DOT's $2.24M ERM Contract with Ernst & Young Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $2,243,845 ($2.2M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Transportation

Start Date: 2021-09-14

End Date: 2026-03-12

Contract Duration: 1,640 days

Daily Burn Rate: $1.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: STB'S ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20423

State: District of Columbia Government Spending

Plain-Language Summary

Department of Transportation obligated $2.2 million to ERNST & YOUNG LLP for work described as: STB'S ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM. Key points: 1. The contract's value of $2.24M for an Enterprise Risk Management program raises questions about cost-effectiveness. 2. Ernst & Young, a major consulting firm, secured the contract, indicating potential for high fees. 3. The 'Full and Open Competition' method was used, but the specific impact on price discovery needs further analysis. 4. The sector is professional services, a common area for significant government consulting spend.

Value Assessment

Rating: questionable

The $2.24M contract value for ERM services appears high without clear performance metrics or benchmarks. Similar ERM programs for large agencies can vary widely, making direct comparison difficult, but this amount warrants closer examination for efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which theoretically allows for the best pricing. However, the specific details of the bidding process and how price was evaluated against technical merit are not provided, leaving room for potential overpayment if not managed rigorously.

Taxpayer Impact: Taxpayer funds are being used for consulting services. The value for money and the necessity of the ERM program at this scale are key considerations for fiscal responsibility.

Public Impact

Citizens expect government contracts to be awarded efficiently and at fair prices. Transparency in how consulting contracts are managed is crucial for public trust. Effective risk management is vital for government operations, but the cost must be justified.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value for consulting services.
Potential for scope creep in ERM programs.
Lack of detailed performance metrics for value assessment.

Positive Signals

Contract awarded through full and open competition.
Firm fixed price contract type can provide cost certainty.

Sector Analysis

The professional services sector, particularly consulting, sees significant government spending. Benchmarks for ERM programs can vary greatly depending on agency size and complexity, but $2.24M suggests a substantial scope of work.

Small Business Impact

This contract was awarded to Ernst & Young, a large, established firm, with no indication of small business participation. The focus appears to be on large prime contractors for specialized services.

Oversight & Accountability

Oversight of this contract will be critical to ensure the ERM program delivers tangible benefits and that the $2.24M is spent effectively. Regular performance reviews and audits are necessary to maintain accountability.

Related Government Programs

Offices of Certified Public Accountants
Department of Transportation Contracting
Immediate Office of the Secretary of Transportation Programs

Risk Flags

High contract value.
Potential for vendor lock-in.
Lack of clear performance metrics.
Limited visibility into specific ERM program outcomes.
Dominance of large consulting firms in government contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $2.2 million to ERNST & YOUNG LLP. STB'S ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM.

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Immediate Office of the Secretary of Transportation).

What is the total obligated amount?

The obligated amount is $2.2 million.

What is the period of performance?

Start: 2021-09-14. End: 2026-03-12.

What specific deliverables and expected outcomes justify the $2.24M expenditure for the ERM program?

The contract details should outline specific deliverables such as risk assessments, policy development, training materials, and implementation plans for the ERM framework. Expected outcomes should include improved risk identification, mitigation strategies, and enhanced decision-making capabilities across the Department of Transportation. Without these clearly defined, the value proposition remains unclear.

How was the 'full and open competition' process structured to ensure the most cost-effective solution was chosen?

A robust full and open competition would involve detailed evaluation criteria that weigh both technical approach and price. The agency should have assessed proposals based on factors like the proposer's understanding of DOT's needs, proposed methodology, team qualifications, and cost realism. The selection of Ernst & Young suggests they met these criteria, but the specific weighting and scoring would reveal the emphasis placed on cost-effectiveness.

What mechanisms are in place to measure the effectiveness and return on investment of the ERM program?

Effectiveness should be measured through key performance indicators (KPIs) tied to risk reduction, incident avoidance, and improved operational efficiency. Regular reporting on these KPIs, along with periodic program reviews and potentially independent audits, would help assess the ROI. The contract should specify these measurement tools and reporting frequencies to ensure accountability.

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) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

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: $2,243,845

Exercised Options: $2,243,845

Current Obligation: $2,243,845

Actual Outlays: $1,925,567

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F290CA

IDV Type: FSS

Timeline