Department of Education's $223.8M contract with Central Research Inc. for student loan debt collection faces scrutiny

Contract Overview

Contract Amount: $223,796,392 ($223.8M)

Contractor: Central Research Inc

Awarding Agency: Department of Education

Start Date: 2015-10-16

End Date: 2024-09-30

Contract Duration: 3,272 days

Daily Burn Rate: $68.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 21

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: "CRITICAL FUNCTION" - IGF::CT::IGF PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS.

Place of Performance

Location: LOWELL, BENTON County, ARKANSAS, 72745

State: Arkansas Government Spending

Plain-Language Summary

Department of Education obligated $223.8 million to CENTRAL RESEARCH INC for work described as: "CRITICAL FUNCTION" - IGF::CT::IGF PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS. Key points: 1. The contract supports a critical function: collecting federal student loan debt. 2. Central Research Inc. is the sole awardee under a full and open competition after exclusion of sources. 3. The contract duration is substantial, spanning over 8 years. 4. The firm fixed price contract type aims to control costs. 5. The contract is managed by the Department of Education.

Value Assessment

Rating: fair

The contract's total award value is $223.8 million over approximately 8 years. Benchmarking against similar debt collection contracts is difficult without more specific service details, but the scale suggests a significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a competitive process but with specific source exclusions. This method might limit the pool of potential bidders and potentially impact price discovery.

Taxpayer Impact: Taxpayer funds are used to pay for the collection services. The effectiveness of these services in recovering debt directly impacts the net cost to taxpayers.

Public Impact

Ensures recovery of delinquent federal student loan debt, reducing losses for the government. Provides administrative resolution activities for borrowers, potentially offering pathways to resolve outstanding debts. The contract's success impacts the financial health of federal student aid programs. Potential for borrower disputes or challenges regarding collection practices.

Waste & Efficiency Indicators

Waste Risk Score: 68 / 10

Warning Flags

Limited competition due to source exclusion.
Long contract duration may reduce flexibility.
Potential for high administrative costs associated with debt collection.

Positive Signals

Supports critical government function of debt recovery.
Firm fixed price contract provides cost certainty.
Managed by a relevant agency (Department of Education).

Sector Analysis

The contract falls under the Collection Agencies sector (NAICS 561440). Spending in this sector is driven by government needs to recover delinquent debts across various programs. Benchmarks are highly dependent on the volume and complexity of debt handled.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. The awardee, Central Research Inc., is not identified as a small business in the provided data.

Oversight & Accountability

The Department of Education is responsible for oversight. The contract's long duration and critical function necessitate robust oversight to ensure efficiency, compliance, and fair collection practices.

Related Government Programs

Collection Agencies
Department of Education Contracting
Department of Education Programs

Risk Flags

Limited competition.
Long contract duration.
Potential for high administrative costs.
Lack of specific performance metrics in provided data.
Borrower protection and fair practices oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $223.8 million to CENTRAL RESEARCH INC. "CRITICAL FUNCTION" - IGF::CT::IGF PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS.

Who is the contractor on this award?

The obligated recipient is CENTRAL RESEARCH INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $223.8 million.

What is the period of performance?

Start: 2015-10-16. End: 2024-09-30.

What is the historical recovery rate for debts managed under this contract compared to industry benchmarks?

A key question is the effectiveness of Central Research Inc.'s collection efforts. Analyzing historical recovery rates against established industry benchmarks for federal student loan debt would provide insight into the contract's value. A higher recovery rate than anticipated would justify the expenditure, while a lower rate might indicate inefficiencies or overly high service costs.

How does the cost per dollar collected compare to alternative debt collection methods or contractors?

Given the firm fixed price structure, understanding the cost per dollar collected is crucial for assessing value. Comparing this metric against other federal contracts or private sector collection agencies can reveal if the government is achieving competitive pricing. Significant deviations could signal either exceptional service or an inefficient contract.

What mechanisms are in place to ensure fair and compliant collection practices for borrowers?

The contract's focus on debt collection raises concerns about borrower treatment. It's essential to understand the oversight mechanisms and compliance protocols ensuring adherence to the Fair Debt Collection Practices Act and other regulations. Robust auditing and complaint resolution processes are vital for accountability and protecting borrowers' rights.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Collection Agencies

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 21

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 506 ENTERPRISE DR STE 200, LOWELL, AR, 72745

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

Financial Breakdown

Contract Ceiling: $223,796,392

Exercised Options: $223,796,392

Current Obligation: $223,796,392

Actual Outlays: $124,010

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $1,675,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA14D0012

IDV Type: IDC

Timeline