Contractual Scenario Analysis of National Forest Operations in Japan

Japan’s national forests, which account for about 30% of the country’s woodlands, play a pivotal role in sustaining the operations of forestry companies. By 2010, the private-sector outsourcing rate for national forestry operations had reached 100%, but there has not been sufficient research or discussion on the actual status of the ordering and receiving of these operations. The purpose of this study is to examine the current conditions and issues of the ordering and receiving of national forest operations using five years of bidding data from the Kyushu Regional Forest Office. The selection of contractors through general bidding encompasses two methods, namely price competition and comprehensive evaluation, with an indicative benchmark of ¥10 million in planned price being the key differentiator between these methods. Comprehensive evaluation considers not only bid prices but also the organizational structures of contracting agencies, including evaluation criteria related to working conditions. Over the five-year period, national forest operations encompassed afforestation (406 cases) and timber production projects (810 cases), with about 60% of contracts awarded to single bidders, often at prices close to the planned amount. The percentage of one-party bids was higher for joint venture bids than for single-entity bids, and the bids were closer to the planned amount. As the number of bidders increased, prices tended to be suppressed, with general competitive bidding exerting a more pronounced effect than comprehensive evaluation. The prevalent single bidder scenario not only suppresses bid prices but also diminishes incentives for improving aspects such as working conditions, as outlined in the comprehensive evaluation criteria.