DoD's $41M contract for telecommunications services awarded to QSS Group, Inc. shows potential value concerns

Contract Overview

Contract Amount: $41,088,376 ($41.1M)

Contractor: NTT Data Services Federal Government, LLC

Awarding Agency: Department of Defense

Start Date: 2005-03-31

End Date: 2009-08-31

Contract Duration: 1,614 days

Daily Burn Rate: $25.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200507!500658!2100!W911S1!ACA, ARMY RESERVE CONTRACTING CE!W91QUZ04D0005 !A!N! !Y!2G01 ! !20050331!20060228!840015911!840015911!840015911!N!QSS GROUP, INC !4500 FORBES BLVD STE 200 !LANHAM !MD!20706!59724!113!13!PEACHTREE CITY !FAYETTE !GEORGIA !+000008428828!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !* !541513!E! !5!B!M! !A! !20200930!B!E!Y!B! !A!U!J!2!004!B! !C!N!Z! ! !Y!B!N!N! ! !A! !A!A!000!A!B!N! ! ! ! ! !W81PNH!0001! !

Place of Performance

Location: PEACHTREE CITY, FAYETTE County, GEORGIA, 30269

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $41.1 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC for work described as: 200507!500658!2100!W911S1!ACA, ARMY RESERVE CONTRACTING CE!W91QUZ04D0005 !A!N! !Y!2G01 ! !20050331!20060228!840015911!840015911!840015911!N!QSS GROUP, INC !4500 FORBES BLVD STE 200 !LANHAM !MD!20706!59724!113!13!PEACHTREE CITY !FAYE… Key points: 1. The contract's value appears high relative to its duration and scope, warranting further investigation into cost-effectiveness. 2. Competition was full and open, suggesting a competitive bidding process, but the final price needs benchmarking. 3. The contract's duration of over four years (1614 days) for a fixed-price award requires scrutiny for potential cost overruns or scope creep. 4. Performance context is limited, but the 'OTHER ADP & TELECOMMUNICATION SERVICES' category suggests a broad range of potential services. 5. The contract falls within the IT and Telecommunications sector, a significant area of federal spending. 6. No small business set-aside was utilized, indicating the primary awardee was not a small business.

Value Assessment

Rating: questionable

The total award amount of $41,008,376.33 over 1614 days (approximately 4.4 years) averages to roughly $10 million per year. This figure needs to be benchmarked against similar telecommunications service contracts awarded by the Department of Defense or other agencies to determine if it represents fair market value. Without specific details on the services rendered, it is difficult to assess the per-unit cost or overall value proposition. The fixed-price nature of the contract suggests that the contractor assumed the risk of cost overruns, but the substantial total value raises questions about the initial pricing and potential for overpayment if the scope was not fully utilized or if market rates have decreased.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit bids. The data shows 4 bids were received. While a competitive process was employed, the number of bidders (4) is moderate and does not necessarily guarantee the lowest possible price. Further analysis would be needed to understand the specific evaluation criteria and how the winning bid was selected relative to others. The level of competition is a positive indicator, but the final price achieved still requires validation against market benchmarks.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it aims to solicit the best value through multiple offers. However, the ultimate benefit depends on the effectiveness of the bidding process and the pricing negotiated.

Public Impact

The primary beneficiary is the Department of the Army, receiving telecommunications and ADP services essential for its operations. Services delivered likely include a range of wired telecommunications, data processing, and related support, crucial for military communication networks. The geographic impact is centered in Georgia, where the contractor QSS Group, Inc. is located, and potentially extends to Army Reserve facilities nationwide. Workforce implications include employment opportunities within QSS Group, Inc. and potentially its subcontractors, contributing to the IT and telecommunications sector workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The total contract value of over $41 million for a 4+ year period may represent a high cost if the services were not fully utilized or if market prices for similar services have declined.
Lack of detailed service descriptions makes it difficult to assess if the awarded amount aligns with the actual work performed and its value.
The fixed-price contract, while shifting risk, could still lead to overpayment if the initial pricing was not competitive or based on inflated estimates.
The contract duration is substantial, increasing the risk of obsolescence of technology or changes in service requirements not fully accounted for in the initial award.

Positive Signals

The contract was awarded through a full and open competition, suggesting a structured and inclusive bidding process.
The fixed-price contract structure places the cost risk on the contractor, potentially protecting the government from unexpected cost increases.
The award to QSS Group, Inc. indicates they met the government's requirements and were deemed a capable provider.
The contract falls under a specific NAICS code (517110), allowing for more targeted benchmarking against industry standards.

