Summary: In response to a congressional request, GAO examined whether Forest Service regional offices performed financial ability reviews of prospective timber purchasers who had previously defaulted on timber sales contracts.
GAO found that: (1) although the Forest Service issued a directive that required financial reviews of prospective timber sales purchasers that had defaulted on timber sales contracts within the previous 3 years, the regional offices awarded contracts to seven companies that defaulted on timber sales contracts; (2) the offices conducted the reviews for two purchasers, but awarded five contracts totalling about $43.4 million without conducting the reviews; (3) the regions did not perform the reviews prior to award, because they were not aware that the purchasers had defaulted on other contracts; (4) in some cases the reviews were not done at the correct local or regional level, because the purchasers operated in more than one forest within the region; (5) the regions did not coordinate with other regions or the Bureau of Land Management (BLM) regarding the need for reviews; (6) neither the Forest Service nor the regions knew that BLM required defaulted purchasers to provide a bond of 50 percent of the total contract price; (7) most of the local and regional officials were not satisfied with the directive, since each forest conducted reviews differently; and (8) many of those responsible for the reviews had not received any formal training or guidance.
