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B-224730 1 (1987-03-31)

handle is hein.gao/gaobadmqo0001 and id is 1 raw text is: RThe Comptroller General of the United States Washington, D.C. 20548 Decision Matterof: Department of Agriculture, Forest Service-- Request for Advance Decision File: B-224730 Date: March 31, 1987 DIGEST Where prices in timber sale contract under which purchaser is credited, against bid price, for cost of building roads to reach the timber, are adjusted downward pursuant to statute to point where no such credits are available, contract may be modified to provide for government contribution of funds to offset road construction costs, since contribution would have been made if such lower rates had been bid initially. DECISION The United States Department of Agriculture, Forest Service, has requested an advance decision on the propriety of mod- ifying the timber sales contracts of Mitkof Lumber Company (the Granite sale) and Reid Timber, Tnc. (the Suemez sale), to enable the firms to recover a portion of the road con- struction costs incurred during contract performance. Both sales involve the harvesting of timber in the Tongass National Forest, Alaska. We conclude that the contracts may be modified. tinder these timber contracts, the contractor agrees to pay for timber partly in cash and partly in the form of purchaser credits. The purchaser credits are earned by the contractor when it builds the roads that permit it access to the timber. Each species of timber covered by a contract has a specified base rate, which the contractor pays in cash. Any additional money owed by the contractor for removing timber (the bid premium) is offset against the contractor's road construction costs, through the purchaser credits. For example, in the case of the Suemez timber sale, Reid bid S250 per thousand board feet (MBF) for sitka spruce utility logs, for which the base rate was $10 per MBF. Thus, Reid was required to pay cash of S10, and the balance of $240 per MBF was to be credited to Reid against its road construction

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