THE DEPARTMENT OF GENERAL SERVICES WAS CREATED BY A MERGER OF TWO STATE DEPARTMENTS IN 1975 AND SERVES AS THE CENTRAL PROCUREMENT AND PROPERTY MANAGEMENT AGENCY FOR THE STATE. ITS RESPONSIBILITIES INCLUDE THE PURCHASING, LEASING, CONSTRUCTION, REPAIR, AND MAINTENANCE OF ALL FACILITIES, EQUIPMENT, AND SUPPLIES USED BY EVERY STATE ADMINISTRATIVE DIVISION. THE FINANCIAL STATEMENTS CONTAIN A SUMMARY BALANCE SHEET FOR 1976 AND 1977 AND DATA ON STATUS OF APPROPRIATIONS, RECEIPTS, AND EXPENDITURES. THE AUDITOR GENERAL FOUND THAT RESPONSE TO BID INVITATIONS WAS LOW, AN UNACCEPTABLE SITUATION SINCE REDUCED COMPETITION CAN INCREASE CONTRACTING COSTS, AND SURVEYED VENDORS TO DETERMINE WHY. EXAMPLES OF VENDOR'S RESPONSES ARE PROVIDED, AND SUGGESTIONS FOR MAKING THE BIDDING PROCESS MORE FLEXIBLE AND ATTRACTIVE TO BUSINESSES ARE PRESENTED. ANALYSIS OF A MILLION DOLLAR CONTRACT FOR LOUNGE FURNITURE DEMONSTRATED ADDITIONAL BIDDING PROBLEMS SUCH AS LETTING CONTRACTS AS A GROUP RATHER THAN ON THE ITEM-BY-ITEM BASIS. THE AUDIT DISCOVERED INEFFICIENT CONTROLS OVER CONTRACT FILES, EXCESSIVE DELAYS IN DEPOSITING AWARDED BIDDER SECURITIES, AND NO RECORDING PROCEDURES FOR BID SAMPLES. THE STATUTORY LIMITS ON STATE INSURANCE FUNDS PRECLUDE AN ECONOMICAL INSURANCE PROGRAM, AND EFFORTS TO PROMOTE LEGISLATION INCREASING THESE LIMITS SHOULD BE CONTINUED. A REVIEW OF EMPLOYEE FILES DISCLOSED THAT THEY DID NOT CONTAIN PAYROLL DEDUCTION AUTHORIZATIONS. VARIOUS BUREAUS OF THE DEPARTMENT OF GENERAL SERVICES DID NOT COMPLY WITH ESTABLISHED INVENTORY CONTROL POLICIES RESULTING IN INACCURATE FIXED ASSET RECORDS. FINDINGS AND RECOMMENDATIONS OF THE AUDIT REPORTS FOR 1974 AND 1975 ARE SUMMARIZED AND THEIR STATUS REVIEWED. (MJM)