Federal Timber Sales
Forest Service Could Improve Efficiency of Field-Level Timber Sales Management by Maintaining More Detailed Data Gao ID: GAO-07-764 June 27, 2007For years, GAO has raised concerns about the ability of the Department of Agriculture's Forest Service (Service) to track the amounts it obligates for and spends on timber sales and to use this information in managing the sales. Timber sales are generally carried out by ranger districts (the lowest level of the Service's decentralized organizational structure), which are overseen by national forest offices. The Bureau of Land Management (BLM) within the Department of the Interior also conducts timber sales. This report examines the extent to which (1) the Forest Service tracks timber sales-related obligations and expenditures, including the extent to which the Service uses this information in making management decisions; (2) BLM tracks timber sales-related obligations and expenditures; and (3) both agencies track their timber sales-related revenue.
The Forest Service tracks the funds it spends to conduct timber sales--such as funds for personnel and equipment--in a way that does not provide the detailed data many field managers, such as district rangers and forest supervisors, told us they need in order to properly manage these sales. The Service's accounting system aggregates obligation and expenditure data by the programs that fund the sales--such as the Forest Products Program and the Salvage Sale Program--and by national forest, rather than by individual timber sale or by ranger district. Forest Service headquarters officials told us that field managers do not need sale-by-sale or district-level data. However, many field managers told us that such data are crucial to their management of timber sales. For example, without such data to monitor the progress and cost of individual sales, field managers have difficulty both knowing when to redirect resources among sales and assessing the cost-effectiveness of individual sales. Without detailed data in the Service's accounting system, many field managers have developed manual "cuff records," such as spreadsheets, to maintain obligation and expenditure data at the individual sale or ranger district level. However, maintaining these cuff records can be time consuming, according to field managers, and can thus take time away from conducting "on the ground" activities such as overseeing timber harvests. Although headquarters officials said that aggregating data has reduced the cost of managing the accounting system data, the resources field managers are expending to compensate for the lack of detailed system data may partially offset those savings. However, the Service does not know the cost of maintaining cuff records, and it has not systematically identified field managers' information needs. BLM, in contrast to the Forest Service, tracks many timber sales obligations and expenditures by individual sale. BLM has chosen to maintain detailed data in order to allow its field managers to use these data in managing timber sales--by, for example, monitoring the progress and cost of sales. As a result of BLM's approach, field managers have access to detailed data without relying on cuff records. Overall, the Forest Service and BLM have systems that track revenue data by timber sale. These systems track the volume, type, and value of timber harvested; generate bills to timber purchasers; and track payments against those bills. Both agencies have struggled with, but are resolving, the challenge of tracking revenue from sales conducted under their stewardship contracting authority. Stewardship contracts generally involve the exchange of goods, such as timber, for contract services, such as thinning of brush. The Forest Service recently added a module to its accounting system to track revenue from stewardship contracting projects, while BLM has developed a database for this purpose.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-764, Federal Timber Sales: Forest Service Could Improve Efficiency of Field-Level Timber Sales Management by Maintaining More Detailed Data
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
June 2007:
Federal Timber Sales:
Forest Service Could Improve Efficiency of Field-Level Timber Sales
Management by Maintaining More Detailed Data:
GAO-07-764:
GAO Highlights:
Highlights of GAO-07-764, a report to congressional requesters
Why GAO Did This Study:
For years, GAO has raised concerns about the ability of the Department
of Agriculture‘s Forest Service (Service) to track the amounts it
obligates for and spends on timber sales and to use this information in
managing the sales. Timber sales are generally carried out by ranger
districts (the lowest level of the Service‘s decentralized
organizational structure), which are overseen by national forest
offices. The Bureau of Land Management (BLM) within the Department of
the Interior also conducts timber sales. This report examines the
extent to which (1) the Forest Service tracks timber sales-related
obligations and expenditures, including the extent to which the Service
uses this information in making management decisions; (2) BLM tracks
timber sales-related obligations and expenditures; and (3) both
agencies track their timber sales-related revenue.
What GAO Found:
The Forest Service tracks the funds it spends to conduct timber
sales”such as funds for personnel and equipment”in a way that does not
provide the detailed data many field managers, such as district rangers
and forest supervisors, told us they need in order to properly manage
these sales. The Service‘s accounting system aggregates obligation and
expenditure data by the programs that fund the sales”such as the Forest
Products Program and the Salvage Sale Program”and by national forest,
rather than by individual timber sale or by ranger district. Forest
Service headquarters officials told us that field managers do not need
sale-by-sale or district-level data. However, many field managers told
us that such data are crucial to their management of timber sales. For
example, without such data to monitor the progress and cost of
individual sales, field managers have difficulty both knowing when to
redirect resources among sales and assessing the cost-effectiveness of
individual sales. Without detailed data in the Service‘s accounting
system, many field managers have developed manual ’cuff records,“ such
as spreadsheets, to maintain obligation and expenditure data at the
individual sale or ranger district level. However, maintaining these
cuff records can be time consuming, according to field managers, and
can thus take time away from conducting ’on the ground“ activities such
as overseeing timber harvests. Although headquarters officials said
that aggregating data has reduced the cost of managing the accounting
system data, the resources field managers are expending to compensate
for the lack of detailed system data may partially offset those
savings. However, the Service does not know the cost of maintaining
cuff records, and it has not systematically identified field managers‘
information needs.
BLM, in contrast to the Forest Service, tracks many timber sales
obligations and expenditures by individual sale. BLM has chosen to
maintain detailed data in order to allow its field managers to use
these data in managing timber sales”by, for example, monitoring the
progress and cost of sales. As a result of BLM‘s approach, field
managers have access to detailed data without relying on cuff records.
Overall, the Forest Service and BLM have systems that track revenue
data by timber sale. These systems track the volume, type, and value of
timber harvested; generate bills to timber purchasers; and track
payments against those bills. Both agencies have struggled with, but
are resolving, the challenge of tracking revenue from sales conducted
under their stewardship contracting authority. Stewardship contracts
generally involve the exchange of goods, such as timber, for contract
services, such as thinning of brush. The Forest Service recently added
a module to its accounting system to track revenue from stewardship
contracting projects, while BLM has developed a database for this
purpose.
What GAO Recommends:
GAO recommends actions the Forest Service can take to ensure that its
field managers have the obligation and expenditure data they need to
manage effectively. In commenting on a draft of this report, the Forest
Service generally agreed with its findings and recommendations.
Similarly, the Department of the Interior agreed with the report‘s
contents.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-764].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robin M. Nazzaro at (202)
512-3841 or nazzaror@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The Forest Service's Aggregation of Obligation and Expenditure Data
Hinders Field-Level Project Management:
The Bureau of Land Management's Detailed Data Help Managers Monitor
Projects:
Both Agencies Have Systems That Track Revenue by Timber Sale:
Conclusions:
Recommendation for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Forest Service:
Appendix III: Comments from the Department of the Interior:
Appendix IV: GAO Contact and Staff Acknowledgments:
Figures:
Figure 1: Forest Service Regions:
Figure 2: BLM-Administered Lands and State Jurisdictions:
Abbreviations:
BLM: Bureau of Land Management:
CBS: Collections and Billing System:
FFIS: Foundation Financial Information System:
FFS: Federal Financial System:
K-V: Knutson-Vandenberg:
MIS: Management Information System:
SCID: Stewardship Contracting Information Database:
TIM: Timber Information Management system:
TSA: Timber Sale Accounting system:
TSIS: Timber Sale Information System:
United States Government Accountability Office:
Washington, DC 20548:
June 27, 2007:
The Honorable Tom Harkin:
Chairman:
Committee on Agriculture, Nutrition, and Forestry:
United States Senate:
The Honorable Jeff Bingaman:
Chairman:
Committee on Energy and Natural Resources:
United States Senate:
As the steward for more than 190 million acres of federal land, the
Department of Agriculture's Forest Service (Service) undertakes a
myriad of land management projects to sustain the land's health,
diversity, and productivity. Such projects may involve harvesting
marketable timber, such as fuel reduction projects designed to thin
heavy undergrowth and dense stands of trees, and salvaging (i.e.,
removing) dead and dying trees. In fiscal year 2006, the sale of timber
generated revenue of over $221 million for the Service.
The Service has a decentralized structure consisting of the Washington
Office and the field. The field consists of nine regions that oversee
155 national forests; the forests, in turn, oversee hundreds of ranger
districts. Timber harvests, like other land management projects, are
generally conducted by the Service's ranger districts and national
forests, and the Service places considerable decision-making authority
in managers at these field offices. The Service funds its land
management projects through various programs.[Footnote 1] These
programs include wildlife and fish management, forest products, grazing
management, and so forth. Timber sales involving the harvest of live
trees are generally conducted under the Forest Products Program, while
sales involving the salvage of dead or dying trees are generally
conducted under the Salvage Sale Program.
Forest Service timber sales activities have long been controversial, in
part because of concerns over the ecological and financial costs
associated with harvesting timber. For years, we, along with other
organizations, have questioned the Service's ability to track the
amount it spends on timber sales, as well as the Service's ability to
use these data to make management decisions about its operations. For
example, for fiscal years 1992 through 1997, the Department of
Agriculture's Office of Inspector General reported that the Forest
Service's accounting data--including data associated with timber sales-
-were not reliable. We reported a similar finding in 2001. Further, in
2003 and again in 2006, we reported that the Service does not maintain
data on the actual cost of individual work activities, including timber
sales, and as a result cannot assess the extent to which these
activities yielded accomplishments commensurate with the dollars spent
on them.
In this context, you asked us to examine the Service's current
mechanisms for tracking timber sales-related obligations and
expenditures,[Footnote 2] as well as timber sales-related revenue. In
addition, given that the Bureau of Land Management (BLM) within the
Department of the Interior also conducts timber sales, you asked us to
include that agency in our review as well. Specifically, we agreed to
determine the extent to which (1) the Forest Service tracks timber
sales-related obligations and expenditures, including the extent to
which the Service uses this information in making management decisions;
(2) BLM tracks timber sales-related obligations and expenditures, and
how BLM's methods for doing so compare with those of the Forest
Service; and (3) the Forest Service and BLM track their timber sales-
related revenue.
In conducting our work, we reviewed Forest Service timber sales
accounting policies and procedures; financial system manuals and
documentation; reports from systems in place to track obligations,
expenditures, and revenue; and databases and spreadsheets devised by
field offices to track this information. We visited numerous field
locations because the Forest Service is a decentralized agency. Our
work included visiting six of the nine Forest Service regional offices
and at least one national forest office in each of six regions. We also
interviewed officials of five ranger districts. We also visited the
Service's Washington Office and the Albuquerque Service Center, which
performs many Forest Service accounting functions. Our BLM work
included reviewing BLM timber sales accounting policies and procedures,
financial system manuals and documentation, and reports from systems in
place to track obligations, expenditures, and revenue. In addition, we
visited the National Business Center in Denver, Colorado; two state
offices; one district office; and one field office. At each of these
Forest Service and BLM locations, we interviewed officials responsible
for tracking timber sales and managing related obligations,
expenditures, and revenue, and we reviewed related policies,
procedures, and records. We conducted our review from April 2006
through April 2007 in accordance with generally accepted government
auditing standards, which included an assessment of data reliability
and internal controls. Additional information on our scope and
methodology appears in appendix I.
Results in Brief:
The Forest Service tracks the funds it spends on timber sales,
including obligations and expenditures for personnel and equipment, in
a way that does not provide the detail that many field managers, such
as district rangers and national forest supervisors, said they need in
order to make management decisions--for example, in deciding how to
allocate or redirect resources among sales. The Service does not track
timber sales-related obligation or expenditure data by individual sale
but rather aggregates these data by the programs that fund the sales--
such as the Forest Products Program or the Salvage Sale Program. Also,
within these programs, the Service recently stopped tracking
obligations and expenditures at the ranger district level, where timber
sales are generally carried out, and now tracks them instead at the
national forest level. Forest Service headquarters officials said that
the aggregation of obligation and expenditure data at the forest level
was part of an effort to reduce the proliferation of job codes in the
accounting system and the associated data management costs. These
officials said that the aggregate data are "good enough" and that field
managers do not need more detailed data. However, many field managers
we talked with said that detailed data are crucial to their timber
sales management efforts. Without obligation and expenditure data on
individual sales, for example, field managers said they cannot compare
actual expenditures on sales with planned expenditures, identify
potential inefficiencies across sales, or identify resources available
for redirection to another sale if needed. Further, without data on
program obligations and expenditures at the ranger district level,
field managers said they cannot efficiently compare actual and planned
program obligations and expenditures across districts to ensure that
spending is occurring as planned. To compensate for the lack of
detailed data, many field managers have independently developed a
variety of so-called "cuff records," such as spreadsheets, containing
information they deem essential for managing their timber sales. Field
managers we spoke with said that maintaining these cuff records is time
consuming--for example, one forest official said he spends about 20
percent of his time gathering and analyzing the data he needs to manage
timber sales. As a result, although the aggregation of data has
decreased the Service's recognized data management costs, it has
increased the time spent by some field managers on tracking this
information through cuff records, thus raising questions about the
actual cost savings resulting from the aggregation of data. Moreover,
the Service has not systematically determined the information needs of
its field managers or the extent to which actual cost savings may be
offset by the cost of maintaining cuff records. We are recommending
actions the Service can take to improve its managers' ability to use
obligation and expenditure data to understand the actual cost of work
activities and make management decisions accordingly.
In contrast to the Forest Service, BLM can track timber sales data by
individual sale, thereby allowing field managers to use these data in
managing the sales--including comparing planned and actual
expenditures, identifying potential inefficiencies across sales, and
redirecting resources among sales when needed. For example, using the
unique job code assigned to each timber sale conducted under the Forest
Ecosystem Health and Recovery Fund, managers can track all obligations
and expenditures on each sale--from those incurred during the planning
phase (e.g., on environmental assessments) to the final administrative
expenditures involved in closing the sale. BLM chose to maintain
detailed data because its managers find them necessary in making
decisions about, for example, how to allocate resources or reduce
expenditures. At the project level, for example, managers can track
actual expenditures and compare them with planning estimates. More
broadly, managers can analyze several years of data to identify trends
in expenditures across offices. These data can then reveal how
efficient offices are in accomplishing projects and inform decisions
about reallocating resources among offices or programs.
Both the Forest Service and BLM have systems that track and report
revenue data by timber sale. Both agencies' systems track the volume,
type, and value of timber harvested by individual timber sale;
automatically generate bills to timber purchasers; and track payments
against those bills. Over the past few years, both agencies have
struggled with, but are now resolving, the challenge of tracking
revenue from timber sales conducted under their stewardship contracting
authority. Stewardship contracts generally involve the exchange of
goods, such as timber, for contract services, such as thinning of small
trees and brush. Such exchanges can be difficult to account for with
traditional accounting systems. The Forest Service has recently added a
module to its accounting system to track stewardship contracting
revenue, and BLM has developed an agencywide database for stewardship
contracting information.
We provided a draft of this report to the Secretaries of Agriculture
and the Interior for review and comment. The Forest Service and the
Department of the Interior generally agreed with our report; their
comment letters are presented in appendixes II and III, respectively.
Background:
Both the Forest Service and BLM conduct timber sales as part of their
management of public land. However, the agencies differ in their
organizational structure and in the sources of funding they use for
carrying out timber sales. Timber sales activities involve staff time
and, in some cases, equipment and supplies, to identify the sale area,
conduct the required environmental analyses, solicit bids, prepare the
timber sale contract, mark the sale boundary and the trees to be cut or
left, and monitor the harvest operations and reforestation activities.
Forest Service Organization:
The Forest Service manages 193 million acres of national forests and
grasslands. The Service has nine regions that oversee 155 national
forests; the forests, in turn, oversee more than 600 ranger districts.
Each region (see fig. 1) encompasses a broad geographic area, headed by
a regional forester who reports directly to the Chief of the Forest
Service and provides leadership for, and coordinates the activities of,
the various forests within the region. Each forest, headed by a
supervisor, allocates the budget and coordinates activities among the
various ranger districts within the forest. Each ranger district,
headed by a district ranger, conducts or oversees "on the ground"
activities such as construction and maintenance of trails; operation of
campgrounds; management of wildlife habitat; and the sale and harvest
of forest products, including timber. The districts vary in size from
50,000 acres to more than 1 million acres.
