DoD's $22.8M AT&T contract for telecommunications services shows limited competition and fair value

Contract Overview

Contract Amount: $22,825,272 ($22.8M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2017-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $12.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::OT::IGF LFXVBB, LFXVBC, LFXVMT, LFXWCA PDC FOR AT CARR EXP CSAS AEPP QTRS 1&2 FY13.

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22185

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to AT&T ENTERPRISES, LLC for work described as: IGF::OT::IGF LFXVBB, LFXVBC, LFXVMT, LFXWCA PDC FOR AT CARR EXP CSAS AEPP QTRS 1&2 FY13. Key points: 1. The contract was awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. While the duration was substantial (5 years), the total value suggests a moderate annual spend. 3. The fixed-price with economic price adjustment (EPA) structure introduces some risk of cost escalation. 4. The specific services provided under this contract are not detailed, making a precise value assessment difficult. 5. The contractor, AT&T, is a major player in the telecommunications market, indicating a strong incumbent position. 6. The contract's value is relatively small compared to the overall IT spending within the Department of Defense.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the services rendered. However, given the sole-source award and the fixed-price with EPA structure, there is a risk that the government did not achieve the best possible price. Compared to competitively bid contracts for similar telecommunications services, this award may represent a fair, but not necessarily optimal, value. The annual spend of approximately $4.56 million is moderate for a large federal agency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one bidder, AT&T Enterprises, LLC, was solicited. This significantly limits the opportunity for price competition and may result in higher costs for the government compared to a fully competed procurement. The lack of multiple bids prevents a robust comparison of offerings and pricing, making it difficult to ascertain if the government received the most advantageous terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding processes. This can lead to higher overall government expenditures for the same or similar services.

Public Impact

The primary beneficiaries are likely Department of Defense personnel and operations requiring reliable wired telecommunications services. The contract supports essential communication infrastructure for military operations and administrative functions. The geographic impact is primarily within Virginia, where the contract was administered. The contract likely supports a workforce within AT&T responsible for maintaining and operating these telecommunications networks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Fixed Price with Economic Price Adjustment (EPA) introduces risk of cost increases over the contract term.
Lack of detailed service description hinders precise value-for-money assessment.
Long contract duration (5 years) could lock in potentially suboptimal pricing if market conditions change significantly.

Positive Signals

AT&T is a major telecommunications provider with established infrastructure and expertise.
The contract provides essential communication services critical for DoD operations.
The contract was awarded to a single, large, and reputable vendor, potentially ensuring reliability.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers industry, a sector characterized by significant infrastructure investment and a few dominant players. The market includes services like voice and data transmission over wired networks. Federal spending in this area supports the backbone of government communications. Comparable spending benchmarks are difficult to establish without knowing the exact scope of services, but large federal agencies often have multi-million dollar contracts for telecommunications infrastructure.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, and there are no explicit mechanisms in place to ensure small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. Specific accountability measures would be detailed in the contract terms and conditions. Transparency is limited due to the sole-source nature and lack of detailed public information on performance metrics. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

DoD Telecommunications Services
Wired Network Infrastructure Contracts
Federal Communications Procurement
Government IT Services

Risk Flags

Sole-source award
Potential for cost escalation (FP-EPA)
Lack of detailed service description
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to AT&T ENTERPRISES, LLC. IGF::OT::IGF LFXVBB, LFXVBC, LFXVMT, LFXWCA PDC FOR AT CARR EXP CSAS AEPP QTRS 1&2 FY13.

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2012-10-01. End: 2017-09-30.

What specific telecommunications services were provided under this contract?

The provided data indicates the contract was for 'PDC FOR AT CARR EXP CSAS AEPP QTRS 1&2 FY13' awarded to AT&T Enterprises, LLC. While the North American Industry Classification System (NAICS) code 517110 points to 'Wired Telecommunications Carriers,' the specific services are not detailed. This likely includes a range of services such as voice, data, and potentially broadband internet access over AT&T's wired infrastructure. Without a more granular description of the service catalog or service level agreements, it is difficult to ascertain the exact nature and scope of the support provided to the Defense Information Systems Agency (DISA).

How does the $22.8 million total value compare to similar federal telecommunications contracts?

The total value of $22.8 million over five years (approximately $4.56 million annually) is a moderate sum for federal telecommunications contracts, especially for a large agency like the Department of Defense. Major federal telecommunications procurements, particularly those involving enterprise-wide solutions or large-scale network infrastructure, can easily reach hundreds of millions or even billions of dollars. However, this contract's value is substantial enough to warrant scrutiny. Its sole-source nature means direct comparison to competitively bid contracts is difficult, but it suggests a focused scope of services rather than a comprehensive agency-wide solution.

What are the primary risks associated with a sole-source award for telecommunications services?

The primary risk of a sole-source award for telecommunications services is the lack of competitive pressure, which can lead to inflated prices and suboptimal terms for the government. Without competing bids, the government cannot be assured it is receiving the best value available in the market. This can also stifle innovation, as the incumbent contractor may have less incentive to offer cutting-edge solutions. Furthermore, sole-source contracts can create vendor lock-in, making it difficult and costly to switch providers in the future, even if better alternatives emerge.

What is the significance of the 'Fixed Price with Economic Price Adjustment' (FP-EPA) contract type?

The 'Fixed Price with Economic Price Adjustment' (FP-EPA) contract type means that the base price is fixed, but it can be adjusted upwards (or sometimes downwards) based on specific economic factors outlined in the contract, such as inflation indices or changes in labor or material costs. For the government, this type of contract offers some price certainty while acknowledging that certain external economic factors are beyond the control of either party. However, it introduces a risk of cost escalation over the contract's duration, as the government is obligated to pay for these pre-defined adjustments, potentially increasing the total expenditure beyond the initial fixed price estimate.

What does the 'Wired Telecommunications Carriers' NAICS code imply about the contract's scope?

The NAICS code 517110, 'Wired Telecommunications Carriers,' indicates that the contract primarily involves the provision of telecommunications services using fixed-line infrastructure. This typically includes services like local and long-distance voice transmission, broadband internet access, and private line services delivered over copper, fiber optic, or coaxial cable networks. It excludes wireless communication services. For the Department of Defense, this suggests the contract supports essential fixed-line connectivity for bases, offices, and command centers, forming a critical part of their communication backbone.

How does the contract duration of 1825 days (5 years) impact its overall assessment?

A contract duration of 1825 days, equivalent to five years, is a substantial commitment for the government. This extended period allows for stable service provision and potentially volume discounts. However, it also means that the government is locked into the terms and pricing for a significant duration. In rapidly evolving fields like telecommunications, a five-year term carries the risk that technology or market prices could change, potentially making the contracted services less competitive or technologically advanced by the end of the term. The FP-EPA clause further mitigates against potential cost increases over this long period.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc. (UEI: 108024050)

Address: 3033 CHAIN BRIDGE RD, OAKTON, VA, 22185

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

Financial Breakdown

Contract Ceiling: $22,825,272

Exercised Options: $22,825,272

Current Obligation: $22,825,272

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Timeline