KPMG LLP awarded $22.6M contract for critical financial audits and FISMA evaluations by Treasury OIG

Contract Overview

Contract Amount: $22,601,311 ($22.6M)

Contractor: Kpmg LLP

Awarding Agency: Department of the Treasury

Start Date: 2023-03-06

End Date: 2027-02-15

Contract Duration: 1,442 days

Daily Burn Rate: $15.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TOIG REQUIRES CONTRACTOR SUPPORT TO CONDUCT THE REQUIRED AUDITS, EXAMINATIONS, AND FISMA EVALUATION, AS FOLLOWS: A. AUDIT OF THE DEPARTMENT OF THE TREASURY'S FINANCIAL STATEMENTS B. AUDIT OF THE BEP'S FINANCIAL STATEMENTS C. FISCAL SERVI

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $22.6 million to KPMG LLP for work described as: TOIG REQUIRES CONTRACTOR SUPPORT TO CONDUCT THE REQUIRED AUDITS, EXAMINATIONS, AND FISMA EVALUATION, AS FOLLOWS: A. AUDIT OF THE DEPARTMENT OF THE TREASURY'S FINANCIAL STATEMENTS B. AUDIT OF THE BEP'S FINANCIAL STATEMENTS C. FISCAL SERVI Key points: 1. Contract ensures independent oversight of Treasury and BEP financial statements, crucial for accountability. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract duration of nearly four years indicates a long-term need for these specialized audit services. 4. Fixed-price contract type shifts performance risk to the contractor, KPMG LLP. 5. This award aligns with the Inspector General's mandate to provide independent audits and evaluations. 6. The North American Industry Classification System (NAICS) code 541211 points to a standard accounting service requirement.

Value Assessment

Rating: good

The contract value of $22.6 million over approximately four years for comprehensive audit services appears reasonable given the scope. Benchmarking against similar large-scale federal audit contracts would provide a more precise value-for-money assessment. The fixed-price nature of the contract is generally favorable for the government, as it caps costs and incentivizes contractor efficiency. However, without detailed task breakdowns and historical cost data for comparable services, a definitive assessment of pricing competitiveness is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this significant audit requirement. While two bidders are better than one, a higher number of bidders would typically foster more aggressive pricing and potentially a wider range of innovative solutions. The agency's decision to proceed with two offers implies that the submitted proposals met the evaluation criteria adequately.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it generally leads to more competitive pricing and a wider selection of qualified contractors, ensuring the government receives the best value for its investment.

Public Impact

The primary beneficiaries are the Department of the Treasury and the Bureau of Engraving and Printing (BEP), whose financial statements will undergo rigorous independent audits. The contract delivers essential audit and evaluation services, including financial statement audits and Federal Information Security Management Act (FISMA) evaluations. The geographic impact is centered in Washington D.C., where the Department of the Treasury is headquartered. The contract supports the workforce within KPMG LLP, a major accounting firm, providing employment for auditors and related professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if audit requirements expand beyond initial definitions.
Reliance on a single contractor for critical oversight functions could pose a risk if performance falters.
Ensuring the independence and objectivity of audit findings is paramount and requires continuous monitoring.

Positive Signals

Award to a well-established 'Big Four' accounting firm (KPMG LLP) suggests a high level of expertise and reliability.
The fixed-price contract structure incentivizes cost control and efficient service delivery by the contractor.
The contract's duration allows for continuity in audit processes and the development of deep institutional knowledge.

Sector Analysis

This contract falls within the professional services sector, specifically accounting, auditing, and tax preparation services (NAICS 541211). The federal government is a significant consumer of these services, relying on external auditors for independent verification of financial statements and compliance with regulations. The market for these services is dominated by large, established firms like KPMG, Deloitte, PwC, and EY, which possess the scale and expertise to handle complex government audits. This contract represents a portion of the broader federal spending on audit and financial oversight services, which is critical for maintaining public trust and fiscal responsibility.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. While KPMG LLP is a large business, the contract does not explicitly mention subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless KPMG voluntarily engages small businesses for specialized support. Future solicitations could explore opportunities for small business participation in specific audit support roles.

Oversight & Accountability

The Office of Inspector General (OIG) itself is the awarding agency, indicating a high level of inherent oversight. The contract requires KPMG LLP to conduct audits and evaluations, with the OIG responsible for reviewing and validating these findings. Transparency is expected through the publication of audit reports. The OIG has jurisdiction over the contractor's performance, and any deficiencies would be addressed through contractual remedies or potential future actions.

