DoD's $59M audit readiness contract awarded to Guidehouse Inc. shows mixed value and limited competition

Contract Overview

Contract Amount: $59,125,635 ($59.1M)

Contractor: Guidehouse Inc.

Awarding Agency: Department of Defense

Start Date: 2018-04-01

End Date: 2023-09-30

Contract Duration: 2,008 days

Daily Burn Rate: $29.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: LABOR HOURS

Sector: Other

Official Description: DEFENSE AGENCY AUDIT READINESS AND AUDIT/EXAM REMEDIATION SUPPORT

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $59.1 million to GUIDEHOUSE INC. for work described as: DEFENSE AGENCY AUDIT READINESS AND AUDIT/EXAM REMEDIATION SUPPORT Key points: 1. Contract value of $59.1M over five years suggests significant investment in audit support. 2. Awarded via full and open competition, but only two bids were received, indicating potential limitations in market engagement. 3. The contract's duration and scope point to a sustained need for specialized audit remediation services. 4. Performance context is crucial, as the effectiveness of audit readiness support directly impacts financial accountability. 5. Sector positioning within administrative management consulting highlights the specialized nature of the services required. 6. Risk indicators include potential for cost overruns if not managed tightly and reliance on a single contractor for critical functions.

Value Assessment

Rating: fair

Benchmarking the value for money on this contract is challenging without specific performance metrics and detailed cost breakdowns. However, the total award of $59.1 million over five years for audit readiness and remediation support suggests a substantial investment. Comparing this to similar contracts for management consulting services within the federal government, the per-year average of approximately $11.8 million falls within a reasonable range for complex, specialized support. The 'labor hours' pricing structure, while common, necessitates careful oversight to ensure efficiency and prevent scope creep, which could impact overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for broad market engagement. However, the receipt of only two bids suggests that the market for this specific type of highly specialized audit readiness and remediation support may be limited, or that the solicitation's requirements were very narrowly defined. A low number of bidders, even in a full and open competition, can sometimes lead to less aggressive pricing than a more robustly competed contract with multiple offers.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers by encouraging a wider range of offers, the limited number of bidders in this instance may have constrained the potential for significant price reductions that could have otherwise been achieved through more intense competition.

Public Impact

The Department of Defense benefits from improved financial transparency and auditability. Services delivered include support for audit readiness, examination, and remediation of financial statements. Geographic impact is primarily within the Department of Defense's financial operations, potentially across various installations. Workforce implications include the need for skilled financial auditors and management consultants within the DoD and its contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if labor hours are not efficiently managed.
Reliance on a limited number of bidders could indicate a lack of robust market competition for specialized services.
The effectiveness of audit remediation is critical; failure could lead to continued financial reporting issues.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
Contract duration provides stability for sustained audit readiness efforts.
Focus on critical financial audit functions supports government accountability.

Sector Analysis

The federal sector for administrative management and general management consulting services is substantial, with agencies frequently outsourcing specialized expertise. This contract fits within the broader market for professional services supporting government operations, particularly in areas requiring deep financial and regulatory knowledge. Comparable spending benchmarks for large-scale consulting engagements within federal agencies often run into tens or hundreds of millions of dollars, depending on the scope and duration. The demand for audit readiness support has grown significantly as federal agencies strive to meet stricter financial reporting requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, Guidehouse Inc., is a large business. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract award is likely minimal, unless Guidehouse Inc. voluntarily includes small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Finance and Accounting Service (DFAS) and the Department of Defense's Inspector General. Mechanisms for oversight likely include regular performance reviews, milestone tracking, and financial audits of contractor expenditures. Transparency is generally maintained through contract award databases and public reporting, though detailed performance data may be internal. The Inspector General's office would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Financial Management
Audit Remediation Services
Management and Consulting Services
Department of Defense Financial Operations
Government Accountability Office (GAO) Audits

Risk Flags

Limited competition despite full and open award.
Potential for cost overruns with labor hour contracts.
Effectiveness of audit remediation is critical and hard to quantify publicly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.1 million to GUIDEHOUSE INC.. DEFENSE AGENCY AUDIT READINESS AND AUDIT/EXAM REMEDIATION SUPPORT

Who is the contractor on this award?

The obligated recipient is GUIDEHOUSE INC..

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 $59.1 million.

What is the period of performance?

Start: 2018-04-01. End: 2023-09-30.

What is the track record of Guidehouse Inc. in providing similar audit readiness and remediation services to federal agencies?

Guidehouse Inc. has a significant track record in providing management consulting services, including those related to financial management, audit, and regulatory compliance, to various federal agencies. They have been involved in supporting financial statement audits, implementing financial systems, and assisting with audit readiness initiatives across departments like Defense, Health and Human Services, and others. Their experience often involves navigating complex federal financial regulations and reporting requirements. While specific details on past performance for this exact type of 'audit/exam remediation support' would require deeper dives into individual contract performance reports, Guidehouse's overall profile suggests they possess the requisite expertise and experience for such engagements. Their history includes work on large-scale federal financial transformation projects, indicating a capacity to handle substantial and complex contracts.

How does the awarded amount of $59.1 million compare to other federal contracts for similar audit support services?

The awarded amount of $59.1 million over a period of approximately five years (April 2018 to September 2023) averages around $11.8 million annually. This figure is substantial but falls within the expected range for large, complex federal contracts focused on specialized areas like audit readiness and remediation, particularly within a large agency like the Department of Defense. Many federal contracts for management and financial consulting services can range from several million to tens or even hundreds of millions of dollars, depending on the scope, duration, and criticality of the services. For instance, broader financial system modernization projects or comprehensive audit support across an entire agency could easily exceed this amount. Therefore, while significant, this contract's value appears commensurate with the specialized and sustained support required for DoD's audit functions.

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

Primary risks associated with this contract include potential cost overruns due to the 'labor hours' pricing structure, which requires diligent oversight to ensure efficiency and prevent scope creep. Another risk is the potential for contractor performance issues, where the quality or timeliness of the audit readiness and remediation support might not meet DoD's expectations, impacting financial reporting accuracy. Reliance on a single contractor for critical functions also poses a risk if the contractor faces challenges. Mitigation strategies likely involve robust contract management by DFAS, including performance monitoring, regular progress reviews, and potentially performance-based incentives or penalties. Clear statement of work, defined deliverables, and strong government oversight are crucial to managing these risks effectively and ensuring the contractor delivers the required value.

How effective has the contractor been in achieving the stated objectives of audit readiness and remediation?

Assessing the effectiveness of Guidehouse Inc. in achieving the stated objectives of audit readiness and remediation requires access to detailed performance reports, audit outcomes, and potentially Inspector General assessments related to this specific contract. Publicly available information typically focuses on contract awards and basic details, not granular performance metrics. However, the continued need for such services over a five-year period suggests an ongoing requirement, but not necessarily a complete resolution of audit challenges. The Department of Defense has historically faced significant challenges with auditability, and contracts like this are part of a broader, long-term effort. Without specific performance data, it's difficult to definitively state the effectiveness, but the sustained engagement implies a level of satisfaction or necessity from the agency's perspective.

What are the historical spending patterns for audit readiness and financial management support within the Department of Defense?

Historical spending patterns within the Department of Defense for audit readiness and financial management support have been substantial and have increased significantly over the past decade, driven by legislative mandates such as the National Defense Authorization Act (NDAA) requiring auditable financial statements. Agencies like DFAS, and the DoD components they support, have consistently allocated significant budgets towards financial improvement and audit remediation (FIAR) initiatives. This includes spending on internal resources, system upgrades, and extensive external consulting services. The total spending across the DoD for these functions can run into billions of dollars annually when considering all related efforts, including system implementations, process improvements, and direct audit support. Contracts like the one awarded to Guidehouse are indicative of this sustained, high-level investment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

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: HQ042317Q0009

Offers Received: 2

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1676 INTERNATIONAL DR STE 800, MC LEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $59,125,635

Exercised Options: $59,125,635

Current Obligation: $59,125,635

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F045DA

IDV Type: FSS

Timeline