Sector Analysis

This contract falls within the Information Technology and Telecommunications sector, specifically under Wired Telecommunications Carriers (NAICS 517110). This sector is characterized by rapid technological advancements and significant government investment. Federal spending in this area supports critical infrastructure for communication, data processing, and network management across various agencies. Comparable spending benchmarks would involve analyzing other large-scale telecommunications service contracts awarded to prime contractors by the Department of Defense and other federal entities over similar timeframes to assess pricing and value.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'SB: N'. The prime contractor, QSS Group, Inc., is likely a large business. There is no explicit information provided regarding subcontracting plans or goals for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, unless QSS Group, Inc. voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract structure, requiring QSS Group, Inc. to deliver specified services within the agreed budget. Transparency is facilitated by the public availability of contract data, though detailed performance reports or Inspector General investigations related to this specific award are not provided. The contract number and award details are publicly accessible, allowing for some level of scrutiny.

Related Government Programs

Department of Defense Telecommunications Services Contracts
Army Reserve IT and Communication Support
Wired Telecommunications Carrier Services
Federal ADP and Telecommunication Services

Risk Flags

Potential for Overpricing
Long Contract Duration
Lack of Detailed Service Scope
Moderate Competition Level

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.1 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC. 200507!500658!2100!W911S1!ACA, ARMY RESERVE CONTRACTING CE!W91QUZ04D0005 !A!N! !Y!2G01 ! !20050331!20060228!840015911!840015911!840015911!N!QSS GROUP, INC !4500 FORBES BLVD STE 200 !LANHAM !MD!20706!59724!113!13!PEACHTREE CITY !FAYETTE !GEORGIA !+000008428828!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !* !541513!E! !5!B!M! !A! !202

Who is the contractor on this award?

The obligated recipient is NTT DATA SERVICES FEDERAL GOVERNMENT, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $41.1 million.

What is the period of performance?

Start: 2005-03-31. End: 2009-08-31.

What specific telecommunications and ADP services were included in this $41M contract, and how do they align with the Army Reserve's mission requirements?

The contract data indicates the service falls under NAICS code 517110 (Wired Telecommunications Carriers) and PSC code D399 (Other ADP & Telecommunication Services). This suggests a broad scope potentially encompassing services like network infrastructure, voice and data transmission, internet access, and related support. However, the specific deliverables, service level agreements (SLAs), and technical specifications are not detailed in the provided data. To assess alignment with the Army Reserve's mission, a review of the original Performance Work Statement (PWS) or Statement of Work (SOW) would be necessary. This would clarify how these services directly support operational readiness, communication security, and administrative functions within the Army Reserve.

How does the average annual cost of approximately $9.3 million for this contract compare to similar telecommunications contracts awarded by the DoD during the 2005-2009 period?

Benchmarking this contract's average annual cost of approximately $9.3 million requires access to a broader dataset of similar DoD telecommunications contracts awarded between 2005 and 2009. Factors such as contract scope, duration, specific services (e.g., bandwidth, managed services, equipment), geographic coverage, and security requirements significantly influence pricing. Without comparative data on contracts with comparable scope and complexity, it's challenging to definitively state whether $9.3 million annually was high, low, or fair. However, for context, large-scale enterprise telecommunications contracts for federal agencies can range from millions to tens of millions annually, depending heavily on the scale and criticality of the services.

What was the track record of QSS Group, Inc. with federal contracts prior to and during the period of this award (2005-2009)?

Information on QSS Group, Inc.'s specific track record prior to and during the 2005-2009 period for this contract is not fully detailed in the provided data snippet. However, the award itself signifies that they were considered a capable and responsible contractor by the Department of the Army at the time. To conduct a thorough assessment, one would need to examine their broader federal contract history, including past performance evaluations, any documented issues or disputes, and the types and values of other contracts they held. This would provide a more comprehensive view of their experience and reliability in delivering government services.

Given the 4 bids received in a full and open competition, what does this suggest about the level of market interest and potential for price optimization?

Receiving four bids in a full and open competition suggests a moderate level of market interest for these specific telecommunications services. While more than a sole-source or limited competition, it is not an exceptionally high number of bidders, which could indicate a specialized service area or a limited number of qualified providers. A higher number of bidders (e.g., 8+) often correlates with more intense price competition and potentially better value for the government. With four bids, there was a basis for price comparison, but it's possible that additional competition could have driven the price lower. The selection of the winning bid would depend on the evaluation criteria, which might have included factors beyond just price, such as technical approach and past performance.

What are the potential risks associated with a fixed-price contract of this magnitude and duration (over 4 years)?

Fixed-price contracts, while generally favorable for cost certainty, carry risks, especially for long durations like this 4+ year award. One primary risk is that the initial price may not accurately reflect the evolving market costs or technological advancements over the contract period, potentially leading to the government overpaying if market rates decrease or the contractor securing a windfall if costs are lower than anticipated. Conversely, if the scope of work was underestimated or unforeseen complexities arise, the contractor might struggle to deliver profitably, potentially impacting performance or leading to disputes. For long-duration contracts, there's also the risk of scope becoming outdated or misaligned with agency needs by the end of the term, requiring costly modifications or re-competition.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dell Computer Corporation (UEI: 114315195)

Address: 8270 WILLOW OAKS CORPORATE DR STE 500, FAIRFAX, VA, 11

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

Parent Contract

Parent Award PIID: W91QUZ04D0005

IDV Type: IDC

Timeline