United States Government Accountability Office

Washington, DC 20548 

May 9, 2007 

Congressional Committees 

Subject: General Services Administration Could Better Manage Unexpended 

Construction Balances and Make Its Budget More Transparent

The General Services Administration (GSA) is the federal government’s principal real 

estate agent, with responsibilities including constructing, leasing, and maintaining a 

variety of facilities—such as office buildings, courthouses, border stations, and

laboratories—that it rents to federal agencies. GSA’s construction projects, which 

can span several years, are authorized to carry forward fund balances from year to 

year in its construction and facility accounts for these projects. GSA is responsible 

for keeping track of and managing these balances to ensure that any unexpended 

funds that remain after projects are completed are redirected to other construction 

project needs within the agency.1

 GSA is required to identify construction projects 

that are estimated to cost in excess of established thresholds and obtain 

congressional approval for them. Funding for these projects exists in two accounts: 

(1) Construction and Acquisition and (2) Repairs and Alterations. For the purposes 

of this report, we refer to them as GSA’s construction accounts. Additionally, the 

studies required for construction projects are among the items funded in the Building 

Operations account and we decided to include this account in our review. For 

purposes of this report, we refer to this as GSA’s facility account. 

Under the Comptroller General’s authority to conduct evaluations on his own 

initiative, and as part of a continued effort to assist Congress in overseeing real 

property management issues, we examined GSA’s management of unexpended 

construction balances in relation to issues raised in our high-risk series.2

 Specifically, 

we addressed the following question: To what extent does GSA have readily 

available information about unexpended balances in its construction and facility 

accounts to effectively manage these funds? 

To do this work, we reviewed the President’s fiscal years 2006 and 2007 budgets, 

GSA’s fiscal year 2007 congressional budget justification, previous years’ 

 1

Unexpended funds are the cumulative total of past fiscal years unobligated and obligated-but-not-yetoutlayed balances. 

2

GAO, High-Risk Series: Federal Real Property, GAO-03-122 (Washington, D.C.: January 2003); Federal 

Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to 

Hamper Reform, GAO-07-349 (Washington, D.C.: April 2007). 

GAO-07-409R General Services Administration 
appropriations, conference reports, committee reports, GSA Inspector General (IG) 

reports, and previous GAO reports. We also reviewed Office of Management and 

Budget (OMB) guidance for budget preparation, Circular A-11. We limited our review 

to GSA construction and facility accounts. We reviewed project financial 

information, project management information, and facility financial information 

provided by GSA. We interviewed GSA Washington, D.C., headquarters officials in 

budget, finance, and construction management. Working with these GSA officials we 

obtained budget authority, and obligated and unexpended balances for each project; 

identified and verified all financial information gathered; and verified shortcomings 

we identified in gathering this information. We determined that the reliability of the 

information was adequate for our purposes. We conducted our review from February 

2006 to January 2007 in accordance with generally accepted government auditing 

standards. 

Results in Brief

In its construction accounts, GSA did not have readily available information about 

unexpended balances that were no longer needed and could be redirected to other 

needs. Having such information would better ensure effective management of these 

funds. Two issues hindered GSA from readily identifying these unexpended balances, 

which could be made available to support other construction projects. 

• First, GSA’s project information system lacked readily available information to 

track project status and provide timely and accurate information to GSA 

management. For example, GSA took almost 2 months to provide corrected data 

on unexpended balances that were no longer needed and could be redirected. 

 

• Second, GSA lacked effective policies and procedures for determining when 

projects are complete and unexpended balances become available for other 

needs. For example, instead of identifying projects as soon as they are 

completed, GSA identified construction projects for closure on an ad hoc basis. 

These issues allowed unexpended balances in completed construction project 

accounts to accumulate. We found about $32 million in unexpended balances 

from 45 completed projects; as a result of our review, GSA reallocated these funds 

to other projects. 

GSA’s construction funds are made available from the Federal Buildings Fund (FBF), 

a revolving fund that includes the rent federal agencies pay for the space that GSA 

leases to them. Although the unexpended balances we identified are small compared 

with FBF’s almost $8 billion budget, the absence of an adequate means of tracking 

the status of projects associated with these funds leaves GSA vulnerable to larger 

balances accumulating and not being redirected in a timely manner to other 

construction project needs within the agency. 

We also found that GSA’s Fiscal Year 2007 Congressional Justifications lacked 

transparency regarding how GSA treats certain facility account unexpended balances 

used to fund unexpected needs. For example, we found about $70 million in 

Page 2 GAO-07-409R General Services Administration 
unexpended Building Operations account balances that GSA retained from prior 

fiscal years to use to address unexpected needs that might arise. GSA officials said 

the agency was authorized to hold over these funds in this manner and that they were 

used, for example, to address unexpected needs related to Hurricane Katrina. 

Nonetheless, GSA’s congressional budget justification did not clearly identify these 

funds as being available for such contingency purposes; as a result, congressional 

oversight for these funds was limited. We are making recommendations to GSA 

aimed at strengthening its ability to track and manage unexpended balances for 

completed projects and improving transparency with regard to how unexpended 

balances are identified in its congressional budget justification. GSA generally agreed 

with our recommendations related to tracking and managing unexpended balances 

that could be redirected but disagreed with our recommendation to be more 

transparent with regard to how unexpended balances are identified in its budget 

justification. 

 

Background 

In annual appropriation legislation, Congress appropriates funds from the FBF for 

GSA to obligate for specific construction projects. The funding is made available as 

“no-year money” if the project starts in the fiscal year for which the funds were 

appropriated (that is, the funding is available until expended without further time 

constraints); this allows GSA to fund construction projects that take several years to 

complete.3

 The President’s fiscal year 2007 budget request for GSA sought about $8 

billion in new obligational authority from the FBF, including $245 million in 

appropriations to the FBF. GSA estimated that the unobligated FBF balance carried 

forward into fiscal year 2007 would be almost $3.5 billion.

 

Within the FBF, GSA fiscal year 2007 construction projects estimated to cost in 

excess of $2.54 million for public buildings and $1.27 million for leased buildings are 

identified individually to and approved by Congress.4

 Funding for these projects in 

GSA’s construction accounts (Construction and Acquisition and Repairs and 

Alterations) were estimated to have unobligated balances of $912 million and almost 

$1 billion, respectively, at the end of fiscal year 2006. Studies required for 

construction projects are funded in the Building Operations account, also in the FBF. 

This account had an unobligated balance of $60 million of fiscal year 2005 funds to 

supplement fiscal year 2006 funds; however, it was estimated that no funds would be 

carried forward to fiscal year 2007.5

 

 3

P.L. 109-115, 119 STAT. 2479-2482. 

4

40 U.S.C. § 3307 

5

Office of Management and Budget, Budget of the United States Government, Fiscal Year 2007 

(Washington, D.C., Feb. 6, 2006), 1051.

Page 3 GAO-07-409R General Services Administration 
GSA Lacks Readily Available Information about Unexpended Construction 

Balances Needed to Ensure Effective Management of These Funds 

In its’ construction accounts, GSA did not have readily available information about 

unexpended balances that were no longer needed and could be redirected to other 

needs. Having such information would better ensure effective management of these 

funds. GSA took almost 2 months to provide us with what they considered to be 

accurate data on these unexpended balances in its construction projects. We 

identified two issues that hindered GSA officials from identifying unexpended 

balances available to support other construction projects within its construction

accounts. 

First, GSA’s project information system lacked timely data GSA management would 

need to redirect funds from completed projects to other needs. In April 2006, we 

asked for data about open projects from budget officials within GSA’s Public Building 

Service. GSA provided (1) a project-specific spreadsheet of financial management 

information system (FMIS) data from its Pegasys reports and (2) project-specific 

management information in the form of Executive Project Fact Sheets (EPF) 

generated by its electronic project information portal (PIP). However, some of the 

data contained in these EPFs were neither current nor accurate, a fact that GSA 

officials acknowledged in a subsequent discussion with us. GSA provided corrected 

information 2 months later, in June 2006. 

According to GSA headquarters officials, regional officials update project status data 

on a spreadsheet once a year to fulfill an OMB requirement for planning, budgeting, 

acquisition, and management of capital assets.6

 GSA headquarters officials said they 

send a list of open projects to regional officials to obtain updated information on 

project status and that regional officials generally comply with this request. 

