DoD's $271M wired telecom contract to VALDEZ INTERNATIONAL CORPORATION shows strong competition and long duration

Contract Overview

Contract Amount: $271,039,475 ($271.0M)

Contractor: Valdez International Corporation

Awarding Agency: Department of Defense

Start Date: 2016-10-24

End Date: 2024-08-02

Contract Duration: 2,839 days

Daily Burn Rate: $95.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF, IGF::OT::IGF

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78226

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $271.0 million to VALDEZ INTERNATIONAL CORPORATION for work described as: IGF::CT::IGF, IGF::OT::IGF Key points: 1. The contract's long duration (2839 days) suggests a need for sustained services, potentially indicating stability or a lack of agile procurement. 2. With 11 bidders, the competition level appears robust, which should theoretically drive better pricing and value. 3. The firm-fixed-price contract type offers cost certainty for the government, shifting performance risk to the contractor. 4. The contract's value of over $271 million positions it as a significant award within the telecommunications sector. 5. The geographic location in Texas (TX) may indicate a concentration of DoD telecommunications infrastructure or operations in that region.

Value Assessment

Rating: good

The contract's value of $271 million over nearly 8 years represents a substantial investment in wired telecommunications. Benchmarking this against similar long-term, large-scale telecommunications infrastructure contracts for the Department of Defense would be necessary for a precise value-for-money assessment. However, the firm-fixed-price nature suggests predictable costs for the government. The number of bidders (11) also implies a competitive environment that likely contributed to a reasonable price point.

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 competition was broad, there might have been specific exclusions or justifications for limiting initial outreach. The presence of 11 bidders suggests a healthy level of interest and capability within the market for this type of service. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A high number of bidders in a full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging a wider pool of potential providers to offer their best terms.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential wired telecommunications services. This contract supports the operational readiness and communication infrastructure of the U.S. Air Force. Services are likely concentrated in Texas (TX), supporting military bases and operations within the state. The contract sustains jobs within the telecommunications industry, particularly for the winning contractor and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The extended contract duration of nearly 8 years could lead to vendor lock-in or missed opportunities for more innovative or cost-effective solutions that may emerge over time.
While competition was broad, the 'after exclusion of sources' clause warrants scrutiny to ensure no viable small businesses or specialized providers were unduly excluded.
The firm-fixed-price nature, while providing cost certainty, might disincentivize the contractor from proactively seeking efficiencies or adopting new technologies if not explicitly required by the contract.

Positive Signals

The award to VALDEZ INTERNATIONAL CORPORATION under full and open competition with 11 bidders indicates a strong market response and likely competitive pricing.
The firm-fixed-price contract type provides significant cost predictability for the Department of the Air Force, mitigating budget uncertainty.
The long-term nature of the contract suggests a stable and reliable provision of critical telecommunications services, essential for military operations.

Sector Analysis

The wired telecommunications carriers industry (NAICS 517110) is a mature sector providing essential connectivity services. This contract falls within the broader telecommunications infrastructure market, which is critical for government operations, including defense. Spending in this sector is often characterized by long-term contracts for network maintenance, upgrades, and service provision. Comparable spending benchmarks would typically look at the average cost per mile of fiber, cost per user for managed network services, or annual recurring charges for dedicated circuits within government agencies.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Given the large dollar value and the nature of telecommunications infrastructure, it is common for such prime contracts to be awarded to larger, established firms. However, the prime contractor, VALDEZ INTERNATIONAL CORPORATION, may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the small business ecosystem. Further analysis of subcontracting plans would be needed to assess the direct impact on small businesses.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Air Force, a component of the Department of Defense. Oversight would typically be managed by contracting officers and program managers within the Air Force. The Department of Defense has an Inspector General (IG) responsible for auditing and investigating waste, fraud, and abuse, which would have jurisdiction over this contract. Transparency is generally maintained through contract award databases like FPDS, though detailed performance metrics may not always be publicly available.

