AT&T awarded $36.7M for Medicare Data Communications Network, a sole-source contract

Contract Overview

Contract Amount: $36,732,479 ($36.7M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2009-06-01

End Date: 2011-06-30

Contract Duration: 759 days

Daily Burn Rate: $48.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MEDICARE DATA COMMUNICATIONS NETWORK

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $36.7 million to AT&T ENTERPRISES, LLC for work described as: MEDICARE DATA COMMUNICATIONS NETWORK Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Duration of 759 days suggests a need for stable, long-term service. 3. The contract falls under Wired Telecommunications Carriers, a mature industry. 4. Fixed price contract type aims to control costs, but competition is key. 5. High dollar value indicates significant reliance on this communication network. 6. No small business set-aside, suggesting large prime contractor involvement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source telecommunications agreements. The raw dollar amount of $36.7 million over approximately two years suggests a substantial investment in network infrastructure and services for Medicare data. Given the lack of competition, it's difficult to definitively assess if this represents optimal value for money. However, the fixed-price nature of the contract provides some cost certainty for the government.

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. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. Without competition, there is less pressure on the contractor to offer the most cost-effective solution.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and service improvements that often result from a competitive bidding environment.

Public Impact

Beneficiaries: Indirectly benefits Medicare beneficiaries through improved data management and communication for healthcare services. Services Delivered: Provides essential wired telecommunications carrier services for the Medicare Data Communications Network. Geographic Impact: Services are likely nationwide, supporting the operations of the Centers for Medicare and Medicaid Services. Workforce Implications: Supports the IT and telecommunications infrastructure necessary for federal healthcare operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in sole-source justification could hide potential inefficiencies.
Contract duration may not align with rapidly evolving telecommunications technology.

Positive Signals

Fixed-price contract provides cost certainty.
AT&T is a major telecommunications provider with established infrastructure.
Contract supports critical government healthcare data communications.

Sector Analysis

The Wired Telecommunications Carriers industry (NAICS 517110) encompasses companies that provide telecommunications services through a network of wired infrastructure. This includes services like broadband internet, voice transmission, and data networking. The market is characterized by significant capital investment, regulatory oversight, and a few dominant players. AT&T is a major incumbent provider in this sector. This contract represents spending on essential network infrastructure to support government operations, fitting within the broader trend of federal agencies relying on established telecommunications providers for critical data transmission.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, AT&T, is a large business. There is no information provided regarding subcontracting plans or performance related to small businesses. This suggests that the primary contract is not structured to directly benefit the small business ecosystem, though AT&T may engage small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. As a sole-source award, the justification and terms would be subject to review by agency procurement officials. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Medicare IT Modernization
Federal Health IT Infrastructure
CMS Network Services
Government Telecommunications Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $36.7 million to AT&T ENTERPRISES, LLC. MEDICARE DATA COMMUNICATIONS NETWORK

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $36.7 million.

What is the period of performance?

Start: 2009-06-01. End: 2011-06-30.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For telecommunications services, justifications might include the need to maintain continuity of operations with an existing provider, unique technical capabilities, or specific network integration requirements that only one vendor can meet. Without the official justification document, it's impossible to confirm the precise reasons, but it likely relates to AT&T's existing infrastructure and service offerings for the Medicare Data Communications Network.

How does the $36.7 million contract value compare to similar Medicare data network contracts?

Direct comparison of this $36.7 million contract value to similar Medicare data network contracts is difficult without access to a broader dataset of federal procurements, especially for sole-source awards. However, considering it spans approximately two years (759 days), the annual spending averages around $18.35 million. This figure represents a significant investment in telecommunications infrastructure for a critical government program. Benchmarking against competitively awarded contracts for similar services would be ideal but is not possible with the current data. The sole-source nature inherently removes the price discovery mechanism present in competitive bids, making direct value-for-money comparisons less straightforward.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($36.7 million) include potential overpayment due to the lack of competitive pricing pressure, reduced incentive for the contractor to innovate or provide superior service, and a lack of transparency in the procurement process. Taxpayers may not be receiving the best possible value. Furthermore, reliance on a single vendor can create vendor lock-in, making it difficult and costly to switch providers in the future, especially if the services are deeply integrated into agency operations. There's also a risk that the chosen vendor's technology or service offerings may not remain the most optimal over the contract's lifespan.

What is the historical spending pattern for Medicare data communications with AT&T or similar providers?

The provided data only details this specific contract from June 2009 to June 2011. To assess historical spending patterns, one would need to examine prior and subsequent contracts awarded by CMS for similar data communication network services, both to AT&T and other potential providers. Analyzing trends in contract values, durations, and competition levels over time would reveal whether spending has increased, decreased, or remained stable, and whether the reliance on sole-source awards has been consistent. Without this broader historical context, it's impossible to identify specific patterns or deviations from past practices.

How does the fixed-price contract type mitigate risks for the government in this sole-source scenario?

The firm fixed-price (FFP) contract type offers a degree of risk mitigation for the government, even in a sole-source scenario. FFP contracts establish a ceiling price that the contractor must adhere to, regardless of their actual costs. This shifts the risk of cost overruns from the government to the contractor. For the government, it provides budget certainty and protects against unexpected increases in the contractor's expenses. However, it does not guarantee the best possible price, as the initial price is set without competitive benchmarking. The government still bears the risk of paying a non-competitive price, even if the contractor's costs are lower than anticipated.

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: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc. (UEI: 108024050)

Address: 1900 GALLOWS ROAD, VIENNA, VA, 22182

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

Financial Breakdown

Contract Ceiling: $36,732,479

Exercised Options: $36,732,479

Current Obligation: $36,732,479

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q09NSD0003

IDV Type: IDC

Timeline