DoD's $2.65M audit contract for financial reporting services awarded to Kearney & Company, P.C

Contract Overview

Contract Amount: $2,653,074 ($2.7M)

Contractor: Kearney & Company, P.C.

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2026-09-30

Contract Duration: 1,460 days

Daily Burn Rate: $1.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE FINANCIAL REPORTING SERVICE FOR FY23.

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22314

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $2.7 million to KEARNEY & COMPANY, P.C. for work described as: DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE FINANCIAL REPORTING SERVICE FOR FY23. Key points: 1. Contract awarded through a broad agency announcement (BAA) call, indicating a specific research or development focus. 2. The contract duration of 1460 days suggests a long-term need for these audit services. 3. The firm-fixed-price contract type aims to provide cost certainty for the government. 4. This contract falls under the 'Offices of Certified Public Accountants' North American Industry Classification System (NAICS) code. 5. The award was made to a single contractor, raising questions about the extent of competition. 6. The contract is not set aside for small businesses, suggesting larger firms are expected to compete.

Value Assessment

Rating: fair

The contract value of $2.65 million over approximately four years for audit services is moderate. Benchmarking against similar large-scale financial audit contracts for federal agencies is difficult without more specific service details. However, the firm-fixed-price structure suggests an attempt to control costs. The absence of a specific per-unit cost makes direct value-for-money assessment challenging without further context on the scope of work and deliverables.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that all responsible sources were permitted to submit offers. However, the award was made via a BPA Call, which can sometimes streamline the process for pre-qualified vendors or specific project types. The number of bids received (4) indicates some level of interest, but it's not exceptionally high for a federal contract of this nature. This level of competition is generally adequate but could potentially lead to higher prices than a more intensely bid contract.

Taxpayer Impact: A moderate level of competition ensures that taxpayer funds are not excessively inflated due to a lack of viable alternatives. However, with only four bidders, there's a possibility that more competitive pricing could have been achieved with broader outreach.

Public Impact

The primary beneficiary is the Department of Defense, which will receive assurance on the accuracy of its financial reporting. The services delivered are critical for maintaining financial accountability and transparency within the federal government. The geographic impact is national, as the audit covers the entirety of the DoD's financial reporting. The contract supports the accounting and auditing profession, likely involving skilled personnel from the contracting firm.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (4) may indicate potential for higher costs than a more competitive scenario.
Reliance on a BPA Call mechanism might limit the visibility of the full competitive landscape.
The specific scope of 'financial reporting services' is broad and could encompass significant complexity, impacting cost and risk.

Positive Signals

Awarded under full and open competition, ensuring a broad range of potential contractors could participate.
Firm-fixed-price contract type provides cost predictability for the government.
The contract duration suggests a stable, long-term need for essential audit services.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing. The market for federal audit services is substantial, with numerous firms, including large public accounting firms and specialized government contractors, vying for these engagements. The DoD, as a massive entity, requires extensive auditing to ensure compliance and financial integrity. This contract represents a portion of the broader federal spending on professional services aimed at oversight and accountability.

Small Business Impact

This contract was not set aside for small businesses, as indicated by the 'ss' field being false. This suggests that the scope and nature of the services required were deemed more suitable for larger, established firms with the capacity to handle complex federal audits. There are no explicit subcontracting requirements mentioned, but large prime contractors often engage smaller specialized firms, though this is not guaranteed.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The Defense Finance and Accounting Service (DFAS) will likely oversee the performance and deliverables. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is generally maintained through contract databases like FPDS, where basic award information is publicly available. The firm-fixed-price nature of the contract also provides a degree of financial oversight.

Related Government Programs

Department of Defense Financial Statement Audits
Federal Audit Services
Government Contract Auditing
Financial Management Services

Risk Flags

Potential for limited competition despite 'full and open' designation due to BPA Call mechanism.
Complexity of DoD financial reporting may pose challenges for audit scope and timely completion.
Contract value may not fully reflect the extensive nature of DoD's financial audit needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.7 million to KEARNEY & COMPANY, P.C.. DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE FINANCIAL REPORTING SERVICE FOR FY23.

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 $2.7 million.

What is the period of performance?

Start: 2022-10-01. End: 2026-09-30.

What is the track record of Kearney & Company, P.C. with federal audit contracts?

Kearney & Company, P.C. has a significant history of performing audit and financial services for various federal agencies. They are a prominent firm specializing in government audits, including those for the Department of Defense and other large federal entities. Their experience typically includes audits of financial statements, internal controls, and compliance. Publicly available data often shows them as a frequent awardee of such contracts, indicating a strong presence and established relationship within the federal contracting space. Their track record suggests they possess the necessary expertise and clearances to handle complex government financial audits, contributing to their repeated selection for these critical services.

How does the $2.65 million contract value compare to similar DoD financial audit contracts?

The $2.65 million contract value for financial reporting audit services over approximately four years is within a moderate range for large federal agencies. However, the Department of Defense's financial operations are vast, and the total cost of comprehensive audits can run into tens or even hundreds of millions of dollars annually, often spread across multiple contracts and firms. This specific contract's value should be considered in the context of its defined scope. If it covers a specific component or a particular phase of the audit, it might be typical. If it represents a significant portion of the overall audit effort, it could be considered on the lower end, potentially indicating a more focused or specialized audit objective compared to broader, more expensive engagements.

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

Key risks for this audit contract include scope creep, where the requirements expand beyond the initial agreement, potentially leading to cost overruns or delays, although the firm-fixed-price structure mitigates some financial risk. Another risk is the potential for findings that reveal significant control deficiencies or material misstatements in the DoD's financial reporting, which could have reputational and operational consequences. Contractor performance risk, such as the quality of the audit work or adherence to deadlines, is also present, though mitigated by the contractor's experience. Finally, there's a risk related to the complexity of the DoD's financial systems, which can make audits challenging and time-consuming, potentially impacting the efficiency and effectiveness of the audit process.

How effective are full and open competitions for specialized audit services like this?

Full and open competition is generally considered the most effective method for ensuring fair pricing and access to the widest range of qualified contractors for specialized services like federal audits. It allows agencies to solicit proposals from all interested and capable firms, fostering a competitive environment that can drive down costs and improve service quality. For specialized areas like DoD audits, this approach ensures that firms with the specific expertise, certifications, and security clearances required are identified and considered. While it can be more time-consuming than other methods, the benefits of broader competition often outweigh the administrative effort, leading to better value for taxpayer money and increased confidence in the integrity of the awarded services.

What is the historical spending trend for financial audit services within the Department of Defense?

Historical spending on financial audit services within the Department of Defense has been substantial and generally increasing over the years, driven by legislative mandates like the Chief Financial Officers Act and the National Defense Authorization Acts, which require annual audits of the DoD's financial statements. The DoD has faced significant challenges in achieving audit readiness and clean audit opinions, leading to sustained and often increased investment in audit support services. This includes contracts for independent public accounting firms to conduct financial statement audits, as well as internal efforts and support services to improve financial management systems and processes. Spending fluctuates based on specific audit requirements, agency priorities, and the success of audit remediation efforts.

What is the significance of the 'BPA CALL' award mechanism for this contract?

A Blanket Purchase Agreement (BPA) Call signifies that this contract was issued under an existing BPA. BPAs are simplified acquisition vehicles that agencies can use to streamline the procurement of recurring goods or services from pre-approved vendors. A 'BPA Call' is essentially an order placed against that BPA. This mechanism is often used for specific projects or task orders that fall within the scope of the established BPA. For this audit contract, it suggests that Kearney & Company, P.C. was likely already a pre-qualified vendor under a broader DoD BPA, and this specific audit requirement was then fulfilled through a call against that agreement. This can expedite the procurement process compared to a full and open competition from scratch.

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

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: E.F. Kearney, Limited

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: $3,393,450

Exercised Options: $2,653,074

Current Obligation: $2,653,074

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ042321A5002

IDV Type: BPA

Timeline