STG LLC awarded $60M contract for Wired Telecommunications Carriers by Department of the Army, spanning 2009-2015

Contract Overview

Contract Amount: $60,079,943 ($60.1M)

Contractor: STG LLC

Awarding Agency: Department of Defense

Start Date: 2009-09-01

End Date: 2015-02-28

Contract Duration: 2,006 days

Daily Burn Rate: $29.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: DIRECT LABOR

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $60.1 million to STG LLC for work described as: DIRECT LABOR Key points: 1. Contract value of $60M over six years suggests a significant but potentially average annual spend for telecommunications services. 2. Full and open competition indicates a healthy market with multiple potential bidders, likely driving competitive pricing. 3. The contract type (Cost Plus Fixed Fee) can introduce cost overrun risks if not closely managed. 4. Performance period of over six years allows for long-term service delivery but requires sustained oversight. 5. The NAICS code 517110 places this contract within the telecommunications infrastructure sector. 6. Delivery Order award type suggests this was one of multiple orders under a larger contract vehicle.

Value Assessment

Rating: fair

The total award of $60M over approximately six years averages to $10M annually. Benchmarking this against similar large-scale telecommunications infrastructure contracts is difficult without more specific service details. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility, can lead to higher costs compared to fixed-price contracts if not managed diligently. The relatively low number of bidders (2) in the final award stage, despite full and open competition, might suggest a specialized service or a market with limited players.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that all responsible sources were permitted to submit bids. The data indicates two bids were received, which is on the lower end for full and open competition. This could imply a specialized service area where fewer companies possess the required capabilities, or that the solicitation period or terms may have inadvertently limited broader participation. The limited number of bidders could potentially impact the degree of price discovery achieved through the competitive process.

Taxpayer Impact: While full and open competition is generally favorable for taxpayers, receiving only two bids might mean that taxpayers did not benefit from the full spectrum of potential cost savings that a more robust bidding process could have yielded.

Public Impact

The Department of the Army benefits from the provision of wired telecommunications services, crucial for its operational and communication needs. This contract supports the infrastructure necessary for military communications, potentially impacting readiness and command and control. The services delivered likely include installation, maintenance, and management of telecommunications networks within specified geographic areas. Workforce implications may include employment opportunities for telecommunications technicians, engineers, and support staff employed by STG LLC and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can lead to cost overruns if not rigorously managed.
Limited number of bidders (2) in the final award stage, despite full and open competition, may indicate suboptimal price discovery.
Long performance period (over 6 years) requires sustained vigilance to ensure continued value and performance.
Lack of specific details on services rendered makes it challenging to benchmark value for money effectively.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential offerors.
Contract duration of over six years allows for stable service provision and potential for economies of scale.
The contract supports critical Department of the Army telecommunications infrastructure.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers industry (NAICS 517110), which includes establishments primarily engaged in operating telecommunications networks, such as wireline, fiber optic, and wireless (except satellite) networks, for the transmission of voice, data, text, and video. The federal government is a significant consumer of these services, requiring robust and secure communication networks for its operations. Spending in this sector can vary widely based on infrastructure upgrades, modernization efforts, and specific agency needs. Comparable spending benchmarks would depend on the scale and complexity of the network services provided.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it mention subcontracting goals. The award to STG LLC, a company name that does not immediately suggest a small business, further implies this was not a small business set-aside. Without explicit subcontracting requirements, the direct impact on the small business ecosystem is unclear, though STG LLC may engage small businesses as subcontractors depending on their internal policies and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Army. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including performance metrics, reporting requirements, and invoicing procedures. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Telecommunications Services
Network Infrastructure
Information Technology Services
Defense Communications

Risk Flags

Potential for cost overruns due to CPFF contract type.
Limited competition (2 bidders) may impact price discovery.
Risk of technological obsolescence over the long contract duration.
Need for sustained oversight to ensure performance and value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.1 million to STG LLC. DIRECT LABOR

Who is the contractor on this award?

The obligated recipient is STG LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $60.1 million.

What is the period of performance?

Start: 2009-09-01. End: 2015-02-28.

What was the specific nature of the wired telecommunications services provided under this contract?

The provided data identifies the contract under NAICS code 517110 (Wired Telecommunications Carriers) and specifies the awarding agency as the Department of the Army. However, it does not detail the specific services rendered. Typically, contracts in this category can encompass a wide range of services including the installation, maintenance, operation, and management of telecommunications networks, such as voice and data transmission lines, fiber optic cables, and related infrastructure. These services are critical for ensuring reliable communication capabilities for military operations, administrative functions, and personnel connectivity. Without further details, it's challenging to ascertain the exact scope, such as whether it involved backbone network services, local area network support, or specialized communication systems.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar telecommunications services?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is a high degree of uncertainty in the costs involved, such as in research and development or complex service contracts. For telecommunications services, fixed-price contracts (like Firm-Fixed-Price or Fixed-Price Incentive) are generally preferred by the government when requirements are well-defined, as they offer greater cost certainty and incentivize contractor efficiency. CPFF contracts allow the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. While this structure provides flexibility and can facilitate the start of work when details are still emerging, it carries a higher risk of cost growth for the government compared to fixed-price arrangements. Effective oversight and robust cost controls are essential to mitigate these risks in CPFF contracts.

What is the significance of the two bids received under 'full and open competition' for this contract?

Receiving only two bids under a 'full and open competition' solicitation is noteworthy. Full and open competition aims to maximize the number of potential bidders to foster the most competitive pricing and innovative solutions. When only two bids are received, it can suggest several possibilities: the market for the specific services required might be limited, with only a few companies possessing the necessary technical expertise and capacity; the solicitation's requirements or terms might have been overly restrictive or complex, deterring other potential bidders; or the timing of the solicitation may have coincided with other major industry demands. From a taxpayer perspective, fewer bids generally translate to less robust price competition, potentially resulting in a higher-than-optimal price compared to a scenario with numerous competing offers.

What are the potential risks associated with a six-year performance period for telecommunications services?

A performance period extending over six years for telecommunications services presents both opportunities and risks. On the positive side, it allows for long-term planning, stable service delivery, and potential for economies of scale, reducing disruption and ensuring continuity. However, risks include technological obsolescence, as telecommunications technology evolves rapidly; potential for contractor performance degradation over time if oversight is not consistent; and the possibility of cost escalation if the contract terms do not adequately account for inflation or changing market conditions. Furthermore, a long duration means the government is locked into a specific provider and service level for an extended period, potentially missing out on newer, more cost-effective solutions that emerge during the contract term. Robust performance management and periodic reviews are crucial to mitigate these risks.

How does the $60M award value compare to typical federal spending on wired telecommunications carriers?

The $60 million award value for STG LLC over a period of approximately six years (September 2009 to February 2015) averages to about $10 million per year. Federal spending on wired telecommunications carriers is substantial and varies significantly by agency and the scope of services. Large agencies like the Department of Defense, Department of Homeland Security, and civilian agencies with extensive field operations often procure significant telecommunications services. While $10 million annually might seem substantial for a single contract, it could represent a portion of a larger agency's overall telecommunications budget or a specific regional requirement. Without knowing the exact services, geographic scope, and service level agreements, it's difficult to definitively benchmark this against the entirety of federal spending in this category, but it falls within the range of significant, multi-year service contracts.

Industry Classification

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

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: STG Group, Inc.

Address: 11710 PLAZA AMERICA DR, RESTON, VA, 20190

Business Categories: Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $74,067,928

Exercised Options: $71,823,220

Current Obligation: $60,079,943

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0015

IDV Type: IDC

Timeline