Congressman Bede'l has recently brought to my attention that the Public Buildings Service of the General Services Administration is spending large sums of money each year to pay for alterations to buildings Teased from the private sector. In some cases, these one year alteration costs have been several times greater than the annual rent for the building.

The Government Operations Committee is presently doing a study of the Teasing practices of the Public Buildings Service. In connection with this study, I request the Seneral Accounting Office to initiate an investigation of the alteration of leased buildings. In particular, it would be helpful if the investigation would deal with these matters:

11 The practice and policy of adding major alterations to leased buildings and the effects of these alterations on subsequent lease renewal decisions;

2)

3)

The extent of the practice of the Public Buildings Service authorizing
the owners of leased buildings to provide alterations rather than the
PBS procuring alterations through a competitive bid process;

Other related matters of concern which may develop during the investigation.

It would be helpful if we could have this report by September 15, 1978, but the Committee may need information and/or testimony on this investigation for hearings which may occur before that date. I would also request that this report not be submitted to the General Services Administration for comment.

am

Thank you for your prompt attention on this matter and with best wishes, I

(945154)

Sincerely.

ACK BROOKS
Chairman

Report on Special Review of Buildings Management Procurements,
Regions 1 through 10 (91-8404-XXX)

To

The Administrator (A)

As you requested, during the week of August 21, 1978, we performed a
limited review of current procedures and controls over the procure-
ment of building maintenance and alteration services. The review
was conducted in 20 cities and involved all GSA regions.

We reviewed procurement documents on 326 projects valued at $821,903
and made physical inspections of work completed under 172 contracts
totaling $492,117. Audit teams were supplemented by PBS inspectors
from regional offices outside the region under review. Emphasis was
placed on procurements under $10,000 in amount made by PBS field
offices under authority delegated to buildings managers.

Results of Review

Generally speaking, it is difficult for us to equitably conclude on
the quality of GSA building management procurement since May 1978.
During this period managers responsible for procurement have been
subjected to unusually heavy surveillance and advised of possible
disciplinary action for inadequate performance. Also, during a por-
tion of the period, there was a perceived restraint on "sole-source"
procurement. The result has been a period of significantly reduced
procurement activity. In fact, much of our audit testing necessarily
involved small procurement actions of less than $2,000, and discrep-
ancies of small dollar amounts.

Accordingly, we have chosen to report only those observations which
are sufficiently significant to call to your attention, and which
appear to require positive corrective action. Specifically, procure-
ments questioned were made in Region 3 (Washington, DC), 12 cases;
Region 4 (Miami, Florida), 3 cases; Region 5 (Detroit and Battle
Creek), 5 cases; and Region 9 (San Diego), 1 case. See Attachment D

2

Attachments A, B, and C portray the extent and results of our testing. Note that separate schedules are provided which indicate our findings relative to procurement actions begun prior to May 31, 1978, and after. This distinction was considered useful, to indicate the possible effect of the increased attention to this area. And, it was necessary, in that although the audit selection included only procurement actions which were delivered subsequent to May 31, 1978, many of the procurement documents predated May 31, 1978.

The results of our reviews were reported to all Regional Administrators on August 31, 1978, except for Regions 3 and 5 which were issued on September 8, 1978. To date, comments have been received from seven Regional Administrators. Generally, the Regional Administrators have concurred in our findings and corrective actions are being taken at the regional level. However, there are some cases where the findings are being contested. These cases have not been included on Attachment D.

Irregularities

Our review did not disclose fraud. However, we found several irregularities regarding procurement actions in four regions which suggest the possibility of fraud. As is our usual procedure in such cases, we are referring these matters to the Office of Investigations for investigative review.

Hand Davi

HOWARD R. DAVIA
Director of Audits

rcentage of number of cases with discrepancies to the number of cases inspected.

23

16.1

51

27.9