DOT's $147M Voice Switch Replacement System contract awarded to Frequentis USA, Inc. for 5,111 days

Contract Overview

Contract Amount: $147,341,540 ($147.3M)

Contractor: Frequentis USA, Inc

Awarding Agency: Department of Transportation

Start Date: 2012-09-13

End Date: 2026-09-11

Contract Duration: 5,111 days

Daily Burn Rate: $28.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: VOICE SWITCH REPLACEMETN SYSTEM (VSRS) AWARD

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21045

State: Maryland Government Spending

Plain-Language Summary

Department of Transportation obligated $147.3 million to FREQUENTIS USA, INC for work described as: VOICE SWITCH REPLACEMETN SYSTEM (VSRS) AWARD Key points: 1. The contract value of $147.3 million over approximately 14 years suggests a significant investment in critical communication infrastructure. 2. The award to a single vendor, Frequentis USA, Inc., warrants scrutiny regarding the breadth of competition and potential for price optimization. 3. The firm-fixed-price contract type aims to transfer risk to the contractor, but performance monitoring remains crucial for value realization. 4. The duration of the contract (5,111 days) indicates a long-term commitment, necessitating robust vendor management and contingency planning. 5. The North American Industry Classification System (NAICS) code 334220 points to a focus on manufacturing communication equipment, aligning with the system's nature. 6. The contract's geographic scope is Maryland, suggesting a localized but critical deployment.

Value Assessment

Rating: fair

Benchmarking the value of this $147.3 million contract is challenging without specific performance metrics or comparable system replacement costs. The firm-fixed-price structure provides cost certainty, but the long duration means the initial pricing must be carefully evaluated against projected technological advancements and market shifts. The absence of detailed cost breakdowns or comparisons to similar government procurements makes a definitive value-for-money assessment difficult. However, the scale of the investment suggests a critical need for the Voice Switch Replacement System.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 3 bids suggests a moderate level of competition for this specialized system. While full and open competition is generally favorable for price discovery, the specific number of bidders (3) might not represent the maximum possible interest, potentially impacting the extent of price negotiation.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple vendors to offer competitive pricing, potentially leading to a lower overall cost for the government compared to sole-source or limited competition scenarios.

Public Impact

The primary beneficiaries are likely air traffic controllers and other personnel relying on the FAA's communication systems for safe and efficient air traffic management. The contract delivers a critical Voice Switch Replacement System, essential for maintaining and modernizing air traffic control communications. The geographic impact is centered in Maryland, where the system will be deployed and operational. Workforce implications may include training for personnel on the new system and potential roles for technicians involved in its installation and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 14 years) increases the risk of technological obsolescence or the need for costly modifications.
Reliance on a single vendor for a critical system raises concerns about vendor lock-in and future pricing power.
Limited public information on the specific performance requirements and evaluation criteria makes it difficult to assess the contractor's track record comprehensively.

Positive Signals

Awarded under full and open competition, suggesting a structured procurement process that considered multiple offers.
Firm-fixed-price contract type shifts cost overrun risks to the contractor, providing budget predictability.
The contract addresses a critical operational need for the Federal Aviation Administration, indicating strategic importance.

Sector Analysis

The contract falls within the Information Technology and Telecommunications sector, specifically related to broadcasting and wireless communications equipment manufacturing (NAICS 334220). This sector is characterized by rapid technological advancements and significant government investment in secure and reliable communication systems. The market for air traffic control communication systems is specialized, with a limited number of key players capable of meeting stringent government requirements. Comparable spending benchmarks would typically involve other large-scale government procurements for similar mission-critical communication infrastructure.

Small Business Impact

The data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist if Frequentis USA, Inc. chooses to engage them for specific components or services, but this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Transportation and the Federal Aviation Administration. Accountability measures are typically embedded within the contract's performance clauses and reporting requirements. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's lifecycle.

Related Government Programs

FAA NextGen Air Transportation System
Air Traffic Control Communications Systems
Federal Communications Commission (FCC) Spectrum Management
Department of Defense Secure Communication Networks

Risk Flags

Long-term contract duration increases risk of technological obsolescence.
Potential for vendor lock-in due to specialized nature of the system.
Limited public data on specific performance metrics and value benchmarks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $147.3 million to FREQUENTIS USA, INC. VOICE SWITCH REPLACEMETN SYSTEM (VSRS) AWARD

Who is the contractor on this award?

The obligated recipient is FREQUENTIS USA, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $147.3 million.

What is the period of performance?

Start: 2012-09-13. End: 2026-09-11.

What is the specific performance history of Frequentis USA, Inc. on similar government contracts, particularly those involving critical communication systems?

Assessing the performance history of Frequentis USA, Inc. on similar government contracts requires access to detailed contract performance reports and past performance evaluations, which are not publicly available in the provided data. Generally, for critical systems like voice switches used in air traffic control, government agencies conduct thorough past performance reviews as part of the source selection process. Agencies look for a track record of on-time delivery, adherence to specifications, system reliability, and effective issue resolution. Without specific data on Frequentis' prior government engagements, it's difficult to provide a definitive assessment. However, winning a contract of this magnitude from the FAA suggests a level of confidence in their capabilities and past performance, as agencies typically prioritize vendors with proven experience in mission-critical environments.

How does the per-unit cost or total cost of this Voice Switch Replacement System compare to similar systems procured by other federal agencies or international aviation authorities?

A direct comparison of the per-unit cost or total cost of this $147.3 million Voice Switch Replacement System (VSRS) to similar systems is challenging without detailed specifications and market data. The contract's firm-fixed-price nature and long duration (over 14 years) complicate direct cost benchmarking. Factors such as system complexity, required features (e.g., redundancy, security protocols), integration with existing infrastructure, and the specific operational environment of the FAA significantly influence pricing. International procurements might offer some comparative insights, but differences in regulatory environments, currency exchange rates, and procurement practices can make direct comparisons unreliable. To conduct a robust benchmark, one would need to identify contracts for comparable VSRS with similar technical requirements and contract terms, then normalize for differences in scope, duration, and market conditions.

What are the key risk indicators associated with a 14-year contract for communication equipment, and how are they being mitigated?

Key risk indicators for a 14-year contract for communication equipment include technological obsolescence, vendor lock-in, potential for increased maintenance costs over time, and the risk of the contractor's financial instability. Technological obsolescence is a significant concern as communication technology evolves rapidly; the system procured today might be outdated long before the contract ends. Vendor lock-in poses a risk because the FAA may become dependent on Frequentis USA, Inc. for upgrades, support, and future procurements, potentially leading to higher prices. Mitigation strategies typically involve robust contract clauses for technology refresh, performance-based metrics that incentivize ongoing system improvement, clear exit strategies, and potentially requiring the contractor to provide detailed roadmaps for future development. The firm-fixed-price nature helps mitigate cost overrun risks, but ongoing monitoring of performance and market trends is crucial.

What is the expected impact of this contract on air traffic control efficiency and safety within the FAA's operational domain?

The expected impact of this contract on air traffic control efficiency and safety is substantial, as the Voice Switch Replacement System (VSRS) is a critical component of air traffic management. A modern VSRS is designed to provide clearer voice communications, enhanced reliability, and improved integration with other air traffic control systems. This can lead to reduced communication errors, faster response times, and better situational awareness for controllers. Enhanced safety is a primary objective, as reliable communication is fundamental to preventing mid-air collisions and managing airspace effectively. By replacing an aging system, the FAA aims to reduce the risk of system failures, which could have severe safety consequences. The efficiency gains stem from a more robust and potentially feature-rich communication platform that supports the demands of increasingly complex airspace.

How has the FAA's spending on similar communication systems evolved over the past five years, and does this award represent a significant shift or continuation?

Analyzing the FAA's spending evolution on similar communication systems over the past five years requires access to historical spending data, which is not provided. However, large-scale procurements like this $147.3 million VSRS award typically represent significant investments aimed at modernizing or replacing aging critical infrastructure. Such contracts often follow multi-year strategic plans for upgrading air traffic control systems, such as the FAA's NextGen initiative. If the FAA has been consistently investing in communication upgrades, this award might represent a continuation of that trend. If previous spending was lower or focused on different aspects of communication, this could indicate a strategic shift towards prioritizing voice switch technology. Without historical context, it's difficult to definitively categorize this award as a shift or continuation, but its substantial value suggests a high priority for this specific upgrade.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 9017 RED BRANCH RD STE 102, COLUMBIA, MD, 21045

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $147,341,540

Exercised Options: $147,341,540

Current Obligation: $147,341,540

Actual Outlays: $53,085,357

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline