HHS awards $398.5M EIS contract to Verizon for wired telecommunications, impacting VA facilities

Contract Overview

Contract Amount: $398,549,624 ($398.5M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2020-09-01

End Date: 2026-08-31

Contract Duration: 2,190 days

Daily Burn Rate: $182.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: IT

Official Description: CENTRALIZED HHS EIS REQUIREMENT

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $398.5 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: CENTRALIZED HHS EIS REQUIREMENT Key points: 1. The contract is a significant award within the wired telecommunications sector. 2. Verizon Business Network Services LLC is the sole awardee for this centralized requirement. 3. The contract spans over 5 years, indicating a long-term need for these services. 4. The fixed-price with economic price adjustment structure aims to manage cost fluctuations.

Value Assessment

Rating: good

The total award value of $398.5M over 2190 days suggests a substantial investment. Benchmarking against similar large-scale telecommunications contracts is necessary for a precise value assessment, but the duration and scope indicate a significant, albeit potentially fair, price for comprehensive services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. This method allows multiple vendors to bid, theoretically driving down costs and ensuring the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for essential telecommunications services across HHS and VA facilities.

Public Impact

Ensures critical wired telecommunications infrastructure for HHS and VA operations. Supports the modernization and maintenance of vital communication networks. Potential for improved service delivery and reliability through a single, centralized contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment could lead to cost increases beyond initial projections.
Reliance on a single vendor for a critical infrastructure requirement.
Contract duration may not align with rapidly evolving telecommunications technology.

Positive Signals

Centralized approach simplifies management and potentially reduces administrative overhead.
Full and open competition should ensure a competitive initial price.
Long-term contract provides stability for essential service provision.

Sector Analysis

This contract falls within the IT and Telecommunications sector, specifically Wired Telecommunications Carriers. Spending in this area is critical for government operations, supporting everything from internal communications to public-facing services. Benchmarks for similar large-scale, multi-year telecommunications contracts are typically in the hundreds of millions to billions of dollars.

Small Business Impact

The data indicates this contract was not awarded to small businesses (ss: false, sb: false). While this specific award may not directly benefit small businesses, the overall IT spending by HHS and VA likely includes opportunities for small businesses in subcontracting or other related IT services.

Oversight & Accountability

The award was made by the Office of the Assistant Secretary for Financial Resources within HHS, indicating a level of financial oversight. The contract's duration and value warrant ongoing monitoring to ensure performance and cost control, particularly given the economic price adjustment clause.

Related Government Programs

Wired Telecommunications Carriers
Department of Health and Human Services Contracting
Office of the Assistant Secretary for Financial Resources Programs

Risk Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
Long contract duration (5 years) may not keep pace with technological advancements.
Potential for vendor lock-in with a single provider for critical infrastructure.
No small business participation noted on the prime contract.
Reliance on a single vendor for a centralized, critical requirement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $398.5 million to VERIZON BUSINESS NETWORK SERVICES LLC. CENTRALIZED HHS EIS REQUIREMENT

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 Health and Human Services (Office of the Assistant Secretary for Financial Resources).

What is the total obligated amount?

The obligated amount is $398.5 million.

What is the period of performance?

Start: 2020-09-01. End: 2026-08-31.

What is the projected cost increase due to the economic price adjustment over the contract's life?

The potential cost increase from the economic price adjustment (EPA) is a key concern. While the contract is fixed-price, the EPA allows for adjustments based on economic factors. Without specific indices or caps outlined in the contract, forecasting the exact increase is difficult. However, significant inflation or changes in input costs could lead to substantial budget overruns compared to the initial $398.5M award.

What are the specific risks associated with relying on Verizon for this centralized requirement?

The primary risk is vendor lock-in and potential service disruptions if Verizon faces financial or operational issues. A centralized, sole-source award (even if initially competed) can reduce leverage for renegotiation and make switching providers difficult. Furthermore, dependence on one vendor for critical infrastructure could create vulnerabilities if their security practices are compromised or if they fail to innovate at the pace required by HHS and VA.

How effectively does this centralized contract streamline telecommunications services compared to decentralized approaches?

A centralized contract like this aims for significant efficiencies by consolidating purchasing power, standardizing services, and simplifying management. This can lead to better volume discounts, consistent service levels, and reduced administrative burden across multiple agencies or offices. However, effectiveness hinges on the contract's terms, vendor performance, and whether the standardized services truly meet the diverse needs of all participating HHS and VA entities.

Industry Classification

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

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

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: 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: $1,869,777,539

Exercised Options: $398,549,624

Current Obligation: $398,549,624

Actual Outlays: $291,547,678

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3009

IDV Type: IDC

Timeline