Department of Education's $316M Student Loan Debt Collection Contract with National Recoveries Inc. Faces Scrutiny

Contract Overview

Contract Amount: $316,368,816 ($316.4M)

Contractor: National Recoveries Inc

Awarding Agency: Department of Education

Start Date: 2015-10-15

End Date: 2024-09-30

Contract Duration: 3,273 days

Daily Burn Rate: $96.7K/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: ANDOVER, ANOKA County, MINNESOTA, 55304

State: Minnesota Government Spending

Plain-Language Summary

Department of Education obligated $316.4 million to NATIONAL RECOVERIES 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 critical functions for federal student loan debt collection. 2. National Recoveries Inc. is the sole awardee under a full and open competition after exclusion of sources. 3. The contract's duration and fixed-price nature present potential risks and opportunities for cost control. 4. The sector is professional and business support services, specifically collection agencies.

Value Assessment

Rating: fair

The contract's total award amount is substantial at over $316 million. Benchmarking against similar debt collection contracts is difficult without more granular data on collection rates and recovery percentages.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources,' suggesting a competitive process but with specific criteria that may have limited the pool of bidders. The fixed-price contract type aims to control costs, but the effectiveness of price discovery depends on the initial bid competition.

Taxpayer Impact: Taxpayer funds are used to pay for the services of a private collection agency to recover defaulted student loan debt. The efficiency of this contract directly impacts the net recovery of these funds.

Public Impact

Ensures continued collection of defaulted federal student loan debt, supporting the financial health of federal programs. Impacts borrowers who are in default, potentially offering structured repayment and resolution options. The use of a private agency raises questions about efficiency and cost-effectiveness compared to in-house government collection efforts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 9 years) may lead to complacency or reduced efficiency over time.
Lack of clear performance metrics or outcome-based pricing could limit accountability.
Potential for high administrative costs if not managed tightly.

Positive Signals

Supports a critical government function of debt recovery.
Fixed-price contract provides cost certainty for the government.
Competitive award process suggests potential for reasonable pricing.

Sector Analysis

The professional and business support services sector, specifically collection agencies, plays a vital role in government revenue recovery. Spending in this area can fluctuate based on economic conditions and the volume of delinquent federal debts.

Small Business Impact

The data indicates that small businesses were not awarded this contract, as the awardee is National Recoveries Inc. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within this contract.

Oversight & Accountability

The Department of Education is responsible for overseeing this contract. Robust oversight is crucial to ensure National Recoveries Inc. is performing effectively, adhering to regulations, and maximizing debt recovery while managing costs efficiently.

Related Government Programs

Collection Agencies
Department of Education Contracting
Department of Education Programs

Risk Flags

Long contract duration potentially leading to reduced efficiency.
Lack of detailed performance metrics in the provided data.
Potential for high administrative costs if not managed effectively.
Dependence on a single contractor for a critical function.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $316.4 million to NATIONAL RECOVERIES 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 NATIONAL RECOVERIES INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $316.4 million.

What is the period of performance?

Start: 2015-10-15. End: 2024-09-30.

What is the historical performance of National Recoveries Inc. in collecting federal student loan debt?

Historical performance data for National Recoveries Inc. is essential to assess their effectiveness and efficiency in debt collection. This includes metrics like recovery rates, cost per dollar collected, and compliance with regulations. Without this data, it's difficult to benchmark their performance against industry standards or previous government contracts.

How does the cost-effectiveness of this contract compare to other methods of federal student loan debt collection?

Comparing the cost-effectiveness requires analyzing the total contract value against the total amount of debt recovered, factoring in the contract duration and administrative overhead. It's also important to consider the potential for in-house government collection efforts or alternative strategies. A detailed cost-benefit analysis, including the government's internal collection costs, is needed for a comprehensive comparison.

What are the specific performance standards and key performance indicators (KPIs) mandated in this contract?

The contract's effectiveness hinges on clearly defined performance standards and KPIs. These should include targets for debt recovery, borrower resolution rates, compliance with privacy laws, and customer service quality. The presence and rigor of these KPIs directly influence the agency's accountability and the government's ability to measure success and ensure value for taxpayer money.

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: 14735 HIGHWAY 65 NE, ANOKA, MN, 55304

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

Financial Breakdown

Contract Ceiling: $316,368,816

Exercised Options: $316,368,816

Current Obligation: $316,368,816

Actual Outlays: $101,849

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $23,457,031

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA14D0019

IDV Type: IDC

Timeline