EPA's $45.7M AT&T contract for network services shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $45,668,185 ($45.7M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Environmental Protection Agency

Start Date: 2021-10-20

End Date: 2026-10-17

Contract Duration: 1,823 days

Daily Burn Rate: $25.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: US ENVIRONMENTAL PROTECTION AGENCY (USEPA) DATA AND VOICE ENTERPRISE NETWORK SERVICES

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22185

State: Virginia Government Spending

Plain-Language Summary

Environmental Protection Agency obligated $45.7 million to AT&T ENTERPRISES, LLC for work described as: US ENVIRONMENTAL PROTECTION AGENCY (USEPA) DATA AND VOICE ENTERPRISE NETWORK SERVICES Key points: 1. The contract's fixed-price structure with economic price adjustments offers some cost predictability. 2. Competition was limited to full and open, but only one bid was received, suggesting potential market concentration. 3. The contract duration of 1823 days (approx. 5 years) is substantial, indicating a long-term need for these services. 4. The primary contractor, AT&T, is a major player in telecommunications, suggesting established capabilities. 5. The contract is categorized under Wired Telecommunications Carriers, a mature and competitive sector. 6. The value of the contract is moderate within the context of large federal IT and telecommunications procurements.

Value Assessment

Rating: fair

The contract's total value of approximately $45.7 million over five years appears reasonable for enterprise-wide network services. Benchmarking against similar large-scale federal telecommunications contracts suggests that the pricing is within an expected range, though specific service-level details would be needed for a precise comparison. The fixed-price with economic price adjustment (FPEPA) structure provides a degree of cost control while allowing for market fluctuations, which is a common and generally accepted approach for long-term service contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is the preferred method for ensuring broad market access. However, the fact that only one bid was received is a significant indicator of limited effective competition. This could be due to various factors, including the specialized nature of the requirements, the large scale of the contract, or the dominance of a few providers in the market. The lack of multiple bids may limit the government's ability to secure the most advantageous pricing and terms.

Taxpayer Impact: While full and open competition was advertised, the single bid received means taxpayers may not have benefited from the price reductions typically driven by robust bidding. This could result in a higher overall cost than if multiple strong competitors had vied for the contract.

Public Impact

The Environmental Protection Agency (EPA) benefits from reliable and comprehensive data and voice network services, crucial for its operations. Employees across the EPA will have access to essential communication and data infrastructure, supporting their mission. The services provided likely ensure business continuity and operational efficiency for a key federal agency. The contract supports the telecommunications infrastructure sector, indirectly impacting the workforce employed by AT&T and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited effective competition (one bid received) despite full and open solicitation.
Long contract duration (5 years) may reduce flexibility to adopt newer technologies or renegotiate terms.
Reliance on a single large incumbent provider could create vendor lock-in.
Economic price adjustment clause introduces potential for cost increases beyond initial projections.

Positive Signals

Awarded to a well-established telecommunications provider (AT&T) with a proven track record.
Fixed-price element provides some cost certainty.
Contract supports critical infrastructure for a major federal agency (EPA).
Standard procurement process (full and open competition) was followed.

Sector Analysis

The telecommunications services sector is characterized by high infrastructure costs, rapid technological advancements, and a market dominated by a few large players. Federal spending in this area is substantial, covering everything from basic connectivity to complex network solutions. This contract for enterprise network services fits within the broader category of IT and telecommunications procurement, where agencies rely on providers like AT&T to maintain secure and reliable communication networks. Comparable spending benchmarks for similar large-scale federal network contracts often run into tens or hundreds of millions of dollars over several years.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of large-scale telecommunications infrastructure and services, it is common for prime contracts to be awarded to major providers. However, large prime contractors like AT&T are often required to meet small business subcontracting goals. The extent to which AT&T will utilize small businesses for portions of this contract will determine the indirect impact on the small business ecosystem.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The EPA's contracting officers are responsible for monitoring performance and ensuring compliance with contract terms. Given the nature of telecommunications services, performance metrics and service level agreements (SLAs) are likely in place. The Inspector General of the EPA would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Federal Network Services Contracts
Telecommunications Infrastructure Procurement
EPA IT Modernization Efforts
Enterprise Resource Planning Systems Support
Government Wide Acquisition Contracts (GWACs) for IT

Risk Flags

Limited effective competition (single bid)
Long contract duration may lead to technological obsolescence
Potential for price increases due to Economic Price Adjustment (EPA)

Frequently Asked Questions

What is this federal contract paying for?

Environmental Protection Agency awarded $45.7 million to AT&T ENTERPRISES, LLC. US ENVIRONMENTAL PROTECTION AGENCY (USEPA) DATA AND VOICE ENTERPRISE NETWORK SERVICES

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Environmental Protection Agency (Environmental Protection Agency).

What is the total obligated amount?

The obligated amount is $45.7 million.

What is the period of performance?

Start: 2021-10-20. End: 2026-10-17.

What is the track record of AT&T Enterprises, LLC with federal contracts, particularly with the EPA?

AT&T Enterprises, LLC, as a major telecommunications provider, has a long and extensive history of holding numerous federal contracts across various agencies, including the EPA. Their track record generally involves providing a wide range of services such as network infrastructure, voice communications, data transmission, and cybersecurity solutions. For the EPA specifically, AT&T has likely been a key provider for network services for many years, supporting the agency's mission-critical operations. While specific performance details for individual contracts are often proprietary or found in past performance evaluations, AT&T's continued success in winning large federal bids suggests a generally positive performance history and capability to meet government requirements. However, like any large contractor, there may be instances of performance issues or disputes on specific contracts that would be documented in federal contract databases or agency oversight reports.

How does the pricing of this contract compare to similar federal network services contracts awarded around the same time?

Benchmarking the pricing of this $45.7 million EPA contract against similar federal network services contracts awarded around October 2021 requires access to detailed pricing data and service level agreements for comparable procurements. However, based on general knowledge of federal telecommunications spending, the average annual value of approximately $9.1 million ($45.7M / 5 years) for enterprise-wide network services for a large agency like the EPA appears to be within a reasonable range. Contracts of this scale typically involve significant infrastructure, maintenance, and support costs. Factors influencing price include the scope of services (e.g., bandwidth, security features, geographic coverage), the specific technologies deployed, and the level of service required (e.g., uptime guarantees, response times). Without direct comparison data, it's difficult to definitively state if it's high or low, but it doesn't immediately appear anomalous for an agency of the EPA's size and operational needs.

What are the primary risks associated with a long-term (5-year) contract for network services?

The primary risks associated with a long-term (5-year) contract for network services include technological obsolescence, vendor lock-in, and potential for price increases. Technology in the telecommunications sector evolves rapidly; a 5-year contract might lock the EPA into older or less efficient technologies, making it difficult to adopt newer, more cost-effective, or higher-performing solutions that emerge during the contract period. Vendor lock-in is a risk because the incumbent provider may have integrated their systems deeply within the agency's infrastructure, making it costly and complex to switch providers later. Furthermore, while this contract has a fixed-price component, the economic price adjustment (EPA) clause allows for cost increases due to inflation or market changes, potentially leading to higher-than-anticipated expenditures over the contract's life. Finally, a long duration reduces the agency's flexibility to re-evaluate its needs and market options.

What is the significance of the 'Wired Telecommunications Carriers' NAICS code (517110) in the context of this contract?

The North American Industry Classification System (NAICS) code 517110, 'Wired Telecommunications Carriers,' signifies that the primary business activity of the contractor, AT&T Enterprises, LLC, for this specific contract falls under the provision of telecommunications services using wired infrastructure. This includes services like local and long-distance voice and data communications, internet access, and private line services delivered over fixed networks (e.g., fiber optic, copper). For the EPA, this code indicates that the contract is for the core network connectivity and communication services essential for its operations. It places the contract within a specific segment of the telecommunications industry, allowing for comparisons with other federal procurements in the same sector and helping to define the scope of services expected from the contractor.

How does the fact that only one bid was received impact the value proposition for the EPA and taxpayers?

The fact that only one bid was received for this 'full and open competition' contract significantly impacts the value proposition. Ideally, multiple bids create a competitive environment where contractors vie to offer the best price and terms to win the contract. When only one bid is submitted, this competitive pressure is absent. The EPA may not have received the most advantageous pricing possible, as AT&T did not have to compete against other offers. This could lead to taxpayers potentially overpaying for the services compared to what might have been achieved in a more robustly contested procurement. While the single bidder might be a dominant provider or the requirements highly specialized, the lack of competition is a red flag for price discovery and value for money, necessitating careful review of the awarded price against benchmarks.

What are the potential implications of the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type?

The Fixed Price with Economic Price Adjustment (FPEPA) contract type offers a balance between cost certainty and flexibility for both the government and the contractor. The 'fixed price' component means that a base price is established, providing a degree of predictability for the EPA's budget. However, the 'economic price adjustment' (EPA) clause allows for modifications to the price based on specified economic factors, typically related to inflation or changes in labor and material costs, as outlined in the contract. This protects the contractor from unforeseen cost increases that are beyond their control, ensuring they can maintain service quality without incurring losses. For the EPA, this means that while the base price is fixed, the total cost could increase over the contract's duration if economic conditions change unfavorably. The specific indices and caps defined in the EPA clause are critical for managing this risk.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 68HERD20R0009

Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

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: $362,054,297

Exercised Options: $138,140,385

Current Obligation: $45,668,185

Actual Outlays: $36,600,616

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