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GAO discussed the Forest Service's below-cost timber sales, focusing on: (1) timber sales that did not recover their associated costs; and (2) Service efforts to reduce below-cost timber sales. GAO noted that: (1) fiscal year 1990 below-cost timber sales resulted in unrecovered timber-sale preparation and administration expenses of at least $35.6 million; (2) unrecovered costs ranged from $14.9 million for large sales and $20.7 million for small sales when only preparation and administration costs were considered, to $68.4 million for large sales and $43.8 million for small sales when all operating costs plus payments to states were calculated; (3) sale preparation and administration costs at the 122 national forests ranged from $15 per thousand board feet of harvested timber to $348 per thousand board feet; and (4) the Service issued a draft policy to reduce losses from below-cost timber sales. In addition, GAO noted that the Service needed to take such additional actions to reduce below-cost timber sales as: (1) extending consideration of below-cost sales to the individual sales level; (2) considering its costs when setting minimum rates for a timber sale; and (3) evaluating whether the benefits of a below-cost sale justify the unrecovered costs prior to incurring most preparation costs.

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