KPMG LLP awarded $40.8M for USACE FY09 Financial Statement Audit Services, a task order under a GSA contract

Contract Overview

Contract Amount: $40,801,509 ($40.8M)

Contractor: Kpmg LLP

Awarding Agency: Department of Defense

Start Date: 2009-01-01

End Date: 2013-12-31

Contract Duration: 1,825 days

Daily Burn Rate: $22.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: USACE FY09 FINANCIAL STATEMENT AUDIT SERVICES GSA TASK ORDER BASE PERIOD POP 01/01/09-12/31/09.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20036

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $40.8 million to KPMG LLP for work described as: USACE FY09 FINANCIAL STATEMENT AUDIT SERVICES GSA TASK ORDER BASE PERIOD POP 01/01/09-12/31/09. Key points: 1. The contract value of $40.8M for a 5-year audit period suggests a significant engagement for financial statement assurance. 2. Competition dynamics for this task order are not fully detailed, but the contract type indicates a competitive process. 3. The firm fixed-price contract type aims to control costs and transfer risk to the contractor. 4. The duration of 5 years for the audit services provides a stable period for performance and oversight. 5. The specific nature of financial statement audit services points to a need for specialized accounting and auditing expertise. 6. The award to KPMG LLP, a major accounting firm, suggests a focus on established and reputable service providers for critical financial functions.

Value Assessment

Rating: good

The total award of $40.8 million over five years for financial statement audit services for the USACE represents a substantial investment. Benchmarking this against similar large-scale government audit contracts is challenging without more specific service details. However, the firm fixed-price structure suggests an effort to establish a predictable cost for the government. The price per year averages over $8 million, which for a comprehensive financial audit of a major agency component like USACE, appears within a reasonable range for a 'Big Four' accounting firm.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit a bid. While the specific number of bidders for this particular task order is not provided, the 'full and open' designation suggests a competitive environment. This approach is generally intended to foster price discovery and ensure the government receives the best value by considering a wide range of potential contractors.

Taxpayer Impact: A full and open competition generally benefits taxpayers by promoting a competitive marketplace, which can lead to more favorable pricing and a wider selection of qualified contractors, ultimately driving down costs and improving service quality.

Public Impact

The primary beneficiaries are the U.S. Army Corps of Engineers (USACE) and the Department of Defense, ensuring compliance with financial reporting requirements. The services delivered are critical for the accurate auditing of financial statements, supporting accountability and transparency in federal spending. The geographic impact is national, covering the extensive operations of the USACE across various districts and projects. The contract supports specialized professional services, employing certified public accountants and audit professionals within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in audit requirements over the 5-year period if not managed tightly.
Reliance on a single large firm for a critical function could pose continuity risks if performance issues arise.
Ensuring the audit firm maintains independence and objectivity throughout the engagement is paramount.

Positive Signals

Award to a reputable firm like KPMG suggests a high likelihood of competent and timely service delivery.
The firm fixed-price contract structure provides cost certainty for the government.
The full and open competition process indicates a commitment to seeking the best value from the market.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing. The market for federal audit services is dominated by a few large public accounting firms, often referred to as the 'Big Four'. Government agencies like the USACE require these specialized services to meet stringent financial reporting and accountability mandates. Spending on audit and financial services by the federal government is substantial, driven by regulatory requirements and the need for independent verification of financial statements.

Small Business Impact

The contract was awarded to KPMG LLP, a large public accounting firm, and there is no indication of a small business set-aside. Therefore, this specific task order does not directly benefit small businesses through set-aside provisions. However, large prime contractors like KPMG often utilize small businesses for subcontracting opportunities, though the extent of this in audit services may be limited due to the specialized nature of the work.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Finance and Accounting Service (DFAS) and the USACE contracting officers. The firm fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated through the contract award process and reporting requirements. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

GSA Federal Supply Schedule Contracts
Department of Defense Financial Management
US Army Corps of Engineers Operations
Federal Audit Services
Financial Statement Auditing

Risk Flags

Potential for contractor performance issues
Risk of audit scope expansion
Ensuring auditor independence and objectivity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.8 million to KPMG LLP. USACE FY09 FINANCIAL STATEMENT AUDIT SERVICES GSA TASK ORDER BASE PERIOD POP 01/01/09-12/31/09.

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Finance and Accounting Service).

What is the total obligated amount?

The obligated amount is $40.8 million.

What is the period of performance?

Start: 2009-01-01. End: 2013-12-31.

What is the track record of KPMG LLP in performing similar large-scale federal financial statement audits?

KPMG LLP is one of the largest and most reputable public accounting firms globally, often referred to as one of the 'Big Four'. They have extensive experience auditing financial statements for both private sector corporations and government entities. For federal agencies, KPMG has a history of performing audits for various departments and components, including defense agencies. Their track record typically involves adherence to Generally Accepted Auditing Standards (GAAS), Government Auditing Standards (GAS), and specific agency requirements. While specific performance metrics for past federal audits are not detailed here, their market position suggests a consistent ability to meet the complex demands of large-scale government financial audits, including those for entities with significant operational budgets and complex financial structures like the USACE.

How does the awarded amount compare to other federal financial statement audit contracts of similar scope?

The total award of $40.8 million over five years for the USACE financial statement audit equates to an average annual cost of approximately $8.16 million. Comparing this precisely to other federal audit contracts is difficult without knowing the exact scope, complexity, and specific requirements of those other audits. However, for a major component of the Department of Defense with extensive operations like the USACE, engaging a 'Big Four' accounting firm for a comprehensive financial statement audit would typically fall within this range. Smaller agencies or those with less complex financial operations would likely incur lower costs. The firm fixed-price nature of this contract also implies a defined scope, which aids in cost comparison, but variations in audit standards, reporting requirements, and the volume of transactions can significantly influence pricing across different federal entities.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential for audit scope to expand beyond initial expectations (scope creep), contractor performance issues (e.g., delays, quality of work), and maintaining auditor independence and objectivity. Scope creep is mitigated through clear contract definition, robust change control processes, and close monitoring by the government contracting officer. Contractor performance is managed through performance standards, regular progress reviews, and the firm fixed-price structure which incentivizes efficient delivery. Auditor independence is a critical regulatory and ethical requirement, overseen by professional standards and government regulations, with mechanisms in place to address any perceived or actual conflicts of interest. The government's ability to terminate the contract for default also serves as a risk mitigation tool.

What is the historical spending pattern for financial statement audit services for the USACE or similar entities?

Historical spending patterns for financial statement audit services for the USACE or similar large defense entities are typically substantial and recurring, given the ongoing nature of financial operations and regulatory requirements. Agencies like the USACE, which manage vast budgets and complex projects, require annual audits. Spending in this area is often driven by legislative mandates, such as the Federal Financial Management Improvement Act and the National Defense Authorization Acts, which require audited financial statements. While specific historical dollar amounts for USACE audits prior to this contract are not provided in the data, it's reasonable to assume consistent annual expenditures in the millions of dollars for such services, often awarded through competitive processes or task orders against GSA schedules. Fluctuations might occur based on changes in audit scope, regulatory emphasis, or contractor selection.

How does the 'full and open competition' process impact the value received by taxpayers for these audit services?

A 'full and open competition' process is designed to maximize value for taxpayers by fostering a competitive environment. This means that multiple qualified firms can bid on the contract, leading to a wider range of proposals and potentially lower prices due to market pressures. It allows the government to compare different approaches and pricing structures, theoretically selecting the offer that provides the best combination of technical capability and cost-effectiveness. For taxpayers, this translates to a greater likelihood that the government is not overpaying for essential audit services and that the services rendered are of high quality, ensuring accountability in the use of public funds. The transparency inherent in such a process also builds public trust.

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

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kpmg L.L.P. (UEI: 001667906)

Address: 1676 INTERNATIONAL DR, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $40,801,509

Exercised Options: $40,801,509

Current Obligation: $40,801,509

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F8127H

IDV Type: FSS

Timeline