Department of Labor awards $56.5M contract for managed network services to Verizon Business Network Services LLC

Contract Overview

Contract Amount: $56,518,145 ($56.5M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of Labor

Start Date: 2020-09-25

End Date: 2026-12-31

Contract Duration: 2,288 days

Daily Burn Rate: $24.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: EIS FO1 - TASK AREA 1 MANAGED NETWORK, DATA, VOICE AND TOLL FREE SERVICES ACROSS MULTIPLE SITES IN THE U.S. THE SCOPE OF THIS DOL REQUIREMENT INCLUDES THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTIN

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 $56.5 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: EIS FO1 - TASK AREA 1 MANAGED NETWORK, DATA, VOICE AND TOLL FREE SERVICES ACROSS MULTIPLE SITES IN THE U.S. THE SCOPE OF THIS DOL REQUIREMENT INCLUDES THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTIN Key points: 1. The contract focuses on comprehensive managed network services, including design, engineering, provisioning, management, transition, maintenance, and evolution of existing infrastructure. 2. This is a significant award for Verizon Business Network Services LLC, indicating a strong performance or competitive advantage in securing large-scale telecommunications contracts. 3. The contract duration of approximately 6 years (2020-2026) suggests a need for stable, long-term network solutions for the Department of Labor. 4. The use of Time and Materials (T&M) pricing could introduce cost variability, requiring diligent oversight to manage expenditures effectively. 5. The contract is categorized under Wired Telecommunications Carriers, a sector characterized by substantial infrastructure investment and ongoing technological advancements. 6. The award was made under full and open competition, implying a robust bidding process that likely yielded competitive pricing. 7. The geographic scope covers multiple sites across the U.S., highlighting the extensive reach and complexity of the Department of Labor's network requirements.

Value Assessment

Rating: good

The contract value of $56.5 million over approximately 6 years represents a substantial investment in telecommunications infrastructure. Benchmarking this against similar large-scale managed network services contracts for federal agencies would provide a clearer picture of value for money. The Time and Materials pricing model, while flexible, necessitates careful monitoring of labor hours and material costs to ensure they align with industry standards and the contracted scope. Without specific cost breakdowns or comparisons to market rates for similar services, a definitive value assessment is challenging, but the competitive award suggests a reasonable price point was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple vendors were eligible to bid. The presence of three bidders (as suggested by 'no': 3) signifies a healthy level of competition for this significant telecommunications requirement. This competitive environment generally pressures bidders to offer more favorable pricing and service terms to secure the contract, benefiting the agency.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is expected to drive down costs and ensure the Department of Labor receives high-quality services at a fair market price.

Public Impact

The primary beneficiary is the Department of Labor, which will receive enhanced and managed network, data, voice, and toll-free services across its various sites. This contract ensures the continuity and evolution of critical communication infrastructure, supporting the department's operational efficiency and mission. The services delivered will impact numerous federal employees and potentially the public interacting with DOL systems, ensuring reliable connectivity. The geographic impact is nationwide, covering multiple DOL locations across the United States, requiring robust and scalable network solutions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the Time and Materials (T&M) pricing structure if not closely managed.
Dependence on a single vendor for critical network infrastructure could pose risks if performance issues arise or if the vendor's financial stability is compromised.
The complexity of managing a nationwide network across multiple sites presents inherent operational risks.
Ensuring seamless transition from existing systems to the new managed services requires meticulous planning and execution.

Positive Signals

Awarded under full and open competition, suggesting a competitive and potentially cost-effective solution was selected.
The long contract duration (approx. 6 years) indicates a stable, long-term partnership for critical infrastructure.
Verizon Business Network Services LLC is a major telecommunications provider with extensive experience in managing large-scale networks.
The contract scope is comprehensive, addressing a wide range of network needs from design to evolution.

Sector Analysis

The Wired Telecommunications Carriers industry (NAICS 517110) is a mature but dynamic sector focused on providing voice and data services over wired networks. It involves significant capital investment in infrastructure like fiber optics and switching equipment. The market is dominated by a few large players, including Verizon, AT&T, and Lumen Technologies. Federal contracts for telecommunications services are substantial, driven by the need for secure, reliable, and high-speed connectivity across government agencies. This contract fits within the broader trend of federal agencies outsourcing complex network management to specialized providers to leverage expertise and potentially reduce internal operational burdens.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses explicitly mentioned in the provided data. As a large prime contract awarded to a major telecommunications provider, the primary focus is on the prime contractor's capabilities. While Verizon may engage small businesses as subcontractors, the direct impact on the small business ecosystem is not detailed here. Further review of the contract's subcontracting plan, if available, would be necessary to assess its implications for small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Labor's contracting officers and program managers. Given the nature of managed network services and the Time and Materials pricing, robust oversight mechanisms would be crucial. This includes regular performance reviews, audits of labor hours and material costs, and ensuring adherence to service level agreements (SLAs). Transparency is facilitated through contract reporting requirements. The Inspector General's office for the Department of Labor would likely have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

General Services Administration (GSA) IT Schedule 70
Networx Contract (legacy GSA program)
Enterprise Infrastructure Solutions (EIS) - GSA
Department of Defense (DoD) telecommunications contracts
Federal Civilian Agency Network Modernization Programs

Risk Flags

Time and Materials pricing requires diligent oversight to control costs.
Scope definition for 'evolution' needs clear management to prevent creep.
Dependence on a single vendor for critical infrastructure.
Complexity of nationwide network management.

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $56.5 million to VERIZON BUSINESS NETWORK SERVICES LLC. EIS FO1 - TASK AREA 1 MANAGED NETWORK, DATA, VOICE AND TOLL FREE SERVICES ACROSS MULTIPLE SITES IN THE U.S. THE SCOPE OF THIS DOL REQUIREMENT INCLUDES THE DESIGN, ENGINEERING, PROVISIONING, MANAGEMENT, TRANSITION, MAINTENANCE AND EVOLUTION OF EXISTIN

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 $56.5 million.

What is the period of performance?

Start: 2020-09-25. End: 2026-12-31.

What is the historical spending pattern for managed network services at the Department of Labor prior to this contract?

Analyzing historical spending on managed network services at the Department of Labor is crucial for context. Without specific prior contract data, it's difficult to establish a precise trend. However, federal agencies, including DOL, have increasingly moved towards consolidated, managed network solutions over the past decade, often migrating from older, disparate systems. This shift is driven by the need for greater efficiency, enhanced security, and better scalability. If previous spending was fragmented across multiple smaller contracts or internal resources, this $56.5 million award represents a significant consolidation and modernization effort. Comparing this award's value to previous aggregated spending would indicate whether this represents an increase, decrease, or stable investment in network services, adjusted for inflation and scope changes.

How does the per-unit cost of services under this Time and Materials contract compare to industry benchmarks for similar managed network services?

Benchmarking the per-unit costs for services under this Time and Materials (T&M) contract against industry standards is essential for assessing value. T&M contracts typically involve billing based on actual labor hours and material costs, plus a markup. To perform this benchmark, one would need to identify specific labor categories (e.g., network engineer, technician), their billed hourly rates, and the markup percentage. These would then be compared to published industry rate cards, government-wide contract vehicles (like GSA schedules), or data from similar federal agency contracts. A key challenge with T&M is that the 'per-unit' cost can fluctuate based on the actual effort expended. Therefore, benchmarking often focuses on the reasonableness of the hourly rates and the markup, rather than a fixed per-unit price. If the billed rates and markups are significantly higher than market averages, it could indicate potential overpricing or inefficient service delivery, necessitating closer oversight.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how is performance measured?

Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) are critical for managing and evaluating the performance of this managed network services contract. While not detailed in the provided data, typical KPIs for such a contract would include network uptime/availability (e.g., 99.99%), mean time to repair (MTTR) for outages, network latency, bandwidth utilization, and incident response times. SLAs define the specific targets for these KPIs and the remedies or penalties (e.g., service credits) if they are not met. Performance measurement usually involves regular reporting by the contractor (Verizon) and verification by the Department of Labor's contracting officer's representative (COR). Monthly or quarterly performance reviews would assess adherence to SLAs, review incident reports, and discuss any emerging issues or required service evolutions. Robust measurement ensures the agency receives the contracted level of service and value.

What is Verizon Business Network Services LLC's track record with similar large-scale federal managed network contracts?

Verizon Business Network Services LLC has a substantial track record in delivering large-scale managed network services to both commercial and government clients. They are a major telecommunications provider with extensive experience in areas such as managed WAN, LAN, security, and unified communications. For federal agencies, Verizon has held numerous significant contracts, including work under programs like GSA's Enterprise Infrastructure Solutions (EIS) and previously Networx. Their experience often includes managing complex, geographically dispersed networks with stringent security and reliability requirements. Evaluating their past performance on similar contracts, including any past performance issues, contract modifications, or successful large-scale transitions, provides valuable insight into their capability to execute this Department of Labor requirement effectively and manage the associated risks.

What are the potential risks associated with the 'evolution' aspect of the managed network services scope?

The 'evolution' aspect of the managed network services scope introduces several potential risks. Firstly, it implies a need for continuous adaptation to new technologies and changing requirements, which can lead to scope creep if not carefully managed. This could result in unplanned cost increases beyond the initial $56.5 million award, especially if the evolution involves significant upgrades or new service implementations not fully anticipated. Secondly, defining 'evolution' can be subjective, potentially leading to disagreements between the contractor and the Department of Labor regarding what constitutes a necessary upgrade versus a discretionary enhancement. Thirdly, incorporating new technologies requires careful integration planning to ensure compatibility with existing infrastructure and security protocols. Finally, the pace of technological change means that the network may require frequent updates, placing a continuous demand on resources and potentially impacting budget predictability over the contract's lifespan.

How does this contract's value and scope compare to other federal contracts for similar wired telecommunications carrier services?

This $56.5 million contract for managed network services is a significant award, placing it in the upper tier of federal telecommunications procurements. The scope, encompassing design, engineering, provisioning, management, transition, maintenance, and evolution of network services across multiple sites, is comprehensive. Comparable contracts would likely be found within large agency-wide network modernization efforts or consolidated telecommunications procurements. For instance, contracts awarded under GSA's Enterprise Infrastructure Solutions (EIS) program, which aims to modernize federal telecommunications and IT infrastructure, often reach similar or higher values and cover broad service portfolios. The Wired Telecommunications Carriers sector (NAICS 517110) sees substantial federal spending, but contracts of this magnitude are typically awarded to major providers like Verizon, AT&T, or Lumen, often through competitive bidding processes similar to the full and open competition used here. The duration of approximately six years is also typical for large infrastructure-related 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

Solicitation ID: 1605DC-20-R-00018

Offers Received: 3

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: $572,442,338

Exercised Options: $285,934,215

Current Obligation: $56,518,145

Actual Outlays: $47,621,112

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