Department of Education's $144M contract for student loan debt collection awarded to Collection Technology Inc

Contract Overview

Contract Amount: $144,054,805 ($144.1M)

Contractor: Collection Technology Incorporated

Awarding Agency: Department of Education

Start Date: 2009-07-01

End Date: 2015-04-21

Contract Duration: 2,120 days

Daily Burn Rate: $68.0K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 26

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS.

Place of Performance

Location: RANCHO CUCAMONGA, SAN BERNARDINO County, CALIFORNIA, 91730

State: California Government Spending

Plain-Language Summary

Department of Education obligated $144.1 million to COLLECTION TECHNOLOGY INCORPORATED for work described as: PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS. Key points: 1. The contract aimed to resolve debts from federal student aid loans, indicating a significant effort in managing student financial obligations. 2. Awarded through a competitive process, the contract suggests a market with multiple potential providers for debt collection services. 3. The fixed-price incentive contract structure implies a focus on performance-based outcomes for debt resolution. 4. The duration of the contract (over 7 years) points to a long-term strategy for managing student loan portfolios. 5. The North American Industry Classification System (NAICS) code 541211 categorizes the work under Offices of Certified Public Accountants, suggesting a focus on financial and accounting aspects of debt resolution. 6. The contract was a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle, common for ongoing service needs.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data for student loan debt collection services. The total award amount of $144 million over its lifespan suggests a substantial investment in managing delinquent federal student loans. However, the effectiveness and efficiency of the collection activities, and thus the true value for money, would depend on the recovery rates achieved relative to the costs incurred. Without insight into these recovery rates and the specific terms of the incentive structure, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' indicating that it was part of a full and open competition. This suggests that multiple vendors were likely solicited, and proposals were evaluated based on predefined criteria. The fact that it was a competitive award implies that the Department of Education sought to leverage market competition to secure the best possible terms and services for debt collection. The number of bidders (26) further supports a robust competitive environment for this type of service.

Taxpayer Impact: A competitive award process generally benefits taxpayers by driving down costs and improving service quality through vendor innovation and efficiency. It ensures that the government is not locked into a single provider and can achieve better pricing and performance.

Public Impact

Federal student loan borrowers who have defaulted on their loans are the primary individuals impacted, as they are subject to collection activities. The services delivered include the administrative resolution of debts, aiming to recover funds for the federal government. The contract was awarded to Collection Technology Incorporated, a private entity, highlighting the government's use of contractors for specialized functions. The geographic impact is likely nationwide, given the scope of federal student loan programs, although specific collection efforts might be localized. The workforce implications involve the employment of individuals within Collection Technology Incorporated to perform these collection and administrative tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting borrower financial well-being.
Ensuring data privacy and security of sensitive borrower information during collection processes.
Measuring the true cost-effectiveness of private collection agencies versus in-house government efforts.

Positive Signals

Competitive award process likely led to better pricing and service terms.
Incentive-based contract structure encourages performance and efficiency in debt recovery.
Long contract duration suggests a stable and reliable service provider for ongoing needs.

Sector Analysis

The federal student loan servicing and debt collection sector is a significant area of government contracting. This contract falls under financial services, specifically focusing on accounts receivable and debt management. The market for these services includes numerous private companies specializing in collections, often operating under government contracts. The Department of Education is a major player in this space, managing a vast portfolio of student loans. Comparable spending benchmarks would involve looking at other contracts for debt collection services across various federal agencies, as well as the historical spending by the Department of Education on similar student loan recovery efforts.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (sb: false). Collection Technology Incorporated is likely a larger entity, given the scale of the contract. There is no explicit information on subcontracting plans for small businesses within this data. The impact on the small business ecosystem would depend on whether Collection Technology Incorporated engages small businesses as subcontractors, which is not detailed here. Typically, large prime contracts like this may offer subcontracting opportunities, but this requires specific contractual provisions and oversight.

