DoD's $34.1M telecommunications contract with BT Group shows fair value but limited competition

Contract Overview

Contract Amount: $34,120,751 ($34.1M)

Contractor: British Telecommunications Public Limited Company

Awarding Agency: Department of Defense

Start Date: 2012-09-26

End Date: 2019-12-31

Contract Duration: 2,652 days

Daily Burn Rate: $12.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 662739 IGF::OT::IGF

Plain-Language Summary

Department of Defense obligated $34.1 million to BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY for work described as: TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 662739 IGF::OT::IGF Key points: 1. Contract value of $34.1M over its period of performance. 2. Services provided under a basic ordering agreement. 3. Firm Fixed Price contract type suggests predictable costs. 4. Limited competition raises questions about optimal pricing. 5. Contractor is a large, established telecommunications provider. 6. Performance period spanned over 7 years. 7. No small business set-aside was utilized.

Value Assessment

Rating: fair

The contract's total value of $34.1M over more than seven years suggests a moderate annual spend. Benchmarking against similar telecommunications service orders is challenging without more granular data on the specific services procured. However, the firm fixed-price structure provides cost certainty. The limited competition, as detailed below, may have impacted the ultimate value achieved for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit offers. However, the data indicates only 3 bids were received, which is a relatively low number for a contract of this magnitude and duration. This level of competition might suggest that the market for these specific telecommunications services is concentrated among a few large providers, or that the barriers to entry for potential bidders were significant.

Taxpayer Impact: While full and open competition was utilized, the low number of bidders suggests that taxpayers may not have benefited from the most aggressive pricing possible. Further analysis could explore if the solicitation's requirements inadvertently limited the bidder pool.

Public Impact

Provides essential telecommunications services to the Department of Defense. Supports military operations and administrative functions. Geographic impact is likely global, supporting DoD's worldwide presence. Workforce implications are primarily within the contractor's organization, with potential indirect impacts on DoD personnel relying on these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) for a full and open competition may indicate potential market concentration or high barriers to entry, impacting price competitiveness.
Long performance period (over 7 years) could lead to price erosion if market conditions change significantly and the contract doesn't allow for adjustments.

Positive Signals

Firm Fixed Price contract type provides cost predictability for the government.
Awarded under a basic ordering agreement, suggesting a pre-vetted and established relationship for streamlined service delivery.
Contractor is a major global telecommunications provider with a track record in supporting government needs.

Sector Analysis

The telecommunications sector is a critical enabler for government operations, providing the backbone for communication and data transfer. Spending in this sector is substantial, with significant portions dedicated to network infrastructure, data services, and voice communications. This contract falls within the Wired Telecommunications Carriers industry, a segment focused on providing telecommunications services through a network of wireline facilities. Comparable spending benchmarks would typically involve analyzing other large-scale telecommunications contracts awarded by federal agencies for similar services.

Small Business Impact

This contract did not include a small business set-aside, and the data indicates no small business participation (sb: false). The prime contractor, British Telecommunications Public Limited Company, is a large global entity. This suggests that opportunities for small businesses to participate as subcontractors on this specific award were either not mandated or not pursued. The impact on the small business ecosystem is minimal for this particular contract, as it was not designed to foster small business prime contracting.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Information Systems Agency (DISA) and the Department of Defense. As a purchase order under a basic ordering agreement, standard procurement regulations and contract administration processes would apply. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Telecommunications Services
Network Infrastructure
Basic Ordering Agreements
Defense Communications

Risk Flags

Limited competition may impact value for money.
Long contract duration could pose risks related to price changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.1 million to BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY. TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 662739 IGF::OT::IGF

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 $34.1 million.

What is the period of performance?

Start: 2012-09-26. End: 2019-12-31.

What specific telecommunications services were procured under this contract?

The provided data indicates the contract was for 'TELECOMMUNICATIONS SERVICE ORDERED UNDER BASIC AGREEMENT DCA40087H0020 (CSA) BTP W 662739 IGF::OT::IGF'. While the specific nature of the services isn't detailed, the North American Industry Classification System (NAICS) code 517110, 'Wired Telecommunications Carriers,' suggests services such as dedicated internet access, private line services, voice transmission, and other circuit-switched or packet-switched network services delivered over wired infrastructure. These are fundamental communication services essential for military operations and agency functions.

How does the contract's total value compare to similar telecommunications contracts awarded by DISA or the DoD?

The total value of $34.1 million over approximately 7.5 years (September 2012 to December 2019) equates to an average annual spend of roughly $4.5 million. Comparing this requires access to a broader dataset of DISA and DoD telecommunications contracts. However, for a large federal agency like the DoD, this annual spend is moderate for enterprise-wide telecommunications services. Larger contracts often involve global network backbone services or extensive data center connectivity, potentially reaching hundreds of millions or even billions. This contract likely supported a specific set of requirements or a particular geographic region.

What are the potential risks associated with a firm-fixed-price contract spanning over seven years?

A significant risk with a long-term firm-fixed-price (FFP) contract is price escalation due to unforeseen market changes or technological advancements that were not anticipated at the time of award. If the cost of providing the services increases substantially over the contract period, the contractor may experience reduced profit margins or seek contract modifications. Conversely, if market prices decrease, the government is locked into the higher FFP, potentially overpaying. Another risk is contractor performance degradation if incentives for efficiency diminish over the long term, although the FFP structure does incentivize the contractor to control costs.

What does the limited number of bidders (3) suggest about the market for these services?

The fact that only three bids were received for this 'full and open' competition suggests a potentially concentrated market for the specific telecommunications services procured. This could be due to several factors: the specialized nature of the required services, high capital investment needed to compete in the wired telecommunications carrier space, existing long-term contracts that limit opportunities, or stringent pre-qualification requirements that screened out potential bidders. For taxpayers, a limited number of bidders can mean less competitive pricing, as the government may not have benefited from the full spectrum of market offers.

What is the track record of British Telecommunications Public Limited Company (BT) in serving government contracts?

British Telecommunications Public Limited Company (BT) is a major global telecommunications provider with a long history of serving government and enterprise clients worldwide. They have experience in delivering complex network solutions, secure communications, and managed services. BT has held numerous contracts with various government agencies, including defense departments, in the past. Their extensive infrastructure and established presence suggest a capacity to meet the demands of large-scale government requirements. However, specific performance metrics and past issues on individual contracts would require deeper investigation beyond the scope of this summary data.

How does this contract fit into the broader landscape of federal telecommunications spending?

This $34.1 million contract represents a segment of the vast federal spending on telecommunications services, which is crucial for national security, government operations, and citizen services. Federal agencies collectively spend billions annually on various telecommunications needs, including network infrastructure, data transmission, voice services, and cybersecurity. Contracts like this, even if moderate in size individually, contribute to the overall operational capability of agencies like the Department of Defense. It highlights the ongoing reliance on established carriers for essential wired communication infrastructure.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BT Group PLC (UEI: 221724714)

Address: 81 NEWGATE ST, LONDON

Business Categories: Category Business, Foreign Owned, International Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $34,120,751

Exercised Options: $34,120,751

Current Obligation: $34,120,751

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Timeline