DoD's $73M audit remediation contract awarded to Kearney & Company for accounting services
Contract Overview
Contract Amount: $73,066,194 ($73.1M)
Contractor: Kearney & Company, P.C.
Awarding Agency: Department of Defense
Start Date: 2024-07-27
End Date: 2026-09-26
Contract Duration: 791 days
Daily Burn Rate: $92.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: BASE PERIOD AUDIT REMEDIATION
Place of Performance
Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22314
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $73.1 million to KEARNEY & COMPANY, P.C. for work described as: BASE PERIOD AUDIT REMEDIATION Key points: 1. Value for money assessed through competitive bidding and fixed-price structure. 2. Competition dynamics indicate a robust market for accounting services. 3. Risk indicators include reliance on a single contractor for a critical function. 4. Performance context is tied to the Department of Defense's ongoing audit remediation efforts. 5. Sector positioning places this contract within the broader professional services landscape for government agencies.
Value Assessment
Rating: good
The contract's base period value of approximately $73 million for audit remediation services appears reasonable given the scope and complexity of financial statement audits for a large organization like the Department of Defense. Benchmarking against similar large-scale audit and accounting service contracts for federal agencies suggests this pricing is within expected ranges. The firm-fixed-price structure provides cost certainty for the government, although it places the financial risk on the contractor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple qualified firms were able to bid. The presence of three bidders suggests a healthy level of competition for this type of specialized service. A competitive process generally leads to better price discovery and ensures the government selects the most capable and cost-effective solution.
Taxpayer Impact: The full and open competition ensures that taxpayer funds are used efficiently by driving down costs through market forces and selecting the best value offer.
Public Impact
The Department of Defense benefits from improved financial accountability and audit readiness. Services delivered include critical accounting and auditing support to address financial statement deficiencies. Geographic impact is national, supporting the DoD's widespread financial operations. Workforce implications include the engagement of specialized accounting professionals to meet audit remediation needs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for contractor lock-in if performance is consistently strong.
- Dependence on a single firm for a critical function could pose continuity risks if not managed proactively.
Positive Signals
- Awarded through full and open competition, suggesting a competitive selection process.
- Firm-fixed-price contract provides cost predictability for the government.
- Contract duration allows for sustained focus on complex audit remediation tasks.
Sector Analysis
This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and auditing services. The market for these services within the federal government is substantial, driven by mandates for financial transparency and accountability. Comparable spending benchmarks for large federal audit and financial management contracts often run into tens or hundreds of millions of dollars, reflecting the scale of government operations.
Small Business Impact
The contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. This suggests that the primary award was made to a large business. However, the prime contractor, Kearney & Company, may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the broader small business ecosystem.
Oversight & Accountability
Oversight is likely managed by the Department of the Navy contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms and performance expectations. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to this contract.
Related Government Programs
- DoD Financial Improvement and Audit Remediation (FIAR)
- Federal Financial Management
- Government Auditing Services
- Accounting and Auditing Services Contracts
Risk Flags
- Potential for scope creep if audit remediation needs are more extensive than initially defined.
- Dependence on contractor expertise for critical financial audit functions.
- Need for continuous government oversight to ensure performance and compliance.
Tags
department-of-defense, department-of-the-navy, accounting-services, audit-remediation, professional-services, firm-fixed-price, full-and-open-competition, large-business, federal-contract, financial-management, virginia
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $73.1 million to KEARNEY & COMPANY, P.C.. BASE PERIOD AUDIT REMEDIATION
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 (Department of the Navy).
What is the total obligated amount?
The obligated amount is $73.1 million.
What is the period of performance?
Start: 2024-07-27. End: 2026-09-26.
What is the track record of Kearney & Company in performing similar large-scale federal audit remediation contracts?
Kearney & Company, P.C. is a well-established accounting firm with significant experience in serving federal government clients, including extensive work with the Department of Defense. They have a history of performing financial statement audits, audit readiness services, and remediation support for various government agencies. Their expertise is often sought for complex financial management challenges. While specific details on past contract performance metrics are not publicly detailed in this summary, their repeated engagement by federal entities, including the DoD, suggests a satisfactory track record in delivering required services. It is advisable to consult contract award databases and agency performance reviews for more granular insights into their past performance on similar engagements.
How does the awarded amount compare to historical spending on similar audit remediation services within the DoD?
The base period award of approximately $73 million for audit remediation services to Kearney & Company is substantial, reflecting the significant undertaking of addressing audit deficiencies within the Department of Defense. Historical spending on similar large-scale audit and financial management support contracts within the DoD has often been in the tens to hundreds of millions of dollars over multiple years. The DoD's ongoing efforts to achieve auditability for its vast financial statements necessitate continuous investment in specialized accounting and auditing services. This contract's value is consistent with the scale and complexity of the DoD's financial management challenges and its commitment to audit remediation.
What are the primary risks associated with this contract, and how are they being mitigated?
Key risks associated with this contract include potential cost overruns if the scope of remediation is underestimated (though mitigated by the firm-fixed-price structure), contractor performance issues impacting audit timelines, and reliance on a single entity for critical audit remediation functions. Mitigation strategies likely include robust contract oversight by the Department of the Navy, clear performance metrics and deliverables, and potentially contingency planning by the DoD for continuity of services. The firm-fixed-price nature shifts some financial risk to the contractor, incentivizing efficient performance. Regular progress reviews and communication channels are crucial for proactive risk management.
What is the expected impact of this contract on the DoD's ability to achieve auditability?
This contract is expected to significantly contribute to the Department of Defense's ability to achieve auditability of its financial statements. By engaging Kearney & Company for specialized audit remediation services, the DoD is dedicating resources to address identified deficiencies, improve internal controls, and prepare for future audits. The firm's expertise in accounting and auditing is crucial for navigating the complexities of DoD's financial systems and operations. Successful execution of this contract should lead to cleaner financial reporting, enhanced accountability, and ultimately, a positive audit opinion.
Are there any concerns regarding the concentration of this critical service with a single contractor?
While awarding a significant contract to a single entity can raise concerns about over-reliance and potential disruption if performance falters or the contractor faces unforeseen issues, the competitive award process and the nature of the service aim to mitigate this. The Department of Defense likely has internal expertise and other support mechanisms in place. Furthermore, the contract duration is defined, allowing for periodic reassessment of needs and contractor performance. The government also retains the ability to manage contract modifications or seek alternative solutions if necessary, though transitioning such a specialized service can be complex and costly.
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
Solicitation ID: N0018921RZ050
Offers Received: 3
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: $98,105,526
Exercised Options: $73,295,967
Current Obligation: $73,066,194
Subaward Activity
Number of Subawards: 12
Total Subaward Amount: $6,192,599
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0018922DZ014
IDV Type: IDC
Timeline
Start Date: 2024-07-27
Current End Date: 2026-09-26
Potential End Date: 2027-07-26 00:00:00
Last Modified: 2025-12-10
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