Department of Education's $48.8M loan collection contract with Continental Service Group, LLC, awarded competitively

Contract Overview

Contract Amount: $48,796,277 ($48.8M)

Contractor: Continental Service Group, LLC

Awarding Agency: Department of Education

Start Date: 2004-09-30

End Date: 2009-09-30

Contract Duration: 1,826 days

Daily Burn Rate: $26.7K/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: FAIRPORT, MONROE County, NEW YORK, 14450

State: New York Government Spending

Plain-Language Summary

Department of Education obligated $48.8 million to CONTINENTAL SERVICE GROUP, LLC for work described as: COLLECT ON DEFAULTED STUDENT LOANS FOR THE U.S. DEPARTMENT OF EDUCATION. Key points: 1. The contract aimed to recover defaulted student loan funds, a critical function for the Department of Education. 2. Awarded competitively, suggesting potential for good value, though specific performance metrics are not detailed here. 3. The contract duration of 1826 days (5 years) indicates a significant, long-term need for collection services. 4. The fixed-price incentive contract type suggests a structure designed to reward efficient performance. 5. The geographic location of the contractor in New York (NY) may have implications for regional collection efforts. 6. The absence of small business set-aside flags indicates this was not specifically targeted towards small businesses.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed performance data or comparable contract information. The total award amount of $48.8 million over five years suggests an average annual spend of approximately $9.76 million. This figure needs to be weighed against the volume and value of defaulted loans collected. Without knowing the recovery rate or the cost per dollar collected, it's difficult to definitively assess value for money. However, the competitive award process provides some assurance that pricing was scrutinized.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that multiple vendors were likely solicited and evaluated. The fact that it was competed suggests a healthy market for student loan collection services and that the Department of Education sought the best offer through a formal procurement process. The number of bids received (40) is a strong indicator of robust competition, which typically drives down prices and improves service quality.

Taxpayer Impact: A competitive award process for debt collection services is beneficial for taxpayers as it encourages efficiency and cost-effectiveness, potentially leading to higher recovery rates at a lower operational cost to the government.

Public Impact

The primary beneficiaries are the U.S. taxpayers, through the recovery of defaulted federal student loan funds. The services delivered involve the collection of delinquent and defaulted student loan payments. The geographic impact is national, as defaulted student loans can originate from borrowers across the United States. Workforce implications include jobs created by Continental Service Group, LLC, in their collection operations, likely concentrated in New York.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it hard to gauge effectiveness beyond the raw dollar amount.
The contract type (fixed-price incentive) can sometimes lead to cost overruns if not carefully managed.
Reliance on a single contractor for a significant period could pose risks if performance degrades.

Positive Signals

Awarded through a competitive process, indicating potential for good value and service.
The large number of bids (40) suggests a robust and responsive market for these services.
The fixed-price incentive structure is designed to align contractor performance with government objectives.

Sector Analysis

The federal government utilizes various contractors for the collection of delinquent and defaulted debts across multiple agencies. This contract falls within the broader professional services sector, specifically focusing on debt collection agencies. The North American Industry Classification System (NAICS) code 561440 for Collection Agencies indicates the specific industry segment. Comparable spending benchmarks would involve analyzing other federal contracts for similar debt collection services, both for student loans and other types of government debt, to assess cost-effectiveness.

Small Business Impact

This contract does not appear to have been awarded as a small business set-aside, as indicated by the 'sb' field being false. Therefore, the primary contractor, Continental Service Group, LLC, is likely a larger entity. There is no explicit information provided regarding subcontracting plans or requirements for small business participation. The impact on the small business ecosystem would be minimal unless subcontracting opportunities were actively pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. Accountability measures are typically embedded within the contract terms, including performance standards, reporting requirements, and potential penalties for non-compliance. Transparency is facilitated through contract databases like FPDS, which provide basic award information. Inspector General jurisdiction would apply if there were allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Federal Student Loan Program
Department of Education Debt Collection
Government Debt Recovery Services
Financial Services Contracts

Risk Flags

Contract Duration
Performance Metrics Unclear
Potential for Reputational Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $48.8 million to CONTINENTAL SERVICE GROUP, LLC. COLLECT ON DEFAULTED STUDENT LOANS FOR THE U.S. DEPARTMENT OF EDUCATION.

Who is the contractor on this award?

The obligated recipient is CONTINENTAL SERVICE GROUP, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $48.8 million.

What is the period of performance?

Start: 2004-09-30. End: 2009-09-30.

What was the historical spending pattern for student loan collection services by the Department of Education prior to this contract?

Analyzing historical spending patterns for student loan collection services by the Department of Education prior to this contract (awarded in 2004) would require accessing historical procurement data. Typically, the Department utilizes a mix of in-house efforts and contracted services. The volume of defaulted loans fluctuates based on economic conditions and borrower demographics, influencing the demand for collection services. Understanding past spending levels would provide context for the $48.8 million awarded to Continental Service Group, LLC, helping to determine if this represented an increase, decrease, or stable level of investment in outsourced collection efforts. Without specific historical data, it's difficult to ascertain trends or identify significant shifts in the Department's strategy for managing defaulted student debt.

How does the performance of Continental Service Group, LLC on this contract compare to industry benchmarks for debt collection agencies?

Assessing the performance of Continental Service Group, LLC against industry benchmarks requires access to specific performance metrics from the contract, such as recovery rates, cost per dollar collected, and compliance adherence. The provided data does not include these details. Industry benchmarks for debt collection agencies vary widely depending on the type of debt, the age of delinquency, and the methods employed. Generally, successful agencies aim for high recovery rates while maintaining low operational costs and adhering strictly to legal and ethical collection practices. Without quantifiable performance data from this specific contract, a direct comparison to industry standards is not feasible. The competitive nature of the award suggests an expectation of good performance, but actual results would need to be evaluated against defined key performance indicators.

What were the specific criteria used to evaluate the 40 bids received for this collection services contract?

The specific evaluation criteria used for the 40 bids received for this Department of Education collection services contract are not detailed in the provided data. However, for a competitive delivery order awarded under a fixed-price incentive (FPI) contract type, agencies typically evaluate bids based on a combination of factors. These often include technical approach (how the contractor plans to perform the collection services), past performance (track record with similar contracts), management capability, and price. For an FPI contract, the incentive structure itself, which links profit to performance against targets, would also be a key consideration. The agency would have likely outlined these evaluation factors in the solicitation document, assigning relative importance to each to ensure the selection of the offer that represented the best value to the government.

What is the typical cost structure for federal student loan collection services, and how does this contract's implied cost align?

The cost structure for federal student loan collection services typically involves a percentage of the debt recovered or a fixed fee per collection activity. Agencies often negotiate these rates based on the volume and age of the debt. The implied annual cost for this contract is approximately $9.76 million ($48.8 million / 5 years). To align this with a typical cost structure, one would need to know the total value of defaulted loans managed under this contract and the recovery rate achieved. If, for example, the contract resulted in the recovery of $100 million in defaulted loans, the cost would be roughly 9.76% of recovered funds. This percentage needs to be compared against industry averages and other federal contracts for similar services to determine if it is competitive. Without the recovery volume, the cost per dollar collected remains unknown.

What are the potential risks associated with outsourcing federal debt collection, and were these mitigated in this contract?

Potential risks associated with outsourcing federal debt collection include damage to the government's reputation due to aggressive or non-compliant collection practices, data security breaches of sensitive borrower information, and contractor underperformance leading to lower recovery rates. Mitigation strategies typically involve rigorous contractor vetting, clearly defined performance standards and reporting requirements in the contract, robust oversight by the contracting agency, and strong data security clauses. The competitive award process and the fixed-price incentive structure in this contract suggest an effort to ensure performance and value. However, the effectiveness of risk mitigation would depend on the specific contract clauses, the Department of Education's oversight mechanisms, and the contractor's adherence to all terms and conditions throughout the contract's life.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Collection Agencies

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: 200 CROSSKEYS OFFICE PARK, FAIRPORT, NY, 14450

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $48,796,278

Exercised Options: $48,796,278

Current Obligation: $48,796,277

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS23F0084P

IDV Type: FSS

Timeline