Department of Education awards $201.6M contract to F.H. Cann & Associates for student loan debt collection services

Contract Overview

Contract Amount: $201,654,275 ($201.7M)

Contractor: F.H. Cann & Associates, Inc.

Awarding Agency: Department of Education

Start Date: 2016-07-29

End Date: 2024-09-30

Contract Duration: 2,985 days

Daily Burn Rate: $67.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 22

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: NORTH ANDOVER, ESSEX County, MASSACHUSETTS, 01845

State: Massachusetts Government Spending

Plain-Language Summary

Department of Education obligated $201.7 million to F.H. CANN & ASSOCIATES, 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. Contract focuses on critical function of collecting and resolving debts from federal student aid loan defaults. 2. Full and open competition was utilized, suggesting a robust market for these services. 3. The contract duration of nearly 3000 days indicates a long-term need for debt resolution. 4. Fixed-price contract type aims to control costs and provide predictability. 5. Performance is in Massachusetts, potentially impacting local employment in the collection sector. 6. The contract value represents a significant investment in managing federal student loan portfolios.

Value Assessment

Rating: good

The contract value of $201.6 million over approximately 8 years suggests a substantial but potentially reasonable investment for managing federal student loan debt. Benchmarking against similar large-scale debt collection contracts would be necessary for a precise value-for-money assessment. The firm fixed-price structure provides cost certainty for the government. However, without detailed performance metrics and recovery rates, a definitive assessment of efficiency is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that multiple vendors were likely considered and competed for the opportunity. The presence of 22 offers suggests a competitive marketplace for federal student loan collection services. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down costs and encouraged efficient service delivery from the winning bidder.

Public Impact

Federal student loan borrowers who have defaulted on their loans will be directly impacted by the collection activities. The Department of Education benefits from improved recovery rates on defaulted student loans, reducing financial losses. The contract supports administrative resolution activities, aiming to resolve debt issues efficiently. The primary geographic impact is national, as federal student loans are disbursed nationwide, though the contractor's operations are based in Massachusetts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting vulnerable borrowers.
Long contract duration may lead to complacency or reduced innovation if not actively managed.
Reliance on a single contractor for a critical function could pose a risk if performance falters.

Positive Signals

Contract utilizes full and open competition, indicating a healthy market and potential for competitive pricing.
Firm fixed-price contract type provides cost certainty for the government.
The contract addresses a critical government function of debt collection for federal student aid programs.

Sector Analysis

The North American Industry Classification System (NAICS) code 561440 for Collection Agencies indicates this contract falls within the business support services sector. This sector includes establishments primarily engaged in collecting payments on debts owed to others. The market for debt collection services, particularly for government contracts, is substantial, driven by the need to manage and recover outstanding debts across various federal agencies. This contract represents a significant portion of spending within this specific sub-sector for the Department of Education.

Small Business Impact

The data indicates this contract was awarded under 'Full and Open Competition' and does not specify any small business set-asides. Therefore, it is unlikely that small businesses were specifically targeted for this award. There is no information provided regarding subcontracting plans or their impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. The contract type (firm fixed price) and the nature of the service (debt collection) imply performance metrics and reporting requirements are in place to ensure accountability. Transparency would be facilitated through contract award data and potentially through public reports on debt collection performance, though specific oversight mechanisms are not detailed in the provided data.

Related Government Programs

Federal Student Loan Programs
Department of Education Debt Management
Government Debt Collection Services
Financial Services Contracts

Risk Flags

Potential for high volume of borrower interactions requiring careful management.
Contract duration necessitates sustained performance monitoring.
Dependence on contractor's financial stability and operational capacity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $201.7 million to F.H. CANN & ASSOCIATES, 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 F.H. CANN & ASSOCIATES, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $201.7 million.

What is the period of performance?

Start: 2016-07-29. End: 2024-09-30.

What is the historical spending pattern for student loan debt collection services by the Department of Education?

Historical spending on student loan debt collection by the Department of Education has been substantial and ongoing, reflecting the large volume of federal student loans and the persistent issue of defaults. The Department utilizes a mix of in-house collection efforts and contracts with private collection agencies. Over the years, significant sums have been allocated to these services, with contract values often in the tens or hundreds of millions of dollars, depending on the scope and duration of the agreements. The specific amounts fluctuate based on economic conditions, policy changes regarding loan forgiveness or repayment options, and the overall size of the federal student loan portfolio. This particular contract, valued at over $200 million, is indicative of the scale of investment required to manage defaulted federal student loans effectively.

How does the performance of F.H. Cann & Associates compare to other contractors in similar debt collection roles?

Assessing the performance of F.H. Cann & Associates against other contractors requires access to detailed performance metrics, such as recovery rates, cost per dollar collected, borrower complaint volumes, and compliance adherence. Publicly available data often lacks this granular comparative information. However, the Department of Education's continued awarding of contracts to specific firms, including potentially F.H. Cann & Associates, can suggest a level of satisfactory performance. Agencies typically evaluate contractors based on past performance when making future awards. Without specific benchmark data or independent audits, a direct comparison remains speculative. It is common for agencies to maintain internal performance scorecards that inform these decisions.

What are the key performance indicators (KPIs) used to measure the success of this debt collection contract?

Key performance indicators (KPIs) for a federal student loan debt collection contract typically include the amount of debt recovered (total dollars collected), the recovery rate (percentage of outstanding debt collected), the cost per dollar collected (efficiency metric), the time to resolve debt cases, and compliance with all relevant federal regulations (e.g., Fair Debt Collection Practices Act). The Department of Education likely also monitors borrower satisfaction or complaint rates as an indicator of service quality and adherence to ethical collection practices. The firm fixed-price nature of this contract suggests that the contractor bears more risk if they cannot achieve collection targets efficiently, while the government benefits from predictable costs.

What is the potential risk associated with relying on a single contractor for such a critical function?

Relying on a single contractor for a critical function like federal student loan debt collection presents several potential risks. Firstly, there's a risk of vendor lock-in, where the government becomes overly dependent on the contractor, potentially reducing leverage in future negotiations. Secondly, if the contractor experiences financial difficulties, operational failures, or significant performance degradation, it could disrupt the essential debt collection process, leading to increased government losses and administrative burdens. Thirdly, a lack of ongoing competition might disincentivize the contractor from innovating or maintaining peak efficiency over the long term. Robust oversight, clear performance standards, and contingency planning are crucial to mitigate these risks.

How does the 'Full and Open Competition After Exclusion of Sources' method impact pricing and service quality?

The 'Full and Open Competition After Exclusion of Sources' method, while sounding complex, generally aims to ensure a broad range of potential vendors are considered while potentially excluding specific sources for defined reasons (though in this case, it likely refers to a standard full and open process after initial market research or a previous contract phase). This approach is designed to maximize competition, which typically leads to more competitive pricing as vendors vie for the contract. A higher number of bidders, as indicated by the 22 offers, strengthens this effect. Increased competition often drives improvements in service quality as contractors strive to differentiate themselves through better performance, efficiency, and customer service to win and retain contracts.

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: 22

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1600 OSGOOD ST STE 2-120, NORTH ANDOVER, MA, 01845

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

Financial Breakdown

Contract Ceiling: $201,654,275

Exercised Options: $201,654,275

Current Obligation: $201,654,275

Actual Outlays: $202,716

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $429,558

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA14D0014

IDV Type: IDC

Timeline