GSA awards $150M+ for accounting services to Ernst & Young, raising concerns over competition and value

Contract Overview

Contract Amount: $150,259,479 ($150.3M)

Contractor: Ernst & Young LLP

Awarding Agency: General Services Administration

Start Date: 2016-07-05

End Date: 2022-01-04

Contract Duration: 2,009 days

Daily Burn Rate: $74.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: IGF::CT::IGF FINANCIAL MANGEMENT INTERNAL CONTROLS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20024

State: District of Columbia Government Spending

Plain-Language Summary

General Services Administration obligated $150.3 million to ERNST & YOUNG LLP for work described as: IGF::CT::IGF FINANCIAL MANGEMENT INTERNAL CONTROLS Key points: 1. Significant contract value exceeding $150 million. 2. Sole-source award to Ernst & Young LLP limits competitive pricing. 3. Long contract duration (2016-2022) may not reflect current market rates. 4. Focus on 'Other Accounting Services' suggests specialized, potentially high-cost expertise.

Value Assessment

Rating: questionable

The contract's Time and Materials pricing structure, coupled with a lack of competition, makes a direct value assessment difficult. The reported obligated amount of over $150 million over six years warrants scrutiny to ensure it aligns with market benchmarks for similar accounting services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits price discovery and potentially leads to higher costs for taxpayers as the government did not explore alternative, potentially more cost-effective providers.

Taxpayer Impact: The lack of competition on a contract of this magnitude represents a missed opportunity for cost savings, potentially resulting in millions of dollars in overspending.

Public Impact

Taxpayers may be overpaying for accounting services due to the absence of competitive bidding. Government reliance on a single vendor for critical financial management functions could pose a risk. The long contract period might not reflect the most current or efficient service delivery methods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Time and Materials pricing
Long contract duration

Positive Signals

Services provided by a reputable firm (Ernst & Young)
Contract addresses a clear government need for accounting services

Sector Analysis

The 'Other Accounting Services' category (NAICS 541219) encompasses a broad range of financial advisory and management services. Spending in this sector can vary widely, but large sole-source contracts like this, especially for established firms, often attract scrutiny regarding efficiency and cost-effectiveness compared to competitive procurements.

Small Business Impact

This contract was not awarded to a small business. The sole-source nature of the award further indicates that small businesses were not considered or given an opportunity to compete for these services.

Oversight & Accountability

The sole-source award and the significant dollar value suggest a need for robust oversight to ensure the services rendered are necessary, performed efficiently, and priced appropriately. A review of the justification for the sole-source award is critical.

Related Government Programs

Other Accounting Services
General Services Administration Contracting
Federal Acquisition Service Programs

Risk Flags

Lack of competitive bidding
Potential for inflated costs due to sole-source award
Absence of small business participation
Risk of vendor lock-in
Insufficient transparency in pricing structure

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $150.3 million to ERNST & YOUNG LLP. IGF::CT::IGF FINANCIAL MANGEMENT INTERNAL CONTROLS

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $150.3 million.

What is the period of performance?

Start: 2016-07-05. End: 2022-01-04.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies ever considered?

The justification for a sole-source award is crucial for understanding why competition was bypassed. Agencies typically require extensive documentation proving that only one vendor can meet the requirement, or that exceptional circumstances prevent competition. Without this justification, it's difficult to assess if the government adequately explored options to secure the best value and price for taxpayers.

How does the Time and Materials pricing structure compare to industry standards for similar accounting services, and what controls were in place to manage costs?

Time and Materials (T&M) contracts can be prone to cost overruns if not managed carefully. Assessing whether the rates negotiated with Ernst & Young align with market benchmarks for similar accounting services is essential. Furthermore, understanding the specific oversight mechanisms and reporting requirements GSA implemented to control costs under this T&M contract is vital for evaluating its financial prudence.

Given the contract's duration from 2016 to 2022, what steps were taken to ensure the services remained relevant and cost-effective throughout its term?

Long-term contracts require mechanisms to adapt to changing needs and market conditions. It's important to know if GSA conducted periodic reviews to ensure the services provided by Ernst & Young continued to meet evolving requirements and if pricing was re-evaluated against current market rates. This ensures the government isn't locked into outdated or overpriced service agreements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Other Accounting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: ID11160026

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 1101 NEW YORK AVENUE, NW, WASHINGTON, DC, 20005

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

Financial Breakdown

Contract Ceiling: $196,280,862

Exercised Options: $196,280,862

Current Obligation: $150,259,479

Actual Outlays: $12,247,300

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline