Department of Education awarded $159M for student financial aid servicing, with 4 bidders competing

Contract Overview

Contract Amount: $159,260,682 ($159.3M)

Contractor: Pennslyvania Higher Education Assistance Agency

Awarding Agency: Department of Education

Start Date: 2014-09-01

End Date: 2015-08-31

Contract Duration: 364 days

Daily Burn Rate: $437.5K/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: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17102

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Education obligated $159.3 million to PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY 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 12/31… Key points: 1. Contract provides essential services for Title IV student financial aid. 2. Funding includes a specific program for delinquency reduction. 3. The contract was awarded through full and open competition. 4. The Pennsylvania Higher Education Assistance Agency is the contractor. 5. The contract duration is one year, with potential for extensions. 6. Fixed-price contract type with economic price adjustment is utilized.

Value Assessment

Rating: good

The contract value of $159.3 million for one year of student financial aid servicing appears reasonable given the critical nature of the services. Benchmarking against similar large-scale federal IT and administrative service contracts suggests this is within a typical range for such comprehensive support. The fixed-price with economic price adjustment structure aims to control costs while accounting for potential market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. With four bidders participating, the competition level suggests a healthy market for these services. This level of competition is generally expected to drive competitive pricing and ensure the government receives good value.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are used efficiently by fostering a competitive environment that can lead to lower prices and better service quality.

Public Impact

Benefits millions of students by ensuring the smooth operation of federal financial aid programs. Services include the development, maintenance, and servicing of Title IV student financial aid. Supports the Delinquency Reduction Compensation Program, aiming to improve student loan repayment. Geographic impact is nationwide, affecting all recipients of federal student aid. Workforce implications include support for administrative roles within the contracting agency and the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to economic price adjustment clause if inflation is higher than anticipated.
Dependence on a single contractor for critical student aid servicing could pose a risk if performance issues arise.
The fixed-price nature might limit flexibility if unforeseen service requirements emerge during the contract period.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Contractor has a history of managing large-scale government programs.
Clear performance objectives and reporting requirements are likely in place.
Inclusion of a delinquency reduction program indicates a focus on program efficiency and student success.

Sector Analysis

The federal student financial aid servicing sector is a critical component of the Department of Education's mission. This contract falls under the broader 'Other Activities Related to Credit Intermediation' NAICS code. The market for these services involves specialized administrative and IT support for managing complex financial aid programs, including loan origination, servicing, and repayment. Spending in this area is substantial and directly tied to the government's commitment to higher education accessibility.

Small Business Impact

While this contract was awarded through full and open competition and does not appear to have a specific small business set-aside, the prime contractor, Pennsylvania Higher Education Assistance Agency, may engage small businesses for subcontracting opportunities. The scale of this contract suggests that any subcontracting would likely focus on specialized support services rather than broad operational functions. The impact on the small business ecosystem would depend on the specific subcontracting plan, if any.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. Accountability measures would be embedded in the contract's performance standards, deliverables, and payment terms. Transparency is facilitated through federal contract databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Student Loan Programs
Higher Education Act of 1965
Department of Education IT Services
Student Loan Servicing Contracts

Risk Flags

Potential for cost increases due to economic price adjustment.
Reliance on a single entity for critical services.
Data security and privacy risks associated with sensitive borrower information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $159.3 million to PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY. 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 PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $159.3 million.

What is the period of performance?

Start: 2014-09-01. End: 2015-08-31.

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

Historical spending data for student financial aid servicing by the Department of Education reveals a consistent and significant investment in managing federal student loan programs. Over the past decade, the Department has allocated billions of dollars to various contracts for loan servicing, default prevention, and program administration. This particular contract, valued at approximately $159 million for a one-year period, represents a substantial but not unprecedented portion of this annual expenditure. Trends indicate a move towards consolidating servicing functions and leveraging technology to improve efficiency and reduce costs, often through large, multi-year IDIQ contracts with task orders like this one. The specific amount awarded can fluctuate based on program needs, legislative changes, and the competitive landscape for servicing contracts.

How does the performance of the Pennsylvania Higher Education Assistance Agency (PHEAA) on similar contracts compare to industry benchmarks?

The Pennsylvania Higher Education Assistance Agency (PHEAA) has a long-standing history of servicing federal student loans, often performing well within industry benchmarks. As one of the largest student loan servicers, PHEAA has managed significant portfolios and has been subject to various performance metrics and oversight. While specific performance data for this exact contract is not detailed here, PHEAA's overall track record generally indicates competence in handling large volumes of student aid. Comparisons to industry benchmarks would typically involve metrics such as call center wait times, borrower satisfaction rates, default management success, and compliance with federal regulations. PHEAA's extensive experience suggests a capacity to meet or exceed these benchmarks, though continuous monitoring by the Department of Education is crucial.

What are the primary risks associated with this student financial aid servicing contract?

The primary risks associated with this student financial aid servicing contract include operational disruptions, data security breaches, and compliance failures. Given the critical nature of student financial aid, any interruption in servicing could have severe consequences for students, educational institutions, and the Department of Education's mission. Data security is paramount, as the contract involves handling sensitive personal and financial information of millions of borrowers. A breach could lead to significant financial penalties and reputational damage. Compliance failures, such as not adhering to federal regulations or program guidelines, could result in corrective actions, fines, or contract termination. Additionally, the economic price adjustment clause introduces a financial risk if inflation significantly outpaces projections, increasing the overall cost to the government.

How effective is the Delinquency Reduction Compensation Program funded by this contract?

The effectiveness of the Delinquency Reduction Compensation Program, funded by this contract, is measured by its success in reducing the number of delinquent federal student loans. While specific outcome data for this particular contract period is not provided, such programs are generally designed to incentivize borrowers to make payments and to provide resources or strategies to help them manage their debt. The program's success would be evaluated based on metrics like the percentage decrease in delinquency rates among the targeted loan portfolio, the number of borrowers successfully brought back into good standing, and the cost-effectiveness of the interventions employed. The Department of Education would monitor these metrics to assess the program's return on investment and its contribution to overall student loan portfolio health.

What is the potential impact of this contract on the overall student loan servicing market?

This contract, awarded to the Pennsylvania Higher Education Assistance Agency (PHEAA), has a notable impact on the student loan servicing market. As a significant award, it reinforces PHEAA's position as a major player in the federal student loan servicing landscape. The full and open competition ensures that other large servicers also have opportunities to bid on such contracts, maintaining a competitive environment. The scale of this contract can influence market dynamics by setting expectations for service levels, pricing, and technological capabilities. It also highlights the ongoing need for robust servicing infrastructure to manage the vast federal student loan portfolio, potentially driving innovation and investment in the sector.

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

Parent Company: Commonwealth of Pennsylvania (UEI: 003027539)

Address: 1200 NORTH SEVENTH STREET, HARRISBURG, PA, 17102

Business Categories: Category Business, Government, U.S. National Government, Not Designated a Small Business, U.S. Regional/State Government

Financial Breakdown

Contract Ceiling: $159,260,682

Exercised Options: $159,260,682

Current Obligation: $159,260,682

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: EDFSA09D0014

IDV Type: IDC

Timeline