However, headquarters officials were unsure of the source of the information that the 

regional GSA staff use. GSA headquarters officials explained, for example, that 

information is obtained through contact with regional managers or project executives 

rather than through the EPF system. These GSA officials told us that because project 

managers do not comply with existing policies and procedures to regularly update 

their EPFs, the currency and reliability of EPF information were questionable. As a 

result, GSA management lacked the information on unexpended balances that it 

needed to identify the unexpended balances that could be redirected. GSA was able 

to identify these funds only after matching financial and project data on a project-byproject basis. 

 

 6

Office of Management and Budget, Preparation and Submission of Budget Documents, OMB

Circular No. A-11, Part 7, Section 300, "Planning, Budgeting, Acquisition, and Management of Capital 

Assets" (Washington, D.C., June 2006) requires annual reporting on the original baseline of cost and

schedule goals of capital investments, modifications, and actual performance and variance from the 

OMB approved baseline.

Page 4 GAO-07-409R General Services Administration 
Second, GSA headquarters officials lacked effective policies and procedures for 

determining when projects are complete and unexpended funds become available for 

other needs. GSA officials stated that instead of identifying projects as they are 

completed, they identify construction projects for closure on an ad hoc basis. They 

explained that regional officials control the project-specific funds and that there is a 

disincentive for them to identify completed projects and make funds available to be 

reallocated back to the central office. Nevertheless, GSA headquarters officials 

occasionally ask regional officials to identify projects that can be closed so that 

residual funds can be reallocated to support other ongoing projects. 

 As a result of these two issues, GSA allowed unexpended balances for completed 

construction projects to accumulate. We found that GSA had about $32.2 million in 

unexpended balances that could have been reallocated to address other construction 

project needs. More specifically, GSA identified 9 completed Construction and 

Acquisition projects with about $700,000 in unexpended funds that could be 

reallocated and 36 completed Repairs and Alterations projects with about $31.5 

million in unexpended funds that could be reallocated. GSA reallocated the almost 

$32.2 million to other projects as a result of our review. Although such balances are 

small in relation to the size of the FBF’s almost $8 billion budget, the absence of an 

adequate means of tracking the completed projects associated with these funds 

leaves GSA vulnerable to larger balances accumulating and not being redirected in a 

timely manner to other construction project needs within the agency. 

Unexpended Facility Account Funds GSA Held for Contingencies Are Not Clearly 

Identified

In addition to the unexpended balances at the construction project level, we noted a 

lack of transparency in the way GSA treats unexpended balances in its facility 

account that are used for contingencies. We found that almost $70.3 million in

unexpended facility management balances were carried over from prior fiscal years 

to the current fiscal year Building Operations account for contingencies, but these 

funds were not clearly identified in GSA’s congressional budget justification as being 

available for such a purpose. GSA officials stated that there was typically about a 1 

percent carryover of funds expected for the next fiscal year and the estimated 

carryover funds were not used to offset the fiscal year 2007 request. GSA provided 

data, however, showing the carryover has ranged from 3.35 percent (in fiscal year 

2001) to 4.17 percent (in fiscal year 2004). 

In follow-up discussions concerning the amount of carryover, GSA officials said that 

carrying over funds in the facility account (the Building Operations account) gives 

GSA the flexibility to respond to emergencies such as Hurricane Katrina. 

Nonetheless, these funds were not identified for budget contingency purposes at the 

time of our review. Additionally, because GSA did not clearly identify these 

carryover funds in its congressional budget justification, the funds have not been fully 

transparent to the Congress to enable it to carry out its role in overseeing federal 

funds. 

Page 5 GAO-07-409R General Services Administration 
Conclusions

Although the amount of unexpended balances that could be reallocated to support 

other construction project needs is small compared to the size of GSA’s construction 

and facilities budget, the balances we found point to a larger concern: the absence of 

timely and accurate information about the status of construction projects, along with 

effective policies and procedures that would systematically identify related 

unexpended balances for GSA’s management. Without such information, policies, 

and procedures, GSA officials may not readily know whether unexpended funds from 

completed projects are available to support other construction projects. Given the 

lack of information, GSA officials may not know if amounts greater than those we 

identified are accumulating, representing an even greater untapped resource for other 

projects. 

Furthermore, as long as the transparency of the carryover funds that GSA holds for 

contingencies remains limited, Congress lacks a complete picture of GSA’s available 

resources. The absence of such information means that Congress may not have all 

the pertinent information it needs before making budget decisions. 

Recommendations for Executive Action 

To help strengthen GSA’s ability to track and manage unexpended balances and to 

improve transparency with regard to how they are identified in its congressional 

budget justification, we are recommending that the Administrator of the General 

Services Administration take the following three actions: 

• ensure that project data on unexpended balances identify any such funds that are 

no longer needed and could be redirected, 

• strengthen existing policies and procedures to update and keep current its 

electronic project information system so that completed projects are identified in 

a timely manner, and 

• identify amounts in the Building Operations account estimated for carryover in 

future congressional budget justification requests so that these funds would be 

transparent to OMB and Congress. 

Agency Comments and Our Evaluation 

We provided a draft of this report to GSA for review and comment. GSA provided 

written comments, which are reprinted in enclosure I, together with our responses to 

specific points GSA raised. 

GSA generally concurred with our first and second recommendations—which relate 

to data on unexpended balances and keeping the electronic project information 

system current. However, we clarified these recommendations based on the GSA 

Page 6 GAO-07-409R General Services Administration 
comments discussed below. GSA said that it is implementing performance measures 

to reinforce existing procedures and to improve fund recovery from unobligated 

balances. GSA said that it looks forward to improving its processes and agreed to 

work on the recommendations that relate to construction projects. However, GSA 

disagreed with our third recommendation to identify carryover amounts for the 

Building Operations account in future budget justifications because, according to 

GSA, the carryover amount cannot be known at the time the congressional budget 

justification is submitted. GSA asked that we eliminate this recommendation from 

the final report. While it is true that GSA would not know the actual carryover 

amounts when the budget is submitted, we recommended including estimates to 

improve transparency with regard to how these funds are managed. In fact, OMB 

guidance encourages agencies to include estimates for these types of funds, and GSA 

has included estimates of this carryover in prior year budgets. As a result, we 

decided not to eliminate this recommendation. 

GSA raised several points that led us to adjust some of the language in the report and 

clarify the first two recommendations. GSA stated that our findings were 

inconsistent with GSA’s practices for managing its unexpended balances. For our 

finding that GSA did not have the readily available information about unexpended 

balances in its construction accounts needed to ensure effective management of 

these funds, GSA stated that information about unexpended balances is available 

from GSA’s financial system and that a daily report that tracks unexpended balances. 

While it is true that these sources provide information about unexpended balances, 

they do not identify unexpended balances that are no longer needed and can be 

directed to other needs. Having such information would allow GSA to better ensure 

effective management of these funds and not allow them to accumulate. We added 

information to clarify these points in the report. 

We are sending copies of this report to interested congressional committees and the 

Administrator of GSA and the Director of OMB. We will also make copies available 

to others on request. In addition, the report will be available at no charge on the GAO 

Web site at http://www.gao.gov. 

If you or your staffs have any questions, please contact me at (202) 512-2834 or 

goldsteinm@gao.gov. Contact points for our Office of Congressional Relations and 

Office of Public Affairs may be found on the last page of this report. GAO staff who 

made key contributions to this report include David Sausville (Assistant Director), 

Lindsay Bach, and George Depaoli. 

Mark L. Goldstein 

Director, Physical Infrastructure Issues 

Page 7 GAO-07-409R General Services Administration 
List of Congressional Committees 

The Honorable Richard J. Durbin 

Chairman 

The Honorable Sam Brownback 

Ranking Minority Member 

Subcommittee on Financial Services and General Government 

Committee on Appropriations 

United States Senate 

The Honorable Barbara Boxer 

Chairman 

The Honorable James M. Inhofe 

Ranking Minority Member 

Committee on Environment and Public Works 

United States Senate 

The Honorable Johnny Isakson 

Ranking Minority Member 

Subcommittee on Transportation and Infrastructure 

Committee on Environment and Public Works 

United States Senate 

The Honorable Susan M. Collins 

Ranking Minority Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Eleanor Holmes Norton 

Chairwoman 

The Honorable Sam Graves 

Ranking Minority Member 

Subcommittee on Economic Development, Public Buildings, and Emergency 

 Management 

Committee on Transportation and Infrastructure 

House of Representatives 

 

The Honorable Henry A. Waxman 

Chairman 

The Honorable Tom Davis 

Ranking Minority Member 

Committee on Oversight and Government Reform

House of Representatives 

Page 8 GAO-07-409R General Services Administration 
Enclosure I 

Comments from the General Services Administration 

Note: GAO 

comments 

supplementing 

those in the report 

text appear at the 

end of this

enclosure. 

Page 9 GAO-07-409R General Services Administration 
Enclosure I (cont’d.) 

See comment 1.

See comment 2. 

See comment 3. 

Page 10 GAO-07-409R General Services Administration 
Enclosure I (cont’d.) 

See comment 4. 

See comment 5. 

See comment 6. 

See comment 7. 

Page 11 GAO-07-409R General Services Administration 
Enclosure I (cont’d.) 

Page 12 GAO-07-409R General Services Administration 
The following are GAO’s comments on the General Services Administration’s (GSA) 

letter dated April 6, 2007. 

GAO Comments

1. In response to GSA’s comment, we clarified the distinction between 

unexpended account balances for (1) projects and (2) building operations. 

2. GSA clarified that funds for line item new construction and repairs and 

alterations projects are not appropriated as “no-year money” but attain that 

status when obligations against the line item are made. We revised the report 

to reflect that. 

3. We revised the report to reflect the adjusted dollar amount provided by GSA 

that 40 U.S.C. § 3307 requires. 

4. While GSA’s financial systems provide information about unexpended 

balances, they do not identify unexpended balances that are no longer needed 

and can be directed to other needs. To identify unexpended balances that can 

be redirected, updated or current project status information is necessary—

which GSA agrees is not always available. Having such information would 

allow GSA to better ensure effective management of these funds and not allow 

them to accumulate. We clarified this point further in the report on the basis 

of GSA’s comment. The data on unexpended balances that GSA provided—

which we used to identify the $32.2 million in unexpended balances that were 

no longer needed—were created by GSA for the purposes of our audit and 

came from Pegasys, GSA’s financial management system. GSA had to 

manually determine the status of projects and whether the funds were no 

longer needed, thus demonstrating that GSA is unable to make this 

determination in a systematic manner. 

5. GSA agreed with our description of the unexpended balances as small in 

relation to the FBF, but further stated that they were not material to the FBF. 

We chose not to use the word material in the report as we are discussing 

GSA’s ability to identify unexpended balances that could be redirected to other 

needs and not the significance of the size of the unexpended balances that we 

found. GSA further states that the problem we found with the construction 

accounts is related to “flagging projects as financially complete” and not a 

problem of identifying unexpended project balances. As discussed in 

comment 4, both project status and financial information are necessary to 

identify unexpended project balances that could be redirected to other needs. 

We clarified this point in the report. 

Page 13 GAO-07-409R General Services Administration 
6. We clarified the distinction between the various purposes of GSA’s budget 

accounts in the report. We also revised the report to reflect that one of the 

items the Building Operations account funds is the studies for construction 

projects. The fact that this budget account funds activities not directly related 

to construction is not, in our view, an adequate justification for not discussing 

its carryover of funds as part of this report. 

7. GSA said that the conclusions should show that the unexpended balances are 

known and that policies and procedures are in place to identify completed 

projects. As discussed in comments 4 and 5, our findings focus on the fact that 

GSA does not know when unexpended funds are available for other purposes. 

We clarified the report to recognize that the policies and procedures GSA does

have are not effective in identifying unexpended balances that could be 

redirected.

8. On the basis of GSA’s comments, we clarified this recommendation, focusing 

on the need to ensure that data on unexpended balances identify funds that 

are no longer needed and could be redirected. 

9. In response to GSA’s comment, we modified the recommendation to 

emphasize a need to strengthen existing policies to update and keep current 

the project information system so that completed projects are identified in a 

timely manner. 

10. While it is true that GSA would not know the actual carryover amounts when 

the budget is submitted, we recommended including estimates to improve 

transparency with regard to how these funds are managed. In fact, OMB 

guidance encourages agencies to include estimates for these types of funds 

and GSA has included estimates of this carryover as recently as its fiscal year 

2004 budget.

7

 Additionally, greater transparency would be beneficial for 

Congressional oversight because the Building Operations carry-over continues 

to grow, and is now shown as $90 million for fiscal year 2007 in the Presidents 

fiscal year 2008 budget. 

(543164) 

 7

 Office of Management and Budget, Preparation, Submission and Execution of the Budget, OMB 

Circular No. A-11, Part 1, Section 10.3, "General Information" (Washington, D.C., June 2006).

Page 14 GAO-07-409R General Services Administration 
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