Financial Statement Summary and Analysis

Banner for Fiscal Year 2017 Agency Financial Report

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

GSA Assets

GSA assets primarily include: Property and Equipment such as federal buildings, motor vehicles, and office equipment; Fund Balance with Treasury (FBwT); and debts owed to GSA from federal agencies and non-federal customers, mostly from sales transactions or uncollected rent (Accounts Receivable). In FY 2017, GSA reported Total Assets of $41.4 billion compared to FY 2016 Total Assets of $40.3 billion, representing a net increase of approximately $1.1 billion. Significant changes in assets include an increase in the overall FBwT of $789 million, mainly due to the Federal Buildings Fund (FBF), which saw an increase of $803 million as funding generated for capital programs to cover building repairs and alterations, and new constructions costs exceed amounts spent on these programs. The FBF FBwT has grown over a number of years, when spending authority approved in annual appropriation acts for the capital programs is less than resources generated by net revenues.

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 2017, Total Liabilities were $7.4 billion; a net increase of $533 million compared to FY 2016 Total Liabilities of $6.9 billion. The increase is primarily attributable to a large increase in deferred revenues in the FBF related to payments GSA received from the U.S. Department of State (DOS) to fund acquisitions of real property, for which it has been determined the DOS will receive reduced rent.

GSA Revenue

The Consolidated Statements of Net Cost present, by major program and activity, the revenues and expenses incurred to provide goods and services to our customers. GSA reported $21.8 billion in revenue during FY 2017 compared to $20.5 billion reported in FY 2016. Higher revenues are most noticeable in the Acquisition Services Fund (ASF) due to higher business volume with the U.S. Department of Defense in the Assisted Acquisition Services (AAS) business line. FBF revenues have increased primarily as a result of a higher level of work performed on reimbursable work authorization projects and a modest increase in rent revenues. GSA’s net operating results have increased slightly from the prior year. Changes in FBF and ASF net operating results are discussed further below.

Financial Results by Major Fund – Federal Buildings Fund

The FBF is the primary fund of PBS. PBS provides workplaces for federal agencies and their employees. FBF is primarily supported by rent paid to GSA from other federal agencies. 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 2017 FBF gross revenue is over $11.7 billion, with over half of the revenue generated from five federal customer agencies as shown in the “FBF Top Five Federal Customers” table.

FBF Top 5
Federal
Customers
Revenues
($ in
Millions)
% of
Total
Revenues
U.S. Department of Justice $1,960 16.7%
U.S. Department of Homeland Security $1,880 16.0%
Federal Judiciary $1,186 10.1%
U.S. Social Security Administration $881 7.5%
U.S. Department of the Treasury $730 6.2%

FBF Net Revenue from Operations

FBF Net Revenue from Operations represents the amounts remaining after the costs of operating GSA owned and leased buildings are subtracted from revenue. Net Revenue from Operations is used to invest in major repairs and alterations (R&A) to federal buildings and to partially offset costs of constructing new federal buildings.

The primary source of revenue into the FBF is rent from our customer agencies and the primary sources of expense are the cost of leasing building space and the cost of operating the GSA’s portfolio of owned and leased buildings. 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 $666 million in FY 2017 compared to net revenues in excess of expenses of $605 million in FY 2016, representing an increase of $61 million. One of the more significant items impacting this increase was a $30 million one-time gain on the sale of the Cotton Annex building in Washington, D.C. Historically, revenues and expenses associated with the building portfolio have steadily increased over time as a result of increases in rentable square feet, cost escalations, and higher taxes. However, efforts to ‘reduce the footprint’ (RTF) of federal real property has resulted in a significant reduction in the amount of square footage required by agencies, slowing the growth of rent revenues in the FBF.

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 primarily as a result of projects funded by RWA’s, for acquisition and development of federal real property and modernization and alteration projects. There were also increased obligations for higher construction costs on large projects funded directly by GSA, like the San Ysidro port of entry in San Diego, CA and the U.S. border station in Alexandria Bay, NY. The real estate acquisitions through reimbursable work authorizations and higher construction costs also generated increases in Gross Outlays for FY 2017. In addition, the increased RWA activity for the year was the primary contributor to the increases in Offsetting Collections compared to FY 2016 results.

FBF
Obligations
and Outlays
($ in
Millions)
FY
2017
FY
2016
Change
($)
Change
(%)
Obligations
Incurred
$11,538 $10,700 $838 7.8%
Gross
Outlays
$11,231 $10,282 $949 9.2%
Offsetting
Collections
$12,034 $11,370 $664 5.8%

Financial Results By Major Fund — Acquisition Services Fund

The ASF is a revolving fund that operates from the reimbursable revenue generated by its business portfolios rather than from an appropriation received from Congress. The operations of the ASF are organized into seven business portfolios: General Supplies and Services (GS&S); Travel, Transportation and Logistics (TTL); Information Technology Category (ITC); Assisted Acquisition Services (AAS); Professional Services and Human Capital (PS&HC); Office of Systems Management (OSM), and Technology Transformation Service (TTS). By leveraging the buying power of the federal government, FAS consolidates requirements across multiple agencies and uses its acquisition expertise to acquire goods and services at fair and reasonable prices.

In FY 2017, the ASF realized over $10.3 billion in revenues with over 77 percent of the revenue generated from five federal customer agencies as shown in the “ASF Top Five Federal Customers” table.

ASF Top
Five Federal
Customers
Revenues
($ in Millions)
% of Total
Revenues
U.S. Department of
Defense
$6,249 61.0%
U.S. Department of
Homeland Security
$756 7.4%
U.S. Department of
Agriculture
$339 3.3%
U.S. Department of
Justice
$321 3.1%
U.S. Department of
Health and Human
Service
$287 2.8%

ASF Net Revenues from Operations

ASF Net Revenue from Operations represents the amounts remaining after the costs of goods and services sold and cost of operations. Net Revenues from Operations are invested in the GSA Fleet, IT systems, other programs to improve FAS service levels, and to comply with regulatory and statutory requirements. In FY 2017 the ASF reported a net loss of $8 million compared to positive net income of $8 million in FY 2016. In the TTL business line, revenues and expenses have declined due to a lower volume of motor vehicle sales in the Fleet Purchasing program. Net operating results have declined due to higher petroleum costs, an increase in depreciation expense on GSA owned vehicles, and a decline in the net gains realized on the sale of surplus motor vehicles. The FY 2016 net operating results also include a one-time expense reduction of $20 million in the GS&S business line associated with the reduction in a lease termination liability. In addition, expenses have increased in the ITC business line due to costs incurred in support of the transition to the EIS telecommunications contracts. EIS will replace Networx, Washington Interagency Telecommunications System (WITS) 3, and local telecommunications contracts. Transition costs are funded through reserves and will be recovered over the life of the EIS contracts. Net income for ITC has improved from last year due to lower operating expenses in the Public Key Infrastructure (PKI) program. AAS programs have experienced higher business volume with U.S. Department of Defense customers and this is reflected in the increases for both revenues and expenses. In the category of Other Programs, expenses have decreased significantly from FY 2016 and this is due to activities of the Common Acquisition Platform program. Last year the program incurred large expenses associated with software license acquisitions, application design and implementation, and the transition to a cloudbased infrastructure.

ASF Obligations, Outlays, and Collections

ASF obligations and outlays are primarily driven by contracts awarded to commercial vendors providing goods and services in support of the ASF portfolios. Obligations Incurred increased by $2,018 million between FY 2016 and FY 2017 while Gross Outlays increased by $575 million, due primarily to higher business volume with Defense customers in the AAS programs as well as the recognition of $750 million in obligations (undelivered orders) associated with the minimum revenue guarantees on the EIS contract awards. Net Outlays have decreased from the prior year due to a lower amount of capitalized purchases of replacement motor vehicles.

ASF Obligations and Outlays
($ in millions)

FY
2017

FY
2016
Change
($)
Change
(%)
Obligations Incurred $13,651 $11,633 $2,018 17.3%
Gross Outlays $11,193 $10,618 $575 5.4%
Offsetting Collections $11,279 $10,408 $871 8.4%

Limitations of Financial Statements

The principal financial statements are prepared to report the financial position and results of operations, pursuant to the requirements of 31 U.S.C. 3515 (b). The statements are prepared from the books and records of GSA in accordance with Federal GAAP and the formats prescribed by OMB. Reports used to monitor and control budgetary resources are prepared from the same books and records. The financial statements should be read with the realization that they are for a component of the U.S. Government.

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