State Department's $26.8M IT contract to STG LLC awarded non-competitively for wired telecommunications

Contract Overview

Contract Amount: $26,838,195 ($26.8M)

Contractor: STG LLC

Awarding Agency: Department of State

Start Date: 2007-10-28

End Date: 2009-12-31

Contract Duration: 795 days

Daily Burn Rate: $33.8K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IT SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20520

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $26.8 million to STG LLC for work described as: IT SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract's duration of 795 days suggests a significant, ongoing need for services. 3. Awarded as a Delivery Order under a larger contract, details of the original competition are not provided. 4. The use of Time and Materials pricing can lead to cost overruns if not closely managed. 5. The primary service category is Wired Telecommunications Carriers, indicating a focus on network infrastructure. 6. The contract value of $26.8M places it in the mid-to-large range for IT service contracts.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without knowing the terms of the original contract it was issued under. However, the non-competitive nature raises concerns about whether the government secured the best possible price. Time and Materials contracts, while flexible, can be more expensive than fixed-price contracts if not meticulously monitored for efficiency and necessity of labor hours. Without comparable sole-source awards for similar services to STG LLC or other providers, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, meaning it was not openly competed. This suggests that either STG LLC was the only responsible source, or that the circumstances of the award did not permit full and open competition. The lack of multiple bidders means there was no direct price comparison to drive down costs, potentially leading to a higher price for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to achieve lower prices, which can result in taxpayers paying more for the same services compared to a competitively bid contract.

Public Impact

The primary beneficiary is the Department of State, which receives essential IT services for its operations. The services delivered are related to wired telecommunications, crucial for maintaining secure and reliable communication networks. The contract's performance is geographically centered in Washington D.C., impacting federal operations within the capital. The contract likely supports a workforce involved in IT infrastructure management and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potentially increases cost to taxpayers.
Time and Materials pricing structure carries inherent risk of cost overruns without strict oversight.
Lack of transparency regarding the original contract's competition makes full value assessment difficult.
Limited public information on the specific IT services provided beyond the broad category.
The contract's duration suggests a long-term reliance on a single vendor for critical infrastructure.

Positive Signals

The award indicates STG LLC possesses capabilities meeting the Department of State's specific IT needs.
The contract was awarded to a single entity, suggesting a focused and potentially efficient delivery model.
The existence of the contract implies a recognized need for these telecommunications services within the agency.

Sector Analysis

The IT services sector, particularly telecommunications, is a critical component of federal operations. This contract falls under the Wired Telecommunications Carriers industry, which involves the provision of telecommunications services over wired networks. The federal government is a significant consumer of these services, with spending often driven by the need for secure, reliable, and high-bandwidth communication infrastructure. Benchmarks for similar IT service contracts vary widely based on scope, duration, and competition, but a $26.8M award for a two-year period is substantial.

Small Business Impact

There is no indication that this contract involved a small business set-aside. The award to STG LLC, a single entity, does not provide information on subcontracting opportunities for small businesses. Without specific set-aside requirements or stated subcontracting goals, the direct impact on the small business ecosystem from this particular award is likely minimal, though STG LLC may engage small businesses as part of its broader operations.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and program managers. As a delivery order, it falls under the purview of the contract it was issued from. Transparency is limited due to the non-competitive nature and the lack of detailed public reporting on performance metrics. Inspector General jurisdiction would apply if any issues of fraud, waste, or abuse arise.

Related Government Programs

Department of State IT Modernization Programs
Federal Communications Network Infrastructure Contracts
Wired Telecommunications Services
Sole-Source IT Procurements

Risk Flags

Non-competitive award
Time and Materials pricing
Lack of transparency on original competition

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $26.8 million to STG LLC. IT SERVICES

Who is the contractor on this award?

The obligated recipient is STG LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $26.8 million.

What is the period of performance?

Start: 2007-10-28. End: 2009-12-31.

What was the justification for awarding this contract non-competitively?

The provided data indicates the contract was awarded as a 'NON-COMPETITIVE DELIVERY ORDER'. This typically means that the agency determined that full and open competition was not feasible or not in the government's best interest. Common justifications include that only one source is capable of providing the required services, or that an urgent need exists that cannot be met through competitive procedures. Without further documentation from the Department of State, the specific justification remains unknown, but the 'non-competitive' designation is the primary indicator of the award's nature. This often requires a Justification and Approval (J&A) document to be filed, detailing the rationale.

How does the Time and Materials (T&M) pricing structure compare to other contract types for similar IT services?

Time and Materials (T&M) contracts are often used when the scope of work is not clearly defined or is expected to change. They reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. While offering flexibility, T&M contracts carry a higher risk of cost overruns for the government compared to fixed-price contracts, as the final cost is not predetermined. For IT services where requirements are well-defined, fixed-price or cost-plus-fixed-fee contracts are generally preferred for better cost control. The government typically implements labor hour limitations and requires detailed justification for material purchases to mitigate T&M risks.

What is the typical duration and value range for wired telecommunications contracts awarded by the Department of State?

The duration of this contract is 795 days (approximately 2.18 years), and its value is $26.8 million. Typical durations for federal IT and telecommunications contracts can range from one to five years, often with options for extension. Contract values vary immensely based on the scope of services, agency needs, and market rates. For a large agency like the Department of State, multi-million dollar contracts for core infrastructure services like wired telecommunications are common. However, without access to historical spending data or agency-specific procurement forecasts, providing precise average ranges is difficult. This specific award appears to be within a substantial range for critical infrastructure support.

What are the potential risks associated with a sole-source award for critical IT infrastructure?

Sole-source awards, like this delivery order, present several risks. Firstly, the lack of competition means the government may not achieve the lowest possible price, potentially leading to higher costs for taxpayers. Secondly, it can reduce the incentive for the incumbent contractor to innovate or maintain high service levels, as there is no immediate threat of losing the business to a competitor. Thirdly, it can create vendor lock-in, making it difficult and costly to switch providers in the future. Finally, it raises concerns about whether the agency adequately explored all competitive options, potentially indicating a lack of strategic sourcing or planning.

How does the NAICS code 517110 (Wired Telecommunications Carriers) relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code 517110, 'Wired Telecommunications Carriers,' is used to classify establishments primarily engaged in operating and/or providing access to telecommunications infrastructure, such as telephone lines and VoIP. This includes the infrastructure for transmitting voice, data, and video. For this contract, it suggests the services procured by the Department of State are related to the installation, maintenance, or operation of their internal wired communication networks, potentially including broadband internet access, internal phone systems, or data cabling infrastructure necessary for their operations.

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: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 11710 PLAZA AMERICA DR STE 1200, RESTON, VA, 20190

Business Categories: Asian Pacific American Owned Business, Category Business, Manufacturer of Goods, Minority Owned Business, Not Designated a Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $26,838,195

Exercised Options: $26,838,195

Current Obligation: $26,838,195

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: V797049A3GP067

IDV Type: IDC

Timeline