Congress Should Extend Mandate To Experiment With Alternative Bidding Systems in Leasing Offshore Lands

Gao ID: RCED-83-139 May 27, 1983

In response to a congressional request, GAO reviewed the Department of the Interior's use of alternative bidding systems to lease offshore lands for oil and gas development as mandated in the Outer Continental Shelf (OCS) Lands Act Amendments of 1978. Specifically, the report discusses Interior's record in implementing the alternative systems and their impact on company participation and competition in lease sales, government revenues, diligent lease exploration and production, and administrative costs to the government.

GAO found that the initial effects of the alternative bidding systems on company participation and competition generally parallels or betters the results of the traditional system, although upfront money required to obtain leases is not always reduced. GAO compared the alternative bidding systems and found that two of the six sliding-scale systems and the cash bonus bid with the 33.3 percent royalty alternative produced especially encouraging results. However, GAO concluded that additional time and testing are needed to determine the full impact of the systems on Government revenues, lease exploration and production, and administrative costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Gryszkowiec Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-7756


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