Department of Education's $200M student loan debt collection contract awarded to Account Control Technology Inc

Contract Overview

Contract Amount: $200,437,609 ($200.4M)

Contractor: Account Control Technology Inc.

Awarding Agency: Department of Education

Start Date: 2009-07-01

End Date: 2015-04-21

Contract Duration: 2,120 days

Daily Burn Rate: $94.5K/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: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367

State: California Government Spending

Plain-Language Summary

Department of Education obligated $200.4 million to ACCOUNT CONTROL TECHNOLOGY INC. 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 recover funds from defaulted federal student loans, a critical function for the Department of Education's financial health. 2. Account Control Technology Inc. was selected to perform collection and administrative resolution activities, indicating a need for specialized debt recovery services. 3. The contract duration of approximately 2120 days (around 5.8 years) suggests a long-term need for these services. 4. The award was a delivery order under a larger contract, implying a structured procurement process. 5. The fixed-price incentive contract type suggests that both the government and the contractor had incentives to manage costs and achieve performance targets. 6. The contract's focus on administrative resolution alongside collection highlights a comprehensive approach to managing defaulted student loans.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and comparison data for similar debt collection services. The total award amount of over $200 million over nearly six years indicates a significant investment in recovering defaulted student loans. However, the effectiveness of the collection activities and the ultimate recovery rate compared to the cost would be key indicators of value for money. Without insight into the recovery rates achieved by Account Control Technology Inc., it's difficult to definitively assess if the pricing was competitive or if the value delivered was excellent.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

The contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' suggesting that multiple vendors likely had the opportunity to bid on this specific task order. The fact that it was competed indicates that the Department of Education sought to leverage market competition to secure services. The number of bidders is not specified, but a competitive process generally leads to better price discovery and potentially more favorable terms for the government compared to sole-source awards.

Taxpayer Impact: A competitive award process for debt collection services helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces. It increases the likelihood that the government secures services at a reasonable price, maximizing the recovery of defaulted student loan funds.

Public Impact

Federal student loan borrowers who have defaulted on their loans are directly impacted by the collection activities performed under this contract. The services delivered include the administrative resolution and collection of debts, aiming to recoup funds for the federal government. The geographic impact is national, as federal student loans are dispersed across the United States. This contract supports the financial operations of the Department of Education by managing its portfolio of non-performing student loans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting borrowers.
Effectiveness of collection in relation to administrative costs needs further scrutiny.
Long-term contract duration may reduce flexibility to adapt to changing economic conditions or borrower needs.

Positive Signals

Competitive award process suggests potential for cost efficiency.
Focus on administrative resolution alongside collection indicates a structured approach.
Contract aims to recover funds, directly benefiting federal financial resources.

Sector Analysis

The contract falls within the Miscellaneous Financial Investment Activities sector, specifically related to debt collection and resolution for federal student loans. This sector is crucial for government agencies managing financial assets and liabilities. The size of this contract, exceeding $200 million, indicates a significant volume of defaulted student debt requiring specialized management. Comparable spending benchmarks would typically involve other government contracts for debt collection services across various agencies, or private sector contracts for similar financial recovery operations.

Small Business Impact

Information regarding small business set-asides or subcontracting plans for this specific delivery order was not provided in the data. As a competitive delivery order, it's possible that small businesses could have participated if they met the qualifications. However, without explicit details, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if subcontracting opportunities were mandated or utilized.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers responsible for the student financial aid programs. Accountability measures are typically embedded within the contract terms, including performance standards and reporting requirements. Transparency would depend on the Department's policies regarding the disclosure of contract details and performance outcomes. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse related to the contract arise.

Related Government Programs

Federal Student Loan Programs
Department of Education Financial Management
Government Debt Collection Services
Defaulted Loan Resolution

Risk Flags

Potential for aggressive collection practices.
Data security and privacy concerns.
Contractor performance variability.
Compliance with consumer protection laws.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $200.4 million to ACCOUNT CONTROL TECHNOLOGY INC.. 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 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 $200.4 million.

What is the period of performance?

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

What was the specific performance history of Account Control Technology Inc. on previous federal contracts, particularly those involving student loan debt collection?

Assessing the performance history of Account Control Technology Inc. on prior federal contracts is crucial for understanding their capability and reliability in managing student loan debt. While the provided data does not detail past performance, a thorough review would involve examining contract databases (like FPDS or SAM.gov) for previous awards to ACT, their performance ratings, any past performance issues, and the types of services rendered. Specifically, looking for contracts with the Department of Education or other agencies for debt collection, especially for student loans, would provide the most relevant context. Positive past performance, such as consistently meeting collection targets, maintaining high compliance standards, and receiving favorable performance reviews, would indicate a lower risk for this contract. Conversely, any history of disputes, contract terminations, or significant performance deficiencies would raise concerns about their ability to successