U.S. General Services Administration

Administrator’s Semiannual

Management Report to Congress

Report No. 45

April 1, 2011 to

September 30, 2011

U.S. General Services Administration
Martha Johnson
Administrator
Office of the Chief Financial Officer
Alison L. Doone
Chief Financial Officer
Office of Financial Policy and Operations
Alexis M. Stowe
Director of Financial Policy and Operations
November 2011
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 Financial Policy and Operations, Internal Control
Division, Administrator’s Semiannual Management Report to Congress, No. 45,
Washington, DC 20417.
To obtain copies of this report,
Write to: U.S. General Services Administration, Office of the Chief Financial
Officer, Office of Financial Policy and Operations, Internal Control Division, Room
471A, 1275 First Street, NE Washington, DC 20417

E-mail your request to: Ralph.Boldt@gsa.gov

Call in your request: (202) 501-3094

Obtain a copy of this report on the Agency’s Web site at:
www.GSA.gov/annualreport

Contents
Executive Summary ................................................................................................................................. 4
Introduction and Overview ..................................................................................................................... 5
Organization of Audit Follow-up Program in General Services Administration ...................... 6
Organization Chart .................................................................................................................................. 8
Progress of Audit Closure ....................................................................................................................... 9
Audits with Disallowed Costs .............................................................................................................. 10
Audits with Better Use Funds ............................................................................................................. 11
American Recovery and Reinvestment Act (ARRA) Audits .......................................................... 12
Internal Audits ........................................................................................................................................ 13
Audits under Appeal/Litigation ........................................................................................................... 14
Contract Audits ....................................................................................................................................... 15
Glossary of Terms ................................................................................................................................... 18

Executive Summary

In accordance with the Inspector General Act Amendments of 1978, as amended,
the Administrator of the General Services Administration (GSA) submits this report
to Congress on final actions regarding audit recommendations. The report covers
the period from April 1, 2011 through September 30, 2011. 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 the
GSA Office of the Inspector General (OIG).
During the reporting period, management decisions were issued on 69 audit reports.
Of this total, 54 audit reports represented $65,156,031 in disallowed costs and 48
audit reports represented $201,016,432 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 involved actual cost avoidance determined to have a potential impact on the
budget.
During the six-month period, GSA took final action on 71 audits with management
decisions identifying disallowed costs or funds to be put to better use. These audits
represent the recovery of $13,468,009 and the implementation of $22,382,453 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, 2011, 46 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 actions have been taken with
respect to the remaining 42 audits are provided in the report.

Introduction and 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
GSA for the period beginning April 1, 2011, through September 30, 2011. This is
the agency's 45th report to the Congress since the implementation of the Act (Public
Law 100-504). The data in the report indicate that GSA audit follow-up efforts
continue to play a significant role in the effective management of the agency's
operations and the accomplishment of its mission.
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 the other
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.
Each Service is lead by a Commissioner located in the Central Office in
Washington, DC. The Commissioners are responsible in their respective functional
areas for policy development, program direction, funding, and interfacing with
Congressional staffs, clients and other constituents regarding issues of policy of
international importance.
GSA is organized as a matrix. One vector is the functional area, PBS or FAS. The
other vector is geographical. Regional Commissioners have direct functional line to
the respective FAS/PBS Commissioner. Simultaneously, the Regional
Commissioners have a duty, responsibility, and direct reporting relationship to the
Regional Administrator regarding the health of the region as an enterprise.

Organization of Audit Follow-up Program
in General Services Administration

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 administrative direction to officials in the
Office of the Chief Financial Officer (OCFO) who manage 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 in progress within GSA 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 OIG 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 Administrators
Heads of Services and Staff Offices, and Regional Administrators, to whom audit
recommendations pertain; have primary responsibility for resolving and
implementing recommendations promptly. Their responsibilities include:

• Ensuring controls are implemented 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
OCFO; and

• Providing comments on audit decision papers prepared by the OIG to ensure
that management's position on unresolved audit recommendations is properly
stated.

Organization Chart of the Agency

254

100

154

100

150

200

250

300

Total Open Audits

Total Closed Audits

Total In Progress

Open and Closed Audits

As of September 30, 2011

Progress of Audit Closure

FOR THE SIX-MONTH PERIOD ENDING SEPTEMBER 30, 2011

Timely closing of audits remains a priority for GSA. The OCFO staff worked with
contracting officers and audit liaisons to close out numerous internal and contract
audits. From April 1, 2011 through September 30, 2011, GSA closed approximately
39.4 percent, or 100 internal and contract audits, of 254 open audits. The
remaining 60.6 percent or 154 audits are open because of ongoing litigation,
negotiation, collections, and implementation of corrective actions.

Audits with Disallowed Costs

Final action for the six-month period
Ending SEPTEMBER 30, 2011

Number of
Audit
Reports

Disallowed
Costs

A. Audit reports for which final action had not been
taken by the commencement of the reporting period.

$56,471,864

B. Audit reports on which management decisions
were made during the reporting period.

$63,058,714

C. Audit reports on which final action was taken
during the reporting period.

$40,221,771

(i) the dollar value of disallowed costs that were
recovered by management through:

$13,468,009

- collections…………………...$13,323,231

- offset………………….….…..$144,778

- property in lieu of cash…….…$0

- other………………………….… $0

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

$26,753,762

D. Audit reports for which no final action has been
taken by the end of the reporting period.

$79,308,807

Audits with Better Use Funds

Final action for the six-month
period ending SEPTEMBER 30, 2011

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.

$579,126,797

B. Audit reports on which management
decisions were made during the reporting
period.

$201,016,432

C. Audit reports for which final action was
taken during the reporting period.

$228,183,348

(i) the actual dollar value of
recommendations that were actually
completed.

$22,382,453

(ii) the actual dollar value of
recommendations that management
has subsequently concluded should not
or could not be implemented or
completed.

$3,691,277

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

$7,574,627

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

$194,534,991

N/A

D. Audit reports for which no final action
had been taken by the end of the reporting
period.

$551,959,881

American Recovery and Reinvestment Act (ARRA) Audits
The American Recovery and Reinvestment Act of 2009 (Recovery Act) authorized
the 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 has developed and is 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, 2011, there
are 45 GSA Recovery Act audits, totaling $266,510,027 audited.

Internal Audits

Audits with Management Decisions Made Prior to September 30, 2010,
But with Final Action not Taken as of September 30, 2011

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

FAS has submitted
a revised action
plan for OIG
review.

04/05/2012

A070180OTW07001

GSA'S Electronic
Messaging Services
(GEMS) and National
Notes Infrastructure
(GNNI)

09/12/2007

Re-opened based
on implementation
review. GSA is
tracking action
plan until
complete.

03/30/2012

A060228OTF08007

Improvements to the
GSA Privacy Act to
Protect PII

03/31/2008

Action plan in
implementation
stage.

11/15/2011

A080081OTF08016

FISMA Review of IT
Security Program

09/11/2008

Action plan in
implementation
stage.

11/15/2011

A070171QAP09005

Performance
Measurement for
Procurement

09/30/2009

Action plan in
implementation
stage.

02/15/2012

A070118QAP09007

Consistency in
Implementing Policy

09/30/2009

Action plan in
implementation
stage.

01/15/2012

A090062BFF10001

Fiscal Year 2009
Financial and EDP
Statements

01/08/2010

Action plan in
implementation
stage.

05/15/2012

A090026Q7P10001

Prompt Payment
Discounts

03/15/2010

Action plan in
implementation
stage.

12/15/2011

A090126BTF10003

CFO Corporate
Information Network

03/31/2010

Action plan in
implementation
stage.

04/15/2012

A080180BTF10002

E2 Travel System

03/31/2010

Action plan in
implementation
stage.

01/15/2012

A090203QAP10007

Contracting within the
Center for IT Schedules
Program

06/11/2010

Action plan in
implementation
stage.

01/15/2012

Audits under Appeal/Litigation

REPORT NUMBER

NAME OF CONTRACTOR

DATE OF
REPORT

MANAGEMENT DECISION AMOUNTS

Disallowed Costs

Better Use Funds

A030140FWX03056

Science Applications International
Corporation

03/25/2003

$1,028,099

A060196P9X07091

TIGARD Electric, Incorporated

08/28/2007

$988,088

A080084P7X08061

KENMOR Electrical Company,
Limited Liability Partnership

04/29/2008

$312,148

A080077Q5X08087

Gartner, Incorporated

08/05/2008

$5,753,000

Contract Audits

Audits with Management Decisions Made Prior to September 30, 2010, but
with Final Action not Taken as of September 30, 2011

REPORT NUMBER

NAME OF
CONTRACTOR

DATE OF
REPORT

MANAGEMENT
DECISION AMOUNTS

REASON FOR NO

FINAL ACTION

Disallowed
Costs

Better Use
Funds

A030140FWX03056

Science Applications
International Corporation

03/25/2003

$1,028,099

The contractor has appealed the
Contracting Officer's decision
and the audit is now in the
litigation process.

A050122F6X06059

FASTERNAL Company

04/18/2006

$35,274

An investigation has been
opened by either the OIG or the
Justice Department regarding
actions taken by the contractor.

A060196P9X07091

TIGARD Electric,
Incorporated

08/28/2007

$988,088

The contractor has appealed the
Contracting Officer's decision
and the audit is now in the
litigation process.

A080084P7X08061

KENMOR Electrical
Company, Limited
Liability Partnership

04/29/2008

$312,148

The contractor has appealed the
Contracting Officer's decision
and the audit is now in the
litigation process.

A080077Q5X08087

GARTNER, Incorporated

08/05/2008

$5,753,000

The contractor has appealed the
Contracting Officer's decision
and the audit is now in the
litigation process.

A080177Q9X09015

Tecolote Research,
Incorporated

12/12/2008

$658,765

Negotiations are proceeding
between Contracting Officer and
contractor.

A080136Q2X09028

Dynamic Decisions, Inc.

01/20/2009

Negotiations have been
completed between Contracting
Officer and contractor.

A080085Q6X09043

The HON Company

03/03/2009

$31,298,140

Negotiations are proceeding
between Contracting Officer and
contractor

A080212Q3X09047

Phillips Corporation --
Federal Division

03/23/2009

$27,429

$1,445,916

GSA is in the process of
collecting funds owed the
government from the contractor.

A080210Q6X09062

ImmixTechnology, Inc.

04/27/2009

$711,525

Negotiations are proceeding
between Contracting Officer and
contractor.

A080077Q5X09071

Gartner, Incorporated

06/11/2009

$1,486,750

Negotiations are proceeding
between Contracting Officer and
contractor

A090007Q6X09075

Booz Allen Hamilton,
Incorporated

07/08/2009

$806,948

$68,696,732

GSA is in the process of
collecting funds owed the
government from the contractor.

REPORT NUMBER

NAME OF
CONTRACTOR

DATE OF
REPORT

MANAGEMENT
DECISION AMOUNTS

REASON FOR NO

FINAL ACTION

Disallowed
Costs

Better Use
Funds

A090145Q5X09082

BTAS, Incorporated

08/06/2009

Negotiations are proceeding
between Contracting Officer and
contractor.

A090106Q3X09084

Perot Systems Government
Services, Incorporated

08/19/2009

$34,758

$33,743,210

GSA is in the process of
collecting funds owed the
government from the contractor.

A080030Q3X09087

Hewlett-Packard Company

08/21/2009

$59,353

$81,038,538

Negotiations are proceeding
between Contracting Officer and
contractor

A090090Q2X09086

Ezenia!, Incorporated

08/21/2009

Negotiations are proceeding
between Contracting Officer and
contractor

A090228PCX09094

GreenHorne & O'Mara,
Incorporated

08/27/2009

$53,000

Negotiations have been
completed between Contracting
Officer and contractor

A090089Q4X09095

Mohawk Carpet
Corporation: Lees Carpets
Division

09/03/2009

$124,119

$3,394,643

GSA is in the process of
collecting funds owed the
government from the contractor.

A090074Q7X09099

TechFlow, Incorporated

09/04/2009

$4,373,215

Negotiations are proceeding
between Contracting Officer and
contractor.

A090254PCX09097

Greenhorne & O'Mara,
Incorporated

09/04/2009

$118,000

Negotiations have been
completed between Contracting
Officer and contractor.

A090232PCX09101

Haley & Aldrich,
Incorporated

09/09/2009

$11,762

Negotiations have been
completed between Contracting
Officer and contractor.

A090234PCX09102

HDR Architecture,
Incorporated

09/10/2009

$809,387

Negotiations have been
completed between Contracting
Officer and contractor.

A090118Q6X09123

Murray-Benjamin Electric
Company

09/25/2009

$461,494

GSA is in the process of
collecting funds owed the
government from the contractor.

A080155Q2X10006

Cascades Technologies,
Incorporated

10/21/2009

$261,525

GSA is in the process of
collecting funds owed the
government from the contractor.

A090170Q9X10007

eTouch Systems
Corporation

10/23/2009

Negotiations are proceeding
between Contracting Officer and
contractor.

A090202Q6X10016

Computech, Incorporated

11/09/2009

$19,043,879

Negotiations are proceeding
between Contracting Officer and
contractor.

A080144Q7X10019

BMC Software,
Incorporated

11/17/2009

$3,246,860

Negotiations have been
completed between Contracting
Officer and contractor.

A090159Q5X10022

RCF Information Systems,
Incorporated

12/10/2009

$4,459

$522,882

Negotiations are proceeding
between Contracting Officer and
contractor.

REPORT NUMBER

NAME OF
CONTRACTOR

DATE OF
REPORT

MANAGEMENT
DECISION AMOUNTS

REASON FOR NO

FINAL ACTION

Disallowed
Costs

Better Use
Funds

A090101P2X10024

Paramount Mechanical
Corporation:
Subcontractor to PJ Dick
Incorporated

12/16/2009

$1,593,437

Negotiations are proceeding
between Contracting Officer and
contractor.

A090198Q3X10037

IBIS Tek; Limited Liability
Company

02/24/2010

$100,507

$688,000

Negotiations are proceeding
between Contracting Officer and
contractor.

A090187Q2X10042

B&H Foto and Electronics
Corporation

03/22/2010

$7,297,749

Negotiations have been
completed between Contracting
Officer and contractor.

A100147P9X10057

AECOM Transportation, a
Division of AECOM U.S.

06/16/2010

$709,183

GSA is in the process of
collecting funds owed the
government from the contractor.

A090222QWX10058

Force 3, Incorporated

06/23/2010

Negotiations are proceeding
between Contracting Officer and
contractor.

A080070QWX10063

Accenture, Limited
Liability Partnership

07/06/2010

Negotiations are proceeding
between Contracting Officer and
contractor.

A110115Q7X11061

Pacific Star
Communications,
Incorporated

06/10/2011

$23,201

Negotiations are proceeding
between Contracting Officer and
contractor.

Glossary of Terms

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.

This page is left blank intentionally.

U.S. General Services Administration

1275 First Street, NW

Washington, DC 20417