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GSA Misses Target for Reducing 'Improper' Payments to Landlords Last Year

Amount More Than Doubled from Previous Year; Keeps GSA Out of Compliance with Federal Laws
May 14, 2018
GSA headquarters in Washington, DC. Credit: GSA

For the second consecutive year, the U.S. General Service Administration, which oversees much of the federal government's leasing of office and industrial space, was not in compliance with federal laws collectively known as the Improper Payments Acts due to more than $107 million in what an internal audit termed improper payments to landlords.

But the issue is more administrative than financial, the GSA notes. By improper, GSA is referring to payments made to lessors not registered in the federal government's System for Award Management (SAM) at the time of payment.

Such registration is a requirement for all vendors choosing to do business with the government. Payments to building owners not registered in SAM, even those with proper lease contracts or awards, are considered improper payments for purposes of an internal audit by the GSA's Inspector General.

"GSA is required to make payments based on lease agreements regardless of the status of the vendor's SAM registration; however, we are reporting these payments as improper if the lessor's registration is not active at the time of payment," the GSA reported. "Although not registered in SAM at the time of payment, they were not on the "Government's Do Not Pay List" (DNP) and the vendor was registered at the time of the award.

The GSA said corrective actions are already underway, including improved controls over the payment process to ensure that only vendors registered in SAM are paid.

In addition, the audit concluded that a contributing factor to the agency missing its reduction target was to the unrealistic targets GSA itself set for reducing the improper payments. Hitting an aggressive reduction target of 0.025 percent established for fiscal 2017 was not realistic, the audit found, but the goals had already been approved by the U.S. Office of Management & Budget and could not be changed.

The GSA has since worked with OMB to set a new target of getting the improper payments down to 1.8 percent of total outlays for the rental of space for fiscal year 2018.

Interestingly, the improper payments issue for leased space came up in Senate confirmation hearings last fall for new GSA administrator Emily Murphy.

When asked what she would do to ensure that the GSA is in compliance, Murphy answered: "My goal for GSA [is] to not make any improper payments. I will work with the CFO to ensure that all of the [Inspector General's] recommendations are addressed and that we apply all lessons learned to future transactions."

Murphy was confirmed as the agency's new administrator in December after the end of the 2017 fiscal year.

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