Federal Accounting Standards Advisory Board Accounting for Public-Private-Partnerships Associated General Contractors Public Owners

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Federal Accounting Standards Advisory
BoardAccounting for Public-Private-Partnerships
Associated General ContractorsPublic Owners
ForumWestin Georgetown HotelWashington, DC

• March 12, 2014

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Disclaimer

• Views expressed are those of the speakers. The
  Board expresses its views in official
  publications.

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FASABs 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.

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What is FASAB? One of three U.S. Accounting
Standards-Setting Organizations
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Who is FASAB? We currently have 9 board members
supported by 8 staff.
Tom Allen
Wendy Payne
Chairman
Executive Director
(Former GASB Chair)
Non-voting Member
Mark Reger
Norman Dong
Treasury
OMB
Robert Dacey
Sam McCall
GAO
Graylin Smith
Harold Steinberg
Michael Granof
D. Scott Showalter
Bios available at www.fasab.gov
Current as of December 2013
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Public-Private Partnerships

• Overall goal - Making the full costs of P3s
  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.

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Task Force CompositionPublic Private
Participants
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Task Force CompositionProfessional Disciplines
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Agencies Consulted
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Public-Private PartnershipsDisclosure Phase
Overview
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Work-in-ProgressDraft Definition

• Federal public-private partnerships (P3s) 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 P3s 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 SPVs.
• 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 SPVs.

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Proposed Characteristics

• Conclusive Youre in if you meet any one
• Creation of a long-lived asset or financing
  liability
• The federal entity participates in or helps
  sponsor an SPV, partnership, trust, etc.
• The term of the procurement or contract
  arrangement is longer than 5 years.
• The principal arrangement is exempt from the
  Federal Acquisition Regulation (FAR)

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Proposed Characteristics

• Suggestive Maybe, maybe not - requires
  judgment. View each SC in light of the others.
• A Value for Money analysis is performed.
• The principal arrangement is NOT managed by an
  Administrative Contracting Officer (ACO) and/or
  Procurement Contracting Officer (PCO).
• The consideration or items given up in an
  arrangement or their value are not readily
  apparent.
• Significant work force duties, activities, or
  knowledge are cross-shared between public and
  private sector P3 parties.

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Proposed Characteristics

1. The focus is more on collaboration and informal,
   real-time, resolution processes as opposed to
   formal, contractual, administrative processes.
2. The government relies on either the private
   sector partners or a third partys determination
   of a P3s performance or return on
   investment/equity, without performing its own
   verification of performance/return on
   investment/equity.

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Suggested Disclosures

1. The purpose or objective for the P3 arrangement
   or transaction to include the relative
   benefits/revenues being received in exchange for
   all of the governments consideration, monetary
   and non-monetary.
2. The decision criteria for selecting a P3
   arrangement or transaction to include the
   entitys statutory authority for entering into
   the P3.
3. Type of funding, federal or otherwise used to
   meet mission requirements and service delivery
   needs to support the P3 e.g., appropriated,
   non-appropriated, private capital or investment.

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Suggested Disclosures

• The operational and financial structure of the P3
  including the entitys rights and
  responsibilities and amounts the government can
  be reasonably expected to incur/pay over the life
  of the P3 arrangement or transaction.
• Whether the private partner(s), to include any
  SPV, have borrowed or invested capital contingent
  upon the entitys promise to pay whether implied
  or explicit.
• Identification of the significant risks the P3
  partners are undertaking.
• Violations of legal and contractual provisions
  governing the P3 arrangement or transaction.

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Uncle Sam Wants YOU!!!!

• .

• We invite your comments and suggestions!!
• If youd like to join the P3 Task Force or follow
  its work, let me know.

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Contact and Website Information

• General inquiries can be directed to
  fasab_at_fasab.gov
• Phone [phone]
• www.FASAB.gov
• Listserv
• Exposure Drafts
• Active Projects
• I can be reached at savinid_at_fasab.gov, 202
  512-6841