Treasury's $68.6M telecommunications order to AT&T shows strong competition and fair pricing

Contract Overview

Contract Amount: $68,615,646 ($68.6M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of the Treasury

Start Date: 2019-10-01

End Date: 2020-09-30

Contract Duration: 365 days

Daily Burn Rate: $188.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TNET FY20 MPLS ORDER

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22185

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $68.6 million to AT&T ENTERPRISES, LLC for work described as: TNET FY20 MPLS ORDER Key points: 1. Value for money appears favorable given the competitive bidding process. 2. The contract was awarded under full and open competition, suggesting market-driven pricing. 3. Risk indicators are low due to the established nature of the service and contractor. 4. Performance context is within the scope of standard telecommunications services. 5. This contract fits within the broader IT and telecommunications sector spending. 6. The fixed-price contract type limits cost overrun risks for the government.

Value Assessment

Rating: good

The $68.6 million award for wired telecommunications carriers appears reasonable, especially considering it was competitively bid. Benchmarking against similar large-scale telecommunications contracts awarded by federal agencies suggests that AT&T's pricing is likely in line with market rates for such services. The firm fixed-price structure further enhances value by capping potential cost increases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. The presence of a single award suggests that AT&T offered the best value among the competing proposals. This level of competition is generally beneficial for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive process that drives down costs and ensures the government is not overpaying for essential telecommunications services.

Public Impact

Federal employees across the Department of the Treasury, including the Internal Revenue Service, benefit from reliable wired telecommunications services. The contract ensures the delivery of essential network connectivity for government operations. The primary geographic impact is within Virginia, where the services are likely deployed. The contract supports jobs within the telecommunications sector, particularly at AT&T.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if renewal is not competitively bid.
Dependence on a single large provider for critical infrastructure.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Firm fixed-price contract type mitigates budget uncertainty.
AT&T is a well-established provider with a proven track record in federal contracting.

Sector Analysis

This contract falls within the broader telecommunications sector, specifically wired telecommunications carriers. The federal government is a significant consumer of these services, with annual spending often in the billions across various agencies. This contract represents a portion of that overall spending, supporting the infrastructure necessary for government operations. Comparable spending benchmarks would involve looking at other large federal awards for similar network services.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a large telecommunications award to a major provider, the primary focus is likely on meeting the extensive service requirements. Subcontracting opportunities for small businesses may exist within the execution of this contract, but they are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the contracting officers and program managers within the Department of the Treasury and the Internal Revenue Service. Accountability is maintained through performance metrics and adherence to the firm fixed-price agreement. Transparency is generally provided through federal procurement databases where contract awards are reported.

Related Government Programs

Federal Telecommunications Services
Network Infrastructure Contracts
IRS IT Spending
Department of the Treasury IT Procurement

Risk Flags

Potential for vendor lock-in
Dependence on a single large provider

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $68.6 million to AT&T ENTERPRISES, LLC. TNET FY20 MPLS ORDER

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, 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 $68.6 million.

What is the period of performance?

Start: 2019-10-01. End: 2020-09-30.

What is AT&T's track record with federal telecommunications contracts?

AT&T has a long and extensive history of providing telecommunications services to the U.S. federal government. They are a major incumbent carrier and hold numerous contracts across various agencies for a wide range of services, including voice, data, internet, and network infrastructure. Their track record generally includes significant experience in large-scale deployments and managing complex federal requirements. However, like any large contractor, they have also faced scrutiny and reviews on specific contracts regarding pricing, performance, and compliance. For this specific contract, the award through full and open competition suggests a positive assessment of their proposal at the time of award.

How does the value of this contract compare to similar federal telecommunications awards?

The $68.6 million value for a one-year (365-day) wired telecommunications order is substantial, reflecting the scale of services likely provided to the IRS and Treasury. To benchmark effectively, one would need to compare it against other large, competitively awarded telecommunications contracts for similar services (e.g., MPLS, dedicated internet access) from the same period or recent years. Given that it was competitively bid under full and open competition, the price is presumed to be market-driven and fair. However, without access to a detailed breakdown of services and service level agreements, a precise comparison is difficult. Generally, large federal telecommunications contracts can range from tens to hundreds of millions of dollars annually, depending on the scope and number of users.

What are the primary risks associated with this type of contract?

The primary risks associated with this type of contract include potential vendor lock-in if future renewals are not managed competitively, and dependence on a single large provider for critical infrastructure. While the firm fixed-price structure mitigates cost overrun risks for the government, there's a risk of the contractor prioritizing profit over service quality if oversight is lax. Performance issues, such as service disruptions or failure to meet service level agreements (SLAs), could also pose a risk, although the competitive nature of the award and established provider reduce the likelihood of significant performance failures. Ensuring robust contract management and performance monitoring is key to mitigating these risks.

How effective is full and open competition in ensuring value for taxpayer money in telecommunications?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money in telecommunications procurement. It allows multiple qualified vendors to submit proposals, fostering a competitive environment that drives down prices and encourages innovation. The government can then select the offer that provides the best overall value, considering price, technical approach, and past performance. For telecommunications, where technology evolves rapidly and multiple providers exist, this approach helps prevent monopolies or oligopolies from dictating prices and ensures that agencies receive modern, cost-effective solutions. The $68.6M Treasury order being awarded under this method suggests that competitive pressures were applied.

What is the historical spending trend for wired telecommunications carriers by the Department of the Treasury?

Historical spending by the Department of the Treasury on wired telecommunications carriers has likely been substantial and consistent over the years, reflecting the agency's critical need for reliable network connectivity. While specific year-over-year figures for this exact contract type are not provided, the government's reliance on telecommunications services means that agencies like Treasury consistently allocate significant budgets to these needs. Trends would likely show an evolution from traditional voice and data circuits towards more robust broadband, MPLS, and cloud-based networking solutions. Spending levels can fluctuate based on technology upgrades, consolidation efforts, and specific project requirements, but the overall demand for these services remains high.

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc. (UEI: 108024050)

Address: 3033 CHAIN BRIDGE RD, OAKTON, VA, 22185

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

Financial Breakdown

Contract Ceiling: $396,843,385

Exercised Options: $396,843,385

Current Obligation: $68,615,646

Actual Outlays: $66,018,935

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00T07NSD0007

IDV Type: IDC

Timeline