FCRF (Contents)

Federal Capital Revolving Fund

Full Legislative Text

section 1. short title.

This Act may be cited as the “Federal Capital Revolving Fund Act of 2018”.

sec. 2. findings and purpose.

(a) Findings.—The Congress makes the following findings:

(1) State and local governments maintain a capital budget separate from their operating budget and successfully use the capital budget to evaluate, rank, and fund investments in capital assets.

(2) The Federal Government’s failure to budget for capital acquisitions separately from operating expenses puts investment in federally-owned capital assets at a disadvantage in the current Federal budget process.

(3) Spikes in funding for purchases of federally-owned capital assets are difficult to fit within funding available under discretionary spending limits.

(4) Failure to recapitalize or replace Federal capital assets on a regular schedule ultimately increases the cost to taxpayers of delivering services.

(5) The Office of Management and Budget (Circular A-11, Appendix J, Principles of Budgeting for Capital Asset Acquisitions) recommends combining assets in capital acquisition accounts to accommodate spikes in funding capital acquisitions.

(6) The Congressional Budget Office (Capital Budgeting, May 2008) identifies capital acquisition funds as a potential option for reflecting capital costs in agencies’ budgets while retaining full, up-front recognition of cost in the budget.

(7) The Government Accountability Office (GAO-14-239) found that budgeting for federally-owned capital could be improved by creating a government-wide capital acquisition fund with up-front mandatory funding to pay for projects estimated to exceed a certain total cost threshold, to be repaid by annual discretionary funding provided by agencies’ subcommittee appropriators.

(b) Purpose.—The purpose of this legislation is to improve how the Federal Government budgets for expensive federally owned civilian facilities by making two basic innovations to traditional budgeting—

(1) create a mandatory revolving fund to pay the up-front cost of acquiring expensive facilities so that the acquisition costs do not compete with smaller purchases and operating expenses for funding under the discretionary spending limits; and

(2) require agencies to use discretionary appropriations to replenish the revolving fund over several years as they use facilities to meet their Federal mission needs.

SEC. 3. DEFINITIONS.

For purposes of this Act:

(a) Administrator.—The term “Administrator” means the Administrator of the General Services Administration (GSA).

(b) Agency.—The term “agency” means any of the agencies listed in section 901(b) of Title 31, United States Code except that the term shall not include the Department of Defense.

(c) Director.—The term “Director” means the Director of the Office of Management and Budget.

(d) Discretionary Appropriations and Direct Spending.—The terms “discretionary appropriations” and “direct spending” have the same meaning as in section 250(c) of the Balanced Budget and Emergency Deficit Control Act of 1985.

(e) Federal Facility.—The term “Federal facility” means any interest in land, together with the improvements, structures, and fixtures located thereon having a useful life of at least 25 years and in which Federal personnel perform the agency mission.

(f) Fund.—The term “Fund” means the Federal Capital Revolving Fund established pursuant to section 4.

(g) Project.—The term “project” means—

(1) a Federal facility acquired by an agency for its use (including site, design, management and inspection, construction, and commissioning) whether by purchase, construction, manufacture, lease-purchase, installment purchase, outlease-leaseback, exchange, or modernization by renovation; which may include purchases of associated furniture, fixtures, and equipment necessary to furnish the Federal facility for initial occupancy; and

(2) a one-time administrative fee to be paid to the Administrator, of .03 percent of the total cost of paragraph (1); with a combined total cost of at least $250,000,000. The term excludes items acquired for resale in the ordinary course of operations, consumable goods such as operating materials and supplies, normal maintenance and repair of real property, salaries and other operating expenses of agencies, grants to non-Federal entities, tax incentives, Federal credit assistance provided to non- Federal entities, and capital leases pursuant to which title does not automatically pass to the Government.

(h) Purchase Transfer.—The term “purchase transfer” means an amount approved by an appropriations Act to be transferred from the Fund, to remain available until expended, to pay for the costs of a project. The amount must be sufficient to pay for the full costs, at a minimum, of a useful segment of a Federal facility and the administrative fee.

(i) Purchasing Agency.—The term “purchasing agency” means an agency that receives a purchase transfer from the Fund to pay the full costs of a project.

SEC. 4. ESTABLISHMENT OF FEDERAL CAPITAL REVOLVING FUND.

There is hereby established in the Treasury a Federal Capital Revolving Fund to pay for the costs of projects approved pursuant to this Act.

(a) Administration of Fund.—The Fund is subject to the supervision of the Administrator in accordance with this Act.

(b) Permissible Uses.—Amounts in the Fund are available only for transfer to purchasing agencies to pay for the costs of approved projects.

(c) Prior Approval of Purchase Transfers.—Amounts in the Fund shall be transferred to a purchasing agency to pay for the costs of a project when—

(1) a purchase transfer to fund the project is approved in advance by an appropriations Act;

(2) the purchasing agency has received an appropriation for the first repayment amount and has made the first repayment to the Fund; and

(3) the project is designated by Congress in statute as an approved project and the President subsequently so designates.

(d) Purchase Transfer Limit.—Notwithstanding the amount approved by an appropriations Act for a purchase transfer, if the amount available to the purchasing agency for the first repayment amount is less than the amount required by section 6(c), the amount transferred from the Fund shall be equal to the product of the first repayment amount and the number of years in the repayment period.

(e) Higher Project Cost.—If a purchase transfer from the Fund is approved by an appropriations Act, but the approved amount is insufficient to pay the full costs of the project, then no amounts in excess of the approved amount may be transferred from the Fund to the purchasing agency for the difference (between the approved amount and the full costs of the project) unless approved in advance by an appropriations Act and the purchasing agency has received an appropriation of an additional amount for the adjustment to the repayment amount, calculated pursuant to section 6(c)(2) and has paid such additional amount to the Fund.

(f) Annual Limitation on Total Purchase Transfers.—Total new purchase transfers approved in appropriations Acts shall not exceed $2,500,000,000 per year plus any cumulative unused limitation in prior fiscal years.

(g) Excess Purchase Transfer Amounts.— If for any year the sum of approved purchase transfers exceeds the amounts available in the Fund or the annual limitation specified in subsection (f), each transfer amount approved by such appropriations Acts shall be reduced by a uniform percentage calculated by the Administrator such that the excess is eliminated, and the Administrator shall not transfer more than the reduced purchase transfer amount calculated for each project.

(h) Payment of One-time Administrative Fee.—Upon receipt of the purchase transfer, the purchasing agency shall pay the Administrator from the purchase transfer the one-time administrative fee.

SEC. 5. FUNDING.

(a) Appropriation To Fund.—The following amounts are hereby appropriated, and shall be deposited into the Fund—

(1) $10,000,000,000 from amounts in the Treasury not otherwise appropriated, to capitalize the Fund; and

(2) repayment amounts received from a purchasing agency.

(b) Authorization of Appropriations.—There is authorized to be appropriated to purchasing agencies such sums as may be necessary for repayment amounts under section 6(c).

(c) Availability of Fund.—Amounts deposited into the Fund shall remain available until expended.

SEC. 6. REPAYMENTS BY PURCHASING AGENCIES.

(a) Requirement To Repay Fund.—Purchase transfers from the Fund to pay for the costs of an approved project shall not be made unless the purchasing agency enters into an agreement with the Administrator, in writing, to repay the Fund consistent with this Act. An appropriation provided by the Congress to a purchasing agency consistent with this Act for repayment to the Fund for any year will constitute a legal obligation of the purchasing agency in that year for repayment to the Fund equal to the repayment amount available for that year.

(b) Repayment Period.—To recapitalize the Fund, each purchasing agency shall, subject to appropriation, make annual repayments to the Fund for any approved project over a period agreed to by the purchasing agency and the Administrator, but not to exceed 15 years, beginning in the year that the project is approved by an appropriations Act and the first repayment is appropriated.

(c) Repayment Amount.—The annual repayment amount to recapitalize the Fund shall be a level amount equal to the purchase transfer divided by the number of years in the repayment period.

(1) Timing of repayments.—Each repayment amount shall be paid to the Fund in the year for which it is appropriated.

(2) Adjustments to repayment amounts.—After the first repayment amount for a project is paid to the Fund, the Administrator shall adjust each remaining repayment amount by a uniform amount so that the sum of the repayment amounts, including repayment amounts already paid to the Fund, equals the actual cost of the project, whenever—

(A) the actual cost is less than the purchase transfer from the Fund;

(B) the actual cost is higher than the purchase transfer and an additional purchase transfer for the difference has been approved in advance in an appropriations Act;

(C) repayments by the purchasing agency exceed the annual repayment amount; or

(D) the purchase transfer amount is reduced under section 4(g).

(d) Disposition of Project.—The following requirements apply to the disposition of any project that is funded by a purchase transfer:

(1) Disposition of the project shall be accomplished in accordance with any applicable authorities.

(2) If the disposition of the project occurs before the purchasing agency has completely repaid the Fund, the purchasing agency shall, subject to appropriation, continue to make repayments until the Fund is fully repaid.

(3) If the disposition of the project results in the receipt of sale proceeds, such receipts shall be available—

(A) first, to the purchasing agency to pay any remaining unpaid repayment amounts owed by the purchasing agency for the project; and

(B) second, to the purchasing agency, or to the GSA in the case of a project held in the GSA inventory, to support authorized real property activities excluding operations and maintenance. Such receipts shall be available until expended, without further appropriation, and may be deposited in any account of the applicable agency that is available for the purposes described in subparagraphs (A) and (B).

(e) Change in Need for or Condition of Asset.—Any change in the purchasing agency’s mission need for the project or in the condition of the project does not alter the repayment requirements in section 6.

SEC. 7. TRANSFERS BETWEEN FUND AND PURCHASING AGENCIES.

(a) Expenditure Transfers.—All purchase transfers to purchasing agencies, payments of the one-time administrative fee, and transfers of repayment amounts to the Fund shall be expenditure transfers and shall be recorded as such.

(b) Availability and Purpose.—Subject to subsection (c), purchase transfers to purchasing agencies shall remain available until expended solely to pay for the costs of approved projects and may not be transferred or reprogrammed for any other purpose.

(c) Return of Unused Purchase Transfer Amounts.—Any portion of a purchase transfer that is not necessary to pay for the total cost of a project shall be returned to the Fund as follows:

(1) Unobligated purchase transfer amounts shall be returned to the Fund only after the Federal facility is substantially complete and within the two year period following the date on which the most recent outlay of purchase transfer funds by the agency occurred.

(2) If, after the return of the unused purchase transfer amounts pursuant to paragraph (1) occurs, there is an upward adjustment to a previously incurred project obligation, the Fund shall provide an expenditure transfer for such upward adjustment to the appropriate agency account of the lower of the amount returned pursuant to paragraph (1) and the amount of the upward adjustment to the previously incurred obligation.

(d) Establishing New Accounts.—The Secretary of the Treasury, in consultation with the Director, may establish new accounts within each purchasing agency that receives a purchase transfer from the Fund for the purpose of facilitating budgetary and financial reporting of the transactions authorized by this Act.

SEC. 8. BUDGET ENFORCEMENT.

The following rules shall apply to budget enforcement under the Congressional Budget Act of 1974, the Balanced Budget and Emergency Deficit Control Act of 1985, and the Statutory Pay-As-You-Go Act of 2010.

(a) Direct Spending.—Provisions of appropriations Acts approving purchase transfers from the Fund to purchasing agencies and collections by the Fund of repayments from purchasing agencies, shall be considered direct spending and shall not be included in the estimates under section 251(a)(7) of the Balanced Budget and Emergency Deficit Control Act of 1985 or considered budgetary effects for the purposes of section 3(4) of the Statutory Pay-As-You-Go Act of 2010.

(b) Discretionary Appropriations.—Appropriations to purchasing agencies for annual repayments to the Fund shall be considered discretionary appropriations and shall be scored in the year for which such appropriations are made available by an appropriations Act.

(c) Changes To Fund Balance.—Any provision enacted in an appropriations Act that—

(1) rescinds or precludes from obligation balances in the Fund;

(2) rescinds or precludes from obligation balances of approved purchase transfers; or

(3) reduces the annual limitation on total purchase transfers in section 4(f), shall be considered budgetary effects for purposes of the Statutory Pay-As-You-Go Act of 2010 and shall not be included in the estimates under section 251(a)(7) of the Balanced Budget and Emergency Deficit Control Act of 1985. Such budgetary effects shall be placed on the Office of Management and Budget PAYGO scorecards defined in section 4(d) of that Act and on the PAYGO scorecard maintained for purposes of section 4106 of H. Con. Res. 71 (115th Congress).

(d) Failure to Appropriate Repayments.—If a bill making appropriations for a fiscal year provides a first repayment amount for an approved project and such appropriations bill for a subsequent fiscal year during the repayment period fails to provide the repayment amount required for that fiscal year, an amount equal to the required repayment, calculated pursuant to section 6(c), shall nevertheless be included in the estimates under section 251(a)(7) of the Balanced Budget and Emergency Deficit Control Act of 1985.

(e) Transfers and Reprogramming.—If, notwithstanding section 7(b), a provision in an appropriations Act authorizes or requires—

(1) a transfer of balances in the Fund for any purpose other than to cover the costs of projects approved pursuant to this Act; or

(2) a purchasing agency to transfer or reprogram a purchase transfer for a purpose other than paying the costs of projects approved pursuant to this Act, such amount shall be included in the estimates of discretionary appropriations under section 251(a)(7) of the Balanced Budget and Emergency Deficit Control Act of 1985.

SEC. 9. REQUIREMENTS FOR PROJECTS TO BE HELD IN THE GSA INVENTORY.

In addition to any other existing requirements in law, the requirements in this section shall apply only to any purchase transfer to a purchasing agency that acquires real property space and services through the GSA. This Act neither provides new real property landholding or landmanaging authority to such purchasing agency nor otherwise affects any agency’s existing real property landholding or landmanaging authority.

(a) Approved Projects.—If an appropriations Act approves a purchase transfer to a purchasing agency other than the GSA for the costs of a project to be held in the GSA inventory, the following requirements shall apply.

(1) The purchasing agency shall immediately pay the purchase transfer amount, excluding any amount included for furniture, fixtures, and equipment, to the Administrator for deposit into the Federal Buildings Fund.

(2) The Administrator shall use such purchase transfer only to pay the costs of the approved project. The Administrator shall not charge a fee beyond the one-time administrative fee for the execution of the project.

(3) The project shall be under the custody and control of the Administrator.

(4) The occupancy agreement that the purchasing agency enters into with the GSA will recognize the purchasing agency’s investment in the project by providing for shell rent abatement, as follows:

(A) Rent payments to GSA start with occupancy.

(B) Rent payments to GSA shall equal operating costs only for the first five years (shell rent abatement).

(C) For years 6 through 25, rent payments shall equal operating costs plus a reduced shell rent negotiated between GSA and the agency such that the cumulative difference between the appraised market rent rate and operating rent equals the purchase transfer.

(D) The cumulative rent abatement shall not exceed the purchase transfer amount.

(5) The purchasing agency shall continue to be responsible for making annual repayments to the Fund in accordance with section 6(b).

SEC. 10. SEQUESTRATION.

Section 255(g)(1)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended by inserting “Federal Capital Revolving Fund (47-4614-0-4-804)” after “Farm Credit System Insurance Corporation, Farm Credit Insurance Fund (78-4171-0-3-351).”.

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Counsel Notes

The Federal Capital Revolving Fund Act of 2018 is proposed legislation that would reform the way the Federal Government purchases capital assets. 

Sectional Analysis For The Federal Capital Revolving Fund Act of 2018

Proposal:  The goal of this legislation is to create a new Federal Capital Revolving Fund (FCRF) within the unified budget that would function effectively as a capital budget for investment in federally-owned civilian real property and implement budget enforcement rules that exclude the up-front acquisition cost from the discretionary caps and instead charge the cost to discretionary funding over several years as the assets as used to provide services.  The FCRF would be capitalized by an appropriation of $10 billion, with obligations limited to $2.5 billion per year.  The FCRF would transfer funds to purchasing agencies to cover the cost of acquiring real property and necessary furniture fixtures and equipment as well as a minimal administrative fee, and purchasing agencies would repay the FCRF in equal installments over a period not to exceed 15 years.  Repayments to the FCRF would revolve and be available to fund additional future purchases.  The FCRF could transfer funds to a purchasing agency only if the acquisition is first approved in an appropriations Act and the Act includes funding for the agency’s first annual repayment to the FCRF.  For budget enforcement purposes, transfers from the FCRF to agencies to fund acquisitions and spending of those amounts by agencies would be scored as direct spending, while agencies would use discretionary appropriations to fund annual repayments to the FCRF.  This allocation of cost means that the up-front cost of capital investment would be included in the budget, but the up-front expense would not have to compete with operating expenses in the annual appropriations process.  By limiting total funding available to the FCRF and requiring agencies to use discretionary appropriations to repay the FCRF provides an incentive for agencies, OMB, and the Congress to select projects with the highest returns.  OMB would review agencies’ proposed projects, and the Appropriations Committees would make final allocations by authorizing projects in annual appropriations Acts.  This would allow for a more effective capital planning process that is similar to capital budgets used by private companies and State and local governments, where capital spending is separated from operating expenses, and decisions about the allocation of funding to capital projects is made in the capital budget. The FCRF does not provide any new landholding or land-managing authorities for Federal agencies. For those agencies that rely on GSA to provide space and services, GSA will act as construction agent and the facility will be under the custody and control of GSA.

[From the Transmittal of the Legislative Text  by Director Mick Mulvaney on June 12, 2018. ]

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