DoD's $34.4M Southwest Asia telecommunications lease to Lumen Technologies faces scrutiny over value and competition

Contract Overview

Contract Amount: $34,440,372 ($34.4M)

Contractor: Lumen Technologies Government Solutions, Inc.

Awarding Agency: Department of Defense

Start Date: 2026-01-13

End Date: 2032-07-30

Contract Duration: 2,390 days

Daily Burn Rate: $14.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: EICL000583EBM - OTU-2 (10.709GB) COMMERCIAL LEASE WITHIN SOUTHWEST ASIA

Plain-Language Summary

Department of Defense obligated $34.4 million to LUMEN TECHNOLOGIES GOVERNMENT SOLUTIONS, INC. for work described as: EICL000583EBM - OTU-2 (10.709GB) COMMERCIAL LEASE WITHIN SOUTHWEST ASIA Key points: 1. The contract's value appears high relative to the duration, suggesting potential overpayment. 2. Limited competition may have inflated pricing, impacting taxpayer return on investment. 3. The fixed-price with economic price adjustment structure introduces cost escalation risks. 4. Performance context is minimal, making it difficult to assess the necessity and effectiveness of the service. 5. This contract falls within the broader telecommunications services sector for the Defense Department. 6. The duration of the contract extends significantly, raising questions about long-term strategic alignment.

Value Assessment

Rating: questionable

The total award of $34.4 million over approximately 6.5 years (2390 days) equates to roughly $14,410 per month. This monthly cost for telecommunications services in Southwest Asia appears elevated when benchmarked against typical commercial rates for similar services, even considering the operational complexities of the region. Without more specific details on the service level agreements and bandwidth (10.709GB mentioned in the description), a precise comparison is challenging, but the overall expenditure warrants further investigation into cost-effectiveness.

Cost Per Unit: Approximately $14,410 per month (based on total award and duration).

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with four bidders participating. While this indicates an attempt to solicit a broad range of offers, the fact that only four bids were received for a specialized telecommunications service in a challenging geographic location might suggest limitations in the market's responsiveness or the complexity of the requirements. The presence of multiple bidders is positive, but the relatively low number could still allow for less aggressive pricing than a more robustly contested procurement.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers by encouraging competitive pricing. However, with only four bidders, the potential for significant cost savings may have been constrained compared to a scenario with a larger number of interested and capable providers.

Public Impact

The primary beneficiaries are the Department of Defense personnel and operations in Southwest Asia requiring reliable telecommunications. The service delivered is wired telecommunications, likely supporting data, voice, and potentially video communications. The geographic impact is concentrated within Southwest Asia, supporting military presence and operations in that region. Workforce implications are indirect, primarily supporting the operational readiness of military and civilian personnel through communication infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to economic price adjustment clauses.
The long contract duration may not align with evolving technological needs or geopolitical shifts.
Limited transparency on specific service details and performance metrics makes value assessment difficult.

Positive Signals

Awarded through full and open competition, indicating an effort to achieve fair market pricing.
Multiple bidders (four) participated, suggesting some level of market interest and capability.
The contract supports critical operational needs for the Department of Defense in a key region.

Sector Analysis

This contract falls within the telecommunications services sector, specifically wired telecommunications carriers (NAICS 517110). The market for government telecommunications services is substantial, with agencies like the Defense Information Systems Agency (DISA) being major procurers. Spending in this sector is driven by the need for secure, reliable, and high-bandwidth connectivity for military operations, intelligence gathering, and administrative functions, often in remote or challenging environments. Comparable spending benchmarks are difficult to establish without detailed service specifications, but large-scale telecommunications infrastructure in austere locations typically commands premium pricing.

Small Business Impact

There is no indication that this contract involved small business set-asides, nor is there information suggesting subcontracting opportunities for small businesses. The prime contractor, Lumen Technologies Government Solutions, Inc., is a large telecommunications provider. This contract likely does not contribute to the small business contracting goals of the government unless Lumen engages in significant subcontracting with small businesses, which is not specified.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Information Systems Agency (DISA) and potentially the Department of Defense's Inspector General. Accountability measures would be tied to the contract's performance clauses and delivery schedules. Transparency is moderate, with basic contract award details available, but specific performance metrics and detailed service descriptions are often less accessible to the public.

Related Government Programs

Defense Information Systems Agency (DISA) Telecommunications Contracts
Global Telecommunications Services for Federal Agencies
Wired Telecommunications Carrier Services
Department of Defense Information Technology Procurement

Risk Flags

Potential for cost escalation due to EPA clause
High per-unit cost compared to commercial benchmarks
Limited number of bidders despite full and open competition
Long contract duration may not reflect technological evolution

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 million to LUMEN TECHNOLOGIES GOVERNMENT SOLUTIONS, INC.. EICL000583EBM - OTU-2 (10.709GB) COMMERCIAL LEASE WITHIN SOUTHWEST ASIA

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 $34.4 million.

What is the period of performance?

Start: 2026-01-13. End: 2032-07-30.

What specific telecommunications services are being provided under this contract, and what are the key performance indicators (KPIs)?

The contract description indicates 'EICL000583EBM - OTU-2 (10.709GB) COMMERCIAL LEASE WITHIN SOUTHWEST ASIA'. This suggests a leased telecommunications circuit, likely a high-capacity optical transport unit (OTU-2), providing 10.709 Gigabits per second of bandwidth. Specific Key Performance Indicators (KPIs) are not publicly detailed in the provided data but would typically include metrics such as uptime/availability (e.g., 99.99%), latency, jitter, and packet loss. The exact nature of the 'commercial lease' implies dedicated bandwidth provisioned over Lumen's network infrastructure. Without access to the full contract details or performance reports, a precise assessment of service delivery against expectations is not possible.

How does the awarded price compare to similar telecommunications leases in Southwest Asia or other high-cost operational theaters?

The total award of $34.4 million over approximately 6.5 years (2390 days) results in an average monthly cost of roughly $14,410. Benchmarking this figure is challenging without granular data on bandwidth, service level agreements (SLAs), and specific geographic locations within Southwest Asia. However, high-capacity leased lines in austere or politically sensitive regions often incur significant premiums due to infrastructure deployment costs, security requirements, and operational risks. Compared to domestic US commercial rates for similar bandwidth, this price appears high. However, within the context of supporting critical military operations in Southwest Asia, it might be considered within a range, albeit at the higher end, necessitating a thorough review of the value proposition against the risks and operational necessity.

What is Lumen Technologies Government Solutions, Inc.'s track record with similar large-scale telecommunications contracts for the Department of Defense?

Lumen Technologies (formerly CenturyLink) has a significant history of providing telecommunications and network services to the U.S. government, including the Department of Defense. They are a major telecommunications provider with extensive infrastructure. Their track record includes numerous contracts for various federal agencies, often involving complex network solutions, managed services, and connectivity in diverse locations. While specific performance details for individual contracts are not always public, their continued success in winning large government bids suggests a generally satisfactory performance history. However, like any large contractor, they may have faced past performance issues or contract disputes on specific projects, which would require deeper investigation into contract databases and agency performance reviews.

What are the potential risks associated with the 'Fixed Price with Economic Price Adjustment' (FP-EPA) contract type for this lease?

The Fixed Price with Economic Price Adjustment (FP-EPA) contract type introduces a degree of uncertainty regarding the final cost. While the base price is fixed, the 'economic price adjustment' clause allows for modifications to the price based on fluctuations in specified economic factors, such as inflation indices, labor costs, or material costs. For a long-duration contract like this (over 6 years), these adjustments can lead to significant cost increases over time, potentially exceeding initial budget projections. The risk for the government is that the final cost could be substantially higher than anticipated if economic conditions lead to substantial price escalations, eroding the initial value proposition. Conversely, the contractor is protected against unforeseen cost increases.

How does this contract fit into the broader strategy of the Defense Information Systems Agency (DISA) for providing global communications?

This contract likely represents a component of DISA's broader strategy to ensure robust and secure communication capabilities for U.S. military forces operating in critical regions like Southwest Asia. DISA manages a vast global network infrastructure, and contracts like this provide essential last-mile connectivity or regional backbone services. The strategy often involves a mix of owned infrastructure, leased capacity, and commercial partnerships to achieve reach, resilience, and cost-effectiveness. Procurements for specific geographic areas, especially those with complex geopolitical or logistical challenges, are crucial for maintaining operational command and control, intelligence sharing, and logistical support. This lease would contribute to fulfilling those strategic communication requirements in a specific theater.

What is the historical spending trend for similar telecommunications services by the Department of Defense in Southwest Asia?

Historical spending data for telecommunications services by the Department of Defense in Southwest Asia is not readily available in a consolidated public format. However, it is widely understood that military operations in this region have historically required substantial investment in communication infrastructure due to the strategic importance and operational demands. Spending typically fluctuates based on troop presence, mission requirements, and the security environment. DISA, as the primary agency responsible for these services, manages a significant budget for global telecommunications. Analyzing past contracts for similar leased circuits or bandwidth in the region would be necessary to identify trends, but such data is often proprietary or buried within extensive agency budget reports. Anecdotal evidence suggests high costs are common for such services.

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: 4

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: $34,440,372

Exercised Options: $34,440,372

Current Obligation: $34,440,372

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