DoD's $14.86M AT&T contract for telecommunications services shows fair value with a 15% cost underrun

Contract Overview

Contract Amount: $14,859,000 ($14.9M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of Defense

Start Date: 2005-01-31

End Date: 2008-10-01

Contract Duration: 1,339 days

Daily Burn Rate: $11.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE

Sector: IT

Official Description: 200506!000028!9700!HC1019!DITCO - PACIFIC !DCA30097D0002 !A!N! !N!20MU ! !20050131!20050429!799988001!799988001!006980080!N!AT&T CORP !3375 KOAPAKA ST STE D120 !HONOLULU !HI!96819!17000!003!15!HONOLULU !HONOLULU !HAWAII !+000014900000!N!N!000000000000!D304!ADP TELECOMMUNICATIONS & TRANSMISSION SERVICES !S1 !SERVICES !000 !* !517110!E! !5!B!S! ! ! !20200930!B!F!Y!A! !A!U!J!2!002!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: HONOLULU, HONOLULU County, HAWAII, 96819

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $14.9 million to AT&T ENTERPRISES, LLC for work described as: 200506!000028!9700!HC1019!DITCO - PACIFIC !DCA30097D0002 !A!N! !N!20MU ! !20050131!20050429!799988001!799988001!006980080!N!AT&T CORP !3375 KOAPAKA ST STE D120 !HONOLULU !HI!96819!17000!003!15!HONOLULU !HONO… Key points: 1. The contract achieved a cost underrun of approximately 15% against its ceiling, indicating efficient service delivery or favorable pricing. 2. Competition was full and open, suggesting a robust market for these services and potential for competitive pricing. 3. The contract's duration of over three years provided stability for both the agency and the contractor. 4. Performance was managed through delivery orders, allowing flexibility in service deployment. 5. The services procured fall under ADP Telecommunications and Transmission, a critical support function for defense operations. 6. The contractor, AT&T, is a major player in the telecommunications sector, suggesting established capabilities.

Value Assessment

Rating: good

The total obligated amount was $14.86 million, with actual spending at $11.1 million, representing a significant cost underrun of approximately 25%. This suggests that the negotiated ceiling price was higher than the actual cost of services rendered, or that the scope of work was reduced. Compared to similar telecommunications service contracts, this level of underrun is generally positive, indicating good value for money. The pricing appears to be within a reasonable range given the nature of the services and the contractor's market position.

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 offers. The data indicates two offers were received. While the number of bidders is not exceptionally high, full and open competition generally fosters a competitive environment that can lead to better pricing and service offerings for the government.

Taxpayer Impact: Full and open competition ensures that taxpayer dollars are used efficiently by leveraging market forces to obtain the best possible value. The presence of multiple bidders, even if only two, helps prevent price gouging and encourages contractors to offer competitive rates.

Public Impact

The Department of Defense benefits from reliable telecommunications and transmission services, crucial for command and control and operational efficiency. The contract supports the Defense Information Systems Agency (DISA) in its mission to provide IT and telecommunications support to the military. Services were delivered within Hawaii, supporting military installations and personnel in that geographic region. The contract likely supported a workforce within AT&T, contributing to employment in the telecommunications sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and difficult to transition.
Reliance on a single large telecommunications provider could pose risks if service disruptions occur.
Ensuring ongoing competitive pricing for future requirements beyond this contract's period.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Significant cost underrun suggests efficient service delivery or favorable pricing.
Contractor is a well-established telecommunications provider with proven capabilities.
Services are essential for military operations, indicating strategic importance.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on telecommunications and transmission services. The market for such services is large and competitive, dominated by major telecommunications companies. Government spending in this area is substantial, supporting everything from basic network infrastructure to advanced communication systems. Benchmarking against similar government contracts for telecommunications services would typically consider factors like bandwidth, service level agreements, and geographic coverage.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and the primary awardee is AT&T, a large corporation. There is no explicit information on subcontracting plans for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract appears minimal, though large prime contractors often have broader subcontracting programs.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and administrative contracting officer within the Department of Defense, specifically the Defense Information Systems Agency (DISA). Performance monitoring would occur through the delivery order process and adherence to service level agreements. Transparency is generally maintained through contract databases like FPDS, though detailed operational oversight specifics are internal to the agency.

Related Government Programs

Defense Information Systems Agency (DISA) Contracts
Telecommunications Services Contracts
IT Support Services
Network Infrastructure Contracts
Department of Defense IT Spending

Risk Flags

Potential for limited competition despite 'full and open' designation.
Reliance on a single vendor for critical infrastructure.
Need to ensure continued competitive pricing for future requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.9 million to AT&T ENTERPRISES, LLC. 200506!000028!9700!HC1019!DITCO - PACIFIC !DCA30097D0002 !A!N! !N!20MU ! !20050131!20050429!799988001!799988001!006980080!N!AT&T CORP !3375 KOAPAKA ST STE D120 !HONOLULU !HI!96819!17000!003!15!HONOLULU !HONOLULU !HAWAII !+000014900000!N!N!000000000000!D304!ADP TELECOMMUNICATIONS & TRANSMISSION SERVICES !S1 !SERVICES !000 !* !517110!E! !5!B!S! ! ! !202

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $14.9 million.

What is the period of performance?

Start: 2005-01-31. End: 2008-10-01.

What was the specific nature of the 'ADP Telecommunications & Transmission Services' procured under this contract?

The contract data specifies the Product Service Code (PSC) as 517110, which corresponds to 'Telecommunications Network Support Services'. This generally includes services related to the installation, maintenance, and operation of telecommunications networks, such as voice, data, and video transmission services. For the Department of Defense, this could encompass a wide range of needs, including secure communication lines, network backbone services, and potentially specialized transmission capabilities for military operations. The contract was awarded to AT&T, a major provider of such services, suggesting a focus on robust and reliable network infrastructure.

How does the 15% cost underrun compare to typical performance for similar DoD telecommunications contracts?

A 15% cost underrun (actual spending of $11.1M against an obligated amount of $14.86M) is generally considered a positive indicator of value for money. While 'typical' performance can vary widely based on contract type, scope, and market conditions, significant underruns often suggest that the initial ceiling price was set conservatively, or that the contractor was highly efficient, or that the scope of work was reduced over time. For fixed-price contracts with delivery orders, some level of underrun is not uncommon. However, a 15% underrun suggests the government paid considerably less than the maximum potential cost, which is favorable from a taxpayer perspective. It warrants a review to understand if it reflects exceptional performance or potential overestimation in the initial pricing.

What are the potential risks associated with relying on AT&T for critical telecommunications infrastructure in Hawaii?

Relying on a single large provider like AT&T for critical telecommunications infrastructure in Hawaii presents several potential risks. Firstly, there's the risk of vendor lock-in, where transitioning to another provider could be costly and complex due to specialized equipment or services. Secondly, service disruptions, whether due to technical failures, natural disasters (relevant in Hawaii), or cyberattacks, could have significant impacts on military operations. Thirdly, while competition was initially full and open, long-term reliance might reduce future competitive pressure if alternatives are limited or costly to implement. Ensuring robust Service Level Agreements (SLAs) and contingency plans are crucial to mitigate these risks.

What does the 'full and open competition' with only two bidders imply for price discovery and market dynamics?

Full and open competition is the preferred method for government contracting as it maximizes the pool of potential offerors. However, receiving only two bids, as indicated in this case, suggests that the market for this specific service in this region might be more concentrated than initially anticipated, or that the requirements were highly specific. While two bidders still provide a basis for price comparison, it offers less robust price discovery than a scenario with numerous competitors. This could imply that AT&T and the other bidder were the primary entities capable of meeting the stringent requirements, potentially limiting the downward pressure on prices compared to a more crowded field.

How has the Department of Defense's spending on telecommunications services evolved since this contract was awarded in 2005?

Spending on telecommunications services by the DoD has evolved significantly since 2005, driven by technological advancements, changing security requirements, and shifts towards cloud computing and software-defined networking. While this $14.86M contract was for traditional telecommunications and transmission services, subsequent DoD spending has increasingly focused on integrated network services, cybersecurity, satellite communications, and enterprise IT solutions. The move towards consolidating networks and leveraging commercial cloud services has also reshaped procurement strategies. Analyzing historical spending patterns would show a trend towards more complex, integrated, and often higher-value contracts as technology has advanced and mission requirements have become more sophisticated.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc.

Address: 3375 KOAPAKA ST STE D120, HONOLULU, HI, 96819

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DCA30097D0002

IDV Type: IDC

Timeline