Working Capital Funds:

Three Agency Perspectives

AIMD-94-121: Published: May 20, 1994. Publicly Released: May 31, 1994.

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Pursuant to a congressional request, GAO reviewed the: (1) budgetary approaches used by the Departments of Labor and Justice and the General Services Administration to finance their administrative services; and (2) potential effect of proposals to establish franchise and innovation funds.

GAO found that: (1) officials from the three agencies stated that their current working capital funds (WCF) give managers considerable control and flexibility in providing administrative services; (2) these agencies have taken the initiative to request additional authority when obstacles prevent them from providing centralized services; (3) in some cases, Congress has expanded the agencies' authority by broadening the funds' statutory purposes, providing new sources of funding, and allowing accumulation of additional reserves; (4) the agency officials believe that the fund proposals in H.R. 3400 provide marginal incentives to improve administrative service delivery, but they do not address the most significant obstacles to effective funds management; and (5) the agency officials also believe that the proposed requirement for competitive administrative services is unnecessary, that competition is only one incentive for reducing WCF costs, and WCF will achieve greater efficiency and cost reductions because of the downsizing of the federal government, management reform efforts, and fewer available resources.

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