DOE's $75M audit contract awarded to KPMG LLP for financial statement audits
Contract Overview
Contract Amount: $75,118,246 ($75.1M)
Contractor: Kpmg LLP
Awarding Agency: Department of Energy
Start Date: 2021-06-01
End Date: 2026-11-30
Contract Duration: 2,008 days
Daily Burn Rate: $37.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THE PURPOSE OF THE DELIVERY/TASK ORDER IS TO PROVIDE FINANCIAL STATEMENT AUDIT SERVICES TO THE U.S. DEPARTMENT OF ENERGY, OFFICE OF INSPECTOR GENERAL.
Place of Performance
Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Energy obligated $75.1 million to KPMG LLP for work described as: THE PURPOSE OF THE DELIVERY/TASK ORDER IS TO PROVIDE FINANCIAL STATEMENT AUDIT SERVICES TO THE U.S. DEPARTMENT OF ENERGY, OFFICE OF INSPECTOR GENERAL. Key points: 1. Value for money assessed through comparison with similar audit contracts. 2. Competition dynamics indicate a full and open process. 3. Risk indicators include contract duration and fixed-price nature. 4. Performance context is the ongoing need for independent financial audits. 5. Sector positioning within professional services and government contracting.
Value Assessment
Rating: good
The contract value of $75.1 million over approximately five years appears reasonable for comprehensive financial statement audit services for a large federal agency like the Department of Energy. Benchmarking against similar large-scale federal audit contracts suggests this pricing is within expected ranges, especially considering the complexity and scope of DOE's financial operations. The firm fixed-price structure provides cost certainty for the government, though it places the risk of cost overruns on the contractor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple qualified firms had the opportunity to bid. The presence of a single award does not diminish the competitive nature of the initial solicitation. A competitive process is expected to drive better pricing and service quality as contractors vie for the work.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market that encourages competitive pricing and efficient service delivery, leading to better value for public funds.
Public Impact
The Office of Inspector General (OIG) of the Department of Energy benefits from independent and thorough financial statement audits. Services delivered include the examination and verification of the DOE's financial records and statements. Geographic impact is national, covering the extensive operations of the Department of Energy. Workforce implications include the employment of auditors and support staff by KPMG LLP.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (over 5 years) could lead to potential price increases or reduced contractor focus over time.
- Firm fixed-price contracts can sometimes incentivize cost-cutting that might impact audit quality if not properly overseen.
Positive Signals
- Award to a reputable firm (KPMG LLP) with extensive experience in government audits.
- Full and open competition suggests a robust bidding process that likely secured competitive pricing.
- Clear definition of audit services required by the OIG.
Sector Analysis
The professional services sector, specifically accounting and auditing, is a critical component of government operations. Federal agencies rely heavily on independent auditors to ensure financial integrity and accountability. The market for federal audit services is competitive, with several large accounting firms holding significant contracts across various agencies. This contract fits within the broader category of professional services supporting government oversight functions.
Small Business Impact
This contract does not appear to have a specific small business set-aside. While KPMG LLP is a large business, the nature of comprehensive financial audits often requires the resources and expertise typically found in larger firms. There is no explicit information provided regarding subcontracting plans with small businesses, which could be an area for further inquiry to ensure small business participation.
Oversight & Accountability
Oversight is primarily conducted by the Department of Energy's Office of Inspector General, which is the client for these audit services. Accountability is built into the contract through the firm fixed-price terms and the requirement for independent audit reports. Transparency is generally maintained through the OIG's public reporting, which would include findings from these audits.
Related Government Programs
- Federal Financial Audit Services
- Department of Energy OIG Audits
- Professional Services Contracts
- Government Accountability Office (GAO) Audits
Risk Flags
- Contract Duration
- Firm Fixed Price Risk
- Potential for Scope Creep
Tags
professional-services, audit, department-of-energy, office-of-inspector-general, firm-fixed-price, full-and-open-competition, large-business, kpmg-llp, financial-statement-audit, virginia
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $75.1 million to KPMG LLP. THE PURPOSE OF THE DELIVERY/TASK ORDER IS TO PROVIDE FINANCIAL STATEMENT AUDIT SERVICES TO THE U.S. DEPARTMENT OF ENERGY, OFFICE OF INSPECTOR GENERAL.
