Federal Accounting Standards Advisory Board Public-Private Partnerships – More Complex Than You Think! AGA 2015 Professional Development Training Nashville, TN Tuesday, July 14 Session Number: T108 Room: Delta B 10:45 a.m. – 12:00 p.m. 1

Disclaimer Views expressed are those of the speakers. The Board expresses its views in official publications. 2

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. 3

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 –However, 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. 4

Task Force Composition Public & Private Participants 5

Task Force Composition Professional Disciplines 6

Mr. Kevin J. McHugh Managing Director Navigant Consulting, Inc. Mr. McHugh focuses on providing valuable strategy, operations, fixed asset management and valuation solutions to the federal, state and local governments as well as the higher education and healthcare communities throughout the United States. Kevin brings more than 30 years of valuation consulting experience within these sectors, and focuses on service concessions, public/private partnerships, and infrastructure valuation studies. Kevin has assisted both GASB and FASAB and in particular, helped developed reporting requirements for deferred maintenance and repairs and asset impairment. He can be contacted via or phone: 7

Robert D. Helwig JD Bob Helwig Consulting, LLC; Formerly Office of the Secretary of Defense Mr. Helwig has been involved in privatization initiatives since 1996 when he joined the Department of Defense Housing Revitalization Office. He has been engaged in privatizing both military housing and utilities involving concept development, contract solicitation, deal structuring, portfolio management, and financial analysis. He has Bachelor degrees in Political Science and French from the California State University; a Master's degree in International Policy from the Monterey Institute of International Studies; and a Juris Doctor from George Washington University. He is a member of both the Maryland and Washington, D.C. Bars. He is currently a Doctoral Candidate in Public Administration at the University of Baltimore, writing his dissertation on P3s. He can be contacted via or phone: 8

Larry Checco Founder & President Checco Communications Mr. Checco is a nationally sought-after speaker and consultant on branding and leadership and is a faculty member of the NeighborWorks® Training Institute. Larry’s books on branding and leadership have successfully sold thousands of copies throughout the United States, Australia, Canada, South Africa, Sweden, Israel, Southeast Asia and elsewhere around the globe. Larry has been recognized as a leading branding professional, and his articles are cited and reprinted on countless websites. Larry holds a degree in Economics from Syracuse University, as well as an MA in Journalism and Public Affairs from American University. He can be reached via or phone:

Kevin’s Thoughts: Kevin believes that P3s are one of the most important issues facing the nation and failing to properly address P3 accountability issues has adverse implications for current and future generations. His biggest concern is that ill-advised and inconsistent guidance is coming from foreign consultants. Our focus should be in protecting the best interests of the taxpayer by being nimble in providing guidance to avoid unnecessary P3 failures, inadequate or inappropriate asset valuations, and unfavorable contract terms. Guidance should be readily accessible and easy-to-read. 10

Bob’s Thoughts: Bob has two basic thoughts concerning P3s. First, as a former DoD program manager, he believes that P3s are a very good way of delivering public value that would otherwise not be achieved. Second, he believes P3s are not only about third party financing. Aside from financial capital, the private sector can effectively deliver targeted, less costly operational efficiencies which optimize the delivery of facilities and services. However, Bob cautions that P3s must not be done in darkness and that we need to shed light on them by fostering accountability and sound accounting; i.e., capturing the important costs and risks. 11

Larry’s Thoughts: Larry expects a financial return for taxpayers. However, too often we see that P3s involve less than honorable people leading to cost over-runs and wasted taxpayer dollars. Because greater transparency and accountability are needed over P3s, Larry recommends robust financial statement disclosures that along with other reporting form a “Trust but Verify” approach to P3s. –Sensitivity to public good vs private profits –Executing due diligence through cost-benefit analysis –Not allowing policy and regulatory issues to become barriers to entering into appropriate P3 arrangements He cautions that eliminating disclosures to facilitate auditing leads to auditing without context and a purposeless audit 12

Larry’s Thoughts: (continued) Instead, we need robust disclosures to help government agencies and Citizens be on equal footing with sophisticated private partners. P3s must be: –chosen for the right reasons and use appropriate contracts (i.e. flexible-term Present-Value-of-Revenue (PVR) contracts, etc.) –transparently accounted for in government budgets and balance sheets as if they were public investments so as to avoid the temptation for government overspending –implemented under best governance practices (i.e. avoidance of conflict of interest within government) 13

Uncle Sam Wants YOU!!!!. We invite your comments and suggestions so ask for a copy of the ED and get started now!! If you’d like to join the P3 Task Force or follow its work, let me know. 14

Contact and Website Information General inquiries can be directed to Phone: –Listserv –Exposure Drafts –Active Projects I can be reached at: