Employee Relocation: VA Strengthened Appraised Value Offer's Controls, but Can Improve Efforts to Track Effects on Retention and Recruitment
Published: 2017-09-19T00:00:00

Fast Facts:
Home sale assistance allows federal agencies to facilitate the sale of employees' homes if their relocation is in the government's interest. Veterans Affairs suspended a type of home sale assistance in 2015 after two employees abused it for personal gain.
In 2017, VA reinstated this assistance with strengthened safeguards. For example, VA's policies now state that a relocating employee's participation cannot be approved by the employee's subordinates. Officials stated that the assistance helps with workforce recruitment and retention, but VA doesn't track data to support these assertions.
We recommended that VA track such data.

Highlights:
section_title: Why GAO Did This Study
paragraphs: Employee relocation is a critical tool to help agencies position skilled employees optimally and for workforce recruitment, retention, and development. Agencies can facilitate the sale of a relocating employee's home when the relocation of a specific employee to a different location is in the interest of the government. After a 2015 VA Inspector General report found that two VA employees abused AVO to relocate for their personal benefit, VA suspended AVO in October 2015 and reinstated it in fiscal year 2017. GAO was asked to review the administration of AVO at VA and government-wide.
This report (1) describes federal agencies' and VA's use of AVO; (2) describes federal agencies' key AVO internal controls, evaluations, and lessons learned; and (3) analyzes the extent to which VA has implemented additional internal controls since 2015 for AVO and has evaluated whether AVO improved recruitment and retention. GAO analyzed agency documents and interviewed VA and GSA officials. GAO also distributed a questionnaire to 28 agencies or their components that had completed home sale transactions through GSA's contract in fiscal years 2015 or 2016. Twenty of these agencies responded that they had an operational AVO and provided information on the types of controls they use and any lessons learned.
section_title: What GAO Found
paragraphs: About 80 percent of federal agencies' home sale transactions to support employee relocations are through the contract that the General Services Administration (GSA) manages with relocation management companies. To support relocations, agencies can use an Appraised Value Offer (AVO). Under an AVO, the relocation management company buys a relocating employee's home for its appraised value if it cannot be sold during a stated period of time. From fiscal years 2012 to 2016, use of AVO varied for federal agencies, including the Department of Veterans Affairs (VA). For example, in fiscal year 2012, the federal agencies that used GSA's contract spent over $66 million on 936 homes and in fiscal year 2016 they spent over $42 million on 601 homes.
In response to GAO's questionnaire (which was not sent to VA), most of the 20 agencies that were using AVO identified the following two types of critical internal controls as part of their AVO policies. First are transaction control activities, which are actions built directly into operational processes to support the entity in achieving its objectives and addressing related risks. For example, 18 agencies reported that the AVO approval process must be complete before payments are made. Second is assessing and responding to misconduct risks by considering how misuse of authority or position can be used for personal gain. For example, 19 agencies reported that their AVO had safeguards to prevent it from being used for the personal gain of employees. An agency could require an independent review of its permanent change of station program.
While none of the 20 agencies reported they had evaluated whether AVO improved recruitment and retention of employees, 12 of the 20 agencies provided examples of how AVO had been beneficial. For example, four agencies noted the use of AVO had helped them recruit the most qualified employees or assisted with hard-to-fill positions. GSA officials also identified six good practices based on lessons learned from their role, which includes managing the relocation contract that they believe agencies should incorporate into their AVO. When GAO compared these good practices to VA's AVO process, it found that all of these good practices had been adopted by VA. For example, VA offers pre-decision counseling and VA employees work with the relocation company before their home is put on the market.
Since fiscal year 2016, VA has strengthened the administration of AVO by implementing new policies that include internal controls, but does not track data on whether AVO improves recruitment and retention. For example, VA revised its policies to require approval prior to initiating recruitment efforts and that a relocating employee's participation cannot be approved by the employee's subordinates. VA officials stated AVO is beneficial for hard-to-fill Senior Executive Service positions and for mission critical skills occupations, however, VA does not track data to determine whether AVO improves the recruitment and retention of employees. VA officials stated the agency does not have the resources or capabilities to track such data. These data could be useful in identifying trends and options for targeting certain occupations or skill sets that may improve the agency's use of home sales to support relocation. Without tracking these data, VA will be unable to determine whether AVO has improved recruitment and retention.
section_title: What GAO Recommends
paragraphs: GAO recommends that VA track data to determine whether AVO improves recruitment and retention. VA concurred with the recommendation.

section_title: Letter
paragraphs: Employee relocation is a critical tool to help agencies position skilled  employees optimally and for workforce recruitment, retention, and  development. Agencies can facilitate the sale of a relocating employee’s  home when the relocation of a specific employee to a different location is  in the interest of the government. In fiscal year 2015, the Department of  Veterans Affairs (VA) and other federal agencies spent more than $63  million on Appraised Value Offer (AVO) on 897 homes, which is one of  the ways that federal agencies can assist employees in selling their  homes.
For an employee participating in AVO, a relocation management  company buys a relocating employee’s home if the employee is unable to  sell it within a specified period. In fiscal year 2015, VA spent more than $3  million on AVO. After allegations of abuse, in 2015 the VA Inspector  General investigated and reported that the Veterans Benefits  Administration used moves of senior executives as a method to justify  annual salary increases in fiscal years 2013 to 2015. Although there  were pay freezes at that time, a Senior Executive Service employee’s  salary could be increased as long as the employee was relocating. In  addition, according to the VA Inspector General, two Senior Executive  Service employees abused AVO to relocate for their personal benefit  rather than in the interest of the government. VA suspended the use of  AVO in October 2015 and VA’s fiscal year 2016 appropriations prohibited,  among other things, the use of funds appropriated to VA by the  Consolidated Appropriations Act, 2016 for AVO for Senior Executive  Service employees unless the waiver process enacted in that prohibition  was followed and Congress was notified. VA’s 2017 appropriations did  not include the prohibition. VA reinstituted the use of AVO in fiscal year  2017.
You asked us to review the administration of AVO at VA and government- wide. This report (1) describes federal agencies’ and VA’s use of AVO;  (2) describes federal agencies’ key AVO internal controls, evaluations of  whether AVO improved recruitment and retention of employees, and  lessons learned; and (3) analyzes the extent to which VA has  implemented additional internal controls since 2015 for AVO and has  evaluated whether use of AVO has improved the recruitment and  retention of employees.
To respond to these objectives, we analyzed documents from VA and the  General Services Administration (GSA), interviewed VA and GSA  officials, conducted a literature review on AVO and related topics, and  reviewed agency inspector general reports on relocation programs and  our previous work. We also reviewed relevant statutes and regulations  and interviewed Office of Personnel Management officials. To describe  use of AVO at federal agencies, including VA, we reviewed GSA’s fiscal  year 2012 to 2016 data on AVO transactions completed through GSA’s  contract. According to GSA officials, about 80 percent of federal agency  home sale relocation transactions occur through GSA’s contract, which  agencies can use to contract with relocation management companies.  GSA stated that the number of agencies that use its contract for home  sales can differ from year to year. To describe VA’s use of AVO, we  reviewed VA’s fiscal year 2012 to 2016 data on completed AVO  transactions. To assess the reliability of the GSA and VA data on  completed AVO transactions, we interviewed GSA and VA officials and  reviewed related documentation. We determined that the data were  sufficiently reliable for the purposes of our objectives.
To describe federal agencies’ key AVO internal controls, evaluations of  effectiveness, and lessons learned, we developed a questionnaire. In  addition, we reviewed agencies’ inspector general reports on weaknesses  in the administration of their relocation programs to identify key internal  controls that would be relevant to the AVO process. We modified the list  in response to feedback from pretests of our questionnaire. We created a  list of key controls relevant to AVO and asked the agencies to identify  which internal controls they were using. We distributed the questionnaire  to the 28 agencies or components of agencies (agencies) that had  completed home sale transactions through GSA’s contract in fiscal year  2015 or 2016, excluding VA. Twenty-four of the 28 agencies responded  to the questionnaire, 20 of which stated that they have an operational  AVO, which we interpreted to mean that AVO was being offered at the  agency. Thus we report on the 20 agencies’ responses to the  questionnaire. We characterize the responses to the questionnaire as  “most” when 12 to 19 agencies responded the same way. To assess the  extent of internal controls and evaluations at VA, we analyzed VA  documents and interviewed VA officials. We assessed VA’s controls and  evaluations using internal control standards. For more detailed  information on our objectives, scope, and methodology, see appendix I.
We conducted this performance audit from August 2016 to September  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Home Sale Assistance
paragraphs: Travel and transportation expenses for transferred employees, new  appointees, or student trainees, including moving expenses and  relocation programs, among other aspects of the relocation programs, are  authorized by 5 U.S.C. §§ 5721-5739. Agencies are authorized to pay  the expenses for the sale of a current employee’s residence if it is in the  interest of the government. Agencies are also authorized to hire  contractors to administer these services.
Agencies contract with relocation management companies to manage  home sale assistance. These companies either purchase or facilitate the  purchase of a relocating employee’s home. This allows agencies to  relocate employees quickly, without the employee facing a financial  burden for maintaining a home in both the old and the newly assigned  duty station. Home sale assistance can also be used to address mission  critical skills occupations, which are one or more of the following: a  staffing gap in which an agency has an insufficient number of individuals  to complete its work or a competency gap in which an agency has  individuals without the appropriate skills, abilities, or behaviors to  successfully perform the work.
Agencies can provide relocating employees with home sale assistance  through AVO, Amended Value Sale (AVS), and Buyer Value Option  (BVO).
Under AVO, the relocation management company buys an  employee’s home for its appraised value if it cannot be sold during a  stated period of time. A specified number of appraisers determine the  value of the home and the average is the appraised value. This  provides the relocating employee earlier access to the equity from the  former home that can be used toward a home at the new duty station.
AVS allows an employee approved for AVO to find a buyer willing to  pay a higher price than the appraised value of the home before an  employee has accepted the appraised value offer from the relocation  management company. Once the employee receives a bona fide  offer, they can sell the house or if the offer falls through, then the  relocation management company purchases the house for the offered  price.
Under BVO, the relocation management company purchases an  employee’s home after a bona fide offer from a buyer has been made.  According to GSA officials, appraisals, which can cost up to $3,000,  are typically only conducted for BVO after the employee has been  marketing the home for 6 months.
The average fees for federal agencies, including VA, using the GSA  contract described below in fiscal year 2015 were more than twice as  much for AVO than for AVS and BVO. Specifically, the average fees were  25 percent for AVO, 11 percent for AVS, and 10 percent for BVO.  Similarly, VA’s AVO fees were also more than twice as much for AVO  than for AVS and BVO. The fees for each are a percentage of the sales  price of the home. In fiscal year 2015, about 60 percent of homes sold via  GSA’s contract were AVS or BVO and the remainder were AVO. In fiscal  year 2015, about 17 percent of homes sold under VA’s home sale  program were AVO and the others were AVS or BVO.
section_title: GSA’s Role
paragraphs: GSA’s role in the employee relocation process includes issuing  regulations that apply to all federal agencies, managing a contract that  relocation management companies and agencies can use, and providing  assistance and guidance to agencies. GSA issues the Federal Travel  Regulation (regulation) which includes travel, transportation, and  relocation policies, rules for relocation allowances, and agency reporting  requirements to GSA. GSA has specific authority to issue regulations  governing travel and transportation expenses, including relocation  allowances.
The regulation also outlines employee eligibility requirements, agency  responsibilities (including rules for setting internal policies before  authorizing relocation allowances) the timing of authorization processes,  and who can authorize and approve relocation expenses. In addition,  agencies are required to report relocation activities to GSA if they spend  more than $5 million a year on travel and transportation, including  relocation expenses. Ultimately, however, GSA officials stated that GSA  does not have enforcement authority over agency compliance with the  regulation and can only issue non-binding regulation guidance.
According to GSA officials, GSA works with industry experts and agency  representatives to develop a contract for home sale assistance that  agencies can use to work with relocation management companies to  provide home sale assistance to employees. The contract includes  vendor requirements such as a statement of work. Within the confines of  the contract, agencies can tailor relocation assistance requirements to fit  their needs. GSA also provides guidance and assistance that is available  to all agencies in three ways, according to GSA officials: (1) GSA hosts  bi-monthly agency teleconferences, (2) GSA hosts an annual forum, and  (3) GSA provides one-on-one assistance to agencies.
In addition, according to Office of Personnel Management officials, the  Office of Personnel Management plays a relatively minor role in home  sales and federal agencies are not required to report to the Office of  Personnel Management on home sales and their use of related  relocations. The Office of Personnel Management has a review and  oversight role of agencies offering relocation programs if federal  guidelines are not followed, and Office of Personnel Management officials  stated that they had not seen documentation of use of AVO in their  reviews of agencies’ personnel files.
section_title: Administration of VA’s AVO
paragraphs: VA has a process both for approving the use of AVO and for employees’  participation. In late 2016, VA clarified the AVO approval process by  stating that approval must be obtained before initiating recruitment efforts.  VA requires a written justification for offering AVO in a job announcement.  The justification must be based on the critical need for the position and  difficulty in recruiting for the position without offering AVO, substantiated  by recent unsuccessful recruitment efforts. This is a new policy since  2015, according to VA officials. The decision to use AVO is to be made by  the hiring manager in consultation with the human resource specialist.  The human resource specialist is to provide consultation to help  determine whether the position is designated as difficult to fill or will meet  a critical need. The job opportunity announcement is to clearly state  whether AVO is or is not authorized. In addition, multiple employees are  responsible for making sure that the approval process is correctly  implemented, including the hiring official at the employee’s new post, the  human resources office, and the assigned approving officials.
There is also a process for employees’ participation. Employees  authorized to use AVO are required to participate in home sale  counseling provided by the relocation contractor and cannot list their  home until their travel authorization has been approved. According to VA  officials, counseling includes asking employees a series of questions to  determine if their home is eligible for participation, such as whether the  home is the employee’s current residence. Employees are required to  also list their homes for sale within 90 days of initiation with the relocation  services contractor. After the relocation contractor provides the appraised  value of the home, employees have 60 calendar days to either decline or  accept if an offer is not made by an outside buyer. The employee is also  required to meet marketing and inspection requirements to accept the  appraised value offer.
In addition, the regulations require a service agreement that specifies the  obligated service period after relocation for which the employee must  serve in the government in order to avoid incurring a debt to the  government. If a service agreement is violated (other than for reasons  beyond the employee’s control and which must be accepted by the  agency), the employee would be required to reimburse all costs that the  agency had paid toward relocation expenses, including withholding tax  allowance and relocation income tax allowance.
section_title: Federal Agencies’ and VA’s AVO Home Sale Count and Expenditures Varied
paragraphs: As shown in figure 1, between fiscal years 2012 and 2016 federal  agencies’ spending on AVO, which includes VA, and the number of  homes bought through GSA’s contract differed. According to GSA  officials, about 80 percent of all federal agencies’ home sale transactions,  which includes VA, are done through GSA contract. GSA officials said  that the variation from fiscal year 2012 to 2016 was a result of changing  agency relocation needs from year to year to meet mission requirements,  fluctuating real estate markets, and the location and value of the homes.
As shown in figure 2, VA’s spending on AVO between fiscal years 2012  and 2016 also varied. It dropped from a high of over $3.5 million and 51  home sale transactions in fiscal year 2014 to a low of about $80,000 and  1 home sale transaction in fiscal year 2016. VA officials stated more was  spent on AVO in fiscal year 2014 because the fees for AVO were higher  that year and home sale prices increased as real estate markets  recovered. The sharp decline in the VA home sale count and  expenditures in fiscal year 2016 is due to VA’s suspension of AVO in  October 2015 after the VA Inspector General investigation. VA’s fiscal  year 2016 appropriations prohibited, among other things, the use of funds  for AVO for Senior Executive Service employees unless certain  conditions were met, a waiver from the Secretary was obtained, and  Congress was notified within 15 days. The one employee for whom VA  used fiscal year 2016 funds was not in the Senior Executive Service.  Thus the statutory prohibition was not applicable.
section_title: Most Agencies with an Operational AVO Rely on Two Key Types of Internal Controls and Two Shared Lessons Learned
paragraphs: Most of the 20 agencies with an operational AVO that completed the  questionnaire we sent them reported they rely on AVO policies that  include two types of internal controls. An internal control is a process  affected by an entity’s oversight body, management, and other personnel  that provides reasonable assurance the entity’s objective will be  achieved. In the context of AVO, policies that include two types of internal  controls are critical.
First, actions built directly into operational processes to support the  entity in achieving its objectives and addressing related risks are  transaction control activities. For example, 18 of the 20 agencies  reported the AVO approval process must be complete before  payments are made. In addition, 17 of the 20 agencies reported the  approval process for AVO is included in the agency’s written policies.
Second, assessing and responding to misconduct risks includes  considering how misuse of authority or position can be used for  personal gain. For example, 19 of the 20 agencies reported their AVO  had safeguards to prevent AVO from being used for the personal gain  of employees. An agency could strengthen the approval process for  its permanent change of station program by requiring an independent  review to ensure moves and expenses are appropriate and justified.
While the 20 agencies with an operational AVO that completed our  questionnaire reported they had not examined whether AVO improved  recruitment or retention of staff during fiscal years 2012 to 2016, 12 of the  20 agencies anecdotally provided examples of how AVO has been  beneficial. For example, 4 agencies reported AVO minimized the financial  risks or burdens of employees who are relocating, such as not having two  mortgages. Four other agencies reported AVO assisted them in recruiting  the most qualified employees or assisted them in recruiting and retaining  employees for hard-to-fill positions. Four agencies reported AVO assists  in filling positions in rural areas or areas with depressed real estate  markets. In addition, 7 of the 20 agencies with an operational AVO stated  they use AVO for mission critical skills, such as medical officers,  engineers, and courthouse protection positions.
