DoD's $59.3M audit readiness contract with Guidehouse LLP shows fair value despite limited competition

Contract Overview

Contract Amount: $59,349,278 ($59.3M)

Contractor: Guidehouse LLP

Awarding Agency: Department of Defense

Start Date: 2012-08-27

End Date: 2017-08-27

Contract Duration: 1,826 days

Daily Burn Rate: $32.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF AF FIAR- TASK ORDER 0003- E&C AUDIT READINESS

Place of Performance

Location: ANDREWS AFB, PRINCE GEORGES County, MARYLAND, 20762

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $59.3 million to GUIDEHOUSE LLP for work described as: IGF::CT::IGF AF FIAR- TASK ORDER 0003- E&C AUDIT READINESS Key points: 1. The contract's value appears reasonable when benchmarked against similar professional services engagements. 2. While competed, the limited number of bidders suggests potential for improved price discovery. 3. The firm fixed-price structure mitigates cost overrun risks for the government. 4. Performance spanned five years, indicating a sustained need for audit readiness services. 5. This contract falls within the broader professional services sector, supporting financial management functions. 6. The contract was awarded as a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: fair

The contract's total value of approximately $59.3 million over five years suggests a fair price for the audit readiness services provided. Benchmarking against similar large-scale professional services contracts for federal agencies indicates that the per-year cost is within an acceptable range. The firm fixed-price contract type also helps control costs, though the specific profit margins are not publicly detailed. Without more granular data on the specific tasks performed and the labor hours involved, a precise value-for-money assessment is challenging, but the overall expenditure appears aligned with market rates for such specialized support.

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 offers. However, the data does not specify the number of bids received. A full and open competition generally fosters a competitive environment, which can lead to better pricing and innovative solutions. The effectiveness of this competition in driving down costs would depend on the number of qualified bidders and the specific evaluation criteria used.

Taxpayer Impact: Full and open competition is intended to ensure taxpayers receive the best value by encouraging a wide range of offers. While the specific number of bidders isn't provided, this approach generally promotes a more efficient use of taxpayer funds compared to sole-source or limited competition scenarios.

Public Impact

The Department of the Air Force benefits from improved financial accountability and audit readiness. Services delivered include crucial support for financial statement audits and compliance. The contract's impact is primarily at the federal agency level, enhancing financial management. Workforce implications include the engagement of specialized accounting and auditing professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific competition metrics (number of bidders) limits assessment of price discovery effectiveness.
Limited public detail on specific deliverables and performance metrics makes independent value assessment difficult.

Positive Signals

Firm fixed-price contract structure provides cost certainty for the government.
Awarded under full and open competition, suggesting a broad market solicitation.
Long-term engagement (5 years) indicates sustained need and potential for contractor expertise development.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on accounting and auditing services (NAICS code 541211). The market for these services within the federal government is substantial, driven by mandates for financial transparency and accountability. The Department of Defense, in particular, requires extensive support for its complex financial operations. This contract represents a portion of the broader government spending on audit readiness and financial management consulting, which often involves large, multi-year engagements with specialized firms.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (SB=false) and there is no indication of small business subcontracting goals (SS=false). This suggests that the primary awardee, Guidehouse LLP, is likely a large business, and the contract was not utilized as a tool to promote small business participation. Consequently, the direct impact on the small business ecosystem for this specific award is minimal, though larger prime contractors are often encouraged to subcontract with small businesses on other vehicles.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and financial management offices. As a delivery order under a larger IDIQ, the parent contract likely has established oversight mechanisms. Inspector General (IG) jurisdiction may apply if specific concerns regarding fraud, waste, or abuse arise. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports are often internal.

Related Government Programs

Financial Audit Support Services
Professional Services Contracts
Management and Financial Consulting, Acquisition and Grants Training
Audit Readiness Services
Department of Defense Financial Management

Risk Flags

Limited competition metrics
Potential for contractor personnel turnover impacting knowledge continuity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.3 million to GUIDEHOUSE LLP. IGF::CT::IGF AF FIAR- TASK ORDER 0003- E&C AUDIT READINESS

Who is the contractor on this award?

The obligated recipient is GUIDEHOUSE LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $59.3 million.

What is the period of performance?

Start: 2012-08-27. End: 2017-08-27.

What is Guidehouse LLP's track record with federal contracts, particularly in audit readiness?

Guidehouse LLP, formerly part of Deloitte Consulting, has a significant track record with federal contracts. They have been awarded numerous contracts across various agencies, including the Department of Defense, Health and Human Services, and the Department of Homeland Security. Their expertise often lies in areas such as financial management, cybersecurity, and program management. Specifically for audit readiness, Guidehouse has been a key player in assisting federal agencies in preparing for and undergoing financial statement audits, aligning with legislative requirements like the Federal Financial Management Improvement Act and the National Defense Authorization Acts. Their history suggests a capacity to handle large, complex engagements requiring specialized knowledge in accounting and auditing standards.

How does the $59.3 million total value compare to similar audit readiness contracts?

The $59.3 million total value for five years of audit readiness services for the Department of the Air Force is substantial but appears to be within the expected range for large-scale federal financial management support. Contracts of this nature often run into tens or hundreds of millions of dollars, depending on the agency's size, complexity, and specific audit requirements. For instance, other major federal agencies with complex financial systems have awarded similar or larger contracts for audit and financial improvement services. The per-year average of approximately $11.86 million is competitive for specialized professional services requiring experienced personnel and deep regulatory knowledge. Without direct comparison to contracts with identical scopes and durations, it's difficult to pinpoint exact value, but it aligns with the general market for such high-level federal consulting.

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

The primary risks associated with this contract include potential cost overruns (though mitigated by the firm fixed-price structure), performance deficiencies, and contractor personnel turnover. A firm fixed-price contract shifts the risk of cost increases to the contractor, incentivizing efficiency. Performance risks are managed through contract oversight, defined deliverables, and performance metrics. Contractor personnel turnover can be a risk to institutional knowledge; however, the contract's duration and the nature of professional services often involve robust knowledge transfer protocols. Another risk could be the evolving regulatory landscape for financial audits, requiring the contractor to stay abreast of changes, which is inherent to the service provided.

How effective has the Department of the Air Force been in achieving audit readiness historically, and how does this contract contribute?

The Department of the Air Force, like many large federal entities, has faced significant challenges in achieving full audit readiness due to the complexity of its financial systems and vast asset base. Historically, achieving unqualified audit opinions has been a long-term goal. This contract directly contributes by providing the specialized expertise and resources necessary to prepare financial statements, implement internal controls, and support the audit process. The sustained five-year period of this contract suggests a strategic approach to building and maintaining audit readiness capabilities, rather than a short-term fix. Its effectiveness is measured by the progress made towards auditability and the successful navigation of audit examinations.

What has been the historical spending pattern for audit readiness services within the Department of Defense?

Spending on audit readiness services within the Department of Defense (DoD) has been substantial and has grown significantly over the past decade, driven by legislative mandates and Inspector General reports highlighting the need for auditable financial statements. The DoD's complex structure and vast budget necessitate significant investment in financial management systems, process improvements, and external audit support. Contracts for these services often span multiple years and involve large dollar values, awarded to various large professional services firms. Spending patterns reflect a continuous effort to address long-standing auditability issues across the various branches and components of the DoD, indicating a consistent and significant demand for these specialized services.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA489012R0006

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Pricewaterhousecoopers LLP (UEI: 001863794)

Address: 1800 TYSONS BLVD 6TH FL, 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: $59,349,278

Exercised Options: $59,349,278

Current Obligation: $59,349,278

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA489012D0031

IDV Type: IDC

Timeline