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Financial Statements Analysis

KPMG LLP issued an unmodified opinion on GSA’s FY 2015 financial statements. Agency management is accountable for the integrity of the financial information presented in the financial statements. The financial statements and financial data presented in this report have been prepared from GSA accounting records in conformity with Generally Accepted Accounting Principles (GAAP) as prescribed by the Federal Accounting Standards Advisory Board (FASAB). The Consolidated Statements of Net Cost presents, by major program and activity, the revenues and expenses incurred to provide goods and services to our customers.

Consolidated Financial Results

FY 2015 assets totaled $39,405 (in millions). FY 2014 assets totaled $39,011 (in millions). In FY 2015, GSA assets (in millions) were divided as follows: $27,390 in Net Property and Equipment; $9,748 in Fund Balance with U.S. Treasury; $1,956 in Net Accounts Receivable; $311 in Other Assets. In FY 2014, GSA assets (in millions) were divided as follows: $27,728 in Net Property and Equipment; $8,698 in Fund Balance with U.S. Treasury; $2,277 in Net Accounts Receivable; $308 in Other Assets. FY 2015 liabilities totaled $6,535 (in millions). FY 2014 liabilities totaled $6,755 (in millions). In FY 2015, GSA liabilities (in millions) were divided as follows: $1,989 in Accounts Payable; $954 in Intragovernmental Liabilities; $2,240 in Environmental Liabilities; $1,352 in All Other Liabilities. In FY 2014, GSA liabilities (in millions) were divided as follows: $2,112 in Accounts Payable; $927 in Intragovernmental Liabilities; $2,466 in Environmental Liabilities; $1,250 in All Other Liabilities.GSA Assets

GSA assets primarily include: Property, Plant, and Equipment (PP&E) such as federal buildings, motor vehicles, and office equipment; Fund Balance with Treasury (FBWT); and debts owed to GSA from federal agencies and the public, mostly from sales transactions or uncollected rent (Accounts Receivable). In FY 2015 GSA reported Total Assets of $39.4 billion compared to FY 2014 Total Assets of $39.0 billion, representing a net increase of approximately $394 million. Significant changes in assets include an increase in the overall FBWT of $1 billion, due almost entirely to very positive earnings in the Federal Buildings Fund (FBF), which improved due to reduced spending against prior American Recovery and Reinvestment Act (ARRA) funding, as well the elimination of debt financing commitments that resulted from the FY 2014 retirement of long-term debt. Also, the value of GSA owned buildings increased by almost $1.3 billion. This increase was mostly due to the transfer of approximately $1.1 billion from Construction-in-Progress (CIP) to the Buildings account. GSA has experienced a decline in overall funding for building investments, particularly as past ARRA-funded projects are being completed, which is resulting in reduced volumes of ongoing construction and alteration activities.

GSA Liabilities

GSA liabilities are primarily amounts owed to commercial vendors for goods and services received but not yet paid (Accounts Payable), amounts GSA owes to other federal entities, and long-term estimates of future environmental remediation costs. In FY 2015, Total Liabilities were $6.5 billion; a net decrease of $220 million compared to FY 2014 Total Liabilities of $6.8 billion. This decline is primarily attributable to the following three items. The first is mostly attributable to a $226 million decrease in the estimated future cost of Environmental and Disposal Liabilities. The second is the reduction of $123 million in accounts payable from the Public and this is mostly attributable to sizable reductions in Acquisition Services Fund (ASF) business volume due to cutbacks in orders and the accompanying services. Lastly, the decreases in liabilities were somewhat offset by $42 million in increased liabilities resulting from discontinued operations in the ASF.

GSA Revenue

The Consolidated Statements of Net Cost presents, by major program and activity, the revenues and expenses incurred to provide goods and services to our customers. GSA reported $19.5 billion in revenue during FY 2015 compared to $20.1 billion reported in FY 2014, a decrease of $593 million. Changes in revenues were most notable in the ASF, which experienced a $585 million reduction. FY 2015 Expenses were $19.2 billion compared to FY 2014 Expenses of $20.3 billion, a decrease of $1.0 billion. Net Revenue from Operations was $243 million, a $443 million increase compared to FY 2014, when Net Cost exceeded Revenues from Operations of $200 million. The largest changes in net operating results are due to improvements in FBF results of $724 million, offset by decreased net results of $182 million in the ASF. Changes in FBF and ASF net results are discussed further below.

Financial Results by Major Fund – Federal Buildings Fund

The FBF is the primary fund of the PBS. PBS provides workplaces for federal agencies and their employees. FBF is primarily supported by rent paid to GSA from other federal entities. Operating results are displayed on the Consolidating Statements of Net Costs, segregated into the two primary components of Building Operations – Government Owned, and Building Operations – Leased.

FY 2015 FBF gross revenue is $11.4 billion, with over half of the revenue generated from five federal customer agencies as shown in the “FBF Top 5 Federal Customers” table.

FBF Top 5 Federal Customers Revenues
($ in Millions)
% of Total
Revenues
Department of Justice $1,875 16%
Department of Homeland Security $1,832 16%
Federal Judiciary $1,166 10%
Social Security Administration $833 7%
Department of the Treasury $748 7%

FBF Net Revenue from Operations

 FY 2015 FBF Net Revenues from Operations totaled $620 (in millions). FY 2014 FBF Net Revenues from Operations totaled a loss of $104 (in millions). In FY 2015 there was $683 (in millions) in revenue from Owned Building Operations and a loss of $63 (in millions) in Leased Building Operations. In FY 2014 there was a loss of $31 (in millions) in revenue from Owned Building Operations and a loss of $73 (in millions) in Leased Building Operations.FBF Net Revenue from Operations represent the amounts remaining after the costs of operating GSA owned and leased buildings are subtracted from revenue. Net Revenue from Operations are used to invest in major repairs and alterations (R&A) to federal buildings and to partially offset costs of constructing new federal buildings.

Revenues and expenses in the FBF are primarily from building operations and rent. PBS also operates a Reimbursable Work Authorization (RWA) program, which provides customer agencies with alterations and improvements in GSA space, above what is specified in the base rental agreement.

The FBF reported net revenues in excess of expenses of $620 million in FY 2015 compared to net costs exceeding revenue by $104 million in FY 2014, representing an increase of $724 million. While the net operating results were up significantly, the primary cause was decreases in estimates of the long-term cost of environmental liabilities, totaling $226 million, due to changes in the amount of building space requiring cleanup, and updates to cost factors used in the methodology for estimating future cleanup costs. Comparatively, environmental liability expenses recognized in FY 2014 totaled $512 million, a change of $738 million between the two years. These estimated environmental liabilities are generally classified as retirement obligations, which will be liquidated either over the life of the associated buildings, or at final disposal or demolition of the buildings. While changes for re-estimates of these long-term liabilities are recognized each year in the results of operations, the rental rates for associated buildings are designed to recover such costs over time, similar to funding for capital improvements for building alterations and improvements so that resources are available from year-to-year, as needed. This variation of immediate cost recognition compared to revenue generation over time can periodically create substantial differences in net operating results, as was seen between FY 2015 and FY2014.

FBF Obligations, Outlays and Collections

In the FBF, obligations are primarily the value of contracts awarded to commercial vendors for the construction of new federal buildings; for repairs and alteration, cleaning, utilities and other maintenance of GSA-owned federal buildings; and lease and related payments to commercial landlords for space leased by GSA for federal agencies.

FBF Obligations Incurred has increased by $238 million between FY 2015 and FY 2014. Gross Outlays decreased by $200 million during FY 2015. FY 2015 outlays were lower mostly due to the continued depletion of funding received through the ARRA for new construction and building alterations. Offsetting Collections have decreased by $240 million, which represent revenues collected from other federal agencies that offset expenditures made by GSA, as the square footage of building space under lease have been reduced and agencies reduce their overall space requirements.

FBF Obligations and Outlays
(Dollars in Millions)
FY
2015
FY
2014
Change
($)
Change
(%)
Obligations Incurred $10,987 $10,749 $238 2.2%
Gross Outlays $10,467 $10,667 $(200) -1.9%
Offsetting Collections $11,464 $11,704 $(240) -2.1%

Financial Results by Major Fund — Acquisition Services Fund

The ASF, the primary fund of the FAS, is a revolving fund that operates from the reimbursable revenue generated by its business portfolios rather than from an appropriation received from Congress. FAS business operations are organized into four business portfolios based on the product or service provided to customer agencies: General Supplies and Services (GS&S); Travel, Motor Vehicles, and Card Services (TMVCS); Integrated Technology Services (ITS); and Assisted Acquisition Services (AAS). By leveraging the buying power of the federal government, FAS consolidates requirements across multiple agencies and uses its acquisition expertise in order to acquire goods and services at lower prices.

In FY 2015, the ASF realized $8.2 billion in revenues. The majority of revenues were from the five agencies shown in the “ASF Top 5 Federal Customers” table, with over half of sales revenue generated from Department of Defense agencies.

ASF Net Revenues from Operations

FY 2015 ASF Net Revenues from Operations totaled a loss of $156 (in millions).  FY 2014 ASF Net Revenues from Operations totaled $26 (in millions). In FY 2015 there was a loss of $120 (in millions) for GSS; an increase of $17 (in millions) for TMVCS; an increase of $27 (in millions) for ITS; an decrease of $3 (in millions) for AAS; a loss of $77 (in millions) for others. In FY 2014 there was an decrease of $81 (in millions) for GSS; an increase of $93 (in millions) for TMVCS; an increase of $13 (in millions) for ITS; an increase of $2 (in millions) for AAS; a loss of $1 (in millions) for others.ASF Net Revenue from (Cost of) Operations represent the amounts remaining after the costs of goods and services sold and FAS operating expenses are subtracted from revenues earned during the year. Net Revenues from Operations are used to invest in the GSA Fleet, IT systems, other investments to improve FAS service levels, and to comply with regulatory and statutory requirements. The ASF reported net cost in excess of revenues of $156 million during FY 2015, $182 million less than FY 2014 net revenue in excess of cost of $26 million. The most significant reduction in net operating results is attributable to the discontinued GS&S operations. The closure of a large inventory depot on December 31, 2014 resulted in the recognition of $49 million in expenses associated with the rent liability for the remaining lease term. Additional costs associated with discontinued operations include employee separation expenses, inventory and fixed asset write-offs, and accelerated amortization on leasehold improvements. Beyond the GS&S portfolio, reduced revenues were experienced across the major ASF activities. AAS, the largest ASF portfolio, saw revenues drop over 9 percent, as orders for its services were significantly reduced. This reduction in orders was seen from Defense agencies, the portfolio’s largest customer base. TMVCS revenues were also significantly reduced, attributable to a significant rate reduction implemented to reflect decreased petroleum cost, as well as a later than usual vehicle acquisition cycle which reduced vehicle sales proceeds. Under the category of smaller Other Programs, costs increased $90 million, with significant expenses incurred in support of the Integrated Award Environment activities and the Common Acquisition Platform, for program investments such as software license acquisitions, and application design and implementation. The bulk of the increased costs were funded through the use of prior-year retained earnings rather than new reimbursable agreements with other federal agencies, resulting in the net cost exceeding revenues by $77 million for the Other Programs category.

ASF Top 5 Federal Customers Revenues
($ in Millions)
% of Total
Revenues
Department of Defense $4,656 57.0%
Department of Homeland Security $562 7.0%
Department of Agriculture $431 5.0%
Department of Justice $298 4.0%
Department of Health and Human Services $275 3.0%

 

ASF Obligations, Outlays, and Collections

ASF obligations and outlays are primarily driven by contracts awarded to commercial vendors, who provide goods and services in support of the ASF portfolios. Obligations Incurred decreased by $244 million between FY 2015 and FY 2014, mostly due to lower business volume with military customers in the AAS programs and fewer purchases of motor vehicles for the GSA Fleet program in TMVCS. Lower business volume also contributed to the decline in Gross Outlays and Offsetting Collections.

ASF Obligations and Outlays
(Dollars in Millions)
FY
2015
FY
2014
Change
($)
Change
(%)
Obligations Incurred $10,514 $10,758 $(244) -2.3%
Gross Outlays $9,886 $10,183 $(297) -2.9%
Offsetting Collections $9,888 $9,910 $(22) -0.2%

Limitations of Financial Statements

The principal financial statements report the financial position and results of GSA operations, pursuant to the requirements of 31 U.S.C. 3515 (b). While the statements have been prepared from GSA books and records in accordance with GAAP for federal entities and the format prescribed by the Office of Management and Budget (OMB), the statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records. The statements should be read with the realization that they are for a component of the U.S. Government.

Last Reviewed 2016-05-26