Verizon awarded $24.8M for federal network connectivity, highlighting wired telecom carrier dominance

Contract Overview

Contract Amount: $24,832,275 ($24.8M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of Labor

Start Date: 2020-09-01

End Date: 2026-12-31

Contract Duration: 2,312 days

Daily Burn Rate: $10.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: (EIS) CO-LOCATED HOSTING SERVICES FOR NETWORK CONNECTIVITY ACROSS MULTIPLE SITES IN THE U.S. REQUIRED SERVICES INCLUDE THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTING AND NEW TELECOMMUNICATIONS SER

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20210

State: District of Columbia Government Spending

Plain-Language Summary

Department of Labor obligated $24.8 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: (EIS) CO-LOCATED HOSTING SERVICES FOR NETWORK CONNECTIVITY ACROSS MULTIPLE SITES IN THE U.S. REQUIRED SERVICES INCLUDE THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTING AND NEW TELECOMMUNICATIONS SER Key points: 1. Contract value represents a significant investment in essential network infrastructure. 2. The full and open competition suggests a robust bidding process. 3. Duration of over 2300 days indicates a long-term need for these services. 4. Services encompass the full lifecycle of telecommunications, from design to maintenance. 5. The contract's focus on co-located hosting points to a strategy for centralized network management. 6. Wired Telecommunications Carriers remain a critical sector for government operations. 7. The award to a single vendor implies a focus on established service providers.

Value Assessment

Rating: good

The contract value of $24.8 million over its period of performance appears reasonable for comprehensive network connectivity services across multiple U.S. sites. Benchmarking against similar large-scale telecommunications contracts for federal agencies, this award falls within expected ranges for design, engineering, provisioning, management, and maintenance. The Time and Materials pricing structure, while requiring careful oversight, allows for flexibility in addressing evolving network needs. Without specific per-unit cost data for services like bandwidth or port access, a precise value-for-money assessment is challenging, but the overall scope suggests a fair price for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of multiple bidders, though not explicitly quantified in the provided data, is implied by the nature of full and open competition. This competitive environment is generally expected to drive down prices and encourage innovation as vendors vie for the contract. The award to Verizon Business Network Services LLC suggests they offered the most advantageous proposal based on the evaluation criteria.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it fosters a competitive marketplace, leading to potentially lower prices and better service quality. It ensures that government funds are used efficiently by leveraging market forces to secure the best value.

Public Impact

Federal agencies across the U.S. will benefit from reliable and secure network connectivity. Essential services include the design, engineering, provisioning, management, transition, maintenance, and evolution of telecommunications. The geographic impact covers multiple sites within the United States. Workforce implications may include specialized roles in network engineering, management, and maintenance, potentially supporting both government and contractor personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to cost overruns if not closely monitored.
Long contract duration requires ongoing performance management to ensure continued value.
Reliance on a single vendor for critical network infrastructure presents potential vendor lock-in risks.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Comprehensive service scope covers the entire telecommunications lifecycle.
Long-term contract indicates a strategic commitment to network modernization.

Sector Analysis

The telecommunications sector, particularly wired telecommunications carriers, is fundamental to government operations, providing the backbone for data transmission and communication. This contract fits within the broader market for network services, which includes infrastructure, managed services, and connectivity solutions. The U.S. telecommunications market is highly competitive, dominated by a few large players like Verizon, AT&T, and Lumen Technologies. Government spending in this area is substantial, supporting everything from basic internet access to complex secure networks. This contract's value is modest compared to the total federal IT spending but significant for the specific services procured.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a large-scale telecommunications service contract, it is likely that the prime contractor, Verizon, will be responsible for managing subcontracting opportunities. While there is no explicit requirement for small business subcontracting mentioned, large federal contractors are often encouraged or required to meet certain subcontracting goals. The impact on the small business ecosystem would depend on Verizon's subcontracting strategy and whether smaller, specialized firms are engaged for specific tasks.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Department of Labor's Office of the Assistant Secretary for Administration and Management. Performance monitoring, invoice review, and adherence to contract terms are key oversight mechanisms. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

General Services Administration (GSA) IT Schedule 70
Networx Contract (legacy)
Enterprise Infrastructure Solutions (EIS)
Federal Telecommunications Relay Services (TRS)

Risk Flags

Potential for cost overruns due to Time and Materials pricing structure.
Vendor lock-in risk associated with long-term critical infrastructure contracts.
Need for robust performance monitoring to ensure Service Level Agreement (SLA) compliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $24.8 million to VERIZON BUSINESS NETWORK SERVICES LLC. (EIS) CO-LOCATED HOSTING SERVICES FOR NETWORK CONNECTIVITY ACROSS MULTIPLE SITES IN THE U.S. REQUIRED SERVICES INCLUDE THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTING AND NEW TELECOMMUNICATIONS SER

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 Labor (Office of the Assistant Secretary for Administration and Management).

What is the total obligated amount?

The obligated amount is $24.8 million.

What is the period of performance?

Start: 2020-09-01. End: 2026-12-31.

What is the historical spending pattern for network connectivity services by the Department of Labor?

Analyzing historical spending patterns for network connectivity services by the Department of Labor (DOL) is crucial for understanding the context of this $24.8 million Verizon contract. While specific historical data for DOL's network spending is not provided, federal agencies typically have ongoing needs for telecommunications, often managed through large, multi-year contracts. Agencies like DOL rely heavily on robust network infrastructure to support their diverse operations, including payroll processing, benefits administration, and labor statistics collection. Spending in this area can fluctuate based on infrastructure upgrades, technology shifts (e.g., cloud migration), and the expansion or consolidation of agency facilities. Previous contracts might have been awarded under different programs or to different vendors, reflecting evolving procurement strategies and market conditions. Understanding the trend of DOL's telecommunications expenditure over the past 5-10 years would provide valuable insight into whether this current award represents an increase, decrease, or stable level of investment in network services.

How does the per-unit cost of services under this contract compare to similar federal awards?

A detailed comparison of per-unit costs for services under this Verizon contract to similar federal awards is challenging without specific line-item data on services like bandwidth, port speeds, or managed services. The contract is structured as Time and Materials (T&M), which allows for flexibility but makes direct benchmarking difficult compared to fixed-price contracts. However, the overall contract value of $24.8 million over approximately 6.3 years (from Sept 2020 to Dec 2026) suggests an average annual spend of roughly $3.9 million. This figure needs to be contextualized by the number of sites supported and the scope of services. Federal agencies often leverage large telecommunications vehicles like GSA's Enterprise Infrastructure Solutions (EIS) program, which aims to provide competitive pricing through bulk purchasing and standardized service offerings. If this contract is not directly under EIS, its pricing might be compared to rates negotiated under similar large-scale federal telecom agreements. Generally, large providers like Verizon are expected to offer competitive rates to federal clients due to the volume and long-term commitment, but rigorous oversight is needed to ensure T&M costs remain aligned with market value and avoid overspending.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key Performance Indicators (KPIs) for a contract like this, involving co-located hosting services for network connectivity, are essential for ensuring service quality, reliability, and value. While specific KPIs are not detailed in the provided data, typical metrics for such telecommunications services would include: Network Uptime/Availability (e.g., 99.99% uptime), Latency (measured in milliseconds between key points), Jitter (variation in latency), Packet Loss (percentage of data packets lost), Mean Time to Repair (MTTR) for outages, Service Provisioning Time (time to activate new circuits or services), and Customer Satisfaction. For co-located hosting, KPIs might also extend to environmental controls (temperature, humidity), power redundancy, and physical security of the hosted equipment. The Department of Labor's contracting officers and technical points of contact would monitor these KPIs against agreed-upon Service Level Agreements (SLAs) within the contract. Failure to meet these KPIs could result in service credits or financial penalties for Verizon, ensuring accountability and incentivizing performance.

What is Verizon Business Network Services LLC's track record with federal government contracts, particularly in telecommunications?

Verizon Business Network Services LLC has a substantial and long-standing track record of serving the federal government with a wide array of telecommunications and network services. As one of the largest telecommunications providers in the United States, Verizon has consistently secured significant federal contracts across various agencies, including the Department of Defense, civilian agencies, and intelligence community components. Their involvement often spans critical infrastructure projects, secure network deployments, and managed services. Notably, Verizon was a key player in previous large federal telecom programs like the GSA's Networx contract and is a significant participant in the current Enterprise Infrastructure Solutions (EIS) program. Their experience includes delivering services such as high-speed data, voice, video, wireless, and cybersecurity solutions. The company's ability to manage complex, large-scale deployments and maintain high availability for critical government operations is well-documented through its performance on these extensive contracts. This history suggests a strong capability to fulfill the requirements of the Department of Labor's co-located hosting and network connectivity needs.

What are the potential risks associated with a sole-source award for critical network infrastructure?

While this contract was awarded under full and open competition, the scenario of a sole-source award for critical network infrastructure presents several potential risks. Firstly, it can lead to higher costs for taxpayers, as the absence of competition removes the primary incentive for the vendor to offer the lowest possible price. Secondly, it may stifle innovation, as the sole provider has less pressure to adopt new technologies or improve service offerings. Thirdly, it creates a significant dependency on a single vendor, increasing the risk of service disruptions if the vendor experiences financial difficulties, operational issues, or strategic shifts. This vendor lock-in can make it difficult and costly for the government to switch providers in the future. Lastly, oversight becomes even more critical to ensure fair pricing and adequate performance, as the government lacks the leverage that competition provides. For critical infrastructure, these risks are amplified due to the essential nature of the services provided.

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

Solicitation ID: 1605DC-20-R-00015

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Verizon Maryland LLC

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: $69,840,346

Exercised Options: $34,359,965

Current Obligation: $24,832,275

Actual Outlays: $20,976,797

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3009

IDV Type: IDC

Timeline