Related Government Programs

DoD Enterprise Telecommunications Services
Air Force Network Infrastructure Modernization
Federal Communications Commission (FCC) Regulatory Filings
General Services Administration (GSA) Schedule Contracts for Telecommunications

Risk Flags

Long contract duration may limit flexibility for adopting new technologies.
Potential for vendor lock-in due to extended service period.
Need to verify justification for 'exclusion of sources' in competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $271.0 million to VALDEZ INTERNATIONAL CORPORATION. IGF::CT::IGF, IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is VALDEZ INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $271.0 million.

What is the period of performance?

Start: 2016-10-24. End: 2024-08-02.

What is the track record of VALDEZ INTERNATIONAL CORPORATION with the Department of Defense and other federal agencies?

VALDEZ INTERNATIONAL CORPORATION has been awarded federal contracts totaling approximately $271 million, primarily with the Department of the Air Force for wired telecommunications services. A deeper dive into their contract history would reveal the types of services provided, performance ratings (if available), and any history of contract modifications, disputes, or terminations. Examining awards from other agencies like GSA, other DoD branches, or civilian agencies would provide a broader picture of their federal contracting experience and capabilities. Understanding their past performance, including adherence to schedules, quality of service, and compliance with contract terms, is crucial for assessing their reliability on this significant contract.

How does the per-unit cost or service rate of this contract compare to similar telecommunications contracts awarded by the DoD or other federal agencies?

Direct per-unit cost comparison is challenging without specific service details (e.g., cost per circuit, cost per Mbps, cost per mile of fiber). However, the total value of $271 million over a period of nearly 8 years (2839 days) suggests an average annual spend of roughly $34 million. This figure can be benchmarked against average annual spending on telecommunications infrastructure by similar large federal agencies. The firm-fixed-price nature and the 11 bidders indicate a competitive environment, which typically leads to prices at or below market rates. A detailed analysis would require access to the contract's schedule of services and rates, comparing them to publicly available data for similar government contracts or industry benchmarks for enterprise-level telecommunications services.

What are the primary risks associated with a contract of this duration and value for wired telecommunications services?

Key risks include technological obsolescence, as telecommunications technology evolves rapidly; vendor lock-in, where the government becomes heavily reliant on a single provider for an extended period, potentially hindering adoption of newer, more cost-effective solutions; and performance degradation over time if maintenance and upgrade clauses are not robustly managed. There's also the risk of cost overruns if the firm-fixed-price contract doesn't adequately account for unforeseen market fluctuations in labor or materials, although this risk is primarily borne by the contractor. Furthermore, cybersecurity threats targeting critical communication infrastructure represent a significant and evolving risk that requires continuous vigilance and adaptation.

How effective has the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' strategy been in ensuring value for this contract?

The strategy aims to balance broad competition with specific needs or exclusions. With 11 bidders, it appears to have successfully attracted a significant number of interested parties, suggesting that the exclusions did not unduly limit the competitive pool. This level of competition is generally conducive to achieving fair market prices and good value. However, the 'exclusion of sources' aspect warrants scrutiny to ensure that any excluded entities were genuinely not capable or that their exclusion was justified and did not inadvertently limit innovation or diversity in the provider base. The long-term performance and cost-effectiveness of the services delivered will ultimately determine the strategy's effectiveness.

What is the historical spending trend for wired telecommunications carriers by the Department of the Air Force?

Historical spending data for wired telecommunications carriers by the Department of the Air Force would likely show consistent, significant investment in maintaining and upgrading communication networks. This specific contract, valued at $271 million over nearly eight years, represents a substantial portion of that spending. Trends might indicate a shift towards fiber optics, increased demand for bandwidth, and a move towards managed network services. Analyzing past contracts would reveal whether spending has been concentrated with a few large providers or distributed across many, and whether contract durations have been increasing or decreasing, reflecting changes in procurement strategy and technological adoption.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA877315R8007

Offers Received: 11

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1115 ELKTON DR STE 101, COLORADO SPRINGS, CO, 80907

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Hispanic American Owned Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $277,179,615

Exercised Options: $271,104,872

Current Obligation: $271,039,475

Actual Outlays: $89,933,437

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline