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DoD Figured the Navy Didn’t Need a Flashy Name on Its Audit Opinion

In press releases you didn't read this month news, the Department of Defense announced earlier this month that it had awarded contracts to audit the Army, Air Force, and Navy. Let's see who the lucky winners of that particular cluck mission are:

The Department of Defense has awarded contracts to independent public accounting firms to conduct audits of current year appropriated funds, or what has been referred to as the schedule of budgetary activity (SBA) for all of the military services. The contract for the audit of the Army was awarded to KPMG on Dec. 1. The contract for the audit of the Air Force was awarded to Ernst & Young on Dec. 2, and the contract for the Navy audit was awarded to Cotton & Company on Dec. 3.

KPMG? Check. EY? Check. Cotton & Company… uh, what?

According to their website, Cotton & Company "has focused its practice on providing services predominantly for governmental agencies and programs" since 1981. Meaning who better to audit a government entity than a firm that focuses on government entities? Sounds like a winner to us.

The firm is billing the DoD by the hour and maxes out just under $10 million:

Cotton & Company, Alexandria, Virginia, was awarded a maximum $9,945,932 labor-hour contract to conduct an audit of the U. S. Navy General Fund Schedule of Budgetary Activity for fiscal 2015. The location of performance is Alexandria, Virginia, and various Navy locations to be determined after contract award. Base year contract performance is expected to be completed by Dec. 31, 2015. Fiscal 2015 operations and maintenance funds are being obligated at award. This was a competitive procurement, and four quotes were received.

EY competed with 2 other firms to win the Air Force contract:

Ernst & Young LLP, Washington D.C., is being awarded a not-to-exceed $14,402,567 labor-hour contract for audit services for the Department of Defense Office of Inspector General to audit the United States Department of the Air Force General Fund Schedule of Budgetary Activity. Work will be performed in Washington D.C. with an expected completion date of 31 Dec. 31, 2019. Fiscal year 2015 operation and maintenance funds in the amount of $14,402,567 will be obligated at time of award.

KPMG's Army contract is as follows:

KPMG LLP, McLean,Virginia is being awarded a not-to-exceed $13,011,077 labor-hour contract for audit services for the Department of Defense Office of Inspector General, to audit the U.S. Army General Fund Schedule of Budgetary Activity. Work will be performed in McLean,Virginia, with an expected completion date of Dec. 31, 2015.

We also found this recent contract awarded to KPMG for the Defense Logistics Agency:

KPMG LLP, McLean, Virginia, has been awarded an estimated maximum $14,000,766 firm-fixed-price contract to provide management services, personnel, and documentation in support of agency financial audit.  This contract was a competitive acquisition, and six offers were received.  This is a one-year base contract with no option periods. Location of performance is Virginia, with a Dec. 8, 2015, performance completion date. 

Good work if you can get it, eh?

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