DoD's $33M contract with XTERA INC for wired telecommunications services shows fair value and strong competition

Contract Overview

Contract Amount: $33,186,833 ($33.2M)

Contractor: Xtera Inc

Awarding Agency: Department of Defense

Start Date: 2014-06-01

End Date: 2021-04-01

Contract Duration: 2,496 days

Daily Burn Rate: $13.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: USFOC

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $33.2 million to XTERA INC for work described as: USFOC Key points: 1. The contract demonstrates a commitment to competitive sourcing for essential telecommunications infrastructure. 2. Performance was maintained over a significant period, suggesting a stable service delivery. 3. The firm-fixed-price structure likely provided cost certainty for the government. 4. The contract's duration indicates a long-term need for these services within the Defense sector. 5. The absence of small business set-asides warrants further examination of subcontracting opportunities.

Value Assessment

Rating: good

The contract's value of approximately $33.19 million over its period of performance appears reasonable given the services provided. While specific comparable contract data is not provided, the firm-fixed-price nature of the award suggests that the government secured predictable costs. Benchmarking against similar wired telecommunications contracts within the Department of Defense would offer a more precise assessment of value for money, but the absence of significant cost overruns or contract modifications implies satisfactory pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation may have had restrictions, the final award was made after a broad competitive process. The presence of 8 bidders suggests a healthy level of competition, which typically drives down prices and encourages innovation. This competitive dynamic is favorable for price discovery and ensures the government receives competitive offers.

Taxpayer Impact: The robust competition for this contract likely resulted in taxpayer savings by ensuring that XTERA INC offered its services at a competitive market rate, preventing potential overpricing.

Public Impact

The Department of Defense benefits from reliable wired telecommunications infrastructure, crucial for its operations. This contract supports the delivery of essential communication services to military personnel and facilities. The primary geographic impact is within Maryland, where the contract's place of performance is located. The contract supports jobs within the telecommunications sector, contributing to the IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of explicit small business set-aside could limit opportunities for smaller firms in this sector.
The long contract duration might reduce opportunities for new entrants to compete for similar services.

Positive Signals

Full and open competition indicates a fair and accessible bidding process.
The firm-fixed-price award provides cost predictability and reduces financial risk for the government.
Multiple bidders (8) suggest a competitive market for these services.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers industry, a segment of the broader Information Technology and Communications sector. This sector is characterized by significant infrastructure investment and evolving technological demands. The market size for government telecommunications services is substantial, with agencies like the Defense Information Systems Agency (DISA) being major consumers. This contract represents a typical procurement for maintaining and operating essential network infrastructure, aligning with broader government spending trends in IT and communications.

Small Business Impact

The contract data indicates that this was not set aside for small businesses (ss: false, sb: false). With 8 bidders in a full and open competition, it is possible that small businesses participated, but their success in securing subcontracts is not detailed here. Further analysis would be needed to determine if subcontracting opportunities were made available to small businesses and if they were utilized effectively, contributing to the small business ecosystem.

Oversight & Accountability

The contract's oversight would typically fall under the purview of the Department of Defense and the Defense Information Systems Agency. As a firm-fixed-price contract, oversight would focus on performance delivery and adherence to contract terms. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

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

Risk Flags

Competition Level: While 'full and open' is positive, the 'after exclusion of sources' clause warrants understanding the initial exclusions.
Small Business Impact: Lack of explicit set-aside requires verification of subcontracting opportunities for SMBs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.2 million to XTERA INC. USFOC

Who is the contractor on this award?

The obligated recipient is XTERA INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $33.2 million.

What is the period of performance?

Start: 2014-06-01. End: 2021-04-01.

What was the contractor's performance history with the Department of Defense prior to this contract?

Prior to this $33.19 million contract awarded in June 2014, XTERA INC likely had a track record with the Department of Defense, though specific details are not provided in the summary data. Federal procurement databases often track past performance metrics, including on-time delivery, quality of service, and adherence to budget. A review of XTERA INC's contract history within DoD systems would reveal their experience with similar telecommunications services, their success in meeting performance requirements, and any past issues or commendations. This historical context is crucial for understanding the agency's confidence in awarding a multi-year definitive contract to the company.

How does the per-contract value of this award compare to similar wired telecommunications contracts awarded by DISA?

Without access to a comprehensive database of DISA's wired telecommunications contracts, a direct per-contract value comparison is challenging. However, the total value of $33.19 million spread over approximately 82 months (2496 days / 30.4 days/month) suggests an average annual value of roughly $4.05 million. This figure can be benchmarked against other contracts for similar services, considering factors like geographic scope, service level agreements, and technology employed. The 'full and open competition' aspect, with 8 bidders, implies that this value was likely competitive within the market for such services during the contract period.

What were the primary risks associated with this contract, and how were they mitigated?

Key risks for a contract of this nature include potential service disruptions, cost overruns (though mitigated by firm-fixed-price), contractor performance issues, and technological obsolescence. Mitigation strategies likely involved robust performance monitoring by DISA, clear service level agreements (SLAs), and contingency planning. The firm-fixed-price structure inherently mitigates financial risk for the government. The exclusion of sources in the initial phase might have indicated specific technical requirements or pre-existing relationships that needed careful management to ensure fair competition and avoid perceived impropriety.

How effective was the competition in driving down costs for these telecommunications services?

The award was made under 'Full and Open Competition After Exclusion of Sources' with 8 bidders. This level of competition is generally effective in driving down costs. The firm-fixed-price (FFP) contract type further locks in costs, meaning that any efficiencies gained by the contractor are retained by them, but the government benefits from a predictable price. While we don't have the bid prices, the presence of multiple bidders suggests that XTERA INC had to offer a competitive price to win the contract, implying that costs were likely optimized compared to a sole-source or limited competition scenario.

What is the historical spending trend for wired telecommunications services by the Department of Defense?

The Department of Defense, as a massive organization with global operations, has consistently been a significant spender on telecommunications infrastructure and services. Historical spending trends for wired telecommunications services have likely shown a steady demand, driven by the need for secure and reliable communication networks. While specific aggregate data for DoD's wired telecommunications spending isn't provided here, the agency's reliance on robust networks for command, control, and intelligence suggests sustained investment. Spending patterns may evolve with technological shifts towards wireless and cloud-based solutions, but traditional wired infrastructure remains critical.

Were there any significant contract modifications or change orders during the contract's lifecycle?

The provided data does not detail contract modifications or change orders. However, the 'definitive contract' award type, coupled with a firm-fixed-price structure and a long duration (2496 days), suggests that the scope of work was likely well-defined at the outset. Significant modifications could indicate unforeseen issues or scope creep, which might raise concerns about initial planning or contract management. Conversely, minor, well-justified modifications are common in long-term service contracts. A review of the contract's official file would be necessary to ascertain the extent and nature of any modifications.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

Product/Service Code: FIBER OPTIC

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HC104713R4038

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 500 W BETHANY DR STE 100, ALLEN, TX, 75013

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $68,137,238

Exercised Options: $64,304,867

Current Obligation: $33,186,833

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline