Government Operations:

General Services Administration Could Better Manage Unexpended Construction Balances and Make Its Budget More Transparent

GAO-07-409R: Published: May 9, 2007. Publicly Released: May 9, 2007.

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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?

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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In 2007, GAO found that, 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. 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. GAO recommended that GSA ensure that project data on unexpended balances identify any such funds that are no longer needed and could be redirected. In response, GSA 1) developed new performance measures to improve reporting and tracking of project obligation rates and financial project performance in the capital program; 2) developed procedures to improve capital program performance, project reporting and tracking, and business processes, including project close-out procedures; and, 3) established a Project Fund Balance Report at the line item project level and developed requirements for implementation and use of the report. As a result, GSA's now has the information it needs to track and manage unexpended balances and better ensure the effective management of these funds.

    Recommendation: To help strengthen GSA's ability to track and manage unexpended balances and to improve transparency with regard to how they are identifies in its congressional budget justification, the Administrator of the General Services Administration should ensure that project data on unexpended balances identify any such funds that are no longer needed and could be redirected.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: In 2007, GAO found that, 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. 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, which could have been made available to support other construction projects. GAO recommended that GSA 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. In response, GSA 1) implemented a web-based management tool, Variance Tracking Report; and, 2) developed a comprehensive project management handbook. As a result, GSA now has readily available information on whether unexpended funds from completed projects are available to support other construction projects.

    Recommendation: To help strengthen GSA's ability to track and manage unexpended balances and to improve transparency with regard to how they are identifies in its congressional budget justification, the Administrator of the General Services Administration should 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.

    Agency Affected: General Services Administration

  3. Status: Closed - Implemented

    Comments: In 2007, GAO noted a lack of transparency in the way GSA treats unexpended balances in its facility account that are used for contingencies. GAO 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. The absence of such information means that Congress may not have all the pertinent information it needs before making budget decisions. GAO recommended that GSA identify amounts in the Building Operations account estimated for carryover in future congressional budget justification requests so that these funds would be transparent to Office of Management and Budget and Congress. In response, GSA's reported the amount in the Building Operations account estimated for carryover in its Fiscal Year 2012 congressional budget justification request. As a result, GSA improved the transparency of the carryover funds that it holds for contingencies provides the Office of Management and Budget and Congress a more complete picture of GSA's available resources.

    Recommendation: To help strengthen GSA's ability to track and manage unexpended balances and to improve transparency with regard to how they are identifies in its congressional budget justification, the Administrator of the General Services Administration should identify amounts in the Building Operations account estimated for carryover in future congressional budget justification requests to that these funds would be transparent to the Office of Management and Budget and Congress.

    Agency Affected: General Services Administration

 

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