DoD's $47.9M accounting services contract awarded to KPMG LLP shows potential value concerns

Contract Overview

Contract Amount: $47,941,886 ($47.9M)

Contractor: Kpmg LLP

Awarding Agency: Department of Defense

Start Date: 2023-09-28

End Date: 2024-08-27

Contract Duration: 334 days

Daily Burn Rate: $143.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: BRIDGE CONTRACT/ORDER - DC I&L FIAR SUPPORT SERVICES 7 MONTH BASE PERIOD INCREMENTALLY FUNDED IN THE AMOUNT OF $20,721,133.03.

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $47.9 million to KPMG LLP for work described as: BRIDGE CONTRACT/ORDER - DC I&L FIAR SUPPORT SERVICES 7 MONTH BASE PERIOD INCREMENTALLY FUNDED IN THE AMOUNT OF $20,721,133.03. Key points: 1. Contract value appears high relative to duration and service type. 2. Limited public data makes direct performance benchmarking difficult. 3. Sole contractor for FIAR support raises questions about market availability. 4. Firm Fixed Price contract type offers some cost certainty. 5. Virginia location suggests potential for local economic impact. 6. Small business participation is not mandated, requiring further review.

Value Assessment

Rating: fair

The contract's total value of $47.9 million over approximately 11 months (base period plus options) for accounting services, specifically FIAR support, warrants scrutiny. While KPMG LLP is a reputable firm, the per-month cost appears elevated compared to typical consulting engagements for similar support functions. Benchmarking against other government contracts for financial improvement and audit readiness services is challenging due to the specialized nature of FIAR, but the overall expenditure rate suggests a need for detailed cost analysis to ensure optimal value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the specific number of bidders is not detailed in the provided data. A full and open competition is generally favorable for price discovery, but the specialized nature of FIAR support might limit the pool of qualified bidders, potentially impacting the level of competition achieved in practice.

Taxpayer Impact: A competitive award process, even for specialized services, is beneficial for taxpayers as it encourages multiple firms to offer their best pricing and technical solutions, potentially leading to cost savings.

Public Impact

The Department of Defense benefits from enhanced financial accountability and audit readiness. Services delivered include critical support for the Federal Information and Audit Readiness (FIAR) initiative. The primary geographic impact is within Virginia, where the contractor is located. The contract supports a specialized workforce in accounting and financial consulting.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if scope expands beyond initial estimates.
Reliance on a single contractor for critical FIAR support could pose a risk.
Limited transparency on specific performance metrics and outcomes.

Positive Signals

Firm Fixed Price contract structure provides cost predictability.
Awarded through full and open competition, suggesting a competitive process.
KPMG LLP is a well-established firm with extensive experience in accounting services.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and financial advisory services. The market for FIAR support is specialized, driven by government mandates for improved financial management and auditability. Comparable spending benchmarks are difficult to establish precisely due to the niche nature of FIAR, but overall government spending on audit readiness and financial system modernization is substantial, reflecting a significant market demand for these expertise.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While the prime contractor is KPMG LLP, a large business, there is no explicit information regarding subcontracting plans with small businesses. Further investigation into subcontracting goals and achievements would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically reside with the Department of the Navy's contracting officers and program managers. The firm fixed-price nature of the contract provides a degree of cost control. Transparency is dependent on the reporting requirements within the contract and the Department of Defense's internal oversight processes. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Financial Improvement and Audit Readiness (FIAR) Program
Federal Financial Management Services
Government Accounting and Auditing Services
Professional Services Contracts

Risk Flags

High contract value for a specialized service.
Limited public data on performance metrics.
Potential for scope creep in complex FIAR initiatives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.9 million to KPMG LLP. BRIDGE CONTRACT/ORDER - DC I&L FIAR SUPPORT SERVICES 7 MONTH BASE PERIOD INCREMENTALLY FUNDED IN THE AMOUNT OF $20,721,133.03.

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $47.9 million.

What is the period of performance?

Start: 2023-09-28. End: 2024-08-27.

What is KPMG LLP's track record with similar government contracts, particularly in FIAR support?

KPMG LLP has a significant history of providing professional services to the U.S. government, including extensive experience in audit, tax, and advisory services. They have been involved in various financial improvement and audit readiness initiatives across multiple federal agencies. While specific details on their FIAR support contracts are not publicly itemized in this data, their general expertise in financial management, internal controls, and audit support suggests a strong capability. Their past performance on large-scale government contracts would be a key factor in assessing their suitability for this specific role, and agencies typically review past performance evaluations during the procurement process.

How does the value of this contract compare to similar FIAR support contracts awarded by the DoD or other agencies?

Direct comparison of this contract's value ($47.9 million) to similar FIAR support contracts is challenging due to the specialized nature of the services and variations in contract scope, duration, and specific agency requirements. However, the duration of the base period (7 months) and potential option periods, coupled with the total value, suggests a substantial investment. Government-wide spending on audit readiness and financial system modernization is significant, but the precise benchmarking requires access to detailed scope-of-work and performance data for comparable contracts. Without this granular information, assessing whether this contract represents superior or inferior value is difficult.

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

Key risks include potential cost overruns if the scope of FIAR support expands beyond initial projections, reliance on a single contractor for critical functions, and challenges in ensuring consistent performance quality over the contract's life. Mitigation strategies likely involve robust contract management by the Department of the Navy, including detailed performance monitoring, change control processes for scope adjustments, and regular reviews of contractor deliverables. The firm fixed-price structure also helps mitigate cost overrun risks for the government, provided the scope is well-defined and managed.

How effective is the current approach to achieving FIAR compliance within the Department of the Navy, and how does this contract contribute?

The effectiveness of the Department of the Navy's FIAR compliance efforts is a complex, ongoing process influenced by numerous factors, including system modernization, process improvements, and personnel training. This contract, by providing specialized support services from KPMG LLP, aims to accelerate progress towards audit readiness. The contribution of this contract is primarily in augmenting the Navy's internal capabilities with external expertise, focusing on areas such as financial statement preparation, internal control assessment, and remediation. The ultimate effectiveness will be measured by the Navy's ability to achieve auditable financial statements and pass independent audits.

What are the historical spending patterns for FIAR support services within the Department of the Navy or DoD?

Historical spending on FIAR support within the Department of the Navy and the broader DoD has been substantial and increasing over the years, driven by legislative mandates and the ongoing challenge of achieving auditable financial statements. Agencies frequently engage contractors for specialized expertise in areas like financial system integration, data validation, internal control development, and audit liaison. Spending patterns often reflect a mix of large, multi-year contracts for comprehensive support and smaller, task-order-based awards for specific needs. The overall trend indicates a sustained and significant investment in achieving financial transparency and accountability across the defense establishment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Other Accounting Services

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8350 BROAD ST STE 900, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $47,941,886

Exercised Options: $47,941,886

Current Obligation: $47,941,886

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $11,904,410

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018922DZ015

IDV Type: IDC

Timeline