Department of Education awards $93.6M contract to Nelnet Servicing LLC for Total & Permanent Disability (TPD) program aid servicing

Contract Overview

Contract Amount: $93,619,909 ($93.6M)

Contractor: Nelnet Servicing LLC

Awarding Agency: Department of Education

Start Date: 2019-12-16

End Date: 2024-12-31

Contract Duration: 1,842 days

Daily Burn Rate: $50.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE FUNDING FOR TITLE IV AID SERVICING FOR BORROWERS UNDER THE TOTAL&PERMANENT DISABILITY (TPD) PROGRAM, THROUGH APPROXIMATELY JANUARY 31, 2020.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20202

State: District of Columbia Government Spending

Plain-Language Summary

Department of Education obligated $93.6 million to NELNET SERVICING LLC for work described as: THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE FUNDING FOR TITLE IV AID SERVICING FOR BORROWERS UNDER THE TOTAL&PERMANENT DISABILITY (TPD) PROGRAM, THROUGH APPROXIMATELY JANUARY 31, 2020. Key points: 1. Contract focuses on servicing aid for borrowers under the Total & Permanent Disability (TPD) program. 2. The contract duration spans approximately 5 years, from December 2019 to December 2024. 3. Awarded under a full and open competition, indicating a competitive bidding process. 4. The contract type is a Firm Fixed Price delivery order, providing cost certainty. 5. The North American Industry Classification System (NAICS) code is 522390, related to credit intermediation activities. 6. The primary agency and the servicing agency are both the Department of Education. 7. The contract is not set aside for small businesses.

Value Assessment

Rating: good

The contract value of $93.6 million over approximately five years for TPD program servicing appears reasonable given the scope. Benchmarking against similar large-scale federal loan servicing contracts would provide a more precise value-for-money assessment. The firm fixed-price structure helps manage cost fluctuations. However, without detailed performance metrics or comparisons to private sector servicing costs for similar loan portfolios, a definitive value assessment is challenging.

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 5 bids indicates a healthy level of competition for this servicing requirement. A competitive process generally leads to better pricing and service quality as contractors vie for the award.

Taxpayer Impact: A competitive award process is beneficial for taxpayers as it drives down costs and encourages efficiency from the winning contractor, ensuring federal funds are used effectively.

Public Impact

Benefits borrowers with disabilities by ensuring continued access to and proper servicing of their federal student aid. Services are delivered through Nelnet Servicing LLC, a specialized loan servicing company. The geographic impact is national, covering all eligible borrowers across the United States. The contract supports a critical function within the Department of Education's student financial assistance programs. This contract ensures the continuity of essential services for a vulnerable borrower population.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if contractor performance falters.
Reliance on a single contractor for a critical borrower support function.
Ensuring data privacy and security for sensitive borrower information.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm Fixed Price contract type provides cost predictability.
Contractor has experience in loan servicing, indicated by the award.
Long-term contract duration allows for stable service delivery.

Sector Analysis

This contract falls within the financial services sector, specifically credit intermediation and loan servicing. The federal government is a significant player in the student loan market, contracting out servicing functions to manage its vast portfolio. Comparable spending benchmarks would involve looking at other large federal loan servicing contracts, such as those for Direct Loan servicing or other federal debt collection and management programs. The market for loan servicing is competitive, with several large firms capable of handling federal contracts.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses within the provided data. The award to a large, established entity like Nelnet suggests that the scale and complexity of this task order were deemed best suited for a prime contractor with significant operational capacity. This means that direct opportunities for small businesses to participate as prime contractors on this specific award are limited.

Oversight & Accountability

Oversight is primarily conducted by the Department of Education, which is responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying that the TPD program servicing is executed effectively. Accountability measures are embedded within the contract through performance standards and reporting requirements. Transparency is facilitated through federal contract databases where award details are publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Student Loan Servicing
Total & Permanent Disability (TPD) Program
Department of Education Financial Aid Programs
Direct Loan Servicing Contracts
Credit Intermediation Services

Risk Flags

Contract Performance Risk
Data Security Risk
Regulatory Compliance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $93.6 million to NELNET SERVICING LLC. THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE FUNDING FOR TITLE IV AID SERVICING FOR BORROWERS UNDER THE TOTAL&PERMANENT DISABILITY (TPD) PROGRAM, THROUGH APPROXIMATELY JANUARY 31, 2020.

