Department of Education's $133.9M contract for student aid servicing awarded to Navient Corporation
Contract Overview
Contract Amount: $133,892,027 ($133.9M)
Contractor: Navient Corporation
Awarding Agency: Department of Education
Start Date: 2014-09-01
End Date: 2015-12-31
Contract Duration: 486 days
Daily Burn Rate: $275.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
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. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID, FROM 9/1/2014 THROUGH 8/31/2015. PROVIDES FUNDING FOR TITLE IV AID SERVICING AND DEVELOPMENT AND MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014. PROVIDES FUNDING FOR THE DELINQUENCY REDUCTION COMPENSATION PROGRAM, IN A NOT-TO-EXCEED AMOUNT OF $500,000 PER QUARTER AND $2,000,000 ANNUALLY.
Place of Performance
Location: WILMINGTON, NEW CASTLE County, DELAWARE, 19801
State: Delaware Government Spending
Plain-Language Summary
Department of Education obligated $133.9 million to NAVIENT CORPORATION for work described as: IGF::CT::IGF / CRITICAL FUNCTION IDIQ: SERVICING OF TITLE IV STUDENT FINANCIAL AID. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID, FROM 9/1/2014 THROUGH 8/31/2015. PROVIDES FUNDING FOR TITLE IV AID SERVICING AND DEVELOPMENT AND MAINTENANCE, THROUGH APPROXIMATELY 12/3… Key points: 1. Contract focuses on critical function of Title IV student financial aid servicing. 2. Funding allocated for aid servicing, development, and maintenance through late 2014. 3. Includes a specific program for delinquency reduction with quarterly and annual limits. 4. Awarded via full and open competition, indicating a competitive bidding process. 5. Contract duration spans over 480 days, covering a significant period of operations. 6. Fixed price with economic price adjustment indicates potential for cost fluctuations.
Value Assessment
Rating: fair
The total award amount of $133.9 million for student financial aid servicing appears substantial. Benchmarking this against similar contracts for student loan servicing is challenging without more specific service details and market data. The fixed-price with economic price adjustment structure suggests an attempt to manage risk for both parties, but could lead to cost increases over the contract term. Further analysis would require comparing the scope of services and performance metrics to industry standards.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. The presence of four bidders (no) indicates a degree of competition, which is generally favorable for price discovery and potentially achieving better value. The specific details of the bidding process and the evaluation criteria used would provide further insight into the effectiveness of the competition.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions, potentially reducing overall program costs.
Public Impact
Benefits students and educational institutions by ensuring the proper servicing of Title IV financial aid. Services include the development and maintenance of systems related to student aid. Supports the Delinquency Reduction Compensation Program, aiming to mitigate student loan defaults. Impacts the financial aid administration sector within higher education.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost increases due to economic price adjustment clause.
- Contract duration and scope may present performance management challenges.
- Reliance on a single contractor for critical financial aid servicing functions.
Positive Signals
- Awarded through full and open competition, suggesting a robust selection process.
- Inclusion of a delinquency reduction program addresses a key area of concern in student lending.
- Contract supports essential functions of the federal student financial aid system.
Sector Analysis
The contract falls within the 'Other Activities Related to Credit Intermediation' sector, specifically focusing on the administration and servicing of federal student financial aid. This is a critical component of the higher education ecosystem, involving the management of billions of dollars in loans. Comparable spending benchmarks would likely be found within other government contracts for financial services, loan servicing, and administrative support for large-scale federal programs.
Small Business Impact
Information regarding small business set-asides or subcontracting plans was not explicitly detailed in the provided data. As this is a large contract for critical financial aid servicing, it is possible that subcontracting opportunities may exist for specialized services. Further investigation into the contract's specific clauses and the prime contractor's policies would be needed to assess the impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Education's program offices responsible for student financial assistance. The Inspector General's office within the Department of Education would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is generally facilitated through contract award databases and reporting requirements, though specific performance metrics and oversight activities may not always be publicly detailed.
Related Government Programs
- Federal Student Loan Programs
- Higher Education Act of 1965
- Department of Education Financial Management
- Student Loan Servicing Contracts
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Contractor's past performance and legal challenges require close monitoring.
- Complexity of managing critical financial aid servicing functions.
Tags
student-financial-aid, loan-servicing, department-of-education, navient-corporation, fixed-price-with-economic-price-adjustment, full-and-open-competition, critical-function, delinquency-reduction, higher-education, federal-programs
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $133.9 million to NAVIENT CORPORATION. IGF::CT::IGF / CRITICAL FUNCTION IDIQ: SERVICING OF TITLE IV STUDENT FINANCIAL AID. TASK ORDER: SERVICING OF TITLE IV STUDENT FINANCIAL AID, FROM 9/1/2014 THROUGH 8/31/2015. PROVIDES FUNDING FOR TITLE IV AID SERVICING AND DEVELOPMENT AND MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014. PROVIDES FUNDING FOR THE DELINQUENCY REDUCTION COMPENSATION PROGRAM, IN A NOT-TO-EXCEED AMOUNT OF $500,000 PER QUARTER AND $2,000,000 ANNUALLY.
Who is the contractor on this award?
The obligated recipient is NAVIENT CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $133.9 million.
What is the period of performance?
Start: 2014-09-01. End: 2015-12-31.
What is the historical spending pattern for student financial aid servicing by the Department of Education?
Historical spending on student financial aid servicing by the Department of Education has been substantial, reflecting the scale of federal student loan programs. Prior to and following this specific contract, the Department has consistently awarded large contracts for loan servicing, default prevention, and related administrative functions. These contracts often involve multi-year durations and significant dollar values, fluctuating based on legislative changes, program expansions, and the overall volume of student loans outstanding. Analyzing historical data reveals a trend of consolidating servicing functions and seeking efficiencies through competitive bidding, though the total expenditure remains tied to the growth and management of the federal student aid portfolio.
How does Navient Corporation's track record influence the assessment of this contract?
Navient Corporation has a significant track record in student loan servicing, having previously managed large portfolios for both federal and private loans. Their history includes managing aspects of the federal Direct Loan servicing program. However, Navient has also faced scrutiny and legal challenges related to its servicing practices, including allegations of mismanagement, improper handling of borrower accounts, and misleading information provided to borrowers, particularly concerning repayment options and forgiveness programs. This history introduces a layer of risk and necessitates robust oversight to ensure compliance and effective service delivery under this specific contract, demanding careful monitoring of performance and adherence to regulatory requirements.
What are the key performance indicators (KPIs) typically used for student financial aid servicing contracts?
Key performance indicators for student financial aid servicing contracts typically focus on efficiency, accuracy, compliance, and borrower satisfaction. Common KPIs include call center metrics (e.g., average handle time, first call resolution rate), loan processing times (e.g., disbursement, repayment setup), delinquency and default rates, accuracy of billing and statements, response times to borrower inquiries, and compliance with federal regulations and program guidelines. For this specific contract, KPIs would likely also include metrics related to the Delinquency Reduction Compensation Program, measuring its effectiveness in reducing outstanding delinquent loans. Performance is often evaluated through regular reporting, audits, and potentially incentive or penalty clauses tied to achieving these metrics.
What is the potential risk associated with the 'economic price adjustment' clause in this contract?
The 'economic price adjustment' (EPA) clause in this fixed-price contract allows for adjustments to the contract price based on specified economic factors, such as inflation or changes in labor or material costs. The primary risk for the government is that these adjustments could lead to the contract costing more than initially anticipated if economic conditions trend upwards. While EPA clauses are intended to protect contractors from unforeseen cost increases and ensure fair pricing, they can reduce cost certainty for the government. The specific indices and caps defined within the EPA clause are critical in mitigating this risk; a well-defined clause with reasonable limits helps control potential cost overruns.
How does the 'critical function' designation impact contract oversight and management?
Designating student financial aid servicing as a 'critical function' implies that its disruption would have a significant negative impact on the government's operations or national security. This designation typically triggers enhanced oversight, more stringent performance requirements, and potentially higher levels of scrutiny from agency leadership and oversight bodies. For this contract, it means the Department of Education would likely implement robust monitoring mechanisms, require detailed performance reporting, and ensure contingency plans are in place to maintain uninterrupted service delivery. It also signals the importance of contractor reliability and business continuity.
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: 4
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: 123 S JUSTISON ST STE 300, WILMINGTON, DE, 19801
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $133,892,027
Exercised Options: $133,892,027
Current Obligation: $133,892,027
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Parent Contract
Parent Award PIID: EDFSA09D0015
IDV Type: IDC
Timeline
Start Date: 2014-09-01
Current End Date: 2015-12-31
Potential End Date: 2015-12-31 00:00:00
Last Modified: 2019-07-02
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- Base Award: Servicing of Title IV Student Financial AID. Task Order: Provides Funding for Title IV AID Servicing, Through Approximately 08/31/2017 — $146.7M (Department of Education)
- Critical Function Base Award: 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) for the Period of 09/01/2017 to 08/31/2018. Task Order: 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) for the Period of 09/01/2017 to 08/31/2018. Modification to Provide Funding for Period of Performance: 9/01/2017 - 8/31/2018 and Title IV AID Servicing Through Approximately 12/31/2017 — $145.4M (Department of Education)
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- / Critical Function Idiq: Servicing of Title IV Student Financial AID. Task Order: Servicing of Title IV Student Financial AID, From 9/1/2015 Through 8/31/2016. Provides Funding for Title IV AID Servicing Through Approximately 12/31/2015. Provides Funding for the Delinquency Reduction Compensation Program, in a Not-To-Exceed Amount of $500,000 PER Quarter and $2,000,000 Annually — $141.2M (Department of Education)
- Critical Function - Task Order 0001 Provides 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)FOR the January 01, 2013 to December 31, 2013 Time Period — $108.0M (Department of Education)
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