DoD's $78M Verizon Contract for Bahrain-Yokota Circuit Underwhelms on Value and Competition
Contract Overview
Contract Amount: $78,112,342 ($78.1M)
Contractor: Verizon Business Network Services LLC
Awarding Agency: Department of Defense
Start Date: 2015-08-11
End Date: 2023-10-18
Contract Duration: 2,990 days
Daily Burn Rate: $26.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IGF::OT::IGF VZBZ000613EBM 2.5G/STM-16 BAHRAIN - YOKOTA CIRCUIT
Place of Performance
Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $78.1 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: IGF::OT::IGF VZBZ000613EBM 2.5G/STM-16 BAHRAIN - YOKOTA CIRCUIT Key points: 1. The contract's value appears high given the duration, suggesting potential overpayment. 2. Limited competition may have hindered price discovery and optimal value. 3. The long duration and fixed-price nature present risks if service needs change. 4. Spending in the Wired Telecommunications Carriers sector is substantial, but this contract's specifics warrant scrutiny.
Value Assessment
Rating: questionable
The contract's total value of $78.1 million over nearly 8 years (2990 days) averages to approximately $26,125 per day. This daily rate seems high for a single circuit, especially when compared to industry benchmarks for similar telecommunications services.
Cost Per Unit: $26,125 per day
Competition Analysis
Competition Level: full-and-open
Despite being awarded under full and open competition, the lack of specific details on the bidding process raises questions about whether the most competitive pricing was achieved. The final price may not reflect the best value obtainable.
Taxpayer Impact: Taxpayers may have overpaid due to potentially suboptimal price negotiation and a long-term commitment that could exceed actual needs.
Public Impact
Ensures critical communication links for Department of Defense operations in the Middle East. Supports military readiness and personnel connectivity. Long-term commitment raises questions about adaptability to evolving technological needs. Potential for taxpayer funds to be used inefficiently if better pricing was available.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High daily cost per circuit.
- Long contract duration.
- Potential for price not reflecting best value.
Positive Signals
- Ensures critical infrastructure.
- Long-term service provision.
Sector Analysis
The Department of Defense is a major consumer of telecommunications services, with significant spending in the Wired Telecommunications Carriers sector. This contract represents a portion of that spending, highlighting the need for rigorous oversight to ensure cost-effectiveness.
Small Business Impact
This contract was awarded to a large telecommunications provider, Verizon Business Network Services LLC. There is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award.
Oversight & Accountability
The contract was awarded as a delivery order under a larger agreement, suggesting some level of pre-existing oversight. However, the long duration and substantial value necessitate ongoing monitoring to ensure continued value and performance.
Related Government Programs
- Wired Telecommunications Carriers
- Department of Defense Contracting
- Defense Information Systems Agency Programs
Risk Flags
- High daily cost per circuit.
- Long contract duration (nearly 8 years).
- Potential for price not reflecting best value.
- Lack of transparency on specific competition outcomes.
- Risk of technological obsolescence.
Tags
wired-telecommunications-carriers, department-of-defense, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.1 million to VERIZON BUSINESS NETWORK SERVICES LLC. IGF::OT::IGF VZBZ000613EBM 2.5G/STM-16 BAHRAIN - YOKOTA CIRCUIT
Who is the contractor on this award?
The obligated recipient is VERIZON BUSINESS NETWORK SERVICES 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 $78.1 million.
What is the period of performance?
Start: 2015-08-11. End: 2023-10-18.
Could the daily rate of $26,125 for this circuit be benchmarked against similar DoD or government contracts for international telecommunications links?
Benchmarking this daily rate against similar government contracts for international telecommunications links is crucial. While specific comparable data is not provided, industry knowledge suggests this rate might be on the higher end, especially for a single circuit. Further analysis would require access to a broader dataset of similar contracts to determine if this rate represents a fair market price or indicates potential overspending.
What factors contributed to the long, nearly 8-year duration of this contract, and how do they impact the risk of technological obsolescence or changing mission requirements?
The long duration likely stems from the need for stable, long-term communication infrastructure supporting persistent military operations. However, this extended period increases the risk of technological obsolescence, as telecommunications technology evolves rapidly. It also heightens the risk that changing mission requirements or geopolitical landscapes could render the circuit less critical or necessitate different capabilities, potentially leading to inefficient use of funds.
Given the 'Full and Open Competition' award type, what mechanisms were in place to ensure the government received the best possible price and value for this service over the contract's lifespan?
While 'Full and Open Competition' suggests multiple bidders were allowed, the effectiveness of price discovery depends on the specific solicitation requirements and evaluation criteria. Mechanisms like detailed performance specifications, clear evaluation factors emphasizing price, and potentially requiring vendors to justify their pricing could ensure best value. Without insight into the solicitation details, it's difficult to definitively assess if optimal price discovery occurred, especially given the contract's substantial value and long term.
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
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Verizon Communications Inc
Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $78,112,342
Exercised Options: $78,112,342
Current Obligation: $78,112,342
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HC101909D2000
IDV Type: IDC
Timeline
Start Date: 2015-08-11
Current End Date: 2023-10-18
Potential End Date: 2023-10-18 00:00:00
Last Modified: 2023-09-18
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