Department of Education's $365M contract for student loan debt collection awarded to Immediate Credit Recovery, Inc

Contract Overview

Contract Amount: $364,845,524 ($364.8M)

Contractor: Immediate Credit Recovery, Inc.

Awarding Agency: Department of Education

Start Date: 2015-10-16

End Date: 2024-09-30

Contract Duration: 3,272 days

Daily Burn Rate: $111.5K/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: POUGHKEEPSIE, DUTCHESS County, NEW YORK, 12601

State: New York Government Spending

Plain-Language Summary

Department of Education obligated $364.8 million to IMMEDIATE CREDIT RECOVERY, 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. This contract represents a significant investment in managing federal student loan portfolios. 2. The use of a private collection agency suggests a strategy to enhance recovery rates for delinquent federal student loans. 3. The contract's duration and value indicate a long-term commitment to addressing student loan debt. 4. Performance will likely be measured by the amount of debt recovered and the efficiency of the collection process. 5. The sector for debt collection services is competitive, with agencies vying for government contracts. 6. The fixed-price contract type aims to provide cost certainty for the government.

Value Assessment

Rating: good

The contract value of approximately $365 million over its period of performance is substantial, reflecting the scale of federal student loan debt. Benchmarking against similar contracts for debt collection services is challenging without specific details on the types of debt and recovery rates. However, the firm fixed-price structure suggests an effort to control costs. The 'Immediate Credit Recovery, Inc.' name implies a focus on swift resolution, which could be a value driver if successful.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while competition was sought, there might have been specific reasons for excluding certain sources, potentially related to prior performance or specialized capabilities. The fact that it was not a completely open competition could imply a more limited pool of bidders than a truly open solicitation.

Taxpayer Impact: A limited competition may result in fewer bids, potentially leading to higher prices than if a broader range of contractors had participated. However, if the exclusion was based on specific qualifications, it could ensure a more capable contractor, which might offset higher costs with better performance.

Public Impact

Federal student loan borrowers who are delinquent on their payments will be directly impacted by the collection activities. The Department of Education benefits from improved recovery of defaulted student loans, reducing the financial burden on the government. The services delivered include administrative resolution and collection of debts arising from federal student aid loan programs. The geographic impact is nationwide, as federal student loans are dispersed across the United States. The contract supports jobs within the debt collection industry, specifically at Immediate Credit Recovery, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics that could negatively impact borrowers.
Concerns about data privacy and security when handling sensitive borrower information.
Effectiveness of collection efforts may vary depending on borrower circumstances and economic conditions.

Positive Signals

Focus on recovering funds for federal student aid programs, which can be reinvested.
Contract structure aims for cost certainty through a firm fixed-price award.
The award to a specialized agency suggests a dedicated approach to debt resolution.

Sector Analysis

The debt collection industry is a mature sector that provides essential services to various industries, including government. Federal agencies often contract with specialized firms to manage and recover delinquent debts, particularly in areas like student loans, taxes, and healthcare. The market size for government debt collection services is substantial, driven by the vast amount of outstanding federal debt. This contract fits within the broader financial services and administrative support sector for government operations.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. The large contract value suggests it is likely awarded to a prime contractor capable of handling significant volume. There is no explicit information on subcontracting plans for small businesses, but it is common for large prime contractors to engage small businesses for specialized support services within such contracts.

Oversight & Accountability

Oversight is likely conducted by the Department of Education's program managers responsible for student loan servicing and collections. Accountability measures would typically include performance metrics related to recovery rates, compliance with collection regulations (e.g., Fair Debt Collection Practices Act), and data security. Transparency may be limited due to the nature of collection activities, but reporting requirements to the agency would be in place. Inspector General jurisdiction would apply to potential fraud or mismanagement.

Related Government Programs

Federal Student Aid (FSA)
Department of Education Loan Servicing Contracts
Treasury Offset Program
Government Debt Collection Services

Risk Flags

Limited competition may impact price discovery.
Potential for borrower dissatisfaction with collection practices.
Data security and privacy risks associated with handling sensitive financial information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $364.8 million to IMMEDIATE CREDIT RECOVERY, 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 IMMEDIATE CREDIT RECOVERY, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $364.8 million.

What is the period of performance?

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

What is the historical performance of Immediate Credit Recovery, Inc. with federal contracts, particularly in student loan debt collection?

Information regarding the specific historical performance of Immediate Credit Recovery, Inc. on federal contracts, especially within the student loan debt collection domain, is not directly provided in the data. To assess their track record, one would typically review past contract awards, performance evaluations (like Contractor Performance Assessment Reporting System - CPARS), and any documented instances of compliance issues or successes. Without this detailed performance history, it is difficult to definitively gauge their reliability and effectiveness in managing federal student loan portfolios. Further investigation into federal procurement databases and agency performance records would be necessary to provide a comprehensive answer.

How does the awarded amount of $365 million compare to typical spending on federal student loan debt collection services?

The $365 million figure represents the total estimated value of the contract over its performance period. To benchmark this against typical spending, one would need to analyze historical data on federal student loan debt collection contracts. This includes examining the number of contracts awarded annually, their individual values, and the total government expenditure in this area. Factors such as the volume of delinquent loans, the complexity of debt portfolios, and the prevailing market rates for collection services influence contract values. A $365 million contract suggests a significant portion of the federal student loan debt portfolio is being managed by this single entity, indicating a substantial operational scope.

What are the primary risks associated with outsourcing federal student loan debt collection to a private agency?

Key risks associated with outsourcing federal student loan debt collection include potential damage to the government's reputation if the contractor employs aggressive or unethical collection practices, leading to borrower complaints and negative public perception. There's also a risk of data breaches or mishandling of sensitive borrower information, which could have legal and financial repercussions. Furthermore, the effectiveness of the private agency in recovering debt may not always meet expectations, potentially leading to lower-than-anticipated returns for the government. Ensuring compliance with all relevant federal regulations and maintaining oversight over the contractor's operations are critical to mitigating these risks.

What performance metrics are likely used to evaluate the success of this contract?

The success of this contract is likely evaluated based on several key performance metrics. Primarily, the amount of debt recovered and the rate of recovery (percentage of outstanding debt collected) would be crucial. Efficiency metrics, such as the cost per dollar collected and the average time to resolve a debt, would also be important. Compliance with all federal regulations governing debt collection, including the Fair Debt Collection Practices Act (FDCPA), and adherence to data privacy and security standards are non-negotiable. Customer satisfaction, measured through borrower feedback or complaint rates, might also be a factor, ensuring that collection efforts are conducted professionally and ethically.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' procurement method impact potential cost savings for the government?

The procurement method 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that while the solicitation was intended to be open to all responsible sources, certain entities were excluded. This exclusion could be based on specific criteria, such as past performance, technical capabilities, or security clearances. If the exclusion significantly limits the number of potential bidders, it could reduce the level of competition compared to a truly open solicitation. Reduced competition might lead to less aggressive pricing from the remaining bidders, potentially resulting in higher costs for the government than if a broader range of contractors had competed. However, if the excluded sources were less capable, the remaining bidders might offer superior performance, which could justify a higher price.

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: 169 MYERS CORNERS RD STE 110, WAPPINGERS FALLS, NY, 12590

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

Financial Breakdown

Contract Ceiling: $364,845,524

Exercised Options: $364,845,524

Current Obligation: $364,845,524

Actual Outlays: $158,516

Subaward Activity

Number of Subawards: 452

Total Subaward Amount: $1,500,252,611

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA14D0017

IDV Type: IDC

Timeline