GSA IG: 18F Group Records Estimated $31.7 Cumulative Net Loss Between FY 2014 and 3Q FY 2016

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financial reportingThe General Services Administration‘s inspector general says GSA’s 18F organization has recorded a cumulative net loss of approximately $31.7 million between fiscal year 2014 and the third quarter of fiscal year 2016.

report GSA’s IG published Monday highlighted what auditors believe were financial projections and increased staffing levels as well as the allotment of staff time spent on non-billable activities as potential factors to the impact on cost recovery.

GSA projected 18F to generate $84.2 million in fiscal year 2016 but has only generated $27.82 million in revenue throughout the first three quarters of the year and the organization has also failed to meet target revenues in FY 2014 and 2015 by $4.8 million and $10.3 million respectively.

The IG noted that 18F has not established a plan to achieve full cost recovery as required by a memorandum of agreement with the Federal Acquisition Service and overestimated revenue projections, increased staffing levels and staff time spent on non-billable activities contributed to inability to reach cost recovery targets.

18F management has hired 201 full time employees at a more-than 500 percent staffing increase since the hub’s launch despite underperforming revenues and the former executive director continued to hire people in a push to have enough personnel to meet client demand.

Auditors reviewed 202 agreements that 18F has entered between June 2014 and April 2016 and found out several instances in which 18F staff performed work without approval of the chief information officer and prior to the execution of agreements.

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