Department of Education Spends $121.9M on Collection Agency Services for Delinquent Accounts
Contract Overview
Contract Amount: $121,918,698 ($121.9M)
Contractor: Performant Recovery, Inc.
Awarding Agency: Department of Education
Start Date: 2003-12-11
End Date: 2000-09-15
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 50
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: PRIOVIDES ED A MEANS OF CONROLLING DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTIONS RELATED TO IDENTIFYING DEFAULTED LOANS AND BILLING DEFAULTED BORROWERS.
Place of Performance
Location: CALIFORNIA
Plain-Language Summary
Department of Education obligated $121.9 million to PERFORMANT RECOVERY, INC. for work described as: PRIOVIDES ED A MEANS OF CONROLLING DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTIONS RELATED TO IDENTIFYING DEFAULTED LOANS AND BILLING DEFAULTED BORROWERS. Key points: 1. The contract provides a system for managing delinquent and defaulted loan accounts. 2. Performant Recovery, Inc. is the contractor for these collection services. 3. The contract was awarded under full and open competition. 4. The North American Industry Classification System (NAICS) code is 561440 (Collection Agencies).
Value Assessment
Rating: fair
The total award amount is substantial at over $121 million. Without specific performance metrics or benchmarks for recovery rates, it's difficult to definitively assess value. However, the firm fixed-price contract structure suggests a predictable cost for the government.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is generally expected to lead to better price discovery and potentially more favorable pricing for the government.
Taxpayer Impact: Taxpayer funds are being used to recover funds from delinquent borrowers. The effectiveness of the collection services directly impacts the net recovery and thus the overall taxpayer impact.
Public Impact
Ensures the Department of Education can manage and recover funds from defaulted student loans. Supports the financial health of federal student loan programs by reducing losses. Provides a structured process for identifying and billing defaulted borrowers.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific performance metrics for recovery rates.
- Potential for high administrative costs associated with collections.
- Dependence on a single contractor for critical recovery functions.
Positive Signals
- Firm fixed-price contract provides cost certainty.
- Awarded through full and open competition.
- Addresses a critical need for managing delinquent accounts.
Sector Analysis
The collection agency sector is crucial for government entities managing receivables, particularly in areas like student loans or taxes. Spending benchmarks are highly variable based on the volume and age of debt, but significant investments are common for large portfolios.
Small Business Impact
The data indicates this contract was awarded to Performant Recovery, Inc. There is no specific information provided regarding small business participation or subcontracting opportunities within this contract.
Oversight & Accountability
The Department of Education is responsible for overseeing this contract. Robust oversight would involve monitoring recovery rates, ensuring compliance with collection laws, and evaluating the contractor's performance against agreed-upon terms.
Related Government Programs
- Collection Agencies
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- High total award amount.
- Lack of performance data.
- Potential for non-compliance in collection practices.
- Concentration of critical function with one vendor.
Tags
collection-agencies, department-of-education, ca, dca, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $121.9 million to PERFORMANT RECOVERY, INC.. PRIOVIDES ED A MEANS OF CONROLLING DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTIONS RELATED TO IDENTIFYING DEFAULTED LOANS AND BILLING DEFAULTED BORROWERS.
Who is the contractor on this award?
The obligated recipient is PERFORMANT RECOVERY, INC..
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $121.9 million.
What is the period of performance?
Start: 2003-12-11. End: 2000-09-15.
What is the historical recovery rate achieved by Performant Recovery, Inc. under this contract, and how does it compare to industry benchmarks?
The provided data does not include specific recovery rates. To assess the true value, an analysis of Performant Recovery's performance metrics is necessary. Comparing these rates against industry averages for similar federal debt collection contracts would reveal if the $121.9 million expenditure is yielding optimal returns for taxpayers.
What are the potential risks associated with outsourcing the collection of delinquent federal loan accounts to a third-party agency?
Risks include reputational damage if collection practices are aggressive or non-compliant, potential data security breaches of sensitive borrower information, and over-reliance on the contractor leading to a loss of in-house expertise. Ensuring strict adherence to regulations and continuous performance monitoring is crucial to mitigate these risks.
How effectively does this contract mechanism contribute to the overall financial health and mission of the Department of Education's loan programs?
The contract's effectiveness hinges on its ability to significantly reduce the default rate and recover substantial amounts of money. If Performant Recovery successfully minimizes losses from delinquent accounts, it directly supports the financial sustainability of federal education programs, allowing funds to be reallocated or reducing the need for future appropriations.
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: FULL AND OPEN COMPETITION
Offers Received: 50
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Parent Company: Performant Financial Corporation (UEI: 784424728)
Address: 555 MCCORMICK STREET, SAN LEANDRO, CA, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $146,830,356
Exercised Options: $146,830,356
Current Obligation: $121,918,698
Timeline
Start Date: 2003-12-11
Current End Date: 2000-09-15
Potential End Date: 2005-08-31 00:00:00
Last Modified: 2008-02-13
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