It’s Phaeolus schweinitzii, which is called several different things such as "cow pie fungus" or “Schweinitzii root and butt rot.” If your tree is near a house, this is definitely an issue warranting further inspection and possible tree removal. An arborist should be able to detect internal decay in a Douglas-fir.

This fungus could definitely indicate internal decay of the root and butt of a tree – the lower trunk up to 8 feet – but it’s difficult to know how much rot is there just by looking at a photo of the spore-producing structure known as the conk. The conk has more bright colors in the fall and then turns brown and looks like a cow pie. It will be attached to a root below it but can occur on the tree butt also and be shaped more like a bracket.