Fourteen of the 20 agencies with an operational AVO reported GSA had  provided assistance or guidance to them. Two of the 14 agencies also  reported additional assistance from GSA would be helpful. One agency  reported it would like training for individuals who administer AVO and  another agency reported it would like assistance on negotiating lower  fees.
In addition, 2 agencies with an operational AVO described the following  practices they implemented based on lessons learned from their  administration of AVO.
One agency stated that providing pre-clearance for employees to  participate in AVO can save the agency time initiating AVO. This  agency started using a pre-clearance form that asks employees  questions to ensure they meet basic eligibility criteria, for example  whether or not the house is under foreclosure or has a lien on it. If the  house does not qualify, the agency is spared the time spent initiating  AVO. The agency has not quantitatively tracked the effect of this pre- clearance, but stated that it found it helpful. The agency plans to look  for ways to improve the pre-clearance form.
Another agency stated employees need coaxing to find buyers for  their homes and depend on AVO to avoid carrying two mortgages.  This agency instituted an optional program that provides relocating  employees with housing allowances for their move as well as an  increased bonus for selling the home to an outside buyer, if the  employee keeps the home on the market after the AVO offer is  provided. The agency plans to continue developing more effective  communication for employees to understand relocation assistance  and promote AVS. This pilot program was approved by GSA. GSA  officials told us VA or another agency could apply to implement a  similar but not identical pilot program that is unique in order to  determine if there are similar benefits or cost savings which are in the  interest of the government. However, according to GSA officials,  after a pilot program is determined to be successful, GSA’s Office of  Government-wide Policy could choose to draft a legislative proposal  to Congress, requesting to statutorily permit other agencies to  implement the same program.
In interviews with GSA officials, they noted the following good practices  which they believe agencies should incorporate into their AVO. These are  based on six lessons learned in GSA’s role issuing regulations, managing  the contract that agencies can use, and providing assistance and  guidance as follows:
When mission allows, agencies should implement the more cost- effective BVO home sale assistance before referring a home to a  more expensive option, such as AVO.
Pre-decision counseling helps minimizes the number of employees  who start the home sale process and then drop out.
Agencies should cap the home listing price at no more than 110  percent of the appraised value. Houses priced too high will have few  interested buyers and will stay on the market longer, thus increasing  an agency’s costs.
A relocating employee should start working with the agency’s  relocation management company early in the home sale process  rather than after the employee has been unable to sell the home.  Agencies increase their potential for more cost-effective home sale  transactions when homes are marketed effectively from the outset.
Agencies can reduce service fees by requiring use of the relocation  management company network real estate agents when they list the  house. The network real estate agent will then pay the relocation  management company a referral fee which will result in lower costs  for the agency.
Regular meetings with relocation management companies to review  the status of each transferee keep agencies apprised of what the  agency can do to encourage transferees to be more engaged in  selling their homes. This results in higher sales and lower contractor  fees.
We examined the extent to which VA’s AVO included the good practices  based on lessons learned from GSA. We found that VA’s AVO included  all of these practices. For example, VA offers pre-decision counseling and  VA employees work with the relocation company before their home is put  on the market. In addition, before participation in AVO, VA asks the  employee questions to ensure the home to be sold meets basic criteria.
section_title: VA Strengthened Its Controls over AVO but Is Not Tracking Data on Whether AVO Improves Recruitment and Retention
subsections: section_title: VA Strengthened the Administration of AVO by Implementing New Policies That Include Internal Controls
paragraphs: VA conducted two recent reviews that had recommendations related to  AVO. According to VA officials, the two reviews resulted in VA updating  its AVO approval process and adding the updated process to VA’s human  resources handbook on aids to recruitment. VA also updated its  financial policy in December 2016 to include an annual review of historical  data related to VA’s home sale program that will include examining  homes sale transaction costs and median home sale values. As shown in  table 1, VA implemented or closed all of the review’s recommendations  related to AVO.
In addition, VA implemented new AVO policies that include internal  controls since fiscal year 2016 when VA suspended AVO, as shown in  table 2.
VA’s approval process for AVO is a case-by-case approval granted by  different officials for Senior Executive Service and non-Senior Executive  Service employees. For Senior Executive Service employees, the policy  is now that a secretarial waiver is needed and Congress is notified of the  need to fill the position. The Senior Executive Service-waiver provision  and congressional notification requirement were enacted in VA’s fiscal  year 2016 appropriation as applicable to funds appropriated for that act  for employees of the department in a senior executive position  participating in the Home Marketing Incentive Program or AVO.  However, there is no current statutory mandate for the VA’s policy  regarding the Senior Executive Service-waiver and congressional  notification requirement. For non- Senior Executive Service employees,  under secretaries, assistant secretaries, and other key officials serve as  the approving officials.
VA officials stated that as a result of the Inspector General’s 2015 report,  they identified a need for additional training for human resources officials  on relocation and recruitment, including AVO. VA officials told us they  developed a training module on relocation and recruitment. A webinar  using the module was conducted in March of 2017, according to VA  officials under VA’s policy.
section_title: VA Is Not Tracking Data on Whether Use of AVO Improves Recruitment and Retention
paragraphs: VA collects some data on the use of AVO, including how much is spent  and the number of completed AVO transactions. VA also collects data on  whether the employees who used AVO were in the Senior Executive  Service and on the employees’ occupational codes. For example, VA  reported that it had 38 completed AVO transactions in fiscal year 2015, 9  of which were Senior Executive Service. We compared the occupational  codes that VA identified for each of the 38 completed AVO transactions to  a list of VA’s mission critical occupations that VA provided.
Our analysis found that 10 of the 38 completed AVO transactions were for  mission critical occupations, three of which were Senior Executive  Service employees. The three Senior Executive Service employees were  in three occupational codes: medical officer, contracting, and nurse. We  also found that an additional 10 of the 38 completed AVO transactions  were for core mission workers, which VA stated are occupations that  perform the core work of an organization, but these occupations are not  on the VA mission critical occupations list. These employees were in two  occupational codes: program management and management and  program analysis. The remaining 18 completed AVO transactions were in  seven different occupational codes, which included health system  administration, social science, and realty.
However, VA is not tracking data on whether AVO improves recruitment  and retention of employees. VA officials stated AVO has been most  beneficial for the recruitment and retention of hard-to-fill Senior Executive  Service positions, including positions in locations that were rural, had a  high cost of living, or had physician or nursing shortages. A position could  also be hard to fill because of turnover trends and availability of qualified  talent. In addition, VA officials stated that a position’s classification as a  mission critical skills occupation is one factor VA uses in determining  whether or not AVO should be offered and that they used AVO as an  incentive to move to other mission critical positions within the agency.  However, VA is not tracking the data that would help it determine whether  the use of AVO is improving recruitment and retention of employees  specifically in hard-to-fill Senior Executive Service positions or mission  critical skills occupations.
Federal internal control standards suggest management should obtain  reliable data that can be used for effective monitoring. It is also  important to establish the necessary data to track a program’s  effectiveness and to establish a baseline to measure the changes over  time to assess the program in the future. In addition, reliable data are  crucial for VA to manage its resources effectively. We have previously  reported that flat or declining budgets will continue to necessitate  workforce adjustments across government. However, VA stated it is not  tracking data on whether the use of AVO improves recruitment and  retention of employees because it does not have the resources or  capabilities to do so. As VA continues to seek ways to address  recruitment and retention challenges, collecting such data could be useful  in identifying trends and options for targeting certain occupations or skill  sets that may improve the agency’s use of home sales to support  relocation. Without tracking these data, VA will be unable to determine  whether the use of AVO is improving recruitment and retention.
section_title: Conclusions
paragraphs: Employee relocation, including home sale assistance, can help agencies  position skilled employees optimally and recruit and retain employees.  VA’s Inspector General found instances of officials misusing AVO to  relocate for their personal benefit rather than in the interest of the  government. VA has taken actions to strengthen AVO’s internal controls,  in part due to the Inspector General’s report. VA believes that using AVO  is beneficial specifically for hard-to-fill Senior Executive Service positions  and uses AVO as an incentive for mission critical skills occupations.  However, VA does not track data that can help it determine whether use  of AVO is improving retention and recruitment for these positions. As VA  continues to seek ways to address recruitment and retention challenges,  such data could be useful in identifying trends and options for targeting  certain occupations or skill sets that may improve the agency’s use of  home sales to support relocation. Without tracking these data, VA will be  unable to determine whether the use of AVO has improved recruitment  and retention.
section_title: Recommendation for Executive Action
paragraphs: We recommend the Secretary of Veterans Affairs should track data that  can help VA determine whether AVO improves recruitment and retention.
section_title: Agency Comments
paragraphs: We provided a draft of this report for review and comment to the  Secretary of VA and the Acting Administrator of GSA. In its written  comments, which are reproduced in appendix III, VA concurred with our  recommendation and said it is working to improve reporting capabilities  that will be beneficial in analyzing AVO data. GSA did not comment on  the findings. VA and GSA also provided technical comments, which we  incorporated, as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of VA, the Acting Administrator of GSA, and  other interested parties. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-9110 or lucasjudyj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this engagement were to review the administration of  Appraised Value Offer (AVO) at the Department of Veterans Affairs (VA)  and government-wide. Specifically, this report (1) describes federal  agencies’ and VA’s use of AVO; (2) describes federal agencies’ key AVO  internal controls, evaluations of whether AVO improved recruitment and  retention of employees, and lessons learned; and (3) analyzes the extent  to which VA has implemented additional internal controls for AVO since  2015 and has evaluated whether the use of AVO improved the  recruitment and retention of employees.
To address our objectives, we reviewed federal statutes and regulations  related to relocation programs, conducted a literature review, and  reviewed our prior work on relocation and mission-critical skills. We  reviewed Title 5 of the U.S. Code related to relocation, including agency  authority, roles, and responsibilities in administering AVO. We also  reviewed the Federal Travel Regulation at Title 41 of the Code of Federal  Regulations, and VA’s appropriations from fiscal years 2015 to 2017. We  also conducted a literature review to find reports and articles about VA  and federal use of AVO.
We reviewed relevant documents from the General Services  Administration (GSA) and Office of Personnel Management and  interviewed officials from these agencies about their roles in agency use  of relocation programs generally and on AVO specifically. We reviewed  GSA’s guidance on agency relocation programs. We also interviewed  GSA officials about their role managing the contract with relocation  management companies that federal agencies can use and about  providing agencies guidance and assistance in administering relocation  programs. In addition, we interviewed Office of Personnel Management  officials about their review and oversight role for agencies offering  relocation programs.
To describe how federal agencies and VA use AVO, we reviewed  documents from VA and GSA and interviewed VA and GSA officials. We  reviewed data on AVO transactions completed through GSA’s contract,  which includes VA, in fiscal years 2012 to 2016. According to GSA  officials, about 80 percent of federal agencies’ home sale relocation  transactions occur through GSA’s contract with relocation management  companies. GSA stated that the number of agencies that use its contract  for home sales can differ from year to year. In addition, we reviewed VA’s  data on completed AVO transactions in fiscal years 2012 to 2016. To  assess the reliability of the GSA and VA data on completed AVO  transactions, we interviewed GSA and VA officials and reviewed related  documentation. We determined that the data were sufficiently reliable for  the purposes of our objectives.
To describe federal agencies’ key AVO internal controls, evaluations of  effectiveness, and lessons learned, we developed a questionnaire. The  questionnaire is reprinted in appendix II. To develop the internal controls  section of the questionnaire (question 4), we used relevant federal  internal control standards and the internal control weaknesses in the  administration of relocation programs identified in the VA Inspector  General’s 2015 report on misuse of relocation program funds. In  addition, we reviewed other agencies’ inspector general reports on  weaknesses in the administration of their relocation programs to identify  key internal controls that would be relevant to the AVO process. We  created a list of key controls relevant to AVO and asked the agencies to  identify which internal controls they were using. We modified the list in  response to feedback from pretests of our questionnaire.
After we drafted the questionnaire, we conducted pre-tests on the phone  with two officials from agencies that had used AVO but did not use GSA’s  contract with relocation management companies, as well as an official  from GSA who was familiar with how agencies manage their AVO utilizing  the contract. We conducted these tests with officials familiar with the AVO  process to check that (1) the questions were clear and unambiguous, (2)  terminology was used correctly, (3) the questionnaire did not place an  undue burden on agency officials, (4) the information could feasibly be  obtained, and (5) the questionnaire was comprehensive and unbiased.  We made changes to the content of the questionnaire after the three pre- tests, based on the feedback we received.
We distributed the questionnaire we developed via email to the 28  agencies or components of agencies with completed home sale  transactions through GSA’s contract in fiscal year 2015 or 2016. We did  not include VA when distributing the questionnaire. We selected this set  of agencies for distribution of the questionnaire to remain consistent with  our reporting of federal agencies’ spending on AVO through GSA’s  contract. We emailed the questionnaire to recipients as a Word  attachment on January 9, 2017. We sent reminder emails to and called  non-respondents. We also emailed secondary points of contact where  available at non-responsive agencies. We closed the questionnaire on  March 10, 2017. Twenty-four of 28 agencies completed the questionnaire,  20 of which had an operational AVO, which we interpreted to mean that  AVO was being offered at the agency. Thus, we report on the 20  agencies’ responses to the questionnaire. We characterize the responses  to the questionnaire as “most” when 12 to 19 agencies responded the  same way. All questionnaire data were double key-entered into an  electronic file in batches and were 100 percent verified. All data in the  electronic file were verified again for completeness and accuracy.
To assess the extent to which VA has implemented additional internal  controls since 2015 and has evaluated whether the use of AVO has  improved the recruitment and retention of employees, we analyzed  documents from VA and interviewed VA officials. We assessed VA’s  controls and evaluations using federal internal control standards. We  reviewed VA human resources and financial policy documents about the  administration of AVO with a focus on what changes had been made  since fiscal year 2015. We interviewed VA officials who administer AVO  about these changes and additional changes that are planned. We also  reviewed the 2015 VA Inspector General report on relocation programs and a 2016 review of VA’s Permanent Change of Station program. We  interviewed an official at the VA Inspector General’s office and other VA  officials about the status of the recommendations.
We conducted this performance audit from August 2016 to September  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: AVO Questionnaire Sent to Agencies
subsections: section_title: Section 1: Definitions
paragraphs: 1.  Appraised Value Offer (AVO) programs purchase a relocating  employee’s home based on the appraised value if the employee’s  home is not sold within a specified time period determined by an  agency.  2.  Mission critical skills occupations are one or more of the following:  staffing gap in which an agency has an insufficient number of  individuals to complete its work; and/or a  competency gap in which an agency has individuals without the  appropriate skills, abilities, or behaviors to successfully perform  the work.  3.  Lessons learned are knowledge gained by both positive and negative  experiences that, if applied, could result in a change.
section_title: Section 2: Agency Use of AVO and Policies
paragraphs: 1.  Does your agency have an AVO program that is currently  operational?
No IF “NO”, PLEASE SKIP TO section 5, question 17  2.  Does your agency use the AVO program as a recruitment or retention  incentive for mission critical skills occupations, among others?
No  IF “NO”, PLEASE SKIP to question 4  3.  Please provide two examples of mission critical skills occupations for  which your agency has used the AVO program as a recruitment or  retention incentive.  4.  Does your agency have the following policies for its AVO program? (If  need be, please review your agency’s policies.)  5.  What process or policy changes, if any, has your agency made to its  AVO program in fiscal year 2015 or after? Please describe.  6.  Who at your agency approves the decision to offer the AVO program  as a recruitment or retention incentive? Please provide a position, not  the name of an individual, and the person’s office. For example, Chief  of Relocation Incentives, Human Resources.
section_title: Section 3: Results and Lessons Learned
paragraphs: 7.  Has your agency examined whether the AVO program improved  recruiting or retaining staff at any time during the fiscal years of 2012- 2016?
Yes  IF “YES”, PLEASE email us any documentation that your  agency has on whether the AVO program improved recruiting or  retaining staff, if possible   No IF “NO”, PLEASE SKIP to question 9  8.  Did your agency find that the AVO program improved recruiting or  retaining staff?  9.  For what uses has the AVO program been most beneficial (for  example, in certain locations or occupations)?  10. Has your agency identified any lessons learned that could be applied  to your agency’s AVO program? (Lessons learned are knowledge  gained by both positive and negative experiences that, if applied,  could result in a change.)
Yes  IF “YES”, PLEASE email us any documentation that your  agency has on any lessons learned, if possible   No IF “NO”, PLEASE SKIP to question 14  11. Please describe any lessons learned your agency has identified.  12. What actions, if any, is your agency planning to take in response to  the lessons learned?  13. What actions, if any, has your agency taken in response to the  lessons learned?
section_title: Section 4: Assistance or Guidance
paragraphs: 14. Has GSA provided your agency with assistance or guidance for your  AVO program? (Assistance is customized for your agency’s needs, for  example a phone call or an email in response to a question. Guidance  is standardized and available to all agencies, for example through  websites or conferences.)  15. What additional GSA assistance, if any, would be helpful for your  agency to administer its AVO program?  16. What additional GSA guidance, if any, would be helpful for your  agency to administer its AVO program?
section_title: Appendix III: Comments from the Department of Veterans Affairs
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Signora May (Assistant Director),  Maya Chakko, Jehan Chase, Ellen Grady, Gina Hoover, Jessica  Mausner, Cindy Saunders, Robert Robinson, and Erik Shive made key  contributions to this report.