DoD's $933.5M contract for communication equipment maintenance awarded to Lucent Technologies Inc. in 1998

Contract Overview

Contract Amount: $31,537,143 ($31.5M)

Contractor: Nokia of America Corporation

Awarding Agency: Department of Defense

Start Date: 1997-10-01

End Date: 2001-04-30

Contract Duration: 1,307 days

Daily Burn Rate: $24.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199805!1700!0215!D0222!SPACE AND NAVAL WARFARE SYSTEMS !N0003998C0001 !A!*!* !19971001!19980930!933503385!933503385!933503385!N!1BQ03!LUCENT TECHNOLOGIES INC !600 MOUNTAIN AVE !NEW PROVIDENCE !NJ!07974!28000!081!37!GREENSBORO !GUILFORD !N CAROLINA!0001!+000008323409!Y!N!000000000000!J058!MAINT & REPAIR OF EQ/COMMUNICATION EQUIPMENT !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!*!B!A!*!D !N!U!1!001!N!1A!C!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!D!N!*!*!*!*!*!

Place of Performance

Location: MC LEANSVILLE, GUILFORD County, NORTH CAROLINA, 27301

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $31.5 million to NOKIA OF AMERICA CORPORATION for work described as: 199805!1700!0215!D0222!SPACE AND NAVAL WARFARE SYSTEMS !N0003998C0001 !A!*!* !19971001!19980930!933503385!933503385!933503385!N!1BQ03!LUCENT TECHNOLOGIES INC !600 MOUNTAIN AVE !NEW PROVIDENCE !NJ!07974!28000!081!37!GREENSBORO !GUILFO… Key points: 1. Contract awarded for maintenance and repair of communication equipment, indicating a need for ongoing support of critical infrastructure. 2. The contract's duration of over three years suggests a significant, long-term requirement for these services. 3. Awarded as a definitive contract, it implies a structured and formal agreement for service provision. 4. The 'Cost Plus Fixed Fee' pricing structure can sometimes lead to cost overruns if not carefully managed. 5. The contractor, Lucent Technologies Inc., was a major player in the telecommunications industry at the time. 6. The contract was not competitively bid, raising questions about potential value for money. 7. The geographic location of the contractor's facility in New Jersey suggests a focus on domestic support operations.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more specific details on the scope of services and market rates in 1998. However, the 'Cost Plus Fixed Fee' (CPFF) contract type, while common for R&D or uncertain scope, can incentivize contractors to increase costs to maximize their fixed fee. The lack of competition further complicates a direct value assessment. Without comparable contracts or detailed performance metrics, it's difficult to definitively state if the government received excellent value for the $933.5 million obligated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition scenario. The data does not specify the reasons for this approach, such as a lack of available sources, urgent need, or a specific technological requirement. The absence of a competitive bidding process means that the government did not benefit from the price discovery that typically occurs when multiple vendors vie for a contract.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers as the government may not secure the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches relying on communication equipment. Services delivered include maintenance and repair of essential communication systems, ensuring operational readiness. The contract likely impacts the workforce at Lucent Technologies Inc., potentially supporting jobs in engineering, maintenance, and logistics. Geographic impact is primarily within the United States, supporting DoD operations domestically and potentially abroad through deployed personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and suboptimal service delivery.
The 'Cost Plus Fixed Fee' structure carries inherent risks of cost escalation if not rigorously managed.
Limited transparency into the justification for a sole-source award hinders a full assessment of its necessity.
The contract's significant value necessitates robust oversight to ensure funds are used efficiently and effectively.

Positive Signals

Award to a major telecommunications provider like Lucent Technologies Inc. suggests access to specialized expertise.
The long-term nature of the contract indicates a stable and predictable support structure for critical communication assets.
The definitive contract type implies a formal and structured approach to service delivery and management.
The contract was awarded by the Department of Defense, a primary agency with stringent procurement standards.

Sector Analysis

This contract falls within the broader Information Technology and Defense sectors, specifically focusing on the maintenance and repair of communication equipment. The market for such services is substantial, driven by the continuous need for reliable communication infrastructure by government and commercial entities. Comparable spending benchmarks would typically involve other large-scale maintenance and repair contracts for complex electronic systems within the defense industrial base. The size of this contract ($933.5 million) places it among significant federal procurements for sustainment services.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. Consequently, it is unlikely that small businesses were directly targeted for this specific award. There is also no explicit information regarding subcontracting plans with small businesses. This suggests that the primary contractor, Lucent Technologies Inc., likely performed the majority of the work, potentially limiting opportunities for small business participation in this particular procurement.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), given its role in contract administration. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is limited by the sole-source nature and the historical context; however, standard DoD procurement regulations would have applied. Inspector General jurisdiction would be applicable for investigations into fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Military Communication Equipment Maintenance
Federal IT Services
Department of Defense Procurement
Telecommunications Infrastructure Support

Risk Flags

Sole-source award lacks competitive justification.
Cost-plus contract type carries inherent risk of cost overruns.
Limited transparency into performance metrics and contract modifications.
Significant contract value necessitates robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.5 million to NOKIA OF AMERICA CORPORATION. 199805!1700!0215!D0222!SPACE AND NAVAL WARFARE SYSTEMS !N0003998C0001 !A!*!* !19971001!19980930!933503385!933503385!933503385!N!1BQ03!LUCENT TECHNOLOGIES INC !600 MOUNTAIN AVE !NEW PROVIDENCE !NJ!07974!28000!081!37!GREENSBORO !GUILFORD !N CAROLINA!0001!+000008323409!Y!N!000000000000!J058!MAINT & REPAIR OF EQ/COMMUNICATION EQUIPMENT !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!*!B!A!*!D !N!U!1!0

Who is the contractor on this award?

The obligated recipient is NOKIA OF AMERICA CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $31.5 million.

What is the period of performance?

Start: 1997-10-01. End: 2001-04-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. However, the specific justification for this approach is not detailed in the available information. Common reasons for sole-source awards include the existence of only one responsible source, an urgent and compelling need that precludes full and open competition, or specific national security requirements. Without further documentation from the awarding agency (Department of Defense), the precise rationale remains unknown. This lack of transparency makes it difficult to assess whether the sole-source decision was appropriate and in the best interest of the government.

How did the 'Cost Plus Fixed Fee' (CPFF) structure impact the final cost compared to other contract types?

The CPFF contract type aims to provide the contractor with a fixed profit margin while covering all allowable costs. This structure can be beneficial when the scope of work is not precisely defined or involves research and development, as it allows for flexibility. However, it also carries a risk of cost escalation, as the contractor is incentivized to incur costs to ensure their fixed fee is applied to a larger base. Without access to the contractor's final cost submissions and a comparison to what a fixed-price contract might have yielded, it's challenging to quantify the exact impact. The total obligated amount of $933.5 million suggests significant costs were incurred over the contract's life.

What was Lucent Technologies Inc.'s track record with the DoD prior to this contract?

Lucent Technologies Inc., a spin-off from AT&T, was a major telecommunications equipment manufacturer and service provider in the late 1990s. While specific prior contract history with the DoD is not detailed in this data snippet, it is highly probable that a company of Lucent's scale and technological focus had existing relationships and contracts with various government agencies, including the Department of Defense, for communication systems and services. Their position as a leading industry player suggests they possessed the capabilities and experience necessary to be considered for such a significant contract, even if awarded sole-source.

Were there any performance issues or contract modifications during the life of this agreement?

The provided data does not contain specific details regarding performance issues, disputes, or modifications to this contract. The contract's period of performance extended from October 1, 1997, to September 30, 2001 (with an end date listed as April 30, 2001, suggesting a potential early termination or modification). Large, multi-year contracts often undergo modifications to adjust scope, funding, or timelines. Without access to the contract's full modification history and performance reviews, it's impossible to assess whether there were significant issues or how they were addressed.

How does this spending compare to other DoD contracts for communication equipment maintenance during the late 1990s?

Comparing this $933.5 million contract to other DoD spending in the late 1990s requires broader market data. However, given the scale and the nature of communication equipment maintenance, this contract appears substantial. The DoD historically invests heavily in maintaining its complex communication networks, which are critical for global operations. Contracts of this magnitude were not uncommon for major system sustainment programs. To provide a precise benchmark, one would need to analyze similar contracts for communication system maintenance awarded by the DoD or other federal agencies during that specific period, considering factors like system complexity and duration.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nokia Siemens Networks B.V. (UEI: 409361537)

Address: 600 MOUNTAIN AVE, NEW PROVIDENCE, NJ, 07974

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline