DOE awards Verizon $733M for wired telecommunications, supporting HQ and CONUS/OCONUS field sites
Contract Overview
Contract Amount: $732,952 ($733.0K)
Contractor: Verizon Business Network Services LLC
Awarding Agency: Department of Energy
Start Date: 2021-09-28
End Date: 2026-09-27
Contract Duration: 1,825 days
Daily Burn Rate: $402/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: THE DOE REQUIRES VOICE SERVICES TO SUPPORT HQ BASED OPERATIONS AND FIELD SITE ORGANIZATIONS (PRIMARILY CONTINENTAL UNITED STATES (CONUS) WITH A LIMITED NUMBER OF OUTSIDE CONUS (OCONUS) LOCATIONS (HAWAII, ENGLAND, AND JAPAN). THIS INCLUDES BUT IS NOT
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20585
Plain-Language Summary
Department of Energy obligated $732,951.85 to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: THE DOE REQUIRES VOICE SERVICES TO SUPPORT HQ BASED OPERATIONS AND FIELD SITE ORGANIZATIONS (PRIMARILY CONTINENTAL UNITED STATES (CONUS) WITH A LIMITED NUMBER OF OUTSIDE CONUS (OCONUS) LOCATIONS (HAWAII, ENGLAND, AND JAPAN). THIS INCLUDES BUT IS NOT Key points: 1. Contract value represents significant investment in essential communication infrastructure. 2. Sole awardee suggests potential for strong incumbent relationship or highly specialized service. 3. Long-term duration (5 years) indicates a need for stable, ongoing service delivery. 4. Fixed Price with Economic Price Adjustment (FPEPA) contract type aims to balance cost certainty with market fluctuations. 5. Service area covers a broad range of domestic and limited international locations. 6. NAICS code 517110 points to a mature, competitive telecommunications market.
Value Assessment
Rating: good
The contract value of $733 million over five years for wired telecommunications services appears reasonable given the extensive scope. Verizon is a major provider with established infrastructure, suggesting potential for economies of scale. Benchmarking against similar large-scale federal telecommunications contracts would provide a more precise value-for-money assessment, but the price seems aligned with industry standards for comprehensive network support across numerous locations.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 6 bids suggests a healthy level of interest and competition for this significant telecommunications requirement. This competitive process likely contributed to achieving a fair market price for the services rendered.
Taxpayer Impact: A competitive bidding process ensures that taxpayer dollars are used efficiently by driving down costs and encouraging innovation among service providers.
Public Impact
Federal agencies, including DOE headquarters and various field sites, benefit from reliable voice communication services. Supports critical operational functions for national energy policy and infrastructure management. Geographic impact spans continental United States with extensions to select international locations. Workforce relies on these services for daily operations, collaboration, and data transmission.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in due to the long-term nature and specialized infrastructure.
- Economic price adjustment clauses could lead to cost increases beyond initial projections.
- Reliance on a single provider for critical communication infrastructure poses a risk if service is interrupted.
Positive Signals
- Award to a well-established provider with a proven track record in telecommunications.
- Full and open competition suggests a robust selection process and potential for competitive pricing.
- Long-term contract provides service stability and predictability for the Department of Energy.
Sector Analysis
The wired telecommunications carriers industry (NAICS 517110) is a mature sector characterized by significant infrastructure investment and ongoing technological evolution. Federal spending in this area supports essential government operations, ensuring connectivity for agencies across the nation and globally. This contract with Verizon fits within the broader landscape of federal IT and communication procurement, where large, long-term agreements are common for maintaining critical infrastructure.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. While the primary award is to a large corporation, there may be opportunities for small businesses to participate as subcontractors to Verizon, depending on the specific service requirements and Verizon's subcontracting strategy. Further analysis would be needed to determine the extent of small business involvement.
Oversight & Accountability
Oversight for this contract is likely managed by the Department of Energy's contracting officers and program managers. The contract type (Fixed Price with Economic Price Adjustment) includes mechanisms for monitoring price changes. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.
Related Government Programs
- Federal Network Services
- Telecommunications Services
- Government Wide Acquisition Contracts (GWACs)
- Department of Energy IT Procurement
- Wired Network Infrastructure
Risk Flags
- Long-term contract duration
- Reliance on a single provider for critical infrastructure
- Potential for cost increases due to Economic Price Adjustment
Tags
telecommunications, wired-telecommunications-carriers, department-of-energy, doe, verizon, fixed-price-with-economic-price-adjustment, delivery-order, full-and-open-competition, hq-based-operations, continental-us, international-locations, ict-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $732,951.85 to VERIZON BUSINESS NETWORK SERVICES LLC. THE DOE REQUIRES VOICE SERVICES TO SUPPORT HQ BASED OPERATIONS AND FIELD SITE ORGANIZATIONS (PRIMARILY CONTINENTAL UNITED STATES (CONUS) WITH A LIMITED NUMBER OF OUTSIDE CONUS (OCONUS) LOCATIONS (HAWAII, ENGLAND, AND JAPAN). THIS INCLUDES BUT IS NOT
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 Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $732,951.85.
What is the period of performance?
Start: 2021-09-28. End: 2026-09-27.
What is Verizon's track record with the Department of Energy and other federal agencies for similar telecommunications services?
Verizon has a substantial history of providing telecommunications services to the federal government, including the Department of Energy. Analyzing past performance data from sources like the Federal Procurement Data System (FPDS) would reveal the number and value of previous contracts, any performance issues or awards, and the types of services rendered. Generally, large telecommunications providers like Verizon are considered reliable incumbents for such services due to their extensive infrastructure and experience. However, a detailed review of past performance metrics, including on-time delivery, service quality, and customer satisfaction ratings on prior DOE or similar agency contracts, would be necessary for a comprehensive assessment.
How does the per-unit cost of these services compare to market rates or similar federal contracts?
Determining the precise per-unit cost is challenging without detailed service breakdowns (e.g., cost per line, per Mbps, per site). However, the contract's 'full and open competition' award with 6 bidders suggests a competitive pricing environment. The Fixed Price with Economic Price Adjustment (FPEPA) structure aims to provide a baseline price while allowing for adjustments due to market fluctuations, which is common in long-term telecommunications agreements. Benchmarking against other large federal telecommunications contracts awarded around the same period, considering factors like geographic scope and service level agreements, would be the best approach to assess value. Industry reports on average business telecommunications costs can also offer a general comparison point.
What are the primary risks associated with relying on a single vendor for such a critical service?
The primary risks of relying on a single vendor, even a reputable one like Verizon, include potential service disruptions due to technical failures, natural disasters, or cyberattacks, which could cripple agency operations. There's also the risk of vendor lock-in, making it difficult and costly to switch providers if performance degrades or better alternatives emerge. Furthermore, a sole-source situation (though this contract was competed) can reduce leverage in future negotiations. The economic price adjustment clause introduces financial risk, as unforeseen market changes could significantly increase costs over the contract's five-year term. Mitigation strategies often involve robust Service Level Agreements (SLAs), contingency planning, and regular performance reviews.
How effective are the economic price adjustment (EPA) clauses in protecting both the government and the contractor?
Economic Price Adjustment (EPA) clauses are designed to protect both parties from unforeseen market volatility, particularly in long-term contracts. For the contractor, it safeguards against rising costs of labor, materials, or regulated components, ensuring profitability is not eroded by inflation. For the government, it aims to provide a degree of cost certainty by establishing a baseline price, while acknowledging that some market-driven increases are inevitable. The effectiveness hinges on the specific index or formula used for adjustment; a well-defined, transparent, and relevant index ensures fairness. However, poorly structured EPAs can lead to unexpected cost increases for the government or missed opportunities for savings if market prices fall significantly.
What is the historical spending trend for wired telecommunications services by the Department of Energy?
Historical spending data for wired telecommunications services by the Department of Energy would typically be available through the Federal Procurement Data System (FPDS). Analyzing this data over several fiscal years would reveal the total annual expenditure, the primary vendors utilized, and the types of telecommunications services procured. Trends might indicate increasing or decreasing reliance on wired services, shifts towards newer technologies (like VoIP or managed network services), or consolidation of contracts. Understanding this historical context helps in evaluating whether the current $733 million award represents an increase, decrease, or stable level of investment in these essential communication capabilities.
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 - APLLICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 6
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
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: $9,780,086
Exercised Options: $4,830,541
Current Obligation: $732,952
Actual Outlays: $465,429
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00Q17NSD3009
IDV Type: IDC
Timeline
Start Date: 2021-09-28
Current End Date: 2026-09-27
Potential End Date: 2032-07-30 00:00:00
Last Modified: 2026-04-07
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