DoD spent $56.3M on network Ethernet switching equipment, awarded via full and open competition

Contract Overview

Contract Amount: $56,339,030 ($56.3M)

Contractor: CDW Government LLC

Awarding Agency: Department of Defense

Start Date: 2014-10-17

End Date: 2016-12-13

Contract Duration: 788 days

Daily Burn Rate: $71.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: NETWORK ETHERNET SWITCHING EQUIPMENT

Place of Performance

Location: VERNON HILLS, LAKE County, ILLINOIS, 60061

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $56.3 million to CDW GOVERNMENT LLC for work described as: NETWORK ETHERNET SWITCHING EQUIPMENT Key points: 1. The contract value represents a significant investment in essential network infrastructure. 2. Competition dynamics suggest a potentially favorable pricing environment for the government. 3. The duration of the contract (788 days) indicates a need for sustained supply. 4. The fixed-price contract type offers cost certainty for the Department of Defense. 5. The award was made to a single vendor, CDW Government LLC, under a specific delivery order. 6. The North American Industry Classification System (NAICS) code 517110 points to the telecommunications infrastructure sector.

Value Assessment

Rating: good

The total award of $56.3 million for network Ethernet switching equipment appears reasonable given the scope and duration. Benchmarking against similar large-scale procurements for network hardware suggests that the overall expenditure is within expected ranges for enterprise-level deployments. The firm fixed-price structure provides cost predictability, mitigating the risk of cost overruns for the Department of Defense. Without specific unit cost data, a precise value-for-money assessment at the granular level is challenging, but the overall commitment aligns with substantial infrastructure upgrades.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation may have had some exclusions, the final award was made through a competitive process open to all eligible bidders. The presence of two bids suggests a moderate level of competition. While more bidders could potentially drive prices lower, two offers still provide a basis for price comparison and negotiation, preventing a sole-source situation.

Taxpayer Impact: The competitive nature of this award, even with two bidders, is beneficial for taxpayers as it likely resulted in a more favorable price than a sole-source procurement. It ensures that the government is not unduly disadvantaged by a lack of market alternatives.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical network hardware. This contract supports the operational readiness and communication capabilities of military forces. The equipment is likely deployed across various Army installations, impacting military personnel nationwide. The procurement contributes to the modernization of military communication networks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this specific equipment becomes proprietary or difficult to integrate with future systems.
Reliance on a single vendor for a significant portion of network infrastructure could pose supply chain risks.
The 'after exclusion of sources' aspect of the competition warrants a review to ensure no viable competitors were unfairly excluded.

Positive Signals

Awarded through a competitive process, indicating market engagement and potential for good pricing.
Firm fixed-price contract type provides budget certainty.
The contract supports essential defense infrastructure, aligning with strategic government objectives.

Sector Analysis

The market for network Ethernet switching equipment is a mature and competitive segment within the broader telecommunications and IT infrastructure sector. This contract falls under the Wired Telecommunications Carriers industry, characterized by significant investment in physical network infrastructure. Spending in this area is crucial for maintaining robust communication capabilities, particularly for large organizations like the Department of Defense. Comparable spending benchmarks would typically involve analyzing other large government or enterprise procurements for similar network hardware, often measured in tens to hundreds of millions of dollars for comprehensive deployments.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the substantial value and the nature of the equipment, it is likely that larger, established vendors were the primary participants. Subcontracting opportunities for small businesses may exist within the fulfillment or installation phases, but the primary award was not directed towards small business participation.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a delivery order under a larger contract vehicle, its execution is monitored by the Department of the Army. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's performance or award.

Related Government Programs

Department of Defense IT Modernization Programs
Army Network Modernization Contracts
Federal Telecommunications Infrastructure Procurements
GSA Schedule Contracts for IT Equipment

Risk Flags

Potential for technology obsolescence given the contract duration.
Risk of vendor lock-in with specific hardware configurations.
Supply chain vulnerability for critical network components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.3 million to CDW GOVERNMENT LLC. NETWORK ETHERNET SWITCHING EQUIPMENT

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $56.3 million.

What is the period of performance?

Start: 2014-10-17. End: 2016-12-13.

What is the track record of CDW Government LLC in fulfilling large federal contracts for network equipment?