Related Government Programs

Department of the Treasury Financial Statement Audits
Bureau of Engraving and Printing Audits
Federal Information Security Management Act (FISMA) Evaluations
Government Accountability Office (GAO) Audits
Office of Management and Budget (OMB) Financial Management Guidance

Risk Flags

Potential for contractor performance issues
Risk of inadequate competition
Ensuring audit independence and objectivity

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $22.6 million to KPMG LLP. TOIG REQUIRES CONTRACTOR SUPPORT TO CONDUCT THE REQUIRED AUDITS, EXAMINATIONS, AND FISMA EVALUATION, AS FOLLOWS: A. AUDIT OF THE DEPARTMENT OF THE TREASURY'S FINANCIAL STATEMENTS B. AUDIT OF THE BEP'S FINANCIAL STATEMENTS C. FISCAL SERVI

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Office of Inspector General).

What is the total obligated amount?

The obligated amount is $22.6 million.

What is the period of performance?

Start: 2023-03-06. End: 2027-02-15.

What is KPMG LLP's track record with the Department of the Treasury and similar federal agencies?

KPMG LLP is a major global accounting firm with extensive experience serving federal agencies. They regularly perform financial statement audits for numerous government departments and entities. Their track record includes audits of large, complex organizations, demonstrating their capacity to handle significant engagements. Specific to the Department of the Treasury, KPMG has been involved in various audit and advisory roles over the years. A review of past performance evaluations and contract awards would provide a more granular understanding of their specific successes and any past challenges encountered in similar federal contracts. Their status as a 'Big Four' firm implies a generally strong reputation for competence and adherence to professional standards.

How does the $22.6 million contract value compare to similar federal audit contracts?

The $22.6 million contract value for approximately four years of comprehensive audit and FISMA evaluation services for the Department of the Treasury and BEP appears to be within a reasonable range for contracts of this magnitude and complexity. Large federal agencies often award multi-year contracts in the tens of millions of dollars for financial statement audits and related compliance services. Benchmarking against contracts for similar-sized departments or agencies, considering factors like the number of financial statement lines, complexity of operations, and specific regulatory requirements (like FISMA), would provide a more precise comparison. The fixed-price nature also influences the overall value proposition compared to cost-plus contracts.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential performance deficiencies by the contractor (KPMG LLP), such as missed deadlines, inadequate audit procedures, or failure to identify material misstatements. Another risk is the potential for scope creep, where audit requirements may expand beyond the initial contract terms, leading to cost overruns if not managed properly. Ensuring the independence and objectivity of the audit findings is also critical to maintain the integrity of the oversight process. Mitigation strategies likely involve robust contract management by the Treasury OIG, clear definition of audit scope and deliverables, performance monitoring, and adherence to professional auditing standards. The fixed-price nature also incentivizes the contractor to manage costs and performance effectively.

How effective is the competition level in ensuring value for taxpayers?

The contract was awarded under full and open competition, which is a positive indicator for taxpayer value. This means multiple qualified firms had the opportunity to bid. However, with only two bids received, the level of competition was moderate. While this is better than a sole-source award, a higher number of bidders typically drives prices down more aggressively and encourages greater innovation. The agency's selection of the winning bid suggests it represented the best value among the proposals received. Continued monitoring of performance and future solicitations with broader outreach could further enhance competitive pressure and taxpayer savings.

What is the historical spending pattern for similar audit services by the Treasury OIG?

Analyzing historical spending patterns for similar audit services by the Treasury OIG is crucial for context. While this specific award is for $22.6 million over nearly four years, understanding previous contract values, durations, and awarded contractors for financial statement audits and FISMA evaluations would reveal trends. For instance, were previous contracts awarded to the same firm? Were they also full and open competitions? Were the costs significantly different? This historical data helps determine if the current award represents an increase, decrease, or stable level of spending for these essential oversight functions and whether the agency is achieving better value over time.

What are the implications of the fixed-price contract type for this audit engagement?

The fixed-price contract type (PT: FIRM FIXED PRICE) means that KPMG LLP is obligated to perform the specified audit and evaluation services for a predetermined price, regardless of the actual costs incurred. This shifts the financial risk of cost overruns from the government to the contractor. For taxpayers, this generally offers greater cost certainty and predictability. It also incentivizes the contractor to be efficient and manage its resources effectively to maximize profit. However, it requires a very clear and well-defined scope of work upfront, as any significant changes or unforeseen complexities could strain the contractor's resources or lead to disputes if not managed through contract modifications.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: RFQ1597696

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8350 BROAD ST STE 900, MC LEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,590,609

Exercised Options: $24,911,043

Current Obligation: $22,601,311

Actual Outlays: $14,175,170

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $1,907,780

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F275CA

IDV Type: FSS

Timeline