Verizon awarded $27.2M for telecommunications services, highlighting a concentrated market for federal IT infrastructure
Contract Overview
Contract Amount: $27,200,000 ($27.2M)
Contractor: Verizon Federal Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2007-10-10
End Date: 2008-09-30
Contract Duration: 356 days
Daily Burn Rate: $76.4K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIXED PRICE
Sector: IT
Official Description: OBLIGATION OF FUNDS FOR USE OF THE WITS2001 TELECOMMUNICATIONS SERVICES CONTRACT
Place of Performance
Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20857
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $27.2 million to VERIZON FEDERAL INC. for work described as: OBLIGATION OF FUNDS FOR USE OF THE WITS2001 TELECOMMUNICATIONS SERVICES CONTRACT Key points: 1. The contract's value suggests significant reliance on established telecommunications providers for essential government IT. 2. Limited competition for such services can lead to higher costs and reduced innovation. 3. The fixed-price contract type offers cost certainty but may limit flexibility for evolving needs. 4. The short duration of the delivery order indicates a need for ongoing, potentially ad-hoc, telecommunications support. 5. The single awardee points to potential market concentration within the federal telecommunications sector.
Value Assessment
Rating: fair
The obligation of $27.2 million for telecommunications services represents a substantial investment. Benchmarking this against similar contracts for large-scale telecommunications infrastructure is challenging without more specific service details. However, given the nature of telecommunications services, the price appears within a reasonable range for a large federal agency, assuming comprehensive service delivery. The fixed-price nature provides cost predictability.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. This approach is often used when a specific vendor possesses unique capabilities, proprietary technology, or when existing infrastructure necessitates continuation with the incumbent provider to avoid disruption or excessive transition costs. The lack of open competition means that price discovery through market forces was bypassed.
Taxpayer Impact: For taxpayers, sole-source awards can mean paying a premium compared to a competitively bid contract, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process.
Public Impact
Federal agencies, specifically the Department of Health and Human Services, benefit from reliable telecommunications infrastructure. Essential communication services are delivered, supporting the agency's mission-critical operations. The primary geographic impact is within Maryland, where the contract is managed. The contract supports the federal IT workforce through the provision of necessary communication tools.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices and reduced service innovation.
- Sole-source awards limit opportunities for new or smaller vendors to enter the federal market.
- Dependence on a single provider creates vendor lock-in and potential risks if the provider fails to meet obligations.
Positive Signals
- Ensures continuity of essential telecommunications services for a critical federal agency.
- Fixed-price contract provides budget certainty for the awarded period.
- The awardee, Verizon Federal Inc., is a well-established provider with significant experience in government telecommunications.
Sector Analysis
The telecommunications services sector is a critical component of federal IT infrastructure, enabling communication and data transfer across agencies. This contract falls within the broader IT services market, which is characterized by large incumbent players and significant government spending. Comparable spending benchmarks for federal telecommunications services vary widely based on scope, but large-scale contracts often run into tens or hundreds of millions of dollars annually. The market is essential for national security, agency operations, and public services.
Small Business Impact
The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. As a sole-source award to a large telecommunications provider, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specified by the agency. This limits the direct economic benefit to the small business ecosystem through this specific contract.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Health and Human Services' procurement and program management offices. As a delivery order under an existing contract, the primary oversight would focus on performance against the terms and conditions, and adherence to the fixed-price agreement. Transparency is generally maintained through contract databases, though detailed performance metrics are not publicly disclosed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- WITS2001 Telecommunications Services Contract
- Federal Telecommunications Services
- Department of Health and Human Services IT Spending
- Government Wide Acquisition Contracts (GWACs)
Risk Flags
- Sole-source award bypasses competitive bidding.
- Potential for higher costs due to lack of competition.
- Risk of vendor lock-in with critical infrastructure.
Tags
it, telecommunications, health-and-human-services, verizon-federal-inc, delivery-order, fixed-price, sole-source, maryland, large-contract, federal-agency
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $27.2 million to VERIZON FEDERAL INC.. OBLIGATION OF FUNDS FOR USE OF THE WITS2001 TELECOMMUNICATIONS SERVICES CONTRACT
Who is the contractor on this award?
The obligated recipient is VERIZON FEDERAL INC..
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).
What is the total obligated amount?
The obligated amount is $27.2 million.
What is the period of performance?
Start: 2007-10-10. End: 2008-09-30.
What is the track record of Verizon Federal Inc. in delivering telecommunications services to the federal government?
Verizon Federal Inc. has a long-standing history of providing telecommunications services to various U.S. federal agencies. They are a major telecommunications provider with extensive infrastructure and experience in supporting government needs, including voice, data, and network services. Their track record typically involves managing large, complex networks and ensuring high availability and security, which are critical for government operations. Past performance data, often available through contract databases and agency reports, would detail their success in meeting delivery timelines, service level agreements, and budget constraints on previous contracts. While specific details for this particular delivery order are limited, Verizon's general presence in the federal market suggests a capacity to handle significant telecommunications requirements.
How does the $27.2 million obligation compare to historical federal spending on telecommunications services?
The $27.2 million obligation for telecommunications services represents a significant, but not extraordinary, amount within the context of federal IT spending. Federal agencies collectively spend billions of dollars annually on telecommunications, encompassing everything from basic phone lines to complex wide-area networks and cybersecurity solutions. This specific contract value is substantial for a single delivery order but aligns with the typical scale of contracts awarded to major telecommunications providers for agency-wide support. Historical data shows that agencies like HHS often have multi-year, multi-million dollar contracts for such essential services. The value is indicative of the critical nature and scale of telecommunications required for a large federal department.
What are the primary risks associated with a sole-source award for telecommunications services?
The primary risks associated with a sole-source award for telecommunications services include potential overpayment due to lack of competitive pricing, reduced incentive for the contractor to innovate or improve services, and vendor lock-in. Without competition, the government may not achieve the best possible price or terms. Furthermore, reliance on a single provider can create vulnerabilities if that provider experiences financial difficulties, service disruptions, or changes its strategic direction. Transitioning to a new provider later can also be costly and complex, especially with integrated telecommunications infrastructure. This necessitates careful contract management and performance monitoring to mitigate these risks.
How effective are fixed-price contracts in managing telecommunications service delivery for federal agencies?
Fixed-price contracts are generally effective for managing telecommunications service delivery when the scope of work is well-defined and unlikely to change significantly. They provide cost certainty for the government, shifting the risk of cost overruns to the contractor. For services like telecommunications, where pricing structures can be relatively stable, fixed-price contracts offer predictability in budgeting. However, if requirements evolve rapidly or unforeseen technical challenges arise, a fixed-price contract might limit the agency's flexibility to adapt without costly change orders. Effectiveness also depends on the contractor's ability to manage their own costs and deliver within the agreed price, which is influenced by the initial negotiation and ongoing oversight.
What is the typical duration and value of telecommunications service contracts for agencies like HHS?
Telecommunications service contracts for agencies like the Department of Health and Human Services (HHS) can vary significantly in duration and value, often spanning multiple years and ranging from millions to tens or even hundreds of millions of dollars. This specific contract, a delivery order with an end date of September 30, 2008, had a duration of approximately one year and an obligation of $27.2 million. This suggests it was part of a larger contract vehicle or addressed a specific, time-bound need. Larger, multi-year contracts are common for core telecommunications infrastructure, providing stability and allowing for economies of scale. The value is driven by the breadth of services (voice, data, internet, mobile) and the number of users and locations supported.
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Verizon Communications Inc
Address: 1320 N. COURTHOUSE ROAD, ARLINGTON, VA, 22201
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $27,200,000
Exercised Options: $27,200,000
Current Obligation: $27,200,000
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS11K00BJD0005
IDV Type: IDC
Timeline
Start Date: 2007-10-10
Current End Date: 2008-09-30
Potential End Date: 2008-09-30 00:00:00
Last Modified: 2022-04-01
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