HHS awards $279M to Verizon for local telecommunications services in the DC area over 14 years

Contract Overview

Contract Amount: $279,238,430 ($279.2M)

Contractor: Verizon Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-10-02

End Date: 2023-09-30

Contract Duration: 5,111 days

Daily Burn Rate: $54.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TAS::75 4552 001::TAS LOCAL TELECOMMUNICATIONS SERVICES DC AREA

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $279.2 million to VERIZON FEDERAL INC. for work described as: TAS::75 4552 001::TAS LOCAL TELECOMMUNICATIONS SERVICES DC AREA Key points: 1. Contract value represents significant, long-term investment in essential communication infrastructure. 2. Sole provider for a critical service suggests potential for price leverage, though competition was likely established early. 3. Extended duration (over 14 years) indicates a stable, ongoing need for these services. 4. Fixed-price contract offers budget predictability for the agency. 5. Focus on a specific geographic area (DC) highlights localized infrastructure needs. 6. The contract's scale suggests a substantial portion of the agency's telecommunications budget is allocated here.

Value Assessment

Rating: fair

The contract value of $279 million over 14 years averages approximately $20 million annually. Benchmarking this against similar large-scale telecommunications service contracts for federal agencies in major metropolitan areas is challenging without more specific service details. However, given the duration and scope, the pricing appears to be within a reasonable range for comprehensive, dedicated services. The fixed-price nature provides cost certainty, but the lack of explicit performance metrics or comparison data makes a definitive value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

The contract type is listed as 'COMPETITIVE DELIVERY ORDER,' which implies it was awarded under a pre-existing contract that underwent a competitive process. However, the specific competition for this particular delivery order is not detailed. If this was a competitive task order under a larger IDIQ, the initial competition for the IDIQ would be key. Without knowing the number of bidders for this specific order or the nature of the underlying contract vehicle, it's difficult to assess the level of competition and its impact on price discovery.

Taxpayer Impact: The level of competition directly impacts taxpayer value. Robust competition typically drives down prices and encourages innovation. If this order was competitively bid with multiple strong offers, taxpayers likely benefited from a more favorable price. Conversely, limited competition could lead to higher costs.

Public Impact

Benefits the Department of Health and Human Services (HHS) by providing essential telecommunications infrastructure. Ensures reliable communication services for agency operations within the Washington D.C. metropolitan area. Supports the daily functioning of numerous HHS offices and personnel. The services are critical for maintaining operational continuity and data transmission for a major federal agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the long contract duration and specialized nature of services.
Lack of detailed competition information for this specific order raises questions about optimal price realization.
The sheer scale of the contract could indicate a lack of smaller, more agile service providers being utilized.
Reliance on a single vendor for such a critical service presents a risk if the vendor's performance falters.

Positive Signals

Long-term contract provides stability and predictability for essential communication services.
Fixed-price structure offers budget certainty for the agency.
The award to a major, established provider like Verizon suggests a high likelihood of reliable service delivery.
The contract's duration implies a successful, ongoing relationship and consistent performance over time.

Sector Analysis

The telecommunications services sector is vast, encompassing everything from basic voice and data transmission to complex network management and cloud services. Federal spending in this area is substantial, driven by the need for secure, reliable, and high-capacity communication networks across numerous agencies. This contract falls within the 'Local Telecommunications Services' category, focusing on the infrastructure that supports day-to-day operations within a specific geographic region. Comparable spending benchmarks are difficult without knowing the exact service mix, but large federal agencies often spend tens to hundreds of millions annually on such foundational services.

Small Business Impact

There is no indication that this contract involved small business set-asides, as the awardee is Verizon Federal Inc., a large corporation. The contract's nature as a large-scale telecommunications service likely means that any subcontracting opportunities for small businesses would be indirect, potentially through IT support, maintenance, or specialized equipment provision. The primary focus appears to be on securing core services from a major provider rather than fostering direct small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside within the Office of the Assistant Secretary for Administration (ASA) at HHS, which awarded the contract. Standard contract management processes, performance reviews, and financial audits would be in place. The contract's fixed-price nature simplifies some aspects of financial oversight. Transparency is generally maintained through contract databases like FPDS, though detailed operational performance data may be internal to the agency. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Telecommunications Services
GSA Schedule Contracts
Agency-Specific IT Infrastructure
Network Services Contracts
Local Area Network (LAN) Services

Risk Flags

Long contract duration may limit flexibility.
Lack of specific competition details for the delivery order.
Potential for vendor lock-in.
Reliance on a single provider for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $279.2 million to VERIZON FEDERAL INC.. TAS::75 4552 001::TAS LOCAL TELECOMMUNICATIONS SERVICES DC AREA

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 $279.2 million.

What is the period of performance?

Start: 2009-10-02. End: 2023-09-30.

What specific telecommunications services are included under this $279 million contract?

The data indicates 'TAS LOCAL TELECOMMUNICATIONS SERVICES DC AREA.' This broadly covers essential communication infrastructure such as voice lines, data circuits (e.g., MPLS, Ethernet), potentially internet access, and related managed services within the Washington D.C. metropolitan region. Specifics would detail bandwidth, service level agreements (SLAs), types of circuits, and any included hardware or maintenance. Without a detailed statement of work (SOW), the exact service mix remains generalized. This level of detail is crucial for comparing value and assessing if the $279 million covers a comprehensive suite or basic connectivity.

How does the annual average cost of approximately $20 million compare to similar federal telecommunications contracts in the DC area?

Benchmarking this $20 million annual average requires comparing it to contracts with similar scope, duration, and service levels. Large federal agencies in the DC area often have substantial telecommunications budgets. For instance, contracts for enterprise-wide network services or secure communication systems can easily reach similar or higher annual figures. However, if this contract is primarily for basic POTS lines and standard broadband, $20 million annually might be high. Without knowing the specific services (e.g., dedicated fiber, high-bandwidth data, VoIP, managed security), a precise comparison is difficult. The long duration suggests a comprehensive, potentially managed, service offering.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not specify the KPIs or SLAs. However, for a contract of this magnitude and duration involving critical telecommunications services, robust SLAs are expected. These typically include metrics for network uptime (e.g., 99.99%), latency, jitter, packet loss, and response times for service restoration after an outage. Failure to meet these SLAs usually incurs financial penalties or service credits for the government. The absence of this information in the summary data limits a full assessment of service quality and accountability.

What was the competitive landscape when this contract (or its parent contract) was initially awarded?

The contract is designated as a 'COMPETITIVE DELIVERY ORDER.' This implies that the underlying contract vehicle (likely an IDIQ - Indefinite Delivery, Indefinite Quantity) was competitively awarded. However, the specific competition details for this particular delivery order are not provided. If it was a task order competition among multiple pre-qualified vendors on an IDIQ, the number of bidders and the pricing proposals submitted would determine the level of competition. If it was a sole-source justification or a limited competition under the IDIQ, the price discovery mechanism would be less robust, potentially impacting value for taxpayers.

Has Verizon Federal Inc. had past performance issues with similar large federal telecommunications contracts?

Verizon Federal Inc. is a major telecommunications provider with extensive experience serving government clients. While specific performance issues related to this exact contract are not detailed in the summary, large providers can face challenges with service delivery, network outages, or billing discrepancies on complex, long-term contracts. A thorough past performance review would typically involve examining contract performance reports, CPARS (Contractor Performance Assessment Reporting System) data, and any documented disputes or corrective actions. Generally, Verizon maintains a significant presence and continues to win large federal contracts, suggesting a generally acceptable level of past performance.

What is the historical spending trend for local telecommunications services by HHS or similar agencies?

Historical spending data for HHS on local telecommunications services would provide context for the $279 million award. Agencies often consolidate services over time, potentially leading to larger contracts like this one. Spending trends can be influenced by technology shifts (e.g., migration from POTS to VoIP, increased demand for bandwidth), agency consolidation, and procurement strategies (e.g., moving to GWACs or IDIQs). Without specific historical data for HHS's telecommunications spending, it's difficult to determine if this contract represents an increase, decrease, or stable level of investment compared to previous periods.

Industry Classification

NAICS: Information › Other Telecommunications › All Other Telecommunications

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

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: 22001 LOUDOUN COUNTY PKWY STE C 2 1, ASHBURN, VA, 20147

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

Financial Breakdown

Contract Ceiling: $279,238,430

Exercised Options: $279,238,430

Current Obligation: $279,238,430

Actual Outlays: $16,647,829

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS11T08BJD6001

IDV Type: IDC

Timeline