Technical Service Providers: A Status Report

Remarks by Bruce I. Knight, Chief, Natural Resources Conservation Service at the American Society of Farm Managers and Rural Appraisers Annual Meeting, St. Louis, MO
October 29, 2003

Thank you, Ray (Brownfield). Hello, everyone. I’m happy to be here with you today to talk a little about Technical Service Providers and answer some of your questions about the 2002 Farm Bill and conservation in general.

I know that many members of your organization are interested in becoming Technical Service Providers. Our Technical Service Provider Team has been working with your representatives to write a memorandum of understanding between your organization and NRCS to make that happen. The biggest job in writing the MOU is to match up your accreditation programs with the appropriate conservation practices. This is not a new process. We’ve done it with several other professional organizations, with good results. And we’ll do it with the American Society of Farm Managers and Rural Appraisers.


Our Commitment to Using Technical Service Providers

I want to assure you all that USDA, NRCS and I are all committed to making Technical Service Providers work to the benefit of producers and providers alike.

The Technical Service Provider system is one of the key provisions of the Conservation Title of the 2002 Farm Bill. I have said many times that the farm bill is simply too big for NRCS and its traditional partners to implement without help. As you know, the farm bill provided an additional $17.1 billion for conservation over a 10-year period.

There is no way the NRCS workforce and our traditional partners, the conservation district employees, could put that investment to work on the ground without the help of service providers like accredited farm managers, consultants, and appraisers. Even if we worked evenings and weekends throughout the year, we would still need hundreds, if not thousands, of additional employees – and that is not going to happen. I first made that point more than a year ago, and nothing has changed since.

The Administration is investing more in conservation every year – a proposed $3.8 billion this fiscal year! And with this growing investment, we have a growing need for the help of Technical Service Providers. The American Society of Farm Managers and Rural Appraisers has been involved in creating the Technical Service Provider process from the beginning. You have provided valuable input at every stage of the process, and we have listened closely to your advice and incorporated it into the Technical Service Provider process wherever possible.


Implementation

As with any complex new system, the Technical Service Provider process is the result of many suggestions from different points of view. We started by asking producers what kind of provider system they wanted. We continued, asking provider groups what they needed out of the system, and we worked closely with the groups who have, over the years, been providing technical assistance through Cooperative Agreements and Memorandums of Understanding. With the help of all these stakeholders, we were able to get the interim final rule for the Technical Service Provider assistance out before Thanksgiving of last year.

In March, we issued an amendment to the rule to set up the process for determining rates. With that amendment in place, we began a survey of potential providers to find out what they would charge to provide the services needed for each conservation practice. As you know, that process, and our subsequent work to come up with the not-to-exceed rates took us well into the summer.

We also got the TechReg site up and running on the Internet and used it to register 1,324 providers. Right now, there are 1,074 additional registrations pending - and we are going to reduce that number as quickly as possible. Arriving at the not-to-exceed rates was not an easy task, but by August we had the initial rates in place. We asked for public comments about the rates. We received nearly a hundred comments before the comment period ended October 15.

I know there are still concerns about the rates, and that is one of the issues I want to address today.


Where We Are Today

Let me summarize where we are today: We are working on the final rule for Technical Service Provider assistance. We have a system in place to certify providers and for landowners and operators to select providers. We have more than 1,300 certified providers ready to go. We have not-to-exceed rates in place for the services. And we obligated more than $23 million for technical services in fiscal year 2003. That means we exceeded the $20 million earmark.

The number of certified providers and the number of dollars obligated are going up every day. Every time I double check a number, it has grown considerably. These are pretty amazing accomplishments.

But, we did not do the one thing that matters most to those of you who want to be Technical Service Providers – or to producers, for that matter: We did not get the system in place soon enough to allow very many landowners with conservation program contracts to start selecting and employing contractors during the 2003 fiscal year.

But, I want to be clear that there actually were a number of landowners around the country whose contracts included line items for Technical Service Providers. And current contracts can be modified to include work by Technical Service Providers. Many NRCS offices also used local contracting authority to procure the services of service providers from the private sector.

So there was money that went directly to private sector providers. We are still reviewing the data from the States, to make sure we are consistent and accurate in attributing obligations to the private sector, governments, universities, and other service providers. Preliminary data indicate that about $8.7 million was obligated to private vendors, $7 million to state agencies, $5.9 million to conservation districts, $777 thousand to private organizations, $268 thousand to county governments, and $478 thousand to others.

In a minute, I will give you some examples of how States used providers from the private sector. But first, I need to say that much of the 2003 expenditure for Technical Service Providers went out through State, local, and Tribal governmental entities under Cooperative Agreements and Memorandums of Understanding. Most of the money going to States is for wildlife habitat projects.

I know service providers, including some of the members of your organization, feel like they missed many opportunities because it took so long to set the not-to-exceed rates. All I can say is that setting these rates was a complex process and took time. The private sector price survey indicated that the NRCS cost would be the rate in most cases. Then, we had to look at how our State offices determined their rates and make sure all of the costs were reflected in the rates of each State.


Putting Service Providers to Work

Ever since we started the process of implementing Technical Service Provider assistance, I have said that we are helping build up the provider network. We now have many certified providers in place, and we have started to put them to work.

Our Wyoming office awarded two contracts for engineering services, for more than $400,000. New Mexico entered into agreements with 15 archeological businesses. New York entered into more than $200,000 in contracts with private sector firms. Nebraska awarded $700,000 to engineering firms for livestock waste system design and $300,000 for watershed rehabilitation design. Kansas has contracted out its entire WHIP portfolio. And these are just examples.


Allocating 2004 Funds

The most important thing we have to do is get some 2004 money out there to pay for the work. But – being the most important thing we have to do may not mean that getting the money out is the first thing we can do. As you know, the Federal Government is operating under a continuing resolution. Under that resolution, we will not be signing any new contracts. But we will be servicing existing contracts and getting ready for the ’04 season.

Even after Congress appropriates the money, it will take some time to allocate it to the States. In 2003, the allocation came in April. (Keep in mind that the fiscal year started the previous October – seven months earlier!) We hope to speed that up significantly this year.

Not only is getting the money out important to service providers, it is also important to landowners and operators who want to get on with their conservation planning and implementation.


Adjusting NTE Rates as Appropriate

Another important task this fall will be to look at the not-to-exceed rates and see how they need to be changed. I know many providers, including some of your members, object to several aspects of the rate structure. We hear that some NTE rates are too low, that rates vary too much within both small and large geographic areas, that there should be multiple rates for some practices, that rates overestimate economies of scale for doing certain practices on large agricultural operations, that travel cost adjustments are needed, that rates should include a profit component, that the rates should provide for liability insurance premiums, that it is hard to find the definitions pertaining to practices, and that it is hard to figure out how to combine practices to accommodate multi-practice plans.

We will be looking at these concerns and others over the next few weeks, and we will adjust the rates as appropriate. For example, we are already reviewing the economies of scale for possible adjustment.

I am sure we will make a number of adjustments. But these changes may not answer every complaint. The rates should not be set so low as to discourage all participation by viable Technical Service Providers, nor should they be set so high as to result in wasteful Federal expenditures. After all, the true test of the rates is not that Technical Service Providers are happy with them, but whether providers will bid on and perform the work.

And keep in mind that State Conservationists already can make exceptions to the rates if practices or plans are more complex than usual, to account for unique environmental conditions, or when there is not enough data to establish a rate.


Conclusion

We will continue to work with you toward writing a Memorandum of Understanding between the American Society of Farm Managers and Rural Appraisers and the Natural Resources Conservation Service. We will continue working with service providers and provider organizations to improve the rate determination process. And, we have contracted with economists from Clemson University to conduct a review of the rate methodology.

In addition, we need to finish the certification process for the 1,000 providers who have applications pending. And, we need to recruit more applicants to be sure all geographic areas, and all practices, are covered.

I am confident that by working together we can come up with a rate structure that results in reasonable prices for the landowner and the taxpayer and a reasonable return for the service provider. Thank you. I’ll be happy to answer questions and listen to any concerns.