Figure 1: Forest Service Regions:
[See PDF for image]
Source: Forest Service.
Note: The Forest Service has no Region 7.
[End of figure]
Forest Service Timber Sales-Related Funding:
The Forest Service's timber sales-related activities are funded by a
variety of appropriations. Within the Service's appropriations, there
are several programs (or "budget line items") directly or indirectly
related to timber sales. For the Forest Products Program, which is
responsible for most timber sales-related activity, the Forest Service
received about $277.6 million of its $1.5 billion national forest
system appropriation in fiscal year 2006. However, the Forest Products
Program is not limited to timber sales; some expenditures within the
program are associated with other products, such as mushrooms and
decorative grasses and foliage. The Service issues permits that allow
individuals to gather such products from the forests, whether for
personal use or for sale. Conversely, not all timber sales-related
expenditures are included in the Forest Products Program. Certain
timber sales' planning expenses, for example, might be borne by other
programs--including vegetation and watershed management or wildlife and
fish management--if the primary purpose of the sale is to improve
vegetative conditions or wildlife habitat rather than to provide
commercial timber.
The Forest Service also uses various other funds to pay for timber
sales-related activities, including (1) the Knutson-Vandenberg Trust
Fund, (2) the Salvage Sale Fund, (3) the Brush Disposal Fund, (4) the
Timber Sales Pipeline Restoration Fund, and (5) stewardship contracting
revenue.
* The Knutson-Vandenberg (K-V) Trust Fund, established by the Knutson-
Vandenberg Act of 1930 (16 U.S.C. §§ 576-576b),[Footnote 3] was created
to collect a portion of timber sales revenue to pay for the
reforestation of areas from which timber is cut. The reforestation
projects eligible for such funding include growing trees for planting,
planting trees, sowing seeds, removing weeds and other competing
vegetation, and preventing animals from damaging new trees. The act was
amended in 1976 to allow the Forest Service to use these funds for
other timber sales area improvement activities, such as creating
wildlife habitat. It was amended again in 2005 to authorize
expenditures within the entire Forest Service region in which the
timber sales occurred. In fiscal year 2006, the Forest Service
allocated $40 million of K-V funds for forest product sales under the
expanded authority, and another $77.6 million of K-V funds for
activities conducted under the original K-V authority.
* The Salvage Sale Fund, derived from salvage sale revenue, is used to
pay for preparing and administering future salvage sales.[Footnote 4]
The fund may also be used to pay for the design, engineering, and
supervision of construction of roads associated with such sales. The
Salvage Sale Fund was created by the National Forest Management Act of
1976 (16 U.S.C. 472a(h)).[Footnote 5] Individual salvage sale timber
contracts designate the amount of receipts to be collected and
transferred to the Salvage Sale Fund. For fiscal year 2006, the Forest
Service allocated $75.8 million for salvage sales.
* The Brush Disposal Fund, derived from payments made by timber
purchasers, is used to pay for the removal of brush and debris that
result from logging.[Footnote 6] For fiscal year 2006, the Forest
Service allocated $11.6 million from the Brush Disposal Fund for this
purpose. The Brush Disposal Fund is a permanent fund created to allow
the deposit of funds to pay for certain brush disposal work on all
timber sales, including salvage sales. Forest Service staff complete
brush disposal work using funds collected as an additional charge to
the purchaser, based on the amounts paid for the trees harvested. The
funds are deposited in the Brush Disposal Fund, and the Service
generally seeks to spend them within 3 years of the completion of the
sale. Brush disposal usually entails chipping or burning vegetative
debris from the sale, such as stumps, broken treetops, tree limbs and
branches, or damaged brush resulting from logging operations. Brush
disposal is also referred to as slash disposal.
* The Timber Sales Pipeline Restoration Fund, authorized by the Omnibus
Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. No.
104-134), is used to pay for certain eligible timber sales. For fiscal
year 2006, the Forest Service had $2.5 million in the pipeline fund.
The act created this fund to receive a portion of the receipts from
certain timber sales released under the fiscal year 1995 Supplemental
Appropriations for Disaster Assistance and Rescissions Act. The revenue
deposited in the fund is to be used for the preparation of timber sales
not funded by annual appropriations and to fund certain recreation
projects. Specifically, 75 percent of the revenue is to be used for the
preparation of green timber sales on national forest and certain BLM
lands, and 25 percent is to be used for recreation projects.
* Stewardship contracting revenue, derived from stewardship projects
involving the sale of timber, is used to pay for future stewardship
projects.[Footnote 7] For fiscal year 2006, the Forest Service had $1.7
million in such revenue available. Stewardship contracting involves the
use of any of several contracting authorities that were first
authorized for use by the Forest Service on a pilot basis in October
1998. The Omnibus Consolidated and Emergency Supplemental
Appropriations Act for 1999 established stewardship contracting
authority to achieve national forest land management goals that meet
local and rural community needs.[Footnote 8] Prominent among the
stewardship contracting authorities is the ability to (1) trade goods-
-timber, for example--for contract services, such as thinning of small
trees and brush, and (2) retain for use in future stewardship projects
any revenue generated through selling forest products such as timber,
rather than returning the revenue to the Department of the Treasury, as
is required for traditional timber sales. Although stewardship
contracting was initially established as a demonstration project that
involved a limited number of individual projects within the Forest
Service and was to end in 2002, the Consolidated Appropriations
Resolution of 2003, among other things, extended the use of stewardship
contracting authority to 2013, eliminated the limit on the number of
projects, authorized commercial tree removal for forest health purposes
as a project purpose, and extended the authority to BLM.[Footnote 9]
The Forest Service's tracking of its timber sales-related expenditures
has been the subject of several of our previous reports. For example,
in 2001 we reported that serious accounting and financial reporting
deficiencies precluded an accurate determination of the total costs
associated with the timber sales program and, in fact, rendered the
Service's cost information unreliable.[Footnote 10] In 2003, we noted
that the Service could not accurately report on the actual costs of
individual work activities.[Footnote 11] And in 2006, we reported that
the Forest Service did not have a system that allowed it to determine
the cost of its activities below the program level, resulting in a
continuing focus on budget management without a corresponding focus on
cost management.[Footnote 12]
BLM Organization:
BLM administers more land than any other federal agency--about 261
million acres. Of that amount--most of which is located in the western
states, including Alaska--roughly 69 million acres (about 26 percent)
are commercial forests and woodlands. BLM's organizational structure
includes national, state, and field-level units. National units include
BLM's headquarters office as well as national centers with specific
service and support responsibilities, such as the National Business
Center in Denver, Colorado. State-level units consist of 12 state
offices that implement BLM's activities in one or more states. Field-
level units include 144 district and field offices that carry out the
"on the ground" activities, including timber sales, under the
supervision of the BLM state offices. Figure 2 shows BLM-administered
lands and the boundaries of BLM state jurisdictions.
Figure 2: BLM-Administered Lands and State Jurisdictions:
[See PDF for image]
Source: BLM.
[End of figure]
BLM Timber Sales-Related Funding:
BLM's timber sales-related activities are funded through various
appropriations. BLM conducts timber sales under two separate forestry
programs. Most of BLM's timber program is associated with the agency's
lands in western Oregon, which are managed expressly for the purpose of
providing a permanent source of timber supply, protecting watersheds,
regulating stream flow, contributing to the economic stability of local
communities and industries, and providing recreational facilities under
the provisions of the Oregon and California Sustained Yield Act of
1937.[Footnote 13] These lands, heavily forested with Douglas fir and
western hemlock species, are responsible for the majority of BLM's
timber production. BLM timber sales undertaken in western Oregon are
funded by the Oregon and California Grant Lands appropriation; in
fiscal year 2006, BLM allocated $27.1 million for the sale of this
timber. The remainder of BLM's timber sales occur on other lands, which
are managed for multiple uses, including the sale of timber. These
timber sales are funded by the Management of Lands and Resources
appropriation, which was $10.4 million in fiscal year 2006.
In addition to these appropriations, BLM's timber sales-related
activities rely on the Forest Ecosystem Health and Recovery Fund, the
Timber Sales Pipeline Restoration Fund, and funds from stewardship
contracting activities. The Forest Ecosystem Health and Recovery Fund,
which funds timber salvage sales, is derived from the federal share of
revenue from BLM salvage sales and forest health restoration
treatments.[Footnote 14] This revenue is made available to BLM for
planning and preparing salvage timber for disposal, the administration
of salvage timber sales, and subsequent site preparation and
reforestation. Since fiscal year 1998, the fund has also been available
for forest health restoration treatments, including timber sales
designed to release trees from competing vegetation, control tree
densities, or treat hazardous fuels. BLM's Timber Sales Pipeline
Restoration Fund operates under the same legislation pertaining to the
Forest Service's pipeline fund. Finally, authority for stewardship
contracting was originally limited to the Forest Service but was
extended to BLM in fiscal year 2003. When BLM was first granted
stewardship contracting authority, the Assistant Secretary of the
Interior for Land and Minerals Management had to approve each
stewardship contracting project. That approval has since been delegated
to the state directors. Generally, stewardship contracts valued at
$100,000 or more are handled by BLM's National Business Center or by
the Oregon State Office, while those valued at less than $100,000 are
handled by the state office that originated them.
The Forest Service's Aggregation of Obligation and Expenditure Data
Hinders Field-Level Project Management:
The Forest Service tracks obligation and expenditure data at the
program and forest levels through its accounting system--the Department
of Agriculture's Foundation Financial Information System (FFIS). In
fiscal year 2000, when it transitioned to FFIS, the Service lost the
ability to track information--such as employees' actual time charges
and supply purchases--at the project level (i.e., individual timber
sale level). Instead, FFIS aggregates data at the program level.
Currently, neither FFIS nor any other automated system tracks
obligations and actual expenditures at the project level. Beginning in
fiscal year 2006, as a cost-saving measure, the Service removed from
FFIS the codes that had previously associated program obligations and
expenditures with individual ranger districts. To compensate for the
lack of detailed information, field managers have spent considerable
time and effort to develop and maintain a variety of "cuff records,"
such as spreadsheets, that contain the data they need to manage their
projects, including timber sales.
The Forest Service Tracks Obligations at the Program and Forest Levels:
Through FFIS, the Forest Service tracks, at the program and forest
levels, timber sales-related obligations from the National Forest Fund
as well as from the K-V, brush disposal, salvage sale, pipeline, and
stewardship funds. These obligations include costs for personnel,
vehicles, and supplies and equipment. Personnel costs related to timber
sales include time spent preparing for a sale (e.g., identifying the
sale area and completing related environmental analyses), administering
the sale contract, monitoring the harvest, and conducting or overseeing
the postharvest reforestation and restoration activities.
Since its transition to FFIS, the Service has aggregated data on
obligations at the program level rather than at the project level.
Staff charge their time to a job code that represents the program most
applicable to the activities they conducted--for example, to the job
code associated with the Forest Products Program or the Vegetation and
Watershed Management Program. Overall, according to Forest Service
officials, staff time is by far the Service's biggest expenditure--
about 75 percent or 80 percent of the total. Other expenditures include
vehicles and supplies, such as paint for marking sale boundaries and
marking trees to be cut or left.
In addition to grouping data by program, FFIS also aggregates the
program data at the forest level. For example, when staff at the ranger
district level, where projects are carried out, complete their
timesheets, the program job code to which they charge time indicates
the national forest with which their district is associated. The code
does not, however, indicate the district or the specific project with
which the transaction is associated. Obligations for supplies and
equipment are also tracked at the forest level. Previously, FFIS
contained "subunit" job codes that tied this information to ranger
districts.[Footnote 15] Beginning in fiscal year 2006, as a cost-saving
measure, the Forest Service removed these subunit job codes for timber
sales-related activities.
For stewardship contracting activities, on the other hand, no separate
job code exists in FFIS by which to identify staff time and other
obligations related to these activities. FFIS has no code for
stewardship contracting activities because the Forest Service does not
have a budget line item for these activities. Rather, stewardship
contracting is considered a tool for accomplishing various forest
management objectives. Accordingly, staff time and other obligations
for stewardship contracting activities are charged to the one or more
programs that benefit from the stewardship project and are thus
included in these programs' obligations. For example, if the wildlife
program were expected to derive a benefit from a stewardship thinning
project (e.g., because the project would result in more open space for
elk), then the wildlife program would fund part of the cost of that
project. Field offices maintain spreadsheets to track the monthly
progress of individual stewardship contracting projects and the payment
mechanisms involved in each one (e.g., nonmonetary credits earned for
service work, payments from appropriated funds or trust funds, and
payments from revenue retained from stewardship projects).
Cost Issues Prompted the Forest Service to Further Aggregate Data:
The Forest Service's decision to further aggregate data at the forest
level beginning in fiscal year 2006--that is, to reduce reporting to a
single job code per program per forest--was intended as a cost-saving
measure. By reducing the number of job codes in use, the Service would
in turn reduce the associated number of records that are maintained in
FFIS, thereby reducing its data management costs. The Forest Service
determined that a significant portion of the records was associated
with job codes used to track information associated with ranger
districts. According to officials of the Forest Service's Office of the
Chief Financial Officer, removing these job codes was part of a
continuing effort, begun in fiscal year 2004, to reduce the
"proliferation" of job codes that was leading to increased data
management costs, and doing so resulted in savings of about $8.9
million in 2006 dollars from fiscal year 2004 through fiscal year 2006.
Forest Service headquarters officials, and some regional officials,
told us that detailed tracking of data is not needed at the ranger
district or project level and, consequently, that it was not an
efficient use of Service funds to pay the costs associated with this
unnecessary level of detail. According to one regional official, for
example, district or project information is not needed to manage at the
forest level; the forest supervisor just needs to know how close the
forest is to achieving its objectives and how much of its allocation is
still available for obligation. Tracking at the program level frees up
time to do actual work, he said, rather than tracking multiple job
codes. Other officials also said they were not convinced that forest
and district managers needed to track all of the information they had
historically maintained. Agency records, said one official, were not
designed to be a "personal diary" for managers.
Several headquarters officials, including Albuquerque Service Center
officials, told us that field managers could use the Service's planning
and budgeting system, known as WorkPlan, to monitor their projects.
WorkPlan is an automated system in which project managers estimate how
much they will spend on one or more work activities, such as preparing
or administering timber sales. Managers prepare their WorkPlans at the
beginning of the fiscal year--entering into each plan the personnel,
vehicles, and other equipment they anticipate they will need to carry
out the planned activities. Managers are free to choose the level of
specificity associated with their WorkPlans. For example, one manager
might create a single WorkPlan to encompass a district's entire timber
sales program, while another might create an individual WorkPlan for
each planned timber sale or for each phase of a timber sale.
However, field managers we talked to said that, while they find the
WorkPlan system a valuable planning tool, it does not meet their need
for detailed information on what they have obligated or actually
expended. That is, the WorkPlan system obtains data on obligations and
actual expenditures from FFIS--which, as noted earlier, aggregates
these data by program and national forest, not by ranger district,
project, or individual WorkPlan. Similarly, while other Service
systems, such as the Forest Service Activity Tracking System, contain
project-level information, that information does not include obligation
or actual expenditure data. The headquarters official responsible for
overseeing program activities in the national forest system agreed that
the WorkPlan system cannot provide field managers with such data at the
district or project level. This official, and other headquarters
officials, said that field managers who felt that this detailed
information was necessary must develop their own tracking mechanisms.
Lacking the System Data They Need, Many Field Managers Rely on Cuff
Records:
Although several Forest Service officials contend that information on
district-and project-level obligations and expenditures is not needed,
managers we talked to at various levels of the Service's field
organization said they rely on cuff records, such as spreadsheets, to
track this information and help manage their projects. For example,
these managers told us that by using cuff records to track project
obligations and expenditures, they can more easily determine whether
obligations and expenditures are charged to the appropriate programs,
manage forest or regional allocations, and respond to outside requests
for information about agency timber sales. The amount of time and
effort required to develop and maintain such cuff records is
necessitated by the lack of a system that maintains data on obligations
and actual expenditures at the district or project level.
Field managers we interviewed said they rely on cuff records to
accumulate the detail they find necessary to track projects' progress
and ensure that obligations and expenditures are being charged to the
appropriate programs, as well as to ensure that their projects' on-the-
ground progress keeps pace with the obligations and expenditures
associated with the projects. One forest official said, for example,
that the subunit codes (the ones that were eliminated through the move
to aggregated data) are necessary to keep track of districts'
obligations and expenditures. Accordingly, he continues to use these
codes in his cuff records. Additionally, he requires each district to
account for its obligations and expenditures on a project-by-project
basis (in addition to using WorkPlan) and to provide those data to him
so that he can track this information against the overall allocation
for the forest. By comparing obligations and expenditures with the on-
the-ground progress of individual projects, this manager can determine
whether project spending is on schedule and whether funds need to be
reallocated toward (or away from) individual projects to ensure that
forest priorities are accomplished.
Such tracking of project spending is important because a project might
encounter unexpected costs--for example, unanticipated steps might need
to be taken in order to remedy damage caused by a mudslide. If the
project is of high priority, according to Forest Service officials we
interviewed, the project manager will need to shift funds from other,
lower priority projects in order to provide the additional funds needed
to complete the high-priority project. However, without district-or
project-level data on obligations, it is difficult--if not impossible-
-to know which other projects have funds available to shift to the
priority project, as well as to understand the potential effects on the
projects from which funds were moved.
At another forest, an official noted that it is now "almost
impossible," without the subunit job codes, to track obligations and
expenditures at the district level. Regarding the forest's K-V fund,
for example, this official used to be able to maintain K-V fund
balances by district; to do that now, he counts on district managers to
keep cuff records. Further, the forest developed a K-V tracking
spreadsheet, which is now the only tool available to officials at that
forest for tracking the K-V funds and needs among projects.
With the removal of the subunit codes from FFIS, several field managers
told us they must depend on their cuff records to detect and correct
erroneous transactions to ensure that their limited funds are spent as
intended. In one region, for example, an official said she routinely
scours the FFIS transaction register--which shows, for an individual
program or forest, a record of each obligation--looking for erroneous
charges. Because the list of transactions for a single program or
forest can be hundreds of pages long, she checks only transactions over
$1,000. When she finds a charge that seems potentially erroneous (e.g.,
a name she does not recognize or a credit card purchase that is
questionable for a given program), she queries the managers of the
staff areas. These managers then must investigate the potentially
incorrect charges and correct them, if appropriate. This official said
she spent 15 percent to 20 percent of her time in fiscal year 2006
using her cuff records to track down potentially erroneous charges and
correct them. She found, for example, that numerous time charges had
been miscoded, resulting in a total of about $60,000 being erroneously
charged to the timber program; she followed up and had those charges
removed. This inefficient verification and correction process is used
because the Forest Service does not have a system that links each
charge with an individual district, by project, to enable officials to
more easily detect erroneous charges.
Other managers we spoke with expressed similar concerns about their
diminished ability--since the shift to aggregated data--to identify
costs for particular activities and to monitor obligations against
their forests' allocation. When multiple districts charge the same
code, managers cannot tell--without keeping detailed cuff records--who
might be charging more time or obligating more money than planned to a
code or charging the wrong code. If more time or money is spent on a
project than was planned, a manager must be prepared to either delay
further work on the project or redirect funds from other projects to
compensate. However, in order to take either of these steps in time to
avert overspending, the manager must have timely information on each
project's expenditures. The effects of exceeding allocations can go
beyond the project in which it occurs, or even beyond the forest. For
example, officials in one region told us that a forest within the
region had exceeded its allocation for planning so substantially that
planning activities throughout the region had to be curtailed in order
to compensate for the forest's error.[Footnote 16] As a result, these
managers have created cuff records to monitor projects as they proceed.
Finally, many Forest Service staff we spoke with said they keep cuff
records so that they can respond to the many requests they receive for
information. For example, according to officials in different regions,
timber industry groups, congressional staff, and others frequently ask
for information on individual timber sales, including information on
the volume of timber offered and associated costs, particularly unit
rates to produce timber (in dollars per thousand board feet).[Footnote
17] Responding to these requests is difficult, according to Service
officials we interviewed, because the Service does not maintain
information at the timber sales level; rather, managers must resort to
cuff records in order to furnish the information.
Given the labor-intensive and time-consuming nature of maintaining the
various cuff records in existence throughout the Forest Service, the
actual cost savings resulting from the Service's decision to aggregate
data are not clear because substantial field resources are being
expended to compensate for the unintended effects of this decision.
That is, while the reduction in job codes maintained in FFIS has helped
the Service decrease its recognized data management costs, it has at
the same time resulted in additional, uncalculated costs in staff time
devoted to tracking obligation and expenditure data at the district
level. In fact, the information we gathered from managers in the field
seems to contradict the assertion of a Forest Service official, noted
earlier, that tracking obligations and expenditures at the forest level
frees up time to do actual work rather than tracking multiple job
codes. Instead, field managers told us that the time they need to spend
tracking has actually increased because the system no longer provides
this information at the district level. In addition, neither FFIS nor
WorkPlan tracks obligations and actual expenditures at the project
level. Consequently, field managers who wish to track district-or
project-level data must do so manually. Forest Service headquarters
officials told us that the agency has not attempted to determine the
amount of time currently spent by field managers tracking this
information or the associated costs of doing so.
The Bureau of Land Management's Detailed Data Help Managers Monitor
Projects:
In contrast to the Forest Service, BLM uses its Management Information
System (MIS) to track timber sales-related obligations and expenditures
at a level of detail useful to managers throughout the organization.
Drawing from the Department of the Interior's Federal Financial System
(FFS), MIS tracks timber sales obligations--such as employee time
charges, supplies, and equipment--at various levels. For example, MIS
tracks obligations by funding source and activity type, then by office
and, in many cases, individual timber sale. The two funding sources
most closely associated with timber sales are the Oregon and California
Grant Lands appropriation and the Forest Ecosystem Health and Recovery
Fund. As for activity types, those related to timber sales include (1)
managing commercial timber sales and (2) restoring forests and
woodlands through timber sales (e.g., managing salvage sales). MIS also
tracks obligations by office, at both the state office level and the
field organization level (e.g., district offices and field offices).
Lastly, MIS tracks obligations by specific project, such as a specific
timber sale or stewardship project, when a project code is assigned.
Project codes are required for all sales conducted through the Forest
Ecosystem Health and Recovery Fund, including salvage sales, but are
optional for sales conducted with other funds, including commercial
sales. For commercial sales, for example, managers are free to assign
codes to individual projects but are not required to do so if they do
not believe it is necessary. In some locations, according to a BLM
official, an office may conduct only one or two timber sales a year
and, thus, may not find project codes necessary to identify individual
sales. In one location, BLM officials said they assign project codes
after the general planning work has been completed; in another
location, officials said they assign project codes once funding
approval has been received. Staff working on a specific timber sale
would charge their time to the relevant funding code, activity code,
office code, and project code.
Using MIS has allowed BLM to maintain and monitor obligations and
expenditures at various levels of detail without relying on complicated
cuff records, as the Forest Service does. For example, an official from
BLM's National Business Center said that the job codes assigned to
timber sales conducted under the Forest Ecosystem Health and Recovery
Fund allow managers to track all data on an individual sale--from the
planning phase (e.g., on environmental assessments) to the final
administrative activities involved in closing the sale. In other cases,
a state office official said, individual project codes are not assigned
(e.g., for sales conducted through the Timber Sales Restoration
Pipeline Fund), but those sales can be identified by activity code and
location, allowing managers to track information at those levels. This
official said he also uses MIS to generally monitor district offices'
obligations and expenditures. For example, MIS data allow him to
compare the vehicle and labor obligations and expenditures one office
charged to the timber program with the same type of obligations and
expenditures charged by other offices.
The level of detail available in BLM's system is a function of the
agency's experience in the 1990s, according to a BLM official, when the
agency began losing money on timber sales and officials struggled with
how to handle the reporting of these losses. One of the alternatives
discussed was not calculating timber sales expenditures at all, so that
they would not potentially embarrass the agency politically--an option
that this official referred to as "contrived obfuscation." Instead,
with an eye toward providing full transparency and performance
accountability, BLM took the opposite tack, according to this official;
it decided to track data at an even more detailed level.
Detailed expenditure data--captured in a cost accounting system--help
managers understand how expenditures can be controlled without
sacrificing service to the public. For example, managers of BLM's Wild
Horse and Burro Program in Utah were able to use MIS to track
expenditures on each work activity associated with the
program.[Footnote 18] Program managers identified expenditures for each
activity and determined that the largest expenditures were for labor,
particularly in conducting the adoption process and doing postadoption
inspections, and for feed expenditures during the preadoption holding
period. Armed with this information, BLM was able to reduce its labor
expenditures by making greater use of volunteers and reduce its feed
expenditures by capturing animals just prior to scheduled adoptions. In
1998, BLM collected slightly more than 5,700 animals. After changing
the process in 1999, based on expenditure data, the program collected
more than 7,700 animals and reduced the expense of holding and feeding
them by $600,000 (about $710,000 in 2006 dollars).
MIS has also proven useful in allowing BLM managers to make expenditure-
based decisions with regard to timber sales. For example, expenditure
data were used to determine the efficiency and effectiveness of
individual BLM state timber programs. Trend data were generated for
several years to compare how effectively the individual BLM state
offices were accomplishing their projects relative to their
expenditures. This information was used to move funding and resources
among state offices to more effectively meet program goals and bureau
priorities.
Both Agencies Have Systems That Track Revenue by Timber Sale:
The Timber Sale Accounting system maintains the Forest Service's timber
sales revenue data, while two systems--the Timber Sale Information
System and the Collections and Billing System--maintain BLM's timber
sales revenue data. Both agencies' systems track sale and harvest
information by individual timber sale; they also automatically bill
purchasers and track payments. Both agencies also have systems for
tracking revenue generated under their stewardship contracting
authority, after initially struggling with how to implement the
systems.
Forest Service's Timber Sale Accounting System Maintains Revenue Data:
The Forest Service's Timber Sale Accounting (TSA) system maintains data
on all timber-related revenue. The system tracks the volume, type, and
value of timber harvested by individual timber sale; automatically
generates bills to timber purchasers; and tracks payments against these
bills. TSA tracks revenue from sales conducted with appropriated monies
as well as those conducted with monies from the salvage sale and
pipeline funds. TSA also tracks payments made by purchasers to fund
reforestation and brush disposal activities. Recently, the Forest
Service added a module to TSA to track revenue stemming from activities
conducted under its stewardship contracting authority. These activities
often involve the exchange of timber for services and thus can be
difficult to account for with traditional systems.
TSA maintains timber sales revenue data by individual timber sale
contract or permit. Each contract or permit is given a unique
identifying number in TSA, which provides a standardized process for
managing the financial aspects of timber sales contracts and permits.
(Permits involve the sale of forest products other than timber, such as
firewood, mushrooms, Christmas trees, and decorative grasses and
foliage.) TSA produces a monthly statement of account for each contract
and permit; this statement contains a detailed breakdown of activities
under that contract or permit and ensures accurate computation of
revenue due the government.
The revenue comes to the government in the form of cash or credits.
Cash comes from timber purchasers' payments of bills for timber volume
removed, or stumpage. A Forest Service sale inspector inspects the
sales units at least once a month and reports the volume of timber
harvested. TSA then automatically calculates the amount due, based on
the amount harvested and the product rate, and generates a bill to the
purchaser. Once payment is received, TSA distributes the cash to the
appropriate revenue accounts, such as the National Forest System Fund,
the K-V fund, and the Salvage Sale Fund. TSA also supplies this
information to FFIS, where it is recognized as earned income.[Footnote
19]
TSA also tracks "purchaser credits" and "cost share credits." Purchaser
credits represent the value of road construction or reconstruction the
timber purchaser performed. The purchaser receives credit for the work,
which is deducted from the appraised value of stumpage.[Footnote 20]
TSA tracks the purchaser credits used to pay for (or offset) stumpage
from year to year, as well as the balance of outstanding (unused)
credits. TSA also tracks cost share credits, which represent the value
of construction or reconstruction costs shared between the Forest
Service and the purchaser. For example, if the Forest Service
contributed materials, such as rock for a road surface, and the
purchaser did the work, the value of the purchaser's share would appear
in TSA. Purchaser and cost share credits can be used to pay for timber
removed by the purchaser.
Stewardship contracting has posed challenges for the Forest Service
because the barterlike aspect of stewardship contracting can make it
difficult to account for using traditional accounting systems. As a
result, the Forest Service has struggled to incorporate into TSA a way
to track the collection and distribution of revenue stemming from
stewardship contracts. The accounting theory governing what are
essentially barter transactions (although the value of both the timber
and the services is appraised) is demanding, according to a regional
official, and TSA programmers have devoted much time to this area.
Until recently, the Forest Service had not automated the accounting for
all activities conducted through stewardship contracts. Staff had to
use manual spreadsheets to track, outside of TSA, the value of timber
removed and the value of service work completed, thereby allowing them
to compute the amount the purchaser owed for timber volume removed, if
any. Accordingly, data on stewardship contracting activities have been
entered into TSA for only the past few years, and the data were
incomplete, according to the system administrator. In October 2006,
during our review, the Forest Service implemented a TSA module that
tracks most of the stewardship contracting data.
Within TSA, the monetary activity associated with stewardship contracts
is now tracked using two unique revenue codes. The first code
represents a suspense account that contains monies collected from
timber purchasers as advance payments--that is, money to pay for timber
that is removed before the service work has been completed. In these
cases, the advance monies are used to pay for the timber volume
removed. Then, as the service work is performed, those monies are
automatically refunded to the purchaser, and the stewardship credits
are applied as payment for the volume removed to date. When all the
service work has been completed and there is expected to be additional
timber volume to be paid for with cash (i.e., when the value of the
timber exceeds the value of the service work), then the remaining
suspense fund money is transferred to the retained receipts account.
This account, represented by the second revenue code, is a region-and
forest-specific revenue account that contains cash collected for timber
when the value of the timber exceeded the value of the service work. In
other words, a contractor has to pay the Forest Service only if the
total timber value exceeds the total cost of services. The retained
receipts account may be used to fund additional stewardship sales that
have been approved by the regional forester.
With the October 2006 addition of the stewardship accounting module,
TSA now tracks the amount of stewardship work to be performed, the
amount performed to date, the volume and value of timber removed, and
any cash paid the contractor for service work performed (when the value
of the service work exceeded the value of the timber). TSA
automatically applies the available stewardship credits to pay for
timber volume removed to date.
Although TSA now has a module designed to capture monetary transactions
related to stewardship contracts, regions and forests said they will
continue maintaining spreadsheets to track the monthly progress of
individual stewardship contracting projects and the payment mechanisms
involved in each one. For example, the spreadsheets track nonmonetary
"accrual" transactions, which represent the accrued value of credits
earned by contractors for service work completed. These earned
stewardship credits (nonmonetary) are used to "pay" for timber
harvested and are important because the Forest Service has to know how
much credit to extend when the purchaser wants to cut timber. Without
this credit, the Service would demand a cash payment before the timber
could be cut. Accordingly, stewardship work paid for with credits must
be tracked separately from work paid for with cash. Every month, the
field offices send their completed spreadsheets to the Albuquerque
Service Center, which enters into FFIS the nonmonetary accrual
information. At the end of April 2007, the service center was working
on automating this process as well.
BLM Uses Two Systems to Track Timber Sales Revenue:
In tracking timber sales revenue, BLM uses the Timber Sale Information
System (TSIS) and the Collections and Billing System (CBS). TSIS
maintains specific contract data for individual timber sales, including
the volume, type, and value of timber harvested. Amounts owed by
purchasers are calculated in TSIS and then entered into CBS, which is
BLM's official revenue accounting system. CBS generates bills sent to
purchasers and records collections received for contracts. TSIS and CBS
track revenue from sales conducted with appropriated monies in addition
to those conducted with monies from the Forest Ecosystem Health and
Recovery Fund and the Timber Sales Restoration Pipeline Fund.
TSIS and CBS maintain timber sales revenue data by individual timber
sale contract through a unique sale number. This alphanumeric sale
number identifies the state where the sale takes place, the field
office administering it, the year, and the sequential sale number for
that office in that year.
Throughout the month, information from TSIS on timber harvest activity
is entered into CBS, which generates bills sent to purchasers. These
bills are based on the quantity and value of the timber harvested but
may also include things such as road maintenance fees. At the end of
each month, data in CBS and TSIS are reconciled.
Collections are received either in the form of a check sent from the
purchaser directly to the sale office or as an electronic funds
transfer sent directly to the bank. All collections are posted to CBS,
and a unique transaction number is included in the posting. This
transaction number is generated either by CBS (for collections sent to
the sale office) or by the bank (for collections electronically
transferred there). When collection posting is complete, CBS
automatically produces a statement that is then used to update TSIS.
Data in the two systems are again reconciled. The reporting system in
CBS allows staff to track revenue in various ways, such as by sale,
purchaser, type of timber, or fund.
BLM developed a separate system for recording revenue from timber sales
conducted under stewardship contracting authority, the Stewardship
Contracting Information Database (SCID). For revenue from stewardship
contracts, BLM uses CBS to track monetary collections and SCID to track
credits. Upon approval of a new stewardship contracting project,
initial project information is entered into SCID, and each project is
assigned a special project code that is used in both SCID and
CBS.[Footnote 21] Financial and project progress information is
reported monthly in both systems. Because of the special circumstances
created by the unique nature of stewardship contracting, BLM has
devised collections solutions for the different types of contracts. One
requirement common to both regular timber sales and stewardship
contracting is that, prior to cutting or removing any forest products
from BLM-administered lands, a contractor must either pay in advance
for the product or provide some form of security as a payment bond. For
stewardship contracts, the contractor has the additional option of
using earned conservation credits (similar to the Forest Service's
stewardship credits) in lieu of an advance payment or a payment bond.
Contractors' advance payments are recorded in CBS and directed to a
deposit suspense account. When the value of the product removed exceeds
the amount deposited, the contractor makes additional payments, which
are entered into CBS and directed to the regular stewardship contract
product sales fund.
Conservation credits are also tracked in SCID. When the value of the
product removed is equal to or lesser than the value of the
contractor's conservation credits, transactions are recorded in SCID.
Once a contractor's conservation credits have been exhausted, payments
for further product removed are recorded in CBS.
Conclusions:
The Forest Service, like other federal agencies, is faced with limited
resources with which to carry out multiple activities, such as
maintaining campgrounds and trails, protecting wildlife habitat, and
providing a supply of forest products to society. Given this multitude
of pressing needs, the Service's efforts to reduce its data management
costs--and thus allow more dollars to be directed to on-the-ground
activities through which the Service carries out its mission--would
appear laudable. As an unintended consequence, however, the agency has
made it more difficult and resource intensive for field managers to
manage the very activities that the Service seeks to emphasize. And
because many field officials are maintaining cuff records to compensate
for the lack of detailed data available from the Service's system, the
Service cannot ensure that the hoped-for level of cost savings will
materialize. That is, reductions in the Service's recognized data
management costs may be offset by increases in the use of field
resources to fill in the data gaps. More broadly, maintaining detailed
data on the cost of the Service's various activities would not only
assist field managers as they carry out the Service's mission but also
allow the Service to better assess and improve the efficiency and cost-
effectiveness of these activities and thereby improve its fiscal
accountability.
Recommendation for Executive Action:
To ensure that field managers responsible for carrying out Forest
Service operations have the data they need to manage effectively, and
to provide the Congress and the public with useful cost data to assess
the fiscal accountability of Service operations, we recommend that the
Secretary of Agriculture direct the Chief of the Forest Service to
systematically determine the information needs of the field managers on
whom the Service relies to carry out its operations, and, based on the
results of this analysis, take appropriate action to provide data that
meet those information needs. The Service might consider, for example,
creating a subsidiary system to track obligations and expenditures at a
detailed level without further burdening the Department of
Agriculture's primary system, FFIS.
Agency Comments:
We provided the Departments of Agriculture and the Interior with a
draft of this report for review and comment. The Forest Service
generally agreed with the findings and recommendations in the report.
Similarly, the Department of the Interior generally agreed with the
report's contents. The Forest Service's and Interior's written comments
are reproduced in appendixes II and III, respectively.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to interested
congressional committees, the Secretaries of Agriculture and the
Interior, the Chief of the Forest Service, the Director of the Bureau
of Land Management, and other interested parties. We will also make
copies available to others upon request. In addition, the report will
be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or nazzaror@gao.gov. Contact points for
our Offices of Public Affairs and Congressional Relations may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix IV.
Signed by:
Robin M. Nazzaro Director,
Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our overall objective was to examine the current mechanisms used by the
Department of Agriculture's Forest Service (Service) for tracking
timber sales-related obligations, expenditures, and revenue. In
addition, given that the Department of the Interior's Bureau of Land
Management (BLM) also conducts timber sales, we included that agency in
our review. Specifically, our objectives were to determine the extent
to which (1) the Forest Service tracks timber sales-related obligations
and expenditures, including the extent to which the Service uses this
information in making management decisions; (2) BLM tracks timber sales-
related obligations and expenditures, and how BLM's methods for doing
so compare to those of the Forest Service; and (3) the Forest Service
and BLM account for their timber sales-related revenue.
To determine how the Forest Service tracks timber sales-related
obligations and expenditures and the extent to which Service managers
use this information to make decisions about their programs, we
reviewed agency documents and interviewed officials in headquarters and
in six of the nine Forest Service regional offices about their timber
sales accounting policies and procedures. Because the Forest Service
has no agencywide system to track obligations and expenditures at the
project level, we visited Forest Service regional offices in Alaska,
Georgia, Montana, Oregon, Utah, and Wisconsin to interview officials
responsible for tracking timber sales projects and their related
obligations and expenditures.[Footnote 22] At each of these regional
offices, we interviewed officials responsible for tracking timber sales-
related obligations, expenditures, and revenue, and officials
responsible for planning and conducting timber sales-related
activities. We also met with officials of one or more forest offices in
each of six regions, as well as officials of five ranger districts, to
discuss what information they need, the methods they use to capture it,
and how they use it in managing their day-to-day operations.[Footnote
23] During our site visits, we collected and reviewed records used to
identify and track timber-related data. These included "cuff records,"
such as individually maintained computer spreadsheets and databases,
along with manual modifications made to reports generated by the
WorkPlan system. During one visit, we also accompanied an "activity
review team" from the regional office on its site visits to evaluate
field activities. We also reviewed documents and reports related to the
Department of Agriculture's existing financial system, the Foundation
Financial Information System (FFIS). We also reviewed previous work by
GAO and the Department of Agriculture's Office of Inspector General.
Because BLM was not the primary focus of our review, our study of the
extent to which it tracks timber sales-related obligations and
expenditures was more limited than our work at the Forest Service.
Additionally, unlike the Forest Service, BLM employs standardized
agencywide guidance and systems to track this information at the
project level; therefore, significant variation across different
geographic locations was unlikely. Nevertheless, in order to interview
officials responsible for tracking timber sales projects and their
related obligations and expenditures, we visited several BLM locations,
including the BLM state office in western Oregon that manages the
majority of the agency's timber program, as well as a district office
in Oregon; the BLM state office in Idaho, where we spoke with officials
from the state office, one district office, and two field offices; and
one field office in Montana. In addition, we visited BLM headquarters
in Washington, D.C., and the National Business Center in Denver,
Colorado, and we conducted telephone interviews with BLM officials
knowledgeable about the agency's cost accounting practices and systems.
We obtained and reviewed documents on BLM's policies, procedures, and
practices for tracking timber sales obligations and expenditures,
including system manuals and other documentation for BLM's Timber Sale
Information System (TSIS), Management Information System (MIS), and the
Department of the Interior's Federal Financial System (FFS). Finally,
we relied, in part, on GAO's previous work on accounting practices
within the Department of the Interior.[Footnote 24]
During our visits to Forest Service and BLM offices, including their
respective budget and finance centers, we learned how both agencies
account for timber sales-related revenue. We reviewed relevant portions
of agency manuals and handbooks and documents detailing procedures to
identify and report revenue, including revenue that the agencies manage
through participation in an interagency agreement governing timber
sales financed by the Timber Sales Pipeline Restoration Fund. We
reviewed detailed descriptions of the Forest Service's revenue process,
systems, and its internal controls prepared by the independent auditor,
KPMG, during KPMG's annual audit of the Forest Service's financial
statements, and we read the fiscal year 2006 audit report. We reviewed
KPMG's overall approach and sampling methodology and determined that
KPMG's relevant findings were sufficiently reliable for understanding
sales-related revenue in the Forest Service. We also obtained
information about the Forest Service's Timber Information Management
(TIM) system, which contains detailed information on timber sales
contracts. We also obtained information about the Timber Sale
Accounting (TSA) system, which maintains timber sales revenue data, and
interviewed the system administrator. To gain an understanding of how
TIM and TSA maintain data, we held discussions with cognizant officials
on internal controls over timber sales contracts, data entry practices,
and revenue collection procedures. For BLM, we followed the same
general procedures with respect to the following revenue tracking
systems: the Collections and Billing System (CBS), FFS, and TSIS.
Finally, in addition to reviewing both agencies' standard systems for
timber revenue collection, we interviewed Forest Service and BLM
officials about the progress they are making in designing or modifying
systems to track revenue associated with stewardship contracting
projects. Based on the collective information and findings from our
discussions and interviews, we believe these data are sufficiently
reliable for (separately and comparatively) reporting on systems for
tracking timber sales-related revenue in the Forest Service and BLM.
We conducted our review from April 2006 through April 2007 in
accordance with generally accepted government auditing standards, which
included an assessment of data reliability and internal controls.
[End of section]
Appendix II: Comments from the Forest Service:
USDA:
United States Department of Agriculture:
Forest Service:
Washington Office:
1400 Independence Avenue, SW:
Washington, DC 20250
File Code: 1420/2400:
Date: Jun 15 2007:
Robin M. Nazzaro:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G. Street, NW:
Washington, DC 20548:
Dear Ms. Nazzaro:
Thank you for the opportunity to review and comment on the draft
Government Accountability Office report GAO-07-764, "Federal Timber
Sales: Forest Service Could Improve Efficiency of Field-Level Timber
Sale Management by Maintaining More Detailed Data." The Forest Service
generally agrees with the GAO findings and recommendations and has no
additional comments on the report. Implementation of the
recommendations will require careful examination of the processes and
reporting requirements across the agency's program areas. We would be
happy to work with GAO in such an examination. If you have any
questions, please contact Sandy T. Coleman, Assistant Director for
GAO/OIG Audit Liaison Staff, at 703-605-4699.
Sincerely,
Signed by:
Abigail R. Kimbell:
Chief:
cc: Richard Fitzgerald, Corbin Newman, Clarice Wesley, Jesse L King:
[End of section]
Appendix III: Comments from the Department of the Interior:
United States Department of the Interior:
Office Of The Secretary:
Washington, D.C. 20240:
Jun 18 2007:
Ms. Robin M. Nazzaro:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Ms. Nazzaro:
Thank you for the opportunity to review and comment on the Government
Accountability Office (GAO) draft report entitled "Federal Timber
Sales: Forest Service Could Improve Efficiency of Field-Level Timber
Sale Management by Maintaining More Detailed Data" (GAO-07-764). The
Department of the Interior (DOI) offers the following comments:
The DOI agrees with your findings and conclusions relative to the
Bureau of Land Management (BLM). Your report makes no specific
recommendations to the BLM.
The BLM places great emphasis on accountability at all levels of the
organization. Inherent in this expectation is financial performance. As
you note, our Management Information System and associated data
management systems allow the BLM managers to track performance down to
the Field Office level. Field Office managers are, thus, able to track
project progress, costs, and revenues to adjust resource allocations
and assess the cost effectiveness of specific management activities.
If you have any questions, please call Andrea Nygren, BLM Audit Liaison
Officer, Division of Evaluations and Management Services, 202-452-5153,
Mark Buckbee, Acting Chi", Division of Forests and Woodlands, at 202-
452-5029, or Scott Lieurance, Senior Forester, Division of Forests and
Woodlands, at 202-452-0316.
Sincerely,
Signed by:
C. Stephen Allred:
Assistant Secretary:
Land and Minerals Management:
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Robin M. Nazzaro, (202) 512-3841 or nazzaror@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Stephen Gaty, Assistant
Director; Lisa Brownson; Sandra Davis; Barry Grinnell; Angela
Pleasants; and Pam Tumler made key contributions to this report. Nancy
Crothers, Denise Fantone, Tim Guinane, Kevin Jackson, Rich Johnson,
Phil McIntyre, and Jack Warner also made important contributions to
this report.
FOOTNOTES
[1] The Service allocates funds by budget line item; these items
generally correspond to programs. For the purposes of this report, we
will refer to the budget line items as programs.
[2] An agency incurs an obligation when it places an order, signs a
contract, purchases a service, or takes other actions that require the
government to make payments immediately or in the future. An
expenditure occurs when the payment is actually made (i.e., when funds
are actually transferred). The U.S. budget uses obligational accounting
to control the use of funds and ensure that agencies comply with
appropriations law.
[3] Act of June 9, 1930, Ch. 416, 46 Stat. 527; Pub. L. No. 94-588, §
18, 90 Stat. 2962 (1976); Pub. L. No. 109-54, § 412, 119 Stat. 551
(2005).
[4] Timber sales are generally referred to either as green sales, which
involve the harvest of live trees, or as salvage sales, which involve
the harvest of trees that are dead, dying, or damaged by wind, fire,
disease, or insects.
[5] Pub. L. No. 94-588, § 14, 90 Stat. 2958 (1976), as amended.
[6] Act of Aug. 11, 1916, ch. 313, 39 Stat. 462, as amended.
[7] The law stated that the land management goals of stewardship
contracts include road and trail maintenance, watershed restoration,
and prescribed burning and noncommercial tree removal to improve forest
health.
[8] Pub. L. No. 105-277, § 347, 112 Stat. 2681-298 (1998). The Forest
Service is authorized to use either contracts or agreements in
implementing stewardship projects. In this report, we refer to all such
arrangements as contracts.
[9] Pub. L. No. 108-7, § 323, 117 Stat. 275 (2003). For further
information about the Forest Service's use of stewardship contracting
authority, see our report Federal Land Management: Additional Guidance
on Community Involvement Could Enhance Effectiveness of Stewardship
Contracting, GAO-04-652 (Washington, D.C.: June 14, 2004).
[10] GAO, Financial Management: Annual Costs of Forest Service's Timber
Sales Program Are Not Determinable, GAO-01-1101R (Washington, D.C.:
Sept. 21, 2001).
[11] GAO, Forest Service: Little Progress on Performance Accountability
Likely Unless Management Addresses Key Challenges, GAO-03-503
(Washington, D.C.: May 1, 2003).
[12] GAO, Managerial Cost Accounting Practices: Department of
Agriculture and the Department of Housing and Urban Development, GAO-06-
1002R (Washington, D.C.: Sept. 21, 2006).
[13] 43 U.S.C. 1181a et seq.
[14] The federal share of revenue is that portion of revenue not paid
to the counties in accordance with the requirements of 43 U.S.C. 1181f
and 43 U.S.C. 1181-1 et seq., and Pub. L. No. 106-393.
[15] The Forest Service refers to national forests as "units"; thus, a
ranger district is a "subunit."
[16] Responsibility for fund control, by program, is at the regional
level.
[17] A thousand board feet is a common measure of timber volume. One
board foot equals 12 inches by 12 inches by 1 inch.
[18] These work activities are planning and completing adoptions;
gathering, holding, monitoring, and taking censuses of animals; and
conducting compliance inspections.
[19] In its audit report on the Forest Service's fiscal year 2006
financial statements, KPMG, the Service's independent auditor, noted
that 7 of the 208 timber sales revenue transactions tested were not
recognized in the correct year. The report said that, although the
Forest Service continues to improve its accounting operations, such
deficiencies result in additional time and effort on the part of
Service staff to research and resolve.
[20] For contracts awarded prior to April 1, 1999, however, credits
owed the purchaser for roadwork were not subtracted from the appraisal
value (as is done for contracts awarded since April 1, 1999) but,
rather, offset the stumpage value when the timber was removed.
[21] Stewardship contracts involving projects funded by the Forest
Ecosystem Health and Recovery Fund retain the project code already
assigned them.
[22] These states contain, respectively, the Forest Service's Alaska,
Southern, Northern, Pacific Northwest, Intermountain, and Eastern
regional offices.
[23] The information we gathered from field managers was not intended
to be representative of all field managers. Instead, our interest was
in gaining a perspective from these managers about the data they need
and use in managing their projects. Our interviews ultimately revealed
some recurring common themes across the locations we visited.
[24] GAO, Managerial Cost Accounting Practices at the Department of the
Interior, GAO-07-298R (Washington, D.C.: May 24, 2007).
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