JnA Redacted.pdf

United States Special Operations Command (USSOCOM)

Justification and Approval (J&A) for

Special Operations Financial Management Directorate Audit Support

Contract

26 JULY 2024

J&A No. 24-3864 JUN 2024 unsuccessful contract performance if this requirement were to be awarded to any other firm with less or little qualifications.

This requirement is crucial for assisting the command in providing an auditable system to the Department of Defense, which must be completed in the fourth quarter of FY 24. Therefore, awarding this contract to KPMG under the authority only one responsible source and no other services will satisfy agency requirements is the only viable option to meet the mission-critical deadlines without compromising the quality and timeliness of the audit.

II. Sole Source Award to "Klynveld Peat Marwick Goerdeler" (KPMG).

The complexity of this requirement is underscored by the impending Department of Defense audit, which necessitates SOCOM’s financial management office to demonstrate audit readiness and competency. Any delays in awarding or performance of this contract would result in significant financial repercussions for the Government, jeopardizing SOCOM’s ability to obtain a clean audit opinion and compromising the integrity of its financial statements. Considering the highly sensitive and multifaceted nature of this requirement precludes the process of full and open competition, necessitating the immediate engagement of a contractor with proven expertise and experience in auditing complex and classified financial systems.

KPMG has been identified as the sole source capable of meeting SOCOM’s urgent requirement due to its unmatched audit subject matter expertise and extensive experience in auditing complex financial systems like those of SOCOM. KPMG’s prior work with the DoN, including planning audits, identifying key risks, and executing audit procedures, demonstrates their capability to handle SOCOM’s unique and classified financial environment. KPMG’s experience in evaluating internal controls, performing substantive testing, and ensuring the accuracy of financial data positions them as the only contractor with the necessary skills and knowledge to meet SOCOM’s immediate needs.

Impact of Delay: A delay in contracting with KPMG would prevent SOCOM from conducting a timely and thorough assessment of its financial processes and controls, which is crucial for achieving a clean audit opinion. Such a delay would hinder SOCOM’s ability to rectify identified deficiencies, develop corrective action plans, and improve financial management practices. The inability to promptly address these issues would result in serious financial repercussions, including potential budgetary constraints, increased scrutiny from oversight bodies, and diminished trust in SOCOM’s financial stewardship. Given the classified nature of SOCOM’s operations, any lapse in financial management could also compromise national security.

III. Qualifications and Capabilities of KPMG

1. Assembly of Credible and Knowledgeable Subject Matter Experts: Proven success with United States Navy (U.S. Navy). In the fiscal year 2021, the United States Navy underwent financial statement audits. However, auditors could not express an opinion on the financial statements for the U.S. Navy Working Capital Fund, Navy General Fund, and the Marine Corps General Fund due to the complexity of the enterprise and its initial years of audit. U.S. Navy hired KPMG, as an external audit firm, to play a crucial role in the financial statement audits of the United States Navy. Based on their audit work, KPMG provided an opinion on the Navy’s financial statements and that opinion of the financial statements when presented fairly, express an “unmodified” opinion (also known as a “clean opinion”). Additionally, KPMG offered