6509.11k, 80-83
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FOREST SERVICE HANDBOOK
Portland, Oregon
FSH 6509.11k - SERVICE-WIDE FINANCE AND ACCOUNTING HANDBOOK
R6 Supplement No. 6509.11k-96-1
Effective November 29, 1996
POSTING NOTICE. Supplements are numbered consecutively by title and
calendar year. Post by document name. Remove entire document, if one exists, and
replace with this supplement.
The last R-6 Supplement to this handbook was 6509.11k-94-6.
Document Name
Superseded New
(Number of Sheets)
6509.11k,80-83
4
Page Code
81.1
1
82.31--1, --2
1
82.33
1
82.34
1
83.3
1
Digest:
81 - Revises instructions on bond administration.
82 - Revises instructions on obtaining and administering bond security.
83 - Revises instructions on bond requirements.
/s/ Robert W. Williams
ROBERT W. WILLIAMS
Regional Forester
FSH 6509.11k - SERVICE-WIDE FINANCE AND ACCOUNTING HANDBOOK
R6 SUPPLEMENT 6509.11k-96-1
EFFECTIVE 11/29/96
6509.11k, 80-83
Page 2 of 4
R6 SUPPLEMENT 6509.11k-96-1
EFFECTIVE 11/29/96
CHAPTER 80 - BOND ADMINISTRATION, SECURITY, AND REQUIREMENTS
81 - BOND ADMINISTRATION
81.1 - Bond Forms. Use the following Region 6 forms for bid bonds, performance
and payment bonds, or assignments of savings accounts:
1. R6-FS-6500-63, Power of Attorney and Agreement (Corporation).
2. R6-FS-6500-64, Resolution of Board of Directors (Corporation).
3. R6-FS-6500-65, Power of Attorney and Agreement (Individual).
4. R6-FS-6500-66, Power of Attorney and Agreement (Partnership).
5. R6-FS-6500-67, Assignment of Savings Account Agreement.
82 - OBTAINING AND ADMINISTERING BOND SECURITY
82.3 Options in Lieu of Sureties.
82.31 - United States Treasury Bills, Notes, Bonds, or Other Obligations.
6. Power of Attorney. Region 6 forms R6-FS-6500-63, Power of Attorney and
Agreement (Corporation); R6-FS-6500-64, Resolution of Board of Directors
(Corporation); R6-FS-6500-65, Power of Attorney and Agreement (Individual); and
R6-FS-6500-66, Power of Attorney and Agreement (Partnership) shall be signed by
the obligor and submitted to the bond approving officer.
These forms have been designed to be used for any or all of the following purposes:
Performance of contract, payment due under contract, and bid bond. They have
been worded so that they do not specify particular bonds or contracts by date or
number.
9. Deposit of Securities. Negotiable Treasury bills, bonds, or notes shall be
deposited by the obligor (timber purchaser, contractor, or permittee) through their
correspondent bank directly to the Portland Branch, Federal Reserve Bank of San
Francisco. This procedure is necessary to accommodate the Federal Reserve's
Electronic Book Entry System. The deposit should be made to the account of USDA
Forest Service, Region 6. Notify the Regional Office (R0) Financial Management
(FM) by letter, telephone, or electronic message when a deposit is expected and
provide the obligor's name, address, and description of the security. The Federal
Reserve Bank provides written acknowledgement to RO, FM when the securities
have been deposited. A copy of this acknowledgement will be returned to the forest.
R6 SUPPLEMENT 6509.11k-96-1
EFFECTIVE 11/29/96
6509.11k, 80-83
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82.33 - Irrevocable Letter of Credit.
3. Letter of Credit Contents
g. For timber sale contracts, the expiration date referenced in the parent text
applies to only a letter of credit used for performance guarantee. The expiration
date for payment bonds must meet the following criteria:
(1) Must cover a minimum of one full operating year (season).
(2) The termination date must be in the nonoperating season. It is recommended
that the Forest Service choose a specific date (such as March 31) in the
nonoperating season and require all letters of credit to expire on that date to
minimize the administrative impact (FSM 2456.3)
(3) All letters of credit which do not include a termination date which
exceeds the termination date of the timber sale by a minimum of two months must
include the following paragraph:
This letter of credit shall be automatically extended, without amendment, for one
year from the current termination date, but in no event, later than (date) . After
the original termination date, it may be terminated by the principal or grantor at
any time 30 calendar days after receipt of written notice by the USDA Forest
Service. When not renewed, this letter of credit shall immediately become due and
payable upon presentation of a sight draft and this letter of credit.
The date to be entered above shall be one year after the termination date of the
contract. The letter of credit automatically extends every year until this date.
82.34 - Assignment of Savings Account.
3. Assignment Agreement Contents. Form R6-FS-6500-67 (2/87),
Assignment of Savings Account Agreement, meets the content requirements of the
parent text and should be used to assign savings accounts as security for bond
obligations for all activities except procurement and construction contracts.
This same form can be used to assign Certificates of Deposit provided the bondapproving officer is assured that the financial institution has full control of the
Certificate of Deposit until released by the Forest Service.
Form R6-FS-6500-67a (2/87), Modification of Assignment of Savings Account, is
designed to be used when a Certificate of Deposit is maturing and a new Certificate
of Deposit is being issued with a new account number or the amount being pledged
is being changed.
R6 SUPPLEMENT 6509.11k-96-1
EFFECTIVE 11/29/96
6509.11k, 80-83
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83 - BOND REQUIREMENTS
83.3 - Timber Sale Bonds.
2. Payment Bonds.
a. General Provisions. Requirements for the termination date on a letter of
credit used in lieu of a payment bond are referenced in section 82.33 and FSM
2456.3.
b. Blanket Payment Bond Provisions. The termination date for a blanket
payment bond covered by corporate surety, deposited securities, irrevocable letter of
credit, or assignment of savings account must be December 31 or March 31 of the
5th or 10th year after the beginning date. The purpose of one date is to minimize
the impact of managing the bonding program. Forests should select either date and
use it consistently. A letter of credit used in lieu of a blanket payment bond shall
follow the same policy.
The following clause may be used in irrevocable letters of credit covering blanket
payment bonds if the financial institution cannot provide the full 5 years without a
periodic review and cancellation provision.
AUTOMATIC RENEWAL CLAUSE
It is a condition of this Irrevocable Standby Letter of Credit that it shall be
deemed automatically extended without amendment for one (1) year from the
present or any future expiration date hereof but in full and finally on (5 year
maturity date). Should we elect not to renew this Standby Letter of Credit, we shall
notify you of such election ninety (90) days prior to any such date. All notices shall
be in writing sent by certified mail, return receipt requested, and addressed to you
at the above address. Notwithstanding receipt by you of such notice, you may draw
hereby by means of your draft on us at sight accompanied by the documents herein,
until such expiration date.
3. Performance Bonds. Requirements for the termination date on a letter of
credit used in lieu of a performance bond are the same as the corporate surety bonds
that are referenced in section 82.33.