Forest Service Cancels Arizona 4FRI Phase 2 Process

Anxious bidders for the Phase 2 contract that’s part of the federal 4 Forests Restoration Initiative (4FRI) seeking to treat and improve forest health conditions on more than 2.5 million acres across four Arizona national forests were told to wait a while longer after U.S. Forest Service (FS) officials abruptly cancelled the Phase 2 Request for Proposal (RFP) process in mid-September. The FS cited “performance risk” concerns over the proposed 20-year life of the Phase 2 stewardship contract that covers more than 500,000 acres.

The Phase 2 contract award announcement had been delayed several times since 2019 due to a dozen contract modifications. An FS statement concerning the cancellation says, “The requirements for meeting the restoration objectives (as currently defined in the RFP) are not reasonably aligned to industry needs. In addition, significant financial and investment risks remain which ultimately represents a performance risk to the Government.”

News of the cancellation brought outcries from several stakeholders, including politicians and others. Arizona Gov. Doug Ducey slammed the decision, as well as several elected officials who emphasized the importance of forest health to the state.

John Godfrey, owner of Godfrey Forest Products and a panel industry veteran who has developed several OSB plants, was a bidder on Phase 2 and proposed to build a state-of-the-art 850MMSF OSB plant in Winslow as the centerpiece of the company’s small log and biomass conversion plan to execute the contract. He says the announcement came as a surprise, but he’s confident any issues will be resolved.

The FS is committed to forest restoration, Godfrey believes. “They’re also under tremendous pressure. They’ll come forward with a new mechanization or proposal, but just what remains to be seen. It can’t be that nothing happens.”

Godfrey plans to stay the course with the RFP process, even if it takes some time. He already has a site picked out near Winslow and has an engineering design ready. “It’s a great place to build a mill,” Godfrey says. “It’s in the middle of a big market. It’s also meaningful to be part of the forest restoration and fire reduction and preserving the water supply. There’s no reason to throw this away.”

The Phase 2 setback continues a tough run for the 4FRI effort: Phase 1, initially awarded in 2012 then transferred in 2013 to its current owner NewLife Forest Restoration, and including 300,000 acres over 10 years, has been hampered due to lack of logging and conversion capacity and is just now appearing to turn the corner on infrastructure needs while the number of acres actually treated remain well below initial projections.

NewLife, which is in the process of installing a sawmill at Bellemonte, Ariz., was apparently the other major bidder for the Phase 2 contract.

A big sticking point in operating the Phase 1 contract (and the same for Phase 2) is a lack of biomass markets in the state, and the overall 4FRI will continue producing mountains of the low-quality material. There’s only one dedicated biomass power producer in Arizona, Novo Power, which has been involved in utilizing material produced in ongoing forest health operations in the White Mountains area, but at 24 MW can only take so much.

Novo Power participated in both of the two major bids as the procurer of the biomass byproduct produced by the sawmill and/or OSB facility.

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