OIG - Responses to Questions of 06-18-2008.doc

1. We are currently in the process of obtaining a facility clearance, and anticipate having an interim facility clearance well before the start of the fiscal year 2009 audit. Please confirm that it is acceptable for us to bid on this contract as long as we have the aforementioned clearance prior to the start date of the contract.

A facility security clearance at the secret level is required for contract performance. It is acceptable for firms that do not currently have a facility security clearance to bid on this contract. However, the clearance must be in place before the start date of the contract.

2. Does the Department desire the experience presented in Tab(a) Relevant Experience of the proposal to be limited to a set period of time (i.e., within the last 3 or 5 years)?

The first paragraph of page 96 should read:

Offerors should provide information on their experience performing Federal Government financial statement audits for the past 5 years. The offeror should provide the name(s) of the audited entity and the FY(s) audited and explain any complicated or unique accounting and auditing issues associated with these audits. Along with discussing the specific issues associated with these audits, the offerors must also explain their audit experience in the following areas, which are considered essential to this task order.

3. On page 96 (A-8) of the Solicitation, the Department requests, "for each of the FY 2007 and FY 2006 audits discussed in the offerors proposal, the name, address, telephone number, and fax number of COTRs must also be provided." Would the Department consider limiting the number of references to 3-5? We do not feel it is feasible to provide this information for every engagement discussed in the Relevant Experience section.

Firms may choose to provide references for only the five most significant audits discussed in the proposal; however, the Department is not limiting the number of references that firms can provide.

4. In regards to Tab(b) Specific Technical Approach section of the proposal, will the Department consider expanding the10 page limit to allow offerors to provide the level of detail that is requested?

The Department is willing to increase the page limit for Tab (b), Specific Technical Approach, to 15 pages, which should allow firms to provide adequate detail.

5. Page 97, C-1 of the Solicitation states, "please provide a tentative schedule of all key personnel and senior level management and above, that would be assigned to the audit..." Can you please clarify whether the Department is asking for ALL personnel or just KEY personnel (senior level management and above) to be included in this section? For a contract of this size, and given the page constraints of this section we advise limiting to key personnel.

The Department is requesting a list of all personnel that would be assigned to the project that the firm considers key, including all senior level management and above. Some firms may consider only senior management to be key personnel, while others may consider other staff key to the audit.

6. In reference to page 5 of the Solicitation, does the Department intend for the offeror to submit its own cost for the non-audit specialists (i.e. actuarial consultants) or use the amounts in B.4-Pricing of the Solicitation? The table on page 5 has a quantity of 1 LT for the non-audit specialist category, but in B.4-Pricing on page 13, the Schedule includes 2,000 hrs in year 1 and 1,500 hrs in subsequent years for non-audit specialists for $25,000 and $50,000, respectively. The numbers do not appear to make sense, please clarify what the Department intends for the offeror to provide for this line item (i.e. the dollars or hours provided).

The Department requests that firms submit the cost for non-audit specialists. Firm should not rely on the amounts included for that line item on pages 13-17 of the solicitation.

7. There does not appear to be a travel amount provided for the base year on the bottom of page 13. Please clarify.

CLIN 0011 was inadvertently left off. The following should have been included on page 13: 0011 Reimbursable Travel $100,000.

8. Generally speaking, what has the Department experienced for duration and team size for overseas trips?

Currently, the Department’s financial statement auditor sends 2 experienced staff to each post for five work days.

9. What portion of the IT work is performed at overseas locations?

Approximately 15-20 percent of the Department’s financial transactions originate at overseas locations. The overseas transactions are processed either at the financial center in Bangkok, Thailand, or the financial center in Charleston, South Carolina. Charleston handles approximately 75 percent of the number of overseas transactions and approximately 80 percent of the dollar value of overseas transactions.

10. What is the nature of the Department’s intragovernmental services (estimated number of agreements and number of transactions)?

The Department’s intragovernmental transactions consist of the following:

1) Federal Investments/Interest

2) Loans Receivable/Payable

3) Benefit Program Contributions (Receivables & Payables)

4) Accounts Receivables/Accounts Payables

5) Custodial liability

6) Advances & Prepayments to and from Others

7) Buy/Sell Activity (Costs/Revenues)

8) Imputed Costs/Imputed Financing Sources

9) Unexpended Appropriations Transferred In/Out

As of March 31, 2008, the Department had approximately 1,080 pending and approved reimbursable agreements. There are approximately 45,000 annual transactions related to the Department’s trading partners.

1. Are the FY 2007 financial statements and auditor reports available?

The FY 2007 financial statements and auditor report can be found at the following http://www.state.gov/s/d/rm/rls/perfrpt/2007/pdf/

2. Will the incumbent audit firm be able to propose on this solicitation?

Any firm can bid on this solicitation.

3. Can you provide the level of effort hours and dollars (labor and travel) for the FY 2007 and FY 2008 audit effort from the incumbent audit firm?

For FY 2007, the current financial statement auditor expended approximately 15,000 staff hours. For FY 2008, the current financial statement auditor plans to expend approximately 16,000 staff hours. The financial statement auditor spent approximately $60,000 in travel for each year.

4. Can you provide the number of locations outside of Washington, DC (CONUS and OCONUS) the auditors visited annually and the general procedures performed at these locations (i.e. documenting controls, substantive testing, etc.).

The current financial statement auditor performs work at approximately 6-7 overseas posts per year. In addition, it performs work at the financial centers in Bangkok, Thailand, and Charleston, South Carolina, annually.

The majority of the work performed by the current financial statement auditor at overseas posts is related to documenting and testing controls for significant overseas line items that includes, but is not limited to, property, undelivered orders, payroll expenses, other expenses, and revenue.

Work at the financial processing centers includes documenting and testing controls and performing substantive tests. In addition, IT work might be performed on systems in these locations (IT work is performed cyclically, so the work is dependent on what systems are included in the audit).

5. Is the FY 2008 financial statement audit, presumably currently underway, a full-scope audit approach and effort that includes testing on opening balances resulting from the FY 2007 disclaimer (versus a FY 2008 balance sheet only or another non-full scope audit approach)?

The FY 2008 financial statement audit is currently underway. It is a full-scope audit that includes testing opening balances resulting from the FY 2007 disclaimer.

1. Reference: Pages 5-9, Section B—Supplies or Services and Prices/Costs. For line item nos. 101 through 410, the identified hours by labor category do not match the hours in Section B.4, Pricing. In addition, the CLIN numbering system is different. Which is correct?

The offeror should propose estimates of time and the hour rate for all labor categories. The offeror should also address the three requirements that the proposal shall include as include as indicated on page 99 of 108.

2. Reference: Pages 5-9, Section B—Supplies or Services and Prices/Costs. There are * and ** designations by certain labor categories, but there is no legend in Section B to indicate what those designations mean. Please define * and **.

* Key Personnel

** This rate will be competed on individual delivery orders.

3. Reference: Pages 5-9, Section B—Supplies or Services and Prices/Costs. This section handles both non-audit specialists and reimbursable travel as a quantity of 1 Lot; however, Section B.4 identifies both hours and dollars for these CLINS. Which section is correct?

The Department requests that firms submit the cost for non-audit specialists. Firm should not rely on the hours or amounts included for that line item on pages 13-17 of the solicitation.

Firms should rely on the amount included for reimbursable travel on pages 13-17. This is the Department’s estimate based on expectations and experience. (Please note that CLIN 0011 was inadvertently left off of page 13, so please include this line in the response.)

4. Reference: Page 10, Section B.2—Type of Contract. The RFP states: “This is a Fixed Price, Indefinite Delivery/Indefinite Quantity Labor hour type contract.” However, other sections state this is a Fixed Price IDIQ (Section L.3). Section C.2—Scope, III-Pricing Format, states: “The government intends to award an indefinite delivery/indefinite quantity, labor hour contract with not to exceed amounts for a base year and four one year options.” Please clarify the contract type contemplated for this award.

The government intends to award an indefinite delivery/indefinite quantity, labor hour contract with not to exceed amounts (fixed price) for a base year and four one year options. This contract will be fixed price in that there is a projected total value of the contract. It is also ID/IQ in that the government is only projecting the hours we think it will take to perform the task and the labor rates are more important than the number of hours proposed.

5. Reference: Page 10, Section B.3—Description of Services. This section indicates that the offeror will audit the Department of State’s financial statements for FY2009 and FY2008, but all other references to the scope of work in the base year indicate that it will include an audit of the FY2009 financial statements, not FY2008. Which is correct?

The objective of this work will be to perform a full-scope audit of the Department’s FY 2009 financial statements. However, the Department’s annual financial report includes two financial statements presented in comparative format (for FY 2009, the financial report will include information on both FY 2008 and 2009). The successor auditor will be expected to comply with AICPA standards on relating the predecessor auditor’s results on the prior year financial statements.

6. Reference: Page 10, Section B.3—Description of Services and page 32, Section C.3—Statement of Work, IV. Audit Requirements. These sections indicate the Statement of Financing is included within the audit scope. The Statement of Financing is no longer included in the basic financial statements shown in OMB Circular No. A‑136. Will the Department of State consider updating the audit requirements?

The firm will be expected to conduct a full scope financial audit of the Department’s Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statements of Changes in Net Position, and Combined Statements of Budgetary Resources (collectively the Annual Financial Statements). In addition, the firm will be expected to perform appropriate procedures related to the note on the Reconciliation of Net Cost of Operations (proprietary) to Budget (formerly the Statement of Financing)

7. Reference: Page 13, Section B.4—Pricing. The base year hours in Section B.4 are 35,700 hours and the option years have 18,400 hours. Will the base year’s audit include only FY2009 and not FY2008? Should the base year hours be adjusted if the base year audit scope will include FY2008 and FY2009?

The objective of the work for the base year will be to perform a full-scope audit of the Department’s FY 2009 financial statements. However, the Department’s annual financial report includes two financial statements presented in comparative format (for FY 2009, the financial report will include information on both FY 2008 and 2009). The successor auditor will be expected to comply with AICPA standards on relating the predecessor auditor’s results on the prior year financial statements.

8. Reference: Pages 13-17, Section B.4—Pricing. For the Base Year, there is no line item for reimbursable travel (note that travel is specified for the option years, but not in the base year). What is the specified travel amount for the base year that will be used for evaluation purposes?

CLIN 0011 was inadvertently left off. The following should have been included on page 13: 0011 Reimbursable Travel $100,000.

9. Reference: Pages 13-17, Section B.4—Pricing. Regarding non-audit specialists, the base year CLIN 0007 identifies 2,000 hours and $25,000 ($12.50/hour), but the option years identify 1,500 hours and $50,000 ($33.33/hour). Why is the base year dollar amount lower than the option years, and is the dollar amount specified only for proposal evaluation purposes, given that any specialist hourly rates would be significantly higher than the computed rates?

The Department requests that firms submit the cost for non-audit specialists. Firm should not rely on the hours or amounts included for that line item on pages 13-17 of the solicitation.

10. Reference: Page 18, Section B.6—Travel, (c). This section indicates that the offeror will not be reimbursed for time while on travel status after 5:00 p.m. on weekdays or on weekends. If the successful offeror works extended hours or weekends while on travel, will the contractor be permitted to bill for this time?

While on travel status, the Department will not reimburse the employees’ time when not working on the assignment. If employees work extended hours (including weekends) while on travel, the contractor will be permitted to bill for this time.

11. Reference: Page 18, Section B.6—Payment-Compensations. Under this caption, the RFP indicates “The contractor shall provide...and estimate a number of hours for each labor category by phase…”. The language also appears on page 20 of 108 (Section C.2.III, Pricing Format) and in Section L-II Volume I, Tab C-4. How will these hours for each labor category be evaluated, given that Section B and B.4 specify an exact quantity of hours that will be priced for offer evaluation? Please clarify if the offeror is to provide both rates per hour for the exact hours stated in the RFP, as well as an estimate of number of hours, by labor category for conducting the FY2009 audit.

The offeror should provide his rate per labor category and an estimate of the number of hours by labor category for conducting the FY2009 audit.

12. Reference: Page 18, Section B.6—Payment-Travel. The RFP indicates “The contractor will prepare a cost estimate of the travel plans.” Is this travel cost estimate to be included in the proposal or only prepared after contract award? If it is to be included in the proposal, how will this travel estimate be evaluated, given that travel estimates are specified in Section B and B.4?

The contractor need not provide an estimate of travel plans. All travel will be pre-approved and reimbursement will be based on the costs incurred.

13. Reference: Page 18, Section B.6—Payment-Travel. The beginning sentence on this page appears to be missing. It reads: “ment Travel Regulations, Joint Travel Regulations, or the Federal Travel Regulation’s in effect…” Please provide the entire paragraph intended for this section.

Please replace the sentence fragment at the top of Page 18 with this:

Travel expenses reimbursed to contractor shall not exceed those reimbursable to a Federal civilian employee under the Government Travel Regulations, Joint Travel Regulations, or the Federal Travel Regulations in effect at the time of each trip and not exceed the following:

14. Reference: Pages 20-22, Section C.3—Statement of Work. The numbering sequence under Section I—Objectives is odd. We are unable determine if this listing is complete. For example, there are four 1’s and no 4, 7, 10, or 11. Please provide a complete listing of objectives.

The objectives included in the Statement of Work are complete, but the numbering was formatted incorrectly. This is a complete list of the objectives:

· Determine and report on whether the financial statements and related notes present fairly, in all material respects, the assets, liabilities, and net position; net costs, changes in net position, and budgetary resources, in conformity with the accounting principles generally accepted in the United States.

· Perform appropriate procedures consistent with AICPA Auditing Standard AU Section 558, "Required Supplementary Information," on all Required Supplementary Information included in the Department’s FY 2009 consolidated financial statements.

· Determine whether risk-assumed information (including projections of pensions) is presented fairly in all material respects, in accordance with the requirements of the Statement of Federal Financial Accounting Standards (SFFAS) No. 5, and any subsequent revisions. If a specialist is used for this work, the auditor shall comply with guidance in AU Section 336, “Using the Work of a Specialist.”

· Assess whether the other accompanying information, or its manner of presentation, is materially consistent with the information in the Annual Statements.

· Evaluate and report on internal control and the internal control environment related to the FY 2009 consolidated financial statements for the Department. This should include, but not be limited to, obtaining an understanding of the components of internal control and assessing the level of control risk relevant to the assertions embodied in the classes of transactions, account balances, and disclosures components of the financial statements.

· Review information system general and application controls in the Department’s applications that are significant to the financial statements to the extent necessary to (1) conclude whether general controls are properly designed and operating effectively, (2) consider application controls as part of the internal control assessment in the financial statement audit, and (3) support the Federal Financial Management Improvement Act (FFMIA) assessment.

· Obtain an understanding of the process by which the agency identifies and evaluates weaknesses required to be reported under Federal Managers’ Financial Integrity Act (FMFIA) and related agency implementing procedures. Compare material weaknesses disclosed during the audit with those material weaknesses reported in the agency's FMFIA report that relate to the financial statements. If material weaknesses were disclosed during the audit that were not reported in the Department’s FMFIA report, auditor will determine whether the failure to detect and report material weaknesses constitutes a reportable condition or material weakness in the entity’s internal control.

· Perform tests of compliance with laws and regulations that could have a direct and material effect on the Department’s FY 2009 consolidated financial statements, including FFMIA.

· For allocation transfers, coordinate early with “child” agencies to ensure that adequate audit coverage will be provided.

· Determine whether the special-purpose financial statements and accompanying notes are presented fairly, in all material respects, in conformity with the accounting principles generally accepted in the United States of America and the presentation requirements set forth in the Treasury Financial Manual (TFM), Chapter 4700.

· Obtain an understanding of internal control over the financial reporting process for the closing package financial statements and perform tests of those controls. Consider the internal control steps performed during the audit of the general purpose financial statements.

· Perform tests of compliance with TFM Chapter 4700. Consider the testing related to compliance with laws and regulations performed during the audit of the general purpose financial statements.

· Assess the reasonableness of FY 2009 retirement, health, and life insurance withholdings/contributions, and employee headcount information provided to the Office of Personnel Management (OPM), as required by OMB Bulletin 07-04, as amended. Comply with any additional guidance issued by either OPM or OMB during FY 2009.

15. Reference: Pages 32-35, Section C.3—Statement of Work, II, Prior Audits. This section states that the FY2007 audit was not completed by November 15, 2007. Was it completed after November 15, 2007? What was the FY2008 audit scope?

The financial statement auditor issued a disclaimer on the Department’s FY 2007 financial statements. The FY 2008 financial statement audit is a full-scope audit that includes testing opening balances resulting from the FY 2007 disclaimer.

16. Reference: Pages 32-35, Section C.3—Statement of Work, IV. Audit Requirements. With the exception of the period of performance information, this section is a duplication of Section B.3 (pages 10-13). Is this correct?

The information in these two sections is the same, except for the period of performance.

17. Reference: Page 35, Section C.3—Statement of Work, V. Staffing. Staffing indicates that the specialists (statisticians, information systems experts) should be identified along with expected number of hours for each. This seems to differ from the request to price these specialists according to Sections B and B.4, which indicate that these will be negotiated on individual delivery order. Please clarify what information should be provided in this IDIQ proposal response for the non-audit specialists.

This section asks the firms to provide specific information related to key personnel, including senior level management and above assigned to the contract. If the contractor considers statisticians or information systems experts to be key personnel, then they should comply with the information request. The firm will have to make a determination whether statisticians or information systems experts are considered key personnel for this audit.

18. Reference: Page 36, Section C.3—Statement of Work, V. Staffing, Confidentiality and Nondisclosure. Paragraph 6 states: “Except as authorized under this statement of work, the contractor and its employees shall not make any copies of this Department information, including software or applications that are not copyrighted.” As required by professional audit standards, auditors must be able to make and retain complete copies of its workpapers. Will the Department of State modify this sentence to include the following (additional words are in bold): “Except as authorized under this statement of work and as required by professional standards, the contractor and its employees shall not make any copies of this Department information, including software or applications that are not copyrighted.”?

As indicated in the solicitation, the Department expects the contractor to perform the audit in compliance with professional standards. Since professional standards include the requirements for maintaining appropriate supporting documentation for the audit, the Department has, in effect, authorized the contractor to make copies of needed information. However, the Department is willing to modify the sentence indicated in the question as follows:

Except as authorized under this statement of work and required by professional standards, the contractor and its employees shall not make copies of any Department information, including software or applications that are not copyrighted.

19. Reference: Page 36, Section C.3—Statement of Work, V. Staffing, Confidentiality and Nondisclosure. Paragraph 7 states: “Except to the extent necessary to perform the statement of work, any information that the contractor and its employees learn from and about Department data and computer systems shall not be recorded and such information, whether recorded or not, shall be handled as sensitive information under this agreement. The contractor may not use or disclose this data except as the contractor is permitted to use or disclose sensitive information under the statement of work and this nondisclosure agreement.” Will the Department of State modify the second sentence to include the following (additional words are in bold): “Except as required by law or legal process, the contractor may not use or disclose this data except as the contractor is permitted to use or disclose sensitive information under the statement of work and this nondisclosure agreement.”?

The Department is willing to modify the sentence indicated in the question as follows:

Except as required by law or legal process, the contractor may not use or disclose this data except as the contractor is permitted to use or disclose sensitive information under the statement of work and this nondisclosure agreement.

20. Reference Page 39, Section E—Inspection and Acceptance. The version dates are inconsistent (August 1996/ 5/95). Please confirm that the government is including FAR 52.246-4 Inspection of Services-Fixed Price (Aug 1996). Also, please note this section is repeated twice.

The Department confirms that it is including FAR 52.246-4, Inspection of Services – Fixed Price (Aug 1996). The Department notes that this section is repeated.

21. Reference: Page 44, Section F.4—Reporting Requirements: Reports, Detailed Auditing Planning Document. This section states that the Detailed Audit Planning Document draft is due in 15 days following award and, on page 44, the Proposed Audit Programs draft if due in 20 days following award. By contrast, the Audit Milestones on page 49 indicate that the Detailed Audit Planning Documents is due no later then 45 days following award and the Draft Audit Plan is due no later than 50 days following award. Please clarify when these documents are due.

The Detailed Audit Planning Document draft will be due no more than 45 business days after the date of the contract and the Proposed Audit Programs will be due no more than 50 business days after the date of the contract.

22. Reference: Page 61, Section H—Special Contract Requirements, H.6 - Safeguarding of Information. This provision includes the following sentence: “[The contractor and its employees] shall not communicate to any person any information known to them by reason of their performance of services under this contract that has not been made public, except in the necessary performance of their duties or upon written authorization of the contracting officer.” Would the Department of State agree to begin this sentence with the following: “Except as required by law or legal process,”?

The Department is willing to modify this sentence as follows:

They shall not communicate to any person any information known to them by reason of their performance of services under this contract that has not been made public, except in the necessary performance of their duties, upon written authorization of the contracting officer, or as required by law or legal process.

23. Reference: Page 61, Section H—Special Contract Requirements, H.6 - Safeguarding of Information. This section states in part that, “All documents and records (including photographs) generated during the performance of work under this contract shall be for the sole use of and become the exclusive property of the U.S. Government.” As required by professional audit standards, auditors must be able to make and retain complete copies of its workpapers. Would the Department of State agree to add the words “Except for the contractor’s working papers,” at the beginning of this sentence?

The Department is willing to modify the section as follows:

All documents and records (including photographs) generated during the performance of work under this contract shall be for the sole use of and become the exclusive property of the U.S. Government. However, the contractor will be allowed to make and retain a complete copy of the supporting documentation related to the audit in accordance with professional audit standards.

24. Reference: Page 61, Section H—Special Contract Requirements, H.7 - Legal Requirements. This section includes a reference to 18 U.S.C. 2971, a criminal statute; however, there is no 18 U.S.C. 2971. What statute is the Department referring to?

This should read Title 18 Section 2071.

25. Reference: Page 62, Section H—Special Contract Requirements, H.8 - Standards of Work. This section requires the offeror to agree that work shall conform to “the highest professional standards.” Would the Department of State change this phrase to “applicable professional standards”, which more adequately reflects the proposed services?

The Department expects the contractor chosen to perform the work in accordance with all applicable professional auditing standards. However, the term “highest professional standards” in section H.8 is meant in a more generic way. Although the Department is not providing a definition in the solicitation, most firms have some type of customer service goals or performance goals which would relate to this concept. For instance, in addition to complying with auditing standards, the Department wants contractors to provide services in a fair, honest, reliable, timely, flexible, and understandable manner, which would be the highest professional standards.

26. Reference: Page 62, Section H—Special Contract Requirements, H.9 - Security Requirements, paragraph (a). This section states: “A facility security clearance at the secret level is required for contract performance in accordance with the DD Form 254, Department of Defense Contract Security Classification Specification attached to this contract.” There is no DD Form 254 attached to the RFP. Is the offeror required to have a secret facility security clearance? If so, please provide the DD Form 254.

Yes, contractor needs a SECRET clearance at the start of contract performance. Yes, DD254 is adjoined as attachment 1 of RFP package.

27. Reference: Page 62, Section H—Special Contract Requirements, H.8 - Standards of Work, second paragraph. Would the Department of State add the word “applicable” before the word “Federal”?

The Department of State is clarifying that it only intends the contractor to comply with applicable Federal and State laws, rules, and regulations in effect or issued during the period of this contract.

28. Reference: Page 64, Section H—Special Contract Requirements, H.14 - Contractor Generated Material. This section states that, “All material generated by the contractor, including printouts and analytical reports in whatever form, e.g., computer tapes, audio, video, is the property of the Government…sold to any requesting Government or private activity without the prior written approval of the contracting officer.” Would the Department of State agree to add the words “Except for the contractor’s working papers,” at the beginning of the first and fourth sentence of this paragraph? Additionally, there appears to be a typo in the fourth sentence; the word “not” appears to be missing (Contractor generated material of any kind shall not be made available…).

The Department is willing to modify Section H.14 as follows:

All material generated by the contractor under this contract, including printouts and analytical reports in whatever form, e.g. computer tapes, audio, video, is the property of the Government. An inventory list of all such material shall be provided to the Government not less than sixty days prior to the end of the contract. The material shall be delivered to the Government upon completion of the contract except for any items of material that the Government has elected in writing not to take delivery. However, the contractor will be allowed to make and retain a complete copy of the supporting documentation related to the audit in accordance with professional audit standards. Contractor generated material of any kind shall not be made available or sold to any requesting Government or private activity without the prior written approval of the contracting officer. “Material” for purposes of this clause shall not be deemed to include contractor’s business and financial records, such as timesheets, payroll records, and internal memoranda that does not contain classified, proprietary or otherwise sensitive information obtained during contract performance.

29. Reference: Page 64, Section H—Special Contract Requirements, H.13 - Restrictions Against Disclosure, paragraph c. Would the Department of State agree to begin this sentence with the following: “Except as required by law or legal process,”?

The Department is willing to modify H.13 paragraph c as follows:

The contractor agrees not to disclose any information concerning the work under this contract to any persons or entities unless prior written approval is obtained from the contracting officer or as required by law or legal process.

30. Reference: Page 65, Section H—Special Contract Requirements, H.14 - Contractor Generated Material, Contractor System Security. This section states, “The contractor, its subcontractors and their employees shall not bring into Government facility or use on Government facilities laptop computers, cell phones, or similar devices.” Will the Department of State provide computers to the successful offeror as every CPA firm uses automated audit processes? Will the Department of State provide the successful offeror access to the Internet?

The Department will work with the contractor to accommodate their requirements for access to computers and the internet within the standards allowed by Department policies. All contract personnel requiring access to government computers will be required to participate in a half day security training session provided regularly by the Department. The Department will assist the contract personnel to register for this training.

31. Reference: Page 65, Section H—Special Contract Requirements, H.14 - Contractor Generated Material, Contractor System Security. Please provide the Department of State’s IT policies and standards referenced in this section.

“The contractor shall ensure all contractor IT equipment utilized under this statement of work is configured to industry security standards and requirements in accordance with the negotiated rules of engagement.”

32. Reference: Pages 67-79, Section I—Contract Clauses.

a. FAR 52.204-7 Central Contractor Registration (July 2006). Does the Department of State anticipate using the more current April 2008 version?

b. FAR 52.208-9 Contractor Use of Mandatory Sources of Supply. Please clarify if the correct version is June 2006.

c. FAR 52.219-9 Small Business Subcontracting Plan (Nov 2007). Does the Department of State anticipate using the more current April 2008 version?

a. Contractor should comply with FAR 52.204-7 issued in April 2008.

b. Contractor should comply with FAR 52.208-9 issued in June 2006.

c. Contractor should comply with FAR 52.219-9 issued in April 2008.

33. Reference: Pages 67-79, Section I—Contract Clauses. Assuming this is a labor hour contract, will the Department of State delete the following clauses?

a. FAR 52.243-1 Alt I- Changes—Fixed Price

b. FAR 52.249-8 Default (Fixed Price Supply and Service)

c. Section G.2 DOSAR 652.232-70 Payment Schedule and Invoice Submission (Fixed Price)

d. 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity No. This is also a fixed price contract in that there is a project value of the contract and a ceiling amount that the Department expects to spend for these services.

34. Reference: Page 88, Section L—Instructions, Conditions, and Notices to Offerors and Respondents. This section includes clause 52.232-28, Invitation to Propose Performance-Based Payments. Referencing page 20, Section C.2—Scope, V, which discusses monthly invoices, and page 10, Section B.2—Type of Contract, which indicates that this is a labor-hour contract, is 52.232-28 appropriate for a labor hour contract with monthly billings?

Yes.

35. Reference: Page 92, Section L.2—FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data. This section states that the submission of cost or pricing data is not required. However, Section L.11—Proposal Preparation Instructions, Volume II-Price Proposal, seems to indicate that cost buildups are required. Please clarify what information the offeror is to provide as submission of cost or pricing.

The submission of cost or pricing data is required. Page 99 of the solicitation provides information on what the Department expects to be included in the price proposal.

36. Reference: Page 92, Section L.2—FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data. This section states offerors shall provide information in accordance with Section L.13 Business Management Questionnaire (Applicable to Commercial and Nonprofit Organizations). There is not a Section L.13 within the RFP. Please clarify what information the offeror is to provide as submission of cost or pricing.

Page 99 of the solicitation provides information on what the Department expects to be included in the price proposal.

37. Reference: Page 92, Section L.2—FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data. This section of the solicitation incorporates FAR 52.215-21, which states submission of cost or pricing data is not required. Therefore, would the Department of State delete the following cost or pricing data clauses: FAR 52.215-11 Price Reduction for Defective Cost or Pricing Data--Modifications; 52.215-12 Subcontractor Cost or Pricing Data; and 52.215-13 Subcontractor Cost or Pricing Data--Modifications?

No.

38. Reference: Page 95 Section L.11—Proposal Preparation Instructions, Volume I - Technical Proposal, Tab (a) - Relevant Experience. This section indicates “For each of the FY 2007 and FY 2006 audits discussed in the offeror’s proposal, the name address, telephone number, and fax number of the COTRs must be provided.” Our firm has numerous audit clients during FY2006 and FY2007. Given the page restriction to this section (limited to 10 pages), would the Department of State allow offerors to limit their references to their 5 largest clients?

