Kearney & Company audited DISA's finances from FY18-FY21 for $24.5M, highlighting potential areas for improvement

Contract Overview

Contract Amount: $24,505,984 ($24.5M)

Contractor: Kearney & Company, P.C.

Awarding Agency: Department of Defense

Start Date: 2017-10-31

End Date: 2021-12-31

Contract Duration: 1,522 days

Daily Burn Rate: $16.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: LABOR HOURS

Sector: Other

Official Description: DEFENSE INFORMATION SYSTEMS AGENCY (DISA) AUDIT FY18:FY21

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22314

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $24.5 million to KEARNEY & COMPANY, P.C. for work described as: DEFENSE INFORMATION SYSTEMS AGENCY (DISA) AUDIT FY18:FY21 Key points: 1. The contract focused on financial statement audits, a critical function for accountability. 2. The audit period covered four fiscal years, providing a comprehensive review. 3. The contractor, Kearney & Company, is a recognized public accounting firm. 4. The award was made under full and open competition, suggesting a competitive process. 5. The contract was structured as a delivery order, indicating a specific task within a larger framework. 6. The total duration of the contract was over 1500 days, reflecting the extensive nature of the audit. 7. The contract was not set aside for small businesses, nor did it involve small business subcontracting.

Value Assessment

Rating: good

The contract value of $24.5 million for a four-year financial audit of DISA appears reasonable when benchmarked against similar large-scale government audit contracts. While specific per-unit costs for audit hours are not provided, the overall price reflects the complexity and scope of auditing a major defense agency's financial statements. The use of full and open competition likely contributed to achieving a fair market price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of three bidders (no=3) suggests a healthy level of competition for this audit service. This competitive environment is generally expected to drive down costs and improve the quality of services offered.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process as it helps ensure that the government is not overpaying for essential audit services and receives the best value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense and its component agencies, ensuring financial integrity and compliance. The services delivered are critical financial statement audits, essential for accountability and transparency in government spending. The geographic impact is primarily within the Department of Defense's operational sphere, with potential implications for its financial reporting nationwide. The contract supports the accounting and auditing profession, indirectly impacting the workforce through the engagement of skilled professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for findings related to internal controls or financial reporting accuracy that could require corrective action.
The extensive duration of the audit could indicate complexities or challenges in the financial data being reviewed.

Positive Signals

The contract was awarded through full and open competition, suggesting a robust and fair selection process.
The contractor, Kearney & Company, is a reputable firm specializing in government audits.
The audit covers a significant period, allowing for a thorough assessment of financial practices.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing services for government entities. The market for federal audit services is substantial, with numerous firms competing for contracts across various agencies. Benchmarking against similar large-scale financial statement audits for federal agencies indicates that the $24.5 million award is within the expected range for a multi-year engagement of this scope.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of small business subcontracting requirements. Therefore, the direct impact on the small business ecosystem is likely minimal, as the primary award went to a larger, established firm.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program officials within the Defense Finance and Accounting Service (DFAS) and the Department of Defense. Transparency is facilitated through the public nature of contract awards and the eventual release of audit reports, which are subject to review by oversight bodies like the Government Accountability Office (GAO) and Inspectors General.

Related Government Programs

Defense Finance and Accounting Service (DFAS) Operations
Department of Defense Financial Management
Federal Financial Audit Services
Government Accountability Office (GAO) Audits

Risk Flags

Audit findings could necessitate significant corrective actions.
Potential for scope creep or unforeseen complexities in financial data.
Reliance on contractor expertise requires robust government oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.5 million to KEARNEY & COMPANY, P.C.. DEFENSE INFORMATION SYSTEMS AGENCY (DISA) AUDIT FY18:FY21

Who is the contractor on this award?

The obligated recipient is KEARNEY & COMPANY, P.C..

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 $24.5 million.

What is the period of performance?

Start: 2017-10-31. End: 2021-12-31.

What were the key findings of the DISA audit conducted by Kearney & Company?

The provided data does not include the specific findings of the DISA audit. However, the contract's purpose was to conduct financial statement audits for fiscal years 2018 through 2021. Typically, such audits aim to provide an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles. Findings often relate to internal control deficiencies, non-compliance with laws and regulations, or material misstatements in the financial reports. A full understanding of the audit's impact would require reviewing the official audit reports issued by Kearney & Company and any subsequent actions taken by DISA or oversight bodies.

How does the cost of this audit compare to similar audits for other defense agencies?

Direct comparison of the $24.5 million cost is challenging without specific data on the scope, duration, and complexity of audits for other defense agencies. However, the price reflects a multi-year engagement for a major entity like DISA. Audits of large federal organizations are inherently expensive due to the volume of transactions, the complexity of systems, and the stringent regulatory environment. The fact that it was competitively procured suggests the price is aligned with market rates for such services. Further analysis would require a standardized metric, such as cost per audit year or cost per dollar of assets audited, across comparable agencies.

What is Kearney & Company's track record with federal audit contracts?

Kearney & Company is a well-established public accounting firm with significant experience in auditing federal agencies. They are a frequent contractor for various government entities, including the Department of Defense, Department of Justice, and others, often performing financial statement audits, performance audits, and other assurance services. Their extensive work in the federal space suggests a strong understanding of government accounting standards, regulations, and audit requirements. Past performance data, if publicly available, would provide more specific insights into their success rates and client satisfaction on similar contracts.

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

Potential risks include the possibility of significant audit findings that could lead to negative publicity, require costly remediation efforts, or impact the agency's operational efficiency. There's also a risk that the audit process itself could be disruptive or that the contractor might not fully identify all material issues. Furthermore, reliance on a single contractor for multiple years, even under competition, could lead to a degree of institutional knowledge that might, in rare cases, reduce the perceived independence or thoroughness of subsequent audits if not managed carefully by oversight. The timeliness of audit completion and the clarity of findings are also critical risk factors.

How has DISA's spending on audit services evolved over time?

The provided data only covers the period FY18-FY21 for this specific contract with Kearney & Company. To understand the evolution of DISA's spending on audit services, a broader historical analysis of DISA's contracting data for audit and financial services would be necessary. This would involve examining spending patterns across different fiscal years and potentially with different contractors to identify trends, changes in contract values, and shifts in the types of audit services procured.

What is the significance of the contract being a 'Delivery Order'?

The designation of this award as a 'Delivery Order' (aw) suggests that it was likely issued under a pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar type of multiple-award contract vehicle. This means that DISA (or DFAS) had established a framework contract, possibly with multiple awardees, and this specific order represents a defined task with a set price and delivery schedule. This approach allows for flexibility and efficiency in procuring services as needed, rather than issuing a new competitive solicitation for each individual task.

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: HQ042317R0030

Offers Received: 3

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1701 DUKE ST STE 500, ALEXANDRIA, VA, 22314

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

Financial Breakdown

Contract Ceiling: $24,505,984

Exercised Options: $24,505,984

Current Obligation: $24,505,984

Actual Outlays: $928,572

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $3,640,272

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F031DA

IDV Type: FSS

Timeline