KPMG LLP awarded $42.4M contract for financial and IT audit services to the Department of the Interior

Contract Overview

Contract Amount: $42,417,305 ($42.4M)

Contractor: Kpmg LLP

Awarding Agency: Department of the Interior

Start Date: 2011-03-30

End Date: 2016-03-31

Contract Duration: 1,828 days

Daily Burn Rate: $23.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FINANCIAL AND IT AUDIT OF THE DEPARTMENT OF INTERIOR.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20240

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Interior obligated $42.4 million to KPMG LLP for work described as: FINANCIAL AND IT AUDIT OF THE DEPARTMENT OF INTERIOR. Key points: 1. The contract value of $42.4 million over approximately five years suggests a significant investment in audit services. 2. Competition dynamics for this contract are favorable, with a full and open competition process. 3. The fixed-price contract type may offer cost certainty, but requires careful scope management to avoid overruns. 4. Performance context is critical, as audit quality directly impacts financial transparency and accountability. 5. This contract falls within the professional services sector, specifically accounting and auditing. 6. The duration of the contract (over 5 years) indicates a long-term need for these services.

Value Assessment

Rating: good

The contract value of $42.4 million for a five-year financial and IT audit appears reasonable given the scope and complexity of auditing a large federal agency like the Department of the Interior. Benchmarking against similar large-scale federal audit contracts would provide a more precise value-for-money assessment. The firm-fixed-price structure suggests an expectation of predictable costs, but the ultimate value depends on the quality and thoroughness of the audit performed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under a full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is generally expected to drive down prices and ensure the government receives the best value. The number of bids received (5) suggests a healthy level of interest and competition for this type of service.

Taxpayer Impact: A full and open competition benefits taxpayers by fostering a competitive environment that can lead to more cost-effective service delivery and potentially higher quality outcomes due to vendor differentiation.

Public Impact

The Department of the Interior benefits from enhanced financial oversight and improved IT system integrity. Taxpayers benefit from increased accountability and transparency in the management of federal funds. The contract supports the operational efficiency of the Department of the Interior by ensuring compliance and identifying areas for improvement. The workforce within the Department of the Interior may see improved IT systems and clearer financial reporting processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in long-term audit contracts if not managed diligently.
Reliance on a single contractor for critical audit functions could pose a risk if performance falters.
Ensuring the independence and objectivity of the auditor is paramount for credible audit findings.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Firm-fixed-price contract can provide cost predictability for the agency.
KPMG LLP is a well-established audit firm with significant experience in government contracting.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting, tax preparation, bookkeeping, and payroll services (NAICS code 541211). The market for federal audit services is substantial, with numerous large accounting firms competing for government contracts. The Department of the Interior's need for financial and IT audits is a recurring requirement for federal agencies to ensure accountability and compliance with financial regulations.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large firm like KPMG LLP suggests that the primary focus was on the firm's capacity and expertise for a large-scale federal audit. Further analysis would be needed to determine if any small business subcontracting opportunities were mandated or voluntarily pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by contracting officers and program managers within the Department of the Interior. The contract's performance would be monitored against established deliverables and audit standards. Transparency is generally maintained through contract award databases and public reporting of federal spending. Inspector General offices within the Department of the Interior may also have oversight jurisdiction, particularly concerning audit findings and recommendations.

Related Government Programs

Federal Financial Management
Information Technology Audits
Government Accountability Office (GAO) Audits
Department of the Interior Financial Statements
Single Audit Act Compliance

Risk Flags

Long contract duration may lead to scope misalignment.
Potential for reduced contractor incentive on fixed-price contracts if not monitored.
Concentration of risk with a single provider for critical audit functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $42.4 million to KPMG LLP. FINANCIAL AND IT AUDIT OF THE DEPARTMENT OF INTERIOR.

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Departmental Offices).

What is the total obligated amount?

The obligated amount is $42.4 million.

What is the period of performance?

Start: 2011-03-30. End: 2016-03-31.

What is KPMG LLP's track record with federal audit contracts of similar size and scope?

KPMG LLP has a significant track record of performing federal audit services for various agencies. While specific details for contracts of this exact value ($42.4M) and duration (5 years) require deeper database searches, KPMG routinely engages in large-scale financial statement audits, IT audits, and compliance audits for federal entities. Their experience often includes audits for departments with complex financial structures and extensive IT systems, similar to the Department of the Interior. Past performance reviews and contract awards data would provide a more granular understanding of their success rates, any past performance issues, and their ability to meet deadlines and quality standards on comparable federal engagements.

How does the $42.4 million contract value compare to historical spending on similar audit services by the Department of the Interior or other large federal agencies?

The $42.4 million contract value for a five-year financial and IT audit for the Department of the Interior represents a substantial but not necessarily outlier expenditure. Large federal agencies with complex operations and significant IT infrastructure typically require multi-million dollar audit contracts. For context, agencies like the Department of Defense or Health and Human Services often award contracts in the tens or even hundreds of millions for comprehensive audit and financial management services over similar periods. A direct comparison would involve analyzing the scope of work, the number of systems audited, and the specific audit requirements (e.g., FISMA compliance, financial statement audits) for other agencies' contracts. The provided data suggests a significant investment, consistent with the scale of the Department of the Interior.

What are the primary risks associated with a five-year firm-fixed-price audit contract for a large federal agency?

A primary risk with a five-year firm-fixed-price audit contract is the potential for the scope of work to become misaligned with evolving agency needs or regulatory requirements over such a long period. While the fixed price offers budget certainty, it can incentivize the contractor to minimize effort if not carefully monitored, potentially impacting audit quality. Conversely, if the agency's IT systems or financial processes undergo significant, unforeseen changes, the contractor might argue for contract modifications or additional funding, leading to disputes. Ensuring robust change control processes and clear performance metrics are crucial to mitigate these risks and maintain value throughout the contract's duration.

How effective are firm-fixed-price contracts in ensuring the quality and thoroughness of federal audit services?

Firm-fixed-price (FFP) contracts can be effective for audit services when the scope of work is well-defined and unlikely to change significantly. For audits, FFP provides cost certainty to the government. However, the effectiveness hinges on the contractor's motivation to deliver high-quality work despite the fixed price. If the contractor perceives the price as too low or the scope as underestimated, they might cut corners, potentially compromising audit thoroughness. Conversely, a well-priced FFP contract can motivate efficiency. The government's role in clearly defining requirements, monitoring performance closely, and having strong technical expertise is critical to ensuring quality under an FFP structure for audits.

What are the implications of awarding a large audit contract to a single firm like KPMG LLP for five years?

Awarding a large audit contract to a single firm like KPMG LLP for five years can lead to efficiencies through familiarity with the agency's systems and personnel. However, it also concentrates risk. If KPMG's performance declines, or if conflicts of interest arise, the Department of the Interior could face significant disruption in its audit functions. Over-reliance on one firm might also reduce the incentive for continuous innovation or the introduction of fresh perspectives that could come from a more competitive or rotating vendor pool. Maintaining strong oversight and clear performance standards is essential to mitigate these risks.

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: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kpmg TAX and Advisory Limited Liability Partnership (UEI: 685530997)

Address: 1801 K ST NW STE 12000, WASHINGTON, DC, 20006

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

Financial Breakdown

Contract Ceiling: $42,417,305

Exercised Options: $42,417,305

Current Obligation: $42,417,305

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F8127H

IDV Type: FSS

Timeline