Resolution Trust Corporation:

Better Analyses Needed Before Terminating Asset Management Contracts

GGD-94-147, Jul 8, 1994

Contact:

J. William Gadsby
(202) 736-8387
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO reviewed the Resolution Trust Corporation's (RTC) Accelerated Expiration Program procedures, focusing on whether the procedures ensured that Standard Asset Management and Disposition Agreement (SAMDA) contractors satisfactorily met their contractual obligations before their contracts expired.

GAO found that: (1) RTC Accelerated Expiration Program procedures did not ensure that RTC made cost-effective decisions that were in its best interest; (2) an analysis of the related costs and benefits of accelerating the expiration of SAMDA contracts would have assisted RTC in determining whether these actions were in its best interest; (3) the program's procedures included final contract reviews by independent auditors to determine whether SAMDA contractors met their obligations, but poor contractor records and numerous contract interpretations hindered the final reviews; and (4) few of the independent auditors' recommendations were implemented because RTC officials believed that its numerous contract interpretations made strict adherence to the recommendations impractical.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To ensure that RTC makes more informed decisions about expirations of SAMDA contracts, the Deputy and Acting Chief Executive Officer, RTC, should revise RTC procedures to require an assessment of the known costs and benefits associated with these contracts. The cost benefit analyses should include: (1) an estimate of anticipated administrative savings or other benefits related to terminating SAMDA contracts; (2) a fee comparison between the expiring contract and the replacement contract; and (3) an analysis of the expenses associated with all unsold assets before waiving the retention provision.

    Agency Affected: Resolution Trust Corporation

    Status: Closed - Not Implemented

    Comments: RTC cancelled the program for the early expiration of SAMDA contracts. The early expiration program included certain benefits which were the basis for the cost and benefits analysis recommendation. Because the program was cancelled, the recommendation is no longer applicable.

    Recommendation: To improve Office of Contractor Oversight and Surveillance final reviews of all SAMDA contracts and better ensure that the contractors have fulfilled their obligations, the Deputy and Acting Chief Executive Officer, RTC, should require SAMDA contract oversight managers to work with SAMDA contractors to help them prepare, summarize, and reconcile their asset activity records before the final reviews.

    Agency Affected: Resolution Trust Corporation

    Status: Closed - Implemented

    Comments: RTC issued guidelines for the orderly closing of asset management contracts and implemented procedures to help contractors prepare records for final audit. RTC also revised its internal control review guidelines to include verification that oversight managers have taken the steps necessary to help contractors prepare their records for the final Office of Contractor Oversight and Surveillance (OCOS) audits, as the guidelines require. Through active participation of oversight managers and department heads working with contractors, RTC was able to better prepare contractors for the OCOS final audit and resolve them before the contracts were terminated.

    Jun 13, 2013

    May 7, 2013

    Mar 20, 2013

    Jan 3, 2013

    Dec 18, 2012

    Sep 18, 2012

    Sep 13, 2012

    Jul 19, 2012

    Looking for more? Browse all our products here