HHS awards $7.1M for dark fiber circuits, with Zayo Group LLC securing the contract

Contract Overview

Contract Amount: $7,099,816 ($7.1M)

Contractor: Zayo Group LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-02-26

End Date: 2025-11-30

Contract Duration: 1,738 days

Daily Burn Rate: $4.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DARK FIBER CIRCUITS

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $7.1 million to ZAYO GROUP LLC for work described as: DARK FIBER CIRCUITS Key points: 1. The contract value of $7.1 million for dark fiber circuits represents a significant investment in network infrastructure. 2. Competition dynamics for this contract were favorable, indicating potential for competitive pricing. 3. The firm fixed-price contract type suggests predictable costs for the government. 4. The contract duration of over 1700 days indicates a long-term need for these services. 5. The award to Zayo Group LLC places this contract within the telecommunications services sector. 6. The absence of small business set-asides means opportunities for smaller firms may be limited.

Value Assessment

Rating: good

The contract value of $7.1 million for dark fiber circuits appears reasonable given the duration and the nature of the service. Benchmarking against similar federal contracts for dark fiber indicates that pricing is generally competitive within the market. The firm fixed-price structure helps manage cost predictability for the agency. Further analysis would involve comparing the per-mile or per-circuit cost against industry standards for the specific geographic region and bandwidth requirements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The fact that it was competed openly is a positive sign for price discovery and ensuring the government receives competitive offers. Without specific details on the number of bids received, it's difficult to definitively assess the intensity of the competition, but the mechanism itself is designed to foster a competitive environment.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces, ensuring that federal agencies are not overpaying for essential services like dark fiber.

Public Impact

The Food and Drug Administration (FDA) is the primary beneficiary, gaining access to critical dark fiber network infrastructure. These services will support the FDA's mission-critical operations, likely involving data transmission, research, and regulatory functions. The contract's geographic scope is Maryland (MD), indicating a focus on supporting federal operations within that state. The contract supports the telecommunications industry workforce, including technicians, engineers, and support staff involved in network deployment and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to long contract duration and specialized infrastructure.
Reliance on a single provider for critical network connectivity could pose a risk if service is interrupted.
The absence of specific performance metrics in the provided data makes it hard to gauge service quality expectations.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm fixed-price contract type provides cost certainty for the agency.
Long contract duration indicates a stable, long-term need being met.

Sector Analysis

The telecommunications sector, particularly the provision of dark fiber, is a critical component of modern digital infrastructure. Dark fiber, which is unused fiber optic cable, allows organizations to lease raw capacity and control their own network infrastructure. The market for these services is competitive, with major providers like Zayo Group LLC offering extensive networks. Federal spending in this area supports government agencies' increasing demand for high-bandwidth, secure, and reliable data transmission capabilities, essential for operations and data management.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary award went to a large business, and opportunities for small businesses may be limited to indirect roles or specific components not detailed here. The impact on the small business ecosystem is likely minimal unless Zayo Group LLC voluntarily engages small businesses for subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Food and Drug Administration (FDA) contracting officers and program managers. The firm fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated by the contract award being publicly available. Specific accountability measures would be detailed in the contract's statement of work and performance clauses, with potential oversight from the HHS Office of Inspector General if performance issues or financial irregularities arise.

Related Government Programs

Federal Telecommunications Services
Network Infrastructure Contracts
IT Services for Health Agencies
Data Transmission Services

Risk Flags

Long-term contract duration may limit flexibility for adopting newer technologies.
Reliance on a single provider for critical infrastructure could pose availability risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $7.1 million to ZAYO GROUP LLC. DARK FIBER CIRCUITS

Who is the contractor on this award?

The obligated recipient is ZAYO GROUP LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Food and Drug Administration).

What is the total obligated amount?

The obligated amount is $7.1 million.

What is the period of performance?

Start: 2021-02-26. End: 2025-11-30.

What is Zayo Group LLC's track record with federal government contracts, particularly for telecommunications services?

Zayo Group LLC has a history of securing federal contracts, primarily within the telecommunications and network infrastructure space. Their experience often involves providing high-capacity data transport solutions, including dark fiber, Ethernet, and wavelength services. Federal agencies frequently leverage Zayo's extensive fiber network to meet their connectivity needs, especially in areas where building new infrastructure would be cost-prohibitive or time-consuming. Their track record generally indicates a capacity to deliver complex network solutions, though specific performance details on individual contracts would require deeper investigation into contract performance reports and any associated award or termination notices.

How does the $7.1 million contract value compare to similar federal dark fiber contracts awarded in the past or currently?

The $7.1 million contract value for dark fiber circuits over its duration (approximately 1738 days, or about 4.7 years) suggests an average annual expenditure of roughly $1.5 million. This figure needs to be contextualized by the specific services, geographic coverage, and bandwidth provided. Comparing this to other federal dark fiber contracts requires analyzing the per-mile or per-circuit costs, the number of circuits, and the service level agreements. Generally, federal agencies aim for competitive pricing through mechanisms like full and open competition. Without detailed service specifications, a precise benchmark is difficult, but this value appears within a plausible range for significant, long-term network infrastructure needs supporting a major agency like the FDA.

What are the primary risks associated with this dark fiber contract for the FDA?

The primary risks associated with this dark fiber contract include potential vendor lock-in due to the specialized nature of fiber optic infrastructure and the long contract duration. If Zayo Group LLC experiences service disruptions or network outages, it could significantly impact the FDA's operations, given the critical nature of data transmission. There's also a risk related to the long-term relevance of the technology; while dark fiber is robust, future technological advancements might offer more cost-effective or higher-performing alternatives that are not easily integrated into the current contract. Ensuring robust Service Level Agreements (SLAs) and contingency plans are crucial to mitigate these risks.

How effective is the firm fixed-price contract type in managing costs for this type of service?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs in situations where the scope of work is well-defined and risks of cost overruns are relatively low. For dark fiber circuits, where the service is essentially leasing raw capacity over an established network, the FFP structure provides significant cost certainty for the government. Zayo Group LLC assumes the risk of cost fluctuations in providing the service. This structure incentivizes the contractor to manage its own costs efficiently. However, it's crucial that the initial scope and pricing accurately reflect the anticipated needs and market rates to ensure true value for money.

What are the historical spending patterns for dark fiber circuits by the Department of Health and Human Services (HHS) or its agencies?

Historical spending patterns for dark fiber circuits by HHS and its agencies like the FDA typically show a steady or increasing demand, reflecting the growing reliance on robust digital infrastructure for health data, research, and regulatory functions. Agencies often consolidate their network needs through larger, long-term contracts to achieve economies of scale and predictable budgeting. While specific historical dollar amounts for HHS's dark fiber spending are not provided here, the trend across federal agencies is towards greater investment in high-capacity network solutions to support data-intensive operations and modernization efforts. This contract aligns with that broader trend.

What are the implications of the contract duration (1738 days) on the government's flexibility and potential for future technology adoption?

The contract duration of 1738 days (approximately 4.7 years) provides the FDA with stable, long-term access to essential network infrastructure, which is beneficial for operational continuity and planning. However, such a long duration can also limit flexibility. If significant technological advancements emerge during the contract period that offer substantially better performance or cost-effectiveness, the FDA may be constrained from adopting them until the current contract expires. This necessitates careful consideration during the initial contract negotiation phase to include clauses that allow for potential upgrades or renegotiations if market conditions or technology evolve rapidly.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75F40121R00001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1805 29TH ST STE 2050, BOULDER, CO, 80301

Business Categories: Category Business, Community Development Corporation, Corporate Entity Not Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $7,099,816

Exercised Options: $7,099,816

Current Obligation: $7,099,816

Actual Outlays: $6,295,476

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline