Ernst & Young LLP awarded $41.4M for cost management support, with 3 bidders in a full and open competition

Contract Overview

Contract Amount: $41,406,166 ($41.4M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Defense

Start Date: 2019-02-01

End Date: 2024-08-07

Contract Duration: 2,014 days

Daily Burn Rate: $20.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COST MANAGEMENT SUPPORT SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to ERNST & YOUNG LLP for work described as: COST MANAGEMENT SUPPORT SERVICES Key points: 1. Value for money appears fair given the extensive duration and scope of services. 2. Competition dynamics indicate a healthy market for these specialized services. 3. Risk indicators are moderate, primarily related to performance and cost overruns. 4. Performance context shows a long-term engagement for critical financial support. 5. Sector positioning places this contract within the professional services segment of government contracting.

Value Assessment

Rating: fair

The contract's total value of $41.4 million over its extended period suggests a moderate per-year cost. Benchmarking against similar cost management support contracts is challenging without more specific service details. However, the firm-fixed-price nature indicates an attempt to control costs upfront. The duration of the contract (over 5 years) implies a need for sustained support, which could justify the overall expenditure if the services are critical and effectively delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bidders participating. This level of competition is generally positive, suggesting that multiple firms were capable of meeting the requirements and that the government sought the best value. The presence of three bidders indicates a reasonably competitive market for these specialized cost management services, which should help in price discovery and achieving a fair market price.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging high-quality service delivery.

Public Impact

The Department of Defense benefits from enhanced financial oversight and management capabilities. Services delivered include critical cost management, accounting, and financial advisory support. The geographic impact is primarily within Washington D.C., where the agency is located. Workforce implications include the potential for specialized financial analysts and consultants to be engaged.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the long contract duration and evolving needs.
Ensuring consistent quality of service delivery across the entire contract period.
Managing potential cost increases if contract modifications are frequent.

Positive Signals

Firm-fixed-price contract type helps to establish cost certainty.
Full and open competition suggests a robust selection process.
Long-term engagement indicates a sustained need and potential for contractor expertise development.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and financial consulting. The market for these services within the federal government is substantial, with agencies consistently requiring expertise in cost management, auditing, and financial reporting. Comparable spending benchmarks would typically be found within the broader 'Management and Financial Consulting, Acquisition and Grants, and Engineering and Technical Services' categories, where significant federal outlays occur annually.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses, and the prime contractor, Ernst & Young LLP, is a large firm. There is no explicit information on subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless significant subcontracting opportunities are pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program managers within the Department of Defense. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon cost. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Financial Management Services
Audit and Accounting Services
Cost Estimation and Analysis
Department of Defense Financial Operations
Professional Services Contracts

Risk Flags

Long contract duration increases potential for scope creep and performance drift.
Firm-fixed-price contracts can shift cost overrun risk to the contractor.
Dependence on a single large contractor for critical financial support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to ERNST & YOUNG LLP. COST MANAGEMENT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $41.4 million.

What is the period of performance?

Start: 2019-02-01. End: 2024-08-07.

What is the historical spending trend for cost management support services within the Department of Defense over the last five fiscal years?

Analyzing historical spending trends for cost management support services within the Department of Defense (DoD) reveals a consistent and significant investment in financial and accounting expertise. While specific figures for this exact contract's category are not readily available without deeper database access, the DoD generally allocates billions annually to professional services, including financial management, auditing, and consulting. Spending in this area often fluctuates based on budget appropriations, specific program needs, and the complexity of financial operations. Periods of increased defense spending or major acquisition programs typically correlate with higher demand for cost management support. Conversely, budget constraints or program restructuring might lead to temporary dips. The trend generally shows a sustained need for these services due to the sheer scale and complexity of DoD's financial landscape, indicating that cost management support is a perennial requirement rather than a cyclical one.

How does the awarded price per year for this contract compare to similar cost management support contracts awarded by other federal agencies?

Directly comparing the awarded price per year for this Ernst & Young LLP contract to similar cost management support contracts across other federal agencies is complex without granular data on the specific services rendered, contract duration, and geographic location. However, the total award of $41.4 million over approximately 5.5 years (from Feb 2019 to Aug 2024) suggests an average annual value of roughly $7.5 million. This figure needs to be contextualized by the scope of work, which is described as 'COST MANAGEMENT SUPPORT SERVICES.' Large federal agencies, such as the General Services Administration (GSA) or the Department of the Treasury, often procure similar services. Benchmarking would involve identifying contracts with comparable North American Industry Classification System (NAICS) codes (like 541211 - Offices of Certified Public Accountants) and similar service descriptions. Given the specialized nature and the reputation of the contractor, this annual value appears within a reasonable range for significant federal support, though specific comparisons would require detailed analysis of contract line item numbers (CLINs) and performance work statements.

What are the key performance indicators (KPIs) used to evaluate Ernst & Young LLP's performance on this contract, and have they consistently met them?

Key Performance Indicators (KPIs) for cost management support services contracts typically revolve around accuracy, timeliness, efficiency, and the actionable nature of the financial advice provided. For this specific contract with Ernst & Young LLP, detailed public information on the exact KPIs and their fulfillment is not readily available. However, standard KPIs would likely include metrics such as the accuracy of cost projections, the timeliness of financial reports, the identification of cost-saving opportunities, adherence to deadlines for deliverables, and the overall satisfaction of the contracting officer's representative (COR). Performance evaluations are usually documented in Contractor Performance Assessment Reporting System (CPARS) reports. Without access to these specific CPARS data, it's impossible to definitively state whether Ernst & Young LLP has consistently met its KPIs. However, the continuation and value of the contract suggest satisfactory performance, as agencies typically do not extend or significantly fund contracts with consistently poor performance.

What is the track record of Ernst & Young LLP in delivering cost management support services to the federal government, particularly within the Department of Defense?

Ernst & Young LLP (EY) has a substantial and long-standing track record of providing a wide array of professional services, including cost management support, to the federal government, including the Department of Defense (DoD). As one of the 'Big Four' accounting firms, EY possesses extensive expertise in financial consulting, auditing, and advisory services. They have been awarded numerous contracts across various federal agencies over many years. Within the DoD specifically, EY has likely supported numerous initiatives related to financial management, budget analysis, audit readiness, and cost control. Their ability to secure and perform on large, complex contracts like this one indicates a demonstrated capacity to meet the rigorous requirements of federal agencies. While specific performance details for every contract are not always public, their continued presence and success in winning competitive bids suggest a generally positive track record and a high level of client satisfaction.

Are there any identified risks associated with this contract, such as potential cost overruns, schedule delays, or contractor performance issues?

Potential risks associated with any large, long-term federal contract, including this cost management support services agreement with Ernst & Young LLP, are multifaceted. Key risks include potential cost overruns, particularly if the firm-fixed-price structure is challenged by unforeseen complexities or scope changes that necessitate contract modifications. Schedule delays could arise from resource allocation issues, evolving government requirements, or external factors impacting project timelines. Contractor performance issues are always a possibility, ranging from the quality of deliverables to responsiveness and adherence to contract terms. For this specific contract, the long duration (over 5 years) increases the inherent risk of performance drift or the need for significant adaptation to changing government needs. While the firm-fixed-price nature aims to mitigate cost overrun risk for the government, it places the risk on the contractor. Robust oversight and clear communication channels are crucial to proactively manage these potential risks throughout the contract's lifecycle.

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: HQ003418R0198

Offers Received: 3

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: $41,406,167

Exercised Options: $41,406,167

Current Obligation: $41,406,166

Actual Outlays: $1,053,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ003419A0005

IDV Type: BPA

Timeline