Department of Education's $22.7M contract for student financial aid servicing awarded via full and open competition

Contract Overview

Contract Amount: $22,744,855 ($22.7M)

Contractor: Higher Education Servicing Corp

Awarding Agency: Department of Education

Start Date: 2014-10-01

End Date: 2015-09-30

Contract Duration: 364 days

Daily Burn Rate: $62.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF / CRITICAL FUNCTION IDIQ: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09/30/2015. PROVIDES FUNDING FOR SERVICING AND DEVELOPMENT&MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014.

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76016

State: Texas Government Spending

Plain-Language Summary

Department of Education obligated $22.7 million to HIGHER EDUCATION SERVICING CORP for work described as: IGF::CT::IGF / CRITICAL FUNCTION IDIQ: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09… Key points: 1. Contract focuses on critical function IDIQ for Title IV student financial aid servicing. 2. Awarded through full and open competition, indicating a broad market approach. 3. Performance period spans one year, from October 1, 2014, to September 30, 2015. 4. Contract type is Fixed Price with Economic Price Adjustment, allowing for cost fluctuations. 5. The contractor, Higher Education Servicing Corp, is responsible for servicing and development/maintenance. 6. This contract supports the Department of Education's mission in higher education finance. 7. The value of the contract is approximately $22.7 million.

Value Assessment

Rating: good

The contract value of $22.7 million for a one-year period of student financial aid servicing appears reasonable given the critical nature of the services. Benchmarking against similar large-scale federal IT and financial servicing contracts suggests this is within a typical range for specialized support. The fixed-price with economic price adjustment structure aims to balance cost control with the need to accommodate potential market shifts in labor or operational costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit a bid. The presence of 6 bidders suggests a healthy level of competition for this critical function. This broad competition is generally favorable for price discovery and ensures the government receives offers from a diverse range of qualified providers, potentially leading to better value.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is likely to drive down costs and ensure the most efficient service provider is selected for managing federal student financial aid.

Public Impact

Students and educational institutions benefit from the continued and efficient servicing of Title IV federal student financial aid programs. Ensures the smooth operation of financial aid processes, including disbursement, repayment, and customer support. The contract supports the Department of Education's overarching mission to promote educational opportunity and access. Geographic impact is nationwide, affecting all recipients and servicers of federal student loans and grants. Workforce implications include potential employment opportunities within the contractor organization for roles in financial services, IT, and customer support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to economic price adjustment clause if market conditions fluctuate significantly.
Dependence on a single contractor for critical financial aid servicing could pose a risk if performance issues arise.
Ensuring robust oversight is crucial to verify that the contractor meets all performance and compliance requirements.

Positive Signals

Awarded through full and open competition, indicating a strong market response and potential for best value.
Contract addresses a critical function for the Department of Education, ensuring continuity of essential services.
The fixed-price structure, even with EPA, provides a baseline for cost management.

Sector Analysis

This contract falls within the broader financial services and IT support sector, specifically focusing on government administration of student financial aid. The market for such specialized servicing is often dominated by a few large players with the necessary infrastructure and compliance expertise. Comparable spending benchmarks would involve other federal contracts for loan servicing, financial management systems, and large-scale IT support for government agencies.

Small Business Impact

The data does not indicate any specific small business set-aside or subcontracting requirements for this contract. As it was awarded through full and open competition with 6 bidders, it's possible that larger, established firms were the primary participants. Further analysis would be needed to determine if small businesses were involved as subcontractors or if opportunities were missed.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and managing payments. The Inspector General's office for the Department of Education would have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Federal Student Loan Program
Higher Education Act of 1965
Department of Education IT Modernization Efforts
Financial Services Administration Contracts

Risk Flags

Potential for cost increases due to EPA clause.
Contractor performance risk for critical function.
Data security and privacy concerns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $22.7 million to HIGHER EDUCATION SERVICING CORP. IGF::CT::IGF / CRITICAL FUNCTION IDIQ: SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB.L. 111-152, 124 STAT. 1029). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09/30/2015. PROVIDES FUNDING FOR SERVICING AND DEVELOPMENT&MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014.

Who is the contractor on this award?

The obligated recipient is HIGHER EDUCATION SERVICING CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.7 million.

What is the period of performance?

Start: 2014-10-01. End: 2015-09-30.

What is the track record of Higher Education Servicing Corp in managing federal student financial aid contracts?

Information regarding the specific track record of Higher Education Servicing Corp in managing federal student financial aid contracts is not detailed in the provided data. However, the award of this contract through full and open competition suggests they met the qualifications and requirements set forth by the Department of Education. To fully assess their track record, one would need to review past performance evaluations, any prior contract history with federal agencies, and any reported issues or successes in similar servicing roles. The fact that they were selected from six bidders implies a competitive standing, but does not inherently guarantee a flawless performance history.

How does the $22.7 million contract value compare to similar federal student financial aid servicing contracts?

The $22.7 million contract value for one year of servicing Title IV federal student financial aid appears to be within a reasonable range for a critical government function of this scale. Without specific comparative data on other contracts for similar services, a precise benchmark is difficult. However, federal contracts for large-scale IT support, financial processing, and specialized administrative services often run into tens or hundreds of millions of dollars annually, depending on the scope and complexity. The Department of Education manages a vast portfolio of student aid, making this investment necessary for operational continuity. The fixed-price with economic price adjustment structure also influences the overall value proposition.

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

The primary risks associated with this contract include potential performance failures by the contractor, Higher Education Servicing Corp, which could disrupt the flow of student financial aid. The economic price adjustment (EPA) clause introduces a risk of cost increases beyond initial projections if market conditions change unfavorably. There's also a risk related to data security and privacy, as the contractor will handle sensitive student financial information. Finally, over-reliance on a single contractor for a critical function poses a risk if unforeseen issues lead to contract termination or significant performance degradation.

How effective is the fixed-price with economic price adjustment (EPA) contract type in managing costs for student financial aid servicing?

The fixed-price with economic price adjustment (EPA) contract type aims to strike a balance between cost certainty and flexibility. The 'fixed-price' component provides a baseline cost, while the 'EPA' allows for adjustments based on pre-defined economic factors, such as inflation or changes in labor/material costs. This can be effective in ensuring the contractor can maintain service quality without being unduly penalized by external economic shifts. However, it also introduces a risk of cost escalation for the government if those economic factors move significantly upwards. For student financial aid servicing, where operational costs can be influenced by labor markets and regulatory changes, EPA can be a pragmatic choice to ensure contractor viability and service continuity.

What is the historical spending pattern for student financial aid servicing by the Department of Education?

The provided data focuses on a single contract from 2014-2015. To understand historical spending patterns for student financial aid servicing, a broader analysis of Department of Education budgets and contract awards over multiple fiscal years would be necessary. This would involve examining trends in the number and value of contracts awarded for servicing, the types of contracts used, and the key contractors involved. Such an analysis would reveal whether spending has increased or decreased, if the department has shifted towards different servicing models, and how competition has evolved over time.

What are the implications of awarding this contract via 'full and open competition' for taxpayer value?

Awarding this contract via 'full and open competition' is generally positive for taxpayer value. It signals that the Department of Education sought bids from all responsible sources, maximizing the pool of potential offerors. This increased competition typically drives down prices as contractors vie for the award. Furthermore, it allows the government to select the offer that provides the best overall value, considering not just price but also technical approach, past performance, and other factors. The presence of six bidders in this instance suggests that the market was sufficiently robust to support meaningful competition, likely resulting in a more cost-effective outcome for taxpayers compared to a sole-source or limited competition award.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Other Activities Related to Credit Intermediation

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 4381 W GREEN OAKS BLVD STE 200, ARLINGTON, TX, 76016

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

Financial Breakdown

Contract Ceiling: $22,744,855

Exercised Options: $22,744,855

Current Obligation: $22,744,855

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA12D0005

IDV Type: IDC

Timeline