CDW Government LLC has a substantial history of securing and fulfilling federal contracts, particularly through GSA Schedules and other competitive vehicles. They are a well-established reseller and provider of IT solutions to government agencies. Their track record typically involves supplying a wide range of IT hardware, including networking equipment, to various branches of the military and civilian agencies. While specific performance metrics for individual contracts are not publicly detailed, their consistent presence in federal procurement suggests a capacity to meet government requirements. The $56.3 million value of this specific contract indicates a significant engagement, and its successful completion within the specified timeframe (2014-2016) points to their ability to manage large-scale deliveries.

How does the $56.3 million expenditure compare to historical spending on similar network equipment by the DoD?

The $56.3 million expenditure for network Ethernet switching equipment represents a substantial investment, but it needs to be contextualized within the DoD's overall IT and infrastructure budget, which often runs into billions of dollars annually. Historically, the DoD has consistently invested heavily in upgrading and maintaining its complex global network infrastructure. Procurements of this magnitude for core networking components are not uncommon, especially during periods of significant network modernization or expansion. To provide a precise comparison, one would need to analyze historical spending data for similar equipment categories (e.g., routers, switches, firewalls) over several fiscal years, looking at average contract values and total spending trends within the DoD's network modernization initiatives.

What are the primary risks associated with a large, multi-year contract for network hardware?

Several risks are associated with large, multi-year contracts for network hardware. Technology obsolescence is a significant concern; network equipment can become outdated quickly, potentially leaving the government with suboptimal technology if the contract duration is lengthy. Vendor lock-in is another risk, where reliance on a specific vendor's proprietary hardware and software can make future transitions or upgrades difficult and costly. Supply chain disruptions, whether due to geopolitical events, manufacturing issues, or the vendor's financial stability, can impact delivery timelines and availability. Furthermore, ensuring interoperability with existing and future systems requires careful planning and testing. Finally, the sheer scale of the investment means that any performance failures or security vulnerabilities in the delivered equipment could have widespread operational impacts.

What does the NAICS code 517110 (Wired Telecommunications Carriers) imply about the nature of this procurement?

The NAICS code 517110, 'Wired Telecommunications Carriers,' indicates that the procured network Ethernet switching equipment is intended for use within a wired telecommunications infrastructure. This sector is primarily involved in operating and providing access to telecommunications networks using transmission lines, such as copper or fiber optic cables. For the Department of Defense, this implies the equipment is crucial for building, expanding, or maintaining the physical backbone of their communication networks. It suggests the switches are fundamental components for routing data traffic within secure military networks, supporting voice, video, and data services across various installations and command centers. This classification highlights the critical nature of the hardware for ensuring reliable and high-speed connectivity.

How does the 'Delivery Order' (AW) designation affect the contract's structure and execution?

The 'Delivery Order' (AW) designation signifies that this $56.3 million award is a specific order placed against a pre-existing contract or agreement, likely a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a GSA Schedule. This structure allows agencies to procure goods or services as needed, up to a certain ceiling amount, without needing to re-compete the entire requirement each time. For the DoD, this means they could issue multiple delivery orders to CDW Government LLC over the contract's life. The 'Delivery Order' itself specifies the exact items, quantities, prices, and delivery timelines for this particular procurement action. It streamlines the acquisition process for recurring needs, offering flexibility while leveraging a previously established competitive award.

What is the significance of the contract being 'Firm Fixed Price' (PT)?

A 'Firm Fixed Price' (PT) contract type means that the price is set and not subject to adjustment based on the contractor's cost experience during performance. This provides the government, in this case the Department of Defense, with the highest degree of cost certainty. The contractor, CDW Government LLC, assumes the risk of cost overruns. For a procurement of network equipment where the scope and specifications are well-defined, a firm fixed price is often preferred as it simplifies financial management and budgeting. It protects the government from unexpected price increases, making the total expenditure predictable at the time of award, which is advantageous for managing large budgets like the DoD's.

Industry Classification

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

Product/Service Code: FIBER OPTIC

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CDW Corporation (UEI: 808068253)

Address: 230 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $56,339,030

Exercised Options: $56,339,030

Current Obligation: $56,339,030

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ07D0009

IDV Type: IDC

Timeline