NOTES TO THE FINANCIAL STATEMENTS 168

Note 27. Public-Private Partnerships

The government enters into various collaborative relationships with private sector entities in which the goals, structures,

governance, roles and responsibilities are mutually determined to produce a risk-sharing arrangement. These relationships are

referred to as P3s, in accordance with SFFAS No. 49, Public-Private Partnerships: Disclosure Requirements. While many of

the government’s relationships are classified as and may be referred to as a P3, only those meeting the disclosure

requirements outlined in SFFAS No. 49 are disclosed.

The National Energy Conservation Policy Act, as amended, authorizes federal entities to enter into ESPC contracts for

the purpose of achieving energy savings and other related benefits. In consultations with the entity, the contractor designs and

constructs a project that meets the entity’s needs and arranges the necessary funding. The contractor guarantees that the

improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. The cost of the

ESPC project must be covered by the energy, water and related cost savings generated at the project site. GSA and DOE have

entered into contracts with the private sector that meet the criteria for P3s. These contracts allow federal entities to produce

energy savings and facility improvements with no up-front capital costs or special appropriations from Congress. Future

aggregate payments to be made by GSA and DOE are $1.5 billion and $1.3 billion, respectively, over the course of the

agreements. After an ESPC contract ends, all additional cost savings accrue to the entities. The entities are responsible for

contract administration over the term of the contracts and by statute, P3s cannot exceed 25 years.

In addition to the energy contracts, DOC has entered into P3 contracts on other matters. Congress has tasked DOC’s

FirstNet with the responsibility to ensure the deployment and operation of a nationwide interoperable broadband network to

meet the communication needs of public safety. This network must be designed to be reliable, functional, safe, and secure,

and to provide optimal levels of operational capability at all times. The Nationwide Public Safety Broadband Network will be

built out, deployed, operated, and maintained under a 25-year contract awarded by FirstNet to AT&T in March 2017. The

service will cover all 50 U.S. states, five territories, and the District of Columbia, including rural communities and tribal

nations. Under the terms of the contract, total receipts for DOC over the life of the contract are $18.0 billion based on annual

payments AT&T is required to make. Additionally, DOC is required to make payments to AT&T for success-based payment

milestones under fixed firm price buildout task orders. The total paid in FY 2020 was $1.5 billion. No estimates can be made

at this time as to any further payments to AT&T that might occur under the contract.

DOD identified MHPI agreements as P3s requiring disclosure. The MHPI agreements are private sector/market driven

businesses established as LLCs or LPs single purpose entities. These entities allow DOD to work with the private sector to

build, renovate, and sustain military housing by obtaining private capital to leverage government dollars. By engaging MHPI

agreements, the government benefits through use of private industry expertise and tools, improving the condition of military

housing more expediently and efficiently than the traditional military construction process would allow. The military

departments are reviewing the details of individual agreements to ensure the underlying transactions are recorded and

reported in accordance with GAAP. Beginning with the FY 2021 entity financial statement, DOD will present a list of current

MHPI partnerships, the actual values received and paid, and the estimated values to be received and paid over the life of the

LLCs and LPs.

The consolidated amounts the government received and paid in FY 2020 were $0.2 billion and $1.9 billion,

respectively. The estimated amounts to be received and paid in the aggregate over the expected life of the P3s is $20.5 billion

and $5.1 billion, respectively. Disclosure is limited to entities that are material to the Financial Report. Please refer to the

financial statements of DOC, DOE, and GSA for additional information.