Financial Statements Analysis
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 presents, by major program and activity, the revenues and expenses incurred to provide goods and services to our customers.
Consolidated Financial Results
GSA assets primarily include: Property, Plant 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 2016, GSA reported Total Assets of $40.3 billion compared to FY 2015 Total Assets of $39.4 billion, representing a net increase of approximately $933 million. Significant changes in assets include an increase in the overall FBwT of $853 million, mainly due to significant earnings in the Federal Buildings Fund (FBF) which improved due to reduced spending against the American Recovery Reinvestment Act (ARRA) funding, as well as the elimination of debt financing commitments that resulted from the FY 2014 retirement of long-term debt.
Noteworthy, the carrying value of GSA owned buildings increased by $1.1 billion. This increase was mostly due to the transfer of approximately $889 million from Construction-in-Progress 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 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 2016, Total Liabilities were $6.9 billion; a net increase of $330 million compared to FY 2015 Total Liabilities of $6.5 billion. The increase is attributable to higher business volume in the Acquisition Services Fund (ASF) associated with Assisted Acquisition Services (AAS) and Integrated Technology Services. AAS business with Defense customers has increased significantly from the previous year.
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 $20.5 billion in revenue during FY 2016 compared to $19.5 billion reported in FY 2015, an increase of $969 million. Changes in revenues were most notable in the ASF, which experienced a $1,118 million increase primarily due to higher Assisted Acquisition Services (AAS) business volume with the Department of Defense and the Department of Homeland Security. In addition, the Fleet program implemented a $128 million rebate in FY 2015 to pass cost savings from lower than expected petroleum expenses. Petroleum costs have remained below planned amounts throughout FY 2016. FY 2016 Expenses were $20.2 billion compared to FY 2015 Expenses of $19.2 billion, an increase of $922 million. Net Revenue from Operations was $290 million, a $47 million increase compared to FY 2015, when Net Revenues from Operations were $243 million. Changes in FBF and ASF net results are discussed further below.
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 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 2016 FBF gross revenue is $11.3 billion, with over half of the revenue generated from five federal customer agencies as shown in the "FBF Top 5 Federal Customers" table.
|FBF Top 5 Federal Customers||Revenues
($ in Millions)
|Department of Justice||$ 1,844||16.3%|
|Department of Homeland Security||$ 1,795||15.9%|
|Federal Judiciary||$ 1,165||10.3%|
|Social Security Administration||$ 849||7.5%|
|Department of the Treasury||$703||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 source of expense is for rental of space and building operations. 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 $605 million in FY 2016 compared to net revenues in excess of expenses of $620 million in FY 2015, representing a decrease of $15 million. While the net operating results were down, the primary cause was decreases in rental revenue of approximately $77 million with an accompanied decrease in rent expense of approximately $59 million. Historically revenue and expenses related to rent increase from year to year due to increases in rentable square feet, cost escalations and tax increases. However, with the executive branch’s initiative to maintain or reduce federal agencies total square footage for office and warehouse space, also known as “Freeze the Footprint,” we have slowly begun to see those numbers fall.
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 decreased by $287 million between FY 2016 and FY 2015. Gross Outlays decreased by $185 million during FY 2016. FY 2016 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 $95 million, which represent revenues collected from other federal agencies that offset expenditures made by GSA.
|FBF Obligations and Outlays
(Dollars in Millions)
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 four business portfolios and three initiatives: General Supplies and Services (GS&S); Travel, Motor Vehicles, and Card Services (TMVCS); Integrated Technology Services (ITS); Assisted Acquisition Services (AAS); Integrated Award Environment; Common Acquisition Platform; and 18F. 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 lower prices.
In FY 2016, the ASF realized $9.4 billion in revenues. The majority of revenues were from the five agencies shown in the “ASF Top 5 Federal Customers” table, with over half of sales revenue generated from Department of Defense agencies.
|ASF Top 5 Federal
($ in Millions)
|% of Total
|Department of Defense||$ 5,438||58.1%|
|Department of Homeland Security||$731||7.8%|
|Department of Agriculture||$426||4.6%|
|Department of Health and Human
|Department of Justice||$294||3.1%|
ASF Net Revenues from Operations
ASF Net Revenue from (Cost of) Operations represents the amounts remaining after the costs of goods and services sold and cost of operations. 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. In FY 2016 the ASF reported $8 million net revenues in excess of costs, $164 million more than the FY 2015 net costs in excess of revenues of $156 million. In FY 2015, the ASF reported a net loss of $88 million associated with discontinued operations. The closure of the Burlington, NJ warehouse depot in FY 2015 resulted in the recognition of $49 million in expenses associated with the rent liability for the remaining lease term. In FY 2016, the lease termination liability was reduced by $20 million after the execution of a sublease agreement. This created positive net operating results associated with discontinued operations in FY 2016. In TMVCS, a one-time rate reduction for the Fleet program was implemented in FY 2015 to return cost savings associated with lower than expected fuel prices to customer agencies. Fuel prices have remained low throughout FY 2016. In AAS, revenues and expenses have both increased by 20 percent due to higher business volume with the Department of Defense and the Department of Homeland Security. In ITS, the lower net operating results are primarily attributable to lower gross margins on sales in the Wide Area Network (WAN) and Regional Telecom programs. In addition, spending against prior-year retained earnings has increased for initiatives such as the Public Key Infrastructure (PKI) program, the Cloud Services Executive Business Case and the Connect.gov program. Under the category of Other Programs, costs increased by $75 million, with significant expenses incurred in support of the Integrated Award Environment activities and the Common Acquisition Platform for software license acquisitions, application design and implementation, and the transition to a cloud-based infrastructure. The majority of the expenses for these projects 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 $143 million for the Other Programs category.
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 $1,119 million between FY 2015 and FY 2016, due primarily to higher business volume with Defense customers in the AAS programs and an increase in purchases of motor vehicles for the GSA Fleet program in TMVCS. Higher business volumes also contributed to the increase in Gross Outlays and Offsetting Collections.
|ASF Obligations and Outlays
(Dollars in Millions)
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.