Department of Education awards $25M firm-fixed-price contract for servicing system readiness and go-live

Contract Overview

Contract Amount: $25,069,136 ($25.1M)

Contractor: Central Research Inc

Awarding Agency: Department of Education

Start Date: 2023-04-25

End Date: 2024-11-10

Contract Duration: 565 days

Daily Burn Rate: $44.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THE INITIAL TASK ORDER IS A FIRM-FIXED PRICE TASK ORDER FOR THE TASKS AND DELIVERABLES REQUIRED FOR THE USDS SERVICER TO BECOME PERFORMANCE READY, ATTAIN ITS AUTHORIZATION TO OPERATE (ATO), AND ACHIEVE GO-LIVE (GO- LIVE) OF ITS SERVICING SYSTEM.

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 $25.1 million to CENTRAL RESEARCH INC for work described as: THE INITIAL TASK ORDER IS A FIRM-FIXED PRICE TASK ORDER FOR THE TASKS AND DELIVERABLES REQUIRED FOR THE USDS SERVICER TO BECOME PERFORMANCE READY, ATTAIN ITS AUTHORIZATION TO OPERATE (ATO), AND ACHIEVE GO-LIVE (GO- LIVE) OF ITS SERVICING SYSTEM. Key points: 1. Contract focuses on achieving Authorization to Operate (ATO) and system go-live. 2. Firm-fixed-price structure aims to control costs for defined deliverables. 3. Competition was full and open, suggesting a potentially competitive bidding process. 4. Contract duration of 565 days indicates a significant implementation timeline. 5. The contract is for 'Other Activities Related to Credit Intermediation', a niche area. 6. No small business set-aside was utilized for this award.

Value Assessment

Rating: fair

The contract value of approximately $25 million for a system readiness and go-live project appears to be within a reasonable range for complex IT implementations. Benchmarking against similar large-scale system development and deployment contracts within the federal government would provide a clearer picture of value for money. The firm-fixed-price nature suggests a defined scope, which can help manage costs if the scope is well-defined and changes are controlled. However, without detailed breakdowns of labor categories, hours, and specific deliverables, a precise value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This typically suggests a robust bidding environment, which can lead to better pricing and innovation. The number of bidders is not specified, but the open competition is a positive sign for price discovery and ensuring the government receives competitive offers. The agency sought proposals from a wide range of potential contractors.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve the quality of services received. It ensures that the government is not limited to a few providers, increasing the likelihood of securing the best value.

Public Impact

The primary beneficiaries are the Department of Education and its stakeholders who will utilize the improved servicing system. The contract delivers essential IT services for system readiness, Authorization to Operate (ATO), and go-live. The geographic impact is primarily within the District of Columbia, where the Department of Education is headquartered. Workforce implications may include the need for specialized IT personnel for system development, testing, and deployment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if initial requirements are not fully defined, impacting cost and schedule.
Reliance on a single contractor for critical system go-live could pose risks if performance issues arise.
Ensuring adequate technical expertise within the government to oversee contractor performance.

Positive Signals

Firm-fixed-price contract provides cost certainty for the defined scope.
Full and open competition suggests a potentially strong pool of qualified bidders.
Clear objectives (ATO, go-live) provide measurable success criteria.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on custom software development and system implementation for financial servicing. The market for such services is large and competitive, with numerous firms offering expertise in enterprise resource planning (ERP) and specialized financial systems. Comparable spending benchmarks would typically involve analyzing IT modernization projects within other federal agencies or large private sector financial institutions, considering the complexity of regulatory compliance and data security requirements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the requirement was likely perceived as needing specialized capabilities or a scale of operation best met by larger firms, or that the competition was broad enough to include large businesses. There is no explicit information on subcontracting plans for small businesses, which is a common requirement for larger federal contracts to ensure small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program/technical team within the Department of Education. Accountability measures are inherent in the firm-fixed-price structure, tying payment to deliverables. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Federal IT Modernization Programs
Student Loan Servicing Systems
Financial Management Systems
Government-wide Acquisition Contracts (GWACs)

Risk Flags

Potential for performance issues impacting critical system launch.
Risk of cost overruns if scope is not tightly managed.
Dependency on contractor for achieving key operational milestones.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $25.1 million to CENTRAL RESEARCH INC. THE INITIAL TASK ORDER IS A FIRM-FIXED PRICE TASK ORDER FOR THE TASKS AND DELIVERABLES REQUIRED FOR THE USDS SERVICER TO BECOME PERFORMANCE READY, ATTAIN ITS AUTHORIZATION TO OPERATE (ATO), AND ACHIEVE GO-LIVE (GO- LIVE) OF ITS SERVICING SYSTEM.

Who is the contractor on this award?

The obligated recipient is CENTRAL RESEARCH INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.1 million.

What is the period of performance?

Start: 2023-04-25. End: 2024-11-10.

What is the track record of CENTRAL RESEARCH INC in delivering similar large-scale IT system implementation projects for federal agencies?

A review of publicly available contract data (e.g., FPDS) would be necessary to assess CENTRAL RESEARCH INC's track record. Specifically, one would look for past performance on firm-fixed-price contracts of similar value and complexity, particularly those involving financial servicing systems or government authorization to operate (ATO) processes. Analyzing past performance ratings, any reported contract disputes, or modifications would provide insight into their reliability and capability. Without specific historical data on this contractor's performance in similar roles, it is difficult to definitively assess their suitability beyond the fact that they were selected through full and open competition.

How does the awarded amount of $25,069,135.70 compare to the estimated cost or benchmark for similar IT system readiness and go-live projects within the federal government?

Benchmarking this contract's value requires comparison with similar federal IT projects. Projects involving the development and deployment of complex financial servicing systems, especially those requiring an Authorization to Operate (ATO), can vary significantly in cost based on scope, technology stack, and agency-specific requirements. A $25 million award for a 565-day project (approximately 1.5 years) suggests a substantial undertaking. To assess value, one would compare this to the average cost per year or per deliverable for comparable projects, considering factors like the number of users, data migration complexity, and integration with existing systems. Without access to internal agency cost estimates or broader industry benchmarks for similar federal IT modernization efforts, a definitive value comparison is challenging, but the amount appears substantial for the stated objectives.

What are the primary risks associated with a firm-fixed-price contract for a critical system go-live, and how are they mitigated?

The primary risk with a firm-fixed-price (FFP) contract for a critical system go-live is that the contractor may cut corners on quality or scope to maintain profitability if unforeseen challenges arise, or conversely, the government may be locked into paying a premium if the scope is underestimated. Mitigation strategies include a very clearly defined Statement of Work (SOW), robust government oversight, detailed performance metrics, and a strong change control process. For this contract, the Department of Education must ensure that the SOW precisely outlines all tasks for performance readiness, ATO, and go-live. Regular progress reviews, acceptance testing protocols, and clear communication channels are crucial to identify and address potential issues early, ensuring the contractor meets all quality and performance standards before final acceptance.

What is the expected impact of this servicing system upgrade on the Department of Education's operational efficiency and service delivery to its constituents?

The expected impact of this servicing system upgrade is significant improvements in operational efficiency and service delivery for the Department of Education. Achieving performance readiness, Authorization to Operate (ATO), and a successful go-live for a servicing system typically aims to streamline processes, enhance data accuracy, improve user experience for both internal staff and external stakeholders (e.g., loan borrowers), and ensure compliance with relevant regulations. A modern, efficient system can reduce manual workarounds, speed up transaction processing times, provide better reporting capabilities, and ultimately lead to more effective management of federal education programs and financial aid. The specific benefits will depend on the functionalities implemented and the current state of the existing system.

How does the historical spending on 'Other Activities Related to Credit Intermediation' (NAICS 522390) by the Department of Education compare to this specific award?

To analyze historical spending for NAICS code 522390 ('Other Activities Related to Credit Intermediation') by the Department of Education, one would need to query federal procurement databases (like FPDS) for past awards under this code. This specific award of approximately $25 million represents a significant investment within this category. If historical spending under this NAICS code has been substantially lower, this contract could indicate a new strategic initiative or a major upgrade. Conversely, if the Department frequently awards contracts in this range for similar services, it suggests this is part of ongoing or routine system maintenance and enhancement. A detailed analysis would involve summing up all awards under 522390 for the Department over several fiscal years to establish a baseline and context for this particular contract's magnitude.

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

Solicitation ID: 91003122R0007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 122 N BLOOMINGTON ST, LOWELL, AR, 72745

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

Financial Breakdown

Contract Ceiling: $25,069,136

Exercised Options: $25,069,136

Current Obligation: $25,069,136

Actual Outlays: $25,005,574

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $16,975,141

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 91003123D0002

IDV Type: IDC

Timeline