Treasury's $320M AT&T contract for broad networking and telecommunications services awarded via full and open competition

Contract Overview

Contract Amount: $320,206,880 ($320.2M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of the Treasury

Start Date: 2020-12-23

End Date: 2026-09-30

Contract Duration: 2,107 days

Daily Burn Rate: $152.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: ESTABLISH A BROAD NETWORKING AND TELECOMMUNICATIONS SERVICE ENVIRONMENT TO MEET ITS NETWORK SERVICES (WIDE AREA AND LOCAL AREA NETWORK), VOICE TELECOMMUNICATIONS SERVICES, AUDIO/VIDEO/WEB CONFERENCING, AND CYBER REQUIREMENTS.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20224

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $320.2 million to AT&T ENTERPRISES, LLC for work described as: ESTABLISH A BROAD NETWORKING AND TELECOMMUNICATIONS SERVICE ENVIRONMENT TO MEET ITS NETWORK SERVICES (WIDE AREA AND LOCAL AREA NETWORK), VOICE TELECOMMUNICATIONS SERVICES, AUDIO/VIDEO/WEB CONFERENCING, AND CYBER REQUIREMENTS. Key points: 1. The contract aims to establish a comprehensive networking and telecommunications environment, encompassing Wide Area Network (WAN), Local Area Network (LAN), voice, conferencing, and cyber capabilities. 2. Awarded to AT&T Enterprises, LLC, this contract represents a significant investment in the IRS's foundational IT infrastructure. 3. The fixed-price structure with economic price adjustment aims to mitigate risks associated with fluctuating market costs for telecommunications services. 4. The duration of over 2100 days suggests a long-term strategic commitment to these services. 5. The contract's scope covers essential services critical for the IRS's operational efficiency and data security. 6. The use of full and open competition is a positive indicator for achieving competitive pricing and best value.

Value Assessment

Rating: good

Benchmarking this contract's value is challenging without specific service level agreements and detailed pricing breakdowns. However, the $320 million ceiling over approximately five years for comprehensive networking and telecommunications services for a large agency like the IRS suggests a potentially competitive rate, especially given the full and open competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. This approach generally fosters a competitive environment, encouraging bidders to offer their best pricing and technical solutions to secure the award.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing services at a fair market price, preventing potential overspending associated with less competitive procurement methods.

Public Impact

Taxpayers benefit from improved efficiency and security in IRS operations due to robust telecommunications and networking. The IRS gains enhanced capabilities in network services, voice telecommunications, and conferencing, supporting its mission delivery. The contract impacts the District of Columbia, where the IRS is headquartered and likely where many of these services will be managed or utilized. The contract supports the IT and telecommunications workforce, both within the government and at AT&T.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if transition to a new provider is complex or costly.
Reliance on a single large provider for critical infrastructure could pose systemic risks.
Economic price adjustments could lead to costs exceeding initial projections if market conditions fluctuate significantly.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Long-term contract provides stability and predictability for essential IT services.
Comprehensive scope addresses multiple critical telecommunications needs under one contract.

Sector Analysis

The telecommunications and networking sector is characterized by rapid technological advancements and significant infrastructure investments. This contract falls within the Wired Telecommunications Carriers industry (NAICS 517110), a mature market dominated by large providers like AT&T. The IRS's spending aligns with government-wide efforts to modernize IT infrastructure and ensure secure, reliable communication networks.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large prime contract awarded to AT&T, it is possible that AT&T may engage small businesses for certain components or services, but this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. Accountability measures are embedded in the contract's performance standards and service level agreements. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly available.

Related Government Programs

IRS IT Modernization Initiatives
Federal Government Wide Area Network (WAN) Services
Telecommunications Infrastructure Modernization
Cybersecurity Services Contracts

Risk Flags

Long-term contract duration may limit flexibility for future technology adoption.
Economic price adjustment clause introduces potential for cost overruns.
Reliance on a single large vendor for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $320.2 million to AT&T ENTERPRISES, LLC. ESTABLISH A BROAD NETWORKING AND TELECOMMUNICATIONS SERVICE ENVIRONMENT TO MEET ITS NETWORK SERVICES (WIDE AREA AND LOCAL AREA NETWORK), VOICE TELECOMMUNICATIONS SERVICES, AUDIO/VIDEO/WEB CONFERENCING, AND CYBER REQUIREMENTS.

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $320.2 million.

What is the period of performance?

Start: 2020-12-23. End: 2026-09-30.

What is the historical spending pattern for similar networking and telecommunications services at the IRS?

Analyzing historical spending for the IRS on networking and telecommunications requires access to detailed procurement data over several fiscal years. Typically, agencies like the IRS have ongoing needs for these services, often through multiple contracts with various providers. Spending can fluctuate based on infrastructure upgrades, technology refreshes, and changes in service requirements. Without specific historical data for the IRS's telecommunications and networking procurements, it's difficult to establish a precise pattern. However, it is common for large federal agencies to spend tens to hundreds of millions of dollars annually on such services, reflecting the complexity and scale of their operations and the critical nature of reliable communication networks.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to industry standards for similar services?

The Fixed Price with Economic Price Adjustment (FPEPA) pricing structure is common in long-term government contracts, particularly for services where input costs (like labor, fuel, or raw materials) are subject to market volatility. For telecommunications and networking services, this structure allows the contractor to adjust prices based on pre-defined economic indices, protecting them from unforeseen cost increases. While it offers some cost certainty for the government compared to purely cost-reimbursable contracts, it also carries the risk of price escalation. Industry standards often involve a mix of fixed-price components for stable services and adjusted pricing for components susceptible to market fluctuations. The effectiveness of FPEPA hinges on the clarity and fairness of the economic adjustment clauses and the government's ability to negotiate favorable terms.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided award data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a comprehensive networking and telecommunications services contract of this magnitude, typical KPIs and SLAs would likely include metrics related to network uptime and availability (e.g., 99.99% uptime), latency, bandwidth performance, call quality for voice services, response times for technical support, and cybersecurity incident response times. These metrics are crucial for ensuring the IRS receives the quality of service required for its operations and for holding the contractor accountable. The specific details of these KPIs and SLAs would be outlined in the contract's statement of work and performance requirements.

What is AT&T's track record with similar large-scale federal telecommunications contracts?

AT&T has a long and extensive track record of providing telecommunications and networking services to the U.S. federal government, including numerous large-scale contracts. They are a major telecommunications provider with significant infrastructure and experience serving government agencies. Past performance evaluations, available through sources like the Federal Procurement Data System (FPDS) or agency-specific past performance databases, would offer detailed insights into AT&T's performance on similar contracts, including their adherence to schedules, quality of service, and responsiveness. Generally, AT&T is considered a capable provider for such complex requirements, though like any large contractor, specific contract performance can vary.

What are the potential risks associated with relying on a single vendor for such critical infrastructure?

Relying on a single vendor for critical infrastructure like networking and telecommunications presents several potential risks. These include vendor lock-in, where transitioning to a new provider becomes technically complex and prohibitively expensive. There's also the risk of service disruption if the vendor experiences financial difficulties, operational failures, or security breaches. Furthermore, a lack of competition can reduce the incentive for the vendor to innovate or offer the most cost-effective solutions over the long term. Systemic risks are also a concern; a failure in the vendor's core systems could have widespread impacts across the agency. Mitigating these risks often involves robust contract management, clear performance standards, contingency planning, and potentially exploring multi-vendor strategies for future procurements.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Tyto Athene, LLC

Address: 4807 STONECROFT BLVD, CHANTILLY, VA, 20151

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $771,972,770

Exercised Options: $374,967,976

Current Obligation: $320,206,880

Actual Outlays: $161,877,616

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3000

IDV Type: IDC

Timeline