DoD's $16.6M wired telecom contract to United Telephone Company of the Northwest awarded without competition

Contract Overview

Contract Amount: $16,608,310 ($16.6M)

Contractor: United Telephone Company of the Northwest

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2026-09-30

Contract Duration: 2,921 days

Daily Burn Rate: $5.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: WIRED TELECOMMUNICATION SERVICES

Place of Performance

Location: SILVERDALE, KITSAP County, WASHINGTON, 98315

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $16.6 million to UNITED TELEPHONE COMPANY OF THE NORTHWEST for work described as: WIRED TELECOMMUNICATION SERVICES Key points: 1. The contract's value of $16.6 million over nearly 8 years raises questions about potential overspending due to lack of competition. 2. Awarded as 'NOT COMPETED', this contract bypasses standard competitive processes, potentially limiting price discovery and value for taxpayers. 3. The fixed-price nature of the contract shifts some risk to the contractor, but the absence of competition obscures true market value. 4. Performance context is limited as this is a single award, making direct comparisons difficult without more data on similar services. 5. This contract falls within the Telecommunications sector, specifically supporting wired telecommunications carriers. 6. The duration of nearly 8 years suggests a long-term need for these services, but the procurement method warrants scrutiny.

Value Assessment

Rating: questionable

Benchmarking the value of this $16.6 million contract is challenging due to its sole-source nature and the lack of publicly available comparable contract data for similar wired telecommunication services within the Department of Defense. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The fixed-price contract type offers some cost certainty, but the absence of competition prevents a robust assessment of cost-effectiveness against alternative providers or solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' procurement strategy, indicating that a competitive process was not utilized. This typically occurs when only one source is capable of meeting the requirement, or in specific circumstances where competition is deemed not practicable. The lack of multiple bidders means there was no opportunity for price negotiation or comparison among different providers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings typically achieved through a competitive bidding process. This could result in a higher overall expenditure for the government compared to a scenario where multiple companies vied for the contract.

Public Impact

The Department of the Navy benefits from the provision of essential wired telecommunication services. This contract ensures the continuity of critical communication infrastructure for military operations. The services are geographically focused within Washington state, supporting regional military installations. The contract supports the telecommunications workforce employed by United Telephone Company of the Northwest.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing over the contract's long duration.
Sole-source award raises concerns about whether all available market options were explored.
The extended contract period without competition could lock the government into a potentially suboptimal service or price.
Absence of performance metrics or detailed service level agreements in the provided data makes assessing service quality difficult.

Positive Signals

The fixed-price contract structure provides cost predictability for the government.
The contract ensures the provision of essential telecommunications services for national defense.
The contractor, United Telephone Company of the Northwest, is established in providing these services.

Sector Analysis

This contract falls within the broader telecommunications industry, specifically focusing on wired telecommunications carriers. The market for such services is characterized by significant infrastructure investment and regulatory oversight. While the industry has seen shifts towards wireless and fiber optics, traditional wired infrastructure remains critical for many government and enterprise operations. The contract's value of $16.6 million over nearly eight years represents a substantial, albeit specific, commitment within this sector. Comparable spending benchmarks are difficult to establish without knowing the exact scope and service level agreements, but large-scale government telecommunications contracts can range from millions to billions of dollars.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Consequently, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. The award to a single, presumably larger, incumbent provider suggests that opportunities for small businesses to participate in this specific contract, either as prime contractors or through subcontracting, may be limited unless actively sought by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including delivery schedules and service level agreements, though specifics are not detailed here. Transparency is limited due to the sole-source nature of the award, which bypasses the public scrutiny inherent in competitive bidding processes. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Telecommunications Contracts
Wired Network Infrastructure Services
Federal Communications Commission (FCC) Regulations
General Services Administration (GSA) Schedule Contracts (for comparison)
Information Technology Services Contracts

Risk Flags

Sole-source award
Lack of competition
Long contract duration without competition
Potential for uncompetitive pricing
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.6 million to UNITED TELEPHONE COMPANY OF THE NORTHWEST. WIRED TELECOMMUNICATION SERVICES

Who is the contractor on this award?

