U.S. Department of State Fiscal Year 2020 Agency Financial Report

Operating Leases The Department leases real property under operating leases. These leases are non-Federal and expire in various years. Future minimum lease payments under operating leases have Year Ended September 30, 2020 Non-Federal Lease Payments 2021 $ 449 2022 328 2023 206 2024 128 2025 66 2026 and thereafter 184 Total Future Minimum Lease Payments $ 1,361 Year Ended September 30, 2019 Non-Federal Lease Payments 2020 $ 431 2021 329 2022 227 2023 136 2024 76 2025 and thereafter 172 Total Future Minimum Lease Payments $ 1,371 12 C ontingencies and C ommitments Contingencies The Department is a party in various material legal matters (litigation, claims, assessments, including pending or threatened litigation, unasserted claims, and claims that may derive from treaties or international agreements) brought against it. We periodically review these matters pending against us. As a result of these reviews, we classify and adjust our contingent liability when we think it is probable that there will be an unfavorable outcome and when a reasonable estimate of the amount can be made. Additionally, as part of our continuing evaluation of estimates required in the preparation of our financial statements, we evaluated the materiality of cases determined to have either a probable or reasonably possible chance of an adverse outcome. As a result of these reviews, the Department believes that claims considered probable could result in estimable losses of $62 to $263 million and reasonably possible claims could result in potential estimable losses of $0 to $60 million if the outcomes were unfavorable to the Department. The probable cases involve claims related to residential construction, security contracts, Equal Employment Opportunity Commission claims, and international claims made against the United States. The reasonably possible cases involve contract disputes, claims related to embassy construction, sale of Unites States real property overseas dispute, and international claims made against the United States being litigated by the Department. Certain legal matters to which the Department is a party are administered and, in some instances, litigated and paid by other U.S. Government agencies. Generally, amounts to be paid under any decision, settlement, or award pertaining to these legal matters are funded from the Judgment Fund. Payments made by the Judgment Fund for cases covered under the Contract Disputes Act and Notification and Federal Employees Antidiscrimination and Retaliation Act of 2002 on behalf of the Department totaled $5 million and $63 million as of September 30, 2020 and 2019, respectively. As a part of our continuing evaluation of estimates required for the preparation of our financial statements, we recognize settlements of claims and lawsuits and revised other estimates in our contingent liabilities. Management and the Legal Advisor believe we have made adequate provision for the amounts that may become due under the suits, claims, and proceedings we have discussed here. remaining terms in excess of one year as of September 30, 2020 and 2019 for each of the next 5 years and in aggregate are as follows (dollars in millions) : 92 | U ni ted S tates D epartment of S tate 2020 A gency F inanci al R eport FINANCIAL SECTION | NOTES TO THE PRINCIPAL FINANCIAL STATEMENTS