DoD's $23.9M telecommunications contract with Batelco lacked competition, raising value concerns

Contract Overview

Contract Amount: $23,920,650 ($23.9M)

Contractor: Bahrain Telecommunications CO Mpany (batelco)

Awarding Agency: Department of Defense

Start Date: 2009-12-02

End Date: 2015-04-13

Contract Duration: 1,958 days

Daily Burn Rate: $12.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40095H0017 (CSA) BAHR W 000146

Plain-Language Summary

Department of Defense obligated $23.9 million to BAHRAIN TELECOMMUNICATIONS CO MPANY (BATELCO) for work described as: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40095H0017 (CSA) BAHR W 000146 Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Performance spanned over five years, indicating a long-term reliance on the selected vendor. 3. The fixed-price with economic price adjustment structure introduces potential for cost escalation over the contract's duration. 4. The lack of a small business set-aside suggests limited opportunities for smaller firms in this procurement. 5. The contract falls under wired telecommunications, a critical but often specialized sector for government operations. 6. The award was a purchase order against a basic ordering agreement, a common but less transparent contracting vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable pricing for similar telecommunications services in Bahrain. The fixed-price with economic price adjustment clause introduces uncertainty regarding the final cost. Without competitive bids, it's difficult to ascertain if the government secured the best possible price for the services rendered over the nearly six-year period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed and was awarded as a sole-source purchase order against a basic ordering agreement. This indicates that the Defense Information Systems Agency likely identified a specific need that could only be met by Bahrain Telecommunications Company (Batelco) or that a competitive process was deemed impractical or unnecessary at the time of award. The absence of multiple bidders means there was no direct price comparison to drive down costs.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall expenditures for the government.

Public Impact

The primary beneficiary is the Department of Defense, specifically personnel and operations in Bahrain, who received essential wired telecommunications services. The services provided ensured reliable communication infrastructure for military and government activities in the region. The geographic impact is localized to Bahrain, supporting U.S. military presence and operations there. The contract supported the telecommunications workforce employed by Batelco.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Economic price adjustment clause introduces risk of cost increases.
Long contract duration (nearly 6 years) may not reflect current market efficiencies.
Lack of small business participation noted.

Positive Signals

Contract fulfilled a critical telecommunications need for DoD in Bahrain.
Awarded against a basic ordering agreement, suggesting a pre-existing framework for services.
Fixed-price component provides some cost certainty, albeit with adjustments.

Sector Analysis

This contract falls within the telecommunications sector, specifically wired telecommunications carriers. This industry is characterized by significant infrastructure investment and often involves regional monopolies or oligopolies due to the nature of network deployment. Government spending in this area is crucial for maintaining operational capabilities in various geographic locations, especially overseas. Comparable spending benchmarks are difficult to establish without more specific service details and market data for the region.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that opportunities for small business participation were likely minimal or non-existent for this specific procurement. The focus appears to be on securing essential telecommunications services through an established provider, rather than leveraging the small business ecosystem.

Oversight & Accountability

As a purchase order against a basic ordering agreement, oversight would typically be managed by the contracting officer at the Defense Information Systems Agency. Transparency is limited due to the sole-source nature and the lack of a competitive bidding process. Accountability would stem from the performance metrics and terms outlined in the basic ordering agreement and the purchase order, with potential oversight from the DoD Inspector General if performance issues or fraud were suspected.

Related Government Programs

Defense Information Systems Agency Contracts
Telecommunications Services Contracts
Overseas Military Support Contracts
Basic Ordering Agreements
Purchase Orders

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to economic price adjustment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.9 million to BAHRAIN TELECOMMUNICATIONS CO MPANY (BATELCO). TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40095H0017 (CSA) BAHR W 000146

Who is the contractor on this award?

The obligated recipient is BAHRAIN TELECOMMUNICATIONS CO MPANY (BATELCO).

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.9 million.

What is the period of performance?

Start: 2009-12-02. End: 2015-04-13.

What specific telecommunications services were provided under this contract?

The data indicates 'TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40095H0017 (CSA) BAHR W 000146'. While the specific details of the services are not itemized in the provided data, the North American Industry Classification System (NAICS) code 517110 points to 'Wired Telecommunications Carriers'. This typically includes services such as local and long-distance voice and data services, internet access, and private line services delivered over wired infrastructure. Given the context of a Department of Defense contract in Bahrain, these services likely supported military base communications, data networks, and potentially secure communication lines essential for operational readiness and command and control.

How does the contract's duration and value compare to similar telecommunications contracts for overseas bases?

The contract spanned approximately 1958 days (about 5.3 years) with a total value of $23,920,650. Comparing this to similar contracts is difficult without more specific data on the scope of services and the location's market rates. However, a contract of this value over five years suggests a significant investment in telecommunications infrastructure or services for a DoD presence. The average annual value is roughly $4.5 million. Overseas contracts can often be more expensive due to logistical challenges, security requirements, and limited vendor options. The sole-source nature further complicates direct value comparisons, as competitive bids could have potentially lowered the price.

What are the potential risks associated with a fixed-price contract with economic price adjustment?

A Fixed Price with Economic Price Adjustment (FPEPA) contract aims to balance cost certainty for the buyer with protection against market fluctuations for the seller. The primary risk for the government (taxpayer) is that the economic price adjustment clause allows the contractor to increase prices based on predefined economic factors, such as inflation or changes in commodity prices (e.g., fuel, raw materials). While intended to reflect legitimate cost increases, poorly defined adjustment indices or excessive adjustment allowances can lead to higher-than-anticipated costs for the government. Conversely, the contractor bears the risk if costs decrease significantly, as they may not be able to adjust prices downward accordingly under the contract terms.

What does the 'NOT COMPETED' status imply for the procurement process and cost-effectiveness?

The 'NOT COMPETED' status signifies that the contract was awarded without a full and open competitive bidding process. This typically occurs when only one source is capable of providing the required goods or services (sole source), or in specific circumstances like urgent needs or follow-on work where competition is not feasible or practical. For taxpayers, this status implies a potential loss of cost savings that would likely result from a competitive environment. Without competing offers, the government may pay a higher price than if multiple vendors had vied for the contract, and it limits the opportunity to explore innovative solutions from a broader range of suppliers.

What is the significance of the contract being awarded under a Basic Ordering Agreement (BOA)?

A Basic Ordering Agreement (BOA) is not a contract itself but rather a written instrument of understanding executed between a government agency and an approved source of supplies or services. It establishes terms and conditions that will apply to future contracts (orders) awarded during the life of the BOA. Awarding this purchase order under a BOA suggests that the Defense Information Systems Agency had a pre-existing relationship or framework agreement with Bahrain Telecommunications Company. This can streamline the procurement process for recurring needs, but it also means that the specific terms, including pricing, for individual orders might not be as rigorously negotiated or competed as they would be in a standalone contract.

What is the role of the Defense Information Systems Agency (DISA) in awarding such contracts?

The Defense Information Systems Agency (DISA) plays a crucial role in providing, operating, and defending information systems for the Department of Defense (DoD) and other national leaders. For telecommunications contracts like this one, DISA acts as the contracting agency responsible for procuring and managing the necessary communication services to support military operations. This includes identifying requirements, conducting market research, negotiating terms, awarding contracts, and overseeing contractor performance. DISA's expertise in information technology and telecommunications ensures that the DoD has the robust and secure communication capabilities needed for its global mission.

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

Address: HAMALA BATELCO HEADQUARTERS,, HAMALA

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

Financial Breakdown

Contract Ceiling: $23,920,650

Exercised Options: $23,920,650

Current Obligation: $23,920,650

Timeline