Smithsonian Institution awards $1.57M for network services, but competition is absent

Contract Overview

Contract Amount: $1,567,964 ($1.6M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Smithsonian Institution

Start Date: 2022-05-18

End Date: 2026-04-12

Contract Duration: 1,425 days

Daily Burn Rate: $1.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: NEW CONTRACT FOR SINET LAYER.2 NETWORK SERVICES AND UNIVERSAL CHARGES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Smithsonian Institution obligated $1.6 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: NEW CONTRACT FOR SINET LAYER.2 NETWORK SERVICES AND UNIVERSAL CHARGES Key points: 1. The contract's value is moderate, but the lack of competition raises concerns about potential overpayment. 2. Sole-source procurement limits opportunities for innovative solutions and potentially better pricing from other vendors. 3. The firm-fixed-price structure shifts risk to the contractor, which is generally positive for the government. 4. Performance is tied to network services and universal charges, critical for Smithsonian operations. 5. This contract falls within the telecommunications and IT services sector, a common area for federal spending. 6. The duration of the contract is substantial, indicating a long-term need for these services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without competitive bids. Given the absence of competition, it's difficult to ascertain if the $1.57 million represents a fair market price for SINET Layer 2 network services and universal charges. Similar government contracts for network services can vary widely in price based on scope, duration, and specific technologies deployed. The Smithsonian Institution should ensure robust internal cost analysis to validate the pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Verizon Business Network Services LLC, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities or urgent needs), they generally lead to less price discovery and potentially higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution available. Without competing bids, there's a reduced incentive for the awarded contractor to offer the lowest possible price.

Public Impact

The Smithsonian Institution's internal operations and digital infrastructure will directly benefit from these network services. This contract ensures the continuity of essential network connectivity and universal charging services across the institution. The services provided are critical for supporting the Smithsonian's museums, research centers, and administrative functions. The geographic impact is primarily within the District of Columbia, where the Smithsonian has a significant presence.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Absence of competition limits price discovery and potentially increases costs for taxpayers.
Sole-source award may indicate a lack of market research or a failure to identify alternative vendors.
The long contract duration could lock the government into a potentially suboptimal solution if needs evolve.

Positive Signals

Firm-fixed-price contract shifts performance risk to the contractor.
Verizon Business Network Services LLC is a large, established provider with significant experience in network services.
The contract addresses essential operational needs for a major cultural and research institution.

Sector Analysis

This contract falls within the broader Information Technology (IT) and Telecommunications sector. The market for network services is highly competitive, with numerous providers offering a range of solutions. Federal spending in this area is substantial, supporting everything from basic connectivity to complex cloud infrastructure. Benchmarking this specific contract is difficult without knowing the exact technical specifications, but general network service contracts can range from thousands to millions of dollars depending on scale and complexity.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as subcontractors on this particular award, potentially limiting opportunities for them within this specific contract's scope.

Oversight & Accountability

The Smithsonian Institution is responsible for overseeing this contract. As a firm-fixed-price contract, the primary oversight will focus on ensuring that Verizon Business Network Services LLC meets the defined service level agreements and deliverables. Transparency regarding the sole-source justification and the contract's performance metrics would be beneficial for public accountability. The Inspector General for the Smithsonian Institution would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Federal Telecommunications Contracts
Government Network Infrastructure
IT Services for Museums and Cultural Institutions
Universal Service Fund Contributions

Risk Flags

Sole-source award lacks competitive pricing.
Potential for vendor lock-in due to long contract duration.
Limited transparency on specific service details and justification for sole-source.

Frequently Asked Questions

What is this federal contract paying for?

Smithsonian Institution awarded $1.6 million to VERIZON BUSINESS NETWORK SERVICES LLC. NEW CONTRACT FOR SINET LAYER.2 NETWORK SERVICES AND UNIVERSAL CHARGES

Who is the contractor on this award?

The obligated recipient is VERIZON BUSINESS NETWORK SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Smithsonian Institution (Smithsonian Institution).

What is the total obligated amount?

The obligated amount is $1.6 million.

What is the period of performance?

Start: 2022-05-18. End: 2026-04-12.

What specific network services and universal charges are covered under this contract?

The contract, identified by the description 'SINET LAYER.2 NETWORK SERVICES AND UNIVERSAL CHARGES,' indicates that it covers the provision of Layer 2 network services, which are fundamental for data transmission within a network. 'Universal charges' likely refers to fees associated with universal service obligations, such as those mandated by the FCC to support telecommunications services in rural and high-cost areas, or potentially internal institutional charges for shared network resources. The exact scope would be detailed in the contract's statement of work, specifying bandwidth, latency, uptime guarantees, and the nature of the universal charges applicable to the Smithsonian's operations.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Justifications for sole-source contracts typically fall under specific exceptions to the Competition in Contracting Act, such as when only one responsible source is available or possesses unique capabilities, or in cases of urgent and compelling need. For this Smithsonian contract, the justification might stem from Verizon's existing infrastructure, proprietary technology, or a specific integration requirement that only Verizon could meet. Without further documentation from the agency, the precise reason remains speculative, but it implies that a competitive process was deemed impractical or unnecessary by the procuring entity.

How does the firm-fixed-price (FFP) contract type impact risk and cost for the Smithsonian Institution?

A Firm-Fixed-Price (FFP) contract structure means that the total price is set and not subject to adjustment based on the contractor's cost experience. This shifts the primary risk of cost overruns to the contractor, Verizon Business Network Services LLC. For the Smithsonian Institution, this offers budget certainty, as the total expenditure is known upfront. However, it also means that if Verizon can deliver the services more efficiently than anticipated, they will retain the cost savings, potentially foregoing opportunities for the government to benefit from lower prices. The Smithsonian's primary concern under an FFP contract is ensuring the contractor meets all performance and quality requirements.

What is the historical spending pattern for similar network services at the Smithsonian Institution?

Analyzing historical spending patterns for similar network services at the Smithsonian Institution would require access to broader contract databases and historical procurement data. The provided data snippet focuses on a single contract awarded in May 2022. To understand historical trends, one would need to examine previous awards for network services, telecommunications, and related IT infrastructure by the Smithsonian over several fiscal years. This would help determine if the $1.57 million award is consistent with past investments, or if it represents a significant increase or decrease, potentially influenced by changes in technology, institutional needs, or market pricing.

What are the potential implications of a 1425-day contract duration for network services?

A contract duration of 1425 days, approximately 3.9 years, for network services suggests a long-term commitment to the chosen provider and technology. This duration provides stability and allows for the full implementation and utilization of the network services. For the Smithsonian, it ensures continuity of essential operations. However, the rapid pace of technological advancement in networking means that services and equipment that are cutting-edge today could become outdated within this timeframe. The Smithsonian must ensure the contract includes provisions for service upgrades or flexibility to adapt to future technological shifts to avoid being locked into suboptimal or obsolete solutions.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Telephone Apparatus Manufacturing

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - NETWORK

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $1,567,964

Exercised Options: $1,567,964

Current Obligation: $1,567,964

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline