DOT awards $136M for telecommunications support, with Verizon Business Network Services LLC as the contractor

Contract Overview

Contract Amount: $136,092,148 ($136.1M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of Transportation

Start Date: 2023-04-04

End Date: 2025-05-31

Contract Duration: 788 days

Daily Burn Rate: $172.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CREATE DELIVERY ORDER 0001 SUPPORT SERVICES.

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Transportation obligated $136.1 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: CREATE DELIVERY ORDER 0001 SUPPORT SERVICES. Key points: 1. Contract value of $136M over approximately 2.6 years suggests a significant investment in telecommunications infrastructure. 2. The contract was awarded using full and open competition, indicating a potentially competitive bidding process. 3. The fixed-price contract type may offer cost certainty for the government, shifting some risk to the contractor. 4. The primary service falls under Wired Telecommunications Carriers, a critical sector for government operations. 5. The duration of the contract (788 days) allows for sustained support but requires ongoing performance monitoring. 6. The award amount of $17.2M above the benchmark warrants scrutiny of pricing and value.

Value Assessment

Rating: fair

The contract's total value of $136M over roughly 2.6 years averages to approximately $52.3M annually. This is a substantial amount for telecommunications support services. Benchmarking against similar large-scale federal telecommunications contracts is necessary to fully assess value for money. The award amount being $17.2M higher than the benchmark suggests potential overpayment or unique service requirements not captured by the benchmark.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' which theoretically allows all responsible sources to submit an offer. This method is generally preferred for maximizing competition and achieving favorable pricing. However, the number of bidders is not specified, which is crucial for understanding the actual level of competition and its impact on price discovery. A high number of bidders typically leads to better price negotiation.

Taxpayer Impact: Full and open competition is intended to benefit taxpayers by fostering a competitive environment that drives down costs and encourages innovation, leading to better value for public funds.

Public Impact

The Federal Aviation Administration (FAA) is the primary beneficiary, receiving essential wired telecommunications services. These services are critical for supporting the agency's operational needs and communication infrastructure. The contract is geographically focused on Virginia, where the services are likely delivered or managed. The contract supports jobs within the telecommunications sector, particularly for Verizon Business Network Services LLC and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The award amount exceeded the benchmark by $17.2M, raising concerns about potential overpricing or inadequate benchmark data.
The lack of specific details on the number of bidders in the 'full and open competition' makes it difficult to assess the true competitive landscape.
The long contract duration could lead to vendor lock-in if not managed carefully with performance reviews.

Positive Signals

Awarded through full and open competition, suggesting an effort to maximize market participation.
The firm fixed-price contract type provides budget certainty for the government.
The contract supports a critical government function (telecommunications) for the FAA.

Sector Analysis

The Wired Telecommunications Carriers industry (NAICS 517111) is a mature sector characterized by significant infrastructure investment and ongoing technological evolution. Federal spending in this area supports essential government operations, including communication networks, data transmission, and emergency services. The market is often dominated by large providers due to the capital-intensive nature of network infrastructure. This contract represents a significant portion of spending within this sub-sector for the FAA, highlighting the importance of reliable telecommunications for aviation safety and operations.

Small Business Impact

The provided data indicates that small business participation (ss and sb flags are false) was not a primary set-aside consideration for this specific contract. This suggests that the primary focus was on obtaining the best value from the broader market. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem in supporting this large federal requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Transportation's Office of the Inspector General (OIG) and the contracting officers within the Federal Aviation Administration. Transparency is facilitated by the contract award being publicly available. Accountability measures would be tied to performance metrics outlined in the contract's statement of work and delivery orders. Regular performance reviews and audits would be key oversight mechanisms.

Related Government Programs

Federal Aviation Administration Telecommunications Services
Department of Transportation IT and Communications Contracts
Wired Telecommunications Carrier Services
Government Wide Acquisition Contracts (GWACs) for Telecommunications

Risk Flags

Potential overpricing indicated by award amount exceeding benchmark.
Lack of detail on number of bidders limits assessment of competition effectiveness.
Long contract duration may pose risks of vendor lock-in or obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $136.1 million to VERIZON BUSINESS NETWORK SERVICES LLC. CREATE DELIVERY ORDER 0001 SUPPORT SERVICES.

Who is the contractor on this award?

The obligated recipient is VERIZON BUSINESS NETWORK SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $136.1 million.

What is the period of performance?

Start: 2023-04-04. End: 2025-05-31.

What specific telecommunications services are included under this delivery order?

The provided data indicates the contract is for 'CREATE DELIVERY ORDER 0001 SUPPORT SERVICES' within the Wired Telecommunications Carriers sector. While the specific services are not detailed in the summary data, typical support services in this category for an agency like the FAA could include the provision, installation, maintenance, and management of wired network infrastructure, such as dedicated data lines, voice circuits, broadband internet access, and potentially related hardware and software. The scope would likely be tailored to the FAA's operational requirements for secure and reliable communication across its facilities.

How does the $17.2M difference from the benchmark compare to similar large federal telecommunications contracts?

Without access to the specific benchmark data or a broader dataset of comparable federal telecommunications contracts, it is difficult to definitively state how the $17.2M difference compares. However, a difference of this magnitude (approximately 14.5% above the benchmark) warrants further investigation. It could indicate that the benchmark is outdated, does not accurately reflect the specific technical requirements or service levels needed by the FAA, or that Verizon Business Network Services LLC's bid was indeed higher than expected for the services rendered. A detailed analysis would involve comparing the contract's scope, duration, and service level agreements against other similar awards to ascertain if this deviation is common or an outlier.

What are the potential risks associated with a firm fixed-price contract of this magnitude and duration?

A firm fixed-price (FFP) contract of $136 million over nearly three years, while offering cost certainty, carries specific risks. For the government, the primary risk is paying a premium if costs decrease or if the contractor inflates their price to cover unforeseen expenses. If the scope of work needs to change significantly, managing modifications to an FFP contract can become complex and potentially costly. For the contractor, the risk lies in underestimating costs, which could lead to reduced profit margins or even losses. Given the duration, there's also a risk of technological obsolescence if the contracted services don't keep pace with industry advancements, potentially requiring costly upgrades or new contracts.

What is Verizon Business Network Services LLC's track record with federal telecommunications contracts?

Verizon Business Network Services LLC is a major telecommunications provider with a significant history of contracting with the U.S. federal government. They are known to hold numerous contracts across various agencies for a wide range of telecommunications services, including network infrastructure, managed services, and cybersecurity solutions. Their track record generally reflects their position as a large, established player in the market. However, a detailed assessment would require reviewing specific past performance evaluations, any contract disputes, and the overall value and scope of their previous federal awards to gauge their reliability and performance consistency.

How does the $136M spending on this contract fit into the broader context of FAA's telecommunications budget?

The $136 million awarded to Verizon Business Network Services LLC represents a substantial investment in telecommunications support for the FAA. To understand its context, this figure needs to be compared against the FAA's total annual budget and its specific allocations for IT, communications, and infrastructure. For instance, if the FAA's total budget is in the tens of billions, $136 million might represent a smaller, albeit critical, percentage. Conversely, if it's a significant portion of their operational technology budget, it highlights the critical nature of these services. Without the FAA's overall budget figures, it's hard to quantify its relative importance, but it is clearly a major contract for essential services.

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 - NETWORK

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Verizon Maryland LLC

Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147

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

Financial Breakdown

Contract Ceiling: $136,092,149

Exercised Options: $136,092,148

Current Obligation: $136,092,148

Actual Outlays: $136,092,148

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 693KA823D00010

IDV Type: IDC

Timeline