JOHN DAY - The stimulus pipeline is stoked and going into full production.

The Malheur National Forest (MNF) issued its first contract funded by the American Reinvestment and Recovery Act last fall, and many more will be inked before spring.

"Our No. 1 priority is to get all the ARRA contract work into contracting by March 1," MNF Supervisor Doug Gochnour said recently. "We recognize the importance of getting people to work as quickly as possible."

The stimulus money is funding a mix of work - hazardous fuels removal, thinning and other stewardship projects; upgrades to Forest Service buildings, including the historic Civilian Conservation Corps compound in John Day; improvements at campgrounds and boating facilities; roadwork and more. In all, nearly $23 million was approved for such projects on the MNF.

That amount comes in addition to the $5 million stimulus grant awarded to Ochoco Lumber Company for a new pellet-fuel plant. Planning is under way for the plant, which will be built at Ochoco's Malheur Lumber sawmill site in John Day.

As for the forest health and capital construction projects, March 1 is the latest deadline to get them into contracting. Gochnour said the agency originally faced a Sept. 1 deadline, but that was moved up - first to June 1 and then March 1 - as the economy continued to languish and the need for jobs grew more acute.

Of the nearly $23 million, about $3.2 million has been awarded to 21 contractors, Gochnour said. The rest is in the contracting process now - or soon to be, Gochnour said.

He said some work is already under way in the forest, while other projects will begin over the spring and summer. The contracts must be awarded by Sept. 30, but some of the work will carry over into next year.

Just last week, the MNF awarded nearly $500,000 in five contracts for thinning, hand-piling, grapple-piling and burning work. Two of the contracts went to Grayback Forestry, and one each to Triple A Thunderbolt, Browning, and Moore & Hueckman.

The other contracts issued so far include:

? More than $350,000 in paving and roadwork, heritage surveys and evaluations and design work for building upgrades. Contractors included Choate Construction, Lyle Signs, Henderson Logging and several design firms.

? Nearly $800,000 for nine fuels reduction projects. The contractors included such area businesses as Todd Hueckman of Hines and Grayback of Canyon City, as well as Southern Oregon-based 3Bs Forestry and Cutting Edge.

? More than $1.5 million for three stewardship projects. Two went to Iron Triangle and R. Waggoner.

The largest so far - the 1,320-acre Knox project - was purchased by Boise's Kinzua Lumber Company, with contractors O'Rorke Logging, Engle Contracting, Miller Timber Services and Gahlsdorf Logging doing the work on the ground.

As the forest contracting got under way, awards to nonlocal companies drew some criticism, Gochnour acknowledged.

"That hacked off some of our local contractors - and me," he said.

He said the regional center that handles contracting initially ruled out "benefit to local communities" as a factor in assessing the bids.

Gochnour said he and his staff appealed that decision to the chief's office, and won. Later MNF officials also argued successfully to rewrite the criteria to give local benefit more importance than price in awarding the jobs.

Since then, he said, "our local contractors have been rising to the top." He looks to last week's awards as evidence of that trend.

"They're all local," he said of the contractors. "That's good news."

The bids still have to be competitive, Gochnour noted. However, he said, the revision means "benefit to local communities and relevant past performance are significantly more important than just price."

Dave Hannibal of Grayback Forestry is among the contractors who expressed concerns to the Forest Service. Last month he and some other contractors also took the issue up with the Grant County Court. He stressed that they were not complaining about competition.

"When we lose out to a good, qualified contractor, hat's off to them - They won. It's fair competition," Hannibal said. "We don't go to the County Court over that."

His concern was with bids that come in so low it seems impossible to do the work - legitimately - for the sum. He's seen his company bid on work "at cost" or just barely so, only to be undercut by as much as 30 percent.

"We cannot understand how that's possible," if the companies are paying legal workers at the lawful rate, he noted.

Grant County Judge Mark Webb said the Court shares the concern, suggesting there's reason to suspect that some outside contractors may not be adhering to all the labor regulations that apply.

However, he also noted that Gochnour "has worked tirelessly" to readjust the contract requirements to weigh in favor of local contractors.

Asked about compliance with labor regulations, Gochnour said the Forest Service notifies other federal and state agencies - such as immigration and the state Bureau of Labor and Industries - when it awards contracts that could entail large work crews. Those agencies then have the responsibility to follow up, he said.

The Forest Service also must do spot checks for labor compliance on each contract, he said, conducting interviews with randomly selected workers on a range of employment condition and pay issues.

In addition, he said, stimulus-funded projects are likely to undergo intense auditing by several federal offices - making compliance critical.

Meanwhile, the Knox sale - which already is sending truckloads of local timber to Elgin and Pilot Rock - underscores the importance of another stimulus-funded project, the pellet fuel plant.

"A large volume in that sale was chip wood," noted Mike Billman of Malheur Lumber Company. "If we had our pellet plant in place now, I believe we would have kept all that wood in the valley."

Billman expects to see that happen in the future, once the pellet plant is up and running. The Grant County Planning Commission recently granted a conditional use permit to Ochoco Lumber for the John Day site, and company officials hope the pellet plant can begin operating next fall or winter.

Meanwhile, the MNF is gearing up to hire about 50 people for stimulus-funded jobs. Two job fairs in Grant County and one in Harney County were held recently to lay out the opportunities; each of the Grant County events drew more than 60 people hoping to get back to work.

Overall, Gochnour stressed that the stimulus-funded projects are "above and beyond our normal program of work."

He said his staff has had to hustle to prepare the additional projects, which resulted from unanticipated success in the stimulus process. With a total nearing $30 million, he said, the MNF was one of the top forests in the nation in terms of total stimulus awards.

Gochnour said that once the awards were announced, the MNF set about the ARRA planning much like a wildfire operation, complete with an incident commander. He lauded Teresa Raaf, deputy forest supervisor, and the team for their management of the sudden workload. Two employees even had to cancel scheduled leave over the Christmas holidays because of the crush of work, he said.

"It's been intense," he said.

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