DoD's $51.8M accounting support contract with Ernst & Young awarded via full and open competition

Contract Overview

Contract Amount: $51,809,593 ($51.8M)

Contractor: Ernst & Young LLP

Awarding Agency: Department of Defense

Start Date: 2018-12-20

End Date: 2023-08-19

Contract Duration: 1,703 days

Daily Burn Rate: $30.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: ACCOUNTING CONTRACTOR SUPPORT LABOR

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20310

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $51.8 million to ERNST & YOUNG LLP for work described as: ACCOUNTING CONTRACTOR SUPPORT LABOR Key points: 1. Contract value represents a significant investment in accounting services for the Department of Defense. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract duration of over 1700 days indicates a long-term need for these specialized services. 4. The use of Time and Materials pricing requires careful monitoring to ensure cost efficiency. 5. Ernst & Young's established presence in government contracting suggests a capable provider. 6. The contract's focus on accounting services aligns with essential financial management functions within the DoD.

Value Assessment

Rating: good

The contract value of approximately $51.8 million over its duration is substantial for accounting support services. Benchmarking against similar large-scale accounting support contracts within the federal government is necessary for a precise value-for-money assessment. However, the duration and scope suggest a significant need. The Time and Materials (T&M) pricing structure, while common, necessitates diligent oversight to prevent cost overruns and ensure that labor hours are directly tied to project needs. Without specific per-unit cost data or detailed task breakdowns, a definitive value assessment is challenging, but the competitive award process offers a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The data shows three bids were received. A competitive process like this generally fosters price discovery and allows the government to select the offer that best balances cost and technical merit. The presence of multiple bidders suggests a healthy market for these services and provides a basis for negotiating favorable terms.

Taxpayer Impact: Taxpayers benefit from a competitive process as it typically drives down costs and ensures the government receives the best possible value for its investment in accounting support services.

Public Impact

The Department of Defense benefits from enhanced accounting and financial management capabilities. Services delivered likely include audit support, financial statement preparation, and accounting system analysis. The contract's impact is primarily within the administrative and financial operations of the DoD. Workforce implications may include the utilization of specialized accounting professionals, both from the contractor and potentially government personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing requires vigilant oversight to control costs and prevent scope creep.
The long contract duration necessitates ongoing performance monitoring to ensure continued value.
Ensuring clear deliverables and performance metrics is crucial for managing a large T&M contract.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Ernst & Young is a well-established firm with significant experience in government contracting.
The contract addresses a critical function (accounting support) for a major federal agency.

Sector Analysis

The federal accounting services sector is a significant market, encompassing a wide range of support functions from audit and compliance to financial system modernization. This contract falls within the professional services category, specifically targeting accounting expertise. The Department of Defense, as one of the largest federal agencies, represents a substantial portion of government spending in this area. Comparable spending benchmarks would involve analyzing other large contracts for accounting, auditing, and financial advisory services across various federal departments.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). Therefore, the primary contractor, Ernst & Young LLP, is expected to perform the majority of the work. There is no explicit information provided regarding subcontracting plans or goals for small businesses. This means the direct impact on the small business ecosystem for this specific contract is likely minimal, unless Ernst & Young voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant program managers within the Department of the Army. Performance monitoring, invoice review, and ensuring compliance with contract terms are standard oversight mechanisms. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Department of Defense Financial Management
Federal Audit Services
Government Accounting Standards
Professional Services Contracts
Time and Materials Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing structure.
Need for robust performance monitoring over the extended contract duration.
Risk of contractor complacency in a long-term engagement.
Ensuring alignment with evolving DoD financial management requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.8 million to ERNST & YOUNG LLP. ACCOUNTING CONTRACTOR SUPPORT LABOR

Who is the contractor on this award?

The obligated recipient is ERNST & YOUNG LLP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $51.8 million.

What is the period of performance?

Start: 2018-12-20. End: 2023-08-19.

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

Ernst & Young LLP (EY) has a substantial track record of securing and performing federal government contracts. Within the Department of Defense (DoD) and its components like the Department of the Army, EY has been awarded numerous contracts across various service areas, including financial management, audit, cybersecurity, and management consulting. Their experience often involves large-scale, complex engagements requiring deep expertise in government regulations and financial systems. Publicly available contract data indicates a consistent presence and significant contract values awarded to EY by the DoD over many years. This specific $51.8 million contract for accounting support is indicative of their established relationship and capability to handle major federal financial service requirements.

How does the awarded amount of $51.8 million compare to similar accounting support contracts within the federal government?

The $51.8 million contract value for accounting support services over its duration is significant, placing it among larger engagements for specialized financial services. To provide a precise comparison, one would need to benchmark against contracts for similar scope, duration, and service type (e.g., audit readiness, financial statement support, accounting system implementation) awarded to large professional services firms by agencies like the DoD, GSA, or HHS. Contracts for comprehensive accounting support can range from a few million to tens of millions annually, depending on the agency's size and complexity. Given the DoD's scale, this contract appears to be a substantial, but not unprecedented, investment for critical accounting functions. The Time and Materials (T&M) pricing structure also influences the final cost, making direct comparisons slightly more complex than fixed-price contracts.

What are the primary risks associated with a Time and Materials (T&M) contract of this magnitude and duration?

The primary risks associated with a T&M contract of this magnitude ($51.8M) and duration (over 1700 days) revolve around cost control and scope management. T&M contracts pay the contractor for the actual cost of labor (at specified hourly rates) and materials used. This structure inherently carries a risk of cost escalation if labor hours are not efficiently utilized or if the scope of work expands without proper controls. For the government, the risk is that costs could exceed initial estimates significantly if not closely monitored. Contractor performance and productivity are critical; a lack of clear deliverables or performance metrics can exacerbate these risks. Effective oversight, detailed task tracking, and robust reporting mechanisms are essential to mitigate these potential issues and ensure the government receives good value.

How effective is the 'full and open competition' approach likely to be in ensuring value for this accounting support contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value in federal contracting. By allowing all responsible sources to compete, it maximizes the pool of potential bidders, fostering a competitive environment that drives down prices and encourages innovation. For this $51.8 million accounting support contract, this approach suggests that multiple firms likely vied for the opportunity, allowing the Department of the Army to select the offer that presented the best combination of technical capability and price. The fact that three bids were received indicates a degree of competition. While T&M pricing requires ongoing oversight, the initial competitive award provides a strong foundation for achieving value for taxpayer dollars.

What are the potential implications of awarding a long-term contract (over 1700 days) for accounting support?

Awarding a long-term contract, such as this one exceeding 1700 days (approximately 4.6 years), for accounting support has several implications. Positively, it provides stability and continuity for critical financial operations, allowing the contractor to develop deep institutional knowledge and potentially achieve efficiencies over time. It also reduces the administrative burden and cost associated with frequent re-competition. However, long-term contracts can also pose risks. Market conditions, technology, and agency needs can evolve, potentially making the contract terms or the contractor's approach outdated. There's also a risk of contractor complacency or reduced incentive to innovate if competition is not a factor during the contract's performance period. Regular performance reviews and potential for contract modifications are crucial to manage these long-term dynamics.

How does the PSC code (likely related to accounting/auditing services) and NAICS code (541211 - Offices of Certified Public Accountants) inform the nature of the services provided?

The assigned NAICS code 541211, 'Offices of Certified Public Accountants,' directly indicates that the core services procured under this contract are related to accounting, auditing, tax preparation, and bookkeeping performed by certified public accountants. The Product Service Code (PSC), though not explicitly provided in the abbreviated data, would further specify the nature of the accounting support. Given the NAICS code and the agency (Department of Defense), the services likely encompass a broad spectrum of financial management support, potentially including financial statement preparation and audit readiness, internal control assessments, accounting system support, and compliance with government accounting standards. This specialization ensures the DoD is engaging experts for its complex financial operations.

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) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91CRB18R0021

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 1101 NEW YORK AVENUE, NW, WASHINGTON, DC, 20005

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

Financial Breakdown

Contract Ceiling: $58,287,853

Exercised Options: $55,896,377

Current Obligation: $51,809,593

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline