General Services Administration Could Better Manage Unexpended Construction Balances and Make Its Budget More Transparent
Gao ID: GAO-07-409R May 9, 2007The General Services Administration (GSA) is the federal government's principal real estate agent, with responsibilities including constructing, leasing, and maintaining a variety of facilities--such as office buildings, courthouses, border stations, and laboratories--that it rents to federal agencies. GSA's construction projects, which can span several years, are authorized to carry forward fund balances from year to year in its construction and facility accounts for these projects. GSA is responsible for keeping track of and managing these balances to ensure that any unexpended funds that remain after projects are completed are redirected to other construction project needs within the agency. GSA is required to identify construction projects that are estimated to cost in excess of established thresholds and obtain congressional approval for them. Funding for these projects exists in two accounts: (1) Construction and Acquisition and (2) Repairs and Alterations. For the purposes of this report, we refer to them as GSA's construction accounts. Additionally, the studies required for construction projects are among the items funded in the Building Operations account and we decided to include this account in our review. For purposes of this report, we refer to this as GSA's facility account. Under the Comptroller General's authority to conduct evaluations on his own initiative, and as part of a continued effort to assist Congress in overseeing real property management issues, we examined GSA's management of unexpended construction balances in relation to issues raised in our high-risk series. Specifically, we addressed the following question: To what extent does GSA have readily available information about unexpended balances in its construction and facility accounts to effectively manage these funds?
In its construction accounts, GSA did not have readily available information about unexpended balances that were no longer needed and could be redirected to other needs. Having such information would better ensure effective management of these funds. Two issues hindered GSA from readily identifying these unexpended balances, which could be made available to support other construction projects. First, GSA's project information system lacked readily available information to track project status and provide timely and accurate information to GSA management. Second, GSA lacked effective policies and procedures for determining when projects are complete and unexpended balances become available for other needs. We found about $32 million in unexpended balances from 45 completed projects; as a result of our review, GSA reallocated these funds to other projects. GSA's construction funds are made available from the Federal Buildings Fund (FBF), a revolving fund that includes the rent federal agencies pay for the space that GSA leases to them. Although the unexpended balances we identified are small compared with FBF's almost $8 billion budget, the absence of an adequate means of tracking the status of projects associated with these funds leaves GSA vulnerable to larger balances accumulating and not being redirected in a timely manner to other construction project needs within the agency. We also found that GSA's Fiscal Year 2007 Congressional Justifications lacked transparency regarding how GSA treats certain facility account unexpended balances used to fund unexpected needs. For example, we found about $70 million in unexpended Building Operations account balances that GSA retained from prior fiscal years to use to address unexpected needs that might arise. GSA officials said the agency was authorized to hold over these funds in this manner and that they were used, for example, to address unexpected needs related to Hurricane Katrina. Nonetheless, GSA's congressional budget justification did not clearly identify these funds as being available for such contingency purposes; as a result, congressional oversight for these funds was limited.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Mark L. Goldstein Team: Government Accountability Office: Physical Infrastructure Phone: No phone on recordGAO-07-409R, General Services Administration Could Better Manage Unexpended Construction Balances and Make Its Budget More Transparent
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May 9, 2007:
Congressional Committees:
Subject: General Services Administration Could Better Manage Unexpended
Construction Balances and Make Its Budget More Transparent:
The General Services Administration (GSA) is the federal government's
principal real estate agent, with responsibilities including
constructing, leasing, and maintaining a variety of facilities--such as
office buildings, courthouses, border stations, and laboratories--that
it rents to federal agencies. GSA's construction projects, which can
span several years, are authorized to carry forward fund balances from
year to year in its construction and facility accounts for these
projects. GSA is responsible for keeping track of and managing these
balances to ensure that any unexpended funds that remain after projects
are completed are redirected to other construction project needs within
the agency.[Footnote 1] GSA is required to identify construction
projects that are estimated to cost in excess of established thresholds
and obtain congressional approval for them. Funding for these projects
exists in two accounts: (1) Construction and Acquisition and (2)
Repairs and Alterations. For the purposes of this report, we refer to
them as GSA's construction accounts. Additionally, the studies required
for construction projects are among the items funded in the Building
Operations account and we decided to include this account in our
review. For purposes of this report, we refer to this as GSA's facility
account.
Under the Comptroller General's authority to conduct evaluations on his
own initiative, and as part of a continued effort to assist Congress in
overseeing real property management issues, we examined GSA's
management of unexpended construction balances in relation to issues
raised in our high-risk series.[Footnote 2] Specifically, we addressed
the following question: To what extent does GSA have readily available
information about unexpended balances in its construction and facility
accounts to effectively manage these funds?
To do this work, we reviewed the President's fiscal years 2006 and 2007
budgets, GSA's fiscal year 2007 congressional budget justification,
previous years' appropriations, conference reports, committee reports,
GSA Inspector General (IG) reports, and previous GAO reports. We also
reviewed Office of Management and Budget (OMB) guidance for budget
preparation, Circular A-11. We limited our review to GSA construction
and facility accounts. We reviewed project financial information,
project management information, and facility financial information
provided by GSA. We interviewed GSA Washington, D.C., headquarters
officials in budget, finance, and construction management. Working with
these GSA officials we obtained budget authority, and obligated and
unexpended balances for each project; identified and verified all
financial information gathered; and verified shortcomings we identified
in gathering this information. We determined that the reliability of
the information was adequate for our purposes. We conducted our review
from February 2006 to January 2007 in accordance with generally
accepted government auditing standards.
Results in Brief:
In its construction accounts, GSA did not have readily available
information about unexpended balances that were no longer needed and
could be redirected to other needs. Having such information would
better ensure effective management of these funds. Two issues hindered
GSA from readily identifying these unexpended balances, which could be
made available to support other construction projects.
* First, GSA's project information system lacked readily available
information to track project status and provide timely and accurate
information to GSA management. For example, GSA took almost 2 months to
provide corrected data on unexpended balances that were no longer
needed and could be redirected.
* Second, GSA lacked effective policies and procedures for determining
when projects are complete and unexpended balances become available for
other needs. For example, instead of identifying projects as soon as
they are completed, GSA identified construction projects for closure on
an ad hoc basis. These issues allowed unexpended balances in completed
construction project accounts to accumulate. We found about $32 million
in unexpended balances from 45 completed projects; as a result of our
review, GSA reallocated these funds to other projects.
GSA's construction funds are made available from the Federal Buildings
Fund (FBF), a revolving fund that includes the rent federal agencies
pay for the space that GSA leases to them. Although the unexpended
balances we identified are small compared with FBF's almost $8 billion
budget, the absence of an adequate means of tracking the status of
projects associated with these funds leaves GSA vulnerable to larger
balances accumulating and not being redirected in a timely manner to
other construction project needs within the agency.
We also found that GSA's Fiscal Year 2007 Congressional Justifications
lacked transparency regarding how GSA treats certain facility account
unexpended balances used to fund unexpected needs. For example, we
found about $70 million in unexpended Building Operations account
balances that GSA retained from prior fiscal years to use to address
unexpected needs that might arise. GSA officials said the agency was
authorized to hold over these funds in this manner and that they were
used, for example, to address unexpected needs related to Hurricane
Katrina. Nonetheless, GSA's congressional budget justification did not
clearly identify these funds as being available for such contingency
purposes; as a result, congressional oversight for these funds was
limited. We are making recommendations to GSA aimed at strengthening
its ability to track and manage unexpended balances for completed
projects and improving transparency with regard to how unexpended
balances are identified in its congressional budget justification. GSA
generally agreed with our recommendations related to tracking and
managing unexpended balances that could be redirected but disagreed
with our recommendation to be more transparent with regard to how
unexpended balances are identified in its budget justification.
Background:
In annual appropriation legislation, Congress appropriates funds from
the FBF for GSA to obligate for specific construction projects. The
funding is made available as "no-year money" if the project starts in
the fiscal year for which the funds were appropriated (that is, the
funding is available until expended without further time constraints);
this allows GSA to fund construction projects that take several years
to complete.[Footnote 3] The President's fiscal year 2007 budget
request for GSA sought about $8 billion in new obligational authority
from the FBF, including $245 million in appropriations to the FBF. GSA
estimated that the unobligated FBF balance carried forward into fiscal
year 2007 would be almost $3.5 billion.
Within the FBF, GSA fiscal year 2007 construction projects estimated to
cost in excess of $2.54 million for public buildings and $1.27 million
for leased buildings are identified individually to and approved by
Congress.[Footnote 4] Funding for these projects in GSA's construction
accounts (Construction and Acquisition and Repairs and Alterations)
were estimated to have unobligated balances of $912 million and almost
$1 billion, respectively, at the end of fiscal year 2006. Studies
required for construction projects are funded in the Building
Operations account, also in the FBF. This account had an unobligated
balance of $60 million of fiscal year 2005 funds to supplement fiscal
year 2006 funds; however, it was estimated that no funds would be
carried forward to fiscal year 2007.[Footnote 5]
GSA Lacks Readily Available Information about Unexpended Construction
Balances Needed to Ensure Effective Management of These Funds:
In its' construction accounts, GSA did not have readily available
information about unexpended balances that were no longer needed and
could be redirected to other needs. Having such information would
better ensure effective management of these funds. GSA took almost 2
months to provide us with what they considered to be accurate data on
these unexpended balances in its construction projects. We identified
two issues that hindered GSA officials from identifying unexpended
balances available to support other construction projects within its
construction accounts.
First, GSA's project information system lacked timely data GSA
management would need to redirect funds from completed projects to
other needs. In April 2006, we asked for data about open projects from
budget officials within GSA's Public Building Service. GSA provided (1)
a project-specific spreadsheet of financial management information
system (FMIS) data from its Pegasys reports and (2) project-specific
management information in the form of Executive Project Fact Sheets
(EPF) generated by its electronic project information portal (PIP).
However, some of the data contained in these EPFs were neither current
nor accurate, a fact that GSA officials acknowledged in a subsequent
discussion with us. GSA provided corrected information 2 months later,
in June 2006.
According to GSA headquarters officials, regional officials update
project status data on a spreadsheet once a year to fulfill an OMB
requirement for planning, budgeting, acquisition, and management of
capital assets.[Footnote 6] GSA headquarters officials said they send a
list of open projects to regional officials to obtain updated
information on project status and that regional officials generally
comply with this request. However, headquarters officials were unsure
of the source of the information that the regional GSA staff use. GSA
headquarters officials explained, for example, that information is
obtained through contact with regional managers or project executives
rather than through the EPF system. These GSA officials told us that
because project managers do not comply with existing policies and
procedures to regularly update their EPFs, the currency and reliability
of EPF information were questionable. As a result, GSA management
lacked the information on unexpended balances that it needed to
identify the unexpended balances that could be redirected. GSA was able
to identify these funds only after matching financial and project data
on a project-by-project basis.
Second, GSA headquarters officials lacked effective policies and
procedures for determining when projects are complete and unexpended
funds become available for other needs. GSA officials stated that
instead of identifying projects as they are completed, they identify
construction projects for closure on an ad hoc basis. They explained
that regional officials control the project-specific funds and that
there is a disincentive for them to identify completed projects and
make funds available to be reallocated back to the central office.
Nevertheless, GSA headquarters officials occasionally ask regional
officials to identify projects that can be closed so that residual
funds can be reallocated to support other ongoing projects.
As a result of these two issues, GSA allowed unexpended balances for
completed construction projects to accumulate. We found that GSA had
about $32.2 million in unexpended balances that could have been
reallocated to address other construction project needs. More
specifically, GSA identified 9 completed Construction and Acquisition
projects with about $700,000 in unexpended funds that could be
reallocated and 36 completed Repairs and Alterations projects with
about $31.5 million in unexpended funds that could be reallocated. GSA
reallocated the almost $32.2 million to other projects as a result of
our review. Although such balances are small in relation to the size of
the FBF's almost $8 billion budget, the absence of an adequate means of
tracking the completed projects associated with these funds leaves GSA
vulnerable to larger balances accumulating and not being redirected in
a timely manner to other construction project needs within the agency.
Unexpended Facility Account Funds GSA Held for Contingencies Are Not
Clearly Identified:
In addition to the unexpended balances at the construction project
level, we noted a lack of transparency in the way GSA treats unexpended
balances in its facility account that are used for contingencies. We
found that almost $70.3 million in unexpended facility management
balances were carried over from prior fiscal years to the current
fiscal year Building Operations account for contingencies, but these
funds were not clearly identified in GSA's congressional budget
justification as being available for such a purpose. GSA officials
stated that there was typically about a 1 percent carryover of funds
expected for the next fiscal year and the estimated carryover funds
were not used to offset the fiscal year 2007 request. GSA provided
data, however, showing the carryover has ranged from 3.35 percent (in
fiscal year 2001) to 4.17 percent (in fiscal year 2004).
In follow-up discussions concerning the amount of carryover, GSA
officials said that carrying over funds in the facility account (the
Building Operations account) gives GSA the flexibility to respond to
emergencies such as Hurricane Katrina. Nonetheless, these funds were
not identified for budget contingency purposes at the time of our
review. Additionally, because GSA did not clearly identify these
carryover funds in its congressional budget justification, the funds
have not been fully transparent to the Congress to enable it to carry
out its role in overseeing federal funds.
Conclusions:
Although the amount of unexpended balances that could be reallocated to
support other construction project needs is small compared to the size
of GSA's construction and facilities budget, the balances we found
point to a larger concern: the absence of timely and accurate
information about the status of construction projects, along with
effective policies and procedures that would systematically identify
related unexpended balances for GSA's management. Without such
information, policies, and procedures, GSA officials may not readily
know whether unexpended funds from completed projects are available to
support other construction projects. Given the lack of information, GSA
officials may not know if amounts greater than those we identified are
accumulating, representing an even greater untapped resource for other
projects.
Furthermore, as long as the transparency of the carryover funds that
GSA holds for contingencies remains limited, Congress lacks a complete
picture of GSA's available resources. The absence of such information
means that Congress may not have all the pertinent information it needs
before making budget decisions.
Recommendations for Executive Action:
To help strengthen GSA's ability to track and manage unexpended
balances and to improve transparency with regard to how they are
identified in its congressional budget justification, we are
recommending that the Administrator of the General Services
Administration take the following three actions:
* ensure that project data on unexpended balances identify any such
funds that are no longer needed and could be redirected,
* strengthen existing policies and procedures to update and keep
current its electronic project information system so that completed
projects are identified in a timely manner, and:
* identify amounts in the Building Operations account estimated for
carryover in future congressional budget justification requests so that
these funds would be transparent to OMB and Congress.
Agency Comments and Our Evaluation:
We provided a draft of this report to GSA for review and comment. GSA
provided written comments, which are reprinted in enclosure I, together
with our responses to specific points GSA raised.
GSA generally concurred with our first and second recommendations--
which relate to data on unexpended balances and keeping the electronic
project information system current. However, we clarified these
recommendations based on the GSA comments discussed below. GSA said
that it is implementing performance measures to reinforce existing
procedures and to improve fund recovery from unobligated balances. GSA
said that it looks forward to improving its processes and agreed to
work on the recommendations that relate to construction projects.
However, GSA disagreed with our third recommendation to identify
carryover amounts for the Building Operations account in future budget
justifications because, according to GSA, the carryover amount cannot
be known at the time the congressional budget justification is
submitted. GSA asked that we eliminate this recommendation from the
final report. While it is true that GSA would not know the actual
carryover amounts when the budget is submitted, we recommended
including estimates to improve transparency with regard to how these
funds are managed. In fact, OMB guidance encourages agencies to include
estimates for these types of funds, and GSA has included estimates of
this carryover in prior year budgets. As a result, we decided not to
eliminate this recommendation.
GSA raised several points that led us to adjust some of the language in
the report and clarify the first two recommendations. GSA stated that
our findings were inconsistent with GSA's practices for managing its
unexpended balances. For our finding that GSA did not have the readily
available information about unexpended balances in its construction
accounts needed to ensure effective management of these funds, GSA
stated that information about unexpended balances is available from
GSA's financial system and that a daily report that tracks unexpended
balances. While it is true that these sources provide information about
unexpended balances, they do not identify unexpended balances that are
no longer needed and can be directed to other needs. Having such
information would allow GSA to better ensure effective management of
these funds and not allow them to accumulate. We added information to
clarify these points in the report.
We are sending copies of this report to interested congressional
committees and the Administrator of GSA and the Director of OMB. We
will also make copies available to others on request. In addition, the
report will be available at no charge on the GAO Web site at
http://www.gao.gov.
If you or your staffs have any questions, please contact me at (202)
512-2834 or goldsteinm@gao.gov. Contact points for our Office of
Congressional Relations and Office of Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to
this report include David Sausville (Assistant Director), Lindsay Bach,
and George Depaoli.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
List of Congressional Committees:
The Honorable Richard J. Durbin:
Chairman:
The Honorable Sam Brownback:
Ranking Minority Member:
Subcommittee on Financial Services and General Government:
Committee on Appropriations:
United States Senate:
The Honorable Barbara Boxer:
Chairman:
The Honorable James M. Inhofe:
Ranking Minority Member:
Committee on Environment and Public Works:
United States Senate:
The Honorable Johnny Isakson:
Ranking Minority Member:
Subcommittee on Transportation and Infrastructure:
Committee on Environment and Public Works:
United States Senate:
The Honorable Susan M. Collins:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Eleanor Holmes Norton:
Chairwoman:
The Honorable Sam Graves:
Ranking Minority Member:
Subcommittee on Economic Development, Public Buildings, and Emergency
Management:
Committee on Transportation and Infrastructure:
House of Representatives:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Minority Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Enclosure I: Comments from the General Services Administration:
Note: GAO comments supplementing those in the report text appear at the
end of this enclosure.
GSA-GSA Administrator:
April 6, 2007:
The Honorable David M. Walker:
Comptroller General of the United States:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Walker:
The U.S. General Services Administration (GSA) appreciates this
opportunity to submit agency comments on the Government Accountability
Office's (GAO's) draft report entitled "GSA Needs to Better Manage
Unexpended Construction Balances and Make Its Budget More Transparent,"
GAO-07-409R.
The draft report cites findings that are inconsistent with GSA's
practices for managing its unexpended balances. For example, the report
states that GSA did not have readily available information about
unexpended balances contained in its construction accounts to ensure
effective management of these funds. Information about unexpended
balances in construction accounts and all Federal Buildings Fund (FBF)
accounts is readily available from GSA's financial system of record,
Pegasys. GSA also uses a daily report, Allowance Budget Plan Status
Report (FR83AB), to track unexpended balances for all FBF accounts.
In addition, GAO's report identified areas where GSA can strengthen its
performance of project close-out and redirecting the unexpended
balances. Currently, GSA is implementing performance measures to
reinforce existing procedures and improve fund recovery from
unobligated balances to yield the best value to our Federal customer
agencies and the American taxpayer. GSA looks forward to improving its
processes and agrees to work on the recommendations relating to
construction projects.
I suggest eliminating the finding and recommendation related to
unexpended balances in the Building Operations account, since the carry-
over amount cannot be known at the time the congressional budget
justification request is submitted. I have included additional
clarifications for GAO's consideration.
Again, thank you for the opportunity to comment on the draft report.
Should you have any questions, please contact me. Staff inquiries may
be directed to Mr. Kevin Messner, Associate Administrator, Office of
Congressional and Intergovernmental Affairs, at (202) 501-0563.
Cordially,
Signed by:
Lurita Doan:
Administrator:
Enclosure:
cc: Mark Goldstein, Director, Physical Infrastructure:
Additional GSA Comments:
Subject: GAO-07409R-Draft Audit Report, Titled: GSA Needs to Better
Manage Unexpended Construction Balances and Make Its Budget More
Transparent:
Overall: The Budget Submission process timing issue related to the
Buildings Operations Account should not be confused with project
unexpended balances. PBS recommends that such references be removed or,
at a minimum, revised in the report.
Finding: "Congress appropriates funds for GSA to obligate for specific
construction projects and facility management from the FBF in annual
appropriations legislation. The funding is made available as 'no-year
money (that is, the funding is available until expended without time
constraints), that allows GSA to fund construction projects that take
several years to complete."
Public Law 109-115 appropriates $792,056,000 for new construction and
$881,376,000 for repairs and alterations, indicating that these amounts
shall remain available until expended. However, it further specifies
that funds for direct construction projects and funds for repairs and
alterations prospectus projects "shall expire on September 30, 2007 and
remain in the Federal Building Fund except funds for projects as to
which funds for design or other funds have been obligated in whole or
in part prior to that date."
More simply stated, funds for line-item new construction and repairs
and alterations projects are not appropriated as "no-year money" but
attain that status when obligations against the line-item are made. If
no obligation for a project is made by the date specified in the
appropriations act, the funds for that project remain in the Federal
Buildings Fund but are no longer available for obligation.
Finding: "Within the FBF, GSA's fiscal year 2007, Construction Projects
that are estimated to cost in excess of $1,500,000 for Public Buildings
and $750,000 for Leased Buildings are Identified Individually to and
Approved by Congress."
The draft report states incorrect amounts for the 2007 prospectus
levels. The amount in the report references $1.5 million for
construction and $750,000 for leasing. The statute sets these amounts
forth, but does not adjust for them based on inflation as required by
the statute. Therefore, they are outdated and misleading. The FY 2007
prospectus threshold for construction, acquisition, alteration and
lease projects is $2,540,000. For alterations in leased space (space
already under lease to, and occupied by, the Government), the FY2007
threshold is $1,270,000.
Finding: GSA Lacks Readily Available Information about Unexpended
Construction Balances Needed to Ensure Effective Management of These
Funds.
Information about unexpended balances in all accounts is readily
available from Pegasys, GSA's financial system of record. GSA utilizes
a daily report, Allowance Budget Plan Status Report (FR83AB) to track
and monitor unexpended balances for all Federal Building Fund Budget
Activities. This report tracks obligations against the allowances, as
well as shows the cumulative undelivered orders and unobligated
balances. In addition, financial information is updated daily and
transferred into our Financial Management Information System (FMIS) for
query by financial and program managers. The draft report refers to
Executive Project Fact Sheets (EPFS) drawn from our Project Information
Portal (PIP). Construction project managers update project status and
financial information in PIP on a monthly basis. As we acknowledged
during the audit, this status information is not always updated in a
timely manner, thus necessitating headquarters officials to request
regional officials to update the status information as needed. The
draft report correctly points out that regional officials are generally
able to comply with this request. The draft report should be modified
to make the distinction between financial data, which is updated and
available on a daily basis from Pegasys and FMIS, and project status
data in PIP. PIP is not GSA's accounting system of record for
identifying project and account balances.
The second issue identified in the report is a perceived lack of
policies and procedures for identifying unexpended balances once
construction projects are completed. As previously stated, the
unexpended balances are known. The issue is rather one of identifying
when a project is complete and the balances become available to support
other ongoing projects. Current policies identify when a project is
considered "substantially complete". Unless we anticipate claims
against the government, we then expect the unexpended balances to taper
down to their final levels. However, financial completion cannot occur
until expenditures have ended. This point in time is difficult to
predict. Thus, on a semiannual basis, we require regional officials to
review their open items to ascertain what funds will be available to
support other ongoing projects. Because of potential claims that
continue long after the project is complete, regional officials are
sometimes hesitant to release the funds. (As of December 31, 2006,
pending claims total $236 million.) As stated in the report, these
balances, which may be available, are small in relation to the size of
the Federal Buildings Fund budget, and are not material to the FBF. The
draft report should be modified to identify the problem relating to
flagging projects as financially complete, not as a problem identifying
the project unexpended balances.
Finding: Unexpended Facility Management Funds GSA Held as Contingency
Are Not Clearly Identified.
The draft report does not make a clear distinction between the minor
Repairs and Alterations (non prospectus) Budget Activity 54, which
funds construction projects not estimated to be excess of established
thresholds, and the Buildings Operations Budget Activity 61, which
funds facilities management, personnel, travel, and other
administrative functions. The discussion regarding Buildings Operations
carryover amounts (ranging from 3.35 percent to 4.17 percent) is not
pertinent to the construction program, and should be removed from the
report in this context. For the minor Repairs and Alterations budget
activity, as well as the Buildings Operations, at the time the
congressional justification for the fiscal year 2007 was submitted in
February 2006, the unexpended balance for fiscal year 2006 could not be
known.
Conclusions:
The conclusions should show that the unexpended construction project
balances are known, and that policies and procedures are in place to
identify completed projects for which those balances can be made
available to support other need projects.
Recommendation: Establish policies and procedure to periodically
identify completed projects for close-out and redirect the unexpended
balances, in a timely manner, to other construction project needs
within GSA.
This recommendation should be modified to say, "enforce existing
policies..." instead of "establish policies..."
Recommendation: establish policies and procedures for its EPFS to
update and keep current the data on Construction and Acquisition
projects and Repairs and Alterations projects.
This recommendation should be modified to say, "enforce existing
policies..." instead of "establish policies..."
Recommendation: Identify amounts in the Buildings Operations account
estimated for carry-over in future congressional budget justification
requests so that these available funds would be transparent to OMB and
Congressional oversight.
This recommendation should be eliminated, since the cant'-over amount
cannot be known at the time the congressional budget justification
request is submitted.
The following are GAO's comments on the General Services
Administration's (GSA) letter dated April 6, 2007.
GAO Comments:
1. In response to GSA's comment, we clarified the distinction between
unexpended account balances for (1) projects and (2) building
operations.
2. GSA clarified that funds for line item new construction and repairs
and alterations projects are not appropriated as "no-year money" but
attain that status when obligations against the line item are made. We
revised the report to reflect that.
3. We revised the report to reflect the adjusted dollar amount provided
by GSA that 40 U.S.C. § 3307 requires.
4. While GSA's financial systems provide information about unexpended
balances, they do not identify unexpended balances that are no longer
needed and can be directed to other needs. To identify unexpended
balances that can be redirected, updated or current project status
information is necessary--which GSA agrees is not always available.
Having such information would allow GSA to better ensure effective
management of these funds and not allow them to accumulate. We
clarified this point further in the report on the basis of GSA's
comment. The data on unexpended balances that GSA provided--which we
used to identify the $32.2 million in unexpended balances that were no
longer needed--were created by GSA for the purposes of our audit and
came from Pegasys, GSA's financial management system. GSA had to
manually determine the status of projects and whether the funds were no
longer needed, thus demonstrating that GSA is unable to make this
determination in a systematic manner.
5. GSA agreed with our description of the unexpended balances as small
in relation to the FBF, but further stated that they were not material
to the FBF. We chose not to use the word material in the report as we
are discussing GSA's ability to identify unexpended balances that could
be redirected to other needs and not the significance of the size of
the unexpended balances that we found. GSA further states that the
problem we found with the construction accounts is related to "flagging
projects as financially complete" and not a problem of identifying
unexpended project balances. As discussed in comment 4, both project
status and financial information are necessary to identify unexpended
project balances that could be redirected to other needs. We clarified
this point in the report.
6. We clarified the distinction between the various purposes of GSA's
budget accounts in the report. We also revised the report to reflect
that one of the items the Building Operations account funds is the
studies for construction projects. The fact that this budget account
funds activities not directly related to construction is not, in our
view, an adequate justification for not discussing its carryover of
funds as part of this report.
7. GSA said that the conclusions should show that the unexpended
balances are known and that policies and procedures are in place to
identify completed projects. As discussed in comments 4 and 5, our
findings focus on the fact that GSA does not know when unexpended funds
are available for other purposes. We clarified the report to recognize
that the policies and procedures GSA does have are not effective in
identifying unexpended balances that could be redirected.
8. On the basis of GSA's comments, we clarified this recommendation,
focusing on the need to ensure that data on unexpended balances
identify funds that are no longer needed and could be redirected.
9. In response to GSA's comment, we modified the recommendation to
emphasize a need to strengthen existing policies to update and keep
current the project information system so that completed projects are
identified in a timely manner.
10. While it is true that GSA would not know the actual carryover
amounts when the budget is submitted, we recommended including
estimates to improve transparency with regard to how these funds are
managed. In fact, OMB guidance encourages agencies to include estimates
for these types of funds and GSA has included estimates of this
carryover as recently as its fiscal year 2004 budget.[Footnote 7]
Additionally, greater transparency would be beneficial for
Congressional oversight because the Building Operations carry-over
continues to grow, and is now shown as $90 million for fiscal year 2007
in the Presidents fiscal year 2008 budget.
(543164):
FOOTNOTES
[1] Unexpended funds are the cumulative total of past fiscal years
unobligated and obligated-but-not-yet-outlayed balances.
[2] GAO, High-Risk Series: Federal Real Property, GAO-03-122
(Washington, D.C.: January 2003); Federal Real Property: Progress Made
Toward Addressing Problems, but Underlying Obstacles Continue to Hamper
Reform, GAO-07-349 (Washington, D.C.: April 2007).
[3] P.L. 109-115, 119 STAT. 2479-2482.
[4] 40 U.S.C. § 3307
[5] Office of Management and Budget, Budget of the United States
Government, Fiscal Year 2007 (Washington, D.C., Feb. 6, 2006), 1051.
[6] Office of Management and Budget, Preparation and Submission of
Budget Documents, OMB Circular No. A-11, Part 7, Section 300,
"Planning, Budgeting, Acquisition, and Management of Capital Assets"
(Washington, D.C., June 2006) requires annual reporting on the original
baseline of cost and schedule goals of capital investments,
modifications, and actual performance and variance from the OMB
approved baseline.
[7] Office of Management and Budget, Preparation, Submission and
Execution of the Budget, OMB Circular No. A-11, Part 1, Section 10.3,
"General Information" (Washington, D.C., June 2006).
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