department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 and deliver satisfactory products, and because the amount of contractor costs incurred but yet unpaid are estimable, the Department has recognized a contingent liability for the estimated unpaid costs that are considered conditional for payment pending delivery and government acceptance. Total contingent liabilities for progress payments based on cost represent the difference between the estimated costs incurred to date by contractors and amounts authorized to be paid under progress payments based on cost provisions within the FAR. Estimated contractor-incurred costs are calculated by dividing the cumulative unliquidated progress payments based on cost by the contract-authorized progress payment rate. The balance of unliquidated progress payments based on cost is deducted from the estimated total contractor-incurred costs to determine the contingency amount. NOTE 16. COMMITMENTS AND CONTINGENCIES Legal Contingencies The Department is a party in various administrative proceedings and legal actions related to claims for environmental damage, equal opportunity matters, and contractual bid protests. The Department has accrued contingent liabilities for legal actions where the Office of General Counsel (OGC) considers an adverse decision probable and the amount of loss is measurable. In the event of an adverse judgment against the Government, some of the liabilities may be payable from the U.S. Treasury Judgment Fund. The Department records contingent liabilities in Note 15, Other Liabilities. The Department reports 48 legal actions with individual claims greater than the Department’s FY 2012 materiality threshold of $140.3 million. The total of the 48 actions is approximately $13.0 trillion. Of this amount, the OGC determined that claims totaling approximately $8.6 billion are classified “reasonably possible,” $956.7 billion are classified “remote,” and $12.0 trillion are classified “unable to determine the probability of loss.” The Department also had a number of potential claims that individually did not meet the Department’s materiality threshold but did meet the individual Components’ thresholds. These claims are disclosed in the Components' financial statements. Other Commitments and Contingencies The Department is a party in numerous individual contracts that contain clauses, such as price escalation, award fee payments, or dispute resolution, that may result in a future outflow of expenditures. Currently, the Department has limited automated system processes by which it captures or assesses these potential contingent liabilities, therefore, the amounts reported may not fairly present the Department’s contingent liabilities. Contingencies considered both measurable and probable have been recognized as liabilities. Refer to Note 15, Other Liabilities, for further information. 112 Financial Information
Department of Defense Agency Financial Report for FY 2012 NOTE 17. MILITARY RETIREMENT AND OTHER FEDERAL EMPLOYMENT BENEFITS Military Retirement and Other Federal Employment Benefits Dollars in Millions As of September 30 Pension and Health Benefits Liabilities 113 2012 (Less: Assets Available to Pay Benefits) Unfunded Liabilities Military Retirement Pensions $ 1,477,918.0 $ (371,657.5) $ 1,106,260.5 Military Retirement Health Benefits 298,216.9 0.0 298,216.9 Military Medicare-Eligible Retiree Benefits 532,781.3 (174,703.7) 358,077.6 Total Pension and Health Actuarial Benefits Other Benefits $ 2,308,916.2 $ (546,361.2) $ 1,762,555.0 FECA $ 6,540.8 $ 0.0 $ 6,540.8 Voluntary Separation Incentive Programs 678.2 (308.5) 369.7 DoD Education Benefits Fund 1,385.4 (1,385.4) 0.0 Other 6,403.7 (4,666.3) 1,737.4 Total Other Benefits Total Military Retirement and $ 15,008.1 $ (6,360.2) $ 8,647.9 Other Federal Employment Benefits $ 2,323,924.3 $ (552,721.4) $ 1,771,202.9 Actuarial Cost Method Used: Aggregate Entry-Age Method Assumptions: Effective Interest Market Value of Investments in Market-based and Marketable Securities: $807.7 billion Military Retirement and Other Federal Employment Benefits Dollars in Millions As of September 30 Pension and Health Actuarial Benefits Liabilities 2011 (Less: Assets Available to Pay Benefits) Unfunded Liabilities Military Retirement Pensions $ 1,360,922.5 $ (368,236.0) $ 992,686.5 Military Retirement Health Benefits 305,985.0 0.0 305,985.0 Military Medicare-Eligible Retiree Benefits 533,667.7 (184,914.3) 348,753.4 Total Pension and Health Actuarial Benefits Other Actuarial Benefits $ 2,200,575.2 $ (553,150.3) $ 1,647,424.9 FECA $ 6,366.4 $ 0.0 $ 6,366.4 Voluntary Separation Incentive Programs 770.1 (348.6) 421.5 DoD Education Benefits Fund 1,773.6 (1,773.6) 0.0 Other 2,874.3 (1,065.8) 1,808.5 Total Other Actuarial Benefits $ 11,784.4 $ (3,188.0) $ 8,596.4 Total Military Retirement and $ 2,212,359.6 $ (556,338.3) $ 1,656,021.3 Financial Information
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Contributors to the Agency Financia
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department of defense agency financial report fiscal year 2012

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