DoD's $13.5M VPNs and Ethernet Transport Contract with Verizon Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $13,460,720 ($13.5M)
Contractor: Verizon Business Network Services LLC
Awarding Agency: Department of Defense
Start Date: 2020-09-01
End Date: 2026-08-31
Contract Duration: 2,190 days
Daily Burn Rate: $6.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: IT
Official Description: VPNS PORT AND AA / ETHERNET TRANSPORT
Place of Performance
Location: BARKSDALE AFB, BOSSIER County, LOUISIANA, 71110
Plain-Language Summary
Department of Defense obligated $13.5 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: VPNS PORT AND AA / ETHERNET TRANSPORT Key points: 1. Contract awarded to Verizon Business Network Services LLC for VPNs and Ethernet Transport. 2. Significant spending of $13.5M over 5 years raises questions about cost-effectiveness. 3. Full and open competition was utilized, but price discovery effectiveness needs review. 4. The contract falls under the Wired Telecommunications Carriers sector, with potential for better pricing benchmarks.
Value Assessment
Rating: fair
The contract's fixed-price with economic price adjustment structure warrants close monitoring to ensure costs remain competitive. Benchmarking against similar telecommunications services is crucial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While full and open competition was employed, the specific pricing mechanisms and the impact of economic price adjustments on final costs require further analysis to confirm optimal price discovery.
Taxpayer Impact: Taxpayers are impacted by the $13.5M expenditure, with the effectiveness of the competition and pricing structure determining the overall value for money.
Public Impact
Ensures critical network connectivity for Department of Defense operations. Supports secure data transmission essential for national security. Provides telecommunications infrastructure across various DoD agencies.
Waste & Efficiency Indicators
Waste Risk Score: 100 / 10
Warning Flags
- Potential for cost overruns due to economic price adjustments.
- Need to verify if the fixed-price component adequately controls costs.
- Assessing long-term value against evolving telecommunications technologies.
Positive Signals
- Awarded under full and open competition, promoting a broad vendor pool.
- Long-term contract provides stability for essential communication services.
- Supports critical defense information infrastructure.
Sector Analysis
This contract is within the Wired Telecommunications Carriers sector, which is characterized by rapid technological advancements and evolving pricing models. Benchmarking against industry standards is vital to ensure competitive pricing.
Small Business Impact
The data does not indicate specific participation or set-asides for small businesses in this contract, suggesting a potential gap in opportunities for smaller entities within this telecommunications service procurement.
Oversight & Accountability
Oversight should focus on the implementation of economic price adjustments and regular performance reviews to ensure the contract remains cost-effective and meets DoD's evolving needs.
Related Government Programs
- Wired Telecommunications Carriers
- Department of Defense Contracting
- Defense Information Systems Agency Programs
Risk Flags
- Potential for cost escalation due to economic price adjustments.
- Need for ongoing benchmarking to ensure competitive pricing.
- Risk of vendor lock-in over the contract's long duration.
- Limited visibility into small business participation.
Tags
wired-telecommunications-carriers, department-of-defense, la, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $13.5 million to VERIZON BUSINESS NETWORK SERVICES LLC. VPNS PORT AND AA / ETHERNET TRANSPORT
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 Defense (Defense Information Systems Agency).
What is the total obligated amount?
The obligated amount is $13.5 million.
What is the period of performance?
Start: 2020-09-01. End: 2026-08-31.
What specific metrics are used to evaluate the effectiveness of the economic price adjustment clause in preventing cost overruns?
The effectiveness of the economic price adjustment (EPA) clause hinges on clearly defined indices and caps. Agencies should regularly compare the EPA-driven price increases against market benchmarks and inflation rates. If the EPA consistently results in prices higher than the market average or exceeds general inflation, it signals a potential for cost overruns and warrants a review of the clause's terms or renegotiation.
How does the pricing structure compare to similar government or commercial VPN and Ethernet transport contracts awarded in the same period?
A comprehensive comparison requires access to detailed pricing data from comparable contracts. However, the fixed-price with EPA structure suggests a balance between cost certainty and market fluctuation. If benchmarked prices for similar services are significantly lower, it indicates potential overpayment or a less favorable negotiation by the agency. Conversely, if prices align or are justified by specific service requirements, the value proposition is stronger.
What is the potential impact of vendor lock-in, given the long duration and specific nature of the services provided?
Long-term contracts for specialized services like VPNs and Ethernet transport can lead to vendor lock-in, potentially limiting future flexibility and competitive pricing. While this contract ensures continuity, agencies must proactively plan for future transitions. This includes assessing the ease of switching providers, the cost of migration, and ensuring contract terms do not unduly penalize early termination or prevent the adoption of newer, potentially more cost-effective technologies.
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: 3
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: $37,806,138
Exercised Options: $16,941,623
Current Obligation: $13,460,720
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
Start Date: 2020-09-01
Current End Date: 2026-08-31
Potential End Date: 2032-07-30 00:00:00
Last Modified: 2025-09-18
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