Department of Education awarded Navient Corporation $108M for student financial aid servicing in 2013

Contract Overview

Contract Amount: $108,025,412 ($108.0M)

Contractor: Navient Corporation

Awarding Agency: Department of Education

Start Date: 2013-01-01

End Date: 2013-12-31

Contract Duration: 364 days

Daily Burn Rate: $296.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF CRITICAL FUNCTION - TASK ORDER 0001 PROVIDES SERVICING OF TITLE IV STUDENT FINANCIAL AID IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L.111-152, 124 STAT. 1029)FOR THE JANUARY 01, 2013 TO DECEMBER 31, 2013 TIME PERIOD.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $108.0 million to NAVIENT CORPORATION for work described as: IGF::CT::IGF CRITICAL FUNCTION - TASK ORDER 0001 PROVIDES SERVICING OF TITLE IV STUDENT FINANCIAL AID IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L.111-152, 124 STAT. 1029)FOR THE JANUARY 01, 2013 TO DECEMBER 31, 2013 TIME PERI… Key points: 1. Contract focused on servicing Title IV student financial aid, a critical function for federal education programs. 2. Awarded under full and open competition, suggesting a broad market engagement. 3. Fixed Price with Economic Price Adjustment contract type introduces potential for cost fluctuations. 4. Performance period of one year (2013) indicates a short-term operational focus. 5. The contract value represents a significant investment in student loan administration. 6. Geographic location of servicing is Virginia, impacting regional employment and operations.

Value Assessment

Rating: fair

The contract value of $108 million for a one-year period for student financial aid servicing appears substantial. Benchmarking against similar large-scale federal IT or administrative service contracts would be necessary for a precise value-for-money assessment. Given the fixed-price with economic price adjustment structure, actual costs could vary. Without detailed performance metrics or comparisons to other student loan servicing contracts, it's difficult to definitively assess if this represented excellent value, but it falls within a range expected for complex federal program administration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit offers. The presence of 4 bidders (no) suggests a competitive environment, which typically aids in price discovery and potentially leads to more favorable pricing for the government. The specific details of the bidding process and the number of proposals received would provide further insight into the intensity of the competition.

Taxpayer Impact: A competitive award process generally benefits taxpayers by fostering a market that drives efficiency and potentially lower costs for essential government services.

Public Impact

Benefits millions of students and borrowers by ensuring the proper servicing of their federal financial aid. Delivers essential administrative services for the Title IV student financial aid programs. Geographic impact is centered in Virginia, where the servicing operations are based. Supports a workforce involved in the complex administration of student loans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the 'economic price adjustment' clause.
Complexity of student loan servicing requires robust oversight to ensure compliance and efficiency.
Dependence on a single contractor for a critical function like student aid servicing carries inherent risk.

Positive Signals

Awarded through full and open competition, indicating a potentially robust market for these services.
The contract specifies a clear performance period, allowing for focused management and evaluation.
Servicing Title IV aid is a core government function, suggesting established processes and regulatory frameworks.

Sector Analysis

This contract falls within the financial services and credit intermediation sector, specifically focusing on the administration of federal student loans. The market for student loan servicing is significant, involving both government and private entities. The size of this contract, over $100 million for a single year, highlights the substantial financial and administrative resources required to manage federal student aid programs effectively. Comparable spending benchmarks would likely be found in other large-scale government contracts for financial processing and administrative support.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions (ss: false, sb: false). This suggests the contract was not specifically targeted towards small businesses. Therefore, the primary impact on the small business ecosystem would be indirect, potentially through subcontracting opportunities if Navient Corporation engaged smaller firms for specialized services, though this is not explicitly stated.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Education's contracting officers and program managers. Accountability measures would be defined within the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or identified.

Related Government Programs

Federal Student Loan Programs
Department of Education Financial Management
Student Aid Administration
Credit Intermediation Services

Risk Flags

Potential for cost increases due to Economic Price Adjustment clause.
Complexity of student loan servicing requires diligent oversight.
Contractor's historical performance and regulatory scrutiny warrant attention.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $108.0 million to NAVIENT CORPORATION. IGF::CT::IGF CRITICAL FUNCTION - TASK ORDER 0001 PROVIDES SERVICING OF TITLE IV STUDENT FINANCIAL AID IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L.111-152, 124 STAT. 1029)FOR THE JANUARY 01, 2013 TO DECEMBER 31, 2013 TIME PERIOD.

Who is the contractor on this award?

The obligated recipient is NAVIENT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $108.0 million.

What is the period of performance?

Start: 2013-01-01. End: 2013-12-31.

What is the track record of Navient Corporation in servicing federal student loans prior to or during this contract period?

Navient Corporation has a long history in student loan servicing, evolving from its origins within Sallie Mae. Prior to and during the 2013 contract period, Navient was a major player in servicing federal and private student loans. The company has faced scrutiny and legal challenges related to its servicing practices, including allegations of improper handling of borrower accounts, misapplication of payments, and steering borrowers into forbearance. These issues have led to investigations and settlements with various state and federal authorities. Understanding these historical challenges is crucial for assessing the ongoing performance and risk associated with contracts awarded to Navient.

How does the $108 million contract value compare to other federal student loan servicing contracts awarded around the same time?

The $108 million contract value for one year of servicing Title IV student financial aid is substantial and indicative of the scale of federal student loan programs. To benchmark this effectively, one would need to compare it against other large contracts awarded by the Department of Education or other agencies for similar services during the 2013 fiscal year or surrounding periods. Contracts for student loan servicing can vary significantly based on the number of borrowers, the complexity of the portfolio, and the specific services required (e.g., origination, servicing, default management). Without direct comparative data on the volume of loans serviced or the scope of services, a precise comparison is difficult, but this figure suggests a significant operational footprint.

What were the primary risks identified for this specific contract, and how were they mitigated?

Key risks for a contract of this nature typically include operational failures (e.g., incorrect billing, missed deadlines), data security breaches, non-compliance with federal regulations, and potential for borrower dissatisfaction or harm. The 'Fixed Price with Economic Price Adjustment' (FP/EPA) contract type introduces financial risk related to fluctuating costs of labor and materials. Mitigation strategies would likely involve robust performance standards, clear reporting requirements, regular audits, strong cybersecurity protocols, and a defined process for managing economic price adjustments. The Department of Education's oversight mechanisms, including contract surveillance and quality assurance, would be critical in identifying and addressing risks throughout the performance period.

What was the overall effectiveness of Navient Corporation in fulfilling the terms of this contract?

Assessing the overall effectiveness of Navient Corporation in fulfilling this specific 2013 contract requires access to performance reports, quality assurance reviews, and any contractor performance evaluation data (e.g., CPARS) that may exist. Without this specific performance data, a definitive judgment on effectiveness cannot be made. However, given Navient's broader history and the nature of student loan servicing, effectiveness would be measured by metrics such as accuracy in payment processing, timely communication with borrowers, compliance with all relevant laws and regulations (like the Higher Education Act), and the overall efficiency of the servicing operations. Any significant borrower complaints or compliance issues would negatively impact the assessment of effectiveness.

How has federal spending on student loan servicing evolved since this 2013 contract?

Federal spending on student loan servicing has seen significant evolution since 2013, driven by changes in federal policy, the volume of outstanding student debt, and shifts in how loans are managed. The federal government has increasingly taken on direct servicing responsibilities or consolidated servicing contracts. There has also been a greater focus on borrower advocacy and relief programs, which can impact servicing requirements and costs. Furthermore, the landscape of student loan servicers has changed, with some companies exiting the market or facing consolidation. Overall spending trends are influenced by the total amount of federal student loan debt outstanding and the administrative costs associated with managing it.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Other Activities Related to Credit Intermediation

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 300 CONTINENTAL DR, NEWARK, DE, 19713

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

Financial Breakdown

Contract Ceiling: $108,025,412

Exercised Options: $108,025,412

Current Obligation: $108,025,412

Parent Contract

Parent Award PIID: EDFSA09D0015

IDV Type: IDC

Timeline