DoD's $22.5M contract for acquisition support services awarded to KPMG LLP shows fair value with 13 bids

Contract Overview

Contract Amount: $22,509,796 ($22.5M)

Contractor: Kpmg Peat Marwick LLP

Awarding Agency: Department of Defense

Start Date: 1998-07-22

End Date: 2011-04-23

Contract Duration: 4,658 days

Daily Burn Rate: $4.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: 199812!1700!J313!RA13A!FLEET & INDUSTRIAL SUPPLY CENTER!N0014098D0510 !A!*!1001 !19980722!19991115!083658880!001667906!001667906!N!5D237!KPMG LLP !2001 M ST NW !WASHINGTON !DC!20036!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !0001!+000002062567!N!N!000000000000!R707!CONTRACT, PROCUREMENT & ACQUISITION SUPPORT SVCS !C9E!ALL OTHER SUPPLIES AND EQUIPME!2000!NOT DISCERNABLE OR CLASSIFIED !8742!5!B!M!A!B!A!*!A !U!U!2!013!B!* !Z!N!Z!* !* !N!C!*!C!C!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $22.5 million to KPMG PEAT MARWICK LLP for work described as: 199812!1700!J313!RA13A!FLEET & INDUSTRIAL SUPPLY CENTER!N0014098D0510 !A!*!1001 !19980722!19991115!083658880!001667906!001667906!N!5D237!KPMG LLP !2001 M ST NW !WASHINGTON !DC!20036!50000!001!11!WASHINGTON !DISTRI… Key points: 1. The contract demonstrates a competitive bidding process, suggesting potential for good value. 2. While specific performance metrics are not detailed, the duration and value indicate a significant engagement. 3. The award to a well-established firm like KPMG suggests a focus on experienced providers for critical support. 4. The contract's scope covers essential acquisition support, aligning with broader defense procurement needs. 5. The use of a Cost Plus Fixed Fee (CPFF) pricing structure warrants scrutiny for cost control. 6. The contract's long duration (over 12 years) implies a sustained need for these services.

Value Assessment

Rating: good

The contract value of $22.5 million over its extended period appears reasonable given the scope of administrative management and general management consulting services. Benchmarking against similar large-scale, long-term support contracts within the Department of Defense suggests that the overall cost is within an expected range for such engagements. The competitive nature of the award further supports the assessment of fair value, as multiple bidders typically drive pricing towards market norms. However, the Cost Plus Fixed Fee (CPFF) structure requires careful monitoring to ensure costs do not escalate beyond initial projections.

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 record shows 13 bids were received, signifying a robust level of interest and competition for these services. A high number of bidders generally leads to better price discovery and encourages contractors to offer competitive terms, which is beneficial for the government.

Taxpayer Impact: The strong competition for this contract suggests that taxpayer funds were likely used efficiently, as the government benefited from multiple offers, potentially leading to a lower overall cost than if the contract had been awarded on a sole-source or limited basis.

Public Impact

The Department of Defense benefits from enhanced administrative management and general management consulting services, crucial for efficient procurement and operations. The contract supports the effective functioning of the Defense Contract Management Agency (DCMA) and other related defense entities. The services provided likely contribute to the readiness and operational capability of military forces by ensuring necessary supplies and equipment are procured effectively. The contract supports professional services jobs within the consulting sector, particularly in the Washington D.C. metropolitan area where the contractor is headquartered.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can incentivize contractors to increase costs to maximize their fee, requiring diligent oversight.
The extended duration of the contract (over 12 years) raises questions about the initial scope definition and potential for scope creep without adequate re-competition.
Lack of specific performance metrics in the provided data makes it difficult to assess the contractor's performance objectively.
The contract was awarded to a single entity (KPMG LLP), and while competition was high initially, the long-term nature might limit future opportunities for other firms.

Positive Signals

The contract was awarded through full and open competition with 13 bids, indicating a healthy and competitive market.
The award to a reputable firm like KPMG LLP suggests a high likelihood of competent service delivery.
The contract addresses critical support services for defense procurement, aligning with essential government functions.
The contract value appears reasonable in the context of long-term, complex support services for a major federal agency.

Sector Analysis

This contract falls within the professional services sector, specifically administrative management and general management consulting. This sector is vital for government operations, providing expertise in areas like procurement, logistics, and strategic planning. The market for these services is large and competitive, with numerous firms capable of supporting federal agencies. The value of this contract, approximately $22.5 million, is significant but not extraordinary within the context of large federal IT and professional services spending, which often runs into billions annually.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Given the nature of the services (complex management consulting) and the prime contractor (KPMG LLP), it is unlikely that small businesses were the primary focus of the prime award. However, the contract may include subcontracting requirements, offering potential opportunities for small businesses to participate indirectly, though this information is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense, likely managed by the Defense Contract Management Agency (DCMA) given its role in contract administration. The Cost Plus Fixed Fee (CPFF) structure necessitates robust oversight to monitor costs, ensure compliance with contract terms, and verify the reasonableness of expenses. Transparency is generally maintained through contract reporting mechanisms, but specific details on public access to performance reports or cost breakdowns are not provided. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Contract Management Agency (DCMA) Support Services
Federal Acquisition Support Contracts
Management and Consulting Services for Federal Agencies
Department of Defense Procurement Support
Professional Services Contracts

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing structure requires diligent oversight to manage costs.
Extended contract duration may lead to outdated requirements or scope creep without proper management.
Lack of specific performance metrics in summary data hinders objective performance assessment.
Potential for contractor complacency over a very long contract term.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to KPMG PEAT MARWICK LLP. 199812!1700!J313!RA13A!FLEET & INDUSTRIAL SUPPLY CENTER!N0014098D0510 !A!*!1001 !19980722!19991115!083658880!001667906!001667906!N!5D237!KPMG LLP !2001 M ST NW !WASHINGTON !DC!20036!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !0001!+000002062567!N!N!000000000000!R707!CONTRACT, PROCUREMENT & ACQUISITION SUPPORT SVCS !C9E!ALL OTHER SUPPLIES AND EQUIPME!2000!NOT DISCERNABLE OR CLASSIFIED !8742!5!B!M!A!B!A!*!A !U!U!2!0

Who is the contractor on this award?

The obligated recipient is KPMG PEAT MARWICK LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $22.5 million.

What is the period of performance?

Start: 1998-07-22. End: 2011-04-23.

What is the track record of KPMG LLP in performing similar federal contracts, particularly within the Department of Defense?

KPMG LLP, and its predecessor KPMG Peat Marwick LLP, has a significant history of performing federal contracts. While specific performance details for this particular contract are not fully elaborated in the provided data, the firm is a major global professional services company with extensive experience in audit, tax, and advisory services, including management consulting for government agencies. Their track record generally includes supporting large-scale projects, financial management, and operational improvements for various federal departments. For defense contracts, this often involves areas like acquisition support, financial systems modernization, and strategic planning. Publicly available contract databases and agency performance reviews would offer more granular insights into their specific performance on similar DoD contracts, including past performance ratings and any significant issues encountered.

How does the awarded value of $22.5 million compare to similar acquisition support contracts within the DoD?

The awarded value of $22.5 million over a period potentially exceeding 12 years (from 1998 to 2011) averages to roughly $1.875 million per year. This figure appears reasonable for comprehensive acquisition support services provided to a major federal agency like the Department of Defense. Similar contracts for management and consulting services within the DoD can range significantly based on scope, duration, and complexity. Large-scale, long-term engagements for strategic planning, procurement support, or program management often fall within this multi-million dollar annual range. Contracts focused on niche technical support or shorter durations might be smaller, while those encompassing enterprise-wide transformations could be substantially larger. The competitive bidding process for this contract suggests the price was deemed fair market value at the time of award.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration revolve around cost control and contractor incentive. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee. The risk for the government is that the contractor may have less incentive to control costs rigorously, as their profit (the fixed fee) is not directly tied to cost savings. This can lead to cost overruns if not managed diligently. For a contract spanning over a decade, there's also the risk of scope creep, where the requirements may evolve significantly without adequate adjustments to the fee or re-competition, potentially leading to inefficiencies or a loss of value. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks.

What does the high number of bidders (13) indicate about the market for acquisition support services?

The fact that 13 bids were received for this acquisition support contract strongly indicates a healthy and competitive market for such services within the federal sector. A high number of bidders suggests that multiple firms possess the necessary qualifications, experience, and capacity to perform the required work. This level of competition typically benefits the government by driving down prices, encouraging innovation, and increasing the likelihood of selecting a high-quality provider. It also implies that the barriers to entry for firms seeking to compete for these types of contracts are not excessively high, fostering a dynamic marketplace. This scenario is ideal from a taxpayer perspective, as it maximizes the potential for obtaining the best value.

How has spending on administrative management and general management consulting services evolved within the DoD since this contract was awarded?

Since this contract was awarded in 1998, federal spending on administrative management and general management consulting services, particularly within the Department of Defense, has generally seen fluctuations but has remained a significant category. Factors such as evolving geopolitical landscapes, technological advancements, and shifts in government priorities have influenced spending patterns. While specific year-over-year DoD spending data for this NAICS code (541611) would require detailed analysis of federal procurement databases (like USAspending.gov), it's understood that defense agencies consistently require external expertise for strategic planning, process improvement, acquisition reform, and IT modernization. Spending in this area is often tied to broader defense budgets and specific modernization initiatives, potentially increasing during periods of heightened security concerns or major defense reviews.

What are the implications of the contract's long duration (1998-2011) for accountability and performance management?

The exceptionally long duration of this contract, spanning from 1998 to 2011 (over 12 years), presents both opportunities and challenges for accountability and performance management. On one hand, a long-term relationship can foster deep institutional knowledge and efficiency for the contractor. However, it also poses risks. Over such an extended period, it can be challenging to maintain consistent oversight and ensure that performance standards remain relevant and are rigorously enforced. There's a potential for complacency to set in, both for the contractor and the government oversight team. Furthermore, the original scope and objectives may have become outdated, necessitating careful management to prevent scope creep or ensure that the services continue to align with current agency needs. Regular performance reviews and potential re-competition or contract modifications would be critical for maintaining accountability throughout its lifecycle.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting 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: 13

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1 SILVA LN, MIDDLETOWN, RI, 02842

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0014098D0510

IDV Type: IDC

Timeline