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 3 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 4
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)