DoD's $22.4M bandwidth contract with ARTEL LLC shows fair value, but limited competition context raises questions

Contract Overview

Contract Amount: $22,393,296 ($22.4M)

Contractor: Artel LLC

Awarding Agency: Department of Defense

Start Date: 2011-01-04

End Date: 2016-10-14

Contract Duration: 2,110 days

Daily Burn Rate: $10.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 144 MHZ KU BANDWIDTH

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22041

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $22.4 million to ARTEL LLC for work described as: 144 MHZ KU BANDWIDTH Key points: 1. Value for money appears reasonable given the specialized nature of the service. 2. Competition was limited, potentially impacting price discovery and taxpayer savings. 3. Performance risk seems manageable, with a long contract duration indicating stability. 4. This contract fits within the broader Defense Information Systems Agency's IT infrastructure spending. 5. The firm-fixed-price structure provides cost certainty for the government. 6. The contract's value is moderate within the context of large federal IT procurements.

Value Assessment

Rating: good

The contract's total value of $22.4 million over approximately five years suggests a moderate annual spend. Benchmarking against similar bandwidth and telecommunications services procured by the Department of Defense indicates that the pricing was likely competitive at the time of award, especially considering the specialized nature of 144 MHz KU bandwith. The firm-fixed-price contract type further enhances value by providing cost predictability.

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 offers. However, the data indicates only two offers were received. While full and open competition is the preferred method, a low number of bids can sometimes suggest market limitations or specific technical requirements that narrow the field of potential bidders.

Taxpayer Impact: A low number of bids, even under full and open competition, can sometimes lead to higher prices than if there were more robust competition. Taxpayers benefit from the assurance that the process was open, but the ultimate price paid is influenced by the actual level of bidding activity.

Public Impact

This contract directly supports the Department of Defense's communication and data transmission needs, crucial for operational readiness. The services provided ensure reliable connectivity for military operations and personnel. The geographic impact is primarily within the operational theaters and support facilities of the DoD. The contract supports specialized technical roles within the telecommunications sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) despite full and open competition could indicate potential for higher costs than a more competitive scenario.
The specific nature of '144 MHZ KU BANDWIDTH' might represent a niche market, potentially limiting competitive options.
Long contract duration (2110 days) could introduce risks related to technological obsolescence or changing requirements if not managed proactively.

Positive Signals

Awarded under full and open competition, adhering to best practices for government procurement.
Firm Fixed Price contract type provides cost certainty and limits the government's exposure to cost overruns.
The contract was awarded to ARTEL LLC, a known entity in telecommunications services, suggesting a degree of contractor reliability.
The contract duration indicates a stable, long-term need for these services by the agency.

Sector Analysis

This contract falls within the broader telecommunications and IT services sector, a critical component of federal IT spending. The market for specialized bandwidth, particularly for government and defense applications, is often characterized by a mix of large established providers and niche specialists. Spending in this area is driven by the need for secure, reliable, and high-capacity data transmission to support diverse government functions, from intelligence gathering to operational command and control. Comparable spending benchmarks would typically look at other large-scale telecommunications service contracts awarded by defense agencies.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract, nor does it suggest specific subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal based on this award alone. However, the prime contractor, ARTEL LLC, may engage small businesses as subcontractors for various support functions not detailed in this specific award.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a delivery order under a larger contract vehicle, its execution is monitored by the Defense Information Systems Agency (DISA). The firm-fixed-price nature limits financial risk, and the long duration implies ongoing performance monitoring. Inspector General reviews could be initiated if performance issues or allegations of impropriety arise.

Related Government Programs

Defense Information Systems Agency (DISA) Telecommunications Contracts
DoD Wideband Satellite Communications
Federal Government Bandwidth Procurement
IT Services for National Security

Risk Flags

Low number of bidders despite full and open competition
Potential for niche market limiting future competition
Long contract duration may require proactive management of technological changes

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.4 million to ARTEL LLC. 144 MHZ KU BANDWIDTH

Who is the contractor on this award?

The obligated recipient is ARTEL 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 $22.4 million.

What is the period of performance?

Start: 2011-01-04. End: 2016-10-14.

What is the historical spending trend for similar bandwidth services by the Defense Information Systems Agency?

Analyzing historical spending trends for similar bandwidth services by DISA is crucial for contextualizing the $22.4 million awarded to ARTEL LLC. While specific historical data for '144 MHZ KU BANDWIDTH' is not provided, DISA consistently procures significant amounts of telecommunications and bandwidth services to support global military operations. Past awards for satellite communications, terrestrial circuits, and other data transmission services often run into tens or hundreds of millions of dollars annually. Trends may show increasing demand for higher bandwidth, greater reliance on secure communication channels, and a shift towards more flexible, cloud-integrated solutions. Understanding these trends helps assess whether the ARTEL contract represents a typical investment, an increase in spending, or a decrease, and whether the pricing aligns with evolving market conditions and technological advancements.

How does the number of bids (2) compare to the average number of bids for similar DISA IT contracts?

The fact that only two bids were received for this contract, despite being awarded under full and open competition, warrants further investigation. For many standard IT services contracts, especially those with broader scopes or less specialized requirements, federal agencies often receive a higher number of bids, sometimes ranging from five to ten or more. A lower number of bids, like two, can suggest several possibilities: the market for this specific service (144 MHz KU bandwidth) is inherently limited, the technical specifications were highly restrictive, the contract value was not attractive enough to draw more bidders, or there were significant barriers to entry. This limited competition could potentially lead to less competitive pricing than if more vendors had vied for the contract, impacting the overall value for taxpayers. Benchmarking against other DISA procurements for specialized telecommunications or satellite services would provide a clearer picture of whether two bids is unusually low for this type of requirement.

What are the key performance indicators (KPIs) used to measure the success of this bandwidth contract?

While the specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided data, typical metrics for bandwidth and telecommunications services contracts awarded by agencies like the Defense Information Systems Agency (DISA) often include: Availability (uptime percentage), Latency (delay in data transmission), Jitter (variation in latency), Throughput (actual data transfer rate achieved), and Mean Time to Repair (MTTR) in case of outages. For a contract valued at $22.4 million over several years, DISA would likely have established stringent KPIs to ensure reliable and consistent service delivery. Performance against these KPIs would directly impact ARTEL LLC's adherence to contract terms and potentially influence future contract awards or incentive structures. Regular performance reviews and reporting against these metrics are standard oversight practices.

What is ARTEL LLC's track record with the Department of Defense for similar telecommunications contracts?

ARTEL LLC has a notable track record of providing telecommunications and satellite services to the Department of Defense and other federal agencies. Their experience often includes supporting complex, mission-critical communication needs, similar to the bandwidth services required under this contract. Examining their past performance on similar contracts would reveal their history of meeting delivery schedules, maintaining service quality, managing costs, and adhering to security requirements. Positive past performance generally indicates a lower risk for the government, suggesting the contractor has the necessary expertise, infrastructure, and management capabilities. Conversely, any history of significant performance issues, contract disputes, or cost overruns on comparable DoD contracts would raise concerns about the reliability and value proposition of awarding them this particular $22.4 million agreement.

How does the firm-fixed-price (FFP) contract type mitigate risks for the government in this scenario?

The Firm Fixed Price (FFP) contract type is a significant risk mitigation tool for the government in this $22.4 million bandwidth contract. Under an FFP agreement, ARTEL LLC is obligated to provide the specified services for a predetermined price, regardless of their actual costs incurred. This structure transfers most of the cost risk from the government to the contractor. It provides the government with maximum cost certainty, making budgeting more predictable and preventing unexpected cost overruns that could occur with cost-reimbursement contracts. For specialized services like KU band bandwidth, where operational costs can fluctuate, the FFP structure incentivizes the contractor to manage their expenses efficiently to maintain profitability. The primary risk for the government shifts from cost overruns to ensuring the contractor meets the defined performance standards and quality requirements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13665 DULLES TECHNOLOGY DR STE 300, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,393,296

Exercised Options: $22,393,296

Current Obligation: $22,393,296

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F5151H

IDV Type: FSS

Timeline