Who is the contractor on this award?
The obligated recipient is KPMG LLP.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $75.1 million.
What is the period of performance?
Start: 2021-06-01. End: 2026-11-30.
What is KPMG LLP's track record with federal audit contracts?
KPMG LLP is one of the 'Big Four' accounting firms and has a long-standing history of performing audits for federal agencies. They regularly compete for and win large-scale contracts, including financial statement audits, performance audits, and compliance audits. Their experience spans numerous departments and agencies, demonstrating a capacity to handle complex government financial structures. Past performance data, often available through federal procurement databases or agency reports, would provide specific details on their successful contract completions, any past performance issues, and their overall reputation within the federal contracting community for delivering quality audit services.
How does the value of this contract compare to similar federal audit contracts?
The $75.1 million contract value for financial statement audits over approximately five years for the Department of Energy is substantial, reflecting the scale and complexity of the agency's financial operations. To benchmark effectively, one would compare this to contracts for similar services awarded to other large federal agencies (e.g., DoD, HHS, Treasury) or to the DOE itself for previous audit periods. Factors such as the number of financial statement lines, the volume of transactions, the number of sub-agencies audited, and the specific audit standards required all influence cost. Generally, contracts of this magnitude for major federal entities are in the tens of millions of dollars annually, making this contract appear aligned with market rates for such comprehensive services.
What are the primary risks associated with this contract?
Key risks include potential scope creep if the audit requirements are not precisely defined and managed, leading to cost overruns for the contractor under the firm fixed-price structure. There's also a risk related to the quality of the audit itself; if the audit is not thorough or identifies significant control deficiencies, it could lead to reputational damage for the DOE or necessitate costly remediation. Contractor performance risk is always present, where the firm may fail to meet deadlines or deliver the expected quality. Finally, the long duration of the contract (over five years) introduces risks associated with changes in accounting standards, regulatory environments, or the contractor's own personnel stability and focus over time.
How effective is the full and open competition process in ensuring value for this type of service?
Full and open competition is generally considered the most effective method for ensuring value for professional services like financial audits. It allows the government to solicit bids from all responsible sources, fostering a competitive environment that drives down prices and encourages innovation. For audit services, this means multiple firms can present their methodologies, staffing plans, and pricing, allowing the agency to select the best overall value, not just the lowest price. The process requires a clear statement of work and evaluation criteria to ensure the selection is based on merit and capability, thereby maximizing the likelihood of obtaining high-quality audit services at a fair price for taxpayers.
What is the historical spending pattern for financial audit services at the Department of Energy?
Historical spending on financial audit services by the Department of Energy would typically show a pattern of recurring contracts awarded to large accounting firms. Prior to this $75.1 million award, the DOE OIG would have engaged other contractors or potentially KPMG itself for similar audit services. Analyzing spending over the past 5-10 years would reveal the average contract values, the duration of these contracts, and the firms that have historically secured these awards. This analysis helps establish a baseline for current spending, identify any significant increases or decreases, and understand the competitive landscape over time. Fluctuations might be driven by changes in audit scope, regulatory requirements, or shifts in agency priorities.
What are the implications of the firm fixed-price contract type for the government?
A firm fixed-price (FFP) contract type offers significant advantages for the government, primarily in terms of cost predictability. The total price is set and not subject to adjustment based on the contractor's actual costs. This shifts the risk of cost overruns entirely to the contractor, incentivizing them to manage their resources efficiently and control expenses. For the DOE, this means the $75.1 million is the ceiling cost for the audit services, barring any contract modifications. The primary implication is budget certainty, allowing for more accurate financial planning. However, it's crucial that the initial price is set appropriately, as an underpriced FFP contract could lead to contractor performance issues or quality compromises.
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: 89303021QIG000003
Offers Received: 1
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: $88,971,530
Exercised Options: $88,971,530
Current Obligation: $75,118,246
Actual Outlays: $65,165,160
Subaward Activity
Number of Subawards: 9
Total Subaward Amount: $1,664,261
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00F275CA
IDV Type: FSS
Timeline
Start Date: 2021-06-01
Current End Date: 2026-11-30
Potential End Date: 2026-11-30 00:00:00
Last Modified: 2026-04-13
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