Department of Education awarded $175M for student aid servicing, with 4 bidders competing
Contract Overview
Contract Amount: $175,468,222 ($175.5M)
Contractor: Pennslyvania Higher Education Assistance Agency
Awarding Agency: Department of Education
Start Date: 2015-09-01
End Date: 2016-12-31
Contract Duration: 487 days
Daily Burn Rate: $360.3K/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 9/1/2015 THROUGH 8/31/2016. PROVIDES FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/21/2015.
Place of Performance
Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17102
Plain-Language Summary
Department of Education obligated $175.5 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 9/1/2015 THROUGH 8/31/2016. PROVIDES FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/21/2015. Key points: 1. Contract provides essential servicing for Title IV student financial aid. 2. Funding covers aid servicing through late 2015. 3. The contract was awarded via full and open competition. 4. The contractor, Pennsylvania Higher Education Assistance Agency, has a significant role in state-level student aid. 5. The contract duration is approximately 487 days. 6. Fixed price with economic price adjustment is the contract type.
Value Assessment
Rating: good
The awarded amount of $175.5 million for approximately 16 months of service appears reasonable given the critical nature of Title IV student financial aid servicing. Benchmarking against similar large-scale student loan servicing contracts would provide a more precise value assessment. However, the competitive nature of the award suggests a degree of price discovery that likely yielded a fair market price.
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 bids. With four bidders participating, the competition level suggests a healthy market for these services. This level of competition is generally favorable for price discovery and can lead to more cost-effective solutions for the government.
Taxpayer Impact: A competitive award process for student financial aid servicing ensures that taxpayer dollars are used efficiently, as multiple entities vied to provide the best service at a competitive price.
Public Impact
Benefits millions of students and families relying on Title IV federal student financial aid. Ensures the continued operation and servicing of federal student loan programs. Services are delivered nationwide, impacting the accessibility of higher education. Supports the administrative workforce involved in student financial aid processing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for economic price adjustments to increase final cost beyond initial estimates.
- Reliance on a single contractor for critical financial aid servicing could pose a risk if performance falters.
Positive Signals
- Awarded through full and open competition, indicating a robust bidding process.
- The contract addresses a critical government function, ensuring continuity of student aid.
- The contractor is a state agency with established experience in student financial aid.
Sector Analysis
The federal student financial aid servicing sector is a critical component of the Department of Education's mission, involving the management and disbursement of billions of dollars in loans and grants. This contract fits within the broader IT and administrative services category supporting government operations. Comparable spending in this sector involves large-scale IT systems and customer service operations for loan portfolios.
Small Business Impact
This contract does not appear to have a small business set-aside. The awarded contractor, Pennsylvania Higher Education Assistance Agency, is a state entity, not a small business. There is no immediate indication of subcontracting opportunities for small businesses within this specific award, though larger prime contractors often engage small businesses for specialized support services in broader contracts.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Education's contracting officers and program managers. The Inspector General's office for the Department of Education would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is generally maintained through contract award databases and reporting requirements.
Related Government Programs
- Federal Student Loan Program
- Higher Education Act of 1965
- Department of Education IT Services
- Student Financial Assistance Programs
Risk Flags
- Potential for cost increases due to economic price adjustment.
- Risk of performance degradation impacting student aid delivery.
- Data security and privacy concerns with sensitive financial information.
Tags
department-of-education, student-financial-aid, title-iv-aid, servicing-contract, fixed-price-with-economic-price-adjustment, full-and-open-competition, pennsylvania-higher-education-assistance-agency, federal-student-loans, administrative-services, higher-education
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $175.5 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 9/1/2015 THROUGH 8/31/2016. PROVIDES FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/21/2015.
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 $175.5 million.
What is the period of performance?
Start: 2015-09-01. End: 2016-12-31.
What is the track record of the Pennsylvania Higher Education Assistance Agency (PHEAA) in servicing federal student aid programs?
PHEAA has a long-standing history of servicing student loans, including federal loans, through various programs. As a state agency, it has been involved in managing and disbursing state-based grants and loans, and has also participated in federal loan servicing contracts. Their experience includes managing large loan portfolios, processing applications, and providing customer service to student borrowers. While specific performance metrics for this particular contract are not detailed here, PHEAA's general operational capacity and experience in the student aid landscape suggest a foundational capability to perform the contracted services. Further analysis would require examining past performance reviews and any documented issues or successes during their tenure as a federal loan servicer.
How does the $175.5 million contract value compare to similar federal student aid servicing contracts?
Directly comparing the $175.5 million value requires identifying contracts with identical scope, duration, and service levels. However, given that this contract covers approximately 16 months of servicing for Title IV federal student financial aid, the cost per month is roughly $10.97 million. Large federal IT and administrative service contracts can range widely, but for critical, high-volume functions like student aid servicing, this figure appears within a plausible range. The Department of Education manages substantial budgets for student aid, and the servicing contracts are essential for operational continuity. Without specific benchmark data for comparable federal student aid servicing contracts, a definitive value assessment is challenging, but the competitive award process provides some assurance of reasonable pricing.
What are the primary risks associated with this student financial aid servicing contract?
Key risks include operational disruptions that could impact student access to financial aid, data security breaches involving sensitive student financial information, and potential cost overruns due to the economic price adjustment clause. Performance failures by the contractor could lead to delays in fund disbursement, incorrect servicing of loans, and negative impacts on student borrowers and institutions. Furthermore, a heavy reliance on a single contractor for such a critical function presents a concentration risk. Ensuring robust performance monitoring, clear communication channels, and contingency planning are crucial to mitigate these risks.
How effective is the current servicing model for Title IV student financial aid in terms of efficiency and student support?
The effectiveness of the current servicing model is multifaceted. On the efficiency front, the use of large contracts with experienced entities like PHEAA aims to leverage economies of scale and established infrastructure to manage the vast volume of Title IV aid. However, challenges can arise from the complexity of federal regulations, the need for continuous system updates, and the sheer number of borrowers. In terms of student support, the goal is to provide timely information, accessible repayment options, and responsive customer service. The effectiveness here can vary, with some borrowers reporting positive experiences while others face difficulties navigating the system or accessing necessary assistance. Continuous evaluation of borrower satisfaction and operational metrics is key to assessing and improving effectiveness.
What are the historical spending patterns 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. Over the years, the Department has utilized various contracting mechanisms, including large IDIQs and task orders, to secure servicing capabilities. Spending has fluctuated based on program changes, loan volume, and the specific contracting strategies employed. The trend has generally been towards consolidating servicing functions to achieve efficiencies, but also involves managing multiple servicers to ensure competition and mitigate risk. Analyzing historical data would reveal significant investments in IT infrastructure, customer service operations, and program administration necessary to support millions of student borrowers.
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
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: $175,468,222
Exercised Options: $175,468,222
Current Obligation: $175,468,222
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Parent Contract
Parent Award PIID: EDFSA09D0014
IDV Type: IDC
Timeline
Start Date: 2015-09-01
Current End Date: 2016-12-31
Potential End Date: 2016-12-31 00:00:00
Last Modified: 2022-04-02
More Contracts from Pennslyvania Higher Education Assistance Agency
- Provide Direct Loan Services Such AS Call Center and Financial Reporting - Pheaa From 12/15/2019 Through 12/14/2020 — $506.9M (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 6/17/2014 to 6/16/2019. 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 09/01/2018 to 08/31/2019. Modification: the Purpose of This Modification IS to Create a NEW Task Order for Contract Ed-Fsa-09-D-0014 With the Period of Performance: 9/01/2018 - 8/31/2019, and Provide Funding for Title IV AID Servicing Through Approximately 12/31/2018 — $195.7M (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 June 17, 2009 to June 16, 2019. 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 September 1, 2017 to August 31, 2018 — $186.6M (Department of Education)
- Servicing of Title IV Student Financial AID, From 9/1/2016 Through 8/31/2017. Provides Funding for Title IV AID Servicing, Through Approximately 12/31/2016. Provides Funding for the Delinquency Reduction Compensation Program, in a Not-To-Exceed Amount of $500,000 PER Quarter and $2,000,000 Annually — $183.5M (Department of Education)
- / 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 — $159.3M (Department of Education)
View all Pennslyvania Higher Education Assistance Agency federal contracts →
Other Department of Education Contracts
- Administrative Action — $2.2B (Conduent Education Solutions, LLC)
- - Tivod Supports the Origination, Disbursement, and Reporting of Title IV Federal Student AID Programs, Including - BUT NOT Limited to - Direct Loans, Pell Grants, and the Teacher Education Assistance for College and Higher Education Grants. the Title IV Solution Shall Also Provide Ongoing Support for the Discontinued Title IV Federal Student AID Programs, Including - BUT NOT Limited to - Academic Competitiveness Grants and National Science and Mathematics Access to Retain Talent Grants — $1.5B (Accenture Federal Services LLC)
- Federal Student AID Common Origination and Disbursement Services — $1.1B (Accenture LLP)
- Provide Direct Loan Services Such AS Call Center and Financial Reporting - Nelnet From 12/15/2019 Through 12/14/2020 — $983.7M (Nelnet Servicing LLC)
- Debt Management and Collections System (dmcs) Igf::ct::igf — $906.9M (Maximus Federal Services, Inc.)