2012   Financial Report of the United States Government

Notes to the Financial Statements

Note 23. Commitments

Long-Term Operating Leases as of September 30, 2012, and 2011
(In billions of dollars)
General Services Administration 29.5 26.7
U.S. Postal Service 7.0 7.3
Department of State 1.6 1.4
Department of Defense 1.6 1.2
Department of Health and Human Services 1.2 1.5
Department of Agriculture 0.8 0.8
Department of Treasury 0.7 0.7
Other Operating Leases 4.1 4.3
  Total long-term operating leases 46.5 43.9

The Government has entered into contractual commitments that require future use of financial resources. It has significant amounts of long-term lease obligations and undelivered orders. Undelivered orders represent the value of goods and services ordered that have not yet been received.

The Government has other commitments that may require future use of financial resources. For example, the Government has callable subscriptions in certain Multilateral Development Banks (MDBs), which are international financial institutions that finance economic and social development projects in developing countries. Callable capital stock shares in the MDBs serve as a supplemental pool of resources that may be called, and converted into ordinary paid in shares, if the MDB cannot otherwise meet certain obligations through its other available resources. MDBs are able to use callable capital as backing to obtain very favorable financing terms when borrowing from world capital markets. To date, there has never been a call on this capital for any of the major MDBs and none is anticipated.

Undelivered Orders and Other Commitments as of September 30, 2012, and 2011
(In billions of dollars)
Undelivered Orders:
Department of Education 230.8 229.2
Department of Defense 211.7 315.9
Department of the Treasury 186.9 207.1
EOP Foreign Military Sales Program 163.5 121.4
Department of Transportation 104.0 104.7
Department of Health and Human Services 91.8 90.3
Department of Housing and Urban Development 49.7 56.9
Department of Agriculture 49.1 51.7
Department of Homeland Security 33.3 36.3
Department of Energy 29.1 45.7
Department of State 20.8 20.9
Export-Import Bank of the United States 17.3 9.7
Agency for International Development 16.3 15.6
National Science Foundation 11.4 11.6
Department of Labor 9.9 9.6
Department of Veterans Affairs 9.7 8.7
All other agencies 57.3 64.6
  Total undelivered orders 1,292.6 1,399.9
Other Commitments:
Senior GSE Preferred Stock Purchase Agreement 273.2 -
Callable capital subscriptions for multilateral development banks 82.3 72.0
Fuel Purchase Obligations 7.1 8.5
Agriculture Direct Loans and Guarantees 6.0 5.9
Power Purchase Obligations 4.3 5.1
Long-term Satellite and Systems 4.2 3.2
Conservation Reserve Program 1.8 1.8
All other commitments 5.7 6.8
  Total other commitments 384.6 103.3

Other Commitments and Risks

Commitments to GSE

The SPSPA agreements between Treasury and each GSE, which have no expiration date, provide for Treasury to disburse funds to the GSEs if, at the end of any quarter, the FHFA determines that the liabilities exceed its assets. At September 30, 2012, Treasury recorded a contingent liability of $9.0 billion with a projected maximum remaining potential commitment to the GSEs of $282.3 billion. The recorded contingent liability of $316.2 billion at September 30, 2011, constituted the maximum commitment payable at the end of that year. Therefore, the SPSPA commitments are $273.2 billion and $0.0 billion as of September 30, 2012, and 2011, respectively. Such accruals are adjusted as new information develops or circumstances change. Refer to Note 11—Investments in and Liabilities to Government-Sponsored Enterprises for a full description of the SPSPA agreements and related contingent liability.

Terrorism Risk Insurance Program

The U. S. Government has entered into agreements that could potentially require claims on Government resources in the future. For example, The Terrorism Risk Insurance Act of 2002 (TRIA or the Act) was signed into law on November 26, 2002. This law was enacted to address market disruptions resulting from terrorist attacks on September 11, 2001. On December 26, 2007, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (Reauthorization Act) was enacted extending the Program through December 31, 2014. The Act helps to ensure available and affordable commercial property and casualty insurance for terrorism risk, and simultaneously allows private markets to stabilize. The Terrorism Risk Insurance Program is activated upon the certification of an "act of terrorism" by the Secretary of the Treasury in concurrence with the Secretary of State and the Attorney General. If a certified act of terrorism occurs, insurers may be eligible to receive reimbursement from the Government for insured losses above a designated deductible amount. Insured losses above this amount will be shared between insurance companies and the Government. The Act also gives Treasury authority to recoup Federal payments made under the Program through policyholder surcharges under certain circumstances and contains provisions designed to manage litigation arising from or relating to a certified act of terrorism. There were no claims under TRIA as of September 30, 2012, or September 30, 2011.

Last Updated:  February 27, 2013