Treasury's IRS awards $16.5M for Local Service Agreements Enterprise Infrastructure Solutions

Contract Overview

Contract Amount: $16,498,004 ($16.5M)

Contractor: Granite Telecommunications, LLC

Awarding Agency: Department of the Treasury

Start Date: 2020-07-10

End Date: 2026-07-09

Contract Duration: 2,190 days

Daily Burn Rate: $7.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: LOCAL SERVICE AGREEMENTS ENTERPRISE INFRASTRUCTURE SOLUTIONS (LSAEIS) TRANSITION PROJECT

Place of Performance

Location: QUINCY, NORFOLK County, MASSACHUSETTS, 02171

State: Massachusetts Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.5 million to GRANITE TELECOMMUNICATIONS, LLC for work described as: LOCAL SERVICE AGREEMENTS ENTERPRISE INFRASTRUCTURE SOLUTIONS (LSAEIS) TRANSITION PROJECT Key points: 1. Contract value represents a significant investment in the IRS's telecommunications infrastructure. 2. The fixed-price structure with economic price adjustment aims to mitigate cost fluctuations. 3. The contract duration of approximately six years suggests a long-term need for these services. 4. The award was made under full and open competition, indicating a broad market search. 5. The primary service category is Wired Telecommunications Carriers, essential for modern operations. 6. The contractor, Granite Telecommunications, LLC, will be responsible for delivering these solutions.

Value Assessment

Rating: good

The contract value of $16.5 million over approximately six years for telecommunications services appears reasonable given the scope. Benchmarking against similar large-scale enterprise telecommunications contracts is challenging without more specific service details. However, the fixed-price with economic price adjustment structure suggests an effort to control costs while accounting for market volatility. The number of bids received (2) is on the lower side for full and open competition, which could warrant further investigation into pricing competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. Two bids were received for this Delivery Order. While two bidders indicate some level of competition, it is on the lower end for a full and open solicitation of this magnitude. This could suggest potential limitations in the market for these specific services or a highly specialized requirement.

Taxpayer Impact: The full and open competition process is generally favorable for taxpayers as it aims to solicit the best possible pricing and service offerings by encouraging multiple vendors to compete. However, the low number of bids received warrants scrutiny to ensure optimal value was achieved.

Public Impact

The IRS will benefit from enhanced and reliable telecommunications infrastructure, supporting its mission-critical operations. Services delivered will likely include the provision, installation, and maintenance of wired telecommunications networks. The geographic impact is likely nationwide, supporting IRS facilities across the United States. Workforce implications may include the need for specialized telecommunications technicians and support staff, both within the IRS and potentially at the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) for a full and open solicitation may indicate potential for higher costs than if more vendors had participated.
The fixed-price with economic price adjustment contract type introduces some risk of cost escalation over the contract period.
The specific details of the 'enterprise infrastructure solutions' are not fully elaborated, making a precise value assessment difficult.

Positive Signals

The contract is awarded under full and open competition, maximizing the potential pool of qualified vendors.
The fixed-price component of the contract provides a baseline cost control measure.
The long contract duration suggests a stable and predictable need for these services, allowing for strategic planning.

Sector Analysis

The Wired Telecommunications Carriers industry (NAICS 517110) encompasses companies that provide telecommunications services through the use of the wired telecommunications infrastructure. This includes services like local and long-distance voice and data communications, and internet access. The market is characterized by significant capital investment in infrastructure and evolving technological demands. Federal spending in this sector supports agency-wide communication networks, data transmission, and essential connectivity for operations. Comparable spending benchmarks would typically involve analyzing other large federal contracts for similar enterprise-wide telecommunications solutions.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting goals for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Granite Telecommunications, LLC voluntarily engages small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Treasury's Internal Revenue Service (IRS) contracting officers and program managers. The contract's fixed-price nature with economic price adjustments will require careful monitoring of price changes and justification. Transparency is facilitated by the public nature of federal contract awards, though detailed performance metrics are not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

IRS IT Modernization Initiatives
Federal Network Infrastructure Contracts
Telecommunications Services for Government Agencies
Enterprise IT Solutions

Risk Flags

Limited Competition
Potential for Cost Escalation (EPA)
Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.5 million to GRANITE TELECOMMUNICATIONS, LLC. LOCAL SERVICE AGREEMENTS ENTERPRISE INFRASTRUCTURE SOLUTIONS (LSAEIS) TRANSITION PROJECT

Who is the contractor on this award?

The obligated recipient is GRANITE TELECOMMUNICATIONS, 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 $16.5 million.

What is the period of performance?

Start: 2020-07-10. End: 2026-07-09.

What is the track record of Granite Telecommunications, LLC with federal contracts, particularly with the IRS?

Granite Telecommunications, LLC has a history of securing federal contracts, often through General Services Administration (GSA) schedules. While specific details on their performance with the IRS for this particular 'LSAEIS Transition Project' are not provided in the summary data, their ability to win this Delivery Order suggests they met the qualification criteria. A deeper dive into their contract history, including past performance evaluations and any reported issues on previous federal awards, would be necessary for a comprehensive assessment. Their success in winning this competitive bid indicates they are a recognized player in the federal telecommunications contracting space.

How does the awarded price compare to similar enterprise telecommunications contracts within the federal government?

Directly comparing the $16.5 million award for 'Local Service Agreements Enterprise Infrastructure Solutions' to similar federal contracts is challenging without more granular data on the specific services, scope, and duration. Federal telecommunications contracts can vary widely in cost based on factors like bandwidth, security requirements, geographic coverage, and the inclusion of hardware versus pure service. However, for a multi-year, enterprise-wide solution involving wired telecommunications, this value appears within a plausible range for a large federal agency like the IRS. Further analysis would require identifying contracts with comparable service level agreements (SLAs) and infrastructure footprints.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost overruns due to the economic price adjustment clause, which allows for price changes based on market indices. Mitigation involves careful monitoring of these indices and ensuring adjustments are justified. Another risk is the limited competition (two bidders), which could imply less favorable pricing than a more robustly competed contract. Mitigation here would involve rigorous oversight of performance and pricing throughout the contract's life. Technical risks related to the implementation and integration of new infrastructure are also present, which are typically managed through detailed technical specifications, phased rollouts, and performance-based metrics.

How effective is the 'fixed price with economic price adjustment' contract type for managing telecommunications costs?

The 'fixed price with economic price adjustment' (FPEPA) contract type attempts to balance cost certainty with market reality. The fixed-price component provides a baseline cost, while the economic price adjustment (EPA) allows for modifications based on objective economic factors, such as inflation or changes in raw material costs. For telecommunications, EPAs often track indices related to labor, energy, or specific components. This structure can be effective in preventing contractors from absorbing significant unforeseen cost increases, which could lead to performance issues or contract disputes. However, it requires diligent monitoring by the government to ensure that price adjustments are fair, justified, and do not lead to excessive overall spending beyond what might be achieved in a purely fixed-price scenario with higher initial bids.

What are the historical spending patterns for similar telecommunications services at the IRS?

Historical spending patterns for telecommunications services at the IRS would likely show a consistent need for robust network infrastructure to support its vast operations. Agencies typically spend significant amounts on maintaining and upgrading their communication networks, including voice, data, and internet services. Prior contracts may have involved different vendors, technologies, or contract structures (e.g., multiple smaller contracts versus a large enterprise agreement). Analyzing past expenditures would reveal trends in technology adoption, vendor consolidation efforts, and overall budget allocation towards telecommunications. This $16.5 million award represents a significant portion of that ongoing investment, likely reflecting a consolidation or upgrade of existing services.

What does the low number of bidders (2) for this full and open competition imply for the IRS's ability to secure competitive pricing?

A low number of bidders, such as two, in a full and open competition can raise concerns about the level of price discovery achieved. While it indicates that at least two qualified vendors were interested and capable, it suggests that the market may not be as robustly competitive as desired for this specific requirement. This could be due to the highly specialized nature of the 'enterprise infrastructure solutions,' stringent requirements that limit the pool of eligible contractors, or perhaps the timing and structure of the solicitation. For the IRS, this means they may not have benefited from the downward price pressure that typically occurs with a larger number of competing bids. Consequently, careful negotiation and vigilant oversight of the awarded contract's pricing and performance become even more critical to ensure value for taxpayer money.

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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 1 HERITAGE DR, QUINCY, MA, 02171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $28,154,334

Exercised Options: $18,398,694

Current Obligation: $16,498,004

Actual Outlays: $13,822,617

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3004

IDV Type: IDC

Timeline