Summary

The Department of Veterans Affairs (VA) holds about 5 percent of the real property owned by the federal government in terms of building floor area, including such facilities as hospitals and office buildings. VA's responsibility for managing its real property includes the construction of its facilities and cemeteries. Because these construction projects can span several years, VA is authorized to carry forward fund balances from year to year in its construction accounts. VA is responsible for keeping track of and managing these balances to ensure that any unexpended balances that remain after construction projects are completed are redirected to other construction project needs within the agency. VA's budgets for new construction exist in two accounts--Major Construction and Minor Construction--which are funded as separate line items within the appropriation. For purposes of this report, we refer to the Major and Minor Construction accounts as VA's construction accounts. Construction projects undertaken to replace existing facility components are funded through the Non-Recurring Maintenance (NRM) portion of the Medical Facilities budget account. For purposes of this report, we refer to the NRM as VA's facility account. Under the Comptroller General's authority to conduct evaluations on his own initiative, and as part of a continued effort to assist Congress in overseeing real property management issues, we examined VA's management of unexpended construction balances. Specifically, we addressed the following question: To what extent does VA have readily available information about unexpended balances in its construction and facility accounts to effectively manage these funds?

VA did not have readily available information in its construction and facility accounts about unexpended balances that were no longer needed and could have been redirected to other needs. Two issues hindered VA officials from identifying these unexpended balances in a timely manner. First, VA's systems lacked readily available information to track projects and provide timely and accurate information to VA management. Second, VA lacked effective policies and procedures for identifying unexpended balances when construction projects are completed and the funds designated for those projects are no longer needed. As a result of these two issues, unexpended balances on completed construction project accounts have been allowed to accumulate. We identified about $11 million in unexpended balances from completed construction projects during our review. Furthermore, the Veterans Health Administration (VHA) lacks tools to monitor financial project information in its facility account projects at its Washington, D. C., headquarters. Although there were no unobligated construction balances from completed projects in VHA's facility accounts, there was a related issue concerning its practice of obligating most facility funds in the last month of the fiscal year, which poses a risk. Our past work has shown that year-end spending can place government programs at risk for waste. GAO reported in September 2006 that VA did not include the status of the facility account funds in the three quarterly reports that VA had provided. Our review found that VA's two subsequent reports on the financial status of VHA--for the fourth quarter of fiscal year 2006 and the first quarter of fiscal year 2007--reported the status of NRM funds. However, in these reports, VA did not explain (1) its practice of holding the majority of NRM funds from OMB's quarterly apportionment until the end of the fiscal year and (2) its use of the $69 million difference between planned and actual NRM funds for fiscal year 2006.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Implemented" or "Not implemented" based on our follow up work.

Recommendations for Executive Action