Education Dept. Spends $42.6M on Student Loan Default Collection by Account Control Technology Inc
Contract Overview
Contract Amount: $42,578,473 ($42.6M)
Contractor: Account Control Technology Inc.
Awarding Agency: Department of Education
Start Date: 2004-09-30
End Date: 2009-09-30
Contract Duration: 1,826 days
Daily Burn Rate: $23.3K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 40
Pricing Type: FIXED PRICE INCENTIVE
Sector: Other
Official Description: COLLECT ON DEFAULTED STUDENT LOANS FOR THE U.S.DEPARTMENT OF EDUCATION.
Place of Performance
Location: CANOGA PARK, LOS ANGELES County, CALIFORNIA, 91303, UNITED STATES OF AMERICA
Plain-Language Summary
Department of Education obligated $42.6 million to ACCOUNT CONTROL TECHNOLOGY INC. for work described as: COLLECT ON DEFAULTED STUDENT LOANS FOR THE U.S.DEPARTMENT OF EDUCATION. Key points: 1. Significant contract value of $42.6 million for debt collection services. 2. Account Control Technology Inc. is the sole awardee, raising questions about competition. 3. Fixed Price Incentive contract type suggests performance-based pricing. 4. The sector is Miscellaneous Financial Investment Activities, focusing on debt recovery.
Value Assessment
Rating: fair
The contract's fixed price incentive structure aims to control costs, but the lack of competitive bidding makes a direct pricing assessment difficult. The total award value of $42.6 million over five years needs to be benchmarked against similar debt collection contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This was a competitive delivery order, but the data suggests it may have been limited in scope or number of bidders. The pricing discovery relies heavily on the initial negotiation and incentive structure rather than open market competition.
Taxpayer Impact: Taxpayer funds are used to recover defaulted student loans. The effectiveness of the collection agency directly impacts the net recovery and thus the overall taxpayer burden.
Public Impact
Students with defaulted loans may experience increased collection efforts. The Department of Education utilizes private contractors to manage debt recovery. Efficiency of this contract impacts the federal student loan portfolio's financial health. Potential for aggressive collection tactics by the awarded vendor.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition for debt collection services.
- Potential for aggressive collection practices.
- Contract duration of five years.
Positive Signals
- Performance-based pricing structure.
- Focus on recovering defaulted student loans.
Sector Analysis
This contract falls under Miscellaneous Financial Investment Activities, specifically focusing on the collection of defaulted student loans. Spending in this area is driven by the volume of delinquent federal student debt and the efficiency of recovery efforts.
Small Business Impact
The data does not indicate if small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine small business participation.
Oversight & Accountability
Oversight would involve monitoring the collection activities of Account Control Technology Inc. to ensure compliance with regulations and ethical standards, as well as tracking the financial performance against the incentive structure.
Related Government Programs
- Miscellaneous Financial Investment Activities
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Lack of robust competition.
- Potential for aggressive collection tactics.
- Contract duration may be lengthy for collection services.
- Reliance on a single vendor for critical function.
Tags
miscellaneous-financial-investment-activ, department-of-education, ca, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $42.6 million to ACCOUNT CONTROL TECHNOLOGY INC.. COLLECT ON DEFAULTED STUDENT LOANS FOR THE U.S.DEPARTMENT OF EDUCATION.
Who is the contractor on this award?
The obligated recipient is ACCOUNT CONTROL TECHNOLOGY INC..
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $42.6 million.
What is the period of performance?
Start: 2004-09-30. End: 2009-09-30.
What is the benchmark cost for collecting defaulted student loans per dollar recovered, and how does this contract's performance compare?
Benchmarking the cost per dollar recovered for defaulted student loans is complex, as it depends on loan age, amount, and borrower circumstances. However, typical industry benchmarks for debt collection range from 15% to 30% of the amount collected. Without specific recovery data and the incentive payouts, it's difficult to definitively assess if this contract is cost-effective. Further analysis of the incentive structure's payout and the actual recovery rates is needed.
What are the specific risks associated with using a single vendor for student loan default collection, particularly regarding borrower treatment and data security?
Using a single vendor for student loan default collection poses risks such as a lack of competitive pressure to improve services or lower costs. Borrowers may face potentially aggressive or non-compliant collection practices without alternative vendors to compare against. Data security is also a concern, as a single point of failure could lead to a significant breach of sensitive borrower information. Robust oversight is crucial to mitigate these risks.
How effective is this contract in achieving its primary goal of recovering funds for the Department of Education, and what is the net financial impact?
The effectiveness of this contract is measured by the amount of defaulted student loan debt recovered relative to the contract costs, including the vendor's fees and any incentive payments. The net financial impact depends on the recovery rate achieved by Account Control Technology Inc. compared to the total contract value and the potential recovery through other means. A detailed analysis of recovery metrics and cost-benefit ratios is required to fully assess its effectiveness.
Industry Classification
NAICS: Finance and Insurance › Other Financial Investment Activities › Miscellaneous Financial Investment Activities
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Offers Received: 40
Pricing Type: FIXED PRICE INCENTIVE (L)
Contractor Details
Address: 6918 OWENSMOUTH AVE, CANOGA PARK, CA, 91303
Business Categories: Category Business, Small Business, Woman Owned Business
Financial Breakdown
Contract Ceiling: $42,588,473
Exercised Options: $42,588,473
Current Obligation: $42,578,473
Parent Contract
Parent Award PIID: GS23F0235K
IDV Type: FSS
Timeline
Start Date: 2004-09-30
Current End Date: 2009-09-30
Potential End Date: 2009-09-30 00:00:00
Last Modified: 2015-04-01
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