IRS Exercises $24.4M Option for Network Services with Verizon Business
Contract Overview
Contract Amount: $24,389,067 ($24.4M)
Contractor: Verizon Business Network Services LLC
Awarding Agency: Department of the Treasury
Start Date: 2011-02-28
End Date: 2011-09-30
Contract Duration: 214 days
Daily Burn Rate: $114.0K/day
Competition Type: NOT COMPETED UNDER SAP
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: EXERCISE OPTION PERIOD 1 YR 2
Place of Performance
Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706, UNITED STATES OF AMERICA
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $24.4 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: EXERCISE OPTION PERIOD 1 YR 2 Key points: 1. Significant contract value of $24.4 million for network services. 2. Sole-source award to Verizon Business Network Services LLC. 3. Potential for higher costs due to lack of competition. 4. IT services sector, specifically 'Other Computer Related Services'.
Value Assessment
Rating: questionable
The contract value of $24.4 million for a 7-month period is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to market rates for similar network services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed under Simplified Acquisition Procedures (SAP), indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition in this sole-source award may result in taxpayers paying a premium for these network services.
Public Impact
Ensures continued network connectivity for the IRS. Potential for reduced taxpayer value due to non-competitive award. Reliance on a single vendor for critical IT infrastructure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- No indication of price negotiation or benchmarking.
- Short contract duration (7 months) may indicate interim solution or ongoing issues.
Positive Signals
- Option exercised, suggesting continued need and satisfaction with current service.
- Firm Fixed Price contract provides cost certainty.
Sector Analysis
This contract falls within the Information Technology sector, specifically 'Other Computer Related Services'. Spending in this area is critical for government operations, but competitive procurement is key to ensuring value.
Small Business Impact
The data indicates this contract was not awarded to a small business, as 'sb' is false. There is no information provided on subcontracting opportunities for small businesses.
Oversight & Accountability
The contract was not competed under SAP, raising questions about the oversight process for sole-source awards. Further review of justification for sole-sourcing is needed.
Related Government Programs
- Other Computer Related Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Sole-source award.
- Lack of competition.
- Potential for inflated pricing.
- Limited transparency on justification.
- No small business participation indicated.
Tags
other-computer-related-services, department-of-the-treasury, md, bpa, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $24.4 million to VERIZON BUSINESS NETWORK SERVICES LLC. EXERCISE OPTION PERIOD 1 YR 2
Who is the contractor on this award?
The obligated recipient is VERIZON BUSINESS NETWORK SERVICES LLC.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $24.4 million.
What is the period of performance?
Start: 2011-02-28. End: 2011-09-30.
What was the justification for awarding this contract sole-source to Verizon Business Network Services LLC, and was a market research conducted to ensure fair and reasonable pricing?
The provided data states the contract was 'NOT COMPETED UNDER SAP', implying a sole-source justification was likely made. However, the specific reason and details of any market research or price analysis are not included. Without this information, it's difficult to ascertain if the pricing is fair and reasonable or if taxpayers received optimal value.
Given the sole-source nature of this award, what are the potential risks associated with vendor lock-in and the lack of competitive pressure on pricing for future contract renewals?
Sole-source awards carry inherent risks of vendor lock-in, where the government becomes dependent on a single provider. This lack of competition can reduce the incentive for the vendor to offer competitive pricing or innovate. For future renewals, the IRS may face higher costs and limited options if a competitive strategy is not pursued.
How does the $24.4 million expenditure for 7 months of network services compare to industry benchmarks for similar IT services, and what is the IRS's strategy to ensure cost-effectiveness in the long
Without specific details on the services provided and their scope, a direct comparison to industry benchmarks is challenging. However, $24.4 million for 7 months is a significant investment. The IRS's long-term strategy for cost-effectiveness is unclear from this data; a competitive procurement approach for future needs would be advisable.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: NOT COMPETED UNDER SAP
Solicitation Procedures: SIMPLIFIED ACQUISITION
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Verizon Communications Inc (UEI: 107212169)
Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $24,389,067
Exercised Options: $24,389,067
Current Obligation: $24,389,067
Parent Contract
Parent Award PIID: TIRNO10S00001
IDV Type: BPA
Timeline
Start Date: 2011-02-28
Current End Date: 2011-09-30
Potential End Date: 2011-09-30 00:00:00
Last Modified: 2015-11-03
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