[Review of Forest Service Regulation]

B-195497: Published: Jun 2, 1980. Publicly Released: Feb 10, 1983.

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GAO reviewed a Forest Service regulation which provides that, with certain exceptions, in the resale of timber from an uncompleted timber sale contract, no bids will be considered from the defaulted purchaser. The Forest Service wanted to know whether a GAO decision concerning the right of a defaulted contractor to be solicited for a competitive reprocurement applied to timber sales. It distinguished timber resales from other reprocurements because of the longer term of sale contracts, the difficulty in ascertaining damages for failure to cut timber, and the speculative nature of the timber market. GAO believed that the Forest Service should consider revising its regulations and determining the eligibility of defaulted purchasers for award of resale contracts on a case-by-case basis. The risk of speculative purchasers using the default and resale procedure to play the market on the long term and to avoid payment of damages could be avoided. The Forest Service rule prevents it from accepting a bid from a defaulted purchaser at a price lower than the original contract. The Service could find a speculative purchaser to be nonresponsible and not eligible for award of a reprocurement. GAO had no evidence that preventing a defaulted timber purchaser from bidding on a resale reduced the number of contracts which must be extended or terminated for failure to cut.

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