KPMG LLP contract with CMS for procurement spend optimization valued at over $50.9 million

Contract Overview

Contract Amount: $50,926,507 ($50.9M)

Contractor: Kpmg LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2020-09-18

End Date: 2024-09-17

Contract Duration: 1,460 days

Daily Burn Rate: $34.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TO CONTINUE ANALYZING CMS'S CONTRACT INVESTMENTS AND TO WORK WITH THE CMS TEAM TO DEVELOP RECOMMENDATIONS FOR PROCUREMENT SPEND OPTIMIZATION TO ENSURE THAT CMS IS MAKING SMART AND INFORMED BUYS AND EFFECTIVELY MANAGING ITS SUPPLIERS/VENDORS.

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $50.9 million to KPMG LLP for work described as: TO CONTINUE ANALYZING CMS'S CONTRACT INVESTMENTS AND TO WORK WITH THE CMS TEAM TO DEVELOP RECOMMENDATIONS FOR PROCUREMENT SPEND OPTIMIZATION TO ENSURE THAT CMS IS MAKING SMART AND INFORMED BUYS AND EFFECTIVELY MANAGING ITS SUPPLIERS/VENDORS. Key points: 1. Focuses on optimizing procurement spend and supplier management for CMS. 2. Contract duration of 1460 days suggests a long-term strategic engagement. 3. Award type is a BPA Call, indicating a pre-competed framework. 4. Firm Fixed Price contract type aims to control costs. 5. The contractor, KPMG LLP, is a major player in professional services. 6. This contract aligns with broader government efforts to improve acquisition efficiency.

Value Assessment

Rating: good

The contract's value of over $50.9 million over four years indicates a significant investment in procurement consulting. While specific performance metrics are not detailed, the firm fixed price structure suggests an attempt to manage costs predictably. Benchmarking against similar large-scale procurement optimization contracts is difficult without more granular data on the scope of services, but the engagement of a major firm like KPMG implies a certain level of expected value and expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust bidding process. The presence of two bidders (no) indicates some level of competition, though the exact number of proposals received and evaluated is not specified. This competitive approach is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition helps ensure that taxpayer funds are used efficiently by driving down costs through a competitive bidding process.

Public Impact

Benefits CMS by improving the efficiency and effectiveness of its procurement processes. Services delivered include recommendations for procurement spend optimization and supplier management. Geographic impact is primarily within the Centers for Medicare and Medicaid Services operations. Workforce implications may involve training or process changes for CMS procurement staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if optimization goals are not clearly defined.
Reliance on external consultants may reduce internal capacity building.
Measuring the true ROI of consulting services can be challenging.

Positive Signals

Clear objective to optimize spend and manage suppliers.
Firm fixed price contract helps control budget.
Awarded through full and open competition.
Long contract duration allows for in-depth analysis and implementation.
Contractor is a reputable firm with extensive experience.

Sector Analysis

This contract falls within the professional services sector, specifically focusing on management and financial consulting related to government procurement. The market for such services is substantial, with numerous firms competing to assist federal agencies in improving efficiency and reducing costs. This engagement with CMS represents a significant investment in optimizing a critical operational function within a major health agency.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a large professional services contract awarded to KPMG LLP, it is unlikely to directly benefit small businesses through set-asides. However, the contract's focus on procurement optimization could indirectly impact small businesses if CMS's procurement strategies are revised to include greater opportunities for small business participation.

Oversight & Accountability

Oversight for this contract would typically reside within the Centers for Medicare and Medicaid Services (CMS) contracting and program management offices. The firm fixed price nature and defined period of performance provide a framework for accountability. Transparency is facilitated by the contract's award under full and open competition. Specific Inspector General jurisdiction would depend on the nature of any potential issues arising from the contract's execution.

Related Government Programs

Federal Procurement Data System (FPDS)
Government Accountability Office (GAO) Audits
Office of Management and Budget (OMB) Procurement Directives

Risk Flags

Potential for vendor lock-in if not managed carefully.
Difficulty in quantifying the precise return on investment for consulting services.
Risk of recommendations not aligning with CMS's unique operational environment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $50.9 million to KPMG LLP. TO CONTINUE ANALYZING CMS'S CONTRACT INVESTMENTS AND TO WORK WITH THE CMS TEAM TO DEVELOP RECOMMENDATIONS FOR PROCUREMENT SPEND OPTIMIZATION TO ENSURE THAT CMS IS MAKING SMART AND INFORMED BUYS AND EFFECTIVELY MANAGING ITS SUPPLIERS/VENDORS.

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $50.9 million.

What is the period of performance?

Start: 2020-09-18. End: 2024-09-17.

What specific metrics will be used to measure the success of KPMG's procurement spend optimization recommendations?

The success of KPMG's procurement spend optimization recommendations will likely be measured through a combination of quantitative and qualitative metrics. Quantitatively, key performance indicators (KPIs) could include reductions in overall procurement spending, improved contract pricing, decreased cycle times for procurement processes, and increased utilization of preferred vendors or strategic sourcing agreements. Qualitatively, success might be assessed through improved supplier performance ratings, enhanced compliance with procurement regulations, and greater satisfaction among internal CMS stakeholders regarding the procurement process. The contract documents or a separate performance work statement would typically detail these specific metrics and targets to ensure accountability and measurable outcomes for the $50.9 million investment.

How does the $50.9 million contract value compare to typical spending on procurement consulting services by agencies of CMS's size?

The $50.9 million contract value for procurement spend optimization services over four years is substantial, reflecting the complexity and scale of CMS's operations. Agencies of CMS's size, managing vast healthcare programs and extensive vendor networks, often invest significant sums in specialized consulting to ensure efficiency and cost-effectiveness. While direct comparisons are challenging due to variations in scope, duration, and specific services, this figure appears to be within the expected range for a comprehensive, multi-year engagement aimed at optimizing procurement across a large federal agency. It suggests CMS is prioritizing strategic improvements in its acquisition lifecycle, potentially seeking to achieve significant long-term savings that justify the upfront investment.

What are the potential risks associated with engaging KPMG LLP for this long-term procurement optimization contract?

Potential risks associated with this long-term procurement optimization contract include over-reliance on external expertise, potentially hindering the development of internal CMS capabilities. There's also a risk of scope creep, where the project's objectives expand beyond the initial agreement, leading to increased costs or delays. Ensuring the recommendations are practical and implementable within CMS's specific operational context is crucial; a disconnect between consultant recommendations and agency realities could lead to poor adoption. Furthermore, measuring the return on investment (ROI) for consulting services can be inherently difficult, making it challenging to definitively prove the contract's value. Finally, data security and confidentiality are paramount given the sensitive information involved in procurement processes.

What is KPMG LLP's track record with federal agencies, particularly in procurement and financial consulting?

KPMG LLP has a well-established and extensive track record of providing a wide range of professional services to federal agencies, including management consulting, financial advisory, and audit services. They are a major global professional services firm with a dedicated public sector practice. Their experience often includes assisting government entities with improving operational efficiency, optimizing financial management, enhancing IT systems, and, relevant to this contract, refining procurement processes and supply chain management. Past performance data, often available through sources like the Federal Procurement Data System (FPDS) or agency performance evaluations, would typically detail their success in delivering complex projects, managing large budgets, and meeting government requirements across various departments and agencies.

How might the 'BPA CALL' award type influence the overall cost-effectiveness and flexibility of this contract?

The 'BPA CALL' award type signifies that this contract was issued under a Blanket Purchase Agreement (BPA). BPAs are essentially charge accounts set up with pre-vetted vendors, often established through full and open competition. A 'BPA Call' is a specific order placed against that BPA. This structure generally enhances cost-effectiveness because the underlying BPA likely involved competitive pricing. It also offers flexibility, allowing CMS to quickly procure services as needed without initiating a new, full procurement process each time. This can lead to faster delivery and potentially better pricing due to the established relationship and pre-negotiated terms, although the specific pricing is detailed in the call itself.

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

Solicitation ID: 201848

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: $59,909,626

Exercised Options: $50,926,507

Current Obligation: $50,926,507

Actual Outlays: $41,225,171

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $2,520,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 75FCMC20A0015

IDV Type: BPA

Timeline