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FOREST SERVICE HANDBOOK
JUNEAU, ALASKA
FSH 2409.18 - TIMBER SALE PREPARATION HANDBOOK
Region 10 Supplement No. 2409.18-92-8
Effective December 1, 1992
POSTING NOTICE. Supplements are numbered consecutively by title and
calendar year. Post by document name. Remove entire document and replace with
this supplement. Retain this transmittal as the first page of this document. The
last supplement to this Handbook was Region 10 Supplement No. 2409.18-92-7,
chapter 50, effective October 7, 1992.
Document Name
62.2 (R-10 Supp 7, dtd 10/89)
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(Number of Pages)
1
0
0
5
Digest:
66 - Provides information on the rationale for bid monitoring.
66.1 - Establishes the Alaska Region as a bid-monitoring unit and provides
definitions for bid-monitoring terms.
/s/Michael A. Barton
MICHAEL A. BARTON
Regional Forester
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62.2 - Opening and Reviewing Bids. Form FS-2400-43, Certification of
Nonsubstitution of Timber Purchased and Disposition of Domestically Processed
and Exported Timber, does not apply to Alaska, 36 CFR 223.87. Other reporting
requirements apply, 36 CFR 223.48 and C(T)-provision R10-8.642.
66 - IDENTIFYING AND REPORTING NONCOMPETITIVE BIDDING. See FSM
2432.52. The Sherman Act, 15 U.S.C. section 1, prohibits any agreement among
competitors to fix prices. The Antitrust Division of the United States Department of
Criminal Justice enforces the Act which reads:
Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is declared to be
illegal...[2 July 1890, chapter 647, section 1, 26 Statute 209,
as amended, 15 U.S.C. Annotated, section 1,
supplement 1, 1975]
Collusion among competitors may also violate the federal mail fraud statute,
18 U.S.C. section 1341; and for making false statements to a government agency,
18 U.S.C. section 1001.
Civil actions for injunctive relief, for actual damages under 15 U.S.C. section 15a
and for double damages under the False Claims Act, 31 U.S.C. section 231 and the
following, can enforce options to discourage antitrust activities as well as
prosecution under laws such as the Organized Crime Act and for Tax Fraud.
The National Forest Management Act (NFMA) discourages antitrust violations in
Forest Service timber sales, ensures detection of antitrust bidding practices, and
provides authority for the Forest Service to report potential antitrust activity to the
Attorney General. The original statute of October 22, 1976, suggests a preference
for sealed bidding on all sales except those identified by regulation by the Secretary
of Agriculture. The NFMA also required the Secretary to take appropriate action to
avert collusive practices in timber sales and to establish "...adequate monitoring
systems to promptly identify patterns of noncompetitive bidding."
In February 1978, Congress amended the NFMA leaving no statutory preference for
sealed or oral bidding. Provisions to monitor bidding patterns and report suspected
violations to the Attorney General were retained and requirements to take
administrative actions to eliminate collusive practices were strengthened. The
criteria for reaction to potential collusive acts clarified that collusion, "...should be
vigorously stopped wherever it occurs," Section 14(e)(3) of the NFMA, as amended
in 1978.
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66.1 - Monitoring For Noncompetitive Bidding Patterns. We consider all of Region
10 as the bid monitoring unit. We have information that persons outside the Forest
Service report about 85 percent of violations. Perpetrators must operate under the
cloak of secrecy. We believe a staff, well informed about the industry and collusive
behaviors, provide a determent. We would encourage, at least yearly, that Forest
Supervisors conduct awareness seminars for all persons associated in any way with
bidding on timber sales.
Forest Supervisors shall provide, by December 10, an annual report of monitoring
results within the Forest to the Regional Forester. Include prior fiscal year
information on awareness training, total number of suspicious situations reported,
and creative deterrents you may have used. The Regional Office staff accepts
negative reports. Choose whatever format you wish, but strive to write a brief and
"to-the-point" report.
The Regional Office staff will summarize the reports for the prior fiscal year
activities by December 15, and send them to the Washington Office Timber
Management staff.
1. Noncompetitive Bidding Definitions
a. Antitrust Violations. Any violation of antitrust laws such as collusive
bidding or other illegal restraint against competition.
b. Bid Monitoring System. A system to detect collusive bidding among
potential purchasers using computer, manual, and direct observation.
c. Bid Ratio. The ratio of total contract sale price to minimum acceptable
bid price. If a minimum bid price = $1,000 and a total contract sale price
= $1,100, the bid ratio is $1,100 :- $1,000 = 1.1.
d. Bid Rigging. An agreement to fix bids among independent
purchasers.
e. Bid Rotation. Purchasers take turns as high bidder on the basis of a
rotation, sale size, or other sale characteristics.
f. Bid Suppression. Purchasers who would otherwise bid, refrain from
bidding, or withdraw a bid to ensure acceptance of a competitor's bid.
g. Collusion. Any agreement among competitors that fixes bid prices.
Also referred to as collusive bidding, bid rigging, or price fixing
depending on the sale or procurement context.
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h. Complementary Bidding. Purchasers submit token or unresponsive
bids to give the appearance of bidding and enable a competitor to submit
the winning bid.
i. Direct Sale. A timber sale in which the Forest Service and the
purchaser negotiate the contract price without advertisement or
competitive bidding.
j. Fair Market Value. The amount in cash, or terms equivalent to cash,
in a property exchange. The transaction by a willing and knowledgeable
seller to a willing and knowledgeable buyer, neither under compunction
to deal, and the effect of single transactions do not affect other
transactions because the market value represents a collective of all such
transactions.
k. Geographic Bidding. Same as Territorial Allocation.
l. Market Division. Purchasers agree to refrain from competing in a
designated portion of the market such as a particular product or species
mix.
m. Overbid. The difference between the minimum bid price and the
successful high bid. A measure of the amount of competition for a
particular sale.
n. Preclusive Bidding. An attempt to maintain dominance in territory by
bidding as high as necessary to defeat other competitors who offer a
bidding challenge. Purchasing prior sales at minimum prices provides
the economic base to bid as high as necessary, even beyond the economic
break-even point of a sale.
o. Price Fixing. See Collusion.
p. Sale Sharing. An apparent variation of the subcontracting form of
collusive bidding in which noncompeting purchasers share the sale by
harvesting different sale areas, alternating delivery of harvested timber,
or other means, without regard to species or end product.
q. Sealed Bid Sale. A sale offered under sealed bidding procedures
wherein competitors may submit only one sealed bid offer for the sale.
r. Strict Rotation Pattern. A method of alternating sales whereby each
member of a group of purchasers takes a turn in submitting the winning
bid according to chronological sale sequence.
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s. Subcontracting. Unsuccessful bidders or nonbidders receive
subcontracts from the successful high bidder as a reward for submitting a
noncompetitive, nonresponsive, or no bid.
t. Territorial Allocation. Purchasers divide geographical areas and
agree not to compete in some areas.
u. Token Bidding. In the context of collusive bidding, a bidding pattern
designed to give the appearance of true competition but not truly
competitive pricing levels. Synonymous with complementary bidding.