Financial Statements Summary and Analysis

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 present, by major program and activity, the revenues and expenses incurred to provide goods and services to our customers and execute GSA's programs.

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 amounts due to GSA from Federal agencies and non- Federal customers, mostly from sales transactions or uncollected rent (Accounts Receivable). In FY 2018, GSA reported total assets of $42.9 billion compared to FY 2017 total assets of $41.4 billion, representing a net increase of approximately $1.5 billion. Significant changes in assets include an increase in the overall FBwT of $938 million, mainly due to the Federal Buildings Fund (FBF), which saw an increase of $1 billion as funding generated for capital programs to cover building repairs and alterations (R&A) and new constructions costs exceed amounts spent on these programs.

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 2018, Total Liabilities were $8 billion; a net increase of $627 million compared to FY 2017 Total Liabilities of $7.4 billion. The increase is primarily attributable to the increased business in the Acquisition Services Fund (ASF), particularly in the Assisted Acquisition Services (AAS) and the General Supplies and Services (GS&S) business lines. The increase in Accounts Payable to the Public is due to the timing of individual orders as the magnitude of payables and receivables have increased as a result of the overall level of business increasing.

GSA Revenue

GSA reported $23.8 billion in revenue during FY 2018 compared to $21.8 billion reported in FY 2017.

Changes in the 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 Cost, segregated into the two primary components of Building Operations – Government Owned, and Building Operations – Leased.

FY 2018 FBF gross revenue is over $11.6 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	$1,912	16.4%
U.S. Department of Homeland Security	$1,846	15.8%
Federal Judiciary	$1,201	10.3%
U.S. Social Security Administration	$880	7.5%
U.S. Department of the Treasury	$712	6.1%

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 for Federal buildings and to provide funding for the cost 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 portfolio of GSA-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 $650 million in FY 2018 compared to net revenues in excess of expenses of $666 million in FY 2017, representing a decrease of $16 million. While this overall change was relatively small related to $11.6 billion in total revenues, there were sizable offsetting changes in operating results for the year. Significant fluctuations in the cost factors used to estimate both asbestos and non-asbestos environmental cleanup liabilities produced a $193 million change in future funded expenses for environmental liabilities. In FY 2017 these factors had gone down, driving cost reductions of $137 million last year, while increases in the factors in FY 2018 generated costs of $56 million in current year results. During FY 2018, FBF Leased Building Operations recorded a net loss of $44 million, compared to the prior year net loss of $108 million. At the same time the FBF recognized increased gains from the sale of real property of $63 million.

FBF Obligations and Outlays

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 and Outlays ($ in Millions)	FY 2018	FY 2017	Change ($)	Change (%)
New Obligations and Upward Adjustments	$10,982	$11,538	$(556)	(4.8)%
Net Outlays from Operating Activity	$(875)	$(803)	$(72)	(9.0)%

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: GS&S; Travel, Transportation and Logistics (TTL); Information Technology Category; AAS; Professional Services and Human Capital (PS&HC); Office of Systems Management; and 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 2018, the ASF realized over $12.4 billion in revenues with 80 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	$7,927	64.0%
U.S. Department of Homeland Security	$908	7.3%
U.S. Department of Justice	$381	3.1%
U.S. Department of Agriculture	$375	3.0%
U.S. Department of Health and Human Services	$294	2.4%

ASF Net Revenues from Operations

ASF Net Revenue from Operations represents the revenue remaining after deducting 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 2018, the ASF reported positive net results of $87 million compared to net loss of $8 million in FY 2017. In the TTL business line, revenues and expenses, as well as net operating results, have increased due to strong performance within the Fleet Leasing program. In the GS&S business line, revenue increased due to larger than expected business volume, particularly due to the growth in Supply Chain Management and Retail Operations. Personal Property sales also increased as a result of the aircraft sales that were comparably low in FY 2017. AAS programs have continued to experience significant increased revenue due to higher business volume. The Federal Systems Integration and Management Center's (FedSIM) increase is responsible for nearly two-thirds of the AAS growth.

ASF Obligations and Outlays

ASF obligations and outlays are primarily driven by contracts awarded to commercial vendors providing goods and services in support of the ASF portfolios. New Obligations and Upward Adjustments increased by $1.634 billion between FY 2017 and FY 2018 and Net Outlays from Operating Activity increased by $181 million, primarily due to higher business volume in the AAS and GS&S programs.

ASF Obligations and Outlays ($ in millions)	FY 2018	FY 2017	Change ($)	Change (%)
New obligations and upward adjustments	$15,260	$13,626	$1,634	12.0%
Net Outlays from Operating Activity	$95	$(86)	$181	(210.4)%