Skewed Bidding Presents Costly Problems for the Forest Service Timber Sales Program

Gao ID: RCED-83-37 February 9, 1983

GAO was requested to examine the use of skewed bids on Forest Service timber sales. Skewed bidding occurs when a bidder in a multispecies sale loads most of the bid value on a single tree species and offers the minimum price for the other species. GAO reviewed timber sales in the Forest Service's three western regions where multispecies sales are common and skewed bidding occurs.

GAO found that the use of skewed bidding is causing costly problems for the Forest Service timber sales program. During fiscal years 1980 and 1981, about $1.9 million in sales revenues was foregone on timber sales closed on 11 of the Forest Service's western national forests, and the Service must devote administrative resources to deal with the harvest management problems caused by skewed bidding. Timber harvesting on a species-by-species basis on skewed bid sales compounds the sale management problems. Species logging permits the purchaser to harvest the high-value trees on the sale last, thus delaying the receipt of sale revenues. Species logging also increases the risk that high-value trees will not be harvested and efforts to resell the timber may be unsuccessful in recouping the loss. Although skewed bidding affects the Forest Service's three western regions, most Forest Service efforts to control the practice have occurred at the individual region or forest levels rather than programwide. The three western regions have restricted bidding on minor species by setting various minimum volume bidding criteria. GAO found that restricting bidding to species with more than 10 percent of the sale volume had limited effect.


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