DoD's $32M telecommunications contract with British Telecommunications shows fair value but limited competition

Contract Overview

Contract Amount: $32,190,450 ($32.2M)

Contractor: British Telecommunications Public Limited Company

Awarding Agency: Department of Defense

Start Date: 2010-03-26

End Date: 2015-03-25

Contract Duration: 1,825 days

Daily Burn Rate: $17.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 12

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: IT

Official Description: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 660566

Plain-Language Summary

Department of Defense obligated $32.2 million to BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY for work described as: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 660566 Key points: 1. Contract value appears reasonable given the duration and scope of telecommunications services. 2. Competition was full and open, but the number of bids suggests potential for stronger price discovery. 3. Risk indicators are low, with a fixed-price structure mitigating cost overruns. 4. Performance context is established over a 5-year period, allowing for a track record assessment. 5. This contract falls within the broader IT and telecommunications sector for the Defense Department. 6. Small business participation was not a stated requirement, indicating a focus on large prime contractors.

Value Assessment

Rating: good

The contract's total value of $32.2 million over five years averages to approximately $6.44 million annually. This appears to be a fair price for comprehensive telecommunications services provided to a major defense agency. Benchmarking against similar large-scale telecommunications contracts for government entities suggests this pricing is within expected ranges, especially considering the specialized nature of defense network requirements. The fixed-price with economic price adjustment structure provides some cost certainty while allowing for market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. However, with 12 bids received, the level of competition, while present, might not have been as robust as in some other large federal procurements. This suggests that while the process was open, the market for such specialized telecommunications services might be concentrated among a few key providers, potentially limiting the downward pressure on pricing.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to secure the best value. While 12 bidders is a decent number, further analysis could explore if a more competitive environment could have yielded even greater savings.

Public Impact

The primary beneficiary is the Department of Defense, ensuring reliable telecommunications infrastructure for its operations. Services delivered include wired telecommunications, crucial for secure and consistent data transmission. The geographic impact is likely global, supporting military operations and personnel worldwide. Workforce implications involve skilled technicians and engineers for network management and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bids received despite full and open competition could indicate market concentration.
Reliance on a single prime contractor for a critical service like telecommunications presents potential vendor lock-in risks.
Economic price adjustment clause introduces a degree of uncertainty regarding final cost escalation.

Positive Signals

Awarded under full and open competition, adhering to standard procurement practices.
Fixed-price contract type provides a degree of cost predictability.
Long contract duration (5 years) allows for stable service provision and potential for economies of scale.

Sector Analysis

This contract operates within the telecommunications sector, specifically focusing on wired telecommunications carriers. The market for government telecommunications services is substantial, often dominated by large, established providers capable of meeting stringent security and performance requirements. Spending in this area is critical for national security and operational readiness. Comparable spending benchmarks would involve analyzing other large federal contracts for similar network infrastructure and services, which often run into tens or hundreds of millions of dollars.

Small Business Impact

The data indicates that small business participation was not a specific set-aside requirement for this contract (ss: false, sb: false). This suggests the primary focus was on securing services from large, established telecommunications providers capable of meeting the extensive requirements of the Department of Defense. There is no explicit information on subcontracting plans, but typically, large prime contractors may engage small businesses for specific components or support roles, though it's not guaranteed or mandated by this contract's structure.

Oversight & Accountability

Oversight for this contract would fall under the Defense Information Systems Agency (DISA) and the Department of Defense. Standard oversight mechanisms include contract performance reviews, financial audits, and adherence to service level agreements. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Information Systems Agency (DISA) Contracts
Wired Telecommunications Services
Department of Defense IT Procurement
Federal Telecommunications Infrastructure

Risk Flags

Potential market concentration despite full and open competition.
Economic price adjustment clause introduces cost uncertainty.
Lack of explicit small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.2 million to BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY. TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 660566

Who is the contractor on this award?

The obligated recipient is BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.2 million.

What is the period of performance?

Start: 2010-03-26. End: 2015-03-25.

What is the track record of British Telecommunications Public Limited Company with the Department of Defense?

British Telecommunications Public Limited Company (BT) has a history of providing telecommunications and IT services to various government agencies, including the Department of Defense. While this specific contract (DCA40087H0020) represents a significant award of $32.2 million over five years, BT's broader engagement with the DoD likely involves multiple contracts and task orders over time. Assessing their overall track record would require examining past performance reviews, any documented issues or successes on previous DoD contracts, and their ability to meet security and operational requirements consistently. Their experience in global telecommunications networks positions them as a capable provider for defense needs, but specific performance metrics on prior DoD engagements would offer a more complete picture.

How does the $32.2 million contract value compare to similar telecommunications contracts awarded by the DoD?

The $32.2 million value for five years of wired telecommunications services is substantial but falls within a common range for large-scale government IT and telecommunications procurements. The Department of Defense, being the largest federal agency, frequently awards contracts of this magnitude, and often much larger, for critical infrastructure. For instance, other contracts for network backbone services, secure communication lines, or global connectivity solutions can easily reach tens or hundreds of millions of dollars. When compared to similar contracts for enterprise-wide telecommunications solutions, this award appears to be a moderate to large-sized contract, reflecting the scope and duration of services required by the Defense Information Systems Agency.

What are the primary risks associated with this fixed-price contract with economic price adjustment?

The primary risks associated with a fixed-price contract with economic price adjustment (FP-EPA) involve cost escalation and potential disputes over price adjustments. While the fixed-price element provides a baseline cost, the economic price adjustment clause allows for modifications based on specific economic factors (e.g., inflation, material costs). The risk for the government is that these adjustments could lead to a final price significantly higher than initially anticipated, especially in periods of high inflation or volatile market conditions. For the contractor, the risk lies in accurately forecasting costs and managing the administrative burden of tracking and justifying price adjustments according to the contract's terms. Effective oversight is crucial to ensure adjustments are fair and contractually compliant.

How effective is 'full and open competition' when only 12 bids are received for a $32M contract?

The effectiveness of 'full and open competition' when 12 bids are received for a $32 million contract is a nuanced question. On one hand, receiving 12 bids indicates that the solicitation was broadly advertised and accessible to a wide range of potential offerors, fulfilling the procedural aspect of full and open competition. This number suggests a reasonable level of market interest. However, the true measure of effectiveness lies in whether this competition led to the best possible price and innovative solutions. If the market for such specialized telecommunications services is inherently concentrated among a few large players, 12 bids might represent a significant portion of the qualified market. Further analysis would be needed to determine if a more competitive landscape could have been fostered or if the received bids represented a strong range of pricing and technical proposals.

What are the implications of the contract's duration (1825 days) on service delivery and cost?

The contract duration of 1825 days, equivalent to five years, has several implications. For service delivery, it provides stability and continuity, allowing the Defense Information Systems Agency (DISA) to rely on a consistent provider for essential telecommunications services without the frequent disruption of re-procurement. This long-term relationship can foster better understanding of agency needs and potentially lead to improved service quality. From a cost perspective, a longer duration can enable the contractor to achieve economies of scale, potentially leading to more favorable pricing than multiple shorter-term contracts. It also allows for amortization of initial setup costs over a longer period. However, it also locks the government into a specific provider for an extended time, potentially limiting flexibility if market conditions or technological needs change drastically.

Are there any indications of potential overspending or underperformance based on the provided data?

Based solely on the provided data, there are no direct indications of overspending or underperformance. The contract value of $32.2 million over five years, with a fixed-price structure (albeit with economic price adjustments), suggests a planned expenditure. The fact that it was awarded under full and open competition implies a process aimed at achieving value. The absence of specific performance metrics or cost variance data in this summary prevents a definitive assessment of underperformance. Similarly, without detailed cost breakdowns or benchmarks, confirming overspending is not possible. The 'good' rating for value assessment suggests that, at a high level, the contract is considered to be delivering reasonable value for the cost incurred.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 12

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

Evaluated Preference: NONE

Contractor Details

Parent Company: BT Group PLC (UEI: 221724714)

Address: BT CENTRE, LONDON

Business Categories: Category Business, Foreign Owned, International Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,190,450

Exercised Options: $32,190,450

Current Obligation: $32,190,450

Timeline