DoD's $10M Wired Telecom Contract to Lumen Technologies: A Deep Dive into Value and Competition

Contract Overview

Contract Amount: $10,028,084 ($10.0M)

Contractor: Lumen Technologies Government Solutions, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-05-12

End Date: 2026-05-11

Contract Duration: 1,825 days

Daily Burn Rate: $5.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IPS SERVICES

Place of Performance

Location: FORT KNOX, HARDIN County, KENTUCKY, 40121

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $10.0 million to LUMEN TECHNOLOGIES GOVERNMENT SOLUTIONS, INC. for work described as: IPS SERVICES Key points: 1. Analysis of a significant contract awarded to Lumen Technologies for wired telecommunications services. 2. Examines the competitive landscape and its implications for pricing and value. 3. Assesses potential risks and performance indicators associated with the contract. 4. Provides context on the Defense Information Systems Agency's spending in this sector. 5. Positions the contract within the broader telecommunications industry. 6. Highlights the fixed-price nature with economic price adjustment, impacting long-term cost certainty.

Value Assessment

Rating: good

The contract's total value of approximately $10 million over five years suggests a moderate investment. Benchmarking against similar large-scale telecommunications contracts is challenging without more granular data on service specifics and geographic coverage. However, the fixed-price structure with economic price adjustment aims to provide some cost predictability while allowing for market fluctuations. The award to a major incumbent provider like Lumen Technologies often indicates a balance between established service delivery and potentially higher costs compared to emerging competitors.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of six bidders (as suggested by 'no': 6) signifies a healthy level of competition for this telecommunications service requirement. This competitive process should theoretically drive more favorable pricing and service terms for the government, as providers vie to win the contract.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages a competitive marketplace, potentially leading to cost savings and better service quality compared to sole-source or limited competition awards.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Defense Information Systems Agency, which receives essential wired telecommunications services. Services delivered likely include broadband internet, voice, and data transmission capabilities critical for military operations and communications. The contract's geographic impact is centered in Kentucky (ST: KY, SN: KENTUCKY), where the services are presumably being delivered or managed. Workforce implications may involve the utilization of Lumen Technologies' existing technical staff for installation, maintenance, and support of the telecommunications infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost increases beyond initial projections if market conditions change unfavorably.
Reliance on a single large provider, even if competitively awarded, can create vendor lock-in and limit future flexibility.
The duration of the contract (1825 days) means potential for technological obsolescence if not managed proactively.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process and potential for competitive pricing.
The contract is with a well-established telecommunications provider, implying a degree of reliability and experience in service delivery.
Fixed-price elements provide a baseline cost structure, offering some budget certainty.

Sector Analysis

The wired telecommunications carriers industry is a mature sector characterized by significant infrastructure investment and ongoing technological evolution. Spending in this area by government agencies like DISA is crucial for maintaining secure and reliable communication networks. The North American Industry Classification System (NAICS) code 517110, Wired Telecommunications Carriers, encompasses providers of these essential services. Government contracts in this space often involve long-term commitments due to the nature of infrastructure deployment and maintenance.

Small Business Impact

There is no indication from the provided data that this contract includes specific small business set-asides or subcontracting requirements. As a large contract awarded to a major telecommunications provider, the primary focus is likely on the prime contractor's capabilities. This may limit direct opportunities for small businesses unless they are part of Lumen Technologies' supply chain or are engaged as subcontractors on specific project components.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Information Systems Agency's contracting and program management offices. Accountability measures are embedded within the contract's performance standards and delivery schedules. Transparency is generally maintained through contract award databases and reporting requirements, although specific operational details may be sensitive. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any issues arise.

Related Government Programs

DoD Telecommunications Services
DISA Network Modernization Programs
Federal Communications Infrastructure Contracts
Wired Network Services for Government Agencies

Risk Flags

Potential for cost overruns due to economic price adjustment.
Risk of service disruption impacting critical DoD operations.
Long-term contract duration may lead to technology obsolescence.
Vendor lock-in limiting future flexibility and negotiation power.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to LUMEN TECHNOLOGIES GOVERNMENT SOLUTIONS, INC.. IPS SERVICES

Who is the contractor on this award?

