VA awards $46.6M for co-located hosting, AT&T Enterprises secures multi-year contract

Contract Overview

Contract Amount: $46,586,244 ($46.6M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-09-26

End Date: 2026-09-30

Contract Duration: 2,561 days

Daily Burn Rate: $18.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CO-LOCATED HOSTING SERVICES FOR COMBINATION B - DALLAS, TX AND SAN JOSE, CA

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75201

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $46.6 million to AT&T ENTERPRISES, LLC for work described as: CO-LOCATED HOSTING SERVICES FOR COMBINATION B - DALLAS, TX AND SAN JOSE, CA Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of over 2500 days indicates a long-term need for these services. 3. The fixed-price nature of the contract provides cost certainty for the government. 4. Services are for co-located hosting in Texas and California, indicating a distributed infrastructure need. 5. The North American Industry Classification System (NAICS) code 517110 points to wired telecommunications carriers. 6. The award is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: good

The total award amount of $46.6 million over approximately seven years suggests a significant investment in telecommunications infrastructure. Benchmarking this against similar co-location hosting contracts is challenging without more specific service details. However, the firm-fixed-price structure generally indicates that the government has negotiated a set price, which can be advantageous if the scope of work is well-defined and stable. The absence of specific performance metrics or detailed cost breakdowns makes a precise value-for-money assessment difficult, but the competitive award process is a positive indicator.

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. The data indicates two bids were received. While two bidders is a form of competition, it is on the lower end for a contract of this magnitude and duration. A higher number of bidders typically leads to more aggressive pricing and a wider range of innovative solutions. The limited number of bids may suggest a specialized market or potential barriers to entry for other firms.

Taxpayer Impact: A competitive award process, even with a limited number of bidders, is generally favorable for taxpayers as it aims to secure the best possible price and service. However, with only two bids, there is a risk that the government may not have achieved the most cost-effective outcome compared to a more robustly competed contract.

Public Impact

Veterans Affairs (VA) will benefit from reliable and secure co-located hosting services. Ensures continuity of IT operations and data accessibility for critical VA systems. Supports the delivery of healthcare and benefits to veterans across the nation. The services provided are essential for maintaining the VA's digital infrastructure. Geographic impact includes data centers in Texas and California, supporting regional operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bids received could indicate potential for higher costs than a more competitive scenario.
The long contract duration may present risks if technology rapidly evolves or if contractor performance falters over time.
Lack of detailed performance metrics in the provided data makes it difficult to assess ongoing value and contractor responsiveness.

Positive Signals

Awarded through full and open competition, which is a positive sign for market fairness.
Firm-fixed-price contract provides budget certainty and protects against cost overruns.
The contract supports critical infrastructure for the Department of Veterans Affairs, ensuring service delivery to veterans.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers sector, specifically related to data center and hosting services. The market for co-location and managed hosting is substantial, driven by organizations seeking to outsource their IT infrastructure management. The VA's spending in this area is consistent with government-wide trends towards modernizing IT systems and leveraging cloud and co-location solutions for efficiency and security. Comparable spending benchmarks would depend on the specific service level agreements and capacity utilized, but multi-million dollar contracts for such services are common.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it detail subcontracting plans. Given the nature of co-located hosting services and the prime contractor (AT&T Enterprises, LLC), it is possible that larger telecommunications firms are the primary recipients of such contracts. Further investigation into subcontracting goals and achievements would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. The contract's firm-fixed-price nature and delivery order structure suggest that performance monitoring and invoice verification are key oversight mechanisms. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Infrastructure Services
Data Center Operations
Telecommunications Services
Cloud Hosting Services
Government IT Modernization Programs

Risk Flags

Limited Competition
Long Contract Duration
Potential for Technological Obsolescence
Data Security and Privacy Risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $46.6 million to AT&T ENTERPRISES, LLC. CO-LOCATED HOSTING SERVICES FOR COMBINATION B - DALLAS, TX AND SAN JOSE, CA

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $46.6 million.

What is the period of performance?

Start: 2019-09-26. End: 2026-09-30.

What is the specific scope of services included in this co-located hosting contract?

The provided data indicates the contract is for 'CO-LOCATED HOSTING SERVICES FOR COMBINATION B - DALLAS, TX AND SAN JOSE, CA'. While the exact technical specifications, service level agreements (SLAs), bandwidth, power, cooling, and security measures are not detailed in the summary data, co-located hosting typically involves providing physical space, power, cooling, and network connectivity within a data center facility for the client's IT equipment. This allows the Department of Veterans Affairs (VA) to house its servers and related hardware in a secure, professionally managed environment without the need to build and maintain its own data centers in these locations. The 'Combination B' designation might refer to a specific service package or requirement set within a larger contract vehicle.

How does the $46.6 million award compare to historical VA spending on similar hosting services?

To accurately compare this $46.6 million award to historical VA spending on similar hosting services, one would need to analyze past contracts for co-location, data center services, and potentially managed IT infrastructure. This would involve querying contract databases for the VA, filtering by relevant NAICS codes (like 517110 for Wired Telecommunications Carriers or potentially others related to data processing and hosting), and examining award amounts over several fiscal years. Factors such as contract duration, scope of services, and inflation would need to be considered for a meaningful comparison. Without access to detailed historical data and specific service comparisons, it's difficult to definitively state whether this award represents an increase, decrease, or stable level of spending relative to past trends.

What are the potential risks associated with a seven-year contract for co-located hosting?

A seven-year contract for co-located hosting presents several potential risks. Firstly, technological obsolescence is a significant concern; IT infrastructure and data center technologies evolve rapidly. By the end of the contract term, the services provided might be outdated compared to newer, more efficient solutions. Secondly, vendor lock-in can occur, making it difficult and costly to switch providers if performance issues arise or better market options emerge. Thirdly, the long duration increases exposure to potential contractor performance degradation or financial instability. Finally, changes in the VA's own IT strategy or requirements over seven years could lead to the contract becoming misaligned with the agency's needs, potentially requiring costly modifications or early termination.

Given only two bids were received, what does this imply about the contractor's track record and the market for these services?

The receipt of only two bids for this $46.6 million contract, despite being awarded under full and open competition, suggests a potentially concentrated market for these specific co-located hosting services. This could imply that only a few companies possess the necessary technical capabilities, geographic presence (in Texas and California), and security clearances to meet the VA's requirements. It might also indicate high barriers to entry, such as significant capital investment or complex regulatory compliance. For the winning contractor, AT&T Enterprises, LLC, this situation could mean less pressure to offer the most competitive pricing compared to a scenario with numerous bidders. However, it also underscores the importance of the VA's due diligence in evaluating the capabilities and past performance of the limited bidders to ensure a responsible award.

What are the implications of this contract being a 'Delivery Order'?

The classification of this award as a 'Delivery Order' implies that it is a task order issued under a pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract. IDIQ contracts establish terms and conditions, including pricing structures and performance standards, under which the government can order goods or services up to a certain ceiling amount over a specified period. A delivery order represents a specific commitment to purchase a defined quantity of services at a stated price and delivery schedule. This approach allows agencies to procure services more efficiently as needed, without having to conduct a full competitive procurement for each individual order. It suggests that AT&T Enterprises, LLC holds a broader IDIQ contract with the VA, and this particular order fulfills a specific requirement for co-located hosting in Texas and California.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Tyto Athene, LLC

Address: 4807 STONECROFT BLVD, CHANTILLY, VA, 20151

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $126,286,238

Exercised Options: $46,586,244

Current Obligation: $46,586,244

Actual Outlays: $26,540,278

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3000

IDV Type: IDC

Timeline