Air Force FY17-21 Financial Audit by Ernst & Young LLP Cost $122M, Focused on DEAMS System
Contract Overview
Contract Amount: $122,193,108 ($122.2M)
Contractor: Ernst & Young LLP
Awarding Agency: Department of Defense
Start Date: 2017-09-07
End Date: 2021-12-31
Contract Duration: 1,576 days
Daily Burn Rate: $77.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: LABOR HOURS
Sector: Other
Official Description: IGF::CT::IGF AUDIT OF THE DEPARTMENT OF THE AIR FORCE GENERAL FUND AND WORKING CAPITAL FUND FINANCIAL STATEMENTS AND AN EXAMINATION OF THE STATEMENT ON STANDARDS FOR ATTESTATION ENGAGEMENTS, NO. 18 (SSAE18) OF THE DEFENSE ENTERPRISE ACCOUNTING AND MANAGEMENT SYSTEM (DEAMS).
Place of Performance
Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $122.2 million to ERNST & YOUNG LLP for work described as: IGF::CT::IGF AUDIT OF THE DEPARTMENT OF THE AIR FORCE GENERAL FUND AND WORKING CAPITAL FUND FINANCIAL STATEMENTS AND AN EXAMINATION OF THE STATEMENT ON STANDARDS FOR ATTESTATION ENGAGEMENTS, NO. 18 (SSAE18) OF THE DEFENSE ENTERPRISE ACCOUNTING AND MANAGEMENT SYSTEM (DEAMS). Key points: 1. The contract awarded to Ernst & Young LLP for financial statement audits represents a significant investment in financial integrity. 2. Competition was full and open, suggesting a robust market for audit services, though specific pricing benchmarks are absent. 3. Potential risks include reliance on a single audit firm and the complexity of auditing large defense systems like DEAMS. 4. The sector is professional services, specifically accounting and auditing, crucial for government accountability.
Value Assessment
Rating: questionable
The contract value of $122M for audit services over four years is substantial. Without specific per-unit cost data or comparison to similar large-scale government audits, it's difficult to definitively assess its value. The pricing appears to be based on labor hours, which can be variable.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple firms could bid. This method generally promotes competitive pricing. However, the final price is based on labor hours, which can lead to cost overruns if not managed effectively.
Taxpayer Impact: While competition aims for fair pricing, the total cost of $122M represents a significant taxpayer expenditure for ensuring financial accountability within the Air Force.
Public Impact
Ensures financial transparency and accountability for the Department of the Air Force's General and Working Capital Funds. Audits the critical Defense Enterprise Accounting and Management System (DEAMS), vital for financial operations. Provides an independent assessment of financial statements, building public trust in government spending. The audit's findings can lead to improvements in financial management and internal controls.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific performance metrics beyond audit completion.
- Potential for scope creep in complex system audits.
- Reliance on labor hours can obscure true cost efficiency.
- Audit findings may not be fully remediated.
Positive Signals
- Awarded through full and open competition.
- Addresses critical financial systems (DEAMS).
- Focuses on essential government oversight.
- Contract duration allows for comprehensive review.
Sector Analysis
This contract falls within the professional services sector, specifically accounting and auditing. Government spending on audits is benchmarked against the complexity and size of the entity being audited. The $122M expenditure reflects the scale of the Air Force's financial operations and the DEAMS system.
Small Business Impact
This contract does not appear to involve small businesses as prime contractors, as it was awarded to a large, established firm (Ernst & Young LLP). There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The contract is subject to standard government oversight for professional services. The Inspector General's involvement suggests a focus on accountability. However, the effectiveness of oversight depends on the rigor of reviews and the agency's responsiveness to audit findings.
Related Government Programs
- Offices of Certified Public Accountants
- Department of Defense Contracting
- Defense Finance and Accounting Service Programs
Risk Flags
- High contract value without clear cost-efficiency metrics.
- Complexity of auditing large-scale defense financial systems.
- Potential for cost overruns due to labor hour-based pricing.
- Dependence on a single audit firm for critical financial oversight.
- Lack of transparency on specific audit findings and remediation.
Tags
offices-of-certified-public-accountants, department-of-defense, va, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $122.2 million to ERNST & YOUNG LLP. IGF::CT::IGF AUDIT OF THE DEPARTMENT OF THE AIR FORCE GENERAL FUND AND WORKING CAPITAL FUND FINANCIAL STATEMENTS AND AN EXAMINATION OF THE STATEMENT ON STANDARDS FOR ATTESTATION ENGAGEMENTS, NO. 18 (SSAE18) OF THE DEFENSE ENTERPRISE ACCOUNTING AND MANAGEMENT SYSTEM (DEAMS).
Who is the contractor on this award?
The obligated recipient is ERNST & YOUNG 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 $122.2 million.
What is the period of performance?
Start: 2017-09-07. End: 2021-12-31.
What was the average hourly rate charged by Ernst & Young LLP for this contract, and how does it compare to industry benchmarks for similar government audit services?
The provided data does not include specific hourly rates or a breakdown of labor hours versus total cost. To determine the average hourly rate, the total contract value ($122,193,108.09) would need to be divided by the total labor hours expended. Without this information, a comparison to industry benchmarks for government audit services is not possible.
What were the key findings and recommendations from the audit, and what is the Air Force's plan for addressing them to mitigate financial risks?
The provided data focuses on the contract award details and does not include the specific findings or recommendations of the audit itself. To assess the effectiveness of the audit and identify potential financial risks, a review of the audit reports issued by Ernst & Young LLP and the Air Force's subsequent corrective action plans would be necessary.
How effectively did the full and open competition process ensure competitive pricing for these complex financial audit services, considering the final cost was based on labor hours?
While full and open competition theoretically drives competitive pricing, the reliance on labor hours for this contract introduces variability. The initial bids likely reflected anticipated labor needs and rates. However, without post-award cost analysis or comparison to fixed-price audits, it's challenging to definitively state how effectively competition translated into optimal taxpayer value over the contract's duration.
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: HQ042317Q0014
Offers Received: 1
Pricing Type: LABOR HOURS (Z)
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: $122,193,108
Exercised Options: $122,193,108
Current Obligation: $122,193,108
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00F290CA
IDV Type: FSS
Timeline
Start Date: 2017-09-07
Current End Date: 2021-12-31
Potential End Date: 2021-12-31 00:00:00
Last Modified: 2022-05-17
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