NASA's $6.78M annual financial statement audit by Ernst & Young LLP shows a need for robust oversight
Contract Overview
Contract Amount: $6,784,426 ($6.8M)
Contractor: Ernst & Young LLP
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2024-02-16
End Date: 2026-02-15
Contract Duration: 730 days
Daily Burn Rate: $9.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: NASA'S ANNUAL FINANCIAL STATEMENT AUDIT
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20546
Plain-Language Summary
National Aeronautics and Space Administration obligated $6.8 million to ERNST & YOUNG LLP for work described as: NASA'S ANNUAL FINANCIAL STATEMENT AUDIT Key points: 1. The contract value represents a significant investment in ensuring financial integrity. 2. Competition dynamics for such specialized audits are typically limited due to required expertise. 3. Risk indicators include the potential for audit findings to impact NASA's operational efficiency. 4. Performance context is critical, as audit quality directly affects public trust in the agency. 5. This contract positions NASA to maintain compliance with federal financial reporting standards.
Value Assessment
Rating: good
The contract value of $6.78 million for an annual financial statement audit is within a reasonable range for a federal agency of NASA's size and complexity. Benchmarking against similar audits for large federal agencies suggests that the pricing is competitive, assuming the scope of work is comprehensive and meets all federal requirements. The fixed-price nature of the contract provides cost certainty for NASA, although it places the risk of cost overruns on the contractor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple qualified firms were invited to bid. This approach generally fosters a competitive environment, encouraging bidders to offer their best pricing and service. The presence of multiple bidders suggests that the market for these specialized audit services is sufficiently robust to support competitive procurement, which is beneficial for price discovery and value for money.
Taxpayer Impact: Taxpayers benefit from a competitive bidding process that helps ensure NASA obtains high-quality audit services at a fair price, minimizing unnecessary expenditure.
Public Impact
Taxpayers benefit from increased transparency and accountability in the use of federal funds. NASA's financial operations are subject to rigorous scrutiny, enhancing public trust. The audit supports the integrity of NASA's financial reporting to Congress and the public. The services delivered ensure compliance with federal financial management regulations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for findings that could require significant corrective actions by NASA.
- Reliance on a single contractor for a critical function like financial auditing.
Positive Signals
- Awarded through full and open competition, suggesting a competitive market.
- Firm fixed-price contract provides budget certainty for NASA.
- Contractor is a well-established firm with experience in government audits.
Sector Analysis
The federal government procures a wide range of professional services, including auditing, to ensure accountability and compliance. The market for these services is mature, with numerous large accounting firms capable of performing complex federal audits. NASA's spending on financial statement audits is a standard component of its overall financial management, comparable to spending by other large federal agencies with complex financial structures.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'ss' being false. The focus is on obtaining specialized expertise from large, established firms. There is no explicit information regarding subcontracting plans for small businesses within this specific award, though the prime contractor may engage small businesses in other capacities.
Oversight & Accountability
Oversight is primarily conducted by NASA's Office of Inspector General (OIG), which is responsible for auditing and investigating NASA programs and operations. The contract itself will have performance standards and deliverables that NASA will monitor. Transparency is maintained through public reporting of audit results and NASA's responses to any findings.
Related Government Programs
- Federal Financial Management
- Government Auditing Services
- NASA Financial Operations
Risk Flags
- Potential for audit findings impacting agency operations
- Contractor performance risk
- Reliance on a single provider for critical audit function
Tags
nasa, audit, financial-management, professional-services, full-and-open-competition, firm-fixed-price, ernst-young-llp, district-of-columbia, annual-contract, oversight
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $6.8 million to ERNST & YOUNG LLP. NASA'S ANNUAL FINANCIAL STATEMENT AUDIT
Who is the contractor on this award?
The obligated recipient is ERNST & YOUNG LLP.
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $6.8 million.
What is the period of performance?
Start: 2024-02-16. End: 2026-02-15.
What is the track record of Ernst & Young LLP in performing federal financial statement audits?
Ernst & Young LLP (EY) is one of the 'Big Four' accounting firms and has extensive experience auditing large, complex organizations, including numerous federal agencies. They are regularly awarded contracts for financial statement audits, performance audits, and other assurance services across various government departments. Their track record generally includes successful completion of audits in accordance with government auditing standards (GAGAS) and federal regulations. However, like all large audit firms, they may have faced scrutiny or findings in past audits, which would be detailed in reports from agency Inspectors General or the Government Accountability Office (GAO). Specific details would require reviewing individual audit reports and oversight findings related to EY's federal engagements.
How does the value of this contract compare to similar federal financial statement audits?
The contract value of approximately $6.78 million for an annual financial statement audit for NASA is substantial, reflecting the agency's large budget and complex financial operations. When compared to audits for other large federal agencies (e.g., Department of Defense components, large civilian agencies like HHS or Treasury), this figure appears to be within a comparable range. The cost of such audits is influenced by factors like the volume and complexity of transactions, the number of component organizations, the extent of IT systems involved, and the specific audit standards and reporting requirements. Without a direct comparison of scope and agency size, precise benchmarking is difficult, but the amount is consistent with the scale of services required for a major federal entity.
What are the primary risks associated with this contract for NASA?
The primary risks for NASA associated with this contract revolve around the quality and timeliness of the audit services. A key risk is the potential for the audit to identify significant control deficiencies or material misstatements in NASA's financial statements, which could lead to negative findings, reputational damage, and require costly remediation efforts. Another risk is contractor performance failure, where Ernst & Young LLP might not deliver the audit on time or to the required standards, potentially impacting NASA's compliance deadlines. There's also a risk related to the concentration of this critical function with one provider, although the competitive award process mitigates some of this. Finally, the cost-effectiveness of the audit, ensuring value for money, is an ongoing consideration.
How effective is the full and open competition process in ensuring value for money for this type of specialized service?
The full and open competition process is generally considered effective for specialized services like financial statement audits, provided the solicitation is well-defined and attracts a sufficient number of qualified bidders. It allows multiple firms to compete based on technical qualifications, past performance, and price, driving down costs and encouraging innovation. For complex audits, the technical evaluation is crucial to ensure the selected firm has the necessary expertise. The effectiveness is maximized when the government clearly articulates its needs and evaluation criteria, and when the market has enough capable providers. In this case, with a firm like Ernst & Young LLP being a potential awardee, it suggests the market is competitive enough to support this approach.
What are the historical spending patterns for NASA's financial statement audits?
Historical spending data for NASA's financial statement audits would reveal trends in the cost and frequency of these services. Typically, such audits are conducted annually. Spending can fluctuate year-over-year due to changes in audit scope, complexity of financial operations, or adjustments in market rates for audit services. A review of past NASA financial statements and contract awards would show whether the current $6.78 million contract represents an increase, decrease, or stable level of spending compared to previous years. Understanding these patterns helps in assessing the long-term cost-efficiency and identifying any significant deviations that warrant further investigation.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants
Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
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: $10,265,390
Exercised Options: $6,810,712
Current Obligation: $6,784,426
Actual Outlays: $6,557,147
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: 47QRAD19DU201
IDV Type: IDC
Timeline
Start Date: 2024-02-16
Current End Date: 2026-02-15
Potential End Date: 2026-02-15 00:00:00
Last Modified: 2026-02-05
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