Department of Education awards $37.8M task order for Perkins Loan Servicing to Educational Computer Systems, Inc

Contract Overview

Contract Amount: $37,811,141 ($37.8M)

Contractor: Educational Computer Systems, Inc.

Awarding Agency: Department of Education

Start Date: 2023-04-01

End Date: 2025-07-31

Contract Duration: 852 days

Daily Burn Rate: $44.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TASK ORDER FOR PERKINS LOAN SERVICING WITH BASE PERIOD APRIL 1, 2023 THROUGH JULY 31, 2023.

Place of Performance

Location: CORAOPOLIS, ALLEGHENY County, PENNSYLVANIA, 15108

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Education obligated $37.8 million to EDUCATIONAL COMPUTER SYSTEMS, INC. for work described as: TASK ORDER FOR PERKINS LOAN SERVICING WITH BASE PERIOD APRIL 1, 2023 THROUGH JULY 31, 2023. Key points: 1. The contract value represents a significant investment in managing federal student loan portfolios. 2. The task order was awarded under full and open competition, suggesting a competitive bidding process. 3. The duration of the contract, spanning over two years, indicates a need for sustained loan servicing capabilities. 4. The firm fixed-price contract type aims to provide cost certainty for the government. 5. The North American Industry Classification System (NAICS) code 522110 points to commercial banking activities, aligning with loan servicing functions. 6. The contract is managed by the Department of Education, the primary agency responsible for federal student aid programs.

Value Assessment

Rating: good

The awarded amount of $37.8 million for an 852-day period (approximately 2.3 years) suggests a daily servicing cost of roughly $44,379. Benchmarking this against similar federal loan servicing contracts would provide a clearer picture of value for money. However, the firm fixed-price structure indicates an effort to control costs. The contract's value appears reasonable given the scope of managing federal student loan portfolios, which involves complex administrative and compliance requirements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that the solicitation was broadly advertised, and all responsible sources were permitted to submit offers. This approach typically fosters robust competition, leading to potentially better pricing and service quality as contractors vie for the award. The specific details of the number of bidders are not provided, but the competition type suggests multiple entities likely participated.

Taxpayer Impact: A full and open competition generally benefits taxpayers by driving down costs through competitive pressure and ensuring that the government secures services from the most capable and cost-effective provider.

Public Impact

Students and borrowers who benefit from the efficient servicing of their federal student loans. The Department of Education, which relies on contractors to manage its loan portfolios effectively. The contract's impact is national, covering the administration of federal student loan programs across the United States. The workforce implications include employment opportunities within Educational Computer Systems, Inc. and potentially its subcontractors in the loan servicing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased administrative costs if loan servicing complexities are underestimated.
Reliance on a single contractor for a critical function like loan servicing could pose a risk if performance issues arise.

Positive Signals

The firm fixed-price contract provides cost predictability for the Department of Education.
Awarding under full and open competition suggests a thorough vetting of potential service providers.
The contract duration allows for stable operations and continuity in loan servicing.

Sector Analysis

The federal student loan servicing sector is a critical component of the Department of Education's mission to provide access to higher education. This contract falls within the broader financial services and commercial banking industry, specifically focusing on the administration and management of debt. The market for federal student loan servicing is often dominated by a few large players due to the scale and regulatory complexity involved. The value of this task order is substantial, reflecting the ongoing need for efficient and compliant management of federal student loan portfolios.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, Educational Computer Systems, Inc., is likely a larger entity. There is no explicit information regarding subcontracting plans for small businesses within this specific task order. The impact on the small business ecosystem would depend on whether ECS, Inc. actively seeks small business subcontractors for specialized services, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. They are responsible for monitoring contractor performance, ensuring compliance with contract terms, and managing any disputes. Transparency is facilitated through contract databases like FPDS. While specific Inspector General (IG) jurisdiction is not detailed, the Department of Education's Office of Inspector General typically has oversight over federal spending to detect and prevent waste, fraud, and abuse.

Related Government Programs

Federal Student Loan Programs
Direct Loan Servicing
Higher Education Act Programs
Department of Education Financial Management

Risk Flags

Contract Performance Risk
Cybersecurity Risk
Regulatory Compliance Risk
Financial Stability of Contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $37.8 million to EDUCATIONAL COMPUTER SYSTEMS, INC.. TASK ORDER FOR PERKINS LOAN SERVICING WITH BASE PERIOD APRIL 1, 2023 THROUGH JULY 31, 2023.

Who is the contractor on this award?

The obligated recipient is EDUCATIONAL COMPUTER SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.8 million.

What is the period of performance?

Start: 2023-04-01. End: 2025-07-31.

What is the track record of Educational Computer Systems, Inc. in federal student loan servicing?

Educational Computer Systems, Inc. (ECS) has a history of providing services related to federal student loan programs. While specific details on their performance metrics for this particular task order are not publicly available in this data snippet, their selection suggests they met the qualifications and requirements set forth by the Department of Education during the competitive bidding process. Federal contractors are generally assessed on past performance, and the Department of Education would have reviewed ECS's relevant experience and capabilities. Further investigation into ECS's contract history with federal agencies, particularly the Department of Education, would reveal more about their reliability and effectiveness in managing loan portfolios and adhering to regulatory compliance standards.

How does the cost of this contract compare to similar federal loan servicing contracts?

Directly comparing the cost of this $37.8 million task order for 852 days requires access to a benchmark database of similar federal loan servicing contracts. The daily rate implied is approximately $44,379. Factors influencing cost include the volume of loans serviced, the complexity of the portfolio (e.g., types of loans, borrower demographics), and the specific services required (e.g., billing, collections, customer service, default management). The firm fixed-price nature of this contract suggests a defined scope and expected outcomes. Without comparable data on the number of loans serviced or the specific service level agreements, a precise value-for-money assessment is challenging. However, the Department of Education's procurement process aims to secure competitive pricing.

What are the primary risks associated with this contract for the Department of Education?

The primary risks for the Department of Education in this contract include potential performance failures by Educational Computer Systems, Inc., which could lead to disruptions in loan servicing, negatively impacting borrowers and potentially increasing default rates. There's also a risk of data breaches or cybersecurity incidents, given the sensitive financial information handled. Cost overruns, although mitigated by the firm fixed-price structure, could still occur if unforeseen complexities arise in loan management. Furthermore, a lack of robust oversight could lead to non-compliance with federal regulations. The concentration of servicing with one entity also presents a risk if the contractor faces financial instability or operational challenges.

How effective is the Department of Education in managing its loan servicing contracts?

The Department of Education employs various mechanisms to manage its loan servicing contracts, including performance metrics, regular reviews, and oversight by contracting officers. The effectiveness can vary depending on the specific contract and the resources allocated to oversight. Historically, the federal student loan servicing system has faced scrutiny regarding efficiency, borrower support, and compliance. The move towards fewer, larger contracts aims to streamline operations and potentially improve oversight. The Department continuously refines its strategies for managing these complex agreements to ensure compliance and effective service delivery to millions of borrowers.

What are the historical spending patterns for federal student loan servicing?

Federal spending on student loan servicing has been substantial and has evolved over time, particularly with the transition from the Federal Family Education Loan Program (FFELP) to the Direct Loan Program. Billions of dollars are spent annually to manage the vast federal student loan portfolio. Spending patterns are influenced by the number of borrowers, the total loan volume, interest rates, and the complexity of servicing requirements, including default aversion and rehabilitation programs. The Department of Education periodically re-evaluates its servicing contracts to ensure cost-effectiveness and compliance, leading to shifts in contract awards and overall expenditure.

Industry Classification

NAICS: Finance and Insurance › Depository Credit Intermediation › Commercial Banking

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 181 MONTOUR RUN ROAD, CORAOPOLIS, PA, 15108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,811,141

Exercised Options: $37,811,141

Current Obligation: $37,811,141

Actual Outlays: $74,928,832

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA13D0003

IDV Type: IDC

Timeline