Over the past 18 years, the General Services Administration has paid for millions of dollars in unauthorized cost overruns on federal construction design projects by illegally transferring unused dollars from other projects, the agency's inspector general has reported.

The practice, apparently carried out in good faith on the basis of an old GSA ruling, violates four federal laws and General Accounting Office financial control procedures, according to the audit. Use of the practice has permitted cost overruns on federal construction projects to be concealed from Congress, the Treasury Department and the Office of Management and Budget, investigators said.

Two follow-up audits have been ordered to determine exactly how much money has been shuffled from one project to another and to see if fraud by federal employes is involved, according to Joseph A. Sickon, GSA's inspector general. The follow-up audits are to cover annual expenditures from the $1.8 billion Federal Building Fund, the total pot for government construction, not just the account for construction design. They are expected to take at least five months to complete.

GSA Administrator Gerald P. Carmen, who in a Dec. 18 memorandum requested the IG investigation of "possible irregularities," has ordered the fund-transfer practice stopped. However, Carmen and the inspector general's office have agreed that this cannot be done until next fiscal year "because of possible losses to the government through claims," according to a GSA document.

Carmen said he will ask Congress for supplemental funds to meet the costs of projects that exceeded federal limits and tighten financial controls over all Federal Building Fund accounts. Donald L. Moseley, a GSA official, said, "There is a very good chance we will ask for the legislation to do what we were doing before."

The account that started this widening probe is called the Construction Services Fund (CSF), money set aside to pay for architectural and engineering design costs on federal projects. The money is collected from other government agencies that use GSA to supervise the projects.

For projects that were still under construction at the end of fiscal 1981 the CSF had received $20.4 million more from various federal agencies for construction design fees than it was supposed to spend. Because of cost overruns on some of those projects, that $20.4 million will be $1.1 million less than is needed to complete the work, according to the auditors.

This shuffling means, for example, that some of the money the Social Security Administration paid for design work on its new Baltimore headquarters could have been used to cover a $422,000 cost overrun in a new Saginaw, Mich., federal office building.

Among other things, the audit disclosed that:

* GSA account managers were unable to reconcile the amount allocated for design-related work with the amount they spent. For example, GSA Finance Office records show that the CSF was due $95 million for work done between 1978 and 1981, but management records show they performed work worth $112.3 million.

* Design work on a new federal office building in Ann Arbor, Mich., was supposed to cost $262,000, but cost only $128,000. The GSA retained the $134,000 in the CSF. That, the auditors said, is a violation of the Anti-Deficiency Act.

* Congress authorized $588,000 for design of repairs and alterations to the Jacob K. Javits federal office building in New York City, but the work cost $1.4 million. The difference was paid from funds designated for other projects and Congress was never told of the problem, a violation of the Public Buildings Act, according to the auditors.

"In effect," the report said, "the CSF has expended 'profits earned' on Project A to fund overruns on Project B," a violation of federal law "unless such a practice is clearly authorized . . . . We have found no such statute."

The Construction Services Fund was established in 1946 as a repository for design work funds. The money is used to pay salaries of GSA's 800 Public Building Service employes who either perform work or supervise contractors.

From 1946 to 1964 the account operated on a reimbursement basis: an agency simply paid the bill for work done by the GSA. For reasons the auditors have not discovered, agency managers changed that to a "profit-and-loss system" where the profits would offset losses to keep the CSF whole, the report said.

In 1967 the GSA general counsel ruled that existing law permitted the "fixed price, profit and loss" basis. That ruling, the IG audit said, failed to consider two prior General Accounting Office rulings that required a cost-reimbursable billing system. CAPTION: Picture, GSA Administrator Carmen: ordered practice stopped.GSA Administrator Carmen):ordered practice stopped B," a violation of federal law "unless such a practice is clearly authorized . . . . We have found no such statute."

The Construction Services Fund was established in 1946 as a repository for design work funds. The money is used to pay salaries of GSA's 800 Public Building Service employes who either perform work or supervise contractors.

From 1946 to 1964 the account operated on a reimbursement basis: an agency simply paid the bill for work done by the GSA. For reasons the auditors have not discovered, agency managers changed that to a "profit-and-loss system" where the profits would offset losses to keep the CSF whole, the report said.

In 1967 the GSA general counsel ruled that existing law permitted the "fixed price, profit and loss" basis. That ruling, the IG audit said, failed to consider two prior General Accounting Office rulings that required a cost-reimbursable billing system.GSA Administrator Carmen):ordered practice stopped