Treasury's $58.4M FY17 MPLS network contract awarded to AT&T for critical functions

Contract Overview

Contract Amount: $58,401,511 ($58.4M)

Contractor: AT&T Enterprises, LLC

Awarding Agency: Department of the Treasury

Start Date: 2016-10-01

End Date: 2017-09-21

Contract Duration: 355 days

Daily Burn Rate: $164.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF FOR CRITICAL FUNCTIONS - FY17 TNET MPLS SERVICE

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22182

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $58.4 million to AT&T ENTERPRISES, LLC for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS - FY17 TNET MPLS SERVICE Key points: 1. Contract awarded via full and open competition, suggesting a competitive pricing environment. 2. Fixed-price contract type helps mitigate cost overrun risks for the government. 3. Performance period of approximately one year aligns with typical network service cycles. 4. Awarded as a delivery order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 5. The contractor, AT&T, is a major telecommunications provider with extensive experience. 6. Spending on this specific contract represents a portion of the IRS's broader IT infrastructure budget.

Value Assessment

Rating: good

The contract value of $58.4 million for a one-year term for critical network services appears reasonable given the scale and nature of the requirement. Benchmarking against similar large-scale telecommunications contracts for federal agencies suggests that pricing is likely competitive, especially considering it was awarded under full and open competition. The firm fixed-price structure further supports value for money by locking in costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. The presence of a competitive bidding process generally leads to better price discovery and potentially lower costs for the government. The specific number of bidders is not provided, but the category suggests a robust competition.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible pricing for essential network services, preventing potential overpayment.

Public Impact

The Internal Revenue Service (IRS) benefits from reliable and secure network connectivity essential for its operations. Critical functions, including taxpayer services and data processing, are supported by this network infrastructure. The service is geographically focused on Virginia, where the IRS has significant operational presence. This contract supports the IT workforce responsible for maintaining and managing the IRS's telecommunications infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this is a sole-source follow-on or part of a larger strategic partnership.
Dependence on a single provider for critical network functions could pose a risk if service levels degrade.
The specific performance metrics and service level agreements (SLAs) are not detailed, making it hard to assess performance guarantees.

Positive Signals

Awarded through full and open competition, indicating a healthy market response.
Firm fixed-price contract type provides cost certainty.
Contractor is a well-established telecommunications provider with a proven track record.
The contract supports critical government functions, ensuring continuity of essential services.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers industry, a sector characterized by significant infrastructure investment and competition among established players like AT&T, Verizon, and Lumen. Federal spending in this area supports the backbone of government IT operations, ensuring connectivity for agencies nationwide. The market size for enterprise telecommunications services is substantial, with government contracts representing a key segment. This specific award for MPLS services addresses a need for secure, reliable, and high-performance data transport.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a large telecommunications contract awarded to a major provider, it is unlikely to have direct subcontracting opportunities specifically targeted at small businesses unless AT&T voluntarily includes them in its supply chain. The primary impact is on the large prime contractor rather than the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically reside within the Department of the Treasury's contracting and program management offices. The IRS likely has specific performance monitoring mechanisms and contract officers to ensure adherence to terms and conditions. Transparency is generally maintained through contract databases like FPDS, though detailed operational oversight specifics are internal. The Inspector General for Tax Administration (TIGTA) may conduct audits or investigations related to IT spending and contract performance.

Related Government Programs

IRS IT Infrastructure Modernization Programs
Federal Government Wide Area Network (WAN) Services
Telecommunications Services for Federal Agencies
Critical Infrastructure Protection Contracts

Risk Flags

Potential for service disruption impacting critical government functions.
Cybersecurity vulnerabilities in network infrastructure.
Dependence on a single large provider for essential services.
Contract performance below agreed-upon service levels.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $58.4 million to AT&T ENTERPRISES, LLC. IGF::CT::IGF FOR CRITICAL FUNCTIONS - FY17 TNET MPLS SERVICE

Who is the contractor on this award?

The obligated recipient is AT&T ENTERPRISES, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $58.4 million.

What is the period of performance?

Start: 2016-10-01. End: 2017-09-21.

What is the track record of AT&T Enterprises, LLC in delivering similar telecommunications services to the federal government?

AT&T Enterprises, LLC, as a major telecommunications provider, has a long and extensive history of serving the federal government. They are a primary vendor for a wide range of telecommunications services, including network infrastructure, voice, data, and mobility solutions. Their track record includes numerous large-scale contracts with various agencies, often involving complex network deployments and ongoing service management. While specific performance data for every contract is not publicly detailed, AT&T is generally considered a capable provider for mission-critical services. However, like any large contractor, they have faced scrutiny and performance issues on specific contracts over the years, underscoring the importance of robust government oversight and performance management.

How does the awarded amount compare to similar federal contracts for MPLS services?

The awarded amount of approximately $58.4 million for a one-year term for MPLS services to the IRS is substantial, reflecting the critical nature and scale of the network required. Benchmarking this against other federal contracts for similar services is complex due to variations in scope, duration, geographic coverage, and specific service level agreements (SLAs). However, given that this was awarded under full and open competition and is for a large agency like the IRS, the price per year appears to be within a reasonable range for enterprise-grade MPLS. Larger, multi-year contracts for nationwide network services can run into hundreds of millions or even billions of dollars, making this a significant but not necessarily outlier-level expenditure for a single agency's specific needs within a given fiscal year.

What are the primary risks associated with this type of telecommunications contract?

Key risks associated with this telecommunications contract include potential service disruptions impacting critical IRS functions, cybersecurity threats targeting the network infrastructure, and vendor lock-in if future procurements are not managed competitively. Performance degradation below agreed-upon service levels is another risk, potentially leading to operational inefficiencies. Furthermore, the reliance on a single provider for such a critical function necessitates strong contract management and contingency planning. Changes in technology or evolving security requirements could also necessitate contract modifications or future re-procurements, introducing transition risks and costs.

How effective is the firm fixed-price contract type in managing costs for this service?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for services where the scope of work is well-defined and unlikely to change significantly. For a service like MPLS network connectivity, where the core requirements are relatively stable, FFP provides cost certainty to the government. It shifts the risk of cost overruns to the contractor, AT&T, incentivizing them to manage their own expenses efficiently. This structure helps prevent budget overruns due to contractor inefficiencies or unforeseen cost increases on their part, making it a favorable choice for predictable service procurements.

What is the historical spending pattern for IRS network services, and how does this contract fit in?

Historical spending on IRS network services has been substantial, reflecting the agency's vast IT infrastructure needs to support tax processing, taxpayer services, and enforcement activities. The IRS, like other large federal agencies, relies heavily on robust telecommunications networks. Spending on network services typically constitutes a significant portion of the agency's IT budget. This $58.4 million contract for FY17 MPLS services represents a specific component of that broader spending. Without access to detailed historical IRS IT budgets and specific network contract data over multiple years, it's difficult to pinpoint precise trends, but it aligns with the expectation of significant, ongoing investment in core network infrastructure for such a large operational entity.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: AT&T Inc. (UEI: 108024050)

Address: 3033 CHAIN BRIDGE RD, OAKTON, VA, 22185

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

Financial Breakdown

Contract Ceiling: $208,000,000

Exercised Options: $58,401,511

Current Obligation: $58,401,511

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00T07NSD0007

IDV Type: IDC

Timeline