General Services Administration Could Better Manage Unexpended
Construction Balances and Make Its Budget More Transparent
(09-MAY-07, GAO-07-409R).
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. 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?
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-409R
ACCNO: A69369
TITLE: General Services Administration Could Better Manage
Unexpended Construction Balances and Make Its Budget More
Transparent
DATE: 05/09/2007
SUBJECT: Budgeting
Facility construction
Federal funds
Fund audits
Funds management
Management information systems
Program evaluation
Unexpended budget balances
Unobligated budget balances
Strategic planning
Policies and procedures
Transparency
Federal Buildings Fund
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GAO-07-409R
* [1]Unexpended Facility Account Funds GSA Held for Contingencies
* [2]PDF6-Ordering Information.pdf
* [3]Order by Mail or Phone
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.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.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.
1Unexpended funds are the cumulative total of past fiscal years
unobligated and obligated-but-not-yet-outlayed balances.
2GAO, 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).
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.
o 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.
o 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.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.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 2007.5
3P.L. 109-115, 119 STAT. 2479-2482.
440 U.S.C. S 3307
5Office of Management and Budget, Budget of the United States Government,
Fiscal Year 2007 (Washington, D.C., Feb. 6, 2006), 1051.
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.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.
6Office 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.
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:
o ensure that project data on unexpended balances identify any
such funds that are no longer needed and could be redirected,
o 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
o 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 [email protected] . 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.
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
Enclosure I
Comments from the General Services Administration
Note: GAO comments
supplementing those in the report text appear at the end of this
enclosure.
See comment 3.
See comment 2.
See comment 1.
See comment 7.
See comment 6.
See comment 5.
See comment 4.
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. S 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.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)
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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