DoD's $2.6M Wired Telecom Contract with Verizon Faces Scrutiny Over Long-Term Value and Competition

Contract Overview

Contract Amount: $2,634,407 ($2.6M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of Defense

Start Date: 2020-05-08

End Date: 2032-07-30

Contract Duration: 4,466 days

Daily Burn Rate: $590/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: IT

Official Description: IPS SERVICES

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $2.6 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: IPS SERVICES Key points: 1. Significant contract value of $2.63 million over its lifespan. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Contract duration extends to 2032, raising questions about long-term necessity and adaptability. 4. Sector is Wired Telecommunications Carriers, a critical but evolving area.

Value Assessment

Rating: fair

The contract value of $2.63 million over 12 years needs careful evaluation against current market rates for similar telecommunications services. Without specific performance metrics or benchmarks, assessing true value is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive sign for price discovery. However, the long duration of the contract might limit the impact of ongoing market competition.

Taxpayer Impact: Taxpayer funds are being utilized for telecommunications services. While competition was employed, the extended duration warrants ongoing scrutiny to ensure cost-effectiveness.

Public Impact

Ensures critical communication infrastructure for the Department of Defense. Long contract term may not reflect rapid technological advancements in telecommunications. Potential for cost savings if economic price adjustments are managed effectively. Supports a major telecommunications provider, impacting the broader industry.

Waste & Efficiency Indicators

Waste Risk Score: 59 / 10

Warning Flags

Long contract duration (over 12 years)
Potential for price escalation due to economic adjustments
Lack of specific performance metrics for value assessment

Positive Signals

Awarded under full and open competition
Supports critical defense communication needs

Sector Analysis

The Wired Telecommunications Carriers sector is essential for government operations, but it is also subject to rapid technological change. Benchmarking against similar long-term government contracts in this space is crucial for assessing value.

Small Business Impact

This contract was awarded to Verizon Business Network Services LLC, a large corporation. There is no indication of specific provisions or set-asides for small businesses within the provided data.

Oversight & Accountability

The long duration of this contract necessitates robust oversight to ensure continued relevance, cost-effectiveness, and adherence to contract terms. Regular reviews of pricing and performance against market standards are essential.

Related Government Programs

Wired Telecommunications Carriers
Department of Defense Contracting
Defense Information Systems Agency Programs

Risk Flags

Long contract duration may lead to suboptimal value over time.
Economic price adjustment clauses introduce potential for cost escalation.
Risk of technological obsolescence within the contract term.
Lack of detailed performance metrics hinders value assessment.
Potential for missed opportunities with newer, more cost-effective technologies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.6 million to VERIZON BUSINESS NETWORK SERVICES LLC. IPS SERVICES

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 $2.6 million.

What is the period of performance?

Start: 2020-05-08. End: 2032-07-30.

How does the fixed price with economic price adjustment mechanism compare to market standards for similar long-term telecommunications contracts, and what safeguards are in place to mitigate excessive

The effectiveness of the economic price adjustment (EPA) mechanism hinges on the specific indices used and the caps imposed. Without detailed contract clauses, it's difficult to assess. Typically, EPAs aim to track inflation or specific input costs. Robust contracts include caps or floors to prevent extreme fluctuations, ensuring costs remain reasonable relative to market conditions and protecting taxpayers from unforeseen price spikes.

Given the rapid evolution of telecommunications technology, what is the risk that this 12-year contract will become obsolete or underperform compared to newer, more advanced solutions available on the

The risk of obsolescence is significant with a 12-year telecommunications contract. Technology in this sector advances rapidly, potentially making the contracted services outdated or less efficient than emerging solutions. Mitigation strategies could include contract clauses allowing for technology refreshes, regular performance reviews against industry standards, or options for early termination if superior alternatives become available and cost-effective.

What specific performance metrics are being used to evaluate the effectiveness and value delivered by Verizon Business Network Services LLC under this contract, beyond just service availability?

The provided data does not specify performance metrics beyond service availability. Effective evaluation would require metrics such as data throughput, latency, reliability rates (e.g., uptime percentages), customer support response times, and adherence to security protocols. Without these, assessing the true value and effectiveness of the services rendered is challenging, making oversight more difficult.

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: 6

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: $74,133,280

Exercised Options: $8,625,849

Current Obligation: $2,634,407

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