Army Corps of Engineers audit contract awarded to KPMG LLP for over $57 million

Contract Overview

Contract Amount: $57,174,427 ($57.2M)

Contractor: Kpmg LLP

Awarding Agency: Department of Defense

Start Date: 2018-02-09

End Date: 2022-12-31

Contract Duration: 1,786 days

Daily Burn Rate: $32.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UNITED STATES ARMY CORPS OF ENGINEERS CIVIL WORKS AND SUB-ALLOTTED FUNDS AUDIT

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 $57.2 million to KPMG LLP for work described as: UNITED STATES ARMY CORPS OF ENGINEERS CIVIL WORKS AND SUB-ALLOTTED FUNDS AUDIT Key points: 1. Value for money assessed through competitive bidding process. 2. Competition dynamics indicate a robust market for audit services. 3. Risk indicators are moderate given the nature of audit services. 4. Performance context is tied to the successful completion of audit objectives. 5. Sector positioning places this contract within the professional services for government sector.

Value Assessment

Rating: good

The contract value of $57.17 million for audit services over nearly four years appears reasonable when benchmarked against similar large-scale government audit contracts. The firm fixed-price structure suggests that the contractor assumed the primary risk for cost overruns, which can be advantageous for the government. However, a detailed cost breakdown and comparison to industry standard rates for CPA firms of KPMG's caliber would provide a more precise value assessment. Without specific performance metrics or a comparison to other bids, it's challenging to definitively state if this represents the absolute best value, but the competitive award suggests a fair market price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through a full and open competition, indicating that all eligible firms were invited to bid. The presence of three bidders suggests a healthy level of competition for this significant audit service requirement. A competitive process generally leads to better price discovery and encourages contractors to offer their most competitive terms and pricing to win the award. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would offer further insight into the strength of the competition.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are used efficiently by driving down costs through market forces. It provides assurance that the government is not overpaying for essential services and that the best qualified firm, at a competitive price, is selected.

Public Impact

The primary beneficiaries are the United States Army Corps of Engineers and the Department of Defense, who receive assurance of financial accountability. The service delivered is a comprehensive audit of civil works and sub-allotted funds, crucial for financial integrity. The geographic impact is national, covering the operations of the Army Corps of Engineers. Workforce implications include the employment of auditors and support staff by KPMG LLP.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if audit objectives are not clearly defined and managed.
Reliance on contractor's internal quality control processes for audit accuracy.
Timeliness of audit report delivery could impact corrective actions.

Positive Signals

Award to a reputable firm (KPMG LLP) with established expertise in government audits.
Firm fixed-price contract shifts cost overrun risk to the contractor.
Full and open competition suggests a competitive pricing environment.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and auditing services for government entities. The market for these services is substantial, with numerous large and small firms competing for federal contracts. The Army Corps of Engineers' significant budget and complex operations necessitate specialized audit functions, making this a key contract within the defense and civil infrastructure oversight domain. Comparable spending benchmarks would involve looking at other large federal audit contracts awarded to Big Four accounting firms.

Small Business Impact

This contract was awarded through full and open competition and does not appear to have a specific small business set-aside. While KPMG LLP is a large business, the subcontracting opportunities generated by this contract could potentially benefit small businesses if KPMG chooses to engage them for specialized support or services. However, without explicit subcontracting plans or goals mandated in the contract, the direct impact on the small business ecosystem is uncertain.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the administrative contracting officer at the Department of Defense or the Defense Finance and Accounting Service. Performance monitoring, adherence to the contract terms, and quality of deliverables are key oversight functions. Transparency is generally maintained through contract award databases and public reporting, though the detailed audit findings themselves may not be fully public. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Department of Defense Audit Services
Army Corps of Engineers Financial Management
Federal Audit and Accounting Services
Government Accountability Office Audits

Risk Flags

Contract Duration
Large Contract Value
Audit Service Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.2 million to KPMG LLP. UNITED STATES ARMY CORPS OF ENGINEERS CIVIL WORKS AND SUB-ALLOTTED FUNDS AUDIT

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 $57.2 million.

What is the period of performance?

Start: 2018-02-09. End: 2022-12-31.

What is KPMG LLP's track record with federal audit contracts?

KPMG LLP is a well-established global network of professional services firms and has a significant track record of performing audits for various U.S. federal agencies. They are one of the 'Big Four' accounting firms and regularly compete for and win large government contracts, including those for financial statement audits, compliance audits, and performance audits. Their experience typically spans complex financial systems and regulatory environments common in government. Specific to this contract, their past performance would have been evaluated during the procurement process. Federal contract databases often contain performance ratings and past performance questionnaires submitted by agencies for awarded contracts, which would provide detailed insights into their reliability and quality of service on similar engagements.

How does the $57.17 million contract value compare to similar federal audit contracts?

Benchmarking the $57.17 million contract value requires comparing it to similar large-scale federal audit contracts awarded to major accounting firms. Contracts for comprehensive audits of large agencies or complex programs, such as those managed by the Army Corps of Engineers, often run into tens of millions of dollars over multiple years. For instance, audits for agencies like the Department of Defense's financial statements, the Department of Homeland Security, or large infrastructure projects can command similar or even higher values depending on scope, duration, and complexity. The firm fixed-price nature of this contract also implies that KPMG assumed significant cost risk, which is a factor in pricing. A direct comparison would ideally involve looking at the number of audit hours, the complexity of the systems audited, and the specific audit standards applied in other comparable contracts.

What are the primary risks associated with this audit contract?

The primary risks associated with this audit contract include potential scope creep, where the audit's objectives may expand beyond the initial agreement, leading to increased costs or delays if not managed properly. There's also a risk related to the quality and accuracy of the audit itself; if the audit is flawed, it could lead to incorrect financial reporting or missed compliance issues. Another risk is the contractor's ability to meet deadlines, as timely delivery of audit reports is crucial for accountability and corrective actions. Furthermore, reliance on the contractor's personnel and their adherence to professional standards introduces a risk of human error or inadequate expertise. The government's risk is somewhat mitigated by the firm fixed-price structure, which shifts cost overrun risk to KPMG, but risks related to performance quality and timeliness remain.

How effective is the full and open competition process in ensuring value for this type of service?

The full and open competition process is generally considered highly effective in ensuring value for professional services like audits. By allowing all responsible sources to submit bids, it fosters a competitive environment where multiple firms vie for the contract. This competition drives down prices as firms offer their best rates to win the award. It also encourages innovation and the presentation of diverse approaches to meeting the government's needs. For an audit contract of this magnitude, having multiple bidders (in this case, three) suggests that the market is sufficiently robust to support competition. The evaluation process, which typically includes technical merit and price, helps the agency select the offer that represents the best overall value, not just the lowest price. This process provides a strong basis for believing that the government achieved a fair market price and selected a capable provider.

What are the historical spending patterns for audit services by the Army Corps of Engineers?

Historical spending patterns for audit services by the Army Corps of Engineers (USACE) would likely show a consistent need for financial audits due to the scale and complexity of its civil works and military programs. USACE manages vast budgets and numerous projects, necessitating regular and thorough financial oversight. Spending in this area would typically be allocated through appropriations for financial management and audit functions. Over the years, the agency would have engaged various audit firms, potentially including the 'Big Four' and other specialized government audit contractors, through competitive procurements. The total annual spending on audits can fluctuate based on specific program requirements, regulatory changes, and the lifecycle of major projects. Analyzing past contract awards and their values would reveal trends in spending levels and the types of audit services procured.

What are the implications of the 'Delivery Order' contract type for this audit?

The 'Delivery Order' contract type, in this context, likely refers to a type of indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar vehicle where specific tasks or orders are issued against a master contract. For an audit service spanning several years, this structure allows the Army Corps of Engineers flexibility. Instead of awarding a single, massive contract upfront, they can issue delivery orders for specific audit phases, periods, or components of the overall audit as needed. This approach helps manage the project timeline and budget more effectively. It also allows for adjustments to the scope or focus of the audit based on evolving needs or findings from previous phases. The total value ($57.17 million) represents the cumulative value of all delivery orders issued under this contract.

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: HQ042318Q0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kpmg L.L.P.

Address: 8350 BROAD ST STE 900, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $57,174,427

Exercised Options: $57,174,427

Current Obligation: $57,174,427

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $6,047,491

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F275CA

IDV Type: FSS

Timeline