TREASURY INSPECTOR GENERAL

FOR TAX ADMINISTRATION

The Foundation Information for Real Property Management System Can Be an Effective Tool to Manage Space Inventory

October 2000

Reference No. 2001-10-005

Executive Summary

During Fiscal Year (FY) 2000, the Internal Revenue Service (IRS) will spend over $550 million in rent charges for almost 30 million square feet of occupied space nationwide. Beginning in 1992, the Space Management and Rent Tracking System - Enhanced Revision (SMARTER) was used by the IRS as an effective tool to assist in managing the space inventory. The General Services Administration (GSA) changed its billing policy and structure in 1998, making the SMARTER obsolete. The IRS obtained the Foundation Information for Real Property Management (FIRM) system from the GSA to replace the SMARTER.

The IRS has taken steps that should ensure FIRM will be an effective tool to manage space inventory. A vendor was engaged to modify the system to handle specific needs of the IRS. In addition, while the new system is being tested, the SMARTER is being maintained and run parallel until the FIRM database is updated and perfected. Further, the Real Estate Planning and Management (REPM) Divisionís staff verified the accuracy of the modifications made to FIRM.

The overall objective of this review was to determine if FIRM will be an effective tool to manage space, forecast the rent budget, and reconcile GSA rent bills.

Results

The REPM Division took positive steps to ensure that the information in FIRM was accurate. However, the IRS could be at risk of inaccurate billing if standard operating procedures are not established to ensure the continued accuracy of the FIRM database. To minimize this risk, the standard operating procedures should include a consistent tolerance figure used by the Host Site Coordinators when certifying the accuracy of the GSA monthly bills. In addition, the procedures should include required periodic reviews and verifications of the accuracy of the information in FIRM. Further, the system should be enhanced to ensure that the information input to one module automatically updates component modules requiring the input of the same information. Enhancing the system will allow the IRS to timely identify processing errors or omissions, thus preventing inaccurate billing by the GSA.

Standard Operating Procedures Need to Be Established and Implemented

Standard operating procedures are needed for the Coordinators to properly perform their duties. Individuals responsible for the day-to-day operation of the space management system have been working under different sets of rules and procedures. The procedures should include a consistent tolerance level when verifying GSA rent bills, a consistent method for documenting rent bill discrepancies, and procedures for properly inputting data into FIRM. For example, each Regional Coordinator uses a different tolerance amount. The tolerance ranged from $100 used by 3 Regional Coordinators to $2,000 used by the Headquarters Operations functionís Coordinator. In addition, another Regional Coordinator accepted the monthly bill if the difference was 1 percent or less than the total bill.

For FIRM to be accurate and reliable, the data must be properly processed. Whenever discrepancies are identified, the IRS requires the Coordinators to prepare an Agency Request for Adjustment (Form 2972). However, the Headquarters Operations functionís Coordinator recorded the amount to be paid on a spreadsheet but did not document the reconciliation of the GSA bill with the SMARTER, the discrepancies identified, or the contacts with the GSA.

The procedures should also require periodic quality reviews to ensure that acquisitions and releases of space, and changes in billing rates or lease terms, are accurately entered into FIRM. Without periodic quality reviews, errors and omissions in the monthly rent bills will go undetected, resulting in inaccurate billing by the GSA.

Enhancements to the Foundation Information for Real Property Management System Are Needed to Ensure That Various Modular Components Interact With Each Other

FIRM is a modular database system and not all its components interact with each other. The building inventory screen is a module within FIRM containing the inventory of the space occupied by the IRS. The rent comparison screen is the module used to verify the GSA monthly rent bill for space occupied by the IRS. The system does not automatically update entries made on the building inventory screen to the rent comparison screen. Therefore, information must be manually entered into both screens. All acquisitions and releases of space are input to the building inventory screen and must also be entered into the rent comparison screen. Acquisitions and releases of space accounted for approximately $10 million in transactions for FY 2000. Since the system relies on duplicate entries to both the inventory screen and the rent comparison screen, without the enhancements to FIRM, discrepancies may not be identified and the rent budget projection reports could be inaccurate.

Summary of Recommendations

To ensure that FIRM will be an effective tool to manage space inventory, the REPM should establish and implement operating and quality review procedures to ensure the continued accuracy of the FIRM database. The operating procedures should include a consistent tolerance figure used by the Coordinators when certifying the accuracy of the GSA monthly bills. The procedures should also include required periodic reviews and verifications of the accuracy of the information in FIRM. Also, the system should be enhanced to have the building inventory screen automatically update the rent comparison screen. This enhancement will identify input errors and prevent possible inaccurate billing by the GSA.

Managementís Response: The Director, Real Estate and Facilities Management, issued a policy memorandum establishing a standard threshold of $100 for discrepancies between the IRS inventory and the GSA rent bill. Quality review requirements have been developed and will be issued as part of revised FIRM procedures in October 2000. The FIRM contractor is currently programming the affected screens on FIRM to distinguish between a partial and full release of space. The contractor is also changing the rent comparison screen (agency portion) to include information from the IRS acquisition and building inventory screens, eliminating the need for duplicate data entry. An updated version of FIRM with the modified screens will be issued in October 2000.

Managementís complete response to the draft report is included as Appendix IV.