Federal Accounting Standards Advisory Board Accounting for PublicPrivatePartnerships
Federal Accounting Standards Advisory Board Accounting for Public-Private-Partnerships Associated General Contractors Public Owners’ Forum Westin Georgetown Hotel Washington, DC March 12, 2014 1
Disclaimer • Views expressed are those of the speakers. The Board expresses its views in official publications. 2
FASAB’s Mission The FASAB serves the public interest by improving federal financial reporting through issuing federal financial accounting standards and providing guidance after considering the needs of external and internal users of federal financial information. 3
What is FASAB? One of three U. S. Accounting Standards. Setting Organizations United States Accounting Standards. Setting Organizations Financial Accounting Standards Board (FASB) (Private Sector Business) Governmental Accounting Standards Board (GASB) (State & Local Governments) Federal Accounting Standards Advisory Board (FASAB) (Federal Agencies & Government-wide) 4
Who is FASAB? We currently have 9 board members supported by 8 staff. Tom Allen Wendy Payne Chairman (Former GASB Chair) Executive Director Non-voting Member Mark Reger Norman Dong Treasury OMB Sam Mc. Call Robert Dacey GAO Graylin Smith Harold Steinberg Michael Granof Current as of December 2013 D. Scott Showalter Bios available at www. fasab. gov 5
Public-Private Partnerships Overall goal - Making the full costs of P 3 s transparent • Governments increasingly use innovative approaches to partnering with non-governmental entities. – Benefits include: • Risk sharing • Enhanced performance incentives • Financing arrangements to avoid large up front investments of taxpayer funds – Arrangements may obscure costs and results. • The project will consider how the lease and entity standards may be applied to such arrangements and fill any voids in the standards. 6
Task Force Composition Public & Private Participants 7
Task Force Composition Professional Disciplines 8
Agencies Consulted 9
Public-Private Partnerships Disclosure Phase Overview 10
Work-in-Progress Draft Definition • • • Federal public-private partnerships (P 3 s) are contractual arrangements or transactions between public and private sector entities to deliver a service or an asset for either government or general public use where in addition to the sharing of resources, each party shares in the risks and rewards potential of said arrangements or transactions. As a result, federal P 3 s can (1) exclude contractual protections afforded the government by the Federal Acquisition Regulations, (2) require the government to provide resources or absorb losses greater than other alternative or competing arrangements or transactions, and (3) include the formation of special purpose vehicles or SPV’s. Sharing of risks and rewards is evidenced by conditions such as (1) agreements covering a significant portion of the economic life of a project or asset, and/or lasting more than five years, (2) financing arranged by the private partner, (3) conveyance or transfer of real and personal property, multi-sector skills and expertise, and (4) formation of special purpose vehicles or SPV’s. 11
Proposed Characteristics Conclusive – “You’re in if you meet any one” 1. Creation of a long-lived asset or financing liability 2. The federal entity participates in or helps sponsor an SPV, partnership, trust, etc. 3. The term of the procurement or contract arrangement is longer than 5 years. 4. The principal arrangement is exempt from the Federal Acquisition Regulation (FAR) 12
Proposed Characteristics Suggestive – “Maybe, maybe not” - requires judgment. View each SC in light of the others. 1. A Value for Money analysis is performed. 2. The principal arrangement is NOT managed by an Administrative Contracting Officer (ACO) and/or Procurement Contracting Officer (PCO). 3. The consideration or items given up in an arrangement or their value are not readily apparent. 4. Significant work force duties, activities, or knowledge are cross-shared between public and private sector P 3 parties. 13
Proposed Characteristics 5. The focus is more on collaboration and informal, real-time, resolution processes as opposed to formal, contractual, administrative processes. 6. The government relies on either the private sector partner’s or a third party’s determination of a P 3’s performance or return on investment/equity, without performing its own verification of performance/return on investment/equity. 14
Suggested Disclosures 1. The purpose or objective for the P 3 arrangement or transaction to include the relative benefits/revenues being received in exchange for all of the government’s consideration, monetary and non-monetary. 2. The decision criteria for selecting a P 3 arrangement or transaction to include the entity’s statutory authority for entering into the P 3. 3. Type of funding, federal or otherwise used to meet mission requirements and service delivery needs to support the P 3; e. g. , appropriated, non-appropriated, private capital or investment. 15
Suggested Disclosures 4. The operational and financial structure of the P 3 including the entity’s rights and responsibilities and amounts the government can be reasonably expected to incur/pay over the life of the P 3 arrangement or transaction. 5. Whether the private partner(s), to include any SPV, have borrowed or invested capital contingent upon the entity’s promise to pay whether implied or explicit. 6. Identification of the significant risks the P 3 partners are undertaking. 7. Violations of legal and contractual provisions governing the P 3 arrangement or transaction. 16
Uncle Sam Wants YOU!!!! . We invite your comments and suggestions!! If you’d like to join the P 3 Task Force or follow its work, let me know. 17
Contact and Website Information • General inquiries can be directed to fasab@fasab. gov • Phone: 202 512 -7350 • www. FASAB. gov – Listserv – Exposure Drafts – Active Projects • I can be reached at: savinid@fasab. gov, 202 512 -6841 18
- Slides: 18