DoD's $2.2M Military Retirement Fund Audit by Kearney & Company Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $2,235,295 ($2.2M)

Contractor: Kearney & Company, P.C.

Awarding Agency: Department of Defense

Start Date: 2023-01-01

End Date: 2026-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $1.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FINANCIAL STATEMENT AUDIT OF THE MILITARY RETIREMENT FUND FOR FISCAL YEARS 2023-2027.

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22314

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $2.2 million to KEARNEY & COMPANY, P.C. for work described as: FINANCIAL STATEMENT AUDIT OF THE MILITARY RETIREMENT FUND FOR FISCAL YEARS 2023-2027. Key points: 1. The audit contract for the Military Retirement Fund is valued at $2.24 million. 2. Competition was full and open, suggesting potential for competitive pricing. 3. The contract's effectiveness and value for money warrant further examination. 4. The sector is professional services, specifically accounting and auditing.

Value Assessment

Rating: fair

The contract value of $2.24 million for a 4-year audit seems reasonable for the scope. However, without specific benchmarks for similar large-scale government fund audits, a definitive value assessment is challenging. Further analysis of the deliverables against industry standards is needed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which generally promotes competitive pricing. The impact on price discovery is positive, as multiple bidders likely submitted proposals, driving down costs.

Taxpayer Impact: Taxpayer impact is likely minimized due to competitive bidding, but the overall value for money still needs to be confirmed.

Public Impact

Ensures financial integrity of the Military Retirement Fund, impacting millions of service members and veterans. Provides an independent assessment of DoD's financial management, crucial for public trust. The audit results will inform future policy and resource allocation decisions for military personnel benefits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep or unforeseen complexities in auditing a large fund.
Reliance on contractor expertise may limit internal government oversight capacity.
Timeliness of audit completion and reporting is critical for actionable insights.

Positive Signals

Full and open competition should yield competitive pricing.
Experienced contractor selected, indicating a level of pre-qualification.
Clear contract duration and defined deliverables.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing for government entities. Benchmarks for similar large-scale federal financial statement audits are essential for a robust value assessment.

Small Business Impact

This contract was awarded under full and open competition, and there is no indication that small businesses were specifically targeted or excluded. The primary contractor is a large firm, suggesting limited direct opportunities for small businesses as subcontractors unless specifically included in the prime's plan.

Oversight & Accountability

The Department of Defense, through the Defense Finance and Accounting Service, is responsible for overseeing this contract. Standard government audit oversight procedures should be in place to ensure quality and adherence to the contract terms.

Related Government Programs

Offices of Certified Public Accountants
Department of Defense Contracting
Defense Finance and Accounting Service Programs

Risk Flags

Potential for audit findings that could impact the perceived stability of the fund.
Risk of delays in audit completion affecting timely financial reporting.
Dependence on contractor expertise may limit government's internal capacity building.
Ensuring the audit scope adequately covers all relevant financial aspects of the fund.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.2 million to KEARNEY & COMPANY, P.C.. FINANCIAL STATEMENT AUDIT OF THE MILITARY RETIREMENT FUND FOR FISCAL YEARS 2023-2027.

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 $2.2 million.

What is the period of performance?

Start: 2023-01-01. End: 2026-12-31.

What is the specific methodology used by Kearney & Company, and how does it align with best practices for auditing large retirement funds?

The specific methodology employed by Kearney & Company would typically involve risk assessment, internal control testing, substantive testing of financial statement assertions, and compliance with auditing standards (e.g., Generally Accepted Auditing Standards - GAAS, Government Auditing Standards - Yellow Book). Alignment with best practices requires adherence to these standards, focusing on the unique risks associated with retirement fund liabilities, investment valuations, and participant data.

How does the $2.24 million contract price compare to similar audits of large public or private retirement funds in terms of cost per dollar audited or per participant?

Benchmarking this contract's cost requires detailed comparison with similar audits. Factors like fund size, complexity of investments, number of participants, and specific audit scope significantly influence pricing. Without access to proprietary data or public reports on comparable audits, a precise cost-per-dollar or cost-per-participant benchmark is difficult to establish, making a definitive value assessment challenging.

What are the key performance indicators (KPIs) for this audit, and how will their achievement be measured to ensure effectiveness and taxpayer value?

Key performance indicators for this audit would likely include timeliness of deliverables (interim and final reports), accuracy and completeness of the audit opinion, adherence to the agreed-upon audit plan, and responsiveness to government inquiries. Effectiveness will be measured by the quality and reliability of the audit findings, the identification of any material weaknesses or significant deficiencies, and the overall contribution to the financial integrity of the Military Retirement Fund.

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: HQ042322Q0038

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: $2,881,405

Exercised Options: $2,235,295

Current Obligation: $2,235,295

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $710,974

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F031DA

IDV Type: FSS

Timeline