State Dept. Pays $91.4M for Server Services to Equinix Government Solutions LLC
Contract Overview
Contract Amount: $91,446,246 ($91.4M)
Contractor: Equinix Government Solutions LLC
Awarding Agency: Department of State
Start Date: 2009-01-05
End Date: 2019-06-17
Contract Duration: 3,815 days
Daily Burn Rate: $24.0K/day
Competition Type: NON-COMPETITIVE DELIVERY ORDER
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: CO LOCATION OF SERVERS SVCS
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20171
State: Virginia Government Spending
Plain-Language Summary
Department of State obligated $91.4 million to EQUINIX GOVERNMENT SOLUTIONS LLC for work described as: CO LOCATION OF SERVERS SVCS Key points: 1. Significant spending of $91.4M over 10 years on server services. 2. Sole-source contract raises questions about price discovery and competition. 3. High cost per year suggests potential for cost savings. 4. IT services sector is competitive, making non-competitive awards notable.
Value Assessment
Rating: questionable
The total award of $91.4M over 10 years averages to $9.14M annually. Without comparable contracts or detailed cost breakdowns, it's difficult to definitively assess value. However, the duration and non-competitive nature warrant scrutiny.
Cost Per Unit: $9.14M/year (average)
Competition Analysis
Competition Level: sole-source
This was a non-competitive delivery order, meaning there was no formal solicitation or bidding process. This significantly limits price discovery and may lead to higher costs than if competition had been sought.
Taxpayer Impact: Taxpayers may have overpaid due to the lack of competitive bidding, as the government did not explore potentially lower-cost alternatives.
Public Impact
Citizens rely on government services, and efficient spending ensures taxpayer funds are used effectively. Lack of competition can stifle innovation and lead to reliance on a single provider. Transparency in government contracts is crucial for public trust and accountability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Non-competitive award
- Long contract duration
- High total value
Positive Signals
- Consistent service delivery over 10 years
Sector Analysis
The IT services sector, particularly cloud and server hosting, is highly dynamic and competitive. Benchmarks for similar services vary widely based on scale, security requirements, and service level agreements. This contract's value is substantial within this sector.
Small Business Impact
The contract was awarded to Equinix Government Solutions LLC, a large corporation. There is no indication that small businesses were involved as subcontractors or partners in this specific delivery order.
Oversight & Accountability
The non-competitive nature of this award suggests a potential lapse in robust oversight. Further review of the justification for sole-source procurement and the agency's efforts to promote competition would be beneficial.
Related Government Programs
- Other Computer Related Services
- Department of State Contracting
- Department of State Programs
Risk Flags
- Lack of competition
- High annual cost
- Long contract duration without re-competition
- Potential for vendor lock-in
Tags
other-computer-related-services, department-of-state, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of State awarded $91.4 million to EQUINIX GOVERNMENT SOLUTIONS LLC. CO LOCATION OF SERVERS SVCS
Who is the contractor on this award?
The obligated recipient is EQUINIX GOVERNMENT SOLUTIONS LLC.
Which agency awarded this contract?
Awarding agency: Department of State (Department of State).
What is the total obligated amount?
The obligated amount is $91.4 million.
What is the period of performance?
Start: 2009-01-05. End: 2019-06-17.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive options thoroughly explored?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or situations where only one vendor can meet the requirements. Without access to the specific contract file and its associated documentation, it's impossible to determine the exact reasoning. However, the agency is expected to document why competition was not feasible or advantageous.
How does the annual cost of $9.14M compare to market rates for similar server services, considering the contract's duration and scope?
Benchmarking this cost requires detailed analysis of the specific services rendered, including data center space, power, cooling, network connectivity, and security. Market rates fluctuate, but an average of over $9M annually for server services, especially if not for a massive, highly specialized deployment, could be considered high if comparable commercial offerings are significantly less expensive.
What mechanisms were in place to ensure the Department of State received optimal value and performance throughout the 10-year contract term?
Given the sole-source nature, value realization heavily relies on the initial negotiation and ongoing contract management. Performance metrics, service level agreements (SLAs), and regular performance reviews are critical. Without these, ensuring optimal value and performance over a decade can be challenging, potentially leading to complacency or missed opportunities for cost optimization.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: NON-COMPETITIVE DELIVERY ORDER
Solicitation Procedures: SIMPLIFIED ACQUISITION
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Equinix, Inc.
Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147
Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $969,069,076
Exercised Options: $965,069,076
Current Obligation: $91,446,246
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS35F0073U
IDV Type: FSS
Timeline
Start Date: 2009-01-05
Current End Date: 2019-06-17
Potential End Date: 2019-06-17 00:00:00
Last Modified: 2023-09-05
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