Who is the contractor on this award?

The obligated recipient is NELNET SERVICING LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $93.6 million.

What is the period of performance?

Start: 2019-12-16. End: 2024-12-31.

What is the historical spending trend for TPD program servicing by the Department of Education?

Historical spending data for TPD program servicing specifically is not detailed in the provided information. However, the Department of Education manages a vast portfolio of federal student loans, and the TPD program is a component of that. The current award of approximately $93.6 million over five years suggests a significant, ongoing investment in this area. To understand historical trends, one would need to examine prior contracts for TPD servicing, potentially looking at different contractors or contract vehicles used over time. Fluctuations in spending could be influenced by changes in legislation, borrower eligibility criteria, economic conditions affecting disability claims, and the overall volume of federal student loan debt.

How does the per-unit cost of servicing under this contract compare to other federal loan servicing contracts?

A direct per-unit cost comparison is challenging without knowing the exact number of borrowers or loan accounts serviced under this specific $93.6 million contract. The provided data indicates a total contract value and duration, but not the volume metrics (e.g., number of borrowers, number of loans, number of transactions) that would allow for a per-unit calculation. Federal loan servicing contracts can vary significantly in their per-unit costs based on the complexity of the loan portfolio, the specific services required (e.g., default aversion, repayment plan management, disability processing), and the competitive landscape at the time of award. A comprehensive analysis would require access to detailed performance data and cost breakdowns from multiple comparable contracts.

What is Nelnet Servicing LLC's track record with federal student loan servicing contracts, particularly those involving disability programs?

Nelnet Servicing LLC is a major player in the federal student loan servicing market and has a long history of managing large federal contracts. They have been a significant servicer for the Department of Education's Direct Loan Program for many years. While specific details on their performance with the TPD program under this particular contract are not provided, their continued selection for substantial federal contracts suggests a generally satisfactory performance history. Past performance evaluations, contract awards, and any publicly available reports or audits related to their federal servicing contracts would offer further insight into their capabilities and reliability in managing complex programs like TPD.

What are the key performance indicators (KPIs) used to measure the success of this TPD program servicing contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, typical KPIs for federal loan servicing contracts, especially those involving borrower assistance programs like TPD, would likely include metrics such as borrower satisfaction rates, accuracy of loan data maintained, timeliness of processing applications and requests, compliance with federal regulations and program guidelines, and effective communication with borrowers. The Department of Education would establish these KPIs in the contract's Performance Work Statement (PWS) to ensure Nelnet Servicing LLC meets its obligations and provides adequate support to TPD borrowers.

Are there any identified risks associated with the contractor's ability to perform the TPD servicing requirements?

The provided data does not highlight specific performance risks associated with Nelnet Servicing LLC for this contract. However, general risks inherent in large-scale loan servicing contracts include potential for data breaches, system outages impacting service availability, challenges in maintaining accurate borrower information, and ensuring consistent adherence to evolving regulatory requirements. The Department of Education's oversight mechanisms and Nelnet's established track record in federal servicing would be key factors in mitigating these potential risks. A thorough risk assessment would typically involve reviewing past performance reports and any specific contractual clauses addressing risk mitigation.

How does the $93.6 million award compare in size to other major federal IT or service contracts?

The $93.6 million award for TPD program servicing is a substantial contract, but its size relative to other federal contracts varies greatly depending on the category. In the realm of large-scale IT modernization or major defense procurements, $93.6 million might be considered a mid-tier contract. However, for specialized service contracts like loan servicing, it represents a significant investment. For context, major IT contracts can run into billions of dollars, while smaller, more niche service contracts might be in the millions or tens of millions. This award falls within the upper range for specialized financial services contracts but is considerably smaller than the largest federal procurements across all sectors.

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: 121 S 13TH ST STE 201, LINCOLN, NE, 68508

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $93,619,909

Exercised Options: $93,619,909

Current Obligation: $93,619,909

Actual Outlays: $144,809,624

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: EDFSA09D0013

IDV Type: IDC

Timeline