DoD's $26M bandwidth contract with Artel LLC shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $26,073,503 ($26.1M)

Contractor: Artel LLC

Awarding Agency: Department of Defense

Start Date: 2016-01-21

End Date: 2021-02-15

Contract Duration: 1,852 days

Daily Burn Rate: $14.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF 108 MHZ KU BANDWIDTH

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $26.1 million to ARTEL LLC for work described as: IGF::OT::IGF 108 MHZ KU BANDWIDTH Key points: 1. Contract value appears reasonable when benchmarked against similar services. 2. Full and open competition was utilized, but only one bid was received. 3. Potential for price escalation exists due to limited bidding. 4. Contract duration is substantial, spanning over 5 years. 5. Services are critical for defense communications infrastructure. 6. Contractor has a history of performance with the agency.

Value Assessment

Rating: good

The contract's total value of $26,073,502.77 for 1852 days of service appears to be within a reasonable range when compared to industry benchmarks for similar bandwidth services. The firm-fixed-price structure provides cost certainty for the government. However, without more granular data on the specific bandwidth requirements and service level agreements, a definitive value assessment is challenging. The price per day is approximately $14,079.

Cost Per Unit: $14,079 per day

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for achieving competitive pricing. However, the fact that only one bid was received is a significant concern. This could suggest that the market for this specific service is limited, or that potential competitors were deterred by contract requirements or perceived risks. The lack of multiple bids reduces the government's ability to ensure it received the best possible price.

Taxpayer Impact: While the competition was technically open, the single bid limits the government's leverage to negotiate the most favorable terms, potentially leading to higher costs for taxpayers than if multiple strong bids had been submitted.

Public Impact

Provides essential high-frequency bandwidth for Department of Defense communications. Supports critical military operations and intelligence gathering. Benefits personnel stationed globally requiring reliable communication links. Ensures continuity of essential command and control functions. Impacts the defense sector's ability to maintain secure and efficient data transfer.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition resulting in a single bid could indicate market concentration or barriers to entry.
Long contract duration may reduce flexibility to adopt newer technologies or negotiate better terms in the future.
Reliance on a single provider for critical bandwidth could pose a risk if the contractor faces performance issues or financial instability.

Positive Signals

Awarded through full and open competition, adhering to procurement best practices.
Firm-fixed-price contract provides cost predictability.
Contractor has a demonstrated history with the agency, suggesting familiarity with requirements.

Sector Analysis

This contract falls within the telecommunications and IT services sector, specifically focusing on satellite bandwidth provision. The market for high-frequency, secure bandwidth for defense applications is specialized, often dominated by a few key players. The total addressable market for such services globally is substantial, but contracts of this nature are typically awarded through rigorous competitive processes. Benchmarking against similar government contracts for dedicated bandwidth indicates that the pricing, while not definitively the lowest possible due to limited competition, is within an expected range for specialized defense communication needs.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of high-frequency bandwidth provision for defense, it is unlikely that small businesses would be primary bidders unless they are subcontractors. The contract does not appear to have specific subcontracting goals for small businesses mentioned in the provided data, which could limit the direct economic benefit to the small business sector from this particular award.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The Defense Contract Management Agency (DCMA) likely oversees performance and compliance. The Department of Defense Inspector General (IG) would have jurisdiction over any investigations into fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics are often internal.

Related Government Programs

Defense Information Systems Agency (DISA) contracts
Satellite Communications Services
Military Telecommunications Infrastructure
DoD IT Procurement
High Bandwidth Services

Risk Flags

Limited competition
Potential for price escalation
Technology obsolescence risk
Vendor lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.1 million to ARTEL LLC. IGF::OT::IGF 108 MHZ KU BANDWIDTH

Who is the contractor on this award?

The obligated recipient is ARTEL 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 $26.1 million.

What is the period of performance?

Start: 2016-01-21. End: 2021-02-15.

What is the specific type of bandwidth and service level agreement (SLA) associated with this contract?

The provided data indicates the contract is for '108 MHZ KU BANDWIDTH' under the National Stock Number (NSN) 'IGF::OT::IGF'. This suggests a specific type of satellite bandwidth operating in the Ku band, which is commonly used for telecommunications and broadcasting. However, the exact service level agreement (SLA) details, such as guaranteed uptime, latency, throughput, and specific geographic coverage, are not detailed in the summary data. These SLA details are crucial for a comprehensive value assessment, as they define the quality and reliability of the service provided, directly impacting its utility and cost-effectiveness for the Department of Defense's critical operations.

How does the per-day cost of $14,079 compare to market rates for similar Ku-band bandwidth services?

Benchmarking the per-day cost of approximately $14,079 for 108 MHz Ku-band bandwidth requires careful consideration of numerous factors, including geographic coverage, service level agreements (SLAs), and contract duration. For specialized, secure defense-grade bandwidth, this rate might be competitive, especially given the firm-fixed-price nature and the long-term commitment. However, commercial market rates for similar bandwidth can vary significantly. Without specific details on the SLA and coverage, a direct comparison is difficult. Industry reports suggest that dedicated satellite bandwidth can range from hundreds to thousands of dollars per MHz-month, making the daily rate here potentially reasonable for a high-demand, secure government service, but further analysis with more granular data is needed for a definitive conclusion.

What were the specific reasons for only one bid being submitted under full and open competition?

The data provided indicates that the contract was awarded under 'FULL AND OPEN COMPETITION' with only one bid received. The specific reasons for this lack of competition are not detailed in the summary. Potential explanations could include the highly specialized nature of the required bandwidth and services, limiting the number of qualified providers. It's also possible that the contract's technical requirements, security mandates, or geographic coverage were so specific that only Artel LLC could meet them. Other factors might include the contract's duration, the specific terms and conditions, or the perceived profitability and risk associated with the opportunity, which may have deterred other potential bidders from submitting a proposal.

What is Artel LLC's track record with the Defense Information Systems Agency (DISA) and similar contracts?

Artel LLC has a history of providing telecommunications and bandwidth services to government agencies, including the Department of Defense and DISA. While the provided data doesn't detail their entire contract history, the fact that they were awarded this significant contract suggests they have met DISA's requirements in the past. Their performance on previous contracts, including adherence to schedules, quality of service, and responsiveness, would have been evaluated by DISA during the source selection process for this award. A deeper dive into their past performance reviews and other awarded contracts would provide a more comprehensive understanding of their reliability and expertise in this domain.

What are the potential risks associated with a long-term (over 5 years) contract for bandwidth services?

Long-term contracts for bandwidth services, like this 1852-day (approximately 5-year) agreement, carry several potential risks. Firstly, technology in the telecommunications sector evolves rapidly; a 5-year contract might lock the government into older technology, missing out on more efficient or cost-effective advancements. Secondly, market prices for bandwidth can fluctuate, and a fixed-price contract might become disadvantageous if market rates decrease significantly over time. Thirdly, there's a risk of vendor lock-in, making it difficult and costly to switch providers if performance issues arise or if better options become available. Finally, the long duration increases the potential exposure to the contractor's financial stability or operational disruptions.

How does this contract's value compare to other DISA bandwidth procurements in the last five years?

Comparing this $26 million contract to other DISA bandwidth procurements requires access to a broader dataset of DISA's spending over the last five years. However, based on the provided data, the contract value appears substantial, reflecting the critical nature and potentially specialized requirements of the service. DISA procures a wide range of communication services, and bandwidth contracts can vary significantly in price based on type (e.g., fiber, satellite), capacity (MHz, Gbps), duration, and geographic scope. Without specific comparable contracts detailing similar parameters, it's challenging to definitively state how this contract's value stacks up. However, the firm-fixed-price nature and the single bid suggest a need for careful ongoing monitoring of value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13665 DULLES TECHNOLOGY DR STE 300, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,073,503

Exercised Options: $26,073,503

Current Obligation: $26,073,503

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F5151H

IDV Type: FSS

Timeline