HHS obligated $27.2M for telecommunications services via a sole-source contract with Verizon

Contract Overview

Contract Amount: $27,200,000 ($27.2M)

Contractor: Verizon Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-11-05

End Date: 2009-09-30

Contract Duration: 329 days

Daily Burn Rate: $82.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OBLIGATION OF FUNDS FOR USE OF THE WITSW001 TELECOMMUNICATIONS 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 WITSW001 TELECOMMUNICATIONS CONTRACT Key points: 1. The contract's value appears reasonable given the duration and the provider, but lacks direct competitive benchmarks. 2. Sole-source award limits price discovery and potentially inflates costs compared to a competitive environment. 3. The contract was awarded as a delivery order, suggesting it was part of a larger, pre-existing agreement. 4. Performance dates indicate the contract has concluded, limiting current risk assessment. 5. The telecommunications sector is highly competitive, making a sole-source award for such services unusual without strong justification. 6. The firm fixed-price structure provides cost certainty but may not capture potential savings from competition.

Value Assessment

Rating: fair

Benchmarking the value of this $27.2 million telecommunications contract is challenging due to its sole-source nature and past performance period (2008-2009). Without competitive bids or data on similar sole-source awards for comparable services during that era, it's difficult to definitively assess if the pricing was optimal. However, the duration of 329 days for the delivery order suggests a significant scope of services, and the firm fixed-price contract type offered cost predictability to the agency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, specifically noted as 'NOT AVAILABLE FOR COMPETITION'. This indicates that the agency did not conduct a competitive solicitation process. The reasons for this determination are not provided, but it implies that only one vendor, Verizon Federal Inc., was considered capable of meeting the requirement. The lack of competition means there was no opportunity for other telecommunications providers to bid, potentially leading to a higher price than might have been achieved in an open market.

Taxpayer Impact: Taxpayers may have paid a premium for these telecommunications services due to the absence of competitive bidding. Without a competitive process, there is less assurance that the government secured the best possible price for the services rendered.

Public Impact

The primary beneficiary of this contract was the Department of Health and Human Services (HHS), specifically the Office of the Assistant Secretary for Administration. The services delivered were telecommunications, crucial for the agency's internal operations and communication infrastructure. The geographic impact is likely concentrated in Maryland, where the contract was managed (ST: MD). The contract supported the operational workforce within HHS by providing essential communication tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency regarding the justification for sole-source award.
Contract performance period is historical (2008-2009), limiting current assessment of contractor performance.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Firm fixed-price contract provides cost certainty for the agency.
Awarded to a well-established telecommunications provider (Verizon).
Contract duration was relatively short for a delivery order, suggesting focused service delivery.

Sector Analysis

The telecommunications services sector is a mature and highly competitive market, dominated by large providers like Verizon, AT&T, and others. Federal agencies often procure telecommunications services through various contract vehicles, including large indefinite-delivery/indefinite-quantity (IDIQ) contracts, government-wide acquisition contracts (GWACs), and direct solicitations. The market size for federal telecommunications spending is substantial, running into billions of dollars annually. This specific contract, a delivery order under a larger agreement, represents a small fraction of overall federal spending in this sector, but its sole-source nature warrants scrutiny within the context of a generally competitive industry.

Small Business Impact

There is no indication from the provided data that this contract involved a small business set-aside or that small businesses were specifically targeted for subcontracting. The award was made to Verizon Federal Inc., a large, established telecommunications company. Without specific subcontracting plans or reporting, the impact on the small business ecosystem from this particular contract is likely minimal, as it did not appear to be structured to foster small business participation.

Oversight & Accountability

Oversight mechanisms for this contract would typically be managed by the contracting officer and the program office within the HHS Office of the Assistant Secretary for Administration. As a historical contract (2008-2009), current oversight is not applicable. Transparency regarding the justification for the sole-source award is limited by the provided data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance period.

Related Government Programs

Federal Telecommunications Services
HHS IT Services
Government-wide Acquisition Contracts (GWACs)
Agency-specific Telecommunications Procurement

Risk Flags

Sole-source award without clear justification
Lack of competitive bidding limits price discovery
Historical data limits current performance and value assessment

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 WITSW001 TELECOMMUNICATIONS 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: 2008-11-05. End: 2009-09-30.

What was the specific justification for awarding this telecommunications contract to Verizon on a sole-source basis?

The provided data states the contract was 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. However, the specific justification or rationale behind this determination is not included. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, such as in cases of urgent need, unique capabilities, or when a follow-on contract is necessary to maintain continuity of services. Without further documentation from HHS, the precise reason for bypassing a competitive process remains unknown. This lack of transparency can raise concerns about whether the government truly obtained the best value.

How does the $27.2 million obligation compare to typical federal spending on telecommunications services during the 2008-2009 period?

Comparing the $27.2 million obligation for this single delivery order to overall federal telecommunications spending in 2008-2009 is difficult without more context. Federal spending on telecommunications is vast, encompassing numerous contracts, agencies, and service types. This amount represents a significant sum for a single delivery order but is a relatively small portion of the total federal telecommunications budget, which likely ran into the billions. However, for the Office of the Assistant Secretary for Administration within HHS, this obligation would represent a substantial investment in their operational infrastructure. Benchmarking requires comparing it to similar-sized agencies or specific service categories, which is not readily available.

What were the specific telecommunications services provided under this contract?

The data identifies the contract's purpose as 'OBLIGATION OF FUNDS FOR USE OF THE WITSW001 TELECOMMUNICATIONS CONTRACT.' While 'telecommunications contract' is broad, it generally encompasses services such as voice (landline and mobile), data transmission, internet access, video conferencing, and related network infrastructure and support. Given the award was to Verizon Federal Inc., a major telecommunications provider, it likely included a suite of these core services essential for the operational functioning of the HHS Office of the Assistant Secretary for Administration. Specific details on the exact services procured would require access to the contract's statement of work.

What is the track record of Verizon Federal Inc. in providing telecommunications services to the federal government?

Verizon Federal Inc. has a long-standing and extensive track record of providing telecommunications services to the U.S. federal government. As one of the largest telecommunications companies globally, it holds numerous contracts across various federal agencies, supporting a wide range of communication needs. These services often include network infrastructure, broadband internet, voice services, cybersecurity, and managed network solutions. While this specific contract was a sole-source award from 2008-2009, Verizon's broader history with the government suggests significant experience and capability in meeting federal requirements. However, past performance on other contracts does not automatically validate the value or necessity of a sole-source award.

Given the contract's historical nature (2008-2009), what are the primary risks associated with it today?

The primary risks associated with this historical contract are minimal due to its completed performance period (ended September 30, 2009). The main 'risk' is the lack of current data to assess contractor performance or value. For historical analysis, the key risks involve the potential for inflated pricing due to the sole-source award, the lack of competitive benchmarking, and the absence of detailed justification for not pursuing competition. These factors limit the ability to draw definitive conclusions about the contract's efficiency and effectiveness from a taxpayer perspective. There are no ongoing performance or financial risks as the contract is no longer active.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM 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