Purchase   Purchase
                                 credit    credit        Purchase
                    No purchase   under    $20,000 to   credit over
                      credit     $20,000   $100,000       $100,000

LOLO NATIONAL
  FOREST:

    Sales               61           15        15            17
    Bidders            118           33        48            68
    Average            1.9          2.2       3.2           4.0

FLATHEAD NATIONAL
  FOREST:
    Sales               69           15        23            22
    Bidders            188           45        98           119
    Average            2.7          3.0       4.3           5.4

TOTAL:
    Sales              130           30        38            39
    Bidders            306           78       146           187
    Average            2.4          2.6       3.8           4.8




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