December 10, 2013

1. Federal Accounting Standards Advisory BoardAccounting for Public-Private-PartnershipsThe NCPPP & the ADC4th Annual Federal Energy Workshopand Defense Energy Partnership ForumDoubletree Hotel Crystal CityArlington, VA December 10, 2013

2. FASAB PRESENTERS • Wendy M. Payne, CPA, MPA • Executive Director • Domenic N. Savini, CPA, CMA, MSA • Assistant Director/Project Manager We invite your comments and suggestions!! If you’d like to join the P3 Task Force or follow its work, let Dom know.

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

4. FASAB’s 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.

5. How FASAB Executes its Mission • Comprehensive and independent process that encourages broad participation and objectively considers stakeholder views. • Timely, open, and thorough study of issues. • Participation by stakeholders throughout the process. • Consideration of financial information’s costs vs benefits. • Increase financial understanding through educational efforts. • Provide implementation guidance to preparers and auditors. • Maintain accountability through transparent and consistent governance practices IAW the Memorandum of Understanding among our sponsors; GAO, OMB, & Treasury.

6. United States What is FASAB? One of threeU.S. Accounting Standards-Setting Organizations

7. 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 Current as of December 2013 Bios available at www.fasab.gov

8. 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.

9. 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 SPV’s. • 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 SPV’s.

10. Proposed Characteristics Conclusive – “You’re in if you meet any one” • Creation of an asset or liability • SPV borrowed/invested capital contingent upon the federal entity’s promise to pay • The federal entity participates in or helps sponsor an SPV, partnership, trust, etc. • The principal arrangement is exempt from the Federal Acquisition Regulation (FAR) • The term of the procurement or contract arrangement is longer than 5 years.

11. Proposed Characteristics Suggestive – “Maybe, maybe not” - requires judgment. View each SC in light of the others. • A Value for Money or other similar cost-benefit 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 are not readily apparent. • Significant work force duties, activities, or knowledge are cross-shared between public and private sector P3 parties.

12. Proposed Characteristics • The focus is more on collaboration and informal, real-time, resolution processes as opposed to formal, contractual, administrative processes. • Operational performance metrics exist absent strategic milestone metrics. • Separate payments, as opposed to a unitary payment, are made to the private sector partner. • The government relies on either the private sector partner’s or a third party’s determination of a P3’s performance or return on investment/equity, without performing its own verification of performance/return on investment/equity.

13. What do you think should be Disclosed? • A Federal Entity’s P3 policies? • The entity’s exposure to financial exposure/risk? • Appropriated vs. non-appropriated dollars? • Financing risk, Design & Construction risk, Operating risk, etc. • What other risks exist? • Controls in place to mitigate said risks? • Number of SPVs, Partnerships, Trusts, etc.? • What shouldn’t be Disclosed?

14. Contact and Website Information • General inquiries can be directed to fasab@fasab.gov • Phone: 202 512-7350 • www.FASAB.gov • Listserv • Exposure Drafts • Active Projects • We can be reached at: paynew@fasab.gov, 202-512-7357 or savinid@fasab.gov, 202 512-6841