At a meeting of the CalPERS Risk and Audit Committee, members voted to recommend that the full board award the independent-auditor contract to BDO, subject to final negotiations and satisfaction of all requirements, and directed staff to begin contract talks with BDO immediately; if staff concludes negotiations are unsuccessful, staff was directed to open negotiations with the next-highest scoring finalist, Plante Moran.

The recommendation follows committee interview scoring that placed BDO first on the interview portion (700 points). Justin Heeb, CalPERS contracts and procurement manager, announced the committee interview scores and the combined totals: “BDO USA 700 points for their interview score … Combined with the preliminary technical scores, BDO USA received a total score of 1,050 points including incentive points. Crowe LLP received a total score of 1,010.96 points. KPMG received a total score of 1,018.68 points, and Plante Moran received a total score of 1,034.59 points.”

Why it matters: the committee’s recommendation starts the final procurement step for an audit contract that validates CalPERS financial statements and internal controls. The committee framed its discussion around audit technical competence, project management and continuity, and emerging risks such as artificial intelligence and cybersecurity.

Committee discussion emphasized different strengths among the four finalists. Committee member Kevin Pelkey said BDO’s discussion of cybersecurity and AI influenced his ranking: “they addressed the cybersecurity and AI issue … to the extent that I felt was very appropriate,” and he placed BDO at the top of his list. Other members praised Plante Moran for culture and public-sector experience; one member said the firm showed “both the technical skill side and the human skill side” in its presentation. Crowe and KPMG were described as technically strong; several members said Crowe performed smoothly once its team relaxed and KPMG was strong on technical matters.

Committee members also asked staff about recent auditing history. Staff said BDO has served as CalPERS’ auditor for about six years; before that KPMG performed an interim engagement for roughly one year to finish a prior auditor’s term, and timing of the RFP process led to BDO stepping in under the current multiyear arrangement.

Formal actions: the committee first voted to assign interview-point allocations to each finalist (BDO 700; Plante Moran 690; KPMG 680; Crowe 670). That motion was moved and seconded, and passed by roll call with one member recording a dissent on the allocation. Following announcement of the final combined scores, a separate motion to recommend that the board award the contract to BDO — subject to final negotiations and satisfaction of requirements, and to direct staff to begin negotiations with BDO and, if unsuccessful, to negotiate with Plante Moran — was moved, seconded and passed by the committee.

Committee members explicitly distinguished discussion from formal action: they debated relative strengths, asked staff factual questions about prior contracts and timelines, then used motions and roll-call votes to record the committee’s formal recommendations. Committee counsel and staff reminded members of procurement rules and a restricted-contact policy under Government Code section 20153.

What comes next: staff will open contract negotiations with BDO. If staff, in its discretion, determines negotiations are not successful, staff will begin negotiations with Plante Moran, the next-highest scoring finalist. The committee’s recommendation will be forwarded to the full CalPERS board for final award and contract approval.

Meeting context: committee members characterized the finalist pool as strong and said interviews were substantive, with particular attention to cybersecurity, AI, project-management approach and the firms’ relationships to public-sector rules and audit standards.