The obligated recipient is UNITED TELEPHONE COMPANY OF THE NORTHWEST.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $16.6 million.

What is the period of performance?

Start: 2018-10-01. End: 2026-09-30.

What is the track record of United Telephone Company of the Northwest with federal contracts, particularly with the Department of Defense?

Information regarding the specific track record of United Telephone Company of the Northwest with federal contracts, especially with the Department of Defense, is not detailed in the provided data snippet. A comprehensive analysis would require accessing federal procurement databases like FPDS-NG or SAM.gov to review past performance, contract history, and any reported issues or successes. Understanding their history with similar telecommunications services, contract values, and performance ratings would provide crucial context for assessing the current contract's risk and value. Without this historical data, it's difficult to gauge their reliability and past performance in serving federal agencies.

How does the per-unit cost of this contract compare to market rates for similar wired telecommunication services?

The provided data does not include specific per-unit cost details or service level agreements, making a direct comparison to market rates impossible. The contract value of $16.6 million is for a broad scope of 'WIRED TELECOMMUNICATION SERVICES' over nearly eight years. To benchmark effectively, one would need to break down the total cost into specific services (e.g., per line, per Mbps, installation fees) and compare these against publicly available pricing from other telecommunications providers or government contracts awarded competitively. Given the sole-source nature, it is presumed that such a benchmark was either not performed or not favorable, leading to the non-competitive award.

What are the primary risks associated with awarding a long-term contract without competition?

The primary risks associated with awarding a long-term contract without competition include potential overpayment, lack of innovation, and reduced service quality. Without competitive pressure, the contractor may have less incentive to offer the most competitive pricing or to invest in service improvements. The government could be locked into a contract that becomes outdated or overpriced relative to market developments over its nearly eight-year duration. Furthermore, the absence of a competitive process limits the government's ability to explore alternative solutions or technologies that might emerge during the contract period. This can lead to suboptimal resource allocation and a failure to achieve the best possible value for taxpayer funds.

How effective is the current contract in meeting the Department of the Navy's telecommunication needs, and are there performance metrics available?

The provided data does not include specific performance metrics or details on the effectiveness of this contract in meeting the Department of the Navy's telecommunication needs. While the contract is active and ongoing until September 2026, its success is not quantifiable from the given information. Effectiveness would typically be measured against defined service level agreements (SLAs), uptime guarantees, response times for outages, and overall service quality. Without access to these performance indicators and the Navy's internal assessments, it is impossible to determine the contract's effectiveness. The sole-source nature might imply a critical, unique need, but it doesn't inherently guarantee effectiveness.

What has been the historical spending pattern for wired telecommunication services by the Department of the Navy, and how does this contract compare?

The provided data snippet focuses solely on this single contract and does not offer historical spending patterns for wired telecommunication services by the Department of the Navy. To analyze historical spending, one would need to aggregate data from multiple contracts over several fiscal years, identifying trends in contract values, types of services procured, and procurement methods (competitive vs. sole-source). This $16.6 million contract represents a significant, long-term investment. Without comparative historical data, it's difficult to ascertain if this represents an increase, decrease, or consistent level of spending for such services within the Navy, or how it aligns with overall IT and telecommunications budgets.

What is the justification for awarding this contract on a sole-source basis, and were other vendors considered?

The data indicates this contract was awarded as 'NOT COMPETED', implying a sole-source justification was used. Common justifications include that only one responsible source is available, or that the agency's need is so specialized that only one vendor can meet it. Without the specific justification document (e.g., a Justification and Approval - J&A), it's impossible to know the exact reasoning. Typically, for a sole-source award, agencies must document why competition is not practicable and demonstrate that the proposed price is fair and reasonable. The data does not specify if other vendors were considered and found unsuitable, or if the process was initiated with only one potential provider in mind.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications Carriers › 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

Solicitation ID: N0040618RT001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 100 CENTURYLINK DR, MONROE, LA, 71203

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,494,280

Exercised Options: $18,896,669

Current Obligation: $16,608,310

Actual Outlays: $5,245,895

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline