Agency CFO disagrees with auditors’ interpretation of acquisition rules.
Financial controls designed to minimize agency payments to undeserving parties are not being fully followed by the government’s landlord, the General Services Administration, according to a watchdog report released on Friday.
GSA in fiscal 2018 failed to comply with two of six requirements in the amended Improper Payments Act, said the agency’s inspector general. Specifically, the agency “did not publish an accurate improper payment estimate in its Fiscal Year 2018 Agency Financial Report and … [did not] publish accurate and complete improper payments data in its Fiscal Year 2018 Agency Financial Report,” said the report by the team under IG Carol Fortine Ochoa. “GSA’s risk assessment process is flawed and its procedures for the Do Not Pay initiative contain significant deficiencies and are ineffective.”
Federal law requires agencies with programs susceptible to significant improper payments to estimate and report on them annually to the Office of Management and Budget, in addition to implementing corrective actions. But if a program’s estimated and reported improper payments are below the statutory thresholds for a minimum of two consecutive years, the agency may request relief from the annual reporting requirements.
The IG reviewed GSA’s improper payments in rental of space and purchase cards in fiscal 2017 and 2018, having found $109 million in total improper payments in 2017, and then $16.7 million in 2018 in the rental of space program only. The new report’s review covered August 2018 through February 2019.
“In reporting and estimating wrongful payments in its rental space program, GSA reported $16.7 million in estimated improper payments and a 0.29 percent improper payment rate,” the IG said. “However, based on our testing of rental of space payments, GSA should have reported $38.86 million in estimated improper payments and a 0.68 percent improper payment rate.” Even so, auditors found that “despite being inaccurate, the extrapolated audit results were still below GSA’s reduction target for fiscal 2018, making GSA compliant with publishing and meeting its reduction target.”
The IG recommended that GSA’s chief financial officer submit a plan to remedy the noncompliance within 90 days, propose statutory changes to bring the rental of space program into compliance, and improve controls to ensure that procedures for contractor registration with the System for Award Management jibe with the Federal Acquisition Regulation.
CFO Gerard Badorrek, though agreeing with most recommendations and planning corrective actions, disagreed with the audit findings. “The OIG erroneously concluded that GSA was non-compliant based on OIG’s incorrect interpretation that the lack of an active System for Award Management (SAM) registration for a GSA lessor makes that lessor an ineligible recipient and thus constitutes an improper payment,” he wrote. “This conclusion concerns one payment (out of more than 360) to a lessor in our Rental of Space sample.” GSA’s payment was “correct” and based on advice from GSA’s general counsel and senior procurement executive, Badorrek added.
The IG stuck to its criticism, saying the CFO had failed to provide examples of its claim to use independent verification of contractor suitability, adding that “GSA fails to acknowledge that lack of identified payments does not translate to program effectiveness.”