KPMG LLP awarded $27.7M for FIAR Program Support, focusing on audit readiness services

Contract Overview

Contract Amount: $27,724,366 ($27.7M)

Contractor: Kpmg LLP

Awarding Agency: Department of Defense

Start Date: 2023-01-05

End Date: 2025-01-04

Contract Duration: 730 days

Daily Burn Rate: $38.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FIAR PROGRAM SUPPORT - DATA TEAM AND AUDIT READINESS SERVICES

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $27.7 million to KPMG LLP for work described as: FIAR PROGRAM SUPPORT - DATA TEAM AND AUDIT READINESS SERVICES Key points: 1. Value for money assessed through comparison to similar audit readiness contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include reliance on a single contractor for critical audit functions. 4. Performance context is tied to the Department of Defense's ongoing Financial Improvement and Audit Readiness (FIAR) efforts. 5. Sector positioning within professional services, specifically accounting and auditing for government contracts.

Value Assessment

Rating: good

The contract value of $27.7 million over two years for FIAR Program Support appears reasonable when benchmarked against similar large-scale audit readiness and financial management support contracts awarded by federal agencies. The firm fixed-price structure suggests that the contractor bears the risk of cost overruns, which is generally favorable for the government. However, a detailed cost breakdown and comparison to specific labor rates and overheads would be necessary for a more precise value assessment.

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 bidders had the opportunity to submit proposals. The presence of two bidders suggests a moderate level of competition for this specific award. While full and open competition is generally preferred, the number of actual bidders can influence price discovery. A higher number of bidders typically leads to more aggressive pricing.

Taxpayer Impact: The full and open competition process, even with two bidders, provides a baseline assurance that taxpayer funds are being used efficiently by allowing market forces to influence the final price.

Public Impact

The Department of Defense benefits from enhanced audit readiness and financial management capabilities. Services delivered include data team support and audit readiness assistance, crucial for meeting financial reporting requirements. Geographic impact is primarily within the Department of Defense's operational areas, with a focus on Virginia. Workforce implications include the potential for specialized accounting and auditing roles within the contractor's team supporting the agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and difficult to transition.
Dependence on a single contractor for critical audit readiness functions could pose continuity risks.
Scope creep could increase costs beyond the initial contract value if not managed effectively.

Positive Signals

KPMG LLP is a well-established firm with significant experience in government contracting and audit services.
The firm fixed-price contract type shifts cost risk to the contractor.
The contract is awarded under full and open competition, suggesting a competitive selection process.

Sector Analysis

The federal government's need for audit readiness and financial improvement services is a significant and growing sector, driven by legislative mandates like the Chief Financial Officers Act and the Federal Information Security Modernization Act. This contract falls within the professional services industry, specifically accounting and auditing, which is a mature market with numerous established players. Comparable spending benchmarks for similar large-scale financial management and audit support contracts can range from tens to hundreds of millions of dollars annually across various agencies.

Small Business Impact

This contract was not awarded as a small business set-aside. There is no explicit information provided regarding subcontracting plans for small businesses. The focus on a large, established firm like KPMG LLP suggests that direct small business participation may be limited unless subcontracting opportunities are actively pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Logistics Agency (DLA) contracting officers and program managers. The firm fixed-price nature of the contract provides a degree of accountability by placing cost control responsibility on KPMG LLP. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

FIAR Program Support
Audit Readiness Services
Financial Improvement and Audit Readiness (FIAR)
Professional Services Contracts
Department of Defense Financial Management

Risk Flags

Potential for vendor lock-in
Reliance on single contractor for critical functions
Complexity of achieving full auditability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.7 million to KPMG LLP. FIAR PROGRAM SUPPORT - DATA TEAM AND AUDIT READINESS SERVICES

Who is the contractor on this award?

The obligated recipient is KPMG LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $27.7 million.

What is the period of performance?

Start: 2023-01-05. End: 2025-01-04.

What is KPMG LLP's track record with similar government contracts, particularly in audit readiness and financial management?

KPMG LLP has a substantial track record of performing complex financial management, audit, and advisory services for various U.S. federal agencies. They have been involved in numerous large-scale financial improvement and audit readiness (FIAR) initiatives across departments such as the Department of Defense, Department of the Treasury, and others. Their experience typically includes assisting agencies in achieving auditability of their financial statements, implementing financial systems, and developing internal controls. Publicly available contract databases often show KPMG as a prime or subcontractor on contracts valued in the tens to hundreds of millions of dollars for these types of services. Their long-standing presence in the government contracting space, coupled with their status as a major accounting firm, suggests a capacity to handle significant engagements like the FIAR Program Support contract.

How does the awarded price of $27.7 million compare to the market rate for similar audit readiness services?

Benchmarking the $27.7 million award for two years of FIAR Program Support requires comparing it to similar large-scale, complex audit readiness and financial management support contracts. Given the specialized nature of FIAR and the extensive support required for a department as large as Defense, this contract value appears to be within a reasonable range. Similar contracts awarded to large professional services firms for comprehensive financial improvement and audit support often fall into the multi-million dollar range annually. Factors influencing the rate include the scope of services (data team, audit readiness), the level of expertise required, and the specific agency's financial complexity. Without access to detailed labor rates, overhead, and profit margins for comparable contracts, a precise per-unit cost comparison is difficult, but the overall contract value aligns with the scale of such government-wide financial initiatives.

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

Primary risks associated with this contract include potential scope creep, contractor performance issues, and over-reliance on a single vendor for critical functions. Scope creep is a risk in any large support contract; mitigation involves robust contract management, clear definition of deliverables, and change control processes. Contractor performance risk is managed through performance metrics, regular reviews, and the firm fixed-price structure, which incentivizes timely and quality delivery. Over-reliance risk is inherent when a single entity provides specialized support; mitigation might involve knowledge transfer plans, ensuring adequate government personnel oversight, and potentially planning for future competition or phased transitions. The firm fixed-price nature inherently shifts some financial risk to KPMG LLP, incentivizing efficient service delivery.

How effective is the current approach to achieving audit readiness within the Department of Defense, and how does this contract contribute?

The effectiveness of the Department of Defense's (DoD) approach to achieving audit readiness is a long-standing challenge, marked by significant progress but also persistent hurdles. The DoD has made strides in improving financial reporting and internal controls, but achieving a full, unqualified audit opinion remains a complex, multi-year endeavor. This contract for FIAR Program Support, providing data team and audit readiness services, directly contributes by offering specialized expertise and resources to tackle specific auditability challenges. It aims to enhance the quality and timeliness of financial data, support audit processes, and implement necessary improvements. The effectiveness of this specific contract's contribution will depend on the contractor's performance, the clarity of objectives, and the DoD's internal capacity to leverage the support provided.

What are the historical spending patterns for FIAR Program Support or similar services within the Department of Defense?

Historical spending patterns for Financial Improvement and Audit Readiness (FIAR) and related financial management support services within the Department of Defense (DoD) have been substantial and consistent over the past decade. Driven by legislative mandates and the sheer scale of DoD's financial operations, the department has consistently allocated significant budgets towards achieving auditability. This includes spending on internal resources, system upgrades, and extensive support from external contractors. Annual spending on FIAR-related activities, including audit support, financial system modernization, and process improvements, has often been in the hundreds of millions, if not billions, of dollars across the DoD enterprise. Contracts for these services are typically awarded through competitive processes to large professional services firms, with values ranging from a few million to tens or even hundreds of millions of dollars per contract, depending on scope and duration.

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

Solicitation ID: SP470422Q0031

Offers Received: 2

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: $27,724,366

Exercised Options: $27,724,366

Current Obligation: $27,724,366

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $209,319

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F275CA

IDV Type: FSS

Timeline