This is the accessible text file for GAO report number GAO-07-409R 
entitled 'General Services Administration Could Better Manage 
Unexpended Construction Balances and Make Its Budget More Transparent' 
which was released on May 9, 2007. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

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).

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts 
newly released reports, testimony, and correspondence on its Web site. 
To have GAO e-mail you a list of newly posted products every afternoon, 
go to www.gao.gov and select "Subscribe to Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office 441 G Street NW, Room LM 
Washington, D.C. 20548: 

To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202) 
512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S. 
Government Accountability Office, 441 G Street NW, Room 7125 
Washington, D.C. 20548: 

Public Affairs: 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800 
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, D.C. 20548: