Air Force's $192.6M audit contract with Ernst & Young LLP awarded under full and open competition

Contract Overview

Contract Amount: $192,626,595 ($192.6M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Defense

Start Date: 2022-01-01

End Date: 2026-12-31

Contract Duration: 1,825 days

Daily Burn Rate: $105.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: Other

Official Description: UNITED STATES AIR FORCE AUDIT FISCAL YEARS 2022-2026

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $192.6 million to ERNST & YOUNG LLP for work described as: UNITED STATES AIR FORCE AUDIT FISCAL YEARS 2022-2026 Key points: 1. Contract awarded for audit services, a critical function for financial accountability. 2. Full and open competition suggests a robust market for these services. 3. The contract duration of five years indicates a long-term need for audit support. 4. The contract is structured as a delivery order, allowing for flexibility in tasking. 5. The specific NAICS code (541211) points to a specialized accounting service market. 6. The contract's value is significant, reflecting the scale of the Air Force's financial operations.

Value Assessment

Rating: good

The contract value of $192.6 million over five years for audit services appears reasonable given the scope of the United States Air Force's financial operations. Benchmarking against similar large-scale government audit contracts would provide further context, but the price per year ($38.5 million) for a comprehensive audit of a major military branch suggests a competitive market has been leveraged. The absence of specific performance metrics in the provided data makes a definitive value assessment challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. This suggests a healthy competitive environment for federal audit services. The specific number of bidders is not provided, but the 'full and open' designation implies multiple interested parties likely participated, which generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: Taxpayers benefit from full and open competition as it drives down prices through market forces. This process ensures that the government is not locked into a single provider, fostering efficiency and potentially leading to savings that can be reinvested or reduce the overall tax burden.

Public Impact

The primary beneficiary is the United States Air Force, which receives essential audit services to ensure financial integrity. The services delivered are critical for maintaining accountability and transparency in federal spending. The geographic impact is nationwide, covering all operations of the Air Force. The contract supports the accounting and auditing profession, potentially involving a significant number of certified public accountants and auditors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if delivery orders are not tightly managed.
Reliance on a single contractor for a critical function over a long period.
Ensuring consistent quality of audit services across all delivery orders.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
Contract duration allows for continuity of essential audit services.
The contractor, Ernst & Young LLP, is a well-established firm with significant experience.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically accounting and auditing services. The market for these services is large and competitive, with numerous firms capable of performing large-scale government audits. The Air Force's spending on audits is a necessary component of its overall financial management, reflecting the complexity and scale of its operations. Comparable spending benchmarks would involve looking at audit contracts for other large federal agencies or defense branches.

Small Business Impact

The provided data does not indicate any small business set-aside or subcontracting requirements for this contract. As a large contract awarded to a major accounting firm, it is unlikely to have direct set-aside provisions. However, the prime contractor may engage small businesses for specialized support services, though this is not explicitly stated.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the contracting officer at the Defense Finance and Accounting Service (DFAS). The Inspector General of the Department of Defense would also have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is facilitated through contract award databases like FPDS, though detailed performance reports are often internal.

Related Government Programs

Department of Defense Financial Improvement and Audit Readiness (FIAR) Program
Federal Audit Services
Government Accountability Office (GAO) Audits
Defense Contract Audit Agency (DCAA) Services

Risk Flags

Potential for audit findings impacting financial reporting.
Contractor performance risk over a multi-year period.
Ensuring consistent quality across delivery orders.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $192.6 million to ERNST & YOUNG LLP. UNITED STATES AIR FORCE AUDIT FISCAL YEARS 2022-2026

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 $192.6 million.

What is the period of performance?

Start: 2022-01-01. End: 2026-12-31.

What is the track record of Ernst & Young LLP in performing large-scale federal government audits?

Ernst & Young LLP (EY) is one of the 'Big Four' accounting firms and has extensive experience performing audits for large, complex organizations, including numerous federal government agencies. They have a long history of providing audit, tax, and advisory services to entities across various sectors. For federal contracts, EY has been awarded numerous prime contracts and subcontracts for financial statement audits, performance audits, and internal control assessments. Their track record generally indicates a capacity to handle the scale and complexity required for an organization like the U.S. Air Force. Specific performance details on past government contracts, such as timeliness, audit findings, and client satisfaction, would require deeper analysis of contract performance reports and agency evaluations, which are not publicly detailed in this summary.

How does the value of this contract compare to similar audit services for other branches of the military or large federal agencies?

The $192.6 million contract for the Air Force's audit over five years equates to approximately $38.5 million annually. This figure is substantial but needs to be contextualized against the sheer scale and complexity of the Air Force's financial operations. For comparison, the U.S. Army's audit contracts have also been in the tens of millions annually, and the Department of the Treasury's financial statement audits are also multi-million dollar endeavors. The 'Big Four' accounting firms typically hold these types of large-scale government audit contracts. While precise year-over-year comparisons are difficult without knowing the exact scope and deliverables for each agency's audit, the Air Force's contract value appears to be in the expected range for comprehensive audit services for a major federal entity of its size and budget.

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

Key risks include potential for audit findings that reveal significant financial control weaknesses, leading to corrective action requirements and potential reputational damage for the Air Force. There's also the risk of contractor performance issues, such as missed deadlines or inadequate audit depth, although the competitive award and ongoing oversight aim to mitigate this. Another risk is the potential for cost overruns if the scope of work expands beyond initial estimates, managed through the delivery order structure and oversight. Mitigation strategies involve robust contract oversight by DFAS and DCMA, clear performance standards, regular progress reviews, and the inherent accountability of a large, reputable contractor like EY. The Inspector General's office also provides an oversight layer.

What is the historical spending pattern for audit services by the United States Air Force?

Historical spending on audit services by the U.S. Air Force, and the Department of Defense more broadly, has significantly increased in recent years, driven by legislative mandates like the National Defense Authorization Act requiring auditable financial statements. Prior to these mandates, comprehensive financial statement audits were less common or performed differently. The award of this $192.6 million contract reflects a sustained, large-scale investment in audit capabilities necessary to meet these new financial reporting requirements. Previous contracts may have been smaller in scope or focused on specific areas rather than a full audit of the Air Force's financial statements. The trend indicates a growing and sustained commitment to financial accountability.

How does the 'full and open competition' award mechanism impact the cost-effectiveness for taxpayers?

Awarding the contract through 'full and open competition' is generally highly beneficial for taxpayers. This process allows any qualified firm to submit a proposal, fostering a competitive environment where multiple bidders vie for the contract. This competition typically drives down prices as firms offer their best rates to win the business. It also encourages innovation and efficiency as contractors seek to differentiate themselves. For taxpayers, this means the government is more likely to secure audit services at a fair market price, avoiding the potential overpricing that can occur with sole-source or limited-competition contracts. The selection of Ernst & Young LLP under this mechanism suggests they offered the best value proposition among competing firms.

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: HQ042321Q0014

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: $207,970,997

Exercised Options: $193,429,892

Current Obligation: $192,626,595

Actual Outlays: $3,195,914

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $6,440,537

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F290CA

IDV Type: FSS

Timeline