Ernst & Young LLP awarded $59.2M for Joint Financial Operations and Systems Support by DoD

Contract Overview

Contract Amount: $59,227,112 ($59.2M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2024-08-31

Contract Duration: 1,796 days

Daily Burn Rate: $33.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: LABOR HOURS

Sector: Other

Official Description: JOINT FINANCIAL OPERATIONS AND SYSTEMS SUPPORT

Place of Performance

Location: SCOTT AFB, SAINT CLAIR County, ILLINOIS, 62225

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $59.2 million to ERNST & YOUNG LLP for work described as: JOINT FINANCIAL OPERATIONS AND SYSTEMS SUPPORT Key points: 1. Contract value of $59.2M over nearly 5 years suggests a significant investment in financial operations and systems. 2. The contract was awarded under full and open competition, indicating a potentially competitive bidding process. 3. The use of labor hours pricing may introduce cost variability depending on actual hours worked. 4. The award to Ernst & Young LLP, a large professional services firm, aligns with the complexity of financial systems support. 5. The contract's duration of 1796 days (approx. 5 years) allows for sustained support and system development. 6. The 'IL' (Illinois) state code suggests a primary performance location within the state.

Value Assessment

Rating: good

The contract value of $59.2 million over approximately five years for financial operations and systems support appears reasonable given the scope. Benchmarking against similar large-scale financial system support contracts would provide a more precise value-for-money assessment. The use of labor hours, while common, necessitates careful monitoring to ensure efficiency and prevent cost overruns compared to fixed-price arrangements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The presence of 3 bidders indicates a moderate level of competition. A higher number of bidders typically leads to more competitive pricing and a wider range of innovative solutions, but three bidders still provide a basis for price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and encouraging a broader pool of contractors to vie for government work.

Public Impact

The Department of Defense benefits from enhanced financial operations and integrated systems. Military personnel and civilian staff involved in financial management will likely experience improved tools and processes. The contract supports the operational readiness and financial integrity of USTRANSCOM. The primary geographic impact is likely within Illinois, where the contract is registered.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep due to labor hour pricing if not closely managed.
Dependence on a single large contractor for critical financial systems could pose a risk if performance falters.
Ensuring adequate knowledge transfer and documentation to mitigate risks associated with contractor personnel turnover.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Long-term contract duration allows for stability and continuity of essential financial services.
Ernst & Young LLP is a well-established firm with significant experience in government contracting and financial services.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and financial management support. The market for such services is large and competitive, with numerous firms offering expertise in financial systems, auditing, and operational efficiency. Government spending in this area is crucial for maintaining financial accountability and operational effectiveness across various agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals, the direct impact on the small business ecosystem is likely minimal, though large prime contractors often engage small businesses for specialized support.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within USTRANSCOM. Performance metrics and deliverables would be monitored to ensure compliance with contract terms. Transparency is facilitated through contract award databases, though detailed performance reports may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Financial Management Systems Support
Accounting Services
IT Systems Integration
Professional Services Contracts
Department of Defense IT Spending

Risk Flags

Potential for cost overruns due to labor hour contract type.
Contract performance risk associated with reliance on a single large provider.
Need for robust oversight to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.2 million to ERNST & YOUNG LLP. JOINT FINANCIAL OPERATIONS AND SYSTEMS SUPPORT

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $59.2 million.

What is the period of performance?

Start: 2019-10-01. End: 2024-08-31.

What is Ernst & Young LLP's track record with similar government contracts, particularly within the Department of Defense?

Ernst & Young LLP (EY) has a substantial history of performing contracts for the Department of Defense (DoD) and other federal agencies, often in areas related to financial management, audit, cybersecurity, and IT modernization. Their experience typically involves large, complex engagements requiring deep expertise in accounting principles, regulatory compliance, and system integration. Publicly available data often highlights their role in supporting financial improvement and audit readiness initiatives within the DoD. While specific contract performance details are often proprietary, EY's consistent presence as a prime contractor on significant government awards suggests a generally positive track record in meeting contractual obligations and delivering required services.

How does the per-unit cost or hourly rate for this contract compare to industry benchmarks for similar financial operations and systems support?

Determining a precise per-unit cost or hourly rate benchmark for this contract is challenging without access to the specific labor categories and rates negotiated. However, given that this is a 'LABOR HOURS' contract awarded to a major professional services firm like Ernst & Young LLP, the rates are likely to be at the higher end of the spectrum, reflecting the firm's expertise, overhead, and market position. Government contracts for specialized financial and IT support from large, established firms often command premium rates compared to smaller, niche providers. Benchmarking would require comparing the negotiated hourly rates for specific labor categories (e.g., senior financial analysts, system architects) against GSA schedules, other agency contracts, or industry surveys for comparable skill sets and experience levels within the federal contracting space.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

Key risks for this contract include potential cost overruns due to the labor hours pricing model if work is not efficiently managed, contractor performance issues impacting critical financial operations, and knowledge transfer challenges if key personnel depart. Mitigation strategies likely involve robust contract oversight by the USTRANSCOM contracting officer and program managers, including regular performance reviews, detailed progress reporting, and potentially earned value management techniques. To address knowledge transfer, the contract may include requirements for documentation, training, and phased transitions. The use of a reputable firm like EY also mitigates some performance risk, as they have established processes and quality controls.

How effective is the current financial operations and systems support provided under this contract in meeting DoD's objectives?

Assessing the effectiveness requires detailed performance data and feedback from the USTRANSCOM program office, which is not publicly available. However, the contract's renewal or continuation suggests a level of satisfaction with the services provided. The overarching objective for DoD financial operations and systems support is to ensure financial accuracy, compliance, auditability, and efficient resource management. The effectiveness of EY's support would be measured against key performance indicators (KPIs) related to system uptime, data integrity, reporting timeliness, audit support, and user satisfaction. Continued investment in these services indicates their perceived importance and necessity for the DoD's mission.

What are the historical spending patterns for Joint Financial Operations and Systems Support within USTRANSCOM or the broader DoD?

Historical spending on Joint Financial Operations and Systems Support within USTRANSCOM and the broader DoD has generally been substantial and increasing, driven by mandates for improved financial transparency, audit readiness, and modernization of legacy systems. Agencies like DoD face complex financial landscapes requiring continuous investment in IT infrastructure, software solutions, and expert personnel to manage budgets, track expenditures, and ensure accountability. Spending in this category often fluctuates based on specific modernization initiatives, system upgrades, and evolving regulatory requirements. The $59.2 million awarded here represents a significant, but not necessarily anomalous, investment within the context of the DoD's overall IT and financial management budget.

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: HTC71118QD011

Offers Received: 3

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: $70,783,470

Exercised Options: $59,227,112

Current Obligation: $59,227,112

Actual Outlays: $9,003,169

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $1,064,059

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F290CA

IDV Type: FSS

Timeline