Department of Education awards $18.7M firm-fixed-price contract to Nelnet Servicing LLC for servicing system readiness
Contract Overview
Contract Amount: $18,708,948 ($18.7M)
Contractor: Nelnet Servicing LLC
Awarding Agency: Department of Education
Start Date: 2023-04-25
End Date: 2025-06-02
Contract Duration: 769 days
Daily Burn Rate: $24.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
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
Plain-Language Summary
Department of Education obligated $18.7 million to NELNET SERVICING LLC 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 aims to prepare the USDS Servicer for performance, achieve Authorization to Operate (ATO), and go-live. 2. The contract is a firm-fixed-price type, establishing a clear cost for the defined scope. 3. Competition was full and open, suggesting a competitive bidding process. 4. The award is for 'Other Activities Related to Credit Intermediation' within the financial services sector.
Value Assessment
Rating: good
The $18.7 million firm-fixed-price contract for servicing system readiness appears reasonable given the scope of achieving ATO and go-live for a servicing system. Benchmarking against similar IT system development and implementation contracts would provide further context on pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes price discovery and competitive pricing.
Taxpayer Impact: The firm-fixed-price structure helps control costs for taxpayers by setting a definitive price for the required services.
Public Impact
Improved efficiency and functionality of the USDS Servicing System. Enhanced user experience for borrowers interacting with the servicing system. Potential for cost savings through streamlined operations and better system performance. Ensured compliance and security through the Authorization to Operate (ATO) process.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for scope creep if initial requirements are not clearly defined.
- Dependence on vendor performance for critical system milestones.
- Risk of integration challenges with existing government systems.
Positive Signals
- Clear contract type (FFP) for cost control.
- Full and open competition promotes market-driven pricing.
- Defined deliverables (ATO, Go-Live) provide measurable success criteria.
Sector Analysis
This contract falls within the IT services sector, specifically related to financial services and credit intermediation. Spending benchmarks for similar IT system development and implementation projects within government agencies can be used for comparison.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
The Department of Education is the contracting and awarding agency. Standard oversight mechanisms for firm-fixed-price contracts, including performance monitoring and deliverable acceptance, would apply to ensure accountability.
Related Government Programs
- Other Activities Related to Credit Intermediation
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Potential for vendor lock-in if system is highly proprietary.
- Risk of delays impacting student loan servicing operations.
- Cybersecurity vulnerabilities in the new servicing system.
- Adequacy of testing and validation before go-live.
Tags
other-activities-related-to-credit-inter, department-of-education, dc, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $18.7 million to NELNET SERVICING LLC. 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 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 $18.7 million.
What is the period of performance?
Start: 2023-04-25. End: 2025-06-02.
What is the estimated cost per user or per borrower that this system is expected to serve?
The provided data does not include a per-user or per-borrower cost. To assess value, this metric would need to be calculated based on the total contract value and the projected number of users or borrowers the servicing system will support. This would allow for a more granular comparison against industry standards and identify potential efficiencies or cost overruns.
What are the key performance indicators (KPIs) for the 'performance ready' and 'go-live' milestones?
The specific Key Performance Indicators (KPIs) for 'performance ready' and 'go-live' are not detailed in the provided data. These would typically be defined in the contract's Statement of Work (SOW) and include metrics related to system uptime, transaction processing speed, data accuracy, security compliance, and user acceptance testing. Clear KPIs are crucial for objectively measuring the vendor's success and the government's return on investment.
How does the $18.7 million cost compare to similar federal IT system modernization projects?
Without specific details on the scope and complexity of the USDS Servicer system, a direct comparison to other federal IT projects is challenging. However, $18.7 million for a firm-fixed-price contract aimed at achieving ATO and go-live for a critical servicing system suggests a significant undertaking. Benchmarking against projects of similar scale and technological requirements within financial services or student loan servicing would be necessary to determine if the cost is competitive.
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: 121 S 13TH ST, LINCOLN, NE, 68508
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $18,708,948
Exercised Options: $18,708,948
Current Obligation: $18,708,948
Actual Outlays: $20,508,816
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: 91003123D0005
IDV Type: IDC
Timeline
Start Date: 2023-04-25
Current End Date: 2025-06-02
Potential End Date: 2025-06-02 00:00:00
Last Modified: 2026-03-24
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