Oversight & Accountability

Oversight of this contract would primarily reside with the Department of Education's contracting officers and program managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and approving payments. The contract's fixed-price incentive structure suggests that performance metrics would be key to oversight. Transparency would be facilitated through contract award databases and potentially through reports generated by the contractor on collection activities and outcomes. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Student Aid Loan Programs
Department of Education Debt Management
Government Debt Collection Services
Accounts Receivable Management Contracts

Risk Flags

Contract duration exceeds typical service periods, requiring careful performance monitoring.
Fixed Price Incentive contracts can be complex to administer and require precise performance metric definition.
Reliance on private collection agencies may raise concerns about borrower treatment and public perception.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $144.1 million to COLLECTION TECHNOLOGY INCORPORATED. PRIVATE COLLECTION AGENCY PERFORMS COLLECTION AND ADMINISTRATIVE RESOLUTION ACTIVITIES ON DEBTS RESULTING FROM NON-PAYMENT OF STUDENT LOANS MADE UNDER THE VARIOUS FEDERAL STUDENT AID LOAN PROGRAMS.

Who is the contractor on this award?

The obligated recipient is COLLECTION TECHNOLOGY INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $144.1 million.

What is the period of performance?

Start: 2009-07-01. End: 2015-04-21.

What was the specific performance criteria tied to the 'incentive' in the Fixed Price Incentive contract?

The provided data does not specify the exact performance criteria for the incentive component of the Fixed Price Incentive (FPI) contract. Typically, FPI contracts aim to motivate contractor performance by establishing a target cost, target profit, and an incentive formula. The contractor and the government share the variances from the target cost, with the government's share increasing as the contractor's cost savings increase, up to a ceiling. For debt collection, performance criteria could include metrics such as the percentage of debt recovered, the speed of recovery, the cost per dollar collected, or borrower satisfaction during the collection process. Without the contract's statement of work or detailed award documentation, the precise incentive mechanisms remain unknown.

How does the cost per dollar collected under this contract compare to industry benchmarks or previous Department of Education contracts?

The provided data does not include the cost per dollar collected, making a direct comparison to industry benchmarks or previous contracts impossible. To assess this, one would need to know the total amount collected by Collection Technology Incorporated and the total costs incurred by the contractor (including profit and overhead) that are attributable to those collections. Industry benchmarks for debt collection can vary widely based on the type of debt, the age of the debt, and the collection methods used. Government contracts often have specific reporting requirements for cost-effectiveness. Without access to the contractor's performance reports or the Department of Education's internal analysis, this benchmark cannot be established.

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

The provided data focuses on a single contract awarded in 2009 with an end date in 2015. It does not offer historical spending patterns for student loan debt collection by the Department of Education. To understand historical spending, one would need to analyze contract awards over multiple fiscal years, potentially looking at various contract vehicles (e.g., IDIQs, task orders) and different contractors used for similar services. This would involve querying federal procurement databases like FPDS or USASpending for relevant keywords and agencies over an extended period to identify trends in spending volume, average contract values, and the number of contracts awarded.

What is the track record of Collection Technology Incorporated in handling federal debt collection contracts?

The provided data identifies Collection Technology Incorporated (CTI) as the contractor and the Department of Education as the agency, with a contract value of $144 million. However, it does not detail CTI's specific track record, such as past performance ratings on other federal contracts, the types of debts they have managed, or their success rates. To assess CTI's track record, one would need to research their contract history with the federal government, looking for performance evaluations, any past disputes or contract terminations, and the scope and scale of their previous work in debt collection, particularly for student loans. Information on their experience with similar agencies or debt portfolios would also be relevant.

What were the primary risks identified during the procurement and award of this contract, and how were they mitigated?

The provided data does not detail the specific risks identified during the procurement and award of this contract. Typical risks in federal contracting, especially for debt collection, can include contractor performance failures, data security breaches, cost overruns (though less likely in FPI if well-structured), legal challenges, and reputational damage. Mitigation strategies often involve thorough pre-award evaluations of contractor capabilities and past performance, robust contract language defining performance standards and remedies, clear data security protocols, and ongoing contract surveillance by the government. The competitive nature of the award itself serves as a risk mitigation tool by selecting a vendor deemed most capable and offering the best value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 26

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 10801 6TH STREET SUITE 200, RANCHO CUCAMONGA, CA, 91730

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $152,849,049

Exercised Options: $152,849,049

Current Obligation: $144,054,805

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F0227N

IDV Type: FSS

Timeline