HHS FY 2009 Financial Statement Audit by Ernst & Young LLP for $16.6M

Contract Overview

Contract Amount: $16,617,328 ($16.6M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2009-03-20

End Date: 2011-12-31

Contract Duration: 1,016 days

Daily Burn Rate: $16.4K/day

Competition Type: FULL AND OPEN COMPETITION

Sector: Other

Official Description: FY 2009 FINANCIAL STATEMENT AUDIT OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20857

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $16.6 million to ERNST & YOUNG LLP for work described as: FY 2009 FINANCIAL STATEMENT AUDIT OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES 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 are evaluated based on contractor performance and audit scope. 4. Performance context is framed by the audit's objective for the Department of Health and Human Services. 5. Sector positioning is within professional services, specifically accounting and auditing for government agencies.

Value Assessment

Rating: good

The contract value of $16.6 million for a two-year financial statement audit appears reasonable when benchmarked against similar large-scale government audits. While specific per-unit cost comparisons are difficult without detailed scope breakdowns, the pricing is likely competitive given the full and open competition. The duration of the contract (1016 days) suggests a comprehensive audit process, and the cost should be evaluated against the thoroughness and quality of the audit findings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified firms were invited to bid. The specific number of bidders is not provided, but this method generally fosters competitive pricing and encourages contractors to offer their best value. The open competition is a positive indicator for price discovery and ensures a broad pool of potential service providers.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is likely to result in a more cost-effective audit service for the Department of Health and Human Services.

Public Impact

The primary beneficiary is the Department of Health and Human Services, which receives an independent audit of its financial statements. The service delivered is a comprehensive financial statement audit, crucial for accountability and transparency. The geographic impact is national, as it pertains to the financial operations of a federal department. Workforce implications are minimal, primarily involving the audit team from Ernst & Young LLP.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for audit findings to reveal significant financial irregularities requiring corrective action.
Contract duration may be extended if unforeseen complexities arise during the audit process.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Contractor, Ernst & Young LLP, is a reputable firm with extensive experience in government audits.
Audit scope covers financial statements, a critical component of agency accountability.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing. Government audits are a significant market, with agencies requiring independent verification of their financial health and compliance. Benchmarks for similar large-scale federal audits can vary widely based on agency size and complexity, but a contract in the tens of millions for a comprehensive audit is not uncommon for departments like HHS.

Small Business Impact

There is no indication that this contract involved small business set-asides. As a large professional services contract, it is likely that the primary awardee, Ernst & Young LLP, is a large business. Subcontracting opportunities for small businesses are not specified but could potentially exist for specialized support services if needed by the prime contractor.

Oversight & Accountability

Oversight is provided by the Department of Health and Human Services' Office of the Assistant Secretary for Administration, which awarded the contract. Accountability is ensured through the audit process itself and the requirement for the contractor to deliver a thorough and accurate report. Transparency is facilitated by the public nature of federal spending and audit requirements, though specific audit findings may have varying levels of public disclosure.

Related Government Programs

HHS Financial Statement Audits
Federal Audit Services Contracts
Professional Services Contracts
Government Accountability Office (GAO) Audits

Risk Flags

Contract Duration
Audit Scope Clarity
Contractor Performance Monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $16.6 million to ERNST & YOUNG LLP. FY 2009 FINANCIAL STATEMENT AUDIT OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).

What is the total obligated amount?

The obligated amount is $16.6 million.

What is the period of performance?

Start: 2009-03-20. End: 2011-12-31.

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 a long-standing and extensive track record of performing financial statement audits for both private sector and government entities. They regularly audit major corporations and federal agencies, including components of the Department of Defense and other large cabinet-level departments. Their experience typically encompasses complex financial structures, regulatory compliance, and adherence to government auditing standards (GAGAS). EY's involvement in federal audits suggests a high level of expertise and familiarity with the specific requirements and challenges of government financial reporting and accountability.

How does the $16.6 million cost compare to similar federal financial statement audits?

Benchmarking the $16.6 million cost requires comparing it to audits of similarly sized and complex federal departments. For FY 2009, the Department of Health and Human Services (HHS) managed a substantial budget. Audits for large federal agencies can range from several million to tens of millions of dollars, depending on the scope, duration, and specific financial activities. Given HHS's size and the complexity of its programs (Medicare, Medicaid, etc.), $16.6 million for a two-year audit appears to be within a reasonable range. However, a precise comparison would necessitate detailed data on the number of audit hours, personnel involved, and specific audit objectives for other comparable agency audits.

What are the primary risks associated with this type of financial audit contract?

The primary risks associated with this financial audit contract include: 1) Inadequate audit scope or execution, potentially leading to missed material misstatements or control deficiencies. 2) Delays in the audit process, impacting the timely issuance of financial reports. 3) Contractor performance issues, such as insufficient staffing or expertise, affecting audit quality. 4) Potential for findings that require significant corrective actions by HHS, leading to unforeseen costs or operational changes. 5) Data security risks related to accessing sensitive financial information. The full and open competition and the reputation of the contractor mitigate some of these risks, but ongoing oversight is crucial.

What is the expected effectiveness of this audit in improving HHS's financial management?

The effectiveness of this audit in improving HHS's financial management hinges on several factors. An independent audit provides an objective assessment of the agency's financial statements and internal controls. By identifying areas of weakness, non-compliance, or potential fraud, the audit serves as a critical feedback mechanism. The resulting audit report and recommendations are expected to guide HHS in implementing corrective actions, strengthening internal controls, and improving overall financial reporting accuracy and transparency. The ultimate effectiveness depends on HHS's responsiveness to the audit findings and its commitment to implementing necessary changes.

What were historical spending patterns for financial statement audits at HHS prior to FY 2009?

Historical spending patterns for financial statement audits at HHS prior to FY 2009 would likely show a consistent requirement for independent audits, driven by federal mandates such as the Chief Financial Officers Act of 1990. The annual cost would fluctuate based on audit scope, contractor selection through competitive bidding, and the complexity of HHS's financial operations in those years. It is probable that HHS has engaged large, reputable audit firms for these services over many years. Analyzing prior years' contract values would provide a baseline for assessing the trend and consistency of spending on this essential function.

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: NEGOTIATED PROPOSAL/QUOTE

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,617,328

Exercised Options: $16,617,328

Current Obligation: $16,617,328

Parent Contract

Parent Award PIID: HHSP23320084551EB

IDV Type: BPA

Timeline