Department of Education awards $454M contract for student loan debt collection services to Coast Professional, Inc

Contract Overview

Contract Amount: $453,981,449 ($454.0M)

Contractor: Coast Professional, Inc.

Awarding Agency: Department of Education

Start Date: 2015-10-16

End Date: 2024-09-30

Contract Duration: 3,272 days

Daily Burn Rate: $138.7K/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: GENESEO, LIVINGSTON County, NEW YORK, 14454

State: New York Government Spending

Plain-Language Summary

Department of Education obligated $454.0 million to COAST PROFESSIONAL, 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 supports critical function of collecting defaulted federal student loans. 2. Awarded via full and open competition after exclusion of sources, indicating a competitive process. 3. The contract duration spans nearly a decade, suggesting a long-term need for these services. 4. Firm fixed-price contract type helps manage cost certainty for the government. 5. The contractor, Coast Professional, Inc., is positioned to handle significant debt recovery volumes. 6. Geographic scope includes New York, where the contractor is based.

Value Assessment

Rating: good

The total contract value of $453,981,448.95 over its nearly 9-year term represents a substantial investment in debt recovery. Benchmarking this against similar large-scale federal debt collection contracts is challenging without more specific service-level data. However, the firm fixed-price structure suggests a degree of cost control. The value appears commensurate with the critical function of managing defaulted federal student loans, which have significant financial implications for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'full and open competition after exclusion of sources.' This specific procurement method implies that while the competition was intended to be open, certain sources may have been excluded for reasons not detailed in the provided data. The number of offers received (20) indicates a healthy level of interest and competition, suggesting that the exclusion did not unduly limit the bidding pool. This approach aims to balance broad competition with specific requirements.

Taxpayer Impact: The competitive nature of this award, despite the exclusion of some sources, likely helped secure a reasonable price for taxpayers. A significant number of bidders suggests that the government received proposals from multiple capable firms, fostering price discovery.

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 a contracted service provider to manage the complex and resource-intensive process of debt collection. The services delivered are administrative resolution and collection of debts arising from non-payment of federal student loans. The geographic impact is national, as federal student loans are dispersed across the country, though the contractor is based in New York.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting financially distressed borrowers.
Reliance on a single contractor for a critical function could pose continuity risks if performance issues arise.
The 'exclusion of sources' clause warrants further investigation into fairness and completeness of competition.

Positive Signals

Firm fixed-price contract provides cost predictability for the government.
A large number of offers (20) suggests robust interest and capability in the market.
Contract duration allows for sustained effort in debt recovery.

Sector Analysis

The debt collection industry is a significant sector within business support services, with federal contracts forming a notable segment. This contract falls under the 'Collection Agencies' North American Industry Classification System (NAICS) code 561440. The market for federal debt collection is competitive, with agencies often using a mix of in-house efforts and private contractors. The size of this contract indicates the substantial scale of federal student loan defaults.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed here. Without specific subcontracting plans or goals, it's difficult to assess the direct impact on the small business ecosystem from this particular award.

Oversight & Accountability

Oversight is likely managed by the Department of Education's program offices responsible for student financial assistance and debt management. Accountability measures would be embedded within the contract's performance standards, service level agreements, and payment terms. Transparency is facilitated through contract award databases like FPDS, though detailed performance metrics and oversight reports may not be publicly available.

Related Government Programs

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

Risk Flags

Potential for aggressive collection practices
Contractor performance variability
Data security and privacy concerns
Reliance on a single source after exclusion

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $454.0 million to COAST PROFESSIONAL, 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 COAST PROFESSIONAL, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $454.0 million.

What is the period of performance?

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

What is the track record of Coast Professional, Inc. in handling federal debt collection contracts?

Information regarding Coast Professional, Inc.'s specific track record with federal debt collection contracts is not detailed in the provided data snippet. However, securing a contract of this magnitude from the Department of Education suggests a level of capability and experience deemed sufficient by the agency. To fully assess their track record, one would need to review past performance evaluations, any documented disputes or penalties, and the volume and success rates of previous federal contracts they have managed. Publicly available data on contract awards and performance ratings, if accessible, would provide further insight into their history and reliability in fulfilling government obligations.

How does the value of this contract compare to other federal debt collection efforts?

The total value of $453,981,448.95 over approximately 9 years positions this contract as a significant federal debt collection effort. Direct comparisons are difficult without knowing the specific types of debt being collected (e.g., student loans vs. tax debt vs. other federal receivables) and the prevailing collection rates and costs across different agencies. However, the scale suggests it is among the larger contracts for managing defaulted federal student loans. The Department of Education manages a vast portfolio of student debt, and contracts of this size are necessary to address the substantial volume of delinquencies and defaults.

What are the primary risks associated with this contract for the Department of Education?

The primary risks associated with this contract include performance risk, where Coast Professional, Inc. may fail to meet collection targets or service level agreements, leading to financial losses for the government. Reputational risk is also a concern, as aggressive or improper collection practices by the contractor could lead to public backlash and damage the Department's image. There's also operational risk, such as data security breaches or system failures impacting the collection process. Finally, contractor dependency risk exists; if Coast Professional, Inc. underperforms or faces financial instability, the Department may struggle to transition to a new contractor quickly, disrupting debt recovery efforts.

How effective are contracted services like this in recovering defaulted federal student loan debt compared to in-house efforts?

Contracted services are often employed for federal debt collection due to their potential for specialized expertise, scalability, and cost-effectiveness, especially for managing large volumes of delinquent accounts. Agencies like the Department of Education utilize contractors to supplement their own collection capabilities, particularly for accounts that require extensive follow-up or specialized handling. While in-house efforts can maintain direct control and institutional knowledge, contractors may offer more flexible staffing and advanced collection technologies. The overall effectiveness depends heavily on contract structure, performance incentives, contractor performance, and the specific characteristics of the debt portfolio. Data on the comparative recovery rates and cost per dollar collected would be needed for a definitive assessment.

What are the historical spending patterns for federal student loan debt collection services?

Historical spending on federal student loan debt collection services has generally been substantial, reflecting the significant size of the federal student loan portfolio and the persistent challenge of loan defaults. The Department of Education has consistently relied on a mix of internal resources and private collection agencies to manage delinquent and defaulted loans. Spending levels can fluctuate based on economic conditions, changes in loan servicing policies, and legislative actions affecting loan repayment and forgiveness programs. Over the years, there has been a trend towards utilizing private sector expertise for efficiency and scale, leading to multi-million dollar contracts awarded annually for these services.

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: 214 EXPO CIRCLE, SUITE 7, WEST MONROE, LA, 71292

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: $453,981,449

Exercised Options: $453,981,449

Current Obligation: $453,981,449

Actual Outlays: $250,137

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $61,154,491

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA14D0020

IDV Type: IDC

Timeline