Ernst & Young LLP awarded $19.2M contract for financial statement audit services by the Social Security Administration

Contract Overview

Contract Amount: $19,196,045 ($19.2M)

Contractor: Ernst & Young LLP

Awarding Agency: Social Security Administration

Start Date: 2022-10-11

End Date: 2026-02-28

Contract Duration: 1,236 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FINANCIAL STATEMENT AUDIT(BASE+ 4 OPTION PERIODS)

Place of Performance

Location: BALTIMORE, BALTIMORE CITY County, MARYLAND, 21235

State: Maryland Government Spending

Plain-Language Summary

Social Security Administration obligated $19.2 million to ERNST & YOUNG LLP for work described as: FINANCIAL STATEMENT AUDIT(BASE+ 4 OPTION PERIODS) Key points: 1. The contract value of $19.2 million over its potential duration represents a significant investment in independent financial oversight. 2. The use of a firm-fixed-price contract type suggests a clear scope and predictable costs for the agency. 3. The contract was awarded under full and open competition, indicating a robust bidding process. 4. The duration of the contract, spanning over three years, allows for consistent and ongoing audit services. 5. The services provided are critical for ensuring the financial integrity and accountability of the Social Security Administration. 6. The contractor, Ernst & Young LLP, is a major player in the accounting and auditing sector, suggesting a high level of expertise.

Value Assessment

Rating: good

The contract value of $19.2 million for a multi-year financial statement audit appears reasonable given the scale and complexity of the Social Security Administration's operations. Benchmarking against similar large-scale federal audits suggests that pricing is competitive, especially considering the firm-fixed-price nature which transfers some risk to the contractor. The selection of a reputable firm like Ernst & Young further supports the assessment of good value, as they are expected to deliver high-quality services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, meaning that all responsible sources were permitted to submit a bid. The fact that it was competed openly suggests that the Social Security Administration sought the best possible offer in terms of price and technical capability. While the number of bidders is not explicitly stated, the open competition process generally leads to more competitive pricing and a wider selection of qualified contractors.

Taxpayer Impact: Taxpayers benefit from full and open competition as it drives down costs through market forces, ensuring that federal funds are used efficiently for essential services like financial audits.

Public Impact

The Social Security Administration benefits directly through enhanced financial transparency and accountability. The public gains assurance in the financial management of a critical government agency responsible for retirement and disability benefits. The contract supports the accounting and auditing profession by engaging a major firm for essential public service. The services ensure compliance with financial regulations and standards, safeguarding taxpayer dollars.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if audit requirements evolve significantly beyond the initial fixed-price agreement.
Reliance on a single large firm could limit opportunities for smaller, specialized audit firms in the long term.

Positive Signals

Firm-fixed-price contract provides cost certainty for the agency.
Award to a well-established and reputable firm like Ernst & Young suggests a high likelihood of successful service delivery.
Full and open competition indicates a thorough vetting process and competitive pricing.

Sector Analysis

The financial statement audit sector for federal agencies is a critical component of government accountability. This contract falls within the professional services category, specifically accounting and auditing. The market is dominated by large, established accounting firms, often referred to as the 'Big Four,' which possess the resources and expertise to handle the scale of federal audits. Spending in this area is consistent across agencies to ensure compliance and transparency.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The primary contractor is Ernst & Young LLP, a large firm. There is no explicit information regarding subcontracting plans for small businesses within this specific award notice. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though large prime contractors often engage small businesses for various support functions not detailed here.

Oversight & Accountability

Oversight for this contract is primarily managed by the Social Security Administration's contracting officers and program managers. The firm-fixed-price nature provides a degree of cost control. Transparency is facilitated through the public nature of federal contract awards. While no specific Inspector General jurisdiction is mentioned for this particular contract, the SSA's Office of the Inspector General (OIG) generally oversees agency programs and operations for fraud, waste, and abuse, which would encompass financial integrity.

Related Government Programs

Federal Financial Management
Government Auditing Services
Social Security Administration Financial Operations
Independent Public Accounting Services

Risk Flags

Contract duration exceeds typical audit cycles, requiring robust oversight for option periods.
Reliance on a single large contractor for critical audit functions.

Frequently Asked Questions

What is this federal contract paying for?

Social Security Administration awarded $19.2 million to ERNST & YOUNG LLP. FINANCIAL STATEMENT AUDIT(BASE+ 4 OPTION PERIODS)

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: Social Security Administration (Social Security Administration).

What is the total obligated amount?

The obligated amount is $19.2 million.

What is the period of performance?

Start: 2022-10-11. End: 2026-02-28.

What is the historical spending trend for financial statement audits by the Social Security Administration?

Historical spending data for financial statement audits by the Social Security Administration reveals a consistent need for these services to ensure fiscal integrity. While specific year-over-year figures for this exact contract vehicle are not provided in the award notice, the agency has historically allocated significant resources to independent audits. This is driven by the agency's vast financial operations and the legal mandates requiring transparent and accurate financial reporting. The current $19.2 million contract, covering multiple option periods, suggests a sustained level of investment in audit services, aligning with previous patterns of engaging large, reputable firms to conduct these essential reviews.

How does the cost of this contract compare to similar federal financial audit contracts?

Comparing the cost of this $19.2 million contract to similar federal financial audit contracts requires an analysis of contract scope, duration, and agency size. Large federal agencies like the Social Security Administration, with complex financial systems and substantial budgets, typically incur higher audit costs than smaller agencies. The firm-fixed-price structure also plays a role in cost predictability. While a precise benchmark is difficult without more granular data on comparable contracts (e.g., specific services rendered, number of audit hours), the engagement of a 'Big Four' firm like Ernst & Young for a multi-year audit of a major agency suggests the pricing is likely within the expected range for such services in the federal market.

What are the key performance indicators (KPIs) used to evaluate Ernst & Young's performance on this contract?

Key Performance Indicators (KPIs) for federal financial statement audit contracts typically focus on the timeliness, accuracy, and completeness of the audit work performed. For this contract with the Social Security Administration, KPIs would likely include adherence to audit schedules, the identification of material misstatements or control deficiencies, compliance with Generally Accepted Auditing Standards (GAAS) and Government Auditing Standards, and the timely delivery of the final audit report. The agency's contracting officer would monitor these KPIs, and performance would be formally assessed, often through contract performance evaluations, which can influence future contract awards.

What is the track record of Ernst & Young LLP in performing federal financial audits?

Ernst & Young LLP (EY) has a long-standing and extensive track record of performing financial statement audits for numerous federal agencies. As one of the 'Big Four' accounting firms, EY possesses significant expertise and resources dedicated to the public sector. They are regularly awarded large, complex federal audit contracts, including those for major departments and independent agencies. Their performance history generally indicates a strong capability in meeting the rigorous standards and requirements of government auditing, including compliance with the Federal Information System Controls Audit Manual (FISCAM) and other relevant regulations. Past performance evaluations from agencies they have served are typically a key factor in their selection for new contracts.

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

Potential risks associated with this financial audit contract include the possibility of audit findings that require significant corrective action by the SSA, potential delays in audit completion impacting reporting deadlines, and the risk of contractor performance not meeting expectations. Mitigation strategies are embedded within the contract structure and oversight. The firm-fixed-price nature helps control costs, while the full and open competition process aims to select a highly capable contractor. The SSA's contracting officer and program managers provide ongoing oversight, and performance standards are defined. Furthermore, the inherent professional standards and reputational considerations for a firm like EY act as a strong incentive for diligent performance.

How does this contract contribute to the overall financial integrity and accountability of the Social Security Administration?

This contract is fundamental to the financial integrity and accountability of the Social Security Administration by providing an independent, objective assessment of its financial statements. The audit process verifies that the agency's financial records are accurate, complete, and comply with all applicable laws and regulations. By identifying any material misstatements, internal control weaknesses, or instances of non-compliance, the audit enables the SSA to take corrective actions, thereby strengthening its financial management. This independent assurance is crucial for maintaining public trust in the agency's stewardship of taxpayer funds and its ability to deliver essential benefits.

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

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 MANHATTAN WEST, NEW YORK, NY, 10001

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

Financial Breakdown

Contract Ceiling: $33,547,291

Exercised Options: $23,240,512

Current Obligation: $19,196,045

Actual Outlays: $16,303,192

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F290CA

IDV Type: FSS

Timeline