DoD's $2.87M Contract Audit for Contract Pay System by KPMG LLP Faces Scrutiny
Contract Overview
Contract Amount: $2,866,542 ($2.9M)
Contractor: Kpmg LLP
Awarding Agency: Department of Defense
Start Date: 2022-10-01
End Date: 2026-09-30
Contract Duration: 1,460 days
Daily Burn Rate: $2.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE CONTRACT PAY SYSTEM FOR FY23.
Place of Performance
Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $2.9 million to KPMG LLP for work described as: DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE CONTRACT PAY SYSTEM FOR FY23. Key points: 1. The contract is for an audit of the Contract Pay System, a critical financial function. 2. KPMG LLP, a large accounting firm, is the contractor. 3. The contract was awarded under Full and Open Competition, suggesting a competitive process. 4. The contract duration is 4 years, with a significant value of $2.87 million.
Value Assessment
Rating: fair
The contract value of $2.87 million for a 4-year audit seems reasonable given the scope and the auditor's expertise. Benchmarking against similar large-scale government IT system audits would provide a clearer picture of value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Awarded under Full and Open Competition, this method allows all eligible firms to bid, promoting price discovery and potentially leading to a more competitive price. The BPA Call award mechanism suggests a pre-competed framework was utilized.
Taxpayer Impact: Taxpayer funds are being used for a necessary audit function. The competitive award process aims to ensure efficient use of these funds.
Public Impact
Ensures financial integrity of DoD's contract payment processes. Provides assurance to taxpayers on the proper use of defense funds. Highlights the importance of independent audits for government systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific performance metrics in the provided data.
- Potential for scope creep in a 4-year audit contract.
- Reliance on a single large firm for a critical audit.
Positive Signals
- Awarded through full and open competition.
- Firm Fixed Price contract type limits cost overruns.
- Audit of a critical financial system.
Sector Analysis
This contract falls within the professional services sector, specifically accounting and auditing services for government IT systems. Benchmarks for similar large-scale government IT audits are typically in the millions of dollars over multi-year periods.
Small Business Impact
The contractor is KPMG LLP, a large public accounting firm, indicating no direct benefit or set-aside for small businesses in this specific award. The nature of the service likely favors large, established firms.
Oversight & Accountability
The contract is overseen by the Defense Finance and Accounting Service (DFAS), a key component of the Department of Defense's financial management. The audit itself serves as a form of oversight on the contract pay system.
Related Government Programs
- Offices of Certified Public Accountants
- Department of Defense Contracting
- Defense Finance and Accounting Service Programs
Risk Flags
- Audit scope may not fully cover emerging cyber threats.
- Potential for findings to require extensive and costly remediation.
- Dependence on contractor's independence and objectivity.
- Contract duration may outpace rapid technological changes in payment systems.
Tags
offices-of-certified-public-accountants, department-of-defense, va, bpa-call, 1m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.9 million to KPMG LLP. DEFENSE FINANCE AND ACCOUNTING SERVICE SSAE18 AUDIT OF THE CONTRACT PAY SYSTEM FOR FY23.
Who is the contractor on this award?
The obligated recipient is KPMG LLP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Finance and Accounting Service).
What is the total obligated amount?
The obligated amount is $2.9 million.
What is the period of performance?
Start: 2022-10-01. End: 2026-09-30.
What specific audit standards and methodologies will KPMG LLP employ to ensure the thoroughness and accuracy of the Contract Pay System audit?
The audit will likely adhere to Government Auditing Standards (Yellow Book) and potentially SSAE 18 standards, as indicated. This involves rigorous testing of internal controls, data integrity, and compliance with relevant regulations. Specific methodologies will be detailed in the audit plan, focusing on risk assessment and control testing relevant to the Contract Pay System's functions.
How will the effectiveness of the audit be measured, and what are the key performance indicators (KPIs) for this contract?
Effectiveness will be measured by the identification of significant control weaknesses or non-compliance issues within the Contract Pay System, and the clarity and actionability of the audit findings and recommendations. Key performance indicators would likely include timely delivery of audit reports, the quality of findings, and the DFAS's acceptance and implementation of recommendations.
What is the potential impact on DoD's financial operations if the audit identifies critical deficiencies in the Contract Pay System?
Critical deficiencies could lead to significant disruptions in payment processing, potential financial losses due to errors or fraud, and damage to DoD's financial reputation. Remediation efforts would require substantial resources and could delay other financial initiatives, impacting operational readiness and accountability.
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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 8350 BROAD ST STE 900, MC LEAN, 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: $3,553,512
Exercised Options: $2,866,542
Current Obligation: $2,866,542
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HQ042321A5003
IDV Type: BPA
Timeline
Start Date: 2022-10-01
Current End Date: 2026-09-30
Potential End Date: 2027-09-30 00:00:00
Last Modified: 2026-02-03
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