U.S. General Services Administration

Administrator�s Semiannual
Management Report to Congress

Report No. 43

April 1, 2010
To September 30, 2010

U.S. General Services Administration
Martha Johnson
Administrator

Office of the Chief Financial Officer
Alison L. Doone
Chief Financial Officer

Office of the Controller
Faye C. Basden
Controller

Internal Control and Audit Follow-up Division
Ralph L. Boldt
Director

November 2010

This report is in the public domain. Authorization to reproduce it in whole or in part is
granted. While permission to reprint this publication is not necessary, the citation should be:
U.S. General Services Administration, Office of the Chief Financial Officer, Office of the
Controller, Internal Control and Audit Follow-up Division, Administrator�s Semiannual
Management Report to Congress, No. 43, Washington, DC 20405.

To obtain copies of this report or for any questions,

Write to: U.S. General Services Administration, Office of the Chief Financial Officer, Office
of the Controller, Internal Control and Audit Follow-up Division (BEI) Room 471, 1275 First
Street, NE Washington, DC 20417

E-mail your request to: Travis.Lewis@gsa.gov;
Call in your request: (202) 219-3078; or
Obtain a copy of this report on the Agency�s Web site at:
http://insite.cfo.gsa.gov/backpages.php?c=54

In accordance with the Inspector General Act of 1978, as amended, the Administrator of
General Services Administration (GSA) submits this report to Congress on final actions
regarding audit recommendations. The report covers the period from April 1, 2010 through
September 30, 2010. The Act requires the Administrator to report directly to the Congress on
management decisions and final actions taken on audit recommendations. The report must
provide an explanation in cases where final action has not been taken on an audit one year
after the date of the management decision. The report also summarizes management's
implementation of the recommendations contained in audit reports issued by General Services
Administration's Office of Inspector General.

During the reporting period, management decisions were issued on 65 audit reports. Of this
total, 40 audit reports included $7,725,111 in disallowed costs and $206,356,167 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. There were no management decisions
this period that included actual cost avoidance determined to have a potential impact on the
budget.

During the six-month period, GSA took final action on 36 audits with management decisions
identifying disallowed costs or funds to be put to better use. These audits represent the
recovery of $1,506,699 and $1,043,704 of actual cost avoidance determined to have no impact
on the agency's budget. No cost avoidance determined to have a potential impact on the budget
was implemented during the period.

As of September 30, 2010, 41 audit reports remained open without final action one year after
the management decision. Of this total, four were under formal administrative or judicial
appeal. The reasons no final actions have been taken with respect to the remaining 37 audits
are provided in the report.

Page

Contents
Overview 5
U.S. General Services Administration Organization 5
Agency Audit Follow-up Process 5
Senior Agency Official 6
The Chief Financial Officer 6
Heads of Services and Staff Offices and Regional Commissioners 6
Organization Chart 7
Administrator�s Comments on the Office of the Inspector General�s Semiannual Report to
the Congress 8
For the Six-Month Period Ending September 30, 2010 9
American Recovery and Reinvestment Act Audits 13
Audits with Management Decisions Before 14
September 30, 2009 & 14
Final Action Not Taken by September 30, 2010 14
Audits with Management Decisions Before 16
September 30, 2009 & 16
Final Action Not Taken by September 30, 2010 16
Glossary 20

Overview
This report, submitted pursuant to the Inspector General Act of 1978, as amended, presents
management's perspective on audit resolution and follow-up activity at the General Services
Administration (GSA) from April 1, 2010, through September 30, 2010. GSA's audit follow-up
efforts continue to play a significant role in the effective management of GSA operations and
the accomplishment of its mission.

U.S. General Services Administration Organization
GSA is organized around two major business functions represented by the Federal Acquisition
Service (FAS) and the Public Buildings Service (PBS). In addition, there are 11 Regions and a
number of Staff Offices that provide support to GSA organizations.

The Administrator of GSA directs the execution of all functions pertaining to the agency.
Members of her office, as well as Regional Administrators and Heads of Services and Staff
Offices, advise and make recommendations on policy or operational issues of national scope.

PBS and FAS are each led by a Commissioner located in Washington, DC. The
Commissioners are responsible in their respective functional areas for policy development,
program direction, funding, and working with Congressional staffs, clients and other
constituents regarding issues of policy of national importance.

GSA is organized as a matrix. One vector is the functional area, Public Buildings Service or
Federal Acquisition Service. The other vector is geographical. Regional Commissioners have
direct functional line to the respective FAS/PBS Commissioner. The Regional Commissioners
also report to the Regional Administrator.

Agency Audit Follow-up Process
GSA has effective systems in place for keeping track of audit recommendations. In addition,
GSA has senior management commitment to ensure that appropriate corrective action is
taken. Agency managers have the responsibility to act upon the auditor's recommendations,
with the audit resolution process being supervised by the agency audit follow-up official. The
following provides a description of the responsibilities of GSA officials involved in the audit
follow-up process.

Senior Agency Official
The Deputy Administrator is the Senior Agency Official responsible for audit follow-up in the
agency. As such, she has overall responsibility for ensuring the adequacy of the agency's
follow-up system, monitoring the resolution of audit recommendations, and ensuring the
prompt implementation of corrective actions. She also makes final decisions to resolve
differences between agency management and the Office of Inspector General.

The Chief Financial Officer
The Chief Financial Officer provides direction to Office of the Chief Financial Officer staff who
manages the GSA Audit Resolution and Follow-up System. Their responsibilities include:
Acting as the liaison with the Government Accountability Office (GAO) for the
coordination of GAO audits and for preparation of responses and reports for the
signature of the Administrator on GAO recommendations as required by law;
Ensuring timely resolution and implementation of internal and external audit
recommendations made by the Office of Inspector General as well as GAO;
Overseeing the collection, and proper accounting of amounts determined due to the
Government as the result of audit-related claims;
Analyzing GSA programs upon request from the Administrator, particularly as related
to past or present audit recommendations; and,
Maintaining an automated report control system for both internal and external audits
that provides an accurate means for tracking and documenting actions taken in
implementing audit recommendations.

Heads of Services and Staff Offices and Regional
Commissioners
Heads of Services and Staff Offices and Regional Administrators have primary responsibility
for resolving and
implementing recommendations promptly that pertain to their organization. Their
responsibilities include:
Ensuring controls are in place to provide timely, accurate, and complete responses to
audit reports;
Developing, advocating, and documenting agency positions on audit recommendations;
Preparing responses to draft and final GAO reports in coordination with the Office of
the Chief Financial Officer; and
Providing comments on audit decision papers prepared by the Office of Inspector
General to ensure that management's position on unresolved audit recommendations is
properly stated.

Organization Chart

National
Services

Regional
Services

C
e
n
t
r
a
l

O
f
f
i
c
e

Under the Office of the
Administrator

Administrator�s Comments on the Office of the Inspector
General�s Semiannual Report to the Congress
The Office of Inspector General in its Semiannual Report to the Congress includes financial
reporting among the management challenges facing the GSA. Specifically, the report states
that GSA continues to rely heavily on significant adjusting entries to prepare the financial
statements and related note disclosures. This management challenge was based on a
significant deficiency reported in the Fiscal Year (FY) 2009 Independent Auditors� Report.
The independent auditors eliminated the adjusting entries significant deficiency in the FY
2010 Independent Auditors� Report because GSA no longer relied on significant adjusting
entries to prepare its financial statements and related note disclosures.

For the Six-Month Period Ending September 30, 2010

Timely closing of audits remains a priority for GSA. Office of the Chief Financial Officer
(OCFO) staff worked with contracting officers and audit liaisons to close out numerous
internal and contract audits. From April 1, 2010 through September 30, 2010, GSA closed 24
percent, or 54 internal and contract audits, of 223 open audits. The remaining 169 audits are
open because of ongoing litigation, negotiation, collections, and implementation of corrective
actions. GSA closed a smaller percentage of audits in FY 2010 from previous years because of
the increased number of internal and contract audits issued by the OIG related to the
American Recovery and Reinvestment Act.

Final action for the six months
Ending September 30, 2010

Number of
Audit
Reports

Disallowed
Costs
A. Audit reports for which final action had
not been taken by the commencement of the
reporting period.
33
$38,516,204
B. Audit reports on which management
decisions were made during the reporting
period.
12
$7,725,111
C. Audit reports on which final action was
taken during the reporting period.
11
$2,113,130
(i) the dollar value of disallowed costs
that were recovered by management
through:

$1,506,699
-
collections $1,506,69
9

- offset� $0

- property in lieu of cash $0

- other $0

(ii) the dollar value of disallowed costs
that were written off by management.

$9,666
D. Audit reports for which no final action
has been taken by the end of the reporting
period.
34
$44,128,185

Final action for the six months
ending September 30, 2010

Number of
Audit
Reports

No Budget
Impact � Actual
and Estimated

Budget
Impact
A. Audit reports for which final
action had not been taken by the
commencement of the reporting
period.
86
$586,991,318
$5,438,769
B. Audit reports on which
management decisions were made
during the reporting period.
28
$206,356,167
$0
C. Audit reports for which final
action was taken during the
reporting period.
25
$75,310,453
$0
(i) the actual dollar value of
recommendations that were
actually completed.

$1,043,704
$0
(ii) the actual dollar value of
recommendations that
management has subsequently
concluded should not or could
not be implemented or
completed.

$384,205
$0
(iii) the actual dollar value of
recommendations that
management has subsequently
concluded should not or could
not be determined (calculated).

$0
$0
(iv) the estimated dollar value of
�funds to be put to better use� as
agreed to by GSA management
and the OIG.

$73,882,544
N/A
D. Audit reports for which no final
action had been taken by the end of
the reporting period.
89
$718,037,032
$5,438,769

The American Recovery and Reinvestment Act of 2009 (Recovery Act) authorized the GSA
Public Buildings Service (PBS) to invest $5.5 billion in federal public building projects. This
includes $4.5 billion to transform federal facilities into high-performance green buildings,
$750 million to renovate and construct new federal offices and courthouses, and $300 million
to construct and renovate border stations. As a result of this increased spending, GSA is
developing and implementing risk assessments and control methodologies to ensure Recovery
Act funds are awarded and distributed in a prompt, fair, and reasonable manner; recipients
and uses of Recovery Act funds are transparent to the public; and public benefits of the funds
are reported clearly, accurately, and in a timely manner. To assist in the implementation of
these goals, all Recovery Act monies are tracked and reported. As of September 30, 2010,
there are 38 GSA Recovery Act audits, totaling $152,060,851 in dollars audited. The Recovery
Act audits are summarized in the chart on the following page.

American Recovery and Reinvestment Act Audits

Audit Number
Total Dollars
Reviewed
Question
ed
Amount
Funds to
Better Use
Total
Funds to
Better Use
Unsupported
A090172PRR10001

$0
$0
$0
A090172PRR10005

$0
$0
$0
A090193P9X09078
$14,061,886
$0
$514,132
$0
A090194P2X10012
$1,003,523
$0
$11,044
$0
A090195P2X10052
$1,633,359
$0
$214,844
$0
A090199P9X09080
$6,423,655
$0
$70,762
$0
A090200P2X10026
$2,736,790
$0
$244,702
$0
A090201P9X09079
$1,680,117
$0
$395,337
$0
A090214P9X09083
$1,974,984
$0
$92,869
$0
A090224P2X10027
$422,295
$0
$87,881
$0
A090225P2X10068
$506,839
$0
$0
$0
A090228PCX09094
$2,652,206
$0
$53,000
$0
A090229PCX09117
$6,169,039
$0
$192,302
$0
A090230PCX09103
$210,22,391
$0
$124,032
$0
A090231PCX09114
$2,399,864
$0
$45,134
$0
A090232PCX09101
$863,859
$0
$11,762
$0
A090233PCX09109
$2,258,920
$0
$45,178
$0
A090234PCX09102
$13,541,780
$0
$809,387
$192,400
A090235PCX09127
$1,439,293
$0
$24,739
$0
A090236PCX09112
$1,021,306
$0
$0
$0
A090237PCX09111
$1,789,942
$0
$310,194
$0
A090238PCX09105
$2,313,490
$0
$0
$0
A090239PCX09108
$1,269,754
$0
$90,385
$12,500
A090240PCX10023
$29,364,836
$0
$4,254,124
$0
A090241PCX09121
$8,706,741
$0
$222,987
$0
A090242PCX09106
$1,994,671
$0
$100,894
$0
A090243PCX09126
$5,433,000
$0
$295,245
$0
A090244PCX09124
$1,760,528
$0
$254,455
$21,763
A090245PCX09118
$2,853,806
$0
$93,612
$0
A090246PCX09113
$1,020,274
$0
$30,608
$0
A090247PCX09120
$788,848
$0
$28,621
$0
A090248PCX09129
$719,353
$0
$278,256
$206,450
A090249PCX10001
$1,761,984
$0
$629,199
$0
A090250PCX09122
$887,966
$0
$49,601
$0
A090251PCX09125
$931,012
$0
$32,710
$0
A090252PCX09116
$886,509
$0
$88,996
$0
A090253PCX09115
$1,925,000
$0
$606,342
$0
A090254PCX09097
$5,841,031
$0
$118,000
$0
Totals
$152,060,851
$0
$10,421,334
$433,113

Audits with Management Decisions Before
September 30, 2009 &
Final Action Not Taken by September 30, 2010

REPORT NUMBER
TITLE OF REPORT

DATE OF
REPORT
MANAGEMENT
DECISION
AMOUNTS

REASON
FOR NO
FINAL
ACTION

PROJECTED
COMPLETION
DATE

Disallowed
Costs
Better
Use
Funds

A060190Q6P07004
MAS Contract
Workload

07/31/2007

$0
FAS
submitted a
revised
action plan
for OIG
review.

03/31/2012
A070180OTW0700
1
GSA'S Electronic
Messaging
Services and
National Notes
Infrastructure
(GEMS) and
(GNNI)

09/12/2007

$0
Re-opened
based on
implementat
ion review.
GSA is
tracking
action plan
until
complete.

03/31/2011
A060228OTF0800
7
Improvements to
the GSA Privacy
Act to Protect PII

03/31/2008

$0
Action plan
is being
implemented
.

02/05/2011
A080081OTF0801
6
FISMA Review Of
IT Security
Program

09/11/2008

$0
Action plan
is being
implemented
.

03/15/2011
A070113OTF0900
7
GSA IT Support
Services
Consolidation
(GITGO)

06/18/2009

$0
Negotiations
ongoing
between
Contracting
Officer and
contractor.

12/01/2010

REPORT NUMBER
NAME OF
CONTRACTOR
DATE OF
REPORT
MANAGEMENT DECISION AMOUNTS

Disallowed Costs
Better Use Funds
A030140FWX03056
Science Applications Int�l
Corp.

03/25/2003

$1,028,099
A080084P7X08061
Kenmore Electrical
Company, LP

04/29/2008

$312,148
A080077Q5X08087
Gartner, Inc.
08/05/2008
$0
$5,753,000
A090111P6X10011
Midtown Development
10/30/2009
$0
$3,280,021

Audits with Management Decisions Before
September 30, 2009 &
Final Action Not Taken by September 30, 2010

REPORT NUMBER
NAME OF
CONTRACTOR

DATE OF
REPORT
MANAGEMENT
DECISION AMOUNTS

REASON FOR NO
FINAL ACTION

Disallowed
Costs
Better Use
Funds

A010127P6X01079
DKW Construction,
Inc.

04/30/2001

$303,193

$0
GSA is collecting funds
owed the government
from the contractor.

A63630FWX02004
The Presido
Corporation

10/18/2001

$273,000

$0
GSA is collecting funds
owed the Government
from the contractor.
This is in collection at
DOJ.

A030140FWX03056
Science Applications
Int'l Corp.

03/25/2003

$1,028,099
The contractor has
appealed the
Contracting Officer's
decision, and the audit
is in litigation.
A030186F5X04054
NOVA Solutions,
Inc.

03/09/2004

$46,805

$0
GSA is collecting funds
owed the government
from the contractor.

A040162F5X04053
NOVA Solutions,
Inc.

03/09/2004

$17,000
GSA is collecting funds
owed the government
from the contractor
(collections are being
tracked through OIG
audit A030186 � listed
above).
A050105F6X06006
BCOP Federal

10/12/2005

$882,549
$29,550,00
0
GSA is collecting funds
owed the government
from the contractor.
A050248T9X06056
INFORMATION
SYSTEMS
SUPPORT, Inc.

03/30/2006

$3,138,873

$0
GSA is in settlement
discussions with the
contractor's attorneys.

A050122F6X06059
Fasternal Company

04/18/2006

$35,274

$0
Investigation Process -
An investigation has
been opened by the OIG
and the Justice
Department regarding
actions taken by the
contractor
A060206T9X07012
Information
Systems Support
Inc.

10/31/2006

$4,026,287

$0
GSA is in settlement
discussions with ISS
legal representatives.
A060245F6X07065
COMSTOR, Div. of
Westcon Grp N. A.,
Inc.

04/30/2007

$0
Under investigation by
DOJ.
A060196P9X07091
Tigard Electric, Inc.

08/28/2007

$988,088
Negotiations ongoing
between Contracting
Officer and contractor.
A070168Q6X08057
MSC Industrial
Direct Co., Inc.

04/10/2008

$0
$22,294,05
8
Negotiations ongoing
between Contracting
Officer and contractor.

A080084P7X08061
Kenmore Electrical
Company, LP

04/29/2008

$312,148
The contractor has
appealed the
Contracting Officer's
decision, and the audit
is in litigation.
A080107Q3X08063
Superior Protection
Service, Inc.

05/05/2008

$811,315
Negotiations ongoing
between Contracting
Officer and contractor.

A070095Q3X08073
GTSI Corporation

06/05/2008

$9,700,000
Agreement reached
between OIG and
Contracting Officer on
the Decision Record.
Awaiting PNM and
award documentation.

A040224F3X08077
ADT Security
Services, INC.

06/11/2008

$1,846,647

$0
Agreement has not
been reached between
OIG and Contracting
Officer on the Decision
Record.

A080077Q5X08087
Gartner, Inc.

08/05/2008

$5,753,000
The contractor
appealed the
Contracting Officer's
decision, and the audit
is in litigation.
A080151Q7X09009
SeaArk Marine, Inc.

10/29/2008

$1,835,327
Negotiations ongoing
between Contracting
Officer and contractor.

A080001Q3X09006
SunGard
Availability
Services, LP

10/30/2008

$4,601

$0
Negotiations ongoing
between Contracting
Officer and contractor.
A080177Q9X09015
Tecolote Research,
Incorporated

12/12/2008

$658,765
Negotiations ongoing
between Contracting
Officer and contractor.
A080185P9X09016
Pacific Coast Steel

12/16/2008

$2,199,853
Mediation is being
conducted. Awaiting
legal advice.

A080191Q6X09020
Corporate Lodging
Consultants, Inc.

12/31/2008

$31,700,75
4
Unresolved -
Agreement not reached
between OIG and
Contracting Officer on
the Decision Record.
A080220P9X09022
Bovet Door and
Hardware

01/09/2009

$526,039
Mediation conducted.
Awaiting Legal
Opinion.
A080136Q2X09028
Dynamic Decisions,
Inc.

01/20/2009

$0
Negotiations ongoing
between Contracting
Officer and contractor.

A090005Q9X09033
Nitrate Computer
Inc.

01/28/2009

$0
Agreement reached
between OIG and
Contracting Officer on
the Decision Record.
Awaiting PNM and
award documentation.
A080067Q5X09035
Haworth, Holland,
MI

02/04/2009

$0
$65,000,00
0
Negotiations ongoing
between Contracting
Officer and contractor.
A080085Q6X09043
The HON Company

03/03/2009

$0
$31,298,14
0
Negotiations ongoing
between Contracting
Officer and contractor.
A080212Q3X09047
Phillips Corporation
-- Federal Division

03/23/2009

$27,429

$1,445,916
Negotiations ongoing
between Contracting
Officer and contractor.
A080181Q2X09054
i2, Inc.

04/07/2009

$8,775

$0
GSA is collecting funds
owed the government
from the contractor.
A090068Q3X09052
BAE Systems
Specialty Group,
Inc.

04/10/2009

$40,475

$0
Awaiting final contract
modification from
contracting officer.
A080203Q4X09061
SimplexGrinnell LP

04/23/2009

$0
$18,373,17
9
Negotiations ongoing
between Contracting
Officer and contractor.

A080210Q6X09062
Immix Technology,
Inc.

04/27/2009

$711,525

$0
Negotiations ongoing
between Contracting
Officer and contractor.
A080077Q5X09071
Gartner, Inc.
Stamford, CT

06/11/2009

$1,486,750

$1,486,750
Negotiations ongoing
between Contracting
Officer and contractor.

A090007Q6X09075
Booz Allen
Hamilton, Inc.

07/08/2009

$806,948

$68,696,73
2
Negotiations ongoing
between Contracting
Officer and contractor.
Awaiting Price
Negotiation
Memorandum and
award document from
contracting officer.
A090090Q2X09086
Azania!, Inc.

08/21/2009

$0
Negotiations ongoing
between Contracting
Officer and contractor.
A090215P9X09110
Ross Cusenbery
Architecture, Inc.

09/16/2009

$74,638
Negotiations ongoing
between Contracting
Officer and contractor.

Glossary

The following definitions, based on the Inspector General Act Amendment of 1988, apply to
terms used in this Semiannual Management Report:

Questioned Costs. Costs questioned by the OIG as a result of:

an alleged violation of a provision of a law, regulation, contract, grant, cooperative
agreement, or other agreement or document governing the expenditure of funds;

a finding that, at the time of an audit, such cost is not supported by adequate
documentation; or

a finding that the expenditure of funds for the intended purpose is unnecessary or
unreasonable.

Disallowed Cost. Questioned costs that GSA management in a management decision
sustained or agreed should not be charged to the Government.

Recommendation that Funds be Put to Better Use. A recommendation by the OIG that
funds could be used more efficiently if management took action to implement and complete the
recommendations, including:

reductions in outlays;

de-obligation of funds from programs or operations;
withdrawal of interest subsidy costs on loans or loan guarantees, insurance or bonds;
costs not incurred by implementing recommended improvements related to the
operations of the establishment, a contractor or grantee;

avoidance of unnecessary expenditures noted in pre-award reviews of contract or grant
agreements; or

any other savings that are identified specifically.

Management Decision. The evaluation by management of the findings and
recommendations included in an audit report and the issuance of a final decision by
management concerning its response to such findings and recommendations, including
planned corrective actions to remedy weaknesses identified in the report.

Final Action. The completion of all actions that GSA management concluded in its
management decision were necessary with respect to the findings and recommendations
included in the audit report. In the event that GSA management concluded no action was
necessary, final action occurred when the management decision was made.

Management Actions � Questioned Costs. The following is a list of the different
management actions used by GSA management to resolve questioned costs in an audit report.

Audit reports on which management decisions were made during the period:
Data pertaining to the number of audit reports on which management decisions were
made during the period and the associated amount of disallowed costs was furnished by
the OIG.

Write-offs: For the purposes of this report, write-offs are interpreted to
represent the difference between the disallowed cost and the amount successfully
recovered.

Management Actions � Better Use Funds. The following is a list of the different
management actions used by GSA management to resolve the �better use� of funds in an audit
report.

Better Use Funds: The figure represents amounts cited as �cost avoidance� and
�funds to be put to better use,� as agreed to by GSA management and the OIG. Prior to
April 1990, no funds were identified by the OIG specifically as �funds to be put to better
use,� and no management decisions were issued based on the consideration of �better
use� of funds.

Budget Impact Funds: Funds identified as �budget impact� involve the obligation
process. Audit-related savings of these funds, depending on the particular fund
involved, may be available for reprogramming.

No Budget Impact Funds: Funds identified as �no budget impact� are composed of
estimated and actual amounts, and do not involve obligated monies, and, therefore,
cannot be construed as having a material effect on GSA�s appropriated funds.

Audit reports on which management decisions were made during the period:
Data pertaining to the number of audit reports on which management decisions were
made during the period and the associated dollar amounts agreed to by management
were furnished by the OIG.

Value of recommendations that management concluded should not or could
not be calculable: Management was unable to determine the award amounts and
�better use funds� implemented since the amount is included in the overall award to the
prime contractor and savings could not be determined.

U.S. General Services Administration
1800 F Street, NW
Washington, DC 20405