DoD's $210M AT&T telecommunications contract awarded without competition, raising value-for-money questions

Contract Overview

Contract Amount: $210,073,623 ($210.1M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of Defense

Start Date: 2014-07-29

End Date: 2024-03-31

Contract Duration: 3,533 days

Daily Burn Rate: $59.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF NATIONAL SECURITY/EMERGENCY PREPAREDNESS PRIORITY TELECOMMUNICATIONS SERVICES

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21046

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $210.1 million to AT&T ENTERPRISES, LLC for work described as: IGF::OT::IGF NATIONAL SECURITY/EMERGENCY PREPAREDNESS PRIORITY TELECOMMUNICATIONS SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of over 9 years suggests a need for ongoing critical services. 3. High contract value indicates significant reliance on AT&T for essential telecommunications. 4. Lack of competition raises concerns about whether the government is receiving optimal value. 5. The contract's focus on priority telecommunications highlights its critical national security implications. 6. Fixed-price contract type offers some cost certainty but doesn't mitigate sole-source risks.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized nature of priority telecommunications services. Without competitive bids, it's difficult to ascertain if the $210 million price tag represents a fair market value. The long duration and high dollar amount suggest a critical need, but the absence of competition prevents a direct comparison to similar government contracts or commercial offerings that might reveal potential cost savings. The fixed-price structure provides some predictability, but the lack of competitive pressure could lead to inflated pricing over the contract's lifespan.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning AT&T was the only vendor considered. The justification for not competing this requirement is not detailed in the provided data. Sole-source awards typically occur when only one vendor can provide the necessary goods or services, often due to proprietary technology, unique capabilities, or urgent, unforeseen needs. The absence of multiple bidders means there was no opportunity for price negotiation or comparison among different providers, which can limit the government's ability to secure the best possible pricing.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the lack of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher overall expenditures for the government.

Public Impact

The Department of Defense benefits from uninterrupted and prioritized telecommunications services essential for national security operations. This contract ensures the availability of critical communication infrastructure for military command and control. The services provided likely support a wide range of defense activities, including intelligence gathering and operational coordination. The geographic impact is likely nationwide, supporting military installations and personnel across various locations. Workforce implications are primarily for AT&T, maintaining and operating the telecommunications network.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Long contract duration without re-competition may not reflect current market pricing or technological advancements.
Lack of transparency in the sole-source justification makes it difficult to assess necessity.
High dollar value without competitive validation raises concerns about overall value for money.
Potential for vendor lock-in due to the critical and specialized nature of the services.

Positive Signals

Contract ensures continuity of essential, high-priority telecommunications for national security.
Fixed-price contract type provides cost certainty for the government.
Long-term award suggests a stable and reliable provider for critical infrastructure.
AT&T is a well-established telecommunications provider with extensive infrastructure.

Sector Analysis

The telecommunications industry is characterized by significant infrastructure investment, rapid technological evolution, and a mix of large established players and specialized service providers. This contract falls within the wireless telecommunications carriers sector, specifically supporting critical infrastructure needs for a major government agency. The market is often dominated by a few large companies, making sole-source awards for highly specialized or integrated services more common, though still subject to scrutiny. Comparable spending benchmarks for similar priority telecommunications services are difficult to establish publicly due to the proprietary nature of such offerings and the unique requirements of government clients.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. The prime contractor, AT&T Enterprises, LLC, is a large corporation. There is no information provided regarding subcontracting plans or opportunities for small businesses within this specific contract. Therefore, the direct impact on the small business ecosystem from this particular award is likely minimal, unless AT&T has separate initiatives for small business engagement not reflected here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Defense Contract Management Agency (DCMA) often provides contract administration. Inspector General (IG) oversight is possible, particularly concerning allegations of waste, fraud, or abuse. Transparency is limited due to the sole-source nature and the classification of priority telecommunications, making detailed public scrutiny challenging. Accountability rests with the contracting officers and program managers within the Defense Information Systems Agency (DISA) to ensure performance and adherence to contract terms.

Related Government Programs

DoD Priority Telecommunications Services
Defense Information Systems Agency Contracts
National Security Telecommunications
Wireless Telecommunications Services Government Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $210.1 million to AT&T ENTERPRISES, LLC. IGF::OT::IGF NATIONAL SECURITY/EMERGENCY PREPAREDNESS PRIORITY TELECOMMUNICATIONS SERVICES

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $210.1 million.

What is the period of performance?

Start: 2014-07-29. End: 2024-03-31.

What is the specific justification for awarding this critical telecommunications contract to AT&T on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT' to AT&T Enterprises, LLC. While the specific justification is not detailed, sole-source awards are typically made when only one responsible source is available or capable of providing the required services. This could be due to unique capabilities, proprietary technology, existing infrastructure integration, or urgent national security needs that preclude a competitive solicitation process. For priority telecommunications, factors like network survivability, specific security clearances, and integration with existing defense communication systems might necessitate a single, trusted provider. Further details would likely be found in the contract's Justification and Approval (J&A) document, which is often classified or restricted.

How does the $210 million contract value compare to similar government telecommunications contracts, considering it was sole-sourced?

Direct comparison of this $210 million sole-source contract to similar government telecommunications contracts is inherently difficult. Sole-source awards lack the price discovery mechanism inherent in competitive bidding, meaning the price may not reflect the lowest achievable market rate. While AT&T is a major provider, the specialized nature of 'priority telecommunications services' for national security likely commands a premium. Benchmarking would ideally involve comparing it to other sole-source awards for similar critical infrastructure or, if possible, to competitive contracts for comparable, albeit less critical, services. Without competitive data, assessing whether this represents 'good' or 'fair' value is speculative, though the long duration and high value suggest critical, ongoing needs.

What are the primary risks associated with a sole-source award of this magnitude and duration for critical telecommunications?

The primary risks associated with this sole-source award include potential overpayment due to lack of competition, leading to reduced value for taxpayer money. There's also a risk of vendor lock-in, where the government becomes overly reliant on AT&T, making future transitions difficult or costly. Technological stagnation is another concern; without competitive pressure, the incentive for AT&T to innovate or offer cutting-edge solutions might be diminished compared to a competitive environment. Furthermore, the lack of transparency inherent in sole-source justifications can obscure potential inefficiencies or suboptimal service delivery. Finally, dependence on a single provider for critical national security communications could represent a strategic vulnerability if that provider faces operational issues.

What performance metrics or oversight mechanisms are likely in place to ensure AT&T delivers effective priority telecommunications services?

While specific metrics aren't provided, contracts for critical telecommunications services typically include stringent performance standards related to network uptime, latency, bandwidth availability, security protocols, and restoration times in case of outages. Oversight likely involves the Defense Information Systems Agency (DISA) as the program manager, with the Defense Contract Management Agency (DCMA) potentially involved in contract administration and performance monitoring. Regular performance reviews, service level agreement (SLA) tracking, and potentially independent audits would be employed. The contract's fixed-price nature also incentivizes AT&T to manage costs effectively to maintain profitability, indirectly driving performance.

How has federal spending on wireless telecommunications carriers (NAICS 517210) evolved, and where does this contract fit within that trend?

Federal spending on wireless telecommunications carriers (NAICS 517210) has generally increased over the years, driven by the growing demand for mobile connectivity, data services, and secure communication solutions across various agencies. This $210 million contract represents a significant portion of spending within this category, particularly given its sole-source nature and focus on high-priority, national security-related services. It highlights the government's reliance on established providers like AT&T for mission-critical infrastructure. While overall spending trends reflect increasing reliance on wireless tech, large, long-term, sole-source contracts like this one warrant scrutiny regarding cost-effectiveness compared to potentially more competitive, diversified approaches.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HC101314R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc.

Address: 7125 COLUMBIA GATEWAY, COLUMBIA, MD, 21046

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

Financial Breakdown

Contract Ceiling: $248,986,928

Exercised Options: $210,073,623

Current Obligation: $210,073,623

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline