Department of Education awards $143.6M for student financial aid servicing, extending services through August 2019

Contract Overview

Contract Amount: $143,631,060 ($143.6M)

Contractor: Navient Corporation

Awarding Agency: Department of Education

Start Date: 2018-09-01

End Date: 2019-09-01

Contract Duration: 365 days

Daily Burn Rate: $393.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF 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-0015 WITH THE PERIOD OF PERFORMANCE: 9/01/2018 - 8/31/2019, AND PROVIDE FUNDING FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/31/2018.

Place of Performance

Location: WILMINGTON, NEW CASTLE County, DELAWARE, 19801

State: Delaware Government Spending

Plain-Language Summary

Department of Education obligated $143.6 million to NAVIENT CORPORATION for work described as: IGF::CT::IGF 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 O… Key points: 1. Contract focuses on essential Title IV student financial aid servicing, a critical function for educational access. 2. Navient Corporation, the incumbent, was awarded this delivery order under a full and open competition. 3. The contract duration is one year, aligning with the fiscal year for aid program management. 4. Funding is allocated for services through December 2018, with the full period extending to August 2019. 5. The contract type is Firm Fixed Price, providing cost certainty for the government. 6. This award represents a portion of broader federal spending on student loan servicing and administration.

Value Assessment

Rating: good

The award amount of $143.6 million for one year of student financial aid servicing appears reasonable given the critical nature of the service. Benchmarking against similar contracts for large-scale student loan servicing would provide a more precise value assessment. However, the firm fixed-price structure suggests a degree of cost control and predictability for the Department of Education.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the work. The presence of competition is generally a positive sign for price discovery and ensuring the government receives competitive pricing. The number of bidders is not specified, but the process itself suggests a robust marketplace for these services.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Benefits millions of students and families by ensuring the smooth administration of federal student financial aid programs. Delivers essential services related to the servicing of Title IV student financial aid. Geographic impact is nationwide, covering all recipients of federal student aid. Supports a workforce involved in student loan servicing and administration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if competition is not consistently maintained for future contract renewals.
Reliance on a single vendor for critical financial aid servicing could pose risks if performance falters.

Positive Signals

Awarded under full and open competition, suggesting a healthy market for these services.
Firm Fixed Price contract type provides cost certainty and limits the government's financial exposure.
Incumbent contractor likely possesses established infrastructure and expertise, potentially leading to efficient service delivery.

Sector Analysis

The student financial aid servicing sector is a significant part of the broader financial services industry, particularly within government contracting. This contract falls under the 'Other Activities Related to Credit Intermediation' NAICS code. Federal spending in this area is substantial, driven by the government's role in managing federal student loan programs. Comparable spending benchmarks would involve analyzing other large federal contracts for loan servicing and administration.

Small Business Impact

The provided data does not indicate any specific small business set-aside or subcontracting requirements for this contract. Therefore, the direct impact on the small business ecosystem is not immediately apparent from this award alone. Further analysis would be needed to determine if small businesses are involved as subcontractors or if this contract competes with services typically provided by small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Education's program offices responsible for student financial aid. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver specified services within the agreed-upon price. Transparency is facilitated through contract award databases, though detailed performance metrics may not always be publicly available.

Related Government Programs

Federal Student Loan Servicing Contracts
Department of Education IT and Administrative Support
Student Financial Aid Administration

Risk Flags

Incumbent contractor performance history
Potential for service disruption
Data security and privacy concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $143.6 million to NAVIENT CORPORATION. IGF::CT::IGF 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

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 $143.6 million.

What is the period of performance?

Start: 2018-09-01. End: 2019-09-01.

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

The Department of Education has a long history of contracting for student financial aid servicing. Historically, this has involved significant multi-year contracts awarded through competitive processes to manage the vast portfolio of federal student loans. Spending patterns have evolved with changes in federal student aid policy, including shifts in loan origination and servicing models. Analyzing past contract awards, including their values, durations, and awarded contractors, would reveal trends in federal investment in this area. For instance, the transition from FFELP to Direct Loans and the subsequent consolidation of servicing contracts have shaped spending. Understanding these historical patterns is crucial for assessing the current award in context and anticipating future federal needs and investments in student aid administration.

How does Navient Corporation's performance on previous contracts compare to industry benchmarks?

Navient Corporation has been a significant player in the student loan servicing industry for many years, both as a private lender servicer and a federal contract servicer. Assessing their performance requires examining contract performance reports, any documented issues or successes with previous Department of Education contracts, and potentially customer satisfaction metrics if available. Benchmarking would involve comparing their service levels, error rates, and compliance adherence against other major federal loan servicers. Publicly available data, including IG reports or GAO reviews related to student loan servicing, can offer insights into Navient's track record. A comprehensive review would consider their ability to meet key performance indicators, manage borrower inquiries effectively, and maintain compliance with complex federal regulations.

What are the key performance indicators (KPIs) for student financial aid servicing contracts?

Key Performance Indicators (KPIs) for federal student financial aid servicing contracts are designed to ensure efficient and compliant management of student loans. These typically include metrics related to borrower outreach and communication, timely processing of payments and disbursements, accuracy in account maintenance, default prevention and management strategies, and adherence to regulatory requirements. Specific KPIs might measure call center wait times, resolution rates for borrower inquiries, delinquency rates, and the accuracy of data reporting to the Department of Education. Compliance with regulations such as the Higher Education Act and consumer protection laws is paramount. Performance is often evaluated through scorecards and regular reviews by the contracting agency.

What is the potential impact of this contract on the overall student loan debt landscape?

This contract directly impacts the operational management of federal student loans, which constitute a significant portion of the national student debt. By ensuring the effective servicing of Title IV aid, the contract facilitates the ongoing administration of these loans, including payment collection, borrower assistance, and default management. The efficiency and effectiveness of this servicing can influence borrower experiences, repayment outcomes, and ultimately, the government's recovery of funds. While this specific award is for servicing, it plays a crucial role in the broader ecosystem of student loan debt, affecting millions of borrowers and the government's financial exposure. The servicing process itself does not create or forgive debt but is essential for managing its lifecycle.

Are there any known risks associated with the incumbent contractor, Navient Corporation, in managing federal contracts?

Navient Corporation, like many large federal contractors, has faced scrutiny and challenges in its operations. Past performance reviews and public reporting have sometimes highlighted issues related to customer service, compliance with servicing agreements, and handling of borrower inquiries, particularly during periods of significant policy changes or system transitions. Specific risks could include potential for service disruptions, data security vulnerabilities, or non-compliance with evolving federal regulations. A thorough risk assessment would involve reviewing any formal corrective actions, penalties, or ongoing investigations related to Navient's federal contracts. The Department of Education's oversight mechanisms are intended to mitigate these risks through performance monitoring and contract management.

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: FIRM FIXED PRICE (J)

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: $192,931,218

Exercised Options: $192,931,218

Current Obligation: $143,631,060

Actual Outlays: $620,803

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: EDFSA09D0015

IDV Type: IDC

Timeline