The obligated recipient is LUMEN TECHNOLOGIES GOVERNMENT SOLUTIONS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $10.0 million.

What is the period of performance?

Start: 2021-05-12. End: 2026-05-11.

What is the historical spending pattern of the Defense Information Systems Agency (DISA) on wired telecommunications services?

Analyzing DISA's historical spending on wired telecommunications requires access to detailed procurement data over several fiscal years. Generally, agencies like DISA have consistently allocated significant budgets towards maintaining and upgrading their communication networks. This includes expenditures on broadband, dedicated circuits, and other wired services essential for global operations. Spending patterns can fluctuate based on modernization initiatives, network consolidation efforts, and the expiration of previous contracts. Without specific historical data for DISA's wired telecommunications procurements, it's difficult to provide precise figures, but it is a core operational expenditure category for the agency, likely amounting to tens or hundreds of millions of dollars annually across various contracts and service types.

How does the per-unit cost of Lumen Technologies' services in this contract compare to market rates for similar government contracts?

Determining the precise per-unit cost comparison for this contract is challenging without detailed service level agreements (SLAs) and specific metrics (e.g., cost per Mbps, cost per circuit). Lumen Technologies is a major provider, and their pricing can reflect established infrastructure, service guarantees, and support levels. Generally, large incumbent providers may have higher baseline costs than smaller, more agile competitors, but they often offer greater reliability and broader service portfolios. Benchmarking would require comparing specific service offerings, bandwidth, latency guarantees, and geographic coverage against other competitively awarded contracts of similar scope and duration within the federal government. The 'good' rating suggests it is competitive, but not necessarily the absolute lowest cost option available.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators for a wired telecommunications contract typically focus on service availability, network uptime, latency, bandwidth provisioning speed, and customer support response times. For this specific contract with Lumen Technologies, DISA would likely have established specific metrics within the contract's Performance Work Statement (PWS). These KPIs would be used to assess whether Lumen is meeting its obligations, ensuring reliable connectivity for DoD operations. Failure to meet these KPIs could result in financial penalties or other contractual remedies. Examples might include maintaining 99.9% network uptime, meeting specific latency targets for data transmission, and ensuring rapid fault resolution.

What is Lumen Technologies' track record with the Department of Defense for similar telecommunications contracts?

Lumen Technologies, and its predecessor entities like CenturyLink, has a significant and long-standing track record of providing telecommunications services to the Department of Defense and other federal agencies. They are a major player in the government contracting space for network services. Their history includes numerous large-scale contracts for various communication needs, including broadband, managed network services, and secure data transmission. While specific performance details for every contract are not publicly available, their continued success in winning competitive bids suggests a generally positive track record in meeting the demanding requirements of military and government clients. However, like any large contractor, there may have been instances of performance issues or contract disputes on specific awards over the years.

What are the potential risks associated with relying on a single provider for essential wired telecommunications services, even under full competition?

Even with full and open competition, relying on a single provider like Lumen Technologies for essential wired telecommunications services carries inherent risks. One primary risk is vendor lock-in, where switching providers becomes technically complex and costly, reducing future negotiating leverage. Another risk is service disruption; while Lumen is a major provider, unforeseen technical failures, cyberattacks, or natural disasters could impact service delivery across the contracted scope. Furthermore, the economic price adjustment clause, while intended to manage inflation, could lead to unexpected cost escalations if market conditions are volatile. Finally, over-reliance can stifle innovation if the government becomes dependent on the provider's specific technology roadmap rather than exploring alternative solutions.

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 - NETWORK

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

Address: 931 14TH STE 1000 B, DENVER, CO, 80202

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

Financial Breakdown

Contract Ceiling: $60,349,082

Exercised Options: $14,804,593

Current Obligation: $10,028,084

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17NSD3006

IDV Type: IDC

Timeline