Firms may choose to provide references for only the five most significant audits discussed in the proposal.

39. Reference: Page 96 Section L.11—Proposal Preparation Instructions, Volume I - Technical Proposal, Tab (a) - Relevant Experience. There appears to be missing information. The first paragraph states, “Along with discussing the specific issues associated with these audits...” Which audits and what specific issues is the Department of State referring to?

The first paragraph of page 96 should read:

Offerors should provide information on their experience performing Federal Government financial statement audits for the past 5 years. The offeror should provide the name(s) of the audited entity and the FY(s) audited and explain any complicated or unique accounting and auditing issues associated with these audits. Along with discussing the specific issues associated with these audits, the offerors must also explain their audit experience in the following areas, which are considered essential to this task order.

40. Reference: Page 96 Section L.11—Proposal Preparation Instructions, Volume I - Technical Proposal, Tab (a) - Relevant Experience, A-1. The phrase “Performance and Accountability Reports (or Accountability Reports)” appears to have been inserted, separating the word decentralized. Please provide a corrected sentence.

This sentence should read: Consolidated financial statements of an Executive Department or Federal agency with a decentralized structure.

41. Reference: Page 98, Section L.11—Proposal Preparation Instructions, Volume I - Technical Proposal, Tab (c), C-2. Are the one-page summaries of additional relevant experience for each individual proposed included in the 15 page restriction for this section?

The one-page summaries of additional relevant experience for proposed individuals will NOT count towards the 15 page limit for Proposal Instructions, Tab (c).

42. Reference: Page 99, Section L.11—Proposal Preparation Instructions, Volume II - Price Proposal. We believe that allowing General Services Administration (GSA) rates as a basis of estimate will increase competition under this procurement. Many small and large companies are not able to breakdown costs since they are market driven. May offerors submit GSA rates as a basis of estimate, which have already been determined by the Government to be fair and reasonable for audit services, in lieu of the cost information required in this section?

Firms may submit either GSA rates or discounted GSA rates as a basis of estimate in lieu of the cost information required in this section.

43. Reference: Pages 100-108, Section M—Evaluation Factors for Award. Section M does not appear to contain the Evaluation Factors for Award, but instead repeats Section L.1 through L.11. Please provide evaluation factors for this procurement.

The Department does acknowledge an error in Section M. Section M should read as follows:

SECTION M — EVALUATION FACTORS FOR AWARD

PROVISIONS INCORPORATED BY REFERENCE

FAR SOURCE

TITLE AND DATE

52.216-27

SINGLE OR MULTIPLE AWARDS (OCT 1995)

52.217-5

EVALUATION OF OPTIONS (JUL 1990)

M.1 52.217-05

EVALUATION OF OPTIONS

(JUL 1990)

Except when it is determined in accordance with FAR 17.206(b) not to be in the Government’s best interest, the Government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. Evaluation of options will not obligate the Government to exercise the option(s).

M.2

EVALUATION AND AWARD - NEGOTIATED

(a) Award shall be made to that offeror whose proposal, conforming to this solicitation, is determined to be most advantageous to the Government, cost or price and other factors considered. Other factors include:

(1) Other cost or price-related factors identified in this solicitation.

(2) The offeror’s responsibility for award, as defined in FAR 9.104-1 including any special responsibility criteria identified in Section L of this solicitation.

(3) The offeror’s technical evaluation and score resulting from application of the evaluation factors in paragraph M-4, Technical Evaluation Factors of this solicitation.

(4) In determining which proposal offers the greatest value or advantage to the Government, overall technical merit will be considered more important than price or cost. Between acceptable proposals with a significant difference in technical rating, a determination will be made as to whether the additional technical merit or benefits reflected by a higher priced proposal warrants payment of the additional price or cost.

M.3

SUBJECTIVE TECHNICAL SCORING

Subjective technical scoring will be as follows:

EXCEPTIONAL - Exceeds specified performance or capability in a beneficial way; has a high probability of success; no significant weaknesses.

ACCEPTABLE - Satisfies evaluation criteria. Good probability of success; weaknesses can be readily corrected.

MARGINAL - Fails to satisfy the evaluation criteria; low probability of success; significant deficiencies.

UNACCEPTABLE - Fails to minimally satisfy the evaluation criteria; significant deficiencies, not correctable without a major revision to the proposal.

M.3 TECHNICAL EVALUATION FACTORS (05/95)

Proposals will be evaluated based on the following technical evaluation factors. Factors A, B and C are of equal importance. Factors D, E and F are of equal importance but overall are of less importance than Factors A, B and C.

Factor A – Relevant Experience

Factor B – Specific Technical Approach

Factor C – Past Performance

Factor D – Qualifications of Staff

Factor E – Independence and Quality Control

FACTOR A – Relevant Experience

Subfactor A-1: Consolidated financial statements of an Executive Department or Federal agency with a decentralized structure.

Subfactor A-2: Experience conducting tests of information systems control environment.

Subfactor A-3: Experience with Actuarial Accounting.

Subfactor A-4: Experience with Federal Grant Accounting.

Subfactor A-5: Experience with Working Capital Funds.

Subfactor A-6: Experience with preparing Performance and Accountability Reports.

Subfactor A-7: Agreed-upon procedures on the reasonableness of retirement, health, etc as required by OM Bulletin 01=-02 and the Treasury Financial Manual.

Subfactor A-8: Performing audits of independent service organizations.

FACTOR B - Specific Technical Approach

Subfactor B-1: Demonstrate understanding of accounting and auditing issues.

Subfactor B-2: Approach to performing financial statement audit work for a decentralized client.

Subfactor B-3: Approach to transitioning from the current auditor to limit impact on time and expense of the audit.

Subfactor B-4: Approach to assessing the effectiveness of the information system control environment

FACTOR C – Past Performance

Under this factor the Department of State will evaluate the offerors’s past performance as an indicator of an offeror’s ability to perform the contract. The Government will evaluate the information obtained relative to the past performance of the offeror and significant subcontractors or affiliates, if any. This evaluation may be used both for determining responsibility and for qualitative evaluation purposes. In conducting the evaluation of proposals, the Government reserves the right to utilize all evaluation information available at the time of evaluation, whether provided by the offeror in its proposal or obtained from other sources. For example, the Government may rely on information contained in its own records (such as Government audit agencies), information made available through commercial sources (such as Dunn and Bradstreet reports). Offerors may be given the opportunity to rebut negative information received by the Government during discussions, if discussions are held. NOTE: IN ACCORDANCE WITH FAR 15.305(A)(2)(IV), OFFERORS WITHOUT A RECORD OF RELEVANT PAST PERFORMANCE OR FOR WHOM INFORMATION ON PAST PERFORMANCE IN NOT AVAILABLE, THE OFFEROR MAY NOT BE EVALUATED FAVORABLY OR UNFAVORABLY ON PAST PERFORMANCE: FOR THE PURPOSES OF THIS SOLICITATION, “FAVORABLY OR UNFAVORABLY” IS DEFINED AS ACCEPTABLE PAST PERFORMANCE IN THE CASE OF TECHNICALLY ACCEPTABLE IDENTICAL OFFERS, PREFERENCE WILL BE GIVEN THE OFFFEROR WITH PAST RELEVANT PERFORMANCE.

Subfactor C-1: Conformance to specifications and standards of good workmanship

Subfactor C-2: Adherence to contract schedules Subfactor C-3: Compliance with terms and conditions

Subfactor C-4: Contract cost management

Subfactor C-5: General Business Conduct

FACTOR D – Qualifications of Staff

Subfactor – 1: Experienced, qualified and trained staff.

Subfactor – 2: Obtain security clearance at the “SECRET” level.

Subfactor – 3: Identify key personnel.

FACTOR E – Independence and Quality Control

Under this factor the Department of State will evaluate how the offeror assures that its work products meet or exceed professional standards. Specifically, the General Standards, included in Government Auditing Standards July 2007 Revision.

Subfactor E-1 Professional proficiency

Subfactor E-2 Independence

Subfactor E-3 Due Professional care

Subfactor E-4 Internal Quality Control System

M.5

EVALUATION OF PRICE

A price analysis is anticipated to be performed to include examination of the prices offered for the base and all option years, the range of prices proposed by offerors, the experience of the competing offerors in doing the work, and the exceptions taken by any offeror to the specifications, delivery schedule or other terms of the Request for Proposal to determine if the negotiated price is fair and reasonable. The Government’s determination of price reasonableness will be based on the validation, verification, and analysis of the composition of each loaded price.

M.6

PROMPT PAYMENT DISCOUNTS

Any prompt-payment discounts offered will not be evaluated, but may be taken as offered.

M.7 NEGOTIATIONS AND FINAL PRICE REVISION (FPR)/AWARD WITHOUT DISCUSSIONS

The Government may conduct negotiations with each offeror within the competitive range, followed by a request for Final Proposal Revision (far 15.307(b). The competitive range shall be determined on the basis of price and technical evaluation of the factors stated in this solicitation, and shall include all proposals that have a reasonable chance of being selected for award. HOWEVER, OFFERORS ARE CAUTIONED TO SUBMIT THEIR PRICING PROPOSAL ON THE MOST FAVORABLE BASIS, SINCE THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD WITHOUT FURTHER NEGOTIATION OR DISCUSSION IN ACCORDANCE WITH FAR SUBPART 15.306(a)(3).

44. There are several confidentiality provisions throughout the RFP (page 36 of the SOW, Section H.6, and Section H.13). Would the Department of State consider consolidating these provisions in one location, as these provisions are somewhat contradictory?

The Department does not believe that these provisions are contradictory and will not consolidate them into one location.

45. There are two Organizational Conflict of Interest (OCI) provisions within the RFP (page 61, Section H.5 and page 87, Section K). These provisions are similar, but not identical. Would the Department of State delete the second OCI provision within Section K, page 87 of the RFP?

These two paragraphs are standard items included in all solicitations.