Following its cancellation of the Phase 2 Request for Proposal (RFP) and bid selection in September, which caught everybody by surprise, the Forest Service “has gone back to work” on how to move forward with stewardship and treatment of the 520,000 acres that was included in Phase 2, which was part of the 4 Forests Restoration Initiative (4FRI) seeking to improve forest health conditions on more than 2.5 million acres across four Arizona national forests while establishing wood products manufacturing and biomass processing infrastructure.
The agency hosted an industry roundtable of 4FRI stakeholders on October 12 in Heber, Ariz. that addressed restoration strategies and “lessons learned.”
“Our critical work will continue with the goal of increasing the pace and scale of forest restoration across the 4FRI landscape,” the agency said, adding that the cancellation of Phase 2 does not affect any ongoing forest restoration or fuels reduction work, including stewardship agreements in place and plans to issue new timber sales in 2022.
“It was a surprise for sure,” comments John Godfrey, principal of Godfrey Forest Products, after the FS cancelled the Phase 2 RFP, just when it appeared the agency was about to award the winning bid on the 20-year, 520,000 acres stewardship contract.
Godfrey’s bid, apparently one of two in serious contention, included the construction of an 850MMSF oriented strandboard plant in Winslow, Ariz. Godfrey has developed several OSB facilities through the years.
The Forest Service cited “performance risk” concerns as a reason for the cancellation. The Phase 2 contract award announcement had been delayed several times since 2019 due to 13 contract modifications including reductions in stewardship acreage from as high as 800,000 acres during initial discussions. Upon the cancellation, the FS stated, “The requirements for meeting the restoration objectives (as currently defined in the RFP) are not reasonably aligned to industry needs. In addition, significant financial and investment risks remain which ultimately represents a performance risk to the government.”
In so many words, over a 20-year period what happens if FS timberlands dedicated to the project are somehow made unavailable due to fire damage or administrative withdrawal? How does the FS replace those resources and how are Phase 2 investors to be placated or compensated?
The FS statement added, “It is in the best interest of the government to thoroughly reassess the requirement so that any new solicitation issued would better address all risks to offerors and the government, including financial and investment risks.”
Gofrey remains committed to the process. In addition to a site for the plant, Godfrey’s OSB project has completed an engineering design, preliminary air work, and he has a number of contractual relationships lined up.
“It’s a great place to build a mill,” he says. “It’s in the middle of a big market. It’s also meaningful to be part of forest restoration, fire reduction and preserving the water supply. There’s no reason to throw this away. If it takes another year then that’s what it takes.”
News of the cancellation brought outcries from several stakeholders, including politicians and others. Arizona Gov. Doug Ducey and other elected officials slammed the decision, citing the federal government’s inability to step up to address wildfire risks and protect Arizona communities.
The Phase 2 setback continues a tough run for the 4FRI effort: Phase 1, initially awarded in 2012 then transferred in 2013 to its current owner NewLife Forest Restoration, and including 300,000 acres over 10 years, has been hampered due to lack of logging and conversion capacity and is just now appearing to turn the corner on infrastructure needs while the number of acres actually treated remain well below initial projections.
NewLife, which is in the process of installing a sawmill at Bellemonte, Ariz., was apparently the other major bidder for the Phase 2 contract. There was some speculation that both Godfrey’s and NewLife’s bids would be partially or fully awarded.
A big sticking point in operating the Phase 1 contract (and the same for Phase 2) is a lack of biomass markets in the state, while the overall 4FRI will require producing mountains of the low-quality material. There’s only one dedicated biomass power producer in Arizona, Novo Power, which has utilizing material produced in ongoing forest health operations in the White Mountains area, but at 24 MW can only process so much.
Novo Power, operating at Snowflake, Ariz., participated in both the sawmill and OSB bids to take the biomass resulting from those two projects.
“I was stunned by the cancellation,” comments Novo Power President Brad Worsley. “I knew that there was always a possibility of cancellation but the stated reasons for cancellation were true a year ago; the US FS should have cancelled then if the gap could not be bridged.”
Novo Power has less than two years remaining on its current PPAs. “At this point we need resolution on our PPAs so that we can move forward, invest and maintain the critical employee base that we have today,” Worsley says. “We will support whatever comes in the future but our future needs certainty now.”
Funding for forest health and forest fire prevention programs and contracts is included the Biden administration infrastructure bill that is still under debate.
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