U.S. General Services Administration

Creating a

Successful

Future at

GSA

2001 Annual Accountability Report
2001
LETTER FROM THE ADMINISTRATOR I am honored to have been appointed by President

George W. Bush to serve as the 17th Administrator of

the U.S. General Services Administration (GSA).

Since joining the GSA team on May 31, 2001, I have

been actively involved with all my associates here in

responding to the President’s call for each Federal

department and agency to provide improved services

to the American public. GSA certainly has a critical

role to play in this regard, because it is our

responsibility to provide other Federal agencies with

the efficient and effective procurement and property

management services they need to fulfill their own

missions.

As shown in this year’s annual report, GSA met or

exceeded most of the performance goals and

measures that had been established for FY 2001.

Among the highlights of our performance

achievements are the following:

• We achieved increased customer satisfaction

ratings for GSA’s procurement and property

management services.

• We launched a performance improvement initiative,

“Creating a Successful Future at GSA,” to achieve

high performance and continuous improvement for

customer agencies and taxpayers and career

success for GSA associates.

• We implemented an improved property portfolio

management process that includes aggressively

reducing the large backlog of deferred

maintenance in government-owned buildings,

Stephen A. Perry

1
legislative reform to enable modern property

management practices and reducing the amount of

non-revenue producing space in GSA buildings.

• We continued to sustain highly efficient operations

in GSA facilities and contained operating costs

well below private sector benchmarks.

• We significantly increased Federal agencies’ use of

GSA sources of supply and the number of products

and services available.

• We were instrumental in developing and initiating

the process for using the Internet and electronic

commerce technology to enable citizen and

business transactions with the government.

While we are pleased with the achievements of FY

2001, we recognize that our customers’ needs are

increasing, and we must continue to improve our

performance to meet those needs. We are confident

that we can do just that in FY 2002 and beyond.

Creating a Successful Future at GSA

Building upon the existing foundation at GSA, we

have taken a number of important steps in FY 2001

that will help us achieve

our full potential as a high

performing and

continuously improving

agency. First, we have

attracted to our central

office and regional offices

an outstanding group of

talented, experienced

leaders who are

committed to answering

President Bush’s call for

improved government performance. 

Additionally, the GSA leadership team

and our fellow associates throughout

GSA have embarked on an aggressive

performance improvement initiative

called “Creating a Successful Future at GSA.” We

have engaged GSA associates, customers, suppliers

and other stakeholders in a dialogue about the

importance of GSA’s mission, values and goals. GSA

team members are committed to achieving the

agency’s mission, by living our values every day and

working together to achieve our goals. We will

significantly strengthen our strategic management

processes. We will accomplish our challenging,

customer-focused goals. We will implement a more

rigorous approach for objective performance

measurement and accountability.

In FY 2001, we took the initial steps and challenged

ourselves to meet or exceed the following six GSAwide goals in FY 2002 and beyond:

Provide Best Value for Customer Agencies and

Taxpayers

GSA’s performance for procurement and property

management services has a significant impact on

the ability of other Federal agencies to achieve

their missions of service to the American public.

Therefore, it is essential that we achieve high

performance that consistently yields best value to

our customer agencies. We begin by improving

our understanding of our customer’s needs so that

we can set the appropriate goals and action plans

to meet those needs. 

In FY 2001, we launched an initiative to

significantly enhance our understanding of

customer needs. We held a number of “customer

service visits” with the national and regional

leadership of several of

our major customer

agencies, and we have

used our customer

relationship

management process

and other means to

gather important

information about their

program requirements.

We are using this

information to establish

specific, customer-focused goals,

action plans and performance

measures. We will monitor customer

satisfaction ratings and use customer

feedback to identify opportunities to

continuously improve the quality, cost, speed and

effectiveness of services we provide. 

Achieve Responsible Asset Management

The largest category of assets GSA manages is real

property. GSA is the Federal Government’s largest

civilian property management organization, providing

buildings and facilities where over 1.1 million Federal

associates work. GSA is committed to providing

Our goal is to enable our

customers to transform the

way they interact with the

American public

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world-class workplaces. That means providing space

that is properly laid out and well-suited to

productively achieving the work of the agency

located there, while at the same time providing a safe

and healthy environment for the agency’s workers

and visitors. 

One of the most significant challenges facing the

Federal Government is the

need to address the large

backlog of repair and

deferred maintenance in

government-owned

buildings. In FY 2001, we

took a major step toward

the long-term resolution of

this challenge by initiating

property management

reform, including proposed

legislation to enable the use

of modern property

management practices

government-wide. We must

sustain a long-term

program of applying

appropriate asset management principles to

government-owned buildings. 

Operate Efficiently and Effectively

GSA has specialized expertise, skills and supply

market knowledge necessary for efficient and

effective procurement and property management

services. We provide these services to other Federal

departments and agencies so they do not have to

incur the expense of duplicating the same functions

within each of their agencies. Rather, each agency

can focus its resources on its core mission. 

At GSA, we’re working to improve the

effectiveness and consistency of our overall

performance management processes. This includes

improving our goal-setting process and our

performance measurement process. It also includes

linking budget and management decisions to

performance. Additionally, we have taken steps to

increase the speed of decision-making, achieve lower

overhead expense and improve operational efficiency.

Ensure Financial Accountability

GSA has achieved an enviable record of fourteen

consecutive years with a “clean” financial audit.

Still, we recognize the need for continuous

improvement in making our accounting and financial

systems more up-to-date, efficient and useful for

management decision-making purposes.

Accordingly, we are implementing a new accounting

system that will replace the existing legacy system

by October 2002. 

In FY 2001, the original scope of this project, called

Pegasys, was revised. Since then, Phase I was

successfully completed, and we have continued to

keep the project on schedule and on budget. We are

now in the final phase of development, and the

project will be completed by October 2002. In the

future, we plan to integrate this system with other

components of our existing financial management

system, yielding a more efficient and effective

system for linking budget to performance and other

aspects of financial accountability.

To achieve our goal of having a world-class

workforce, GSA is developing and integrating a more

robust process of workforce recruitment,

development, retention and succession planning into

our overall process of strategic management of the

agency. After setting the GSA-wide goals and the

related goals for each Service and Staff Office, we

identified the mission critical occupations and

positions. These include positions in acquisitions,

technology, real estate, security and financial

management. We are implementing plans for

targeted recruitment, as well as training and

development of the current workforce, to assure that

we have associates in mission critical occupations

with the necessary competencies, skills and

commitment necessary to achieve the specific goals

we have set for ourselves. 

Achieving a world-class workplace requires that

we develop and sustain a positive and productive

work environment—a workplace where every day we 

To achieve our goal of having a

world-class workforce, GSA is

developing and integrating a

more robust process of workforce

recruitment.

3

Maintain a World-Class Workforce and a WorldClass Workplace
4

live our values: ethics and integrity in everything we

do, respect for fellow associates, teamwork, results

orientation and professionalism. 

Carry Out Social, Environmental and Other

Responsibilities as a Federal Government

Agency

Many of GSA’s activities are very much like the

activities of a private sector business, and yet GSA

is different because we are a Federal Government

agency. Consequently, we have social,

environmental and other responsibilities that we

must incorporate into our work in a manner that a

private sector business does not. This extends from

our work to foster competition, to being a catalyst to

local economic development, to providing

contracting opportunities to small businesses, to

providing computer access for individuals with

disabilities, to energy efficiency initiatives and other

responsibilities we take pride in achieving as a

Federal agency. 

* * * * *

Through our intensive review of the GSA mission,

values and goals during FY 2001, we have

strengthened the commitment of our team to

build upon the successes of the past to “Create a

Successful Future at GSA.” We have developed a

long-term strategic plan and a detailed annual

performance plan for FY 2002; these enumerate

the customer-focused goals we will accomplish

in the months and years ahead. We will sharpen

our focus on our mission of helping Federal

agencies better serve the public by providing

procurement and property management services

that yield best value to our customer agencies

and taxpayers. 

As we do so, we will increase Federal agencies’

use of GSA as the preferred source of products and

services they need. We will continue to take the

steps necessary to achieve our full potential for high

performance and continuous improvement, and we

will take the steps necessary to achieve significant

reductions in operating expense and improved

operational efficiency.

As we look back on the accomplishments of FY

2001, we must also reflect on the adversities we

faced, most notably, the tragic events of September

11th and the subsequent anthrax incidents. Lives

were lost in these terrible attacks on America and

Federal agency operations were devastated. These

agencies turned to GSA for assistance, and our

team of professionals delivered. For example, GSA’s

Federal Protective Service played a critical role in

participating in the search and rescue efforts in

New York and Washington, D.C. GSA’s Public

Buildings Service, Federal Technology Service,

Federal Supply Service and all areas of GSA worked

around the clock to assist Federal agencies in

relocating to new space and obtaining the

furnishings, telecommunication and computer

equipment, vehicles and supplies needed to reestablish their operations. 

We also recall with sadness that Federal

Protective Service Officer Ronald C. Sheffield was

killed in the line of duty while protecting Federal

workers and the public in the Patrick McNamara

Federal Building in Detroit, Michigan, on September

21, 2001. While we hope that we will not face such

adversities in FY 2002, we recognize the grim reality

that our country is continuing to fight a long-term

war against terrorism. 

On a more positive note, I am very excited and

optimistic about the bright future at GSA. We have a

great team of talented associates with the skills and

competencies necessary to implement President

Bush’s Management Agenda. GSA is strongly

committed to the high performance and continuous

improvement necessary to achieve the GSA mission.

I am very confident that we will strive to live our

values every day and that we will work together as a

team to achieve our goals. Consequently, we look

forward to successfully meeting the challenges and

opportunities ahead.

Respectfully submitted,

Stephen A. Perry

Administrator
TABLE OF CONTENTS

The FY 2001 GSA Annual Accountability Report is produced under

the guidelines of the Government Management Reform Act of 1994

as amended by the Reports Consolidation Act of 2000 with

performance information. The report provides a performance-based

view of the U. S. General Services Administration’s achievements by

augmenting the traditional audited consolidated financial

information, as required under the Chief Financial Officers Act of

1990 with performance information.

Letter from the Administrator 01

Overview

Creating A Successful Future at GSA 07

Letter from the GSA Chief Financial Officer 12

Management Discussion and Analysis 14

GSA Public Buildings Service 18

GSA Federal Supply Service 20 

GSA Federal Technology Service 23

GSA Office of Governmentwide Policy 26

GSA Financial Statements 

Letter of Transmittal from the Inspector General 29

Report of Independent Public Accountants 31

Inspector General’s Report on Internal Controls Over 

Performance Measures 39

Consolidating and Combining Financial Statements 41

Supplemental Consolidating Statements 68

Supplemental Information

Federal Managers’ Financial Integrity Act Report 73

Inspector General’s Report on Management Challenges 79

Management Assessment of Performance Measures 86

Inspector General’s Semiannual Reports 

to the Congress 91

Administrator’s Semiannual Management Reports 

to the Congress 99

FY 2001 GSA Performance Against Performance Goals 100

Acronyms and Abbreviations 108

5
OverviewOverview
CREATING A SUCCESSFUL

FUTURE AT GSA

The Mission of GSA

“GSA helps Federal agencies better serve the public

by offering, at best value, superior workplaces, 

expert solutions, acquisition services and

management policies.”

GSA is the central management agency of the

Federal Government for regulating administrative

services other than information technology,

personnel and financial management. The

administrative services under GSA’s regulatory

purview include the management of real and

personal property, travel and transportation, motor

vehicles and aircraft, and mail.

GSA is also a significant provider of procurement

and property management services to other Federal

agencies. GSA’s property management service

provides offices and workspace for more than one

million Federal workers in over 8,300 governmentowned and leased buildings located in 1,600

communities nationwide. GSA’s procurement

service assists Federal agencies in the acquisition of

the products and services they need to conduct their

operations. By providing these property

management and procurement services centrally,

GSA enables other Federal agencies to focus their

resources on fulfilling their core missions.

The GSA organization includes three major units

that provide property management and procurement

services to Federal agencies: the GSA Public

Buildings Service (PBS), the GSA Federal Supply

Service (FSS) and the GSA Federal Technology

Service (FTS). A fourth unit, the GSA Office of

Governmentwide Policy (OGP), provides management

policy development. GSA provides its services

through the coordinated efforts of eleven regional

offices and its central office in Washington, D.C.

Consistent with its mission, GSA’s strategic goals

are to:

• Provide best value for customer agencies and

taxpayers

• Achieve responsible asset management

• Operate efficiently and effectively

• Ensure financial accountability

• Maintain a world-class workforce and a world-class

workplace

• Carry out social, environmental and other

responsibilities as a Federal Government agency.

In 2001, GSA associates worked to meet or exceed

the challenging goals the agency had set for itself.

They were also mindful of the mission and the values

GSA has chosen to embrace as an agency. Following

are some examples of the ways GSA found

7
opportunities to accomplish the goals set forth in 

FY 2001, as associates worked together to create a

successful future at GSA.

Providing Best Value

Performance-Based Management: GSA continuously

seeks to create best value for its various constituents

through good business performance practices.

GSA’s Performance Plan accelerates efforts to

systematically measure how well the business units

and the entire enterprise perform. The Plan has led,

in turn, to improvements in key processes, as well as

several initiatives that affect how GSA serves its

customers. 

One very successful PBS program, Linking Budget

to Performance, has resulted

in substantial income and

savings for GSA and other

Federal agencies. The net

effect on performance was a

7.3 percent decline overall in

non-revenue producing space

from 15 percent to 7.7 percent.

Operating costs fell by $1.04

per square foot to a level 16

percent below private sector

costs. Funds from operations climbed to

$1.3 billion. 

Similarly, FSS implemented a balanced

scorecard approach to performance

management that is the cornerstone of

the Service’s strategic and business

planning system. The scorecard

measures financial performance, as well

as business processes, and reveals ways to achieve

greater success by looking at workforce efficiency

and customer satisfaction measures within the

context of FSS unique responsibilities. This new

model for FSS brings performance targets into its

every day work activities, and is intended to ensure

that we provide the best value to our customers by

providing the best prices available.

Ensuring Financial Accountability

Responsible Stewardship of Taxpayer Dollars:

Accurate and timely financial management is also

critical to successful performance. GSA has made

significant strides in improving its internal financial

processes and systems and its customer billing

systems. These improvements increase GSA’s billing

accuracy and efficiency, improve customer relations

and strengthen GSA’s financial management

controls, leading to improved productivity and

resource utilization.

Developing Expert Solutions

Property Management Reform: GSA continually seeks

to provide new and higher levels of service.

Understanding the needs of customers and developing

expert solutions for them drives innovative thinking at

GSA. For example: GSA’s commitment to innovation

resulted in a comprehensive review of the Federal

Property and Administrative Services Act of 1949 and

could lead to groundbreaking reform in the area of

property management. The

new Federal Property Asset

Management Reform Act, as

drafted, would implement four

concepts designed to improve

the management of Federal

assets and promote a total

asset management approach

to real and personal property

issues. It would introduce lifecycle planning and

management; authorize agencies to sublease, out-lease, exchange and sell capital

assets; allow agencies to keep some

portion of the proceeds from sales of

surplus real and personal property; and

streamline asset management. 

Achieving Efficient and Effective

Public Service

Telecommunications—The Next Generation: Meeting

the public’s expectations for rapid access to

government information and assistance is one new

definition of efficient and effective public service.

Reliable and fast voice and data telecommunication

networks, capable of handling a large amount of

information, are critical to mission success, but

keeping costs low is equally vital. 

These factors inspired the FTS2001 and

Metropolitan Area Acquisition (MAA) programs.

They offer superior long-distance and local

telecommunications at the lowest possible rates

by taking advantage of increased competition in

the deregulated telecommunications marketplace. 

8

Reliable and fast voice and

data telecommunication

networks, capable of

handling a large amount of

information, are critical to

mission success.
In FY 2001, GSA completed the final stage of

moving the Federal Government’s long-distance

telecommunications services to new FTS2001

contracts with MCI WorldCom and Sprint. FTS2001

brings state-of-the-art, commercial-grade services to

the Federal Government. Customers now have

access to a wide range of modern and flexible voice

and data network services, including the latest

wireless, satellite and Internet capabilities. Savings

to the taxpayers are substantial, with per-minute,

Federal long-distance rates falling from 4.5 cents to

less than one cent over the life of the contracts.

Also in FY 2001, GSA began the third phase of its

MAA program, designed to realize the benefits in the

competitive local telecommunications market. The

MAA program offers dial tone, voice and data

services; sustained price reductions for services in

selected metropolitan areas; a flexible contractual

vehicle with high-quality services; and a contractual

structure that encourages agency cooperation and

aggregation of requirements.

Linking Government to Its Stakeholders

The Era of E-Government: While telecommunications

provide a vital link between Government and the

public, the Internet is increasingly the access

medium of choice. GSA is a pioneer in Federal

marketing online. GSA’s Web site, GSA.gov, makes it

easier for GSA Federal customers to do business

with GSA electronically. GSA.gov provides

information on opportunities for GSA construction

contracts, emergency disaster relief and sales of

surplus government property, to name a few. The

system is user-friendly and fully compliant with

section 508 requirements. With GSA.gov, GSA

presents one face to customers—whether they are

Federal agencies, vendors or individual citizens.

In FY 2001, GSA launched GSAAuctionsTM, 

a Web site that allows the public to bid online for

surplus, excess and seized goods in the Federal

Government’s possession. During FY 2001, GSA

held 7,136 auctions with proceeds totaling 

$13.3 million.

Continuing to lead the way in the Federal

electronic marketplace, GSA expanded its online

ordering system for supplies and services—GSA

Advantage! TM. The Web site gives Federal

customers online access to 2.4 million services and

products offered by GSA’s Federal Supply Service.

Furthermore, customers can compare prices, place

orders and make payments over the Internet. In FY

2001, GSA did over $157 million in sales on the site.

In June 2001, GSA added a new electronic Request

for Quotes system called E-Buy!, simplifying

procurements for Federal agencies and giving them

more time to focus on their core missions.

To provide best value to customers and taxpayers

in the handling of its real estate assets, GSA posts

online information about owned and leased real

estate on the Web. The information helps customer

agencies track building occupancy data. It gives

prospective lessors and other interested parties

access to public information on some 1,900

government-owned buildings and 7,000 lease

agreements, including date of lease, expiration date

and amount of space. In addition, GSA makes billing

information available online for its customers. 

Delivering on its promise to provide customercentric information on the Internet, GSA expanded the

official Federal Government Web portal it launched

last year—FirstGov.gov. In a fraction of a second, the

site searches over 30 million pages on more than

22,000 Federal Web sites. A state government search

capability was added in June 2001, providing access to

an additional 16 million pages of information for all 50

states and the District of Columbia. 

In the aftermath of the terrorist attacks,

FirstGov.gov was an invaluable resource for many

Americans, providing a comprehensive list of

disaster-related phone numbers and links on its U.S.

Government Responds to September 11th page. The 

While telecommunications provide a vital link

between Government and the public, the Internet is

increasingly the access medium of choice. GSA is a

pioneer in Federal marketing online and leads the

way in the Federal electronic marketplace.

9
Web site had 1.75 million hits that week, with 448,552

unique visitors—triple the usual number. The

enhanced FirstGov.gov is truly a one-stop center for 

Government information and services. The site was

a finalist for the Innovations in American Government

Award administered by Harvard University’s John F.

Kennedy School of Government. The award is one of

the most prestigious given for public service.

Streamlining Business Functions to Cut Costs

Consolidation of Resources: GSA challenges its

associates to optimize value for clients and

customers, ultimately leading to improved benefits

for taxpayers. GSA constantly searches for options

and innovative practices that make operating

Government less costly without detriment to its

effectiveness. 

As part of its strategy to refine its business model

and reshape its organization to reduce overhead

costs, GSA announced in FY 2001 the closure of six

of its eight supply warehouses. The closings were a

logical outcome of customers’ increasing reliance on

a vendor-to-customer, E-commerce system. GSA

consolidated the nationwide network into two

facilities, one in Burlington, New Jersey, and the

other in Stockton, California. GSA also split its

supply and procurement business line into two

units—one offering full-service supply support and

the other offering self-service acquisition solutions.

Achieving Responsible Asset Management

Construction, Restoration and Renovation in the GSA

Real Estate Portfolio: GSA continues to be a 

responsible steward of the Federal Government’s

extensive real estate assets. In response to the needs

of the Federal Judiciary, GSA is moving forward with

the largest courthouse construction program in 50

years. In FY 2001, PBS awarded construction

contracts for courthouses in Laredo, Texas; Seattle,

Washington; Gulfport, Mississippi; and Youngstown,

Ohio. GSA also completed five more courthouses in

FY 2001 in Phoenix, Arizona; Corpus Christi, Texas;

Montgomery, Alabama; Albany, Georgia; and

Greenville, Tennessee. GSA’s courthouse building

program continues to be a hallmark of excellence

with courthouses in Phoenix, Las Vegas, and Central

Islip, winning awards and numerous accolades.

While new construction is exciting, GSA is also

renovating and preserving many of the nation’s

historic building treasures. Responsibly managing

GSA assets is a key goal at GSA. A large part of the

GSA inventory is comprised of buildings constructed

between 1960 and 1980. Many buildings from this era

are nearing eligibility for designation as historic

structures and will require significant upgrades if they

are to remain healthy and efficient workplaces. 

To aid in prioritizing renovation needs, GSA

implemented a new survey tool. Web BER (Web

Building Evaluation Report) provides an intuitive,

easy-to-use approach for evaluating the condition of

GSA-owned properties. The system ranks each

facility’s condition against industry standards and

calculates the level of investment required to bring

the building up to standard.

Maintaining a World-Class Workforce...

Investment in GSA’s Human Capital: GSA’s

workforce, consisting of approximately 14,200

associates, is vital to keeping the Federal

Government running smoothly and safely on a dayto-day basis. GSA is committed to a set of proactive

strategies to create and sustain a World-Class

Workforce. These strategies vary among business

units, but include recruiting, in-service training, boot

camps and performance incentives.

...And World-Class Workplaces

Efficient Work Environments: Just as Government

has to adapt to changes in society, so too must the

buildings that house Government operations. GSA

works with individual agencies to accommodate their

10

GSA works with individual agencies to

accommodate their space needs. GSA is

modernizing offices with new designs and

technologies that help agencies better meet the needs

of the public.
changing space needs. In pursuit of its goal for

creating superior workplaces, GSA is modernizing

offices with new designs and technologies that help

agencies better meet the needs of the public. 

Carrying Out Social and Other Responsibilities

as a Federal Agency

Small Business Procurement Opportunities: As

mandated by Congress, GSA ensures that minority-,

small disadvantaged 8(a)-, women-, HUBZone-,

veteran-, and service-disabled veteran-owned small

businesses are given every opportunity to engage in

the Federal procurement process. GSA maintains

regional small business centers that offer

procurement process counseling, training and

technical assistance to thousands of small

businesses nationwide. GSA’s success is measured

against the annual goaling program, established by

Congress and administered through the Small

Business Administration (SBA), where targets are

set for Federal small business procurement dollars.

In FY 2001, GSA awarded 38 percent of its own

procurement dollars to small businesses, including

nearly 12 percent to small minority-owned firms 4.6

percent to small women-owned firms, and .58

percent to small HUBZone businesses.

Disaster Assistance: Two basic expectations citizens

have of their Government are protection from harm

and swift, expert response when public emergencies

occur. While public protection and disaster response

are primary missions for other agencies, GSA shares

an important responsibility in these areas because it is

the caretaker of the properties and systems on which

so many people depend.

The events of September 11, 2001, and their

aftermath called on all the resources GSA had at its

disposal. Within minutes of the attacks, GSA

mobilized to join Federal, state and local officials in

the rescue and recovery efforts. The agency secured

more than 1.5 million square feet of warehouse and

office space for the Federal Emergency Management

Agency (FEMA) and displaced Federal agencies in

New York City. In addition to office supplies,

computer equipment and telephone service, GSA

also provided 65,000 protective suits, 5,000 facemasks

and 3,000 respirators for rescue workers. GSA

contacted banks to increase the credit card limit for

stranded Federal travelers and quickly procured 100

vehicles for the recovery effort.

In Washington, DC, GSA found 850,000 square

feet of office space, as well as computers,

furniture and 2,000 office supply kits for Defense

Department employees whose workspace had

been destroyed in the attack on the Pentagon.

Space was ready for occupancy on September

17th. GSA associates across the country put in

long hours, donated blood, volunteered to

backstop their exhausted colleagues and gave

generously to charities assisting the victims of the

September 11th attacks. GSA’s industry partners

also did their part in ensuring smooth delivery of

services and products.

GSA’s efficiency in the wake of the terrorist attacks

came from years of experience in responding to

hurricanes, earthquakes, wildfires, floods and other

catastrophic events. As a Federal agency, GSA has a

social responsibility beyond its business operations.

GSA is proud to be an active participant in relief

efforts whenever and wherever disaster strikes.

Conclusion

GSA is continually embarking on new projects,

designing new systems and introducing new

practices to enable it to better address customer

needs and expectations. GSA is proud to be

forging a new era of delivering quality services and

products to its customers, providing value and

accountability to the public and demonstrating

commitment to the Federal workforce.

The events of 

September 11, 2001, and 

their aftermath, called on all the

resources GSA had at its disposal.

Within minutes of the attacks, 

GSA mobilized to join Federal, state

and local officials in the rescue 

and recovery efforts.

11
LETTER FROM THE

GSA CHIEF FINANCIAL OFFICER

Fiscal Year 2001 was a year of continued success for

the CFO team. Our independent auditors provided a

“clean” opinion for the 14th consecutive year. We 

can all be proud of this record of sound financial

accountability.

The purpose of the FY 2001 Accountability Report

is to provide meaningful financial and program

performance information, discuss GSA’s

accomplishments and most serious challenges and

present our audited financial statements. In June

2001, we completed the implementation of the first

phase of Pegasys—GSA’s new integrated financial

system. This first phase provided more than 6,000

GSA associates with new funds management and

credit card management capabilities. The second

phase of Pegasys, focusing on accounts payable and

general ledger functionality, will be implemented by

October 2002. Beginning with FY 2003, Pegasys will

be GSA’s official financial reporting system. With the

full implementation of Pegasys, GSA will realize the

benefits of a commercial-off-the-shelf product, with

improved processes and standard accounting

procedures. Additionally, we will be fully compliant

with the Federal Financial Managers’ Integrity Act

requirements for use of Standard General Ledger

accounts at the transactions level. 

In March 2001, we concluded an assessment of

GSA’s existing financial management architecture

that also mapped out our desired target architecture.

This assessment helped us determine a strategy for

delivering financial services and will help with

William B. Early

12
decisions about future systems development efforts

throughout the agency’s financial community. As a

result of the architecture assessment, the Office of

the CFO has adopted a discretionary services model

to provide flexible and responsive delivery of financial

services. Using this model, we will deliver basic

accounting services through the commercial

software product and will

offer additional financial

management services to

our internal GSA and client

agency customers on a

cost-reimbursable basis.

During FY 2001, GSA

reached a new high mark

for associate participation

in the payroll Direct

Deposit Program with 99

percent of GSA’s 14,216 associates

being paid electronically. Our goal

continues to be 100 percent

participation. GSA also provided

payroll services to 9,794 client

agency associates and we added

OPM as a payroll client in October

of 2001.

GSA’s business lines continued to expand their

business in FY 2001 with revenues from sales of

supplies and services to Federal customers reaching

$16 billion, an 11 percent increase over FY 2000.

The percentage of revenues collected electronically

through OPAC, the Treasury’s electronic bill paying

system, moved up to 88 percent in FY 2001 from 85

percent in FY 2000. However, even with the high

percentage of electronic billings we still had to

distribute 295,754 bills to nonparticipating

customers. We are continuing to work aggressively

with customers to expand their use of Treasury’s

electronic bill paying systems. For accounts

receivable management to operate more efficiently

and effectively, we need to continue reducing the

manual-billing paper burden. Average monthly

delinquencies declined 25 percent to $238.5 million

in FY 2001.

E-commerce plays a major role in GSA’s

payment functions and continues to expand. In FY

2001, GSA paid 79 percent of all invoices

electronically, eight percent more than last year.

They account for 89 percent of the disbursement

total, a six percent increase from FY 2000. The

percentage of invoices GSA received electronically

increased from 12

percent to 24 percent in

FY 2001. Also in FY 2001,

the percentage of GSA

payments made on time

rose to 91 percent and

GSA took 91 percent of

all possible early

payment discounts,

earning the agency $3

million.

GSA continues to make

substantial progress in

performance measurement and

implementation of the Government

Performance and Results Act. The

General Accounting Office issued a

highly favorable report on our most

recent Performance Plan and Performance Report.

We will be issuing a new Strategic Plan to reflect our

enhanced Mission, Values, and Goals. Equally

important, we are concentrating on the internal

implementation of the Results Act, especially the

improvement of performance measurement. This will

focus GSA on becoming one “operating unit” instead

of a loose conglomerate of separate business units.

The Office of the CFO’s ongoing goal is to provide top

quality service and best value and I am committed to

providing the financial stewardship necessary for

GSA’s continued success.

Respectfully,

William B. Early

13

E-commerce plays a major role in GSA’s

payment functions and continues to 

expand. In FY 2001, GSA paid 79 percent

of all invoices electronically, eight percent

more than last year. 
MANAGEMENT DISCUSSION

AND ANALYSIS

While fulfilling the same mission in 2001 as it has for

the past 51 years, today’s GSA is as fundamentally

different as the Internet-influenced information

economy is different from the centralized industrial

economy in which GSA was molded. Today, GSA

works in different ways by:

• Outsourcing nearly 94 percent of its operational

tasks through private contractors

• Vying for Federal business as a non-mandatory

source of space, supplies, and services for Federal

agencies 

• Relying increasingly on reimbursements from

other agencies for its funding, so that less than 1

percent of GSA’s operating budget—$188.6

million—is directly appropriated

• Downsizing to just over a third the size it was at its

peak in 1971; the GSA workforce in FY 2001 was 29

percent lower than the 1993 level.

Some of these factors have worked to GSA’s

advantage; others present challenges. The agency’s

position as provider to Federal agencies makes it able

to play a major role in E-Government. It is positioned

to move many of its own functions online, e.g., GSA

Advantage!TM, and to play a critical role in bringing

the entire Federal Government into the information

economy. GSA products, such as wireless

technology, digital signature capability, smart cards

and SmartPay cards, support E-Government. At the

same time, other agencies have been authorized to

develop and award Government-wide acquisition

contracts (GWACs), which increases the pressure on

GSA to perform well. Such developments make it

extremely important for GSA to attend to its

customers’ needs and bring its underlying strengths

and better prices to play in the Federal marketplace.

Management Issues

GSA continues to respond to several management

issues. While some issues remain unresolved, GSA

has made significant progress. The General

Accounting Office (GAO), the GSA Office of the

Inspector General (OIG) and the agency’s outside

auditors, PricewaterhouseCoopers, identified some

of these issues. The following discussion addresses

the major management issues facing the agency as

of September 30, 2001.

14
Management of the GSA Federal Supply

Service Distribution Centers

In July 1999, GSA began a process to transition its

Government-owned and operated supply distribution

network toward increased reliance on alliances with

private companies. With the evolution of new

acquisition and logistics tools within Government

and the marketplace, GSA has positioned itself to

capitalize on the increased capabilities of Ecommerce systems. By Fall 2001, GSA had reduced

its supply distribution sites from eight to two. The

new distribution strategy increases responsiveness,

breadth of items, and brand reliability of goods made

available to Federal agencies.

Termination costs (severance and buyout) were

calculated and accrued for $7 million. One of the

closing facilities, in Palmetto, Georgia, was covered

under a long term leasing agreement and the net

present value of future lease payments was accrued

for $26 million. Actual payments for the

restructuring associates’ costs will be incurred in

FY 2002, and the payment for the accrued leasing

agreement will be incurred over the remaining

commitment period of the lease.

GSA Systems Security Development 

and Implementation

GSA relies on its automated information systems to

perform its mission and manage its operations. The

agency faces a number of security issues related to

the control of existing systems and the replacement

of a number of old systems. 

An FY 1999 review of eight significant GSA

financial management system applications disclosed

weaknesses in the control and oversight systems

relating to technological and physical access, access

monitoring and follow up, security awareness, and

information technology (IT) security program

implementation and management oversight. As a

result, GSA’s systems remain susceptible to

unauthorized access, modification or undue risk. A

follow-up review during FY 2000 concluded that the

control weaknesses had not been resolved. During

FY 2001, GSA took the following major steps to

correct these weaknesses:

• The development and funding of a new IT Security

Center of Expertise 

• The development and execution of an IT Security

Action Plan

• The development and distribution of agency-wide

IT security guidelines and procedures

• The development and implementation of

procedures for performing vulnerability and risk

assessments

• The monitoring of access attempts and security

violations

• The development and implementation of security

awareness training for all users and systems

administrators

• The monitoring and reporting of policies and

guidelines for compliance by services, staff

offices, and regions

• The development and implementation of

guidelines for periodic review and updating of

security policies and procedures by April 2002.

Another FY 1999 review of three GSA financial

management systems (ITOMS, STAR, and FEDPAY)

found a need for better controls over systems

development and implementation processes to

eliminate schedule delays and cost overruns, the

need for frequent redesign, and difficulties sharing

usable data between systems. The Office of the

Chief Information Officer (CIO) has instituted a

number of corrective actions to meet these

challenges and ensure the integrity of all GSA-wide

systems. These actions include establishing

processes to monitor implementation of control

objectives that support the IT security policy;

developing and implementing procedures and

processes that address, identify, analyze and

15

GSA has positioned itself to capitalize on the increased

capabilities of E-commerce systems and by Fall 2001, reduced

its number of supply distribution sites from eight to two. The

new strategy increases responsiveness, breadth of items, and

brand reliability of goods made available to Federal agencies.
manage/track changes to a system; and providing a

structural methodology for applying technical and

administrative direction and surveillance throughout

the life cycle.

Controls Over the Accuracy of Rent Data

PBS’ FY 2001 data accuracy measure concentrated

on correcting missing building, lease, and space

assignment data in the STAR System. That effort

positively affected the health of the Federal

Buildings Fund. PBS’ focus on continuous

improvement in maintaining the accuracy and

completeness of STAR data has led to the

development of a second data accuracy measure.

The new measure compares a random sample of

STAR data with source occupancy agreements and

lease contract documents. Updated baseline data

will be provided in FY 2002 and performance

targets will be set annually. The results of this

measure will enable PBS to assess the

effectiveness of its data accuracy efforts and aid in

the development of future data-improvement

initiatives. 

Cash Flow in the Information Technology Fund

With the explosive business growth in the

Government IT market, the IT Fund often shows a

very low cash balance. This is in part the result of

increased business volumes and the 30-to-60-day lag

time between payments to contractors and cash

receipts from customers. 

The Department of Defense (DoD) continues to be

GSA’s most problematic client. Therefore, GSA

established a joint solutions team in August 2000 to

address billing issues and improve communications.

Through this initiative, GSA reduced the number of

chargeback billings and increased the number of

electronic billings to DoD. Beginning in FY 2002,

GSA will bill DoD twice a month for services

rendered; thus reducing the lag time between

payments and cash receipts.

In addition, GSA re-engineered some of its

business practices, resulting in improved customer

ordering processing and improved billing accuracy.

Other efforts include reducing discretionary costs,

improving net operating results of the IT Fund, and

improving the working capital position of the Fund to

ensure financial stability.

Workforce Planning

GSA struggles with two significant problems—loss

of institutional memory stemming from senior

management attrition and an aging workforce

eligible for retirement. As the GSA workforce has

become smaller through downsizing, restructuring,

buyouts, and attrition, its average age has increased

to 46.5 years—slightly higher than the Governmentwide average. Only five percent of GSA’s workforce

is less than 30 years old. By the end of FY 2005, 29

percent of the workforce will be eligible for regular

retirement and an additional 23 percent for early

retirement. GSA’s remaining associates, including

those recently hired, have shown considerable

initiative in taking on all the responsibilities of the

agency, and GSA scores remarkably high for

employee job satisfaction. Nonetheless, the agency’s

continuous downsizing over the past decade has

resulted in a loss of institutional memory especially

in key senior management areas. This has resulted in

the movement of some associates into positions of

increased responsibility without adequate training or

experience. The competencies that GSA will need in

the future are similar to those needed today—project,

acquisition, and financial management skills, as well

as leadership and business acumen. GSA is

addressing the “competency gap” through a

comprehensive workforce planning effort that

includes a nationwide recruiting strategy, college

internships, leadership development, linking

performance management to agency mission and

goals, knowledge sharing, and use of contractors to

supplement the expertise of GSA’s workforce.

GSA Performance in FY 2001

GSA accomplished its mission at a high level of

performance in most of its programs. Total

obligations for these programs were $18 billion in FY

2001, a 12 percent increase over the $16.1 billion in FY

2000. GSA’s key performance measures are in the

areas of cost control, customer satisfaction, meeting

socioeconomic responsibilities, and E-Government.

The differences in GSA’s services and their own

broad mandates make it necessary to look at a

variety of measures to ascertain the agency’s overall

performance results. GSA identified 11 key

performance measures for PBS, FSS, and FTS

operations.

16
17

KEY PERFORMANCE MEASURES

FY00 Actual FY01 Actual FY01 Goal

Goal 1: Promote Responsible Asset Management

Generate a capital investment contribution of 3.7% 3.5% 3.1% 

2.5-4.5 percent of the functional replacement value (FRV) 

of the PBS owned inventory 

Reduce the amount of non-revenue producing space 12.2% 11.8% 12.0%

in the PBS Government-owned inventory to 12 percent 

in FY 2001

Maintain PBS building operations costs in office and 17% 16% 12%

office-like space to 12 percent below private sector 

benchmarks 

Reduce costs while expanding FSS supply and $2.35 $2.36 $2.37

procurement support to Federal agencies, thereby 

reducing the cost per $100 sales by over 6 percent 

Goal 2: Compete Effectively for the Federal Market 

Provide quality FTS products and services at $19 $18 $17

competitive prices and achieve significant savings for 

Federal agencies by reducing the monthly average line rate 

Goal 3: Excel at Customer Service*** 

Improve overall PBS customer satisfaction with 81% 86% 82%

GSA-owned space to an overall 82 percent in FY 2002

Achieve a customer satisfaction rating in all PBS leases 80% 85% 82%

of 82 percent 

Increase customer satisfaction with FSS supply and 72% 75% 72%

procurement programs 

Be customer centric – reduce FTS acquisition cycle times 11 7 10

(number of days from quote to award)

Goal 4: Meet Federal Social and Environmental Objectives 

Promote socioeconomic goals by increasing the proportion N/A 38% 38%

of dollars awarded to small and small disadvantaged 

businesses 

Goal 5: Anticipate Future Workforce Needs 

Increase the number of FSS products and services 35% 77% 95%

available to Federal customers via electronic systems and 

Internet connectivity 

* Revised from FY 2000

**Target of $2.37 was appropriate since FY 2001 was a period of transition and increased costs were anticipated from spliting supply and procurement into separate business lines

*** In the past, FTS has obtained information from customers through personal visits, focus groups, telephone interviews, surveys, and other methods. The objective is to better

understand customers’ needs, their levels of satisfaction with FTS services and products and FTS representatives, and why they do business with FTS competitors. Past survey efforts

consisted of professional surveys specifically tailored to our IT Solutions and Network Services business lines and various programs. FTS had planned to utilize this same survey effort

during FTS 2001; however, FTS decided to discontinue the use of the types of surveys that it has done in the past. FTS has worked with GSA management to significantly improve

its performance goals and associated measures to more accurately reflect the vision of FTS and GSA leadership. The new FTS measures provide a focus that will assist FTS in guiding

the organization toward achievement of the FTS and GSA vision. This vision will be clarified through the FTS Blueprint Project, and it will include professionally developed and

administered customer survey efforts as part of this effort.

**** Confirmation data from the Small Business Administration will be available February 2002.

*

*

****

**
GSA PUBLIC BUILDINGS SERVICE The GSA Public Buildings Service’s vision is to be

recognized as the best public real estate

organization in the world and to provide quality work

environments for Federal employees, as well as

superior value for the American taxpayer. Each GSA

office building, laboratory, and courthouse is a

symbol of American democracy, a significant public

investment that must contribute to the vitality of its

neighboring community. To achieve this vision, PBS

improved its internal business practices by

implementing accountability standards, maintaining

internal benchmarks against commercial standards,

and meeting financial and performance targets. By

managing for results, PBS efficiently and effectively

manages and maintains its workplace solutions.

PBS works diligently to improve how its customers

and private partners perceive GSA. PBS aims to be

the provider of choice for Federal agencies, to help

Federal agencies utilize real estate more efficiently,

and to provide lasting value in everything it does.

To continue GSA’s tradition as an innovator in

design and construction, PBS’ internationally

recognized Design and Construction Excellence

programs engage the best private sector architects,

construction managers, and engineers to design and

build award-winning courthouses and office

buildings. This year was the tenth anniversary of the

Design Excellence program, and the first time

projects initiated under the program were eligible to

receive Design Awards. Three new courthouses in

Las Vegas, Phoenix, and Central Islip received Honor

Awards, the highest award given.

Key Performance Measures

PBS constantly strives to improve its financial

performance to save taxpayer money. One of the

ways PBS measures financial results is by the

implementation of a performance measurement

program. One of the key measures is Funds from

Operations (net income minus depreciation), which

measures how efficiently regions are operating.

Another measure estimates the value of space that

is not producing revenue so PBS can minimize space

that does not have tenants. In FY 2001, 7.7 percent of

the inventory was non-revenue producing space,

which is 6.8 percent of potential revenue.

U.S. Courthouse, Phoenix, AZ

13.5%

FY99

12.2%

FY00

6.8%

FY99 FY00 FY01 FY01

13.0%

17.0%

16.0%

GSA Operating

Costs per

Square Foot vs.

Private Sector

GSA costs as a %

below private sector

Non-Revenue

Producing

Space in GSA

Owned

Buildings

Percent

18
Major Management Challenges

The age of buildings in the PBS inventory is a

significant management concern for GSA. Over

41 percent of Government owned buildings are 50

or more years old. Of these buildings, 35 are

National Historic Landmarks; 166 are on, or

eligible for, the National Register at the National,

State, or local level; and

74 buildings are

potentially eligible for

the National Register.

In addition, over 150

buildings are 50 or more

years old that have not

been evaluated for

National Register

eligibility, but would

likely qualify. GSA must

preserve these national

treasures for future

generations. Obtaining

the resources to

manage the

approximately $4.2

billion backlog of

building maintenance

and repair work remains GSA’s

biggest financial challenge.

Financial resources available to

PBS are well short of the

capital reinvestment needs of

the current portfolio.

Generation of net income and

funds from operations are

markedly concentrated in only

a portion of the owned inventory. GSA has made

a commitment to Congress to institute an overall

portfolio strategy to restructure the owned

inventory so that it consists primarily of strong

income-producing properties generating

sufficient funds to meet their own capital

reinvestment needs.

Real Property Disposal

GSA is working to identify and implement strategies

and tools that promote efficient use of property

slated for disposal and to provide flexible options that

will satisfy the needs of agencies, communities and

taxpayers. GSA is part of a three-way partnership

with the National Park Service and the United States

Coast Guard to dispose of historic lighthouses and

light stations using the National Historic Lighthouse

Preservations Act of 2000. GSA was also responsible

for the successful disposition of the Lorton

Correctional Complex in Fairfax County, Virginia this

year. GSA had both

custodial and disposal

responsibility for this site

and was able to ensure

that the majority of the

property will be used for

recreation and open

space.

Federal Protective

Service

As a building manager,

GSA is vigilant about the

safety and security of

Federal employees and

visitors to Federal

properties. FPS has

enhanced training for its

security and law

enforcement personnel,

standardized security guard

contracts and increased the

number of Criminal Investigators

and Law Enforcement Security

Officers. 

As a result of the bombing at the

Murrah building in Oklahoma City

and the terrorist attacks in New

York and at the Pentagon, FPS intensified its efforts

to protect Federal employees and buildings. To aid in

Federal building threat identification, FPS

implemented annual Regional Threat Assessments

(RTA). An RTA is an internal management tool that

examines various factors to determine the major

threats to GSA buildings. In addition to increased

security, GSA’s Office of the Chief Architect

completed a report to Congress on window glass

fragmentation, developed an evaluation program of

construction contractors, developed GSA standards

for blast analysis, and conducted 12 construction

peer reviews.

19

Over 41 percent of Government owned buildings 

like the Dwight D. Eisenhower Executive Office

Building are 50 or more years old. Of these

buildings, 35 are National Historic Landmarks, and

hundreds are either on or eligible to be on on the

National Register. GSA must preserve these national

treasures for future generations.
GSA FEDERAL SUPPLY SERVICE The GSA Federal Supply Service manages the

largest, most diverse and innovative Federal

marketplace in the world, bringing hundreds of

thousands of Federal customers together with over

9,000 contractors. FSS’ total business volume in FY

2001 was approximately $19 billion (excluding

Utilization and Donation cost avoidance activity

which was included in previous annual report

submissions). FSS programs provide customers with

economical, efficient, and effective service delivery

with significant savings in time and administrative

costs. FSS carefully manages its procurement and

supply, vehicle acquisition and leasing, travel and

transportation, and property management programs,

incorporating new technology and other innovations

to enhance business practices and processes.

Through the organization’s $16.8 billion Multiple

Award Schedules Program, FSS provides customers

with access to more than four million professional

services and commercial products. For example, FSS

offers Management, Organizational and Business

Improvement Services (MOBIS) contracts that

provide process improvement, problem resolution,

planning surveys and project management and

training services. In FY 2001, MOBIS service

purchases totaled more than $1 billion. A few

examples of FSS’ commercial products with related

services include information technology, furniture,

office supplies, scientific equipment, and hardware

and appliances. FSS also offers its customers fullservice catalog ordering for an array of commercial

items. Through FSS’ commercially based, global

delivery network, its supply distribution system

shipped nearly nine million orders worldwide. 

By leveraging more than $1 billion in annual

purchasing power and cost effectively managing a

fleet of more than 180,000 vehicles, FSS is able to

supply economical vehicle acquisition and leasing.

The Fleet maintains an extensive variety of vehicles,

including 24,849 alternative fuel vehicles.

FSS’ travel program offers total travel solutions,

including travel agency services, discount airfares,

and travel charge cards. Transportation programs

include employee relocation, express small package

delivery, and freight and household goods

transportation services. Many transactions are now

FY99 FY00 FY01

$12.7

$16.3

$17.9

FY99 FY00 FY01

$2.85

$2.35 $2.36

Supply and

Procurement

Cost per $100

Sales

Cost per 

$100 Sales

Supply and

Procurement

Business

Volume

Dollars in

Billions

20
being conducted online, resulting in the elimination

of paper processes, while leveraging administrative,

financial, and information technology best practices.

Through the personal property disposal system,

FSS redistributes excess Federal property among

Federal agencies, donates surplus property to local

and state governments and non-profit organizations,

and sells surplus property to

the public.

Internet Based Services

GSA Advantage!TM, an

award-winning online

ordering system with 35,000

transactions daily, offers

online access to over 2.4

million services and

products. In FY 2001, FSS

made important

enhancements to GSA

Advantage!TM that will

simplify procurements and

leverage previous technology

investments.

Key Performance

Measures

FSS works to increase customer

use of its programs to maximize

service to Federal agencies and

enhance taxpayer return on

investment. In FY 2001, the

volume of supply and procurement purchases was

$17.9 billion—a significant increase from $16.3 billion

in FY 2000. FSS also strives to reduce costs while

expanding supply and procurement support to

Federal agencies. In FY 2001, the cost per $100 sales

was $2.36. FSS continues to manage its business

efficiently, minimizing in-house expenses while

increasing outsourced business volume.

FSS also uses its enormous buying power to

achieve significant discounts. In FY 2001, FSS Airline

City-Pairs contracts saved Federal agencies an

average of 70 percent off the commercial value of

each fare. Annual savings totaled approximately $2.8

billion. For vehicle acquisitions, FSS continued to

save customers 20 percent off the invoice prices

listed in the Black Book Lease Guide. The automotive

industry recognizes the Black Book as the

authoritative baseline for invoice and retail prices.

For freight and household goods transportation

services, FSS saved customers 46 percent ($53.1

million) and 54 percent ($92.5 million), respectively.

FSS actively promotes the Government’s

socioeconomic goals and

provides support for natural

disaster relief and national

defense efforts. To this end,

FSS reaches out to the small

business community to

increase its participation in

Government contracting. In

FY 2001, GSA awarded 78

percent (7,387) of the

contracts in the Multiple

Award Schedules Program

to small businesses. FSS

also provided over $49 million

in fire suppression

equipment and supplies to

support the U.S. Forest

Service’s wild land firefighting efforts.

Major Management

Challenges

FSS initiatives have been

designed to take advantage of

private sector practices, improve

performance, and create a culture that encourages

excellence and teamwork. In FY 2002, FSS will

enhance its performance management system and

cascade corporate measures down to work units.

Data verification and validation issues for calculating

established measurement targets are the greatest

FSS management challenges.

The constant churn and turbulence within the

travel and transportation sector is a continuing area

of focus for FSS. Commercial transportation and

shipping offerings change frequently due to

emerging technologies, as well as security concerns,

especially in the wake of terrorist activity within the

United States. Balancing the management of these

concerns with increasing customer demands for

21

FSS uses its enormous buying power to achieve

significant discounts. In FY 2001, FSS Airline

City-Pairs contracts saved Federal agencies an average

of 70 percent off the commercial value of each fare.

Annual savings totaled approximately $2.8 billion.
convenience and speed is a major challenge. FSS

will meet this challenge with online tools and

integrated solutions. End-to-end travel solutions will

include online authorization and approval, electronic

booking, travel agent services, and travel vouchering

and payment services. Web-enabled transportation

solutions will allow agencies to seamlessly integrate

all transportation procurement, payment, and audit

functions. 

Federal agencies want customized “virtual stores”

designed to reflect their preferences. The challenge

is for FSS to offer this customization while satisfying

acquisition regulations. In FY 2002, FSS will make

this possible by linking the vast array of Multiple

Award Schedule contracts through new capabilities

in the upgraded GSA Advantage!TM.

Federal agencies want customized “virtual stores” designed to

reflect their preferences. The challenge is for FSS to offer this

customization while satisfying acquisition regulations. 

22
GSA FEDERAL TECHNOLOGY SERVICE The GSA Federal Technology Service provides costefficient tailored solutions and world-class services to

support its customers’ missions worldwide. FTS

provides local and long-distance telecommunications

services, IT solutions, and information security services

to Federal agencies and other authorized entities, such

as the Native American Tribal Nations, on a fee-forservice basis.

As a customer-centric organization, FTS delivers

superior customer service by fully understanding

customers’ requirements and delivering industry

solutions. Customer Action Teams focus on supporting

customers’ constantly evolving missions. Using

customer relationship management tools, FTS

associates share customer information resulting in

better customer service. At the same time, FTS provides

advanced training for associates, challenging work

environment, and other associate-centric initiatives.

Key Performance Measures

FTS operations are financed on a reimbursable basis

through the Information Technology Fund. Less than one

percent of FTS activities—only $8 million in FY 2001—

are funded by congressional appropriations directly to

the Policy and Operations Account of GSA. FY 2001

revenue was $6.2 billion, an increase of more than 21

percent over FY 2000.

FTS met or exceeded its FY 2001 targets for the

following performance goals:

• Small business volume equaled 29 percent of prime

contracts, over the 26 percent goal

• The FTS business volume as a percent of the Federal

IT market was 15 percent, which meets the target of

15 percent

• The average number of days to award task and delivery

orders over $2,500 from request for quotation to award

was 7 days, which is faster than the goal of 10 days

• Number of industry partnerships using FTS contracts

of 296, which is higher than the goal of 186

• Number of industry partnerships using other GWACs

of 44, which is higher than the goal of 33

• Outbound switched voice rates of 3 cents per minute,

which is lower than the goal of 3.51 cents.

23

FY99 FY00 FY01

$3.1

$4.0

$5.1

FY99 FY00 FY01

$1.1

$1.0

$1.1

$0.29

$0.34

$0.36

$0.82

$0.66

$0.70

Local

Long

Distance

Network

Services

Business Volume

Dollars in

Billions

IT

Solutions

Revenue

Dollars in

Billions
FTS Business Lines

GSA’s two technology business lines are Network

Services and IT Solutions. There is substantial

coordination and interaction between the two

business lines because of the growing relationship

between telecommunications and integrated IT

solutions. 

Network Services Business Line

GSA provides end-to-end telecommunications

services, supporting local and long-distance Federal

users. Network Services revenues for FY 2001

totaled $1.1 billion, slightly higher than the FY 2000

total of $1 billion. This is a significant

accomplishment considering the price reductions

being achieved through aggressive pricing

competition by local and long

distance carriers. 

FTS also provides local voice

and data telecommunications

services to Federal agencies

nationwide. FTS provides

switched services through more

than 400 local

telecommunications

systems that offer

customers state-of-the-art

products and services.

GSA achieved significant

cost savings in FY 2001

through its local

telecommunications

program, which primarily

includes the MAA and the

Washington Interagency

Telecommunications

System (WITS). MAA

contracts deliver

immediate and substantial

price reductions in local

telephone markets by

taking advantage of

increased competition as

permitted by the Telecommunications Act of 1996.

With MAA contracts awarded in 21 cities nationwide

thus far, FTS offers customers the potential to

significantly reduce costs. WITS provides up-to-date

and cost-effective communications services to all

Federal agencies and other authorized users in the

Washington, DC, metropolitan area. WITS2001 serves

70 percent of the Federal agencies in the area. In FY

2001, WITS provided switched voice and data services

to more than 349,794 Federal users. 

Within the long distance arena, FTS completed the

transition to FTS2001 this past fiscal year.

Transitioning 138 customer agencies required the

execution of a complex logistics plan that included

emergency procedures, planning, testing, and project

management support. The FTS2001 program provides

Federal agencies integrated voice, data, video, and

wireless telecommunications, as well as flexible

billing options and direct access to industry partners.

The cost of Federal long-distance services declined

from an average 27 cents per minute in FY 1988 to 3

cents per minute in FY 2001 under FTS contracts. 

IT Solutions Business Line

GSA’s IT Solutions (ITS) business

line is a fully cost-reimbursable

information technology solutions

provider to Federal agencies. ITS

offers virtually all types of IT

products and services,

primarily through

contracts with private

sector firms that include

FTS contracts, FSS

contracts, and contracts

negotiated by other

agencies.

The IT Solutions

business line earned $5.1

billion in FY 2001 revenues,

an increase of $1.1 billion

over the FY 2000 level. In

technology as well as in

other areas, ITS is

employing the

effectiveness of online

commerce. The IT

Solutions Shop (ITSS) was

established in FY 1999.

This Web-based electronic purchase and ordertracking system supports approximately 1,800

customers, vendors, and FTS staff. ITSS fully

automates the procurement process, allowing users

to place, award, and track orders for any IT product or

service over the Internet—from any place, at any time.

24

FTS provides local voice and data

telecommunications services to Federal agencies

nationwide. FTS provides switched services 

through more than 400 local telecommunications

systems that offer customers state-of-the-art 

products and services. 
Office of Information Assurance and Critical

Infrastructure Protection

The Office of Information Assurance and Critical

Infrastructure Protection (OIACIP) is the only

operational unit within FTS that is fully funded

through a direct appropriation through the Policy

and Operations Account of GSA, which totaled 

$8 million for FY 2001. This program assists the

Federal community in meeting the challenges of

securing operations in the open systems

environment of the Internet. OIACIP programs

include the Federal Computer Incident Response

Center, the Federal Public Key Infrastructure

Steering Committee, and Federal PKI Policy

Authority/Federal Bridge Certification Authority.

Major Management Challenges

The perception that MAA Program fees are too high

constitutes a major management challenge for FTS.

As the cost of local service dramatically decreases,

FTS overhead appears disproportionate to service

cost. To attack this problem, FTS plans an

independent study to evaluate costs of performing

FTS-like activities and plans to initiate a campaign to

raise awareness of FTS value. Improving the MAA

implementation progress is also a significant

challenge for FTS. FTS will continue to emphasize

its cradle-to-grave support that allows agencies to

concentrate on core missions. FTS will also increase

its dialogue with industry, the Federal

Communications Commission and State Public

Utilities Commissions.

25
GSA OFFICE OF

GOVERNMENTWIDE POLICY

In FY 2001, the GSA Office of Governmentwide

Policy’s performance goals continued to center on

GSA’s roles in building and maintaining a policy

framework, identifying best practices and providing

education and training.

Federal and GSA Acquisition Policy

OGP conducted the first Federal Acquisition

Conference, co-sponsored by the Procurement

Executives Council in April 2001. New Governmentwide acquisition performance measures resulted

from this initiative. OGP completed phase one of a

Government-wide acquisition knowledge

management portal. The portal will enable

acquisition professionals from both the public and

private sectors to access and share various kinds of

acquisition information, and promote the use of

innovative acquisition processes. 

OGP established the Federal Procurement Data

System Reengineering Program Office to provide

Federal managers with a cost-effective and reliable

acquisition management information system.

Performance indicators included schedule and

quality of acquisition tools and timeliness and

usefulness of acquisition regulations. 

Electronic Government

GSA continued to promote citizen-centered

electronic services by designing, prototyping and

evaluating technologies to protect citizen

information, as well as expanding the use of

Government smart card services. OGP coordinated

E-commerce initiatives across Government

including authentication for online transactions

using public key infrastructure interoperability

between agencies; developing new technical

standards; and sponsorships of electronic grants

initiatives. 

GSA developed FedBizOpps.gov to be the single

source for Federal Government procurement

opportunities above $25,000. Businesses now have

universal Internet access to Federal business

opportunities, including solicitations and other

solicitation attachments. Through one portal,

companies wanting to do business will be able to

26
search for opportunities throughout the entire

Federal Government. Government buyers can

publicize business opportunities by posting

information directly to the system. Industry can

register to receive automatic notices for specific

types of items or services or changes to specific

notices. The site lists over 95 percent of all Federal

opportunities. It received

well over 5 million hits a

month in FY 2001, and

had over 120,000

individuals registered to

receive notices. Some 40

agencies now participate

in posting opportunities

to FedBizOpps.

Transportation and

Personal Property

The Office of Transportation and

Personal Property (OTTP) has

had numerous accomplishments.

OTPP’s Computers for Learning

Web site facilitated transfer of

more than 100,000 pieces of excess computer

equipment from Federal agencies to schools across

the nation. 

Under the guidance of OTPP, GSA joined with

most of the Federal agencies that operate

nonmilitary aircraft in signing an unprecedented

Federal Safety Standards Agreement that promotes

a comprehensive aviation safety program. 

During FY 2001, OTPP rewrote a number of travel,

personal property and transportation regulations.

The new transportation regulations move the

Government toward auditing transportation invoices

before they are paid; they also move the

Government toward retiring the 94 year-old

Government Bill of Lading in favor of standard

commercial practice, with potential annual savings

of $60 million in administrative costs.

Regulatory Information Service Center (RISC)

During FY 2001, RISC continued to maintain a

comprehensive Internet site on regulatory

information, Reginfo.gov, that provides links to

sources of information on Federal, state, and local

regulations. These include databases and search

tools for legislation and regulations, Federal agency

home pages, and

information about

pending and recently

completed Office of

Management and Budget

(OMB) regulations. RISC

is upgrading the

computer systems OMB

uses to review agency

regulations under

Executive Order 12866,

and information collection

submissions under the Paperwork

Reduction Act. 

Management Challenges

OGP faces significant challenges

in the future. The organization must clear the

backlog of current acquisition regulations; gain

funding for completion of acquisition tools; and

effectively deal with acquisition workforce issues,

including succession planning, training and

education, and provision of tools. In conjunction with

DoD and NASA, OGP plans to reengineer the

process by which acquisition regulations are

developed. OGP will establish a succession plan for

GSA acquisition workforce, identify needed

competencies and skills in that workforce, develop

training and education to acquire those skills, and

measure to determine whether the skills have been

acquired and performance has been improved. OGP

must also make significant strides to guide agencies

toward accepting and using technology to deliver

citizen services.

27

Through its Computers for Learning Web site, the

Office of Transportation and Personal Property has

facilitated transfer of more than 100,000 pieces of

excess computer equipment from Federal agencies to

schools across the nation.
GSA

Financial

Statements

GSA

Financial

Statements

GSA’s audited financial statements, incorporated in this Annual Report, report GSA’s financial position and results of operations pursuant to the requirements of 31 U.S.C. 3515(b) and

in accordance with prescribed formats. They are in addition to the financial reports used to

monitor and control budgetary resources, which are prepared from the same books and

record. The statements should be read with the understanding that, as GSA is a component

of the U.S. Government, its liabilities cannot be liquidated without legislation that provides

resources to do so.
January 23, 2002

MEMORANDUM FOR STEPHEN A. PERRY

ADMINISTRATOR (A)

WILLIAM B. EARLY, JR.

CHIEF FINANCIAL OFFICER (B)

FROM: DANIEL R. LEVINSON

INSPECTOR GENERAL (J)

SUBJECT: Audit of the General Services Administration’s 

FiscalYears 2001 and 2000 Financial Statements

This memorandum transmits PricewaterhouseCoopers LLP’s (PwC) report on its Fiscal Years 2001 and

2000 financial statement audit of the General Services Administration (GSA), and the Office of Inspector

General’s (OIG) report on internal controls over performance measures.

Results of Independent Audit

The Chief Financial Officers (CFO) Act of 1990 (P.L. 101-576) requires GSA’s Inspector General or an independent external auditor, as determined by the Inspector General, to audit the Agency’s financial statements. Under a contract monitored by the OIG, PwC, an independent public accounting firm, performed

the audit of GSA’s Fiscal Years 2001 and 2000 financial statements. The contract required that the audit

be performed in accordance with Government Auditing Standards issued by the Comptroller General of

the United States, and the Office of Management and Budget’s Bulletin No. 01-02, “Audit Requirements

for Federal Financial Statements.”

PwC issued unqualified opinions on GSA’s Fiscal Years 2001 and 2000 consolidated and combined financial statements and individual funds’ (Federal Buildings Fund, General Supply Fund, and Information

Technology Fund) financial statements. However, PwC did identify four reportable conditions concerning GSA’s need to (1) improve GSA entity-wide system security management and oversight, (2) improve

GSA system development, implementation, and change control efforts, (3) improve the controls over the

integrity of rent data, and (4) improve the controls over the transfer of substantially complete construction in process projects. 

OIG Evaluation of PwC’s Audit Performance

To ensure the quality of the audit work performed, we conducted a review of PwC’s audit of GSA’s Fiscal

Years 2001 and 2000 financial statements. Specifically, we:

• Reviewed PwC’s approach and planning of the audit;

• Evaluated the qualifications and independence of the auditors;

U.S. GENERAL SERVICES ADMINISTRATION

Office of the Inspector General

29
• Monitored the progress of the audit at key points;

• Examined working papers related to assessing internal controls over GSA’s financial reporting

process and GSA’s EDP systems;

• Reviewed PwC’s audit report;

• Performed other procedures we deemed necessary.

However, due to the timing for completing the GSA Fiscal Year 2001 Annual Report, we have not completed our review of the working papers prepared by PwC.

PwC is responsible for the attached auditor’s report dated December 20, 2001, and the conclusions

expressed therein. Our review, as differentiated from an audit in accordance with generally accepted

Government auditing standards, was not intended to enable us to express, and accordingly we do not

express, an opinion on GSA’s financial statements, management’s assertions about the effectiveness of

its internal controls over financial reporting or GSA’s compliance with certain laws and regulations.

However, our review, as qualified above, disclosed no instances where PwC did not comply with generally accepted Government auditing standards.

Report on Internal Controls over Performance Measures

In accordance with Office of Management and Budget Bulletin No. 01-02, the OIG performed the necessary audit procedures to obtain an understanding of the design and operation of internal controls over

the reliability of data supporting the performance measures reported in the Management Discussion

and Analysis section of GSA’s Fiscal Year 2001 Annual Report. The results of this audit identified a

reportable condition regarding the need to clearly assign responsibility and accountability within GSA

for verifying and ensuring the reliability of the data supporting the reported performance measures.

The OIG recognizes that progress has been made towards implementing a process to ensure GSA managers have sufficient controls over performance measure data and we have accepted the CFO’s action

plan describing the methodology that will be used for the Public Buildings Service. However, we believe

the CFO needs to establish a plan for implementing the review process in the other Services and Staff

Offices before the reportable condition can be considered resolved.

The Office of Inspector General appreciates the courtesies and cooperation extended to PwC and to our

audit staff during the audit and review. If you or your staff have any questions, please contact me or

Eugene L. Waszily, Assistant Inspector General for Auditing.

Attachments

30
To Mr. Daniel R. Levinson

Inspector General of the United States

General Services Administration

In our audit of the United States General Services

Administration (GSA) and its three primary

revolving funds, the Federal Buildings Fund (FBF),

the General Supply Fund (GSF), and the

Information Technology Fund (ITF), we found:

• The consolidated balance sheets of the GSA

and individual balance sheets of the FBF, the

GSF, and the ITF as of September 30, 2001 and

2000 and the related consolidated and

individual statements of net cost, consolidated

and individual statements of changes in net

position, combined and individual statements

of budgetary resources, and consolidated and

individual statements of financing, for the fiscal

years then ended are presented fairly, in all

material respects, in conformity with

accounting principles generally accepted in the

United States of America;

• Management fairly stated that as of September

30, 2001, GSA maintained in all material

respects effective internal control over

financial reporting for the GSA, the FBF, the

GSF, and the ITF; and

• No reportable instances of noncompliance with

the laws and regulations we tested.

The following sections outline each of these

conclusions in more detail.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of the GSA and individual balance

sheets of the FBF, the GSF, and the ITF as of

September 30, 2001 and 2000, and the related

consolidated and individual statements of net

cost, consolidated and individual statements of

changes in net position, combined and individual

statements of budgetary resources, and

consolidated and individual statements of

financing, for the fiscal years then ended. These

financial statements are the responsibility of

GSA’s management. Our responsibility is to

express an opinion on these financial statements

based on our audits.

We conducted our audits in accordance with

auditing standards generally accepted in the

United States of America and the standards

applicable to financial audits contained in

Government Auditing Standards, issued by the

Comptroller General of the United States. Also,

except for the provisions of paragraph 6.f. relating

to internal control over performance measures,

we conducted our audits in accordance with

Office of Management and Budget (OMB)

Bulletin No. 01-02, Audit Requirements for Federal

Financial Statements. The work required by

paragraph 6.f. was performed by the GSA Office

of Inspector General, and the objective of that

work was to gain an understanding of and report

deficiencies in the design of internal control over

performance measures, rather than to plan the

financial statement audit. Auditing standards

generally accepted in the United States of

America and the standards applicable to financial

audits contained in Government Auditing

Standards require that we plan and perform the

audit to obtain reasonable assurance about

whether the financial statements are free of

material misstatement. An audit includes

examining, on a test basis, evidence supporting

the amounts and disclosures in the financial

statements. An audit also includes assessing the

accounting principles used and significant

estimates made by management, as well as

evaluating the overall financial statement

REPORT OF INDEPENDENT ACCOUNTANTS

31
presentation. We believe that our audits provide a

reasonable basis for our opinions.

In our opinion, the consolidated, combined, and

individual financial statements referred to above,

present fairly, in all material respects, the

financial position of the GSA, the FBF, the GSF,

and the ITF at September 30, 2001 and 2000, and

their net cost, changes in net position, budgetary

resources, and reconciliation of net cost to

budgetary resources for the fiscal years then

ended in conformity with accounting principles

generally accepted in the United States of

America.

As discussed in note 1.F to the financial

statements, the GSA, the FBF, the GSF, and the

ITF implemented Federal Accounting Standards

Advisory Board (FASAB) Statement of Federal

Financial Accounting Standard No. 10, Accounting

for Internal Use Software, as of October 1, 2000.

Opinion on Management’s Assertion

Regarding the Effectiveness of Internal

Control over Financial Reporting

We have examined management’s assertion that

the GSA, the FBF, the GSF, and the ITF systems of

accounting and internal control are in compliance

with the internal control objectives in OMB

Bulletin No. 01-02, requiring management to

establish internal accounting and administrative

controls to provide reasonable assurance that

transactions are properly recorded, processed,

executed in accordance with (i) laws governing

the use of budget authority and other laws and

regulations that could have a direct and material

effect on the financial statements, and (ii) general

laws identified in OMB Bulletin No. 01-02, and

summarized to permit the preparation of the

consolidating and combining financial statements

in accordance with accounting principles

generally accepted in the United States of

America and that assets be safeguarded against

loss from unauthorized acquisition, use or

disposal. GSA’s management is responsible for

maintaining effective internal control over

financial reporting. Our responsibility is to

express an opinion on management’s assertion

based on our examination.

Our examination was conducted in accordance

with attestation standards established by the

American Institute of Certified Public

Accountants (AICPA), the standards applicable to

financial audits contained in Government Auditing

Standards, issued by the Comptroller General of

the United States, and OMB Bulletin No. 01-02

and, accordingly, included obtaining an

understanding of the internal control over

financial reporting, testing and evaluating the

design and operating effectiveness of internal

control, and performing such other procedures as

we considered necessary in the circumstances.

We believe that our examination provides a

reasonable basis for our opinion. Our examination

was of the internal control in place as of

September 30, 2001.

Because of inherent limitations in any internal

control, misstatements due to error or fraud may

occur and not be detected. Also, projections of

any evaluation of the internal control over

financial reporting to future periods are subject to

the risk that the internal control may become

inadequate because of changes in conditions, or

that the degree of compliance with the policies or

procedures may deteriorate.

In our opinion, management’s assertion that the

GSA, the FBF, the GSF, and the ITF systems of

accounting and internal control are in compliance

with the internal control objectives in OMB

Bulletin No. 01-02, requiring that transactions be

properly recorded, processed, executed in

accordance with: (i) laws governing the use of

budget authority and other laws and regulations

that could have a direct and material effect on the

financial statements, and (ii) general laws

identified in OMB Bulletin No. 01-02, and

summarized to permit the preparation of the

consolidating and combining financial statements

in accordance with accounting principles

generally accepted in the United States of

32
America and that assets be safeguarded against

loss from unauthorized acquisition, use or

disposal, is fairly stated, in all material respects,

as of September 30, 2001.

However, we noted certain matters involving the

internal control and its operation that we consider

to be reportable conditions under standards

established by the AICPA and OMB Bulletin No.

01-02. A reportable condition is a matter coming

to our attention relating to significant deficiencies

in the design or operation of internal control that,

in our judgment, could adversely affect the

agency’s ability to meet the internal control

objectives described above. The reportable

conditions we noted are that (1) GSA entity-wide

system security management and oversight

continue to need improvement; (2) development,

implementation, and change controls over GSA’s

system environment continue to need

improvement; (3) the controls over the integrity of

rent data continue to need improvement; and (4)

controls over transferring substantially complete

construction in process projects need

improvement.

A material weakness as defined by the AICPA

and OMB Bulletin No. 01-02, is a reportable

condition in which the design or operation of one

or more of the internal control components does

not reduce to a relatively low level the risk that

misstatements in amounts that would be material

in relation to the financial statements being

audited or to a performance measure or

aggregation of related performance measures

may occur and not be detected within a timely

period by employees in the normal course of

performing their assigned functions. We believe

that none of the four reportable conditions that

follow is a material weakness as defined by the

AICPA and OMB Bulletin No. 01-02. 

1. GSA entity-wide system security

management and oversight continue to 

need improvement.

GSA entity-wide system security management

and oversight continue to need improvement.

Weak access controls and inadequate security

procedures were reportable conditions identified

during the last three fiscal year financial

statement audits (1998, 1999, and 2000).

During the 2001 fiscal year, GSA made progress

in addressing the information protection issues

raised in prior years. Specifically, the agency:

• Issued the GSA Information Technology (IT)

Security Policy (CIO 2100.1) on October 20,

2000. This upgraded the policies and

procedures of the Instructional Letter CIO IL99-1 (February 1999).

• Issued the IT Security Procedural Guide –

Password Generation and Protection, CIO-IT

Security 01-01 on January 26, 2001.

• Issued the IT Security Procedural Guide –

Security Test & Evaluation (ST&E), CIO-IT

Security 01-04 on March 13, 2001.

• Issued the IT Security Procedural Guide –

Developing a Configuration Management Plan,

CIO-IT Security 01-05 on March 21, 2001.

• Issued the IT Security Procedural Guide –

Access Controls, CIO-IT Security 01-07 on April

27, 2001.

• Issued the IT Security Procedural Guide – Audit

and Monitoring, CIO-IT Security 01-08 on April

27, 2001.

Despite these accomplishments, GSA’s system

environment remains threatened by security and

integrity exposures affecting essential elements

of its distributed systems and networks. This year

we identified security weaknesses similar to

those we found in previous years. The detailed

findings were provided to GSA management in a

separate management letter. The general areas

where exposures occurred include:

• Application-specific security policies and

procedures

• Security administration

• Security monitoring

• Password configuration and controls

• Network and server security

• Segregation of duties

33
In our view, these exposures occurred primarily

because of continuing weaknesses in the

implementation and enforcement of several

components of GSA’s overall information security

program. 

The following examples provide insight into the

types of weaknesses that we identified in the

implementation and enforcement of GSA’s

information security program:

• Information Security Management Structure –

The information security management

structure does not appear to be effective in

implementing and enforcing security policy,

including detailed security architecture and

technical standards and associated

administrative and end-user guidelines and

procedures.

• Security Architecture and Technical Standards –

Network, server, and application security is

inconsistently implemented throughout the

services, staff offices, and regions of GSA.

Minimum configuration settings have not been

implemented and enforced for various

platforms.

• Administrative and End-user Guidelines and

Procedures – Security administration is

inconsistently performed throughout the

services, staff offices, and regions of GSA, and

user guidance and procedures are not fully

developed and communicated.

• Monitoring Processes – Security monitoring is

not being performed on a consistent and

effective basis throughout GSA. While access

attempts, violations, and actions of powerful

IDs are being monitored on select systems and

from the Internet, the majority of environments

we reviewed have not implemented such

controls. Lack of monitoring controls allowed

us to compromise several systems during our

network penetration testing without being

detected.

• Enforcement Processes – Baseline security

policies and procedures set forth by the Office

of the Chief Information Officer (CIO) are not

enforced. Firm reporting relationships have not

been established so that the CIO can

accurately determine whether security policies

and procedures are being followed by the

services, staff offices, and regions.

These weaknesses expose GSA’s resources to

significant risk of unauthorized access to system

resources such as data, programs, and

equipment, which could lead to intentional or

unintentional modification or destruction of these

resources.

Recommendation

We recommend that GSA strengthen the

implementation and enforcement of its

information security program by performing the

following actions:

• The GSA CIO needs to work with the service

line CIOs, staff offices and regions, to ensure

the effective implementation and enforcement

of the security program.This should include,

but not be limited to, the following:

• Implementation and enforcement of

technical standards for specific platforms

• Monitoring of access attempts and security

violations

• Enforcement and reporting guidelines to

ensure policies are followed by the services,

staff offices, and regions

• Guidelines for periodically reviewing and

updating security policies and procedures

with regard to the enforcement of those

policies and procedures

Implementing and enforcing consistent security

standards across the agency will help to ensure

that the current and future systems environment

will meet a minimum level of security. This

environment includes the GSA wide-area

(network) backbone maintained by the Office of

the CIO, the application systems maintained by

the services and staff offices, and the local area

networks and smaller data centers in the regions. 

34
2. Development, implementation, and

change controls over GSA’s system

environment continue to need

improvement.

System development and implementation efforts

at GSA need improvement. Development,

implementation, and change controls were

reportable conditions identified during the last

two fiscal year financial statement audits (1999

and 2000).

During the 2001 fiscal year, GSA made some

progress in addressing the development,

implementation, and change control issues raised

in prior years. Specifically, the agency:

• Issued the GSA Information Technology (IT)

Security Policy (CIO 2100.1) on October 20, 2000.

This security policy includes a section on

configuration management and addresses some

security concerns inherent in development,

implementation, and change control.

• Issued the IT Security Procedural Guide –

Security Test & Evaluation (ST&E), CIO-IT

Security 01-04 on March 13, 2001, which

addresses the consideration of security during

development and implementation projects.

In addition, GSA’s Capital Planning Guide (CPG),

which was last updated in early 2000, contains

expanded documentation requirements for

systems planning and management and was used

during the most recent budget cycle.

Despite these accomplishments, GSA’s system

environment remains threatened by a lack of

consistently implemented development,

implementation, and change controls. GSA’s

agency-wide systems development life cycle

(SDLC) methodology has not been updated in

over 10 years.

Inadequate or inconsistent systems development

and implementation controls can lead to wasted

resources (time, money, staffing), unauthorized

changes to applications, projects that fail to meet

business needs, and also contribute to system

security weaknesses.

Recommendation

The GSA CIO should:

• Continue updating the detailed agency-wide

application development, implementation, and

change control policies and procedures and

ensure implementation and enforcement on all

systems planned, in development, and in

production.

• Assess and report on how well services, staff

offices, regions, and their related contractors

are following GSA application development and

change control policies and procedures for all

systems.

• Ensure that a mechanism to enforce the

established procedures across the entire

agency exists.

3. Controls over the integrity of rent data

continue to need improvement. 

In fiscal years 1998, 1999 and 2000, we found

reportable conditions related to the rent data

used to support the management of the FBF. We

continued to find some of the same issues during

fiscal year 2001. The Public Buildings Service

(PBS) has begun to move forward in addressing

these issues with internal teams, system

enhancements for the System for Tracking and

Administering Real Property (STAR), and efforts

to verify STAR data.

In fiscal year 2001, PBS fully implemented its new

pricing policy in all regional field offices. The new

pricing policy changes the rent pricing structure

for GSA customers as well as requires the passthrough of lease costs and the use of signed

occupancy agreements. We tested controls over

new pricing at GSA's regional offices and

identified instances where controls need

improvement, or where PBS needs to complete

action plans it has already initiated to address

internal control weaknesses. In addition to testing

various aspects of new pricing policy, we also

evaluated the accuracy of data in STAR. We did

note improvements from the prior years; however,

we found the following:

35
• Rent billing terms were not always supported

by occupancy agreements across regional

offices. 

• Instances where occupancy agreements were

either not available or were not signed.

• One instance where GSA was billing a

customer that did not occupy the space. 

Recommendation

PBS needs to complete the following steps

included in the corrective action plan currently

under way for improving the integrity of its rent

data: 

• Use the occupancy agreements as the basis for

supporting space assignments in Federally

owned and leased buildings as discussed in the

pricing desk guide. 

• Move forward with plans to validate space in

Federally owned and leased buildings, if

funding from prior year carryovers becomes

available. 

4. Controls over transferring substantially

complete construction in process projects

need improvement.

In fiscal year 2001, we identified a reportable

condition related to substantially complete

construction in process (CIP) projects. During our

testing, we noted that a number of the basic

repair and alteration projects had not been

transferred from construction in process to the

building account at the time of substantial

completion. This resulted in an understatement of

depreciation expense and a misclassification

between the construction in process and building

line items on the balance sheet, which required

adjustments to the fiscal year 2001 financial

statements. The causes underlying these

misstatements included regional personnel not

entering completion dates in the Inventory

Reporting Information System (IRIS), systems

problems for archived projects, and the lack of a

control procedure to identify basic repair and

alteration projects substantially completed in the

current fiscal year. 

When a new CIP project is established, regional

personnel are expected to enter all necessary

information, including the expected date of

completion, into IRIS. This information allows GSA

central office personnel to monitor the status of

construction projects. Once the project is

substantially complete, the project managers need

to enter the date of substantial completion in IRIS so

that the project will be transferred into the building

accounts in RPADS, GSA’s property sub-ledger of

the NEAR general ledger, to begin depreciation.

However, it is common for regional personnel not to

enter the expected date of completion, limiting the

central office’s ability to monitor project status.

During our testing, we identified substantially

complete projects for which the regional personnel

had not entered a substantial completion date in

IRIS. We also noted projects that had completion

dates in IRIS but were still classified as CIP in

RPADS. This can occur if the record of project

completion in IRIS is archived before the weekly

transfer of data from IRIS to RPADS. 

GSA is aware that weaknesses in its accounting

processes can lead to the failure to recognize the

completion of construction projects on a timely

basis.Therefore, PBS performs procedures to

identify and manually adjust substantially complete

projects that were not systematically moved into

RPADS. For basic repair and alteration projects,

PBS inquires of the regions about the status of all

projects over $10,000 with no current year activity

and without a completion date in RPADS. Because

this inquiry is limited to those projects with no

activity in the fiscal year, it will not identify many

required adjustments, since projects with current

year activity may be substantially complete at yearend. Thus, we noted that this process did not identify

many of our sample basic repair and alteration items

that were substantially completed in fiscal year 2001

and did have activity in the current year. 

36
Recommendation

PBS should complete the following steps to

improve the control procedures to reasonably

assure that substantially complete CIP projects

are transferred to the building account in a timely

manner:

• PBS needs to review the definition of

substantial completion with the regions and

ensure that project managers are entering into

IRIS the expected completion date at the

beginning of the project and the date of

substantial completion. Furthermore, PBS

should communicate to regional employees the

risks and ramifications of not entering

completion dates in IRIS.

• To resolve the systems problem that allows

projects to be completed and archived in IRIS

before being transferred to RPADS, GSA

should investigate the feasibility of modifying

its procedures or its systems to prevent

projects from being archived before the

information is transferred to RPADS. 

• PBS should develop a periodic control

procedure for basic repair and alteration

projects to identify if completion dates are not

being entered on a timely basis and determine

if any balances are incorrectly classified in

RPADS. 

REPORT ON COMPLIANCE WITH LAWS

AND REGULATIONS

We conducted our audit in accordance with

auditing standards generally accepted in the

United States of America, the standards

applicable to financial audits contained in

Government Auditing Standards, issued by the

Comptroller General of the United States, and

OMB Bulletin No. 01-02.

The managements of the GSA, the FBF, the GSF,

and the ITF, are responsible for complying with

laws and regulations applicable to the agency. As

part of obtaining reasonable assurance about

whether the agency’s financial statements are

free of material misstatement, we performed

tests of GSA’s, the FBF’s, the GSF’s, and the ITF’s

compliance with certain provisions of applicable

laws and regulations, noncompliance with which

could have a direct and material effect on the

determination of financial statement amounts and

certain other laws and regulations specified in

OMB Bulletin No. 01-02, including the

requirements referred to in the Federal Financial

Management Improvement Act (FFMIA) of 1996.

We limited our tests of compliance to these

provisions, and we did not test compliance with

all laws and regulations applicable to GSA.

The results of our tests of compliance disclosed

no reportable instances of noncompliance with

laws and regulations that are required to be

reported under Government Auditing Standards or

OMB Bulletin No. 01-02.

The objective of our audit of the financial

statements was not to provide an opinion on

overall compliance with such provisions of laws

and regulations and, accordingly, we do not

express such an opinion.

CONSISTENCY OF OTHER

INFORMATION

Our audits were performed for the purpose of

expressing opinions on the GSA consolidated and

combined financial statements and the individual

financial statements of the FBF, the GSF, and the

ITF as of and for the fiscal years ended

September 30, 2001 and 2000. The supplemental

consolidating statements of operations and cash

37
flows for the years ended September 30, 2001 and

2000, are presented for purposes of additional

analysis and are not required parts of the basic

financial statements. Such supplemental

statements have been subjected to the auditing

procedures applied in our audits of the financial

statements referred to above and, in our opinion,

are fairly stated, in all material respects, in

relation to the consolidated and combined

financial statements of the GSA and the

individual financial statements of the FBF, the

GSF, and the ITF as of and for the fiscal years

ended September 30, 2001 and 2000.

The Management’s Discussion and Analysis and

the disclosures on deferred maintenance and

intra-governmental balances are not required

parts of the financial statements but are

supplementary information required by the

FASAB and OMB Bulletin No. 01-09, Form and

Content of Agency Financial Statements.

According to OMB Bulletin No. 01-09, reporting

entities shall reconcile intra-governmental asset,

liability, and revenue amounts reported in the

required supplementary information with their

trading partners at least annually as of the fiscal

year end. GSA has not performed these

reconciliations and has disclosed this in note 1.B

in the financial statements. We have applied

certain limited procedures, which consisted

principally of inquiries of management regarding

the methods of measurement and presentation of

the supplementary information. However, we did

not audit the information and express no opinion

on it.

Our audit was conducted for the purpose of

forming an opinion on the consolidated and

combined financial statements of the GSA, and

the individual financial statements of the FBF, the

GSF, and the ITF taken as a whole. The other

accompanying information included in this

accountability report, is presented for purposes of

additional analysis and is not a required part of

the consolidated, combined, and individual

financial statements. Such information has not

been subjected to the auditing procedures

applied in the audit of the consolidated,

combined, and individual financial statements

and, accordingly, we express no opinion on it. 

* * * * *

We noted other matters involving the internal

control and its operation that we will

communicate in a separate letter.

This report is intended solely for the information

and use of the management and Inspector

General of GSA, OMB, and Congress and is not

intended to be and should not be used by anyone

other than these specified parties.

Arlington, Virginia

December 20, 2001

38
39

January 14, 2002

MEMORANDUM FOR STEPHEN A. PERRY

ADMINISTRATOR (A)

WILLIAM B. EARLY, JR.

CHIEF FINANCIAL OFFICER (B)

FROM: DANIEL R. LEVINSON

INSPECTOR GENERAL (J)

SUBJECT: Report on Internal Controls Over Performance Measures

This report presents the results of our review regarding the design and operation of the system of internal controls over performance measures reported in the Management Discussion and Analysis section

of the General Services Administration’s (GSA’s) Fiscal Year 2001 Annual Report. This report also

describes our audit responsibilities for conducting the performance measure review. 

Scope and Methodology

The Office of Management and Budget (OMB) Bulletin No. 01-02, establishes the requirements for the

auditing of Federal financial statements. This bulletin requires that agency financial statements be

audited annually, by the agency Office of the Inspector General (OIG) or by an independent auditor

determined by the OIG. Under a contract monitored by the OIG, PricewaterhouseCoopers LLP (PwC)

performed the audit of GSA’s Fiscal Year 2001 Financial Statements. However, the OIG conducted the

portion of the audit related to internal controls over performance measures. During our review, we

assessed the reasonableness of GSA controls concerning the existence and completeness of data supporting individual performance measures. To obtain an understanding of the controls in place, we examined current GSA Government Performance and Results Act (GPRA) reporting policy and interviewed

Chief Financial Officer (CFO) officials regarding compliance with the GSA GPRA policy. We also

reviewed resources produced by CFO officials that showed internal controls were in place and in operation. Our procedures were not designed to provide assurance on internal controls over individual performance measures. Therefore, we do not provide an opinion on such controls. 

This audit was also conducted in accordance with Generally Accepted Government Auditing Standards.

Results of Audit

In response to last year’s reportable condition, the CFO has begun implementing a process to ensure the

adequacy of internal controls over performance data. The process was successfully tested in one

Service with a grouping of relatively stable performance measures. However, because the remaining

Services and Staff Offices are currently re-defining and supplementing their performance measures, we

believe a plan needs to be established to ensure the process will be implemented in the remaining

Services and Staff Offices before the Agency can attest to the adequacy of its controls over performance data.

U.S. GENERAL SERVICES ADMINISTRATION

Office of the Inspector General
40

According to OMB Bulletin No. 01-02, reportable conditions are matters coming to the auditor’s attention that, in the auditor’s judgment, should be communicated because they represent deficiencies in the

design or operation of internal controls that could adversely affect the organization’s ability to record,

process, summarize, and report performance information. 

Last year, we reported that the CFO had not implemented a system of internal controls to ensure that

appropriate levels of management understand and are performing the necessary reviews of performance data. Specifically, managers had not been required to assert that performance data exists and is

complete nor had accountability requirements been fully implemented. During FY 2001, the CFO developed an action plan describing the process that would be utilized to assess controls over performance

measure data. Surveys were issued to Agency managers to assess the adequacy of controls and procedures utilized to report the FY 2002 performance measures. Each survey inquired about the name of the

program manager responsible for the performance measure, the sources of data, the degree of confidence the manager has in the data supporting the performance measure and if current written procedures exist for collecting or reporting of the data.

In addition, as part of the process a test review was conducted of the controls over Public Buildings

Service (PBS) performance measures. The CFO’s analysis of PBS found that a number of data entry

controls have been enhanced and PBS is in the process of enhancing additional controls to the systems

that provide performance management data. As such, the CFO determined that PBS had adequate controls and procedures over performance data. 

We recognize that progress has been made towards implementing a process to ensure Agency managers have sufficient controls over performance measure data and we have accepted the CFO’s action

plan describing the methodology that will be used. However, we believe the CFO needs to establish a

plan for implementing the review process in the other Services and Staff Offices before the reportable

condition can be considered resolved.
41

U.S. General Services Administration

CONSOLIDATING STATEMENTS OF NET COST

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions)

2001 2000

Federal Buildings Fund:

Revenues: 

Building Operations - Government Owned $;;3,502. $ 3,256.

Building Operations - Leased 3,507. 3,419.

Expenses:

Building Operations - Government Owned 2,991. 2,802.

Building Operations - Leased 3,578. 3,504.

Net Income From (Cost of) Operations 440. 369.

General Supply Fund:

Revenues:

Supply Operations 1,266. 1,309.

Vehicle Acquisition and Leasing 1,517. 1,412.

Other Programs 19. 18.

Expenses: 

Supply Operations 1,266. 1,286.

Vehicle Acquisition and Leasing 1,417. 1,306.

Other Programs 25. 21.

Net Income From (Cost of) Operations 94. 126.

Information Technology Fund:

Revenues:

Network Services 1,059. 1,030.

IT Solutions 5,112. 3,982.

Expenses:

Network Services 1,128. 1,088.

IT Solutions 5,112. 3,991.

Net Income From (Cost of) Operations ( 69.) ( 67.)

Other Funds:

Revenues:

Working Capital Fund 252. 229.

GSA Operating Expense Fund 10. 11.

Other Funds 6. 5.

Expenses:

Working Capital Fund 246. 251.

GSA Operating Expense Fund 154. 174.

Other Funds 56. 78.

Net Income From (Cost of) Operations ( 188.) ( 258.)

Less: Intra-GSA Eliminations:

Revenues 448. 449.

Expenses 471. 487.

GSA Consolidated:

Revenues 15,802. 14,222.

Expenses 15,502. 14,014.

 Net Income From (Cost of) Operations $ 300. $ 208.

The accompanying notes are an

integral part of these statements
ASSETS 2001 2000 2001 2000

Intragovernmental Assets:

 Funds with U.S. Treasury (Note 1-D) $ 4,030. $ 3,378. $ 364. $ 390.

Accounts Receivable - Federal, Net (Note 7) 324. 342. 311. 277.

Prepaid Expenses and Advances - Federal 14. 5. 12. 8.

 Total Intragovernmental 4,368. 3,725. 687. 675.

Inventories (Note 1-E) 2. 3. 153. 186.

Accounts Receivable - Public, Net (Note 7) 4. 7. 17. 14.

Prepaid Expenses and Advances - Public -. -. 8. -.

Other Assets 1. 1. -. -.

Property and Equipment (Notes 1-F,2,8):

Buildings 19,168. 18,328. -. -.

Leasehold Improvements 262. 263. 9. 8.

 Telecommunications and ADP Equipment -. -. -. -.

 Motor Vehicles -. -. 3,341. 3,023.

 Other Equipment 60. 60. 103. 78.

 Less: Accumulated Depreciation and Amortization ( 8,467.) ( 7,644.) ( 1,052.) ( 904.)

 Subtotal 11,023. 11,007. 2,401. 2,205.

 Land 1,218. 1,226. -. -.

 Construction in Process 1,455. 1,154. 6. -.

 Total Property and Equipment 13,696. 13,387. 2,407. 2,205.

 Total Assets $18,071. $17,123. $ 3,272. $ 3,080.

LIABILITIES AND NET POSITION 

Intragovernmental Liabilities:

Accounts Payable and Accrued Expenses - Federal $ 82. $ 76. $ 32. $ 14.

Deferred Revenue and Advances - Federal 52. 49. 19. 12.

Intragovernmental Debt (Note 3) 2,390. 2,455. -. -.

Workers' Compensation Actuarial Liability (Note 1-J) 135. 121. 33. 30.

Other Intragovernmental Liabilities (Note 9) 151. 152. 6. 6.

Total Intragovernmental 2,810. 2,853. 90. 62.

Accounts Payable and Accrued Expenses - Public 775. 735. 132. 131.

Deferred Revenue and Advances - Public 19. 13. -. -.

Environmental and Disposals (Notes 6-B, 8-B) 63. 102. -. -.

Obligations Under Capital Leases (Note 2) 293. 303. -. -.

Annual Leave Liability (Note 1-H) 39. 37. 16. 15.

Deposit Fund Liability -. -. -. -.

Earnings Payable to U.S. Treasury -. -. -. -.

Other Liabilities (Note 9) 140. 146. 28. 3.

Total Liabilities 4,139. 4,189. 266. 211.

Net Position (Note 5):

Cumulative Results of Operations 13,932. 12,934. 3,006. 2,869.

Unexpended Appropriations -. -. -. -.

Total Net Position 13,932. 12,934. 3,006. 2,869.

Total Liabilities and Net Position $18,071. $17,123. $ 3,272. $ 3,080.

Federal

Buildings Fund

General Supply

Fund

U.S. General Services Administration

CONSOLIDATING BALANCE SHEETS

As of September 30, 2001 and 2000

(Dollars in Millions)

42

The accompanying notes are an

integral part of these statements
2001 2000 2001 2000 2001 2000 2001 2000

$ 76. $ 60. $ 421. $ 397. $ -. $ -. $ 4,891. $ 4,225.

1,514. 1,405. 8. 17. 24. 34. 2,133. 2,007.

8. 4. 1. 3. 27. 11. 8. 9.

1,598. 1,469. 430. 417. 51. 45. 7,032. 6,241.

-. -. -. -. -. -. 155. 189.

11. 28. 47. 34. -. -. 79. 83.

1. 1. -. -. -. -. 9. 1.

-. -. 3. 15. -. -. 4. 16.

-. -. -. -. -. -. 19,168. 18,328.

-. -. -. -. -. -. 271. 271.

169. 158. -. -. -. -. 169. 158.

-. -. -. -. -. -. 3,341. 3,023.

76. 59. 20. 16. -. -. 259. 213.

( 169.) ( 151.) ( 11.) ( 7.) -. -. ( 9,699.) ( 8,706.)

76. 66. 9. 9. -. -. 13,509. 13,287.

-. -. -. -. -. -. 1,218. 1,226.

1. 1. 21. -. -. -. 1,483. 1,155.

77. 67. 30. 9. -. -. 16,210. 15,668.

$ 1,687. $ 1,565. $ 510. $ 475. $ 51. $ 45. $ 23,489. $ 22,198.

 

$ 53. $ 80. $ 82. $ 93. $ 24. $ 34. $ 225. $ 229.

282. 270. 30. 14. 27. 11. 356. 334.

-. -. 7. 8. -. -. 2,397. 2,463.

11. 10. 19. 17. -. -. 198. 178.

2. 2. 32. 36. -. -. 191. 196.

348. 362. 170. 168. 51. 45. 3,367. 3,400.

1,060. 870. 23. 21. -. -. 1,990. 1,757.

-. -. -. -. -. -. 19. 13.

-. -. 81. 107. -. -. 144. 209.

-. -. -. -. -. -. 293. 303.

11. 10. 16. 15. -. -. 82. 77.

-. -. 40. 46. -. -. 40. 46.

-. -. 68. 54. -. -. 68. 54.

39. 36. 7. 7. -. -. 214. 192.

1,458. 1,278. 405. 418. 51. 45. 6,217. 6,051.

229. 287. 13. ( 23.) -. -. 17,180. 16,067.

-. -. 92. 80. -. -. 92. 80.

229. 287. 105. 57. -. -. 17,272. 16,147.

$ 1,687. $ 1,565. $ 510. $ 475. $ 51. $ 45. $ 23,489. $ 22,198.

Information

Technology Fund Other Funds

Less: Intra-GSA

Eliminations

GSA Consolidated

Totals

43
44

U.S. General Services Administration

CONSOLIDATING STATEMENTS OF CHANGES IN NET POSITION

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions)

2001 2000 2001 2000

Beginning Balance of Net Position:

Cumulative Results of Operations $ 12,934. $12,518. $ 2,869. $ 2,701.

Unexpended Appropriations -. -. -. -.

Net Position Beginning Balance 12,934. 12,518. 2,869. 2,701.

Results of Operations:

Net Income From (Cost of) Operations 440. 369. 94. 126.

Appropriations Used (Note 1-C) 484. -. -. -.

Non-Exchange Revenue (Notes 1-C, 1-G) -. -. -. -.

Imputed Financing Provided By Others 79. 51. 21. 25.

Transfer of Earnings Paid and Payable

to U.S. Treasury -. -. -. -.

Transfers of Net Assets and Liabilities

(To) From Other Federal Agencies ( 5.) ( 5.). 22. 17.

Receipts Paid and Reclassified as Payable From

(To) the Land and Water Conservation Fund -. -. -. -.

Other 1. -. -.

Net Results of Operations 998. 416. 137. 168.

Changes in Unexpended Appropriations:

 Appropriations Received 477. -. -. -.

 Appropriations Used ( 484.) -. -. -.

 Appropriations Transferred From Other

 Agencies or Funds 7. -. -. -.

 Other -. -. -. -.

 Net Change in Unexpended Appropriations -. -. -. -.

Ending Balance of Net Position

 Cumulative Results of Operations 13,932. 12,934. 3,006. 2,869.

 Unexpended Appropriations -. -. -. -.

Net Position Ending Balance $ 13,932. $12,934. $ 3,006. $ 2,869.

Federal

Buildings Fund

General Supply

Fund

The accompanying notes are an

integral part of these statements
45

2001 2000 2001 2000 2001 2000 2001 2000

$ 287. $ 342. $ ( 23.) $ ( 2.) $ -. $ -. $ 16,067. $ 15,559.

-. -. 80. 102. -. -. 80. 102.

287. 342. 57. 100. -. -. 16,147. 15,661.

(;69.) ( 67.) ( 188.) ( 258.) ( 23.) ( 38.) 300. 208.

-. -. 184. 194. -. -. 668. 194.

-. -. 46. 36. -. -. 46. 36.

10. 12. 15. 19. 23. 38. 102. 69.

-. -. ( 37.)) ( 19.) -. -. ( 37.) ( 19.)

1. -. 11. 6. -. -. 29. 18.

-. -. 5. 1. -. -. 5. 1.

-. -. -. -. -. -. -. 1.

( 58.) ( 55.) 36. ( 21.) -. -. 1,113. 508.

-. -. 188. 157. -. -. 665. 157.

-. -. ( 184.) ( 193.) -. -. ( 668.) ( 193.)

-. -. 9. 15. -. -. 16. 15.

-. -. ( 1.) ( 1.) -. -. ( 1.) ( 1.)

-. -. 12. ( 22.) -. -. 12. ( 22.)

229. 287. 13. ( 23.) -. -. 17,180. 16,067.

 -. -. 92. 80. -. -. 92. 80.

$ 229. $287. $ 105. $ 57. $ -. $ -. $ 17,272. $ 16,147.

Information

Technology Fund Other Funds

Less: Intra-GSA

Eliminations

GSA Consolidated

Totals
46

U.S. General Services Administration

COMBINING STATEMENTS OF BUGETARY RESOURCES

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions)

Federal

Buildings Fund

General Supply

Fund

2001 2000 2001 2000

Budgetary Resources:

Budget Authority $ 486. $ -. $ -. $ -.

Unobligated Balance, Net - Beginning Balance 2,853. 2,535. 424. 415.

Spending Authority:

Earned Income 6,990. 6,660. 3,471. 3,379.

Change in Unfilled Customer Orders ( 9.) 424. ( 144.) 87.

Prior Year Recoveries 138. 154. 11. 11.

Resources Temporarily Not Available ( 651.) ( 318.). -. -.

Capital Transfers ( 70.) ( 99.). -. -.

Total Budgetary Resources 9,737. 9,356. 3,762. 3,892.

Status of Budgetary Resources:

Obligations Incurred 6,960. 6,822. 3,225. 3,468.

Unobligated Balance - Available 2,774. 2,067. 537. 424. 

Unobligated Balance - Not Available 3. 467. -. -. 

Total Budgetary Resources 9,737. 9,356. 3,762. 3,892.

Relationship of Obligations to Outlays:

Obligations Incurred 6,960. 6,822. 3,225. 3,468.

Less: Spending Authority from Offsetting

Collections and Adjustments ( 7,119.) ( 7,238.) ( 3,338.) ( 3,477.)

Obligated Balance, Net - Beginning Balance (Note 1-L) 779. 1,109. ( 34.) ( 35.)

Less: Obligated Balance - Ending:

Accounts Receivable 309. 326. 312. 277.

Unfilled Customer Orders 1,601. 1,616. 130. 275.

Undelivered Orders ( 1,884.) ( 1,902.) ( 82.) ( 357.)

Accounts Payable ( 858.) ( 819.) ( 188.) ( 161.)

Outlays ( 212.) ( 86.) 25. ( 10.)

Components of Outlays:

Disbursements 6,796. 6,586. 3,461. 3,358.

Collections ( 7,008.) ( 6,672.) ( 3,436.) ( 3,368.)

Less: Offsetting Receipts -. -. -. -.

Net Outlays (Note 1-L) $ ( 212.) $ ( 86.) $ 25. $ ( 10.)

The accompanying notes are an

integral part of these statements
47

Information

Technology Fund Other Funds

GSA Combined

Totals

2001 2000 2001 2000 2001 2000

$ - $ -. $ 221. $ 210. $ 707. $ 210.

1,055. 698. 86. 121. 4,418. 3,769.

6,233. 5,052. 269. 248. 16,963. 15,339.

1,325. 398. 17. 8. 1,189. 917.

 276. 188. 12. 11. 437. 364.

-. -. -. -. ( 651.) ( 318.)

 -. -. ( 1.) ( 11.) ( 71.) ( 110.)

8,889. 6,336. 604. 587. 22,992. 20,171.

7,256. 5,281. 514. 501. 17,955. 16,072.

1,633. 1,055. 76. 69. 5,020 3,615.

 -. -. 14. 17. 17. 484.

8,889. 6,336. 604. 587. 22,992. 20,171.

7,256. 5,281. 514. 501. 17,955. 16,072.

( 7,834.) ( 5,638.) ( 298.) ( 267.) ( 18,589.) ( 16,620.)

 ( 995.) ( 655.) 88. 84. ( 162.) 503.

1,514. 1,405. 7. 17. 2,142. 2,025.

4,250. 3,206. 1. 1. 5,982. 5,098.

( 3,054.) ( 2,360.) ( 96.) (72.) ( 5,116.) ( 4,691.)

( 1,152.) ( 1,256.) ( 30.) (34.) ( 2,228.) ( 2,270.)

( 15.) ( 17.) 186. 230. ( 16.) 117.

6,120. 4,675. 483. 494. 16,860. 15,113.

( 6,135.) ( 4,692.) ( 297.) ( 264.) ( 16,876.) ( 14,996.)

 -. -. ( 18.) ( 22.) ( 18.) ( 22.)

$ ( 15.) $ ( 17.) $ 168. $ 208. $ ( 34.) $ 95.
48

U.S. General Services Administration

CONSOLIDATING STATEMENTS OF FINANCING

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions)

Federal

Buildings Fund

General Supply

Fund

2001 2000 2001 2000

Resources Used to Finance Activities:

Obligations Incurred $ 6,960. $ 6,822. $ 3,225. $ 3,468.

Less: Spending Authority From Offsetting Collections

and Adjustments ( 7,119.) ( 7,238.) ( 3,338.) ( 3,477.)

Financing Imputed for Cost Subsidies 79. 51. 21. 25.

Other 7. ( 9.) ( 3.) 8.

Total Resources Used to Finance Activities ( 73.) ( 374.) ( 95.) 24.

Resources Used That Are Not Part of the

Net Cost of Operations:

(Increase)/Decrease in Goods and Services Ordered

But Not Yet Received 18. ( 129.) 275. ( 101.)

Increase/(Decrease) in Unfilled Customer Orders ( 9.) 424. ( 144.) 87.

Costs Capitalized on the Balance Sheet ( 1,152.) ( 1,074.) ( 664.) ( 635.)

Financing Sources Funding Prior Year Costs ( 30.) ( 32.) -. -.

Other ( 37.) 30. 16. 4.

Total Resources Used That Are Not Part of

the Net Cost of Operations ( 1,210.) ( 781.) ( 517.) ( 645.)

Costs Financed by Resources Received in

Prior Periods:

Depreciation and Amortization 864. 804. 291. 265.

Net Book Value of Property Sold 12. -. 195. 221.

Other ( 3.) -. 28. 9.

Total Costs Financed by Resources Received

in Prior Periods 873. 804. 514. 495.

Costs Requiring Resources in Future Periods:

Unfunded Capitalized Costs ( 23.) ( 6.) -. -.

Unfunded Current Expenses ( 7.) ( 12.) 4. -.

Total Costs Requiring Resources in Future Periods ( 30.) ( 18.) 4. -.

Net (Income From) Cost of Operations $ ( 440.) $ ( 369.) $ ( 94.) $ ( 126.)

The accompanying notes are an

integral part of these statements
49

Information

Technology Fund Other Funds

Less: Intra-GSA

Eliminations

GSA Consolidated

Totals

2001 2000 2001 2000 2001 2000 2001 2000

$ 7,256. $ 5,281 $ 514. $ 501. $ -. $ -. $ 17,955. $ 16,072.

( 7,834.) ( 5,638.) ( 298.) ( 267.) -. -. ( 18,589.) ( 16,620.)

10. 12. 15. 19. 23. 38. 102. 69.

17. ( 12.) ( 24.) ( 8.) -. -. ( 3.) ( 21.)

( 551.) ( 357.) 207. 245. 23. 38. ( 535.) ( 500.)

( 694.) ( 39.) ( 23.) ( 8.) -. -. ( 424.) ( 277.)

1,325. 398. 17. 8. -. -. 1,189. 917.

( 27.) ( 20.) ( 25.) ( 2.) -. -. ( 1,868.) ( 1,731.)

-. 1. -. -. -. -. ( 30.) ( 31.)

( 4.) ( 5.) 18. ( 3.) -. -. ( 7.) 26.

600. 335. ( 13.) ( 5.) -. -. ( 1,140.) ( 1,096.)

17. 27. 4. 6. -. -. 1,176. 1,102.

-. 54. -. -. -. -. 207. 275.

 1. 8. -. -. -. -. 26. 17.

18. 89. 4. 6. -. -. 1,409. 1,394.

 -. -. -. -. -. -. ( 23.) ( 6.)

 2. -. ( 10.) 12. -. -. ( 11.) -.

 2. -. ( 10.) 12. -. -. ( 34.) ( 6.)

$ 69. $ 67. $ 188. $ 258. $ 23. $ 38. $ ( 300.) $ ( 208.)
NOTES TO FINANCIAL STATMENTS

For the Fiscal Years Ended 

September 30, 2001 and 2000

ORGANIZATION

The U.S. General Services Administration (GSA)

was created by the U.S. Federal Property and

Administrative Services Act of 1949, as amended

(the Act). The U.S. Congress enacted this

legislation to provide for the Federal Government

an economic and efficient system for the

procurement and operation of buildings,

procurement and distribution of general supplies,

acquisition and management of a motor vehicle

fleet, management of automated data processing

resources, and management of

telecommunications programs. 

The Administrator of General Services, appointed

by the President of the United States with the

advice and consent of the U.S. Senate, oversees

the operations of GSA. GSA carries out its

responsibilities through the operation of several

appropriated and revolving funds.

1. SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

For its principal financial statements, GSA uses

consolidating and combining formats to display

its three largest revolving funds: the Federal

Buildings Fund (FBF), General Supply Fund (GSF),

and Information Technology Fund (ITF). All other

funds have been combined under Other Funds.

The accompanying financial statements of GSA

include the accounts of all funds under GSA

control, which have been established and

maintained to account for resources of GSA

management. The entities included in the Other

Funds category are as follows, with a discussion

of the different fund types.

Revolving Funds are accounts established by

law to finance a continuing cycle of operations

with receipts derived from such operations

usually available in their entirety for use by the

fund without further action by the U.S. Congress.

The revolving funds in the Other Funds category

consist of the following:

50
Columbia Hospital For Women Direct Loan

Financing Account

Federal Consumer Information Center Fund

Working Capital Fund 

General Funds are accounts used to record

financial transactions arising under congressional

appropriations or other authorizations to spend

general revenues. GSA manages seven General

Fund accounts of which three are funded by

current year appropriations, two by no-year

appropriations, and two cannot incur new

obligations. The general funds included in the

Other Funds category are as follows:

Allowances and Office Staff for Former

Presidents

Excess and Surplus Real and Related Personal

Property Holding Account

Expenses, Presidential Transition

Office of Inspector General

Office of Inspector General (Automation 

Program)

Operating Expenses, General Services 

Administration

Real Property Relocation

Special Funds are accounts established for

receipts earmarked by law for a specific purpose,

but are not generated by a cycle of operations for

which there is continuing authority to reuse such

receipts. GSA uses Special Fund receipts to pay

certain costs associated with the disposal of

surplus real property and for funding of the

Transportation Audits Program. GSA's special

funds consist of the following:

Expenses, Disposal of Real and Related Personal

Property

Expenses, Transportation Audits

Operating Expenses, Disposal of Real and 

Related Personal Property

Other Receipts, Surplus Real and Related 

Personal Property

Receipts of Rent, Leases and Lease Payments 

for Government Owned Real Property

Receipts, Transportation Audits

Transfer of Surplus Real and Related Personal 

Property

Miscellaneous Receipt and Deposit Fund

accounts are considered Non-entity funds since

GSA management does not exercise control over

how the monies in these accounts can be used.

Miscellaneous Receipt Fund accounts hold

receipts and accounts receivable resulting from

miscellaneous activities of GSA where, by law,

such monies may not be deposited into funds

under GSA management control. The U.S.

Department of the Treasury automatically

transfers all cash balances in these receipt

accounts to general funds of the Treasury at the

end of each fiscal year. Deposit Fund accounts

hold monies outside the budget. Accordingly,

their transactions do not affect budget surplus or

deficit. These accounts include (1) deposits

received for which GSA is acting as an agent or

custodian, (2) unidentified remittances, (3) monies

withheld from payments for goods and services

received, and (4) monies whose distribution

awaits a legal determination or investigation. The

receipt and deposit funds in the Other Funds

category consist of the following:

Budget Clearing Account

Interest Receipts from Columbia Hospital for

Women Direct Loan Financing Account

Credits for Withholding and Contributions, Civil

Service Retirement and Disability Fund

Employees' Payroll Allotment Account, U.S. 

Savings Bonds

Fines, Penalties, and Forfeitures, Not 

Otherwise Classified

Forfeitures of Unclaimed Money and Property

General Fund Proprietary Interest, Not 

Otherwise Classified

General Fund Proprietary Receipts, Not 

Otherwise Classified, All Other

Proceeds from Sale of Surplus Property

Reserve for Purchase Contract Projects

Suspense

Suspense, Transportation Audits

Unconditional Gifts of Real, Personal or Other 

Property

Withheld State and Local Taxes

51
B. Basis of Accounting

The principal financial statements are prepared in

accordance with generally accepted accounting

principles as promulgated by the Federal

Accounting Standards Advisory Board (FASAB),

and OMB Bulletin 01-09, "Form and Content of

Agency Financial Statements." The American

Institute of Certified Public Accountants’ (AICPA)

Statement on Auditing Standards No. 91, Federal

GAAP Hierarchy, established a hierarchy of GAAP

for Federal financial statements as follows:

A. Federal Accounting Standards Advisory Board

(FASAB) Statements and Interpretations plus

AICPA and Financial Accounting Standards

Board (FASB) pronouncements if made

applicable to Federal Government entities by a

FASAB Statement or Interpretation;

B. FASAB Technical Bulletins and the following

pronouncements if specifically made

applicable to Federal Government entities by

the AICPA and cleared by the FASAB: AICPA

Industry Audit and Accounting Guides and

AICPA Statements of Position;

C. AICPA Accounting Standards Executive

Committee (ACSEC) Practice Bulletins if

specifically made applicable to Federal

Government entities and cleared by the

FASAB and Technical Releases of the

Accounting and Auditing Policy Committee of

the FASAB; and

D. Implementation guides published by the FASAB

staff and practices that are widely recognized

and prevalent in the Federal Government. 

GSA's financial statements are prepared in

accordance with formats prescribed in OMB Bulletin

01-09. These formats are considerably different from

business-type formats. The Statements of Net Cost

present the operating results of GSA by major

programs and responsibilities. The Balance Sheets

present the financial position of GSA using a format

clearly segregating intra-governmental balances.

The Statements of Changes in Net Position display

the changes in equity accounts. The Statements of

Budgetary Resources present the sources, status,

and uses of GSA's budgetary resources. Lastly, the

Statements of Financing bridge the gap between the

uses of budgetary resources with the operating

results reported on the Statements of Net Cost.

GSA did not perform all reconciliations with

trading partners required by OMB Bulletin 01-09,

which requires agencies to reconcile intragovernmental income, expense, assets and

liabilities, with all of its trading partners. GSA

limited its reconciliations to fiduciary

transactions activity.

Certain prior year balances have been

reclassified to conform with the current year's

presentation.

On the Consolidating Statements of Net Cost,

Balance Sheets, Statements of Changes in Net

Position, Statements of Financing, Supplemental

Statements of Operations and Supplemental

Statements of Cash Flows, all significant intraagency balances and transactions have been

eliminated in consolidation. No such eliminations

have been made on the Combining Statements of

Budgetary Resources.

The preparation of financial statements requires

management to make estimates and assumptions

that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and

liabilities at the date of the financial statements

and the reported amounts of revenues and

expenses during the reporting period. Actual

results may differ from those estimates.

C. Revenue Recognition and 

Appropriations Used

Generally, Revolving Fund and reimbursable

General Fund revenue is recognized when goods

have been delivered or services rendered.

Revenue under nonrecurring reimbursable

building repair and alteration projects is

recognized under the percentage-of-completion

method. Non-Exchange revenues are recognized

on an accrual basis on the Statements of

Changes in Net Position for sales of surplus real

52
53

property, reimbursements due from the audit of

payments to transportation carriers, and other

miscellaneous items resulting from GSA’s

operations where ultimate collections must be

deposited in miscellaneous receipt accounts of

the Treasury. Non-Exchange revenues are

reported net of associated bad debt expense on

uncollectable accounts.

Appropriations for General Fund and Special Fund

activities are recorded as a financing source on

the Consolidating Statements of Changes in Net

Position when expended. Unexpended

appropriations are reported as an element of Net

Position on the Balance Sheets.

D. Funds with U.S. Treasury

This total represents all unexpended balances for

GSA's accounts with the U.S. Treasury. Amounts

in Funds with U.S. Treasury are based on the

balances recorded by GSA in the National

Electronic Accounting and Reporting (NEAR)

system. Differences existing between the total

balance reported by GSA that were greater (less)

than those reported by the Department of the

Treasury at September 30, 2001, and 2000 were as

follows (dollars in millions):

2001 2000

Federal Buildings Fund $ (1 $ 2

General Supply Fund 3 (6

Information Technology Fund (3 (6

Other Funds 5 (7

Total $ 4 $ (17

Funds with U.S. Treasury are primarily

components of revolving funds such as the FBF,

GSF, and ITF. The fund balances in the Other

Funds category contains amounts in the following

fund types (dollars in millions):

2001 2000

Revolving Funds $ 97 $ 80

Appropriated & General Funds 119 109

Special Funds 145 147

Deposit Funds 39 46

Miscellaneous Receipt Funds 21 15

Total Other Funds $ 421 $ 397

Included in GSA's accounts are certain amounts

that may be transferred to either the U.S.

Treasury or the Land and Water Conservation

Fund (see Note 1-G). These amounts, related to

the Transportation Audits program and surplus

real property disposals, are subject to transfer

subsequent to GSA's determination of the

internal working capital needs of these programs.

Such amounts totaled $149 million and $132

million at September 30, 2001 and 2000,

respectively, of which $120 million and $94 million

were recorded as liabilities in the Consolidating

Balance Sheets. At September 30, 2001 and 2000,

the balance of Funds with Treasury that were no

longer available for expenditure totaled $1 million

and $4 million, respectively. Of these amounts,

substantially all balances were transferred back

to the Special Fund Receipt Accounts from which

they were appropriated, with minor amounts

returned to Treasury.

In accordance with Statement of Federal

Financial Accounting Standards (SFFAS) Number

1, Accounting for Selected Assets and Liabilities,

the following information is provided to further

identify amounts in Funds with U.S. Treasury as of

September 30, 2001 against which obligations

have been made, and, for unobligated balances,

to identify amounts budgetarily available for

future expenditures and those only available to

liquidate prior obligations. Unobligated balances

presented below may not equal related amounts

reported on the Combining Statements of

Budgetary Resources (CSBR), particularly for

Other Funds, as this schedule presents elements

of Funds with U.S. Treasury, which excludes other

authorities reportable in the CSBR and includes

balances in Funds that are not reportable in the

CSBR (dollars in millions):

2001

Obligated Unobligated Balance

Balance, Net Available Unavailable Total

FBF $ 824. $ 2,552 $ 654 $ 4,030

GSF (172.) 536 - 364

ITF (1,558.) 1,634 - 76

Others 118. 76 227 421

Total $ (788.) $ 4,798 $ 881 $ 4,891

)

)

)

)

)

)
54

2000

Obligated Unobligated Balance

Balance, Net Available Unavailable Total

FBF $ 758 $ 1,836 $ 784 $ 3,378

GSF (34) 424 - 390

ITF (995) 1,055 - 60

Others 88 69 240 397

Total $ (183) $ 3,384 $1,024 $ 4,225

E. Inventories

Operating supplies, which are consumed in

operations, are valued at the lower of cost,

determined principally on the first-in, first-out

method, or market. Inventories held for sale to

other Federal agencies consist primarily of

General Supply Fund inventories which are valued

at the lower of cost, generally determined on a

moving average basis, or market. The recorded

values are adjusted for the results of physical

inventories taken periodically in accordance with

a cyclical counting plan.

In the Federal Buildings Fund, inventory balances

consist of operating supplies. In all other

instances, inventory balances reported are

inventories held for sale. In the General Supply

Fund, $6 million of the balances in inventories

held for sale are excess inventories. Excess

inventories are defined as those exceeding the

economic retention limit (i.e., the number of units

of stock which may be held in inventory without

incurring excessive carrying costs). Excess

inventories are generally transferred to another

Federal agency, sold, or donated to state or local

governments.

F. Property and Equipment (See Note 8)

Property and equipment purchases and additions

in fiscal years 2001 and 2000 of $10,000 or more

and having a useful life of 2 or more years are

capitalized and valued at cost. Property and

equipment transferred to GSA from other Federal

agencies on the date GSA was established is

stated at the transfer value which approximates

historical cost. Subsequent thereto, equipment

transferred to GSA is stated at net book value,

and surplus real and related personal property

transferred to GSA is stated at the lower of net

book value or appraised value. Expenditures for

major additions, replacements, and alterations

are capitalized. Normal repair and maintenance

costs are expensed as incurred. The cost of

repair and alteration and of leasehold

improvements performed by GSA, but financed

by other agencies, is not capitalized in GSA's

financial statements as such amounts are

transferred to the other agencies upon

completion of the project. Substantially all land,

buildings, and leasehold improvements are leased

to other Federal agencies under short-term

cancellable agreements. Generally, these

agencies are billed for leased space at rent based

upon commercial rates for comparable space. 

Depreciation and amortization of property and

equipment, exclusive of that acquired under

capital leases, are calculated on a straight-line

basis over their initial or remaining useful lives.

Leasehold improvements are amortized over the

lesser of their useful lives or the unexpired lease

term. Buildings capitalized by the Federal

Buildings Fund at its inception in 1974 were

assigned remaining useful lives of 30 years. Prior

to 1974, no depreciation was recorded by GSA.

Upon completion, construction costs are

capitalized in the Land and Buildings accounts.

Major and minor building renovation projects

carry estimated useful lives of 20 years, and 10

years, respectively. In fiscal year 2001, GSA

recorded capitalized interest costs of $1 million in

the Construction in Process account associated

with debt provided by the U.S. Treasury's Federal

Financing Bank, as discussed in Note 3. Interest

capitalized in fiscal year 2000 amounted to

$103,000.

Telecommunications equipment and automated

data processing equipment are used in operations

to perform services for other Federal agencies for

which billings are rendered. Most of the assets

comprising other equipment are used internally

by GSA. Telecommunications and other

equipment, exclusive of that acquired under

capital leases, is depreciated over periods

generally ranging from 3 to 10 years.
Telecommunications equipment under capital

leases is generally depreciated over its estimated

useful lives (approximately 10 years). Automated

data processing equipment is depreciated over

periods generally ranging from 3 to 5 years. 

Motor vehicles are generally depreciated over 4 to

6 years.

In fiscal year 2001, GSA implemented FASAB

SFFAS No. 10, Accounting for Internal Use

Software. This standard requires capitalization of

software development costs incurred for systems

having a useful life of 2 years or more. With

implementation of this standard, GSA adopted

minimum dollar thresholds per system that would

be required before capitalization would be

warranted. For the Federal Buildings Fund, this

minimum threshold is $1 million. For all other

funds, it is $250,000. With implementation of this

standard, costs were capitalized on GSA’s

Balance Sheet in fiscal year 2001 as follows: FBF

- $6 million, GSF - $17 million, ITF - $1 million,

Other Funds - $21 million.

G. Receipts from Disposal of Property and

Equipment

GSA acts as a disposal agent for surplus Federal

real and personal property. In some cases, public

law entitles the owning agency to the sales

proceeds, net of disposal expenses incurred by

GSA. Proceeds from the disposal of equipment

are generally retained by GSA to replace

equipment. Under GSA's legislative authorities,

the gross proceeds from some sales are

deposited in GSA's Special Fund receipt

accounts and recorded as Non-Exchange

Revenues in the Consolidating Statements of

Changes in Net Position. A portion of these

proceeds is subsequently transferred to a Special

Fund to finance expenses incurred in disposing of

surplus property. The remainder is periodically

accumulated and transferred, by law, to the Land

and Water Conservation Fund administered by

the U.S. Department of the Interior. Transfers in

both fiscal years 2001 and 2000 were $2 million.

H. Annual, Sick, and Other Types of Leave

Annual leave is accrued as it is earned and the

accrual is relieved as leave is taken. Each year

the balance in the accrued annual leave account

is adjusted to reflect current pay rates.

Sick leave and other types of nonvested leave are

expensed as taken.

I. Supplemental Consolidating Statements of

Cash Flows (Unaudited)

These statements identify cash receipts and

payments and classify them into operating,

financing, and investing activities. This additional

disclosure of information is intended to help

assess the ability to generate funds from current

operations, to identify financing acquired from

outside sources, and to identify the major nonoperating (investing) uses of funds. Cash, for the

purposes of these schedules, equals Funds with

U.S. Treasury as defined in Note 1-D. 

J. Workers' Compensation Benefits

The Federal Employees' Compensation Act

(FECA) provides income and medical cost

protection to covered Federal civilian employees

injured on the job, employees who have incurred a

work-related occupational disease, and

beneficiaries of employees whose death is

attributable to a job-related injury or occupational

disease. The FECA program is administered by

the U.S. Department of Labor (DOL) which

initially pays valid claims and subsequently seeks

reimbursement from the Federal agencies

employing the claimants. The DOL provides the

actuarial liability for claims outstanding at the

end of each fiscal year. This liability includes the

estimated future costs of death benefits,

workers' compensation, and medical and

miscellaneous costs for approved compensation

cases. The present value of these estimates at

the end of fiscal year 2001 was calculated by DOL

using discount rates by fiscal year as follows:

2002 – 5.21 percent; 2003 and thereafter –

5.21percent. At the end of fiscal year 2000, the

discount rates used were as follows: 2001 – 6.15

55
56

percent; 2002 – 6.28 percent; 2003 and thereafter –

6.30 percent. The actuarial liability recorded by

GSA totaled $198 million and $178 million as of

September 30, 2001 and 2000, respectively.

K. Statements of Net Cost

Revenues reported by GSA’s funds on the

Statements of Net Cost are primarily generated

from intra-governmental sales of goods and

services. Each fund has established rate setting

processes governed by the laws authorizing their

activities. In most cases, the rates charged are

intended to cover the full cost that the funds will

pay to provide such goods and services and to

provide capital maintenance. In accordance with

the governing laws, rates are generally not

designed to recover costs covered by other funds

or entities of the U.S. Government, such as for

post-employment and other inter-entity costs.

Revenues from non-Federal entities make up an

immaterial portion of GSA’s total sales.

Accordingly, where not otherwise governed by

law, unique rates for non-Federal customers have

generally not been established. 

L. Statements of Budgetary Resources

The Combining Statements of Budgetary

Resources present GSA’s budgetary results in

accordance with reporting requirements

prescribed in OMB Circular A-34, Instructions on

Budget Execution, which identifies budgetary

resources available for spending, the status of

those resources, and the relationship between

obligated balances and outlays (see Note 12).

2. LEASING ARRANGEMENTS

As of September 30, 2001, GSA was committed to

various noncancellable operating leases primarily

covering administrative office space and storage

facilities maintained by the Federal Buildings

Fund (FBF), and for motor vehicles in the General

Supply Fund (GSF). Many of these leases contain

escalation clauses tied to inflationary and tax

increases, and renewal options.

The following are schedules of future minimum

rental payments required under leases that have

initial or remaining noncancellable lease terms in

excess of one year, and under capital leases

together with the present value of the future

minimum lease payments (dollars in millions).

Operating Leases

Fiscal Year FBF GSF Total

2002 $ 2,458 $22 $ 2,480

2003 2,152 13 2,165

2004 1,875 5 1,880

2005 1,652 5 1,657

2006 1,441 5 1,446

2007 and thereafter 7,559 11 7,570

Total minimum lease

payments $17,137 $61 $17,198

Capital Leases

Fiscal Year FBF

2002 $ 28

2003 28

2004 28

2005 28

2006 28

2007 and thereafter 396

Total minimum lease

payments 536

Less: Amounts representingInterest (240)

Executory Costs (3)

Total obligations under

capital leases $ 293

Substantially all leased space maintained by the

Federal Buildings Fund is sublet to other Federal

agencies at rent charges based upon approximate

commercial rates for comparable space. The

agreements covering the sublease arrangements

allow customer agencies, among other things, to

terminate the sublease at any time. In most

cases, however, GSA believes the subleases will

continue without interruption. Rental income

under subleasing agreements approximated $3.2

billion and $3.1 billion for the fiscal years ended

September 30, 2001 and 2000, respectively. Rent
expense under all operating leases, including

short-term non-cancellable leases, was

approximately $3.0 billion and $2.9 billion in fiscal

years 2001 and 2000, respectively.

The Consolidating Balance Sheets as of

September 30, 2001, and 2000, include capital

lease assets of $319 million for buildings.

Aggregate accumulated amortization on such

structures totaled $54 million and $43 million in

those years, respectively. 

For substantially all of its leased property, GSA

expects that in the normal course of business

such leases will be either renewed or replaced in

accordance with the needs of its customer

agencies.

3. DEBT FINANCING

A. Federal Buildings Fund

Purchase Contract and Lease 

Purchase Debt

Purchase contract debt consists of two distinct

financing methods employed to finance

construction of Federal buildings. The Dual

System provided monies via publicly issued

Participation Certificates and Participation

Certificates of the Department of the Treasury's

Federal Financing Bank (FFB). The Package

System, originally consisted of mortgage notes

where construction and financing were arranged

by the same party. GSA is not authorized to

obtain any additional purchase contract debt

without congressional approval.

In fiscal years 1993 through 1995, GSA refinanced

all outstanding publicly issued Participation

Certificates and Package System mortgage notes

with the FFB. GSA now has title to all purchase

contract buildings.

Starting in fiscal year 1991, GSA entered into

several agreements to fund the purchase of land

and construction of buildings under the Federal

Buildings Fund (FBF) lease purchase authority.

Under these agreements, the FBF borrows monies

through the FFB or executes lease-to-own

contracts to finance the lease purchases. The

program authorizes total expenditures of $1,945

million for 11 projects. In fiscal years 2001 and

2000, the FFB made advance payments on the

behalf of GSA totaling $22 million and $6 million,

respectively. As of September 30, 2001, and 2000,

$222 million and $231 million, respectively, of

borrowing authority under the lease purchase

program remained available for obligation. 

Resources to retire debt are obtained from annual

revenues generated by the FBF. Aggregate debt

maturities are as follows (dollars in millions): 2002

- $105; 2003 - $86; 2004 - $56; 2005 - $40; 2006 - $35;

2007 and beyond - $1,299.

Pennsylvania Avenue Debt

The former Pennsylvania Avenue Development

Corporation (PADC) originally received authority

to borrow from the FFB to finance construction of

the Ronald Reagan Building (RRB) in Washington,

D.C., with a project budget of $738 million. In

1990, PADC entered into a long-term lease

agreement with the FFB and GSA, whereby GSA

leased and would ultimately receive title to the

building. The agreement required GSA to make

rental payments over a 30-year period to retire the

PADC debt with the FFB. Through fiscal year

1998, balances financed for this project were

accounted for in GSA's Pennsylvania Avenue

Activities Fund (PAAF). 

In the Omnibus Consolidated and Emergency

Supplemental Appropriations Act, 1999 (Public

Law 105-277 dated October 21, 1998), GSA was

authorized to merge the assets, liabilities and

fund balances of the PAAF into the FBF. The most

significant impact of this action was to close out

the capital lease agreement between the two

funds for the RRB and reflect the debt as a

liability of the FBF. 

In fiscal year 2001 and 2000, the FFB made $2

million and $300,000, respectively, in advance

payments on the behalf of GSA for this project

(see Note 11).

57
58

Aggregate maturities on debt related to the RRB

are as follows (dollars in millions): 2002 - $12; 2003

- $13; 2004 - $13; 2005 - $14; 2006 - $16; 2007 and

beyond - $701.

B. Direct Loan Financing Debt

In the Treasury and General Government

Appropriations Act, 2000 (Public Law 106-58),

Congress gave GSA the authority to sell a parcel

of land in Washington D.C. to the Columbia

Hospital for Women and provided for GSA to offer

30-year financing. In accordance with the

budgetary requirements of the Credit Reform and

Deficit Reduction Act of 1990, when financing

terms were accepted for the sale, GSA borrowed

an equal amount of money from the U.S. Treasury

to obtain an immediate credit of cash for the

amount of the sale. The note receivable and

borrowing are accounted for in the Columbia

Hospital for Women Direct Loan Financing

Account, a fund established with the U.S.

Treasury solely for this purpose. The term of the

borrowing matched the 30-year term of the note.

Proceeds from the note receivable from the sale

will be used to liquidate the Treasury borrowing

over the matching terms. The $14 million

proceeds from the borrowing were deposited in

the related program account (the FBF). FBF funds

were then used to pay a subsidy cost of $6 million

to the financing account that represents the

present value differential caused by below-market

interest rate provided by Congress, as well as the

possible credit risk associated with the note. 

On November 9, 2001 the Columbia Hospital for

Women liquidated the remaining balance on the

related note receivable. Accordingly, GSA

expects to take action in fiscal year 2002 to retire

the outstanding $7 million debt balance.

C. Schedules of Debt Arrangements

GSA’s outstanding debt arrangements at September 30, 2001 and 2000 were as follows (dollars in millions):

2001 2000 

FEDERAL BUILDINGS FUND

Purchase Contract Debt:

Dual System:

Participation certificates held by the Federal Financing Bank, due at various

dates from November 1, 2001 through November 15, 2004, at interest rates 

ranging from 4.703 percent to 9.162 percent. $ 127 $ 175 

Package System:

Mortgage loans held by the FFB due at various dates from March 25, 2003

through March 25, 2005, at interest rates ranging from 6.399 percent 

to 7.939 percent. 15 21 

Lease Purchase Debt: 

Mortgage loans and construction advances held by the FFB, due at various 

dates from January 30, 2002 through October 1, 2026, at interest rates

ranging from 2.416 percent to 8.561 percent 1,479 1,481 

Pennsylvania Avenue Debt:

Ronald Reagan Building, mortgage loans due November 2, 2026, at interest

rates ranging from 5.198 percent to 8.323 percent 769 778 

Subtotal FBF Debt $ 2,390 $ 2,455

DIRECT LOAN FINANCING DEBT

Columbia Hospital Direct Loan Financing Account 7 8

TOTAL GSA DEBT $ 2,397 $ 2,463
4. EMPLOYEE BENEFIT PLANS

A. Background

Although GSA funds a portion of pension benefits

for its employees under the Civil Service

Retirement System and the Federal Employees

Retirement System and makes the necessary

payroll withholdings from them, GSA is not

required to disclose the assets of the systems or

the actuarial data with respect to accumulated

plan benefits or the unfunded pension liability

relative to its employees. Reporting such

amounts is the direct responsibility of the Office

of Personnel Management (OPM). Reporting of

health care benefits for retired employees are

also the direct responsibility of OPM.

In accordance with Statement of Federal Financial

Accounting Standards (SFFAS) Number 5,

Accounting for Liabilities of the Federal

Government, GSA recognizes the normal cost of

pension programs and the normal cost of other

post-employment health and life insurance

benefits, as defined in that standard, on the

Consolidating Statements of Net Cost. While

these costs will ultimately be funded out of direct

appropriations made to OPM and do not require

funding by GSA activities, they are an element of

Government-wide costs incurred as a result of

GSA’s operations.

B. Civil Service Retirement System

In fiscal year 2001, 42.1 percent of GSA employees

were covered by the Civil Service Retirement

System (CSRS), a defined benefit plan. Total GSA

(employer) contributions (9.01 percent of base pay

for law enforcement employees, and 8.51 percent

for all others) to CSRS for all employees in both

fiscal years 2001 and 2000 were $33 million.

C. Federal Employees Retirement System

On January 1, 1987, the Federal Employees

Retirement System (FERS), a defined

contribution plan, went into effect pursuant to

Public Law 99-335. Employees hired after

December 31, 1983, were automatically covered

by FERS and Social Security while employees

hired prior to January 1, 1984, elected to either

join FERS and Social Security or remain in CSRS.

As of September 30, 2001, 57.4 percent of GSA's

employees were covered under FERS. One of the

primary differences between FERS and CSRS is

that FERS offers automatic and matching

contributions into the Federal Government's Thrift

Savings Plan (TSP) for each employee. Under

CSRS, employees can invest up to 5 percent of

their base pay in the TSP. Employees under FERS

can invest up to 10 percent of base pay, plus GSA

will automatically contribute 1 percent of base

pay and then match employee contributions up to

an additional 4 percent of base pay. During fiscal

years 2001 and 2000, GSA (employer)

contributions to FERS (23.3 percent of base pay

for law enforcement employees and 10.7 percent

for all others) totaled $45 million and $42 million,

respectively. Additional GSA contributions to the

TSP totaled $18 million and $17 million in those

years, respectively.

D. Social Security System

GSA also makes matching contributions to the

Social Security Administration (SSA) under the

Federal Insurance Contributions Act (FICA). For

employees covered by FERS, GSA contributed

matching amounts of 6.20 percent of gross pay

(up to $80,400) to SSA's Old-Age, Survivors, and

Disability Insurance (OASDI) program in calendar

year 2001. Additionally, GSA makes matching

contributions for all employees of 1.45 percent of

gross pay to SSA's Medicare Hospital Insurance

program in calendar year 2001. Only 0.5 percent

of GSA's employees are covered exclusively by

these Social Security programs. Payments to

these programs in fiscal years 2001 and 2000

amounted to $41 million and $39 million,

respectively.

59
60

E. Schedule of Unfunded Benefit Costs

Amounts recorded in fiscal year 2001, and 2000, 

in accordance with SFFAS Number 5 for postemployment benefits are as follows (dollars in

millions.)

2001

Pension Health/Life

Benefits Insurance Total

FBF $ 15 $ 18 $ 33

GSF 8 7 15

ITF 4 4 8

Other Funds 7 6 13

Total $ 34 $ 35 $ 69

2000

Pension Health/Life

Benefits Insurance Total

FBF $ 14 $ 17 $ 31

GSF 7 7 14

ITF 4 3 7

Other Funds 7 6 13

Total $ 32 $ 33 $ 65

5. STATEMENTS OF CHANGES IN NET

POSITION

A. Cumulative Results of Operations

Cumulative results of operations for Revolving

Funds include the net cost of operations since

their inception, reduced by funds returned to the

U.S. Treasury, by congressional rescissions, and

by transfers to other Federal agencies, in addition

to balances representing invested capital.

Invested capital includes amounts provided to

fund certain GSA assets, principally land,

buildings, construction in process, and

equipment, as well as appropriated capital

provided as the corpus of a fund (generally to

meet operating working capital needs).

GSA's Federal Buildings Fund (FBF), General

Supply Fund (GSF), Information Technology Fund

(ITF), Working Capital Fund (WCF), and Federal

Consumer Information Center Fund (FCICF) have

legislative authority to retain portions of their

cumulative results for specific purposes. The FBF

retains cumulative results to finance future

operations and construction, subject to

appropriation by Congress. In the GSF, earnings

are retained to cover the cost of replacing the

motor vehicle fleet and supply inventory. The ITF

retains cumulative results to provide financing for

major systems acquisitions and improvements,

contract conversion costs, major contingencies,

and to maintain sufficient working capital. The

WCF retains earnings to finance future

operations. The FCICF retains cumulative results

to finance future operations, subject to

appropriation by Congress.

B. Unexpended Appropriations

Unexpended Appropriations of GSA’s general

appropriated and special funds consist of

unobligated balances, and undelivered orders, net

of unfilled customer orders. Undelivered orders

are orders placed by GSA with vendors for goods

and services that have not been received.

Unfilled customer orders are reimbursable orders

placed with GSA by other agencies, other GSA

funds or from the public where GSA has yet to

provide the good or service requested. At

September 30, 2001, and 2000, balances reported

as unexpended appropriations were as follows

(dollars in millions):

2001 2000

Unobligated Balances:

Available $ 40 $ 44

Unavailable (3) 11

Undelivered Orders, Net 55 40

Total Unexpended Appropriations $ 92 $ 95

6. COMMITMENTS AND CONTINGENCIES

A. Commitments

In addition to future lease commitments

discussed in Note 2, GSA is committed under

obligations for goods and services that have been

ordered but not yet received (undelivered orders)
at fiscal year-end. Aggregate undelivered orders

for all GSA activities amounted to $5.1 billion in

fiscal year 2001, and $4.7 billion in 2000.

In fiscal year 1999, GSA awarded two contracts for

long-distance telecommunications services

(FTS2001) to replace the existing FTS2000 contracts

that provide state-of-the-art integrated voice, data,

and video telecommunications. Costs for services to

be provided over the eight-year term of the contracts

are estimated to be $5 billion. The contracts provide

minimum revenue guarantees, of which $722 million

and $1,253 million remained outstanding as of

September 30, 2001, and 2000, respectively.

B. Contingencies

GSA is a party in various administrative proceedings,

legal actions, environmental suits, and claims

brought by or against it. In the opinion of GSA

management and legal counsel, the ultimate

resolution of these proceedings, actions, and claims

will not materially affect the financial position or

results of operations of GSA.

Contingencies Covered by GSA Funds

As of September 30, 2001 and 2000, GSA recorded

liabilities in total of $161 million and $134 million,

respectively, for pending and threatened legal

matters for which, in the opinion of GSA

management and legal counsel, GSA funds will

probably incur losses. These balances are reported

as Other Liabilities on the Consolidating Balance

Sheets.

In addition, GSA had another $162 million and $152

million in contingencies at September 30, 2001 and

2000, respectively, where it is reasonably possible, but

not probable, that GSA funds will incur some cost.

Accordingly, no balances have been recorded in the

financial statements for these contingencies.

In most cases, legal matters which directly involve

GSA relate to contractual arrangements GSA has

entered into either for property and services it has

obtained or procured on behalf of other Federal

agencies. The costs of administering, litigating, and

resolving these actions are generally borne by GSA

unless it can recover the cost from another Federal

agency. Certain legal matters in which GSA may be

named party are administered and, in some

instances, litigated by other Federal agencies.

Amounts to be paid under any decision, settlement,

or award pertaining thereto are sometimes funded by

those agencies.

Contingencies Covered by the Judgment Fund

In most cases, tort and environmental claims are

administered and resolved by the U.S. Department of

Justice and any amounts necessary for resolution

are obtained from a special Judgment Fund

maintained by the Department of the Treasury. In

accordance with the FASAB’s Interpretation Number

2, Accounting for Treasury Judgment Fund

Transactions, costs incurred by the Federal

Government are to be reported by the agency

responsible for incurring the liability, or to which

liability has been assigned, regardless of the ultimate

source of funding. In accordance with this

interpretation, GSA reported $82 million and $133

million in fiscal years 2001 and 2000, respectively, of

Environmental and Disposals and Other Liabilities for

contingencies, which will require funding exclusively

through the Judgment Fund. Of those amounts, $78

million and $95 million, result from several

environmental cases outstanding at the end of fiscal

years 2001 and 2000, respectively, where GSA has

been named as a potentially responsible party.

Additional contingencies subject to ultimate funding

from the Judgment Fund where the risk of loss is

reasonably possible but not probable ranged from $109

million to $3.5 billion at September 30, 2001 and ranged

from $174 million to $3.6 billion at September 30, 2000

The recognition of claims to be funded through the

Judgment Fund on GSA’s Consolidating Statements

of Net Cost and Consolidating Balance Sheets is, in

effect, recognition of these liabilities against the

Federal Government as a whole, and should not be

interpreted as claims against the assets, or resources

of any GSA fund, nor will any future resources of

GSA be required to liquidate any resulting losses.

Further, for most environmental claims, GSA has no

managerial responsibility other than as custodian

and successor on claims made against former

61
62

Federal entities, particularly former World War II

defense related activities.

Amounts paid from the Judgment Fund on behalf of

GSA were $52 million and $68 million in fiscal years

2001 and 2000, respectively. Of these amounts $12

million and $63 million, respectively, related to claims

filed under the Contract Disputes Act for which

payments have been or will be made to reimburse

the Judgment Fund by the GSA funds liable under the

contacts in dispute. The balance of claims paid on

behalf of GSA do not require reimbursement to the

Judgment Fund.

7. ACCOUNTS AND NOTES RECEIVABLE

Substantially all accounts receivable are from other

Federal agencies. Unbilled accounts receivable

result from the delivery of goods or performance of

services for which bills have not yet been rendered.

Allowances for doubtful accounts are recorded using

aging methodologies based on analysis of historical

collections and writeoffs.

Notes receivable are from the sale of surplus real and

related personal property, from motor vehicle

damage claims, and from contract claims. Interest

rates range from 0.0 percent to 12.6 percent.

In the Treasury and General Government

Appropriations Act, 2000 (Public Law 106-58), 

Congress gave GSA the authority to sell a parcel of

land inWashington D.C. to the Columbia Hospital for

Women and provided for GSA to offer 30 year

financing at 4.25% interest for the $14 million sale

amount. The property was sold under this authority

in September 2000, with GSA accepting a down

payment of approximately $1 million, with the

balance of $13 million being financed by a note with

the terms indicated above. In accordance with the

budgetary requirements of the Credit Reform and

Deficit Reduction Act of 1990, and FASAB Standard

No. 2, Accounting for Direct Loans and Loan

Guarantees, this note is presented at the present

value of the anticipated cash flows from the note.

This note receivable is accounted for in the Columbia

Hospital for Women Direct Loan Financing Account.

A subsidy cost of $6 million was recorded as an

allowance against this note in accordance with

estimates made by the Office of Management and

Budget. This subsidy amount represents the present

value differential caused by the below market

interest rate, totaling $2 million, as well as the

possible credit risk associated with the note,

estimated at $4 million. In November 2001, the

Columbia Hospital for Women paid the remaining

balance of the note. Accordingly, the subsidy cost

allowance was reversed effective for the September

30, 2001, Consolidating Balance Sheet to reflect the

revised estimate. 

A summary of Accounts and Notes Receivable is as

follows (dollars in millions).

Less: GSA

Intra-GSA Consolidated

FBF GSF ITF Others Eliminations Totals

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000

Current:

Accounts Receivable – Billed $ 234 $ 232 $ 127 $ 119 $ 133 $ 218 $39 $ 30 $ - $ - $ 533 $ 599

Accounts Receivable – Unbilled 161 163 206 181 1,392 1,215 7 17 24 34 1,742 1,542

Allowance for Doubtful Accounts (67) (46) (5) (9) - - (4) (4) - - (76) (59)

328 349 328 291 1,525 1,433 42 43 24 34 2,199 2,082 

Add: Current Notes Receivable - - - - - - - 1 - - - 1 

Subtotal Current Receivables 328 349 328 291 1,525 1,433 42 44 24 34 2,199 2,083 

Noncurrent Notes Receivable

(Net of Allowance of $28 million

and $30 million in 2001 and 2000,

respectively) - - - - - - 13 7 - - 13 7 

Total Accounts and Notes

Receivable $328 $ 349 $ 328 $291 $1,525 $ 1,433 $55 $ 51 $ 24 $ 34 $2,212 $2,090 
63

B. Cleanup Costs

In GSA's Federal Buildings Fund, certain

properties contain environmental hazards that

will ultimately need to be removed and/or require

containment mechanisms to prevent health risks

to the public. Cleanup of such hazards is

governed by various Federal and State laws. The

laws most applicable to GSA are the

Comprehensive Environmental Response

Compensation and Liability Act of 1980, the Clean

Air Act, and the Resource Conservation and

Recovery Act.

In accordance with the Federal Accounting

Standards Advisory Board's Statements of

Federal Financial Accounting Standards (SFFAS)

Numbers 5 and 6, Accounting for Liabilities of the

Federal Government, and Accounting for Property

Plant and Equipment, respectively, and

interpretive guidance in "Federal Financial

Accounting and Auditing Technical Release

Number 2" issued by the Accounting and

Auditing Policy Committee, if an agency is

required by law to clean up such hazard, the

estimated amount of cleanup cost must be

reported in the financial statements. Accordingly,

GSA recognized liabilities totaling $63 million and

$102 million for Environmental and Disposals

costs as of September 30, 2001 and 2000,

respectively, for properties currently in GSA's

property inventory. In instances where no

reasonable estimate of the cost to clean up a

particular site could be made, GSA recognized

the estimated costs for related environmental

studies as is prescribed in the guidance noted

above. In some instances, GSA has been named

as a party in certain environmental cases where

the subject property is no longer in the GSA or

Federal property inventory. GSA's liability for

such cases is further discussed in Note 6.

8. PROPERTY AND EQUIPMENT

A. Summary of Balances

Balances in GSA's Property and Equipment accounts subject to depreciation as of September 30, 2001,

and 2000, are summarized below (dollars in millions).

2001 2000 

Accumulated Net Accumulated Net

Cost Depreciation Book Value Cost Depreciation Book Value

Buildings $19,168 $ 8,219 $ 10,949 $ 18,328 $ 7,407 $ 10,921

Leasehold Improvements 271 222 49 271 208 63

Telecom and ADP Equipment 169 124 45 158 112 46

Motor Vehicles 3,341 996 2,345 3,023 858 2,165

Other Equipment 259 138 121 213 121 92

Total $23,208 $ 9,699 $ 13,509 $ 21,993 $ 8,706 $ 13,287
10. UNFUNDED LIABILITIES

As of September 30, 2001, and 2000, budgetary

resources were not yet available to fund certain

liabilities reported on the balance sheet. For the

balances in question, most are long-term in

nature where funding is generally made available

in the year payments are anticipated. These

Unfunded Liabilities consist of amounts reported

on the Balance Sheet for fiscal years 2001 and

2000, under the captions: Workers'

Compensation Actuarial Liability, Other

Intragovernmental Liabilities, Annual Leave

Liability, Environmental and Disposals, and Other

9. OTHER LIABILITIES

As of September 30, 2001, and 2000, amounts reported on the balance sheet as Other Intragovernmental

Liabilities and Other Liabilities consisted of the following (dollars in millions):

2001 Total GSA

FBF GSF ITF Others Consolidated

Other Intragovernmental Liabilities:

Workers’ Compensation Due to DOL $ 25 $ 6 $ 2 $ 4 $ 37

Deposits Held in Suspense - - - 27 27

Payments Due to the Judgment Fund 126 - - 1 127

Total $ 151 $ 6 $ 2 $ 32 $ 191

Other Liabilities:

Contingencies $ 121 $ 2 $ 39 $ - $ 162

Long-Term Lease Commitments - 26 - - 26

Installment Purchase Liabilities 15 - - - 15

Pensions for Former Presidents - - - 7 7

Unamortized Rent Abatements 4 - - - 4

Total $ 140 $ 28 $ 39 $ 7 $ 214

2000 Total GSA

FBF GSF ITF Others Consolidated

Other Intragovernmental Liabilities:

Workers’ Compensation Due to DOL $ 24 $ 6 $ 2 $ 4 $ 36

Deposits Held in Suspense - - - 32 32

Payments Due to the Judgment Fund 128 - - - 128

Total $ 152 $ 6 $ 2 $ 36 $ 196

Other Liabilities:

Contingencies $ 133 $ 3 $ 36 $ - $ 172

Installment Purchase Liabilities 13 - - - 13

Pensions for Former Presidents - - - 7 7

Total $ 146 $ 3 $ 36 $ 7 $ 192

64
65

Liabilities. In addition, balances reported as

Intragovernmental Debt for fiscal years 2001 and

2000, include unfunded balances totaling $108

million and $122 million, respectively. Certain

other balances reported in the Balance Sheet

under the captions: Deposit Fund Liability, and

Earnings Payable to Treasury, as well as amounts

shown as Deposits Held in Suspense in Note 9,

while unfunded by definition, will be liquidated

from resources outside of the traditional funding

process.

11. NON-ENTITY ASSETS

As of September 30, 2001, and 2000, certain

amounts reported on the balance sheet are not

available to management for use in ongoing

operations and are classified as Non-entity assets

(see Note 1.A). These balances consisted of the

following (dollars in millions):

2001 2000

Funds with U.S. Treasury $ 87 $ 90

Accounts Receivable – Public 2 3

Prepaid Expenses - Federal 1 3

Total $ 90 $ 96

12. RECONCILIATION TO THE

PRESIDENT’S BUDGET

Differences can occur between amounts

reported in the Combining Statements of

Budgetary Resources (CSBR) and similar

amounts reported in the President’s Budget.

Balances submitted to the U.S. Treasury

constitute the basis for reporting in the

President’s Budget. As the President’s

Budget will not be published until after the

issuance of these financial statements, the

differences identified below for fiscal year

2001 were calculated using balances reported

to Treasury, since those are the amounts

expected to be presented in the President’s

Budget. The most significant differences are

due to adjustments identified during the

preparation of the CSBR, which occurred

after the U.S. Treasury’s deadline for

reporting of fund balances and budget

execution results. Such adjustments to the

balances reported to Treasury have been

made to more fully reflect the activity for the

fiscal year ended and for balances as of

September 30, 2001, and 2000. Additional

reconciling differences are caused by the

presentation style of the President’s Budget,

which excludes unobligated balances and

recoveries of obligated balances in expired

annual appropriated funds but are

appropriately included in the CSBR in the

Other Funds group. Such amounts totaled

$46 million and $70 million in fiscal years 2001

and 2000, respectively. Amounts reported on

the CSBR that are greater or (less) than

amounts reported to Treasury due to timing,

are as follows (dollars in millions):

FBF GSF ITF Others Total

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000

Budgetary Resources $(59) $ - $ (2) $ - $ 11 $ 47 $ 2 $ - $ (48) $ 47

Obligations Incurred - - (2) 2 (4) (46) - - (6) (44)

Unobligated Balance (59) - - (2) 15 93 2 - (42) 91

Obligated Balance 53 2 3 (4) (18) (99) - (14) 38 (115)

Outlays 3 (2) (9) 32 (3) 20 (16) 14 (25) 64
13. BUSINESS RESTRUCTURING COSTS

On April 18, 2001 the GSA Acting Administrator

announced that the Federal Supply Service would

undergo a warehouse facility consolidation

requiring the closure of two distribution centers

and four forward supply points. The closing date

for the distribution centers was November 2001,

and for the forward supply points, October 2001. 

During the interim period from closure

announcement to actual closure, a phased shift of

inventory from the six locations to the remaining

two locations commenced. It is anticipated that

all final closure actions will be completed 60 days

after the November closure of the last closing

facility in Palmetto, GA. The two remaining

facilities located in Burlington, NJ and Stockton,

CA will assume all distribution work. 

The opportunity was given to all FSS associates

directly affected by closures to request Voluntary

Separation Incentive Payments (buyouts). Based

upon those associates’ intended acceptance

replies, termination costs for $7 million were

accrued for 247 associates. Lease liability rent

costs for $26 million were accrued for the

warehouse facility in Palmetto, GA, the only closing

facility bound by a long-term lease agreement. 

Payments for accrued associates’ termination

costs will be incurred during fiscal year 2002 and

the Palmetto rent payments will be made over the

remaining commitment period of the lease.

66
67

REQUIRED SUPPLEMENTARY INFORMATION

DEFERRED MAINTENANCE 

As of the end of fiscal year 2001, GSA had no

material amounts of deferred maintenance cost

to report. GSA administers the Building

Maintenance Management Program that, on an

ongoing basis, maintains the Building Class

inventory in acceptable condition, as defined by

GSA management. GSA utilizes a condition

assessment survey methodology, applied at the

overall portfolio level, for determining reportable

levels of deferred maintenance. Under this

methodology, GSA defines "acceptable condition"

and "acceptable level of service" in terms of

certain National Performance Measures,

formulated under the provisions of the

Government Performance and Results Act

(GPRA) of 1993. 

GSA expenses normal repair and maintenance

costs as incurred. Although GSA has no

substantive backlog of deferred maintenance

tasks, the average building in the GSA inventory

is 45 years old, and only 25 percent of these

buildings have had extensive modernization. This

has led to a large inventory of capital Repair and

Alteration (R&A) work items of which

approximately $4.2 billion has not yet been

addressed by an ongoing PBS R&A project. For

fiscal year 2002, GSA has requested new

obligational authority of approximately $827

million for the R&A program.

INTRA-GOVERNMENTAL BALANCES

For fiscal year 2001, the following schedule

identifies major customers of GSA's Intragovernmental revolving funds and the associated

amount of sales representing over 80 percent of

GSA's total consolidated revenues (dollars in

millions):

Agency Amount

Department of the Army $ 2,201

Department of the Navy 1,677

Department of the Air Force 1,569

Department of Justice 1,511

Department of the Treasury 1,306

Judiciary 870

Social Security Administration 643

Dept. of Health and Human Services 572

Department of Defense 559

Department of the Interior 486

Department of Agriculture 438

Department of State 328

Environmental Protection Agency 320

Department of Transportation 318

Total $12,798

The following schedule reflects accounts

receivable balances owed to GSA as of

September 30, 2001, from the major customers of

GSA's Intra-governmental revolving funds,

representing over 80 percent of GSA's total

consolidated accounts receivable (dollars in

millions):

Agency Amount

Department of the Army $ 419

Department of the Air Force 317

Department of Defense 277

Department of the Navy 276

Department of the Treasury 59

Department of Justice 48

Corps of Engineers 40

Department of State 36

Department of Energy 33

Department of the Interior 30

Depart. of Health and Human Services 29

Judiciary 27

Department of Commerce 26

District of Columbia 25

Social Security Administration 23

Department of Agriculture 23

Department of Transportation 19

Total $ 1,707

GSA reported $3,367 million of intra-governmental

liabilities on its Balance Sheet as of September 30,

2001. Of that balance, the significant elements

comprising over 80 percent of the total included

borrowings from the Department of the Treasury -

$2,397 million (see note 3); Workers’ Compensation

liabilities administered by the Department of Labor

- $235 million; and Judgment Fund reimbursements

due the Department of the Treasury - $127 million.
68

U.S. General Services Administration

SUPPLEMENTAL CONSOLIDATING STATEMENTS OF OPERATIONS

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions) (Unaudited)

Federal

Buildings Fund

General

Supply Fund

Information

Technology Fund

2001 2000 2001 2000 2001 2000

Operating Revenues:

 Building Rents and Services $ 6,983. $6,668. $ -. $ -. $ -. $ -.

 Sales of Supplies -. -. 1,596. 1,574. -. -.

 Information Technology Services -. -. -. -. 6,171. 4,986.

 Motor Vehicle Services -. -. 957. 953. -. -.

 Reimbursements -. -. -. -. -. -.

 Other 26. 7. 249. 212. -. 26.

 Total Operating Revenues 7,009. 6,675. 2,802. 2,739. 6,171. 5,012.

Expenses:

Cost of Supply Sales -. -. 1,351. 1,322. -. -.

Personnel Salaries and Benefits 520. 481. 232. 220. 142. 127.

Rent 3,004. 2,905. 71. 44. 15. 13.

Information Technology -. -. -. -. 6,051. 4,840.

Motor Vehicles -. -. 340. 373. -. -.

Contracted Services 1,553. 1,459. 111. 109. -. -.

Depreciation and Amortization 864. 804. 291. 265 17. 27.

Utilities 298. 264. -. -. -. -.

Operating Supplies 58. 55. 174. 162. 2. 3.

Interest 193. 198. -. -. -. 1.

Travel and Transportation 25. 24. 6. 6. 7. 6.

Shipping Expenses -. -. 43. 54. -. -.

Workers' Compensation Actuarial Expense 14. 8. 3. 2. 1. 1.

Other Expenses 40. 108. 86. 56. 5. 61.

Total Operating Expenses 6,569. 6,306. 2,708. 2,613. 6,240. 5,079.

Net Income From (Cost of) Operations 440. 369. 94. 126. ( 69.) ( 67.)

Other Results of Operations:

Appropriations Used 484. -. -. -. -. -.

Non-Exchange Revenue -. -. -. -. -. -.

Imputed Financing Provided By Others 79. 51. 21. 25. 10. 12.

Transfers of Assets and Liabilities, Net ( 5.) ( 5.) 22. 17. 1. -.

Transfers and Reclassifications of Earnings -. -. -. -. -. -.

Other -. 1. -. -. -. -.

Net Results of Operations $ 998. $416. $ 137. $ 168. $ ( 58.) $ ( 55.)
69

Other Funds

Less: Intra-GSA

Eliminations

GSA Consolidated Totals

2001 2000 2001 2000

 $ -. $ -. $ 109. $ 83. $ 6,874. 43.5 % $ 6,585. 46.3 %

-. -. 18. 24. 1,578. 10.0 1,550. 10.9

 -. -. 116. 117. 6,055. 38.3 4,869. 34.2

 -. -. 8. 8. 949. 6.0 945. 6.7

 261. 234. 197. 217. 64. 0.4 17. 0.1

7. 11. -. -. 282. 1.8 256. 1.8

 268. 245. 448. 449. 15,802. 100.0 14,222. 100.0 

 -. - 18. 24. 1,333. 8.4 1,298. 9.1

223. 217. -. -. 1,117. 7.1 1,045. 7.3

24. 25. 109. 83. 3,005. 19.0 2,904. 20.4

-. -. 116. 117. 5,935. 37.6 4,723. 33.2

-. -. 8. 8. 332. 2.1 365. 2.6

211. 226. 206. 238. 1,669. 10.6 1,556. 10.9

 4. 6. -. -. 1,176. 7.4 1,102. 7.7

-. -. -. -. 298. 1.9 264. 1.9

 2. 2. -. -. 236. 1.5 222. 1.6

-. 1. -. -. 193. 1.2 200. 1.4

7. 7. -. -. 45. 0.3 43. 0.3 

-. -. -. -. 43. 0.3 54. 0.4 

2. -. -. -. 20. 0.1 11. 0.1 

( 17.) 19. 14. 17. 100. 0.6 227. 1.6 

456. 503. 471. 487. 15,502. 98.1 14,014. 98.5 

( 188.) ( 258.) ( 23.) ( 38.) 300. 1.9 208. 1.5 

184. 209. -. -. 668. 4.2 209. 1.5 

 46. 36. -. -. 46. 0.3 36. 0.3 

15. 15. 23. 38. 102. 0.6 65. 0.5 

11. 6. -. -. 29. 0.2 18. 0.1 

( 32.) ( 33.) -. -. ( 32.) ( 0.2 ) ( 33.) ( 0.2 ) 

-. 1. -. -. -. 0.0 % 2. 0.0 

$ 36. $ ( 24.) $ -. $ -. $ 1,113. 7.0 % $ 505. 3.6 %

2001 2000

Amount

Percent of

Revenues Amount

Percent of

Revenues
70

U.S. General Services Administration

SUPPLEMENTAL CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended September 30, 2001 and 2000

(Dollars in Millions) (Unaudited)

Federal

Buildings Fund

General Supply

Fund

2001 2000 2001 2000

Cash Flows from Operating Activities:

Net Income From (Cost of) Operations $ 440. $ 369. $ 94. $ 126.

Adjustments to Net Income From (Cost of) Operations -

Depreciation and Amortization 864. 804. 291. 265.

Non-Exchange Revenues -. -. -. -.

Other Adjustments and Write-offs ( 3.) 27. 3. 7.

(Gain) Loss on Disposal of Equipment ( 3.) -. 42. 19.

Changes in Current Assets and Liabilities -

(Increase)/Decrease

Accounts Receivable, Net 21. 9. ( 37.) ( 3.)

Inventories 1. 1. 28. ( 9.)

Prepaid Expenses and Advances to Others ( 9.) ( 5.) ( 12.) 11.

Increase/(Decrease)

Accounts Payable and Accrued Expenses 48. ( 36.) 19. ( 12.)

Deposit Fund Liability -. -. -. -.

Deferred Revenue and Advances From Others 6. 9. 7. 8.

Other Liabilities ( 40.) ( 35.) 30. 5.

Total Adjustments 885. 774. 371. 291.

Net Cash Provided by (Used in) Operating Activities 1,325. 1,143. 465. 417.

Cash Flows from Investing Activities:

Proceeds from Sales of Property and Equipment 21. -. 153. 202.

Payments Received from Notes Receivable, Net -. -. -. -.

Capital Expenditures ( 1,152.) (1,074.) ( 664.) ( 635.)

Other ( 5.) 4. ( 1.) 1.

Net Cash (Used in) Provided by Investing Activities ( 1,136.) ( 1,070.) ( 512.) ( 432.)

Cash Flows from Financing Activities:

Principal Payments Under Capital Lease Obligations ( 9.) ( 7.) -. -.

Additional Appropriated Capital, Net 484. -. -. -.

Principal Payments on Long-Term Debt ( 90.) ( 124.) -. -.

Financing Sources Provided By Others 79. 51. 21. 25.

Receipts Transferred Out, Net ( 1.) -. -. -.

Net Cash Provided by (Used in) Financing Activities 463. ( 80.) 21. 25. 

Net Increase (Decrease) in Funds with U.S. Treasury 652. ( 7.) ( 26.) 10.

Funds with U.S. Treasury at Beginning of Year 3,378. 3,385. 390. 380.

Funds with U.S. Treasury at End of Year $ 4,030. $ 3,378. $ 364. $ 390. 

Supplemental Disclosure of Cash Flow Information:

Total Interest Paid $ 175. $ 180. $ -. $ -.

Supplemental Schedule of Financing and Investing Activities:

Property and Equipment Acquired Under

Capital Lease Obligations $ 3. $ 36. $ -. $ -.

Property Acquired Under Long-Term Financing

Arrangements $ 24. $ 6. $ -. $ -.
71

Information

Technology Fund Other Funds

Less: Intra-GSA

Eliminations

GSA Consolidated

Totals

2001 2000 2001 2000 2001 2000 2001 2000

$ ( 69.) $ ( 67.) $ ( 188.) $ ( 258.) $ ( 23.) $( 38.) $ 300. $ 208.

17. 27. 4. 6. -. -. 1,176. 1,102.

-. -. 34. 36. -. -. 34. 36.

1. 7. -. -. -. -. 1. 41.

-. 28. -. -. -. -. 39. 47.

( 92.) ( 372.) 1. 1. 10. ( 5.) ( 117.) ( 360.)

-. 2. -. -. -. -. 29. ( 6.)

( 5.) ( 4.) 2. 11. ( 16.) ( 11.) ( 8.) 24.

163. 322. ( 7.) ( 13.) ( 10.) 5. 233. 256.

-. -. ( 6.) ( 1.) -. -. ( 6.) ( 1.)

12. 54. 16. 12. 16. 11. 25. 72.

5. 5. ( 17.) 10. -. -. ( 22.) ( 15.)

101. 69. 27. 62. -. -. 1,384. 1,196.

32. 2. ( 161.) ( 196.) ( 23.) ( 38.) 1,684. 1,404.

-. 26. -. -. -. -. 174. 228.

-. -. ( 5.) 1. -. -. ( 5.) 1.

( 27.) ( 19.) ( 25.) ( 2.) -. -. ( 1,868.) (1,730.)

1. ( 4.) -. ( 10.) -. -. ( 5.) ( 9.)

( 26.) 3. ( 30.) ( 11.) -. -. ( 1,704.) (1,510.)

-. -. -. -. -. -. ( 9.) ( 7.)

-. -. 217. 198. -. -. 701. 198.

-. -. ( 1.) ( 6.) -. -. ( 91.) ( 130.)

10. 12. 15. 19. 23. 38. 102. 69.

-. -. ( 16.) ( 27.) -. -. ( 17.) ( 27.)

10. 12. 215. 184. 23. 38. 686. 103.

16. 17. 24. ( 23.) -. -. 666. ( 3.)

60. 43. 397. 420. -. -. 4,225. 4,228.

$ ;76. $ 60. $ 421. $ 397. $ -. $ -. $ 4,891. $ 4,225.

$ -. $ -. $ -. $ -. $ -. $ -. $ 175. $ 180.

$ -. $ -. $ -. $ -. $ -. $ -. $ 3. $ 36.

$ -. $ -. $ -. $ -. $ -. $ -. $ 24. $ 6.
Supplemental

Information

Supplemental

Information
The President 

The White House

Washington, DC 20500

Dear Mr. President:

I am pleased to report that the General Services Administration’s (GSA’s) management control and

financial management systems, taken as a whole, provide reasonable assurance that the objectives of

the Federal Managers’ Financial Integrity Act (FMFIA), Section 2 and Section 4, and the Federal

Financial Management Improvement Act (FFMIA), are being achieved. The content of the enclosed

FMFIA report is based on information provided by GSA’s managers, as well as on advice provided by the

agency’s Management Control Oversight Council (MCOC). It is also based on the results of the audit of

GSA’s Financial Statements, which produced an unqualified opinion for the 14th consecutive year.

During the past year, two previously reported material weaknesses have been corrected. Management

officials have fully implemented the schedule of corrective actions concerning the material weakness

“Rent Revenue Shortfall.” Regarding the material weakness “Level of Federal Protective Service

Officers,” the MCOC determined that the Federal Protective Service had taken sufficient corrective

action and that this issue is no longer considered a material weakness. Managers have evaluated their

programs and have attested that their management controls comply with the Office of Management and

Budget’s (OMB) Circular A-123, Management Accountability and Control. The responsible systems

managers and financial management officials have evaluated GSA’s financial management systems in

accordance with OMB Circular A-127, Financial Management Systems.

During fiscal year 2001, management control issues surfaced from a variety of sources. The MCOC,

under the chairmanship of the Deputy Administrator, examined a wide range of management issues that

were brought to its attention. The Inspector General, in his role as an advisory member of the MCOC,

continues to provide useful, constructive suggestions for improving the agency’s management control

and financial management policies and practices.

The plans and actions to correct our three material weaknesses and two remaining systems nonconformances are addressed in the enclosure to this letter. I consider none of the weaknesses reported

as critical to the performance of the agency’s missions.

Respectfully,

Stephen A. Perry

Administrator

Enclosure

73

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT REPORT
A. Statistical Summary of Performance

Section 2, Internal Control Systems

Number of Material Weaknesses

Number reported For that year, number that For that year, 

for the first time have been corrected number still pending

Prior Years 47 45 2

1997 Report 2 2 0

1998 Report 1 0 1

1999 Report 0 0 0

2000 Report 0 0 0

2001 Report 0 0 0

Total 50 47 3

Of the total number corrected, how many were corrected in 2001? 2

Section 4, Financial Management Systems

Number of non-conformances

Number reported For that year, number that For that year, 

for the first time have been corrected number still pending

Prior Years 8 8 0

1997 Report 1 1 0

1998 Report 2 2 0

1999 Report 2 0 2

2000 Report 0 0 0

2001 Report 0 0 0

Total 13 11 2

Of the total number corrected, how many were corrected in 2001? 0

*The two pending non-conformances are not considered to be significant. 

B. Material Control Weaknesses 

Target Date 

Calendar Year for Correction in Current Target

Material Weakness First Reported FY 2000 Report for Correction

GSA/FPS Control Centers 1995 2001 2002

Multiple Award Schedule Program 1996 2001 2002

Security Enhancements in Federal Buildings 1998 2001 2002

74

*
GSA/Federal Protective Service (FPS) 

Control Centers

A study conducted of GSA’s control centers

disclosed significant risks related to the GSA/FPS

control centers. The study indicated that, due to

budgetary and personnel constraints accumulating

over more than a decade, the control centers have

been degraded to a point at which various systems

are functioning, but raise risk and liability concerns

in the ability to provide an acceptable, efficient, and

effective FPS level of performance. The initial plan

was to upgrade all regional control centers with

state-of-the-art equipment; however, to gain

economies of scale, the project has been redirected

to consolidate some control centers into

megacenters and establish regional dispatch

centers.

All regional alarm accounts have been transferred

to their respective megacenter. The

telecommunications system for regions 5, 6, 7, 8, 9,

10, and 11 is installed. Funding is now available for

completion of the telecommunications system for

regions 1, 2, 3 and 4. Installation should be

completed by February 2002. A final review to

ensure that the actions taken are producing the

intended results is scheduled for April 2002.

Multiple Award Schedule (MAS) Program

Federal agencies collectively acquire goods and

services valued at billions of dollars annually

through Multiple Award Schedule (MAS) contracts.

The MAS program has several problems, which

were identified by agency management and cited in

General Accounting Office (GAO) and GSA Office

of Inspector General (OIG) audits. First, the

information that GSA receives from vendors to

evaluate prices offered to the Government is not

always accurate, current and complete. Second,

the heavy workload in the MAS program may

adversely affect the ability of contracting officers

to award the most favorable prices for the

Government. Third, agencies that use the MAS

program may not always comply with applicable

ordering procedures.

In previous years, this material weakness was

reported as a high-risk area, because the solutions

necessitated the involvement of the Office of

Management and Budget and, perhaps, the

Congress. Also, the Federal Acquisition

Streamlining Act significantly altered the conduct

of Federal procurement. Implementation of this law

continues to be evaluated as to the effect on the

MAS program. 

Currently, completion of this material weakness is

being tracked and corrected via OIG internal audit

A83007/F/W/V98000. Other major milestones in the

OIG audit and material weakness action plan call

for GSA to implement several contract automation

data actions. These include implementing a

Contract Modification Audit Trail with the FSSOnline System and an Offer Registration System

within FSS-Online and preparing a revised action

plan to establish goals by June 2002.

Security Enhancements In Federal Buildings

Improvements are needed in GSA’s implementation

of security equipment and structural

enhancements recommended by the Building

Security Committees. The lack of programmatic

controls and approaches has resulted in concerns

over the implementation and reported status of

security countermeasures and the use of

designated security upgrade funds for projects

that: (1) did not involve a Committeerecommended countermeasure, and (2) lacked

Central Office approval.

Since this material weakness was identified in FY

1998, GSA has taken a number of steps to

implement security countermeasures and

accurately report their costs. All corrective actions

are due to be completed by September 2002.

Actions Completed to Correct Rent 

Revenue Material Weakness

The PBS Commissioner reported in his fiscal year

2001 Assurance Statement that all actions were

implemented to correct deficiencies related to rent

revenue income projections. PBS adopted a new

billing system–the System for Tracking and

Administering Real Property (STAR) - with the

implementation of a new billing module in June 1998.

75
A budget-estimate module was implemented on-line

in May 2000 and a rent-forecasting module in fiscal

year 2001. Since 1997, PBS’ final revenue collections

were within two percent of the projections made at

the start of each year. 

Actions Completed to Correct Level of Federal

Protective Police Officers: The Management

Control Oversight Council met in November 2001

and reviewed the status of this weakness and the

actions taken to correct the weakness. After

review, the Council determined that a material

weakness no longer exists with the level of Federal

Protective Police Officers (FPPO’s). This

determination is based upon several factors,

including Congressional repeal of a specified

number of FPPO’s under Public Law 105-61, FPPO

resource levels are determined on a regular basis

by individual facility security surveys and Regional

Threat Assessments, a decreasing crime trend, and

an emphasis on multi-skilled Law Enforcement and

Security Officers (LESO’s). 

The material weakness originally existed because

the number of FPPO’s did not meet the

requirements that existed at the time for Public

Law 100-440, which stated, “The Administrator of

the General Services is authorized and directed to

hire up to and maintain an annual average of not

less than 1,000 (full time equivalent) positions for

Federal Protective Police Officers.” However,

Congress repealed the 1,000 FPPO level

requirements under Public Law 105-61 (signed by

the President on October 10, 1997). 

In fiscal year 2001, FPS reports that security

resources are now allocated based on individual

facility security surveys and Regional Threat

Assessments that are conducted on a regular and

reoccurring basis. Also, a decreasing crime trend

and a new emphasis on the use of multi-skilled Law

Enforcement Security Officers (uniformed

personnel trained in both law enforcement and

physical security competencies) has mitigated this

material weakness. 

C. Systems Non-Conformances

As required by Section 4 of the FMFIA and the

FFMIA, GSA conducts an annual evaluation to

determine whether its financial management

systems comply substantially with Federal financial

management system requirements, applicable

Federal accounting standards, and the U.S.

Government Standard General Ledger at the

transaction level.

Based on all review work performed during 2001, it

is our conclusion that GSA is in substantial

compliance with the requirements referred to in

Section 4 of the FMFIA and the FFMIA,

notwithstanding the two reportable nonconformances noted below. The two nonconformances listed below are not considered to

be significant, therefore the non-conformances do

not warrant a remediation plan to be prepared in

consultation with OMB.

Entity-wide System Security Management

and Management Oversight 

During the past four years, a review of several

significant GSA financial management system

applications disclosed control weaknesses relating

to logical and physical access, access monitoring

and follow up, security awareness, and related IT

security program implementation and oversight. In

the absence of such controls and oversight

systems, IT system resources remain susceptible

to unauthorized access, modification or undue risk.

During 2001, significant progress was made to

improve security training and provide more

consistency in GSA’s security posture by issuing

configuration guidelines. Despite these

improvements, GSA still needs to more effectively

implement and enforce its existing security policies

and guidelines. To address this challenge, GSA has

begun to update its IT security management

structure and will codify this change in a revised

security policy that will be drafted by January 2002.

All actions to improve IT security governance

within GSA will be completed by March 31, 2002. 

In addition, the Office of the Chief Information

Officer (CIO) will work with the Service-level CIO’s

to establish a common enterprise management

76
system, which is needed to provide the necessary

automation to monitor security configurations. The

planned target date to identify all additional actions

needed to correct this condition is March 2002. 

System Development, Implementation and

Change Controls 

During four of the past five years, a review of

several GSA systems disclosed that better controls

were needed relating to systems development and

implementation processes within the agency.

Specific improvements needed relate to the need

to establish and enforce more uniform policies and

procedures relating to application development,

implementation and change control. 

During the past year, GSA has made progress in

this area. Specifically, the CIO has reviewed the

existing systems development policies and

procedures and has determined that changes are

necessary to strengthen and improve GSA’s

agency-wide process. The next step planned is to

coordinate the modification, development and

implementation of change control policies and

procedures pertaining to creating or modifying

system applications with all GSA components. 

To further address this issue, GSA’s CIO plans to

establish an agency-wide System Life Cycle

Development process for systems planning,

acquisition, development and deployment.

Once all planned actions are completed, we believe

that this condition will be corrected by June 2002.

D. Summary of Additional Issues

Identified below are four issues that surfaced

during fiscal year 2001 which merit disclosure in

this year’s FMFIA report. However, these issues

were not considered by GSA’s Management Control

Oversight Council to be material weaknesses.

Background Checks of Contract Employees

GSA needs to improve it controls to ensure timely

background checks of contract employees. In

several reports issued between FY 1999 and FY

2001, the OIG noted recurring problems related to

contract service personnel such as cleaning staff

and maintenance workers not undergoing the

required background checks. In a follow-up review

on a previously reported material control weakness

regarding background checks for childcare

employees, the OIG found improvement in the

number of checks that were made. However, the

OIG noted that the process could be further

improved by ensuring that the background checks

were completed on a timelier basis.

GSA officials are continuing to meet to discuss

such possible solutions as modifying contract

vehicles to ensure adequate background checks are

performed.

Contract Administration Activities

The OIG issued several reports detailing

weaknesses in the controls over service and

construction contracts. In particular, the OIG

found that quality control programs were not

developed to monitor contractor performance and

preventative maintenance schedules, and that on

site supervisors were present in all buildings. In

one OIG audit, the report noted 13 out of 47

construction projects were delivered at least a

month late. Also, completed construction work

was not always inspected and receiving reports

were not consistently prepared.

GSA has implemented and continues to implement

action plans to correct deficiencies noted in the

OIG audit reports. Additionally, GSA officials

agreed to explore performance-based contract

vehicles to address the problem GSA-wide.

Use of Credit Cards

In past FMFIA reports, the OIG has expressed

concerns about the controls over payments made

by GSA Services and Staff Offices related to credit

card purchases. Despite these concerns questions

continue to arise regarding procurements made

with credit cards. In fiscal year 2001 the OIG noted

examples of items purchased with credit cards that

were not procured in compliance with procurement

regulations.

While the Office of the Chief Financial Officer has

taken steps to inform users about the Agency's

credit card policies (i.e. issued guidance and

conducted ethics briefings), OIG reviews continue

to uncover instances where credit card policies are

not being followed. The OIG found that the required

77
logs and supporting receipts of purchases were not

being properly maintained, sales tax was

improperly included on credit card purchases and

"purchase" cards were inappropriately used for

travel expenses. In addition, cardholders routinely

bought office products at higher prices than those

offered on GSA Advantage, appropriate approving

officials were not assigned to approve credit

cardholders transactions, and approving officials

were not required to review travel receipts when

approving travel vouchers.

GSA management and OIG are continuing to work

together in correcting this problem, including

issuance of guidance, ethics briefings and training,

and implementation of action plans to correct

deficiencies noted in OIG audit reports. Also, GSA

will explore increasing the emphasis on the role and

responsibilities of managers for reviewing credit

card transactions.

Multiple Award Schedule Pricing Practices

In an OIG special report, the OIG expressed

concern that, as the MAS program has grown,

program fundamentals including pricing objectives

and other pricing tools have been marginalized.

These fundamentals include the mandate for mostfavored customer pricing, the requirement to

perform meaningful price analysis when awarding

or extending contracts, and the use of pre-award

audits to assist in negotiating contracts. The OIG’s

review of three MAS schedules with expected

purchases of $7.4 billion found that Most Favored

Customer (MFC) pricing was achieved in only 10 of

31 contracts. In four contracts, the OIG could not

determine whether MFC pricing was achieved.

With regard to price analysis, the OIG found that in

44 of 80 contract extensions the price analysis was

inadequate to support the extension. 

Finally, the OIG believes the reduction in the

number of pre-award contract audits requested by

Contracting Officers significantly reduces the

likelihood that MFC pricing is achieved. In FY 1990,

211 pre-award audits were conducted compared to

only 23 in FY 2000. From 1990 to 1996 Contracting

Officers used audit-developed information to lower

MAS prices by over $618 million. From 1997 to 2000

audit developed data was used to lower MAS prices

by only $98 million. 

Currently, plans are in place for FSS and the OIG to

form a task group to address pricing concerns.

78
December 13, 2001

MEMORANDUM FOR STEPHEN A. PERRY

ADMINISTRATOR (A)

WILLIAM B. EARLY, JR.

CHIEF FINANCIAL OFFICER (B)

FROM: DANIEL R. LEVINSON

INSPECTOR GENERAL (J)

SUBJECT: GSA’s Major Challenges

Attached is a copy of our office’s updated assessment of the major challenges currently facing GSA. The

Reports Consolidation Act of 2000, Pub. L. 106-531, requires that Offices of Inspectors General (OIG)

prepare, for inclusion in agency Accountability Reports, a statement summarizing what the Inspector

General considers to be the most significant management and performance challenges facing the agency

and briefly assessing the agency’s progress in addressing those challenges. The Act requires that OIGs

provide agency heads with the assessment 30 days before the due date of the Accountability Report.

The Chief Financial Officer has set a goal of forwarding the Accountability Report to OMB by January 17,

2002. We are hereby providing you with our assessment to afford you the opportunity to review and prepare

any comments you wish to append.

If you have any questions or wish to discuss this, I would be happy to meet with you.

Attachment

79

INSPECTOR GENERAL’S REPORT ON MANAGEMENT CHALLENGES

U.S. GENERAL SERVICES ADMINISTRATION

Office of the Inspector General
UPDATED ASSESSMENT OF GSA’S MOST

SERIOUS CHALLENGES

November 2001

Protection of Federal Facilities and Personnel

Issue 

Providing a safe, healthful, and secure environment

for over 1 million workers and the visitors to over

8,300 owned and leased Federal facilities

nationwide is a major multifaceted responsibility of

GSA. The increased risks from terrorism have

greatly expanded the range of vulnerabilities

traditionally faced by building operations

personnel. The challenge facing GSA is a difficult

one: the need to ensure appropriate and effective

security to protect Federal facilities, employees,

and the public, while also ensuring that our

buildings and institutions remain open and

accessible in keeping with the character of a free

society.

OIG Work Completed

Since 1996, the OIG has issued more than 25 audit

reports and special alert reports addressing various

aspects of the physical security program. The

results, especially in our earlier efforts, frequently

reported systemic operating shortcomings. Some

of the areas covered by these reviews were

contract security guards, countermeasures,

childcare center security, access to Government

facilities, and intelligence sharing. At the same

time, we performed more than 170 related

investigations. GSA management has been

responsive to our findings and has implemented

many corrective actions and enhancements. Our

office and GSA management, however, are aware

that the safety and security programs still face

many challenges—challenges that have been

greatly expanded in nature and dimension by the

terrorist attacks of September 11, 2001. 

Agency Actions

In FY 2000, the FPS introduced a risk assessment

methodology, Federal Security Risk Manager

(FSRM), to address potential threats to Federal

facilities. This methodology was designed to link

threats, risk levels and countermeasure (CM)

recommendations; and address vulnerabilities and

impact of loss should an incident occur. The

desired goal is to reduce threats at each facility

through specific CMs to address the risks. We have

tested the FSRM Program and have identified

some implementation shortfalls, which FPS is

working to overcome. 

OIG Work In Process

We are currently conducting a review of the FPS

Federal Security Risk Program to assess how the

FPS is implementing the new risk assessment

methodology mentioned above. We expect to issue

our formal report during the second quarter of FY

2002.

OIG Work Planned

Our FY 2002 Audit Plan includes, at the request of

the Administrator and senior PBS managers, a

major reevaluation of the measures the FPS has

taken over the past several years to strengthen and

upgrade the buildings security program. In light of

recent events, this review will be expedited and the

scope will be expanded to include all regions.

Management Controls

Issue

Multiple management controls have been replaced,

through reinvention initiatives, by fewer and

broader controls, making it essential that the

remaining controls be emphasized and consistently

followed. 

80
Procurement: Management has been

emphasizing the use of purchase cards as a

means of streamlining the procurement process.

Individuals can charge any amount up to their

spending authority. The Agency encouragement

to use purchase cards whenever possible

significantly heightens the importance of

adequate controls for purchase card transactions.

Our concerns encompass whether speedy

procurement is being attained at the expense of

appropriate regulatory requirements and good

internal controls, whether charge cards are being

used solely for appropriate Government purchases,

and whether GSA is getting the best price. 

Data Integrity: In passing the Government

Performance and Results Act of 1993 (Results Act),

Congress emphasized that the usefulness of

agencies’ performance data depends, to a large

degree, on the reliability and validity of those data.

Past audit work has shown that the absence of

controls or the non-compliance with existing

controls has resulted in poor quality data at the

operational levels of many GSA programs.

OIG Work Completed

We have conducted several recent reviews

specifically designed to test management controls.

However, the majority of control evaluations were

part of larger examinations of Agency programs

and functions, many of which utilize the charge

cards for purchases, travel or fleet services. From

April through September 2001, we also conducted

51 investigations involving alleged abuses of the

SmartPay charge card program. These

investigations were conducted cooperatively with

card issuers, Federal agencies (including the Secret

Service and FBI), as well as state and local law

enforcement agencies. The allegations included

employees not complying with card usage

guidelines and making unauthorized personal

purchases, as well as frauds by Government

employees and others through the theft or misuse

of charge card account checks or numbers. From

these reviews, we concluded that management is

not consistently applying controls that will help

deter fraud and misuse.

Agency Actions

GSA’s CFO is aware of the importance of adequate

controls for charge card transactions and is

working with our office to strengthen those

controls. In November 2000, representatives from

the OIG Offices of Audits and Investigations, the

CFO, and Citibank (the VISA card issuing Bank)

formed a team to establish a process to enhance

the detection and prevention of improper purchase

and travel card activity by GSA cardholders. The

team’s objective is to develop a highly effective, low

cost detection/prevention program that will serve

as a model for other Federal agencies.

After we completed another review of the purchase

and travel card controls within the FTS Heartland

Region, the Assistant Regional Administrator for

FTS issued a memo to all regional associates

detailing our concerns and asked the associates to

take immediate corrective action, including

requesting that approving officials carefully review

travel vouchers and monthly statements for

purchases to ensure prudent usage of charge

cards.

OIG Work In Process

We are currently reviewing the purchase and travel

card controls in the FTS, Rocky Mountain and MidAtlantic Regions. 

OIG Work Planned

Our Fiscal Year 2002 Audit Plan includes reviews to: 

• evaluate the controls in place over refunds by the

banks awarded contracts under the SmartPay

Program;

• examine the controls in place over cardholders’

ordering and acceptance of goods and services; 

• assess the practices of approving officials and

the cardholders whose transactions they are to

review; and 

• determine whether financial controls over the

FEDSIM Program are effective and operating

efficiently to meet objectives. 

Information Technology 

Issue

GSA’s challenges in this area continue to increase.

GSA relies on its automated information systems

81
to perform its mission and manage its operations.

Many of these systems process and store sensitive

information such as personal employee data and

contractors’ proprietary information. 

Systems Development: GSA is in the process of

replacing a number of its old systems, in keeping

with technological advances. Many of the IT

projects are designed to go beyond automating

current business functions and create real change

in the way that GSA does business. However, GSA

has experienced recurring difficulty in deploying

and maintaining structured system development

practices that ensure the proper development of

requirements as well as implementation of

prescribed system processes through approved

systems development life cycles. As a result, GSA

systems commonly experience schedule delays and

cost overruns, need frequent redesign, have

difficulty sharing usable data between systems, and

spend a prolonged period of time in development. 

Many GSA IT projects attempt to minimize

development cost and deployment schedules by

developing systems based on already existing

Commercial-Off-The-Shelf (COTS) software.

COTS solutions offer agencies the ability to forgo

lengthy development of core system functionality,

and the ability to adhere to industry information

processing standards. However, the majority of

COTS solutions do require modifications to meet

unique Federal requirements. Moreover, new

systems require interfaces with existing systems

that are difficult to implement. Reviews by our

office have shown this to be the case with GSA’s

Pegasys system, the foundation of which is a COTS

financial management product. Pegasys will

replace the National Electronic Accounting and

Reporting (NEAR) system as GSA’s financial

system of record. We found similar difficulties with

the implementation of STAR, PBS’ new

management information system. Major system

development efforts can rapidly grow in cost and

complexity unless management consistently

provides comprehensive oversight.

Information Technology Security: The

Government Information Security Reform Act

(GISRA) focuses on the program management,

implementation, and evaluation aspects of Federal

information systems security. With the OIG’s first

annual GISRA Information Security program

evaluation, we found that GSA faces a significant

management challenge to ensure that systems

continue to operate as intended, agency assets are

protected, and privacy is assured. 

OIG Work Completed

Since the beginning of Fiscal Year 1998, our office

has performed 18 IT-related reviews. We have

evaluated the Agency’s Year 2000 conversion

efforts; security of Local Area Networks and

electronic commerce; the PBS Electronic

Acquisition System; STAR; implementation and

contract administration of Pegasys; the Integrated

Task Order Management System; Smart Card and

Seat Management initiatives; the FTS Millennia

Program, FEDdesk; GSA’s Critical Infrastructure

Protection Plan; the Agency’s activities related to

“cookies.” We also performed a review of GSA’s

Agency-wide information security program, as

required by GISRA of October 2000

Agency Actions

The CIO has tasked the new Center of Expertise on

IT Security to provide a more substantial leadership

role in ensuring electronic commerce systems

security. 

The CFO is working with the Office of Acquisition

Policy to determine ways to introduce

performance-based contracting methods into the

Pegasys contracting process. Additionally, the CFO

has taken positive steps to gain better control over

the development and implementation process, and

has engaged Government consultants and

commercial sources to assist in the identification

of steps that can be taken to gain better control

over the cost and timeliness of the project.

OIG Work-In-Process

Another review of the CFO’s Development of the

Pegasys System has been completed and the report

is forthcoming. The report will concentrate on the

Re-scoping of the Pegasys effort and its effects,

system architecture and migration strategy,

implementation and recurring system incidents,

and integration with GSA’s existing older systems.

82
OIG Work Planned

Our FY 2002 Audit Plan includes the following

reviews:

• GSA’s Electronic Mail System;

• GSA’s Implementation of the Clinger-Cohen Act;

• GSA’s Connectivity Infrastructure;

• Recurring System Development Issues;

• Government Information Security Reform Act

• Comprehensive Human Resources Integrated

System (CHRIS);

• GSA’s Office of FirstGov; and

• PBS’ Systems Development Center.

Procurement Activities

Issue

GSA provides Federal agencies with products and

services valued in the billions through various types

of contracts, two of the most prevalent types being

the Multiple Award Schedule (MAS) Program and

Multiple Award Contracts (MACs). 

The MAS Program provides Federal agencies

with a simplified procurement process for the

purchase of a diverse range of commercial supplies

and services from multiple vendors at prices

associated with volume buying. GSA administers

over 110 schedules that produced sales of $13.8

billion in FY 2000 alone; and the volume is expected

to continue to grow. 

Our Office is concerned that, as the MAS program

has grown, the importance of certain program

fundamentals—including pricing objectives and

other pricing tools—has diminished. These

fundamentals, which are set out by regulation,

include the mandate for most-favored customer

pricing, the requirement to perform meaningful

price analysis when awarding or extending

contracts, and the use of pre-award audits to assist

in negotiating contracts. 

MACs are appropriate when the Government

cannot predetermine, above a specified minimum,

the precise quantities of supplies or specific

services that will be required during the contract

period. GSA competitively awards, using source

selection procedures, multiple contracts covering

the same scope of work and then, as needs are

identified for specific tasks and products, the

agencies compete the task/delivery orders among

the contract holders. The use of multiple award

contracts is encouraged by the Federal Acquisition

Streamlining Act of 1994 to promote best value and

the fair opportunity for contract awardees to

compete among themselves. The competition is

intended to lower prices, obtain better quality,

reduce delivery time, and improve customer

service.

OIG Work Completed

During FY 2001, our office completed a review of

FSS’ contracting for services under MAS

contracts, which showed that FSS is supporting

Federal Acquisition Regulation changes that will

require agencies using the services schedules to

attempt to obtain better-than-negotiated pricing

on large procurements. We also completed a

review of the operations of FSS’ Hardware

SuperStore. We found that FSS’ efforts to

improve contracting have yet to alleviate MAS

pricing concerns. Finally, on August 24, 2001, we

issued an OIG white paper, titled “MAS Pricing

Practices: Is FSS Observing Regulatory

Provisions Regarding Pricing?” This paper

reported to management that: (1) FSS is not

consistently negotiating most favored customer

prices; (2) many MAS contract extensions are

accomplished without adequate price analysis;

and (3) pre-award audits are not being used

effectively to negotiate better MAS prices.

Agency Actions / OIG Work-In-Process

We are participating with FSS on a working group

to review current MAS procurement practices, and

look at any needed enhancements to program

pricing activities. The group will be comprised of

representatives from the Offices of Acquisition

Policy, General Counsel, FSS acquisition, and the

Office of Inspector General.

As a result of our review of FTS Use of Multiple

Award, Indefinite Delivery Indefinite Quantity

Contracts, GSA is working with an interagency

committee to develop a best practices guide,”7

Steps to Performance-Based Services Acquisition.”

Additionally, a Center of Expertise has been

established to gather sample statements of work

83
and develop a template for performance-based

service contracting solicitations.

OIG Work Planned

Our FY 2002 Audit Plan includes a review of GSA

Advantage!TM, an electronic ordering system, to

determine if it can reasonably serve as a primary

source of supplies and services for Federal

agencies.

Our Plan also calls for us to identify best practices

for procuring services. 

Human Capital

Issue

Like many Federal agencies, GSA has an aging

workforce and faces significant potential loss of

institutional knowledge in the coming years. Since

1993, GSA has been downsizing and has focused

on restructuring its financial and business efforts.

The Agency workforce was reduced from 20,000 to

14,000 between 1993 and 1999. Much of the

downsizing was accomplished through early

retirement and buyout authority, and by filling job

vacancies sparingly. 

Since 1998, the OIG has consistently cited human

capital management as one of the major

management challenges facing GSA. Additionally,

Congress and GAO have identified human capital

management policies as a missing link in the

Government’s performance management

framework. GAO added this issue to its list of

major management challenges facing Federal

agencies. Human capital planning and

organizational alignment, leadership continuity and

succession planning, and recruitment and retention

of staff with the right skills were identified as key

areas needing attention. 

OIG Work Completed

To establish a benchmark regarding whether GSA’s

efforts are enough to acquire the skills and talent

needed to respond to a rapidly changing,

increasingly competitive business environment, we

looked at other Federal agencies’ self-assessment

reports, suggested by GAO to identify current and

future human capital needs to pursue agency

missions. The assessments by the other agencies

not only demonstrate senior level commitment, but

also map out, in an objective fashion, the agencies’

human capital requirements to meet current and

future demographic and performance challenges.

In our Advisory Report on GSA’s Human Capital

Management, we encouraged GSA to proceed with

the human capital assessment suggested by GAO. 

Agency Actions

GSA has moved on several fronts to meet identified

human capital challenges. For example, GSA’s

World Class Workforce (WCW) has met or

exceeded its targets for hiring new employees over

the past two years. The WCW also has a number of

initiatives regarding employee orientation,

engaging existing employees, and developing

leaders within GSA. 

OIG Work In Process

We are reviewing GSA’s Implementation of the

Federal Activities Inventory Reform (FAIR) Act to

determine if GSA is consistently and accurately

collecting and reporting on its commercial

activities, and if not, what improvements can be

made to its processes. 

OIG Work Planned

Our FY 2002 Audit Plan includes an audit of

Procurement Personnel Development. We will be

evaluating GSA’s program to enhance the

professionalism of procurement personnel to

determine if it is meeting the training requirements

of the Clinger-Cohen Act. 

Aging Federal Buildings

Issue

GSA is being challenged to provide quality space to

Federal agencies with an aging, deteriorating

inventory of buildings and critical budgetary

limitations in a competitive environment.

It is estimated that it would take several billion

dollars to bring the building inventory up to

standard. Since the Federal Building Fund

generates annual revenue between $4.5 and $5

billion, most of which is committed to leased space

costs, operating expenditures, and construction of

84
new courthouses, finding funds for needed repairs

is a major problem.

GSA needs to determine which buildings represent

the greatest risk from a safety and operational

perspective, which buildings will yield the best

return on investment, what the Government’s future

space requirements are, and how to fund the

highest priority projects in a timely manner. 

OIG Work Completed

The reviews we performed in FY 2001 showed that

PBS:

• needs to improve the administrative aspects of

asbestos management;

• needs a more comprehensive fire safety

management system that focuses on a national

fire safety strategy;

• has opportunities to develop initiatives and

approaches to improve management of large

dollar value contract change orders; and

• needs to evaluate the formula used to measure a

building’s net income, and improve profit and

loss information to facilitate better property

management decisions.

Agency Actions

In response to our observations in Audit of the

Public Buildings Service’s Asset Business Plans,

PBS provided a strategy for restructuring the

owned building inventory. The strategy envisions a

combination of actions including disposals,

exchanges, public/ private partnerships, outleases,

and new construction. PBS has proposed a threetiered approach in prioritizing the inventory, using a

series of asset diagnostic tests or measures, each

with a performance target or threshold that will

assist in categorizing individual buildings. The first

test simply seeks to determine whether the

property produces sufficient income to meet both

operating expenses and a reserve for replacement.

The second test measures an asset’s financial

performance in terms of return on investment.

Other tests address operating efficiency, customer

satisfaction, rental rate and vacancy levels, and

current repair and replacement needs.

In response to our Audit of PBS’ Environmental

Management Program, management has developed

a PBS-wide Environmental System to address our

recommendations that it become more proactive in

how it views and acts on environmental issues and

to address issues such as property contamination,

compliance with Federal and state environmental

laws and regulations, and liability for tenant

activities. 

As a result of an Alert Report we issued during our

review of PBS’ Fire Safety Activities, management

officials initiated immediate actions to expedite

installation of an automatic sprinkler system in a

three-building complex housing 2,500 Federal

employees.

PBS is developing a more comprehensive fire

safety strategy, which endeavors to provide a

functional, safe, and healthful work environment for

Federal employees and the visiting public, protect

Federal real and personal property, and promote

client agency mission continuity.

OIG Work Planned

Our FY 2002 Audit Plan includes a review of the

Repair and Alteration Program. We will be focusing

on whether GSA has adequate criteria in place to

make decisions on which buildings are to be given

priority for Repair and Alteration projects. Issues

include: improving data quality and strategic

planning; giving highest priority to prospectus level

projects that have the greatest potential to return

more rent revenue to the FBF; and supporting

legislative action to retain revenues from sales of

unneeded assets. 

Energy Savings Performance Contracting. This is a

congressionally approved mechanism for funding

capital improvements using private sector funds to

retrofit aging facilities with energy-saving

environmental improvements. We plan to

determine if GSA is effectively using these

contracts as an alternative financing source for

energy improvements in Federal buildings.

Finally, our Audit Plan includes an Environmental

Hazards review to assess how effective GSA is in

cleaning up hazardous waste on Federal property,

particularly at active sites such as the Southeast

Federal Center. 

85
January 10, 2002

The Reports Consolidation Act of 2000 requires each agency head to assess the completeness and

reliability of the performance and financial data used in the report. I am pleased to deliver this assessment:

1) The financial data used in the report are complete and reliable. I base this assessment on the unbroken

series of 14 unqualified opinions GSA has received on its financial statements. However, certain nonmaterial weaknesses in GSA’s financial reporting and operations is identified in this year’s Independent

Accountant’s Report. We intend to follow their guidance in addressing any issues that are identified.

2) The performance data used in this report are generally complete and reliable. Improvements are

underway, however, to increase our confidence in the data. Briefly, we are taking the following actions:

• In conformance with a finding made by the Inspector General, we are reviewing the procedures used to

collect performance data and the basis on which an assertion of validity can be made at the program

activity level. The review of the Public Buildings Service has been completed. The intention is to

complete at least one other Service in the coming year

• In some cases, the reviews may lead to an enhancement of the written documentation for the

procedures or systems being used. Similarly, there must be current, clear designations of responsibility

for data collection and review.

• GSA is developing a performance measurement database. This system will prescribe procedures for

data collection and entry, as well as identify those responsible for data entry and review. The database

will be another tool in raising confidence in the performance data.

• One of the areas that has been identified as a non-material weakness in the past involved the STAR

system in the Public Buildings Service. STAR is a source of both financial and performance data.

Improvements to the STAR system will have a favorable impact on the completeness and reliability of

both financial and performance data.

We are committed to continuously improving our ability to measure our work and to use these

measurements to build a successful future at GSA.

Stephen A. Perry

Administrator

86

MANAGEMENT ASSESSMENT OF PERFORMANCE MEASURES
Issue

Providing a safe, healthful, and secure environment

for over 1 million workers and the visitors to over

8,300 owned and leased Federal facilities nationwide

is a major multifaceted responsibility for GSA. The

increased risks from terrorism have greatly expanded

the range of vulnerabilities traditionally faced by

building operations personnel. The challenge facing

GSA is a difficult one: the need to ensure appropriate

and effective security to protect Federal facilities,

employees, and the public, while also ensuring that

our buildings and institutions remain open and

accessible in keeping with the character of a free

society.

GSA has taken many actions to combat terrorism

in the wake of the events of September 11, 2001.

GSA enhanced guard services nationwide in

response to the heightened state of alert. At the

New York City Terrorist Trial Operation Center, GSA

erected barriers, ballistic level guard post facilities,

bollards, explosive detection devices and closed

circuit TV. In many other locations, the agency

installed X-ray machines, magnetometers,

environmental design planters for crime prevention

and explosive detection devices.

FPS had increased Federal building security

vigilance prior to the September 11th attacks. FPS

enhanced training for security personnel,

standardized security guard contract criteria, and

increased the number of criminal investigators and

uniformed, law enforcement, security officers.

To identify Federal building threats, FPS

implemented Regional Threat Assessments. The

RTA is an internal management tool that examines

various factors to determine the major threats to

buildings. The heart of the RTA is an examination

of Motive, Opportunity, and Means for GSAcontrolled workplaces which may constitute a

threat from groups or individuals. The “threat”

ranges from the most catastrophic, but least

probable terrorism to the most probable, but least

catastrophic larcenies. At the center of the

continuum, falls workplace violence.

The RTA will clarify resource allocation by

providing a clear focus on the intended outcome of

the physical security program threat reduction. As

such, it will demonstrate whether levels of

personnel are adequate and where adjustments

should be made.

Issue

Multiple management controls have been replaced,

through reinvention initiatives, by fewer and broader

controls, making it essential that the remaining

controls be emphasized and consistently followed.

Our concerns encompass whether speedy

procurement is being attained at the expense of

appropriate regulatory requirements and good

internal controls, whether charge cards are being

used solely for appropriate Government purchases,

and whether GSA is getting the best price.

Congress has emphasized that the usefulness of

agencies’ performance data depends, to a large

degree, on the reliability and validity of those data.

Past audit work has shown that the absence of

controls or the non-compliance with existing

controls has resulted in poor quality data at the

operational level of many GSA programs.

GSA management agrees that this is a serious

issue. It has become particularly important as GSA

makes in-roads into the world of e-government.

New ways of buying and selling will require new

business methods to ensure strong management

control. Within GSA these efforts are the

responsibility of the Management Control and

Oversight Council, which provides overall policy

and direction to the agency’s senior managers.

Also very important to management control are the

efforts to train and inform both our customers and

GSA associates. We have created tools, such as

the Multiple Award Schedules Owners’ Manual to

help ensure that management policies are followed.

Lastly, GSA is improving data quality in order to

keep data collection and reporting activities under

87

MANAGEMENT’S RESPONSE TO THE INSPECTOR GENERAL’S REPORT ON

MANAGEMENT CHALLENGES
control. This includes both scrubbing old data

residing in computer systems, and enforcing

documentation requirements. This will provide

management assurance that GSA data is valid and

reliable. In addition, the performance measurement

database, currently under development, will

enhance these processes by standardizing GSA’s

corporate-level data collection.

Issue

GSA’s challenges in the Information Technology area

continue to increase. GSA relies on its automated

information systems to perform its mission and

manage its operations. Many of these systems

process and store sensitive information such as

personal employee data and contractor’s proprietary

information.

GSA is in the process of replacing a number of its

old systems, in keeping with technological advances.

GSA systems commonly experience schedule delays

and cost overruns, need frequent redesign, have

difficulty sharing usable data between systems, and

spend a prolonged period of time in development.

Major system development efforts can rapidly grow

in cost and complexity unless management

consistently provides comprehensive oversight.

With respect to information security, GSA faces a

significant management challenge to ensure that

systems continue to operate as intended, agency

assets are protected, and privacy is assured.

Systems Development

The Clinger-Cohen Act requires that GSA’s IT

investments remain within 10 percent of the

planned cost and schedule. Among other actions,

GSA is identifying and tracking the number of IT

investments that are approved and reviewed

through its IT Capital Planning and Investment

Process. Capital planning is a systematic

approach to managing the risks and returns of IT

investments for a given mission. It is an integrated

management process which provides for the

continuous selection, control, life-cycle

management and evaluation of IT investments. It is

focused on achieving a desired business outcome.

IT investments require a complete project plan,

cost benefit analysis and risk management plan.

Two overall objectives of GSA’s capital process are

1) to align proposed system investments with

strategic and tactical goals, and 2) to measure

performance and net benefit for the dollars

invested.

IT Security

GSA relies on its automated information systems

to perform its mission and manage its operations.

GSA has had several audits and reviews conducted

by PriceWaterhouseCoopers and the Office of the

Inspector General that have identified IT security

vulnerabilities and weaknesses during penetration

testing. Some of the findings have been repeated

as a result of slow action within the agency to

complete work correcting the issues identified.

During FY 2001, GSA took the following major steps

to correct these vulnerabilities and weaknesses:

• The development and funding of a new IT Center

of Expertise

• The development and execution of an IT Security

Action Plan

• The development and distribution of agency-wide

IT security guidelines and procedures

• The development and implementation of

procedures for performing vulnerability and risk

assessments

• The monitoring of access attempts and security

violations

• The development and implementation of security

awareness training for all users and systems

administrators

• The monitoring and reporting of policies and

guidelines for compliance by Services, staff

offices, and regions.

The challenge of information security is so complex

and far reaching that there can be no practical

possibility of “solving it once and for all.” GSA has

a long-term mandate to maintain a program that

addresses the challenge in all its dimensions.

Issue

GSA provides Federal agencies with products and

services valued in the billions through various types

of contracts two of the most prevalent types being

88
the Multiple Award Schedule (MAS) Program and

Multiple Award Contracts (MACs). Our Office is

concerned that, as the MAS program has grown, the

importance of certain program fundamentals

including pricing objectives and other pricing tools

has diminished. These fundamentals, which are set

out by regulation, include the mandate for mostfavored customer pricing, the requirement to

perform meaningful price analysis when awarding or

extending contracts, and the use of pre-award audits

to assist in negotiating contracts.

For many decades, the MAS program has provided

a vehicle for the acquisition of commercial

products and services. In the last few years, many

changes have been made as the program has

adopted more commercial practices. Of course,

these changes have been made to add value to the

Government thereby making the taxpayer’s dollar

go farther.

The changes to the MAS program have moved the

Government to real-time commercial buying

practices and in doing so have significantly reduced

acquisition time. However, the streamlining

resulting from The Federal Acquisition Streamlining

Act and the Clinger-Cohen Act decreased the

Inspector General ability to perform some audits,

such as audits of post-award pricing information.

GSA’s customer base has evolved from a relatively

small group of procurement or supply professionals

to a broad base of Government employees. The

new customer base includes thousands of

customers from charge card holders to program

managers. This represents a significant challenge

in educating customers about the advantages and

use of the procurement programs. Customer

education is critical to GSA success.

The procurement workforce must be prepared to

not only address the needs of the MAS program,

but to do so in the context of a dynamic and

complex environment. Therefore, under the ClingerCohen Act, all contracting personnel hired must be

college graduates or have 24 hours of business

related courses at the college level. In addition,

they will be expected to keep pace with the rapid

growth of electronic commerce.

Issue

Like many Federal agencies, GSA has an aging

workforce and faces significant potential loss of

institutional knowledge in the coming years. Since

1993, GSA has been downsizing and has focused on

restructuring its financial and business efforts. The

Agency workforce was reduced from 20,000 to 14,000

between 1993 and 1999. Much of the downsizing was

accomplished through early retirements and buyout

authority, and by filling job vacancies sparingly.

Human capital planning and organizational alignment,

leadership continuity and succession planning, and

recruitment and retention of staff with the right skills

are key areas needing attention.

GSA’s Workforce Analysis, submitted to OMB in July

2001, indicates that the agency is prepared for the

challenge of keeping its human capital need from

becoming a human capital crisis. GSA is developing

a more effective human capital management

process that will be integrated with GSA’s strategic

goals and performance management process. The

human capital management process at GSA will

address the need for specific recruitment, training,

retention, and exit/succession planning as required

to maintain the skills and competencies needed to

achieve high performance and continuous

improvement at GSA. To reflect the recognition of

its importance, GSA leadership created a new

strategic goal, “Maintain a world-class workforce

and a world-class workplace.”

GSA is focusing on five categories of human

capital goals to measure success:

1. Strategic Competencies: Recruit, develop, and

retain associates with the strategic competencies

for mission critical occupations

2. Leadership: Ensure leadership in the agency

inspires, motivates and models high standards

3. Performance Culture: Create a culture that

motivates associates while ensuring fairness in the

workplace

4. Learning: Promote knowledge sharing,

intellectual honesty and continuous learning and

improvement

5. Strategic Awareness: Align human capital

policies to support the agency’s Mission, Values,

and Goals.

89
Issue

GSA is being challenged to provide quality space to

Federal agencies with an aging, deteriorating

inventory of buildings and critical budgetary

limitations in a competitive environment.

It is estimated that it would take several billion

dollars to bring the building inventory up to standard.

Since the Federal Buildings Fund generates annual

revenue between $4.5 and $5 billion, most of which

is committed to leased space costs, operating

expenditures, and construction of new courthouses,

finding funds for needed repairs is a major problem.

GSA needs to determine which buildings represent

the greatest risk from a safety and operational

perspective, which buildings will yield the best return

on investment, what the Government’s future space

requirements are, and how to fund the highest

priority projects in a timely manner.

More than half of GSA’s Government-owned

buildings are over fifty years old and nearly a

quarter bear historic designation. GAO noted in its

most recent report that $4 billion is needed to

ensure acceptable quality, health, and safety

standards. GSA’s first capital priority is repairs and

alterations to our aging buildings.

GSA’s annual repair and alteration budget this year

is approximately 2.8 percent of the inventory’s

replacement value which falls in the range (2-4

percent) of private sector practice. Determination

of budget priorities and financial decisions are

aided by the new R&A Decision Model. GSA is

reinvesting in its inventory at the low end of the

industry standard yet GSA’s inventory is

significantly older than the industry average.

“Aging Buildings” will continue to be a challenge

until a way is found to increase reinvestment.

90
Executive Summary for the Period October 1,

2000 - March 31, 2001

This period we continued our work in addressing

what we believe are the major issues facing GSA.

We worked to help improve Agency operations by

providing a variety of services, including program

evaluations, contract and financial auditing,

management control reviews, investigative

coverage, litigation support in contract claims, civil

fraud and enforcement actions, and criminal

prosecutions. In addition, we provided professional

assistance through enhanced consulting services

and the use of alert reports designed to quickly

inform management of potentially serious

deficiencies or other concerns prior to completion

of all analytical work and formal report issuance. 

Management Challenges

In November 2000, we identified to members of the

Congressional leadership what we believe to be the

most serious management challenges currently

facing the Agency. A summary of these issues is

provided on the inside front cover. This report

highlights a number of reviews that address some

of these issues. These reviews are in the areas of

Federal facilities and personnel protection,

information technology, management controls, and

aging Federal buildings. Our efforts during this

period focused on the following:

Protection of Federal Facilities and Personnel

The OIG continues to review GSA’s progress in

improving the security of Federal buildings and the

individuals who occupy them. We performed a

follow-up review of the Childcare Program to

determine if all employees of the GSA-licensed

childcare centers received background clearances

before they were allowed to work. We found that

although GSA has made progress in strengthening

its processes for helping to ensure that personnel

hired by childcare providers are properly screened

and undergo background checks, not all personnel

have undergone proper checks before beginning

work. Additionally, the required time to complete a

background check remains unacceptably lengthy. 

A previous facility and fire safety survey identified

the need to install sprinklers in a three-building

complex leased by GSA. During a recent follow-up

site visit, numerous safety system and structural

deficiencies were found. Such deficiencies

included: the absence of building-wide automatic

sprinklers, smoke detectors, and visual fire alarms;

a lack of emergency power for fire pumps and

elevators; inadequate stairwell egress; and large

volumes of paper and other materials stored in

hallways and stairwells. Because of these

problems and concern for the safety of the 2,500

Federal employees housed in this complex, an alert

report was issued for management’s immediate

attention. 

We performed a review of the FPS Intelligence

Sharing Program (ISP). The program was designed

to develop strategic alliances with other Federal,

state, and local law enforcement agencies as part

of a criminal intelligence information network that

provides information regarding potential threats to

employees, customers, and GSA property. We

found that FPS is not optimally managing the ISP

since regional offices are operating autonomously

with different levels of effort and personnel

resources devoted to the program. As a result, FPS

cannot ensure that it fully achieves its mission of

providing a safe and secure environment in Federal

facilities.

We examined the management controls over smart

cards—computer-readable cards for building

access—at a regional office building. We found

that the existing controls did not prevent

unauthorized access to Federal buildings by former

employees and others. Our recommendations

included keeping an updated, accurate, and

manageable list of authorizing officials and other

steps to assure proper controls were in place.

Information Technology 

The Consolidated Appropriations Act of 2001

required us to review GSA’s Federal Internet sites

to determine whether these sites were collecting

personally identifiable information using a

particular computer technology referred to as

91

INSPECTOR GENERAL’S SEMIANNUAL REPORTS TO THE CONGRESS
“cookies.” The review assessed over 100,000

Internet pages managed by GSA finding 15 Web

portals where “persistent cookies”—those

retaining data beyond a single computer session—

were either currently being used or had been

recently removed. We found that either the Web

sites did not disclose appropriate privacy policy

statements or such statements were weak in the

areas of security intrusion and detection language.

Also noted was that GSA did not have policies and

procedures in place to direct the appropriate use of

cookies or to ensure that personally identifiable

information is adequately protected. 

In 1999, GSA began implementing an effort to

standardize information technology hardware,

software, and support for personal computer users

across the Agency. The program, called Seat

Management, is aimed at improving performance

and productivity and lowering overall technology

costs. However, our review of Phase I of the

program found that GSA was not able to effectively

determine whether it should continue on to Phase II

since performance measures relative to Agency

mission and the efficient utilization of resources

were lacking. We noted that GSA experienced

challenges in four areas during Phase I including:

cost savings, uniform maintenance and IT support,

communications, and funding. Until such

challenges are addressed, the CIO has postponed

the implementation of Phase II for a minimum of 6

months.

Management Controls

During a recent review, we found GSA does not

always obtain adequate advance funding prior to

providing specialized support services to its high

level national security Federal customers. As a

result, GSA has overspent 280 customer orders by a

total of $6.4 million since FY 1993. Additionally, we

found that GSA did not always attempt to obtain

additional funding for these overspent orders.

Conversely, GSA has approximately 500 customer

orders, dating back to FY 1993, with unused funding

balances totaling over $7.9 million. Unless GSA

informs its customers of such unspent balances,

they are not given the chance to recoup the funds

for alternative uses.

In FY 2000, GSA’s billings to Federal customers

totaled $13.3 billion; however, we found that

amounts due from customers are growing and at

year’s end were in excess of $2.0 billion. GSA is

concerned that these amounts due are causing

cash flow problems. GSA has taken positive steps

with the Defense Finance and Accounting Service

to improve the ordering, billing, payment, and

collection processes between the respective

agencies. Similar efforts with other customers

would be beneficial.

GSA’s Logistics Operations Center runs four

distribution facilities. We performed a review on

one of the four Distribution Centers to determine

whether the most cost-effective carriers were

selected to deliver supplies to its customers. While

we found that the center was selecting the most

cost-effective carriers, we noted that

overpayments were made to one of the small

package carriers. The small package carrier

acknowledged overcharges were made in error;

however, the Distribution Center failed to detect

these improper charges before certifying the

invoices for payment. We recommended that

Agency management: review all future carrier

billing statements for accuracy; ensure GSA

receives credit for incorrect billings; and verify

whether the carrier made similar mistakes in

billings at any of the three other Distribution

Centers.

Aging Federal Buildings

GSA obtains construction services for repairing

and remodeling public buildings under its repair and

alteration (R&A) program by contracting with the

private sector. We performed a review of 10 R&A

projects completed in FY 1998 and 1999 with

contract values of $142 million. Change orders to

these projects were valued at nearly $53 million, a

cost growth of 37 percent. To better manage these

projects and control costs, the Agency has

promoted the Construction Excellence Program

which aims to deliver the highest quality

construction for the best value. While we found

that renovation project teams are involving tenant

agencies in defining project goals, design, and

schedule, the teams are not documenting the

delays and increased costs caused by the tenant

92
agencies. Our recommendations to Agency

management included continuing the Construction

Excellence Program initiatives and improving

change order management.

Procurement and Related Activities

A central part of the OIG’s work is to support the

Agency’s contracting officers and to protect the

integrity of GSA’s procurement programs and

operations by detecting and preventing fraud,

waste, and abuse.

As a result of our audit and legal work, Gateway

2000, Inc., a computer manufacturer, agreed to pay

$9 million to resolve potential civil liabilities under

the False Claims Act.

GSA has been very active in trying to control and

reduce the energy costs of its Federal agency

customers. For example, GSA, along with other

Federal agencies in the Pacific Rim area, entered

into an agreement with the Bonneville Power

Administration to purchase electricity which has

saved its Federal customers almost $4 million.

However, this agreement expires in April 2002, at

which time the Agency may be exposed to the

volatility of market-based pricing presently

occurring throughout California. If prices remain at

today’s levels, GSA’s electrical energy costs will

increase dramatically. In other energy reviews, we

found that GSA was being billed for various state

and local utility taxes and other charges from

which it is specifically exempt. We recommended

that GSA review its utility bills to ensure it is not

paying for these exempt charges. We also

recommended that GSA conduct annual rate

reviews to ensure that utility companies are billing

GSA the most economical rate available for its

individual buildings.

GSA relies on contractors to maintain accurate

equipment inventories, formulate preventive

maintenance schedules, and properly perform

mechanical maintenance on equipment such as

heating and air conditioning equipment and

elevators. Our review found inaccurate equipment

inventories and incomplete performance in the

preventive maintenance services. We concluded

that GSA needs to clearly identify the responsibility

for inventories and preventive maintenance

programs and monitor quality control plans

submitted by the contractors.

As a result of an OIG investigation, Morse Diesel

International, Inc. (MDI), a multinational

construction services firm, was charged with and

pled guilty to making a false claim involving double

billing for performance and payment bonds in

connection with a major courthouse construction

project. MDI received and has paid a $500,000 fine.

GSA proposed MDI and six of its employees for

debarment from Federal contracts. The Agency

subsequently lifted the debarment action against

the company; the action against the employees

remains pending. Another investigation, conducted

jointly with other law enforcement agencies,

resulted in the conviction of two executives of ABC

Project Management, Inc., for submitting

fraudulent bid, performance, and payment bonds to

the Government. The company and both executives

were debarred from Federal contracting by the

Department of the Army. 

Partnering with GSA Management

At the request of GSA management, we continued

to provide consulting services to review business

practices and make recommendations for

improving operations across a wide range of GSA

activities in all Agency components.

We assessed the process for awarding and

administering contracts to supplement personnel in

one region; reviewed contractor performance for

facility management at a Federal courthouse and

made suggestions concerning contract

administration to Agency management; and

analyzed contract documentation to determine if

the Agency was being properly billed. In addition,

we issued advisory reports concerning a proposed

procedure for paying vendors without requiring a

receiving report and concerning best practices

among various public and private sector entities in

issuing annual reports.

The OIG provided value-added professional

assistance to GSA through participation in Agency

project teams, task forces, and working groups. We

provided input to the task force established to

93
develop performance measures for FSS’ Office of

Acquisition. We continued to participate in a

project team to address courthouse occupancy

issues, and to oversee the renovation of a Federal

building. We also reviewed policy changes on an

Agency building delegation program. In addition,

we participated on two work groups to establish a

coordinated ongoing process concerning improper

purchase and travel card activity, and to assist

other agencies in developing procedures to file for

fuel tax refunds. 

We participate in the Information Technology

Council which discusses information technology

issues relevant to GSA. The OIG participates in a

number of interagency committees and working

groups that directly affect our ability to add value

to the Agency. For example, we are a member of

the President’s Council on Integrity and Efficiency

(PCIE) IT Roundtable, and PCIE IT Security and

Audit Workforce working groups. We also

participate in the Procurement Executives Council.

Other Criminal Investigations

This reporting period, one GSA computer specialist

was terminated and a co-worker suspended for the

roles they played in gaining unauthorized access to

confidential GSA electronic mail files. We

completed an investigation that resulted in a

former GSA official pleading guilty to soliciting a

bribe from a GSA construction contractor in return

for the award of repair and renovation contracts. In

addition, a former GSA contract guard, assigned to

the immigration area of a Federal building, pled

guilty to charges of bribing an Immigration and

Naturalization Service official. 

Summary of Results

The OIG made over $77 million in financial

recommendations to better use Government funds;

made 261 referrals for criminal prosecution, civil

litigation, and administrative actions; reviewed 183

legislative and regulatory actions; and received

1,087 Hotline calls and letters. This period, we

achieved savings from management decisions on

financial recommendations, civil settlements, and

investigative recoveries totaling over $99 million. 

94
Executive Summary for the Period April 1, 2001

– September 30, 2001

During this period, the OIG continued to direct its

audit, investigative, and evaluative resources to

activities that address what we believe to be the

major management challenges facing the Agency.

We provided a variety of traditional services,

including program evaluations; contract and

financial auditing; management control reviews;

and investigative coverage and litigation support in

contract claims, civil fraud and enforcement

actions, and criminal prosecutions. We also

continued to provide professional assistance

through enhanced consulting services, alert reports

designed to quickly inform management of

potentially serious deficiencies, and reviews of

proposed legislation and regulations.

Management Challenges

We have highlighted a number of our reviews that

address major management issues facing GSA. In

November 2000, we identified to members of the

Congressional leadership the most serious

management challenges currently facing the

Agency. Some of these challenges are in the areas

of Federal facilities and personnel protection,

procurement activities, information technology,

management controls, and human capital. Our

efforts during this period focused on the following:

Protection of Federal Facilities and Personnel

GSA is responsible for developing and managing a

physical security program aimed at protecting

Federal buildings and the people who work in and

visit those buildings. Since the bombing of the

Murrah Federal Building in Oklahoma City, the OIG

has continuously assessed GSA’s physical security

program. We have issued over 25 audit and special

alert reports recommending corrective actions and

improvements in all aspects of the program. GSA

management has been responsive to our work and

has implemented many program enhancements.

However, improving physical security is an ongoing

challenge for GSA and for the OIG—a challenge

greatly magnified by the terrorist attacks of

September 11th, and subsequent events (pages 2-3).

As this reporting period ended, we were nearing

completion of our nationwide review of the

implementation of GSA’s enhanced Federal

Security Risk Management Program, a survey

process designed to identify vulnerabilities of

individual buildings and assess the adequacy of

measures taken to lower the risks. At the same

time, we started to make ready for a

comprehensive “re-look” at the key elements of the

overall security program to determine what

progress has been made in addressing previously

identified shortcomings and to assess how well the

security program is working as a whole.

As part of our continuing efforts to help GSA

better manage its public buildings program, this

period we issued reports dealing with two

additional safety related issues: asbestos

management and fire prevention. GSA, through its

Asbestos Management Program, is responsible for

minimizing occupational exposure to asbestos in

the buildings it controls. We observed the technical

aspects (project specific) and reviewed the

administrative aspects of asbestos management in

the National Capital Region. We found that the

project specific work, aimed at reducing identified

or potential hazards and performed by

professionals who understand the serious

consequences of mishandling asbestos containing

material (ACM), was well managed and controlled.

However, we found that the administrative aspects

of the program need improvement in order to

provide proper procedures and controls to ensure

health risks are minimized and full regulatory

compliance is achieved. We found that a master

list of buildings with known ACM was incomplete.

It was also revealed that asbestos surveys,

intended to inform contractors and building

maintenance workers of the location and condition

of ACM in a given building, are not updated to

reflect the results of additional assessments and

abatement work (page 4).

We reviewed fire safety risk management in PBS

facilities. Currently, the Agency’s fire safety and

prevention activities primarily reside with the Fire

Protection Engineers, located in 10 of GSA’s 11

regional offices. These individuals are responsible

for conducting building surveys, assessing the

95
adequacy of fire safety systems, and conducting

prevention training. We found fire safety and

prevention within GSA is not a coordinated

endeavor and numerous inconsistencies exist with

regard to fire safety activities. Most facilities

reviewed had some fire safety risk conditions that

posed unacceptable, but correctable, risk to the

property, its occupants, and visitors. In one case,

we issued an Alert Report to management after

observing numerous system and structural

deficiencies in a facility housing 

2,500 Federal employees (page 5). 

Procurement Activities

GSA’s MAS contracting program has grown from

sales of $5.6 billion in FY 1997 to $13.6 billion in FY

2000. As the MAS program has grown, certain

program fundamentals, including pricing objectives

and other pricing tools, have been marginalized.

These fundamentals, which are set out by

regulation, include the mandate for most-favored

customer (MFC) pricing, the requirement to

perform meaningful price analysis when awarding

or extending contracts, and the use of pre-award

audits to assist in negotiating contracts. An OIG

review revealed that FSS was not consistently

negotiating MFC pricing on the photocopier and IT

schedules. This occurred because FSS was not

fully leveraging the Government’s aggregate buying

power and because it often failed to properly

evaluate differing terms and conditions. We noted

that on the photocopier contracts alone, in the 1998

- 1999 time period, contracting officers sustained

only $3.8 million or about 2 percent of the $199

million in recommended cost avoidances. We also

found that over 50 percent of the sample of the

MAS contract extensions we reviewed were

extended without a meaningful or vigorous price

analysis. Finally, we noted significant decreases in

the number of requests we received from FSS for

pre-award audits, even as MAS sales skyrocketed.

In FY 1990, 211 requested pre-awards were

conducted, while in FY 2000, 23 were requested and

conducted (page 6).

We performed a limited review of the award and

administration of a vendor’s 5-year, $73 million MAS

contract. The contracting officer (CO) wrote that

because he was able to obtain improved prompt

payment discounts, the prices provided by the

vendor were deemed fair and reasonable. We found

no support for this conclusion by the CO. We also

learned that during negotiations, FSS contracting

personnel accepted a weakened version of a

contract clause that in its standard version is

designed to afford the Government pricing

protection throughout long-term contracts (page 8).

Information Technology 

GSA is developing and implementing Electronic

Commerce (EC) systems in order to enhance the

Agency’s buying and paying functions, improve

customer service, and support internal business

operations. Because EC systems are linked to the

Internet, they face increased risks of unauthorized

use. Our review of nine selected EC systems found

that the absence of clear leadership within GSA

has left the Services, Staff Offices, and regions

without guidance on how best to implement and

ensure security for GSA’s expanding EC-based

business operations. We noted that two-thirds of

the EC systems lacked completed security plans.

In addition, all of the security plans contained

weaknesses because critical system controls were

not included. Finally, continuity and contingency

planning documentation was lacking in most of the

security plans that had been developed. Our

recommendations included ensuring the security

plans for EC systems fully identify system security

requirements and necessary controls (page 10).

To meet the requirements of the Government

Information Security Reform Act, which focuses on

the program management, implementation, and

evaluation aspects of Federal information systems

security, we updated information on the security

status of seven of the systems that were included

in our earlier EC systems security review. We

found that only two of the systems had an approved

risk assessment, one had an approved security

plan, and two had not begun any of these key

security tasks (page 11).

The MAA Program was developed by FTS as an

innovative way to provide better value local voice

and data telecommunications services to its Federal

customers. The plan was to open a series of

competitive procurements that would result in

96
contract awards to more than one vendor per city to

ensure ongoing, task-order competition over the life

of the contract. Phase I included the cities of New

York, Chicago, and San Francisco. The procurement

yielded multiple offers, but the winning variance

was so great that FTS chose to make a single award

in each city. We found that 17 months after Notice

to Proceed, the conversion of FTS’ users to the

MAA Program ranged from only 7 percent to 38

percent. The experience in the Phase II cities we

examined (Philadelphia, Buffalo, and Boston) was

similar. We provided suggestions for improvement

in a number of areas, including customer service

and contractor relations (page 13).

Management Controls

Property Management Centers (PMCs) fulfill the

needs and requests of Government agencies that

occupy space in Federally-owned and leased

buildings. Our review of the PMC located in

Springfield, Illinois revealed several deficiencies

related to its procurement and contract

administration functions. We found examples

where GSA did not receive services contracted and

paid for and construction projects were delivered

late. The areas reviewed involved service

contracts, construction contracts, temporary duty

travel expenses, and personal services contracts.

We offered recommendations to strengthen the

management controls over the procurement and

contract administration functions (page 14).

GSA is in the process of replacing its aging

financial accounting system, with a new fully

integrated financial management system known as

Pegasys. In previous semiannual reports, we cited

our concerns that the scope, the timelines for

implementation, and the costs associated with the

modernization project, were all increasing at a

rapid and unabated pace. Subsequently, measures

were taken to refocus the project’s scope to

concentrate on replacement of the core accounting

system, with the related systems to be upgraded

under separate modernization efforts later. This

period we examined the contract vehicles being

used to have system engineers and programmers

transform the COTS software into Pegasys, a

financial software system tailored to meet GSA’s

unique business requirements as well as comply

with the newest Government-wide accounting

standards. We noted that, as currently structured,

the contractor has few incentives to complete work

tasks economically or promptly. Our

recommendations encouraged revamping the

current agreement to build in incentives beneficial

to both parties (page 15). 

During this reporting period, the OIG pursued 51

investigations involving alleged abuse of the GSA

SmartPay charge card program. The GSA

SmartPay program is the principal vehicle for

Federal agencies to acquire charge card services in

order to procure goods and services for

Government offices, travelers, and fleet vehicles.

The investigations resulted in two administrative

actions against employees, four arrests, two

convictions, and restitution of nearly $150,000

(page 17). 

Human Capital

GSA, as with all Federal agencies, faces the

difficult management challenge of acquiring a

workforce with the skills and talents needed to

meet the demands of the 21st century. To help GSA

meet this challenge, we performed a benchmark

review of other Federal agencies and several

private organizations as to how they were

assessing their progress in accomplishing this

objective. We encouraged GSA to follow the

course set by others who have first performed

detailed self-assessment studies that serve as the

foundation for further analyses and action on

specific human capital issues such as recruiting,

retention, succession planning, and skills

development (page 17).

Other Reviews of GSA Programs

GSA’s Natural Gas Program, administered by the

Agency’s National Center for Utilities Management,

offers Federal facilities an opportunity to realize

cost savings by purchasing utilities from

independent contractors rather than a local utility

company. PBS awards contracts to independent

suppliers, who transport the gas to a local utility

company over various interstate pipelines. The

local utility company delivers it through its own

97
distribution system to an end-user facility. GSA

reported savings of over $16 million for FY 2000.

After a review of the program, we offered

recommendations to improve the billing and

collecting processes (page 23).

PBS needs accurate information concerning the

revenues and expenses incurred for each property

it manages. At the request of GSA management,

we reviewed the allocation methods used by PBS

to properly assign costs to specific individual

properties. Our review determined costs were

properly classified, consistently recorded, and

charged to the appropriate buildings in the regions

(page 24).

Other Procurement and Related Activities

During this period, we worked with the Department

of Justice to obtain nearly $1 million in civil

settlements from several contractors for potential

false claims and contract violations on matters

related to providing copying equipment from

prohibited foreign sources, providing inaccurate

pricing information on computer hardware and

software products which led to higher Government

prices, and over-billings for systems furniture and

computer cabling (pages 19-20). Also, as a result of

OIG investigations, we were able to obtain

restitution of over $660,000 for fraudulent activities,

including duplicate billings for fuel storage tanks

and for fictitious orders for computer equipment

using a Government charge card (pages 20-21).

Other Criminal Investigations

As a result of a major OIG-led investigation into

corruption in connection with building construction

and repair/alteration contracts, a GSA employee

received a criminal sentence and five contractors

pled guilty to charges of bribery and accepting

gratuities. Additionally, five GSA employees and

five contractors are still awaiting court action

(page 33). 

Two separate investigations resulted in the

convictions of GSA employees for abusive sexual

contact. In one case, a GSA maintenance work

inspector pled guilty to charges of abusive sexual

contact with female employees who worked for a

GSA contractor. In the other case, a GSA mechanic

was sentenced after being convicted of abusive

sexual contact against a female co-worker (page 33).

Summary of Results

The OIG made over $23 million in financial

recommendations to better use Government funds;

made 322 referrals for criminal prosecution, civil

litigation, and administrative actions; reviewed 238

legislative and regulatory actions; and received

1,074 Hotline calls and letters. This period, we

achieved savings from management decisions on

financial recommendations, civil settlements, and

investigative recoveries totaling over $32 million.

(See page v for a summary of this period’s

performance.)

98
Executive Summary Combining the

Semiannual Reports for Fiscal Year 2001

In accordance with the Inspector General Act

Amendments of 1988, the Administrator of General

Services reports directly to Congress on

management decisions and final actions taken

regarding audit recommendations issued by GSA's

OIG. The Administrator must also provide an

explanation when final action has not been taken

within one year of an audit's management decision

date. 

The Administrator's reports are statutorily required

on a semiannual schedule for periods ending March

31 and September 30 of each fiscal year. The

information below represents a compilation of

summary statistics from the two reports issued for

fiscal year 2001. Where appropriate to be

consistent with this Annual Report presentation,

six months totals have been combined to reflect

full fiscal year performance. 

For a fuller understanding of the statistics

presented below, it should be known that the OIG

identifies audit recommendations for cost

avoidance as "funds to be put to better use" and

distinguishes whether the funds have or do not

have an impact on the agency's budget. Funds

categorized as having budget impact involve the

obligation process, and audit-related savings of this

category may be available for reprogramming.

Funds identified as having no budget impact do not

involve obligated monies and, therefore, do not have

a material effect on the agency's appropriated

funds.

During the fiscal year ending September 30, 2001,

management decisions were issued on 199 audit

reports. Of this total, 96 audit reports represented

$14,667,826 in disallowed costs and $98,103,423 in

funds to be put to better use. The latter category

is comprised of estimated and actual cost

avoidance determined to have no impact on the

agency's budget. 

By the fiscal year's end, final action was achieved

for 100 audits with management decisions

identifying disallowed costs or funds to be put to

better use. These audits represent the recovery of

$11,092,273 and the implementation of $ 13,272,834

of actual cost avoidance determined to have no

impact on the agency's budget. 

As of March 31, 2001, 131 audit reports remained

open without final action a year after management

decision, with 17 of this total under formal

administrative or judicial appeal. As of September

30, 2001, 139 audits remained open without final

action a year after management decision, with 44

under appeal. The full reports for each semiannual

period cite the reasons final actions were not yet

taken on the open audits that were not under appeal.

Copies of the semiannual reports may be 

obtained directly from 

GSA's Office of the Chief Financial Officer. 

U.S. General Services Administration 

1800 F Street, NW 

Washington, DC 20405

(202) 501-0705 

http://www.gsa.gov

99

ADMINISTRATOR’S SEMIANNUAL MANAGEMENT REPORTS TO THE CONGRESS
This chart provides GSA’s performance goals and

measures—the baseline performance in FY 2000,

the FY 2001 target and the actual performance in

FY 2001 against the target for the year. The

following symbols are provided as a quick indicator

of performance on each goal.

▲ indicates that GSA’s performance exceeded

target

✔ indicates that GSA met the target

▼ indicates that GSA did not meet the target

N/A indicates that GSA’s performance against that

goal could not be measured, either because a

target had not been established or because

measurement had not been completed.

In some cases, goals, measures, baselines or

targets have been revised since the GSA FY

2000/2001 Performance Plan was adopted. The

performance measures reported in the Annual

Accountability Report are consistent with the

results reported in the GSA Annual Performance

Report for FY 2001, which are summarized here.

The full text of this report will be submitted to

Congress in a separate document.

100

FY 2001 GSA PERFORMANCE AGAINST PERFORMANCE GOALS
101

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Revenue and Investment

Generate a capital Contribution to capital as 3.7% 3.5% 3.1% ▲

investment contribution of a percent of FRV 

2.5-4.5 percent of the 

functional replacement 

value (FRV) of the owned 

inventory

Reduce the amount of Percent of Government- 12.2% 11.8% 12.0% ▲

non-revenue producing owned inventory not 

space in the Government- producing revenue

owned inventory from 

13 percent in FY 2000 to 

12 percent in FY 2001

Maintain the amount of Percent of non-revenue 3.3% 2.7% 3.0% ▲

non-revenue producing producing leased space

space in the leased inventory 

at 3.0 percent in FY 2001 

and FY2002

Real Property Operations

Maintain building operations Percent difference between 17% 16% 12% below ▲

costs in office and office-like GSA’s operating cost per 

space to 12 percent below square foot and the private

private sector benchmarks sector costs

Reduce indirect costs as a Indirect costs as a percent 10.2% 10.5% 10.1% ▼

percentage of revenue from 

10.1 percent in FY2001 to 

10.0 percent in FY2002

Improve overall customer Percent of tenants that rate 81% 86% 82% ▲

satisfaction to an overall GSA-owned space as 

82 percent in FY2002 satisfactory or better

Improve to an overall Percent of tenants that rate 84% N/A** 85% N/A

85 percent customer GSA’s protective services 

satisfaction level with satisfactory or better

GSA's protective services

in FY 2002

For FY 2002, realize an annual Reduction in the Regional N/A 26% 2.5% ▲

reduction of 2.5 percent in Threat Composite Index

the Regional Threat 

Composite Index from the 

baseline established at the 

start of FY 2002

Improve energy reduction Percent reduction from 20% 18.4% 22% ▼

from 22 percent below the FY1985 baseline

FY1985 baseline in FY2001 to 

24 percent below in FY2002

Leasing Operations

Keep the cost for new GSA Cost for leased space for N/A Below Below ✔

leased office space under the each of the four aggregate industry industry 

average for each of the four markets average average

aggregate market ranges 

we track in FY2002

PBS

*

*

* See footnotes on page 107
102

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Reduce the loss on operating Loss on operating leases $66.2 $57.2 $46.2 ▼

leases to $21.2 million million million million

Achieve a customer Percent of tenants that rate 80% 85% 82% ▲

satisfaction rating in all leased space and services 

leases of 82 percent with as satisfactory or better

86 percent or higher in newly 

leased space in FY 2002 85% N/A** 86% N/A

Construction and Acquisition

Improve the percentage of Percent of construction 46% 75% 60% ▲

construction projects projects completed on 

completed on schedule from schedule (weighted by cost)

60 percent in FY2001 to 

65 percent in FY2002

Reduce the cost escalation Total cost of construction 5.7% 2.3% 1% ▼

rate for new construction projects over $10 million 

projects to 1 percent in projects completed as a 

FY 2001 and FY 2002 % of original appropriation

Maintain a 90 percent Percent of satisfied 86% 89% 90% ▼

customer satisfaction rating customers

in newly constructed buildings

Repairs and Alterations

Improve the percent of repair Percent of total dollars of 80% 80% 78% ▲

and alterations projects R&A projects over 

completed on schedule from $10 million completed 

78 percent in FY2001 to on schedule

82 percent in FY2002

Maintain the cost escalation Total cost for R&A projects 1% 0% 1% ▲

rate for repairs and over $10 million completed as

alterations projects at a percent of original 

1 percent appropriation

Property Disposal

Improve annual cycle time to Cycle time in days N/A 174 days 335 days ▲

335 days for property subject 

to the Property Act of 1949

Improve the dollar returned Ratio of dollar returned to 16:1 18:1 16:1 ▲

to dollar spent ratio from dollar spent

$16:1 in FY2001 to $17:1 in 

FY2002

Supply and Procurement

Reducing costs while Cost per $100 sales $2.35 $2.36 $2.37*** ▲

expanding supply and 

procurement support to 

Federal agencies, thereby 

reducing the cost per 

$100 sales by over 6 percent

Increase Federal agencies’ use Dollar volume of GSA supply $16.3 $17.9 $16.4 ▲

of GSA sources of supply by and procurement programs billion billion billion

7 percent over FY 2001 by 

providing additional products 

and services and by making it 

easier to access them

PBS FSS

See footnotes on page 107
103

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Promote socioeconomic goals Percent of Schedule 77% 78.1% 77% ▲

by maintaining the current contracts awarded to 

proportion of Schedules small business

contracts awarded to small 

businesses

Increase customer satisfaction Percent of responses in the 72% 75% 72% ▲

with supply and procurement “highly satisfied” category

programs

Increase the number of Percent of Schedule contracts 35% 77% 95% ▼

products and services accessible through 

available to Federal customers GSA Advantage!TM

via electronic systems and 

Internet connectivity

Vehicle Acquisition and Leasing

Achieve an average 20 percent Percent saved compared to 27% 20% 20% ✔

savings over commercial “Black Book” price

“Black Book” prices on 

compact sedans

Save taxpayers money by Savings through vehicle $4.1 $3.9 $3.7 ▲

consolidating additional consolidation million million million

vehicles into GSA’s fleet

Hold annual increases in the Increase in overall 8.6% 6.14% 3.1% ▼

cost per mile for GSA Fleet cost-per-mile CPM vs. CPM vs. CPM vs.

operations at or below the 9.48% 5.83% 3.1% 

weighted Industry inflation rate inflation rate inflation rate

inflation rate

Increase GSA’s share of Percent of Federal fleet 46% 49.5% 47% ▲

Federal fleet operated by GSA

Meet or exceed customer Percent of respondents giving N/A N/A 79% N/A

expectations a “highly satisfied” rating

Fill 100 percent of requests for Percent of requests filled 100% 100% 100% ✔

alternative fuel vehicles

Travel and Transportation

Achieve significant savings on Savings on Government travel 70% 70% 65% ▲

Federal travel as compared as a percent of the total 

with commercial prices commercial value of the 

same travel

Reduce Government’s Increase cost avoidance due $4 $13 $5 ▲

transportation costs by to pre-payment audits million million million

recovering or avoiding excess 

charges through pre- and 

post-payment audits of freight Decrease collections from $19 $13.6 $13 ▼

and transportation charges post-payment audits million million million

Achieve significant savings of Percent savings from 

45 – 52 percent compared to commercial rates:

commercial rates for shipment Freight 46% 46% 46% ✔

of freight and household goods, Household Goods 52% 54% 52% ▲

and for small package express Small package express 45% 45% 45% ✔

delivery services

FSS
104

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Increase customer satisfaction Percent highly satisfied:

with FSS transportation Freight 67% 84% 69% ▲

programs Household goods 88% 83% 88% ▼

Travel management 59% 74% 61% ▲

Increase the percentage of Percent of audits performed 40% 50% 50% ✔

audits performed electronically

electronically

Personal Property Management

Maximize cost avoidance New expenditures avoided $3.2 billion $1.6 billion $1.6 billion ✔

through reutilization and through reutilization and 

donation of excess Federal donations of excess 

personal property personal property

Control costs while effectively Dollar volume of $30.2 $16.4 $15.2 ▲

performing utilization, donation Utilization/Donation transfers million million million

and sales services per FTE

Sales proceeds per FTE $1.49 $0.81 $0.62 ▲

million million million

Increase customer satisfaction Percent of respondents who 68% 72% 68% ▲

with Personal Property report being “highly satisfied”

Management services

IT Solutions and Network Services

Assist Federal agencies Total business volume as a 14% 15% 15% ✔

in achieving significant savings percent of the Federal

by providing high quality IT market

products and services at 

competitive prices that the 

demand for IT Solutions 

increases our overall business 

volume thereby resulting in a 

larger share of the 

Federal market

Maintain an employee-centric Percentile of FTS associates 74% N/A 72% N/A

environment where employees satisfied or very satisfied 

thrive with FTS internal 

communications

Be customer centric – reduce Average calendar days to Quote Quote Quote ▲

acquisition cycle times award task and delivery orders to to to 

over $2,500 Award Award Award

11 7 10

Notice Notice Notice ▼

to to to 

Proceed Proceed Proceed

N/A 31 15

Achieve and maintain an Cover FTS costs, excluding $13 $19 0 ✔

an appropriate level of full cost reserve use and those costs million million

recovery to maximize service not recovered from the rates

to Federal agencies and affect 

the greatest advantage to

the Government

FSS FTS
105

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Be customer centric—increase Percent of customers indicating 76% N/A**** 77% N/A

customer satisfaction with satisfaction with FTS reps and 

FTS representatives and programs, products, and 

products/services services in annual FTS surveys

Increase the number of industry Number of agency partnerships:

partnerships by making FTS Contracts 177 296 186 ▲

available new sources that can Schedules 293 306 308 ▼

provide state-of-the-art Other 7 4 7 ▼

equipment and workplace GWACS 31 44 33 ▲

environments to meet the 

needs of the mobile 

Federal worker

IT Solutions and Network Services

Achieve and maintain an Percent of procurements with 36% 29% 26% ▲

appropriate level of small business as compared

procurements with small to total contracts

business as a percent of

prime contracts

Network Services

Provide quality products and Outbound switched voice rates 4.70 3.00 3.51 ▲

services at competitive prices —rates per minute cents cents cents

and achieve significant savings 

for Federal agencies by reducing 

long distance prices

Provide quality products and Average monthly line rate $19 $18 $17 ▼

services at competitive prices 

and achieve significant savings 

for Federal agencies by reducing 

the average monthly line rate

Governmentwide Policy

Organize, lead and collaborate Number of areas with OGP 12 of 12 12 of 12 12 of 12 ✔

with Federal agencies through supported interagency 

interagency working groups to committees

implement Federal laws and 

Executive Orders and address 

government-wide issues

Maintain up-to-date policies Percent of planned regulatory 93% 100% 100% ✔

and guidelines for those areas changes completed

within OGP’s responsibility

Ensure that all OGP employees Percent of employees at basic N/A TBD TBD N/A

have the necessary knowledge level or higher in critical 

and skills to support the competency areas

organization’s mission

Identify and publish best Number of initiatives that 42 45 49 ▼

practices for those areas promote improved 

within OGP’s responsibility management

Number of agencies 161 295 237 ▲

participating in pilots or 

applying leading practices

FTS OGP

See footnotes on page 107
106

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Develop and promote Number of areas with 11 of 12 12 of 12 12 of 12 ✔

performance measurement performance measurement 

systems for Government-wide systems

use

Number of Federal entities N/A 218 203 ▲

using performance measures

Encourage innovation and Employee satisfaction with the N/A 46% TBD N/A

increase employee satisfaction quality of work life in OGP

with OGP-wide communications, 

cooperation, and information 

assets

Improve accessibility to shared Number of information 9 of 9 9 of 9 9 of 9 ✔

databases and information on systems accessible via 

best practices and policies for the Internet

government, industry and the 

public’s use

Develop partnerships to share Number of partners 60 171 78 ▲

resources contributing resources to 

support OGP initiatives

Dollars from outside OGP $3.1 $15 $6.0 ▲

supporting OGP initiatives million million million

Governmentwide Improvement Initiatives

Improve customer satisfaction Customer satisfaction with N/A 82% TBD

OGP’s services

Establish policies, standards Number of solutions and 4 27 5 ▲

and best practices to help best practices

develop an interoperable, Number of Government-wide 3 12 4 ▲

single face for Government guidelines

electronic business transactions Number of interoperability 5 5 5 ✔

standards

Number of information 5 11 6 ▲

sharing initiatives

Provide a centralized source of Number of EI&T classes with N/A 0 3 ▼

information on IT products acceptable protocols

that have been tested by users 

with disabilities pursuant to 

the accessibility standard 

mandated by Section 508 of 

the Workforce Investment Act

Assist Federal agencies where Number of projects that meet N/A 8 8 ✔

the products, services and their goals

infrastructure have not been 

implemented to meet the 

needs of persons with 

disabilities for a barrier-free 

IT environment

OGP
107

FY 2001 

Performance Performance FY 2000 FY 2001 FY 2001 Performance 

Goals Measures Actual Actual Target vs. Target

Establish and maintain a core New Internet courses 2 10 4 ▲

curriculum of classroom and developed

Internet-based courses and 

increase the number of Number of training instances. 2,800 32,487 20,000 ▲

training instances (A training instance is defined 

as one person completing one 

course session)

Improve the professional skills Numbers of Federal IT 

of agencies’ present and future professionals in IT leadership 

IT leaders programs:

Students enrolled in 1038 1062 1,000 ▲

“1,000 by 2,000”

Students completing Trail 110 N/A N/A N/A

Boss seminars

Participants at IRMCO 414 450 350 ▲

Number of participants 51 111 60 ▲

in STAR

CIO University participants 40 103 100 ▲

Provide a “single point of entry” Number of agencies using 19 40 40 ✔

for industry to find opportunities Electronic Posting System 

to do business with the Federal (FedBizOpps)

government

Provide a prototype Federal Number of web sites linked to 1000 22,000 2,000 ▲

gateway to the Internet to by the search database

make Government information 

more accessible to the public

Maintain/increase enrollment Number of children from 50% 50% 50% ✔

from Federal families of 50% of Federal families as compared 

the total nationwide to the total

Increase percent Percent of eligible childcare 88% 80% 85% ▼

accreditation of all eligible centers accredited

GSA child care centers

Increase the magnitude and Publications distributed N/A N/A 6 N/A

quality of the outreach of million

Federal consumer information 

through the effective delivery Accesses of FCIC electronic N/A N/A 10 N/A

of services to other Federal products million

agencies, the print and 

broadcast media, and 

the public

OGP GSA Office of Child Care

* Revised from FY 2000

** Data available February 2002

*** Target of $2.37 was appropriate since FY 2001 was a period of transition as supply and procurement were split into separate business lines

**** In the past, FTS has obtained information from customers through personal visits, focus groups, telephone interviews, surveys, and other methods. The objective is to better understand customers’ needs, their levels of satisfaction with FTS services and products and FTS representatives, and why they do business with FTS competitors. Past survey efforts consisted of professional surveys specifically tailored to our IT Solutions and Network Services business lines and various programs. FTS had planned to utilize this same survey effort during FTS 2001;

however, FTS decided to discontinue the use of the types of surveys that it has done in the past. FTS has worked with GSA management to significantly improve its performance goals and associated measures to more accurately reflect the vision of FTS and GSA leadership. The new FTS measures provide a focus that will assist FTS in guiding the organization toward achievement of the FTS and GSA vision. This vision

will be clarified through the FTS Blueprint Project, and it will include professionally developed and administered customer survey efforts as part of this effort.
ACM Asbestos Containing Material

CFO Chief Financial Officer 

CHRIS Comprehensive Human Resources 

Integrated System

CIO Chief Information Officer

CM Countermeasure

CO Contracting Officer

COTS Commercial Off The Shelf

DoD Department of Defense

EC Electronic Commerce

EI&T Electronic and Information

Technology

FAIR Act Federal Activities Inventory Reform 

Act

FBI Federal Bureau of Investigation

FedBizOpps Federal Business Opportunities

FCIC Federal Consumer Information 

Center

FFMIA Federal Financial Management

Improvement Act

FMFIA Federal Managers’ Financial Integrity

Act

FPPO Federal Protective Police Officer

FPS Federal Protective Service

FRV Functional Replacement Value

FSRM Federal Security Risk Manager

FSS GSA Federal Supply Service

FTE Full Time Equivalency

FTS GSA Federal Technology Service

FY Fiscal Year

GAO General Accounting Office 

GISRA Government Information Security

Reform Act

GPRA Government Performance and

Results Act 

GSA U.S. General Services

Administration 

GWAC Governmentwide Agency Contract

IRMCO Interagency Resources Management

Conference

ISP Intelligence Sharing Program

IT Information Technology

ITOMS Integrated Tack Order Management

System

ITSS Information Technology Solutions

Shop 

LESO Law Enforcement and Security

Officers

MAA Metropolitan Area Acquisition

MAC Multiple Award Contract

MAS Multiple Award Schedule

MCOC Management Control and Oversight

Council

MDI Morse Diesel International, Inc.

MFC Most Favored Customer

MOBIS Management, Organizational, and

Business Improvement Services 

NASA National Aeronautics and Space

Administration

NEAR National Electronic Accounting and

Reporting System

OGP GSA Office of Governmentwide

Policy 

OIACIP Office of Information Assurance and

Critical Infrastructure Protection

OIG Office of the Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

OTPP Office of Transportation and

Personal Property

PBS GSA Public Buildings Service 

PCIE President’s Council on Integrity and

Efficiency

PMC Property Management Center

R&A Repair and Alterations 

RISC Regional Information Service Center

RTA Regional Threat Assessment

STAR System for Tracking and

Administering Real Property

WCW World-Class Workforce

WITS Washington Interagency

Telecommunications System 

108

ACRONYMS AND ABBREVIATIONS USED IN THIS REPORT

February 2002

U.S. General Services Administration

1800 F Street, NW

Washington, DC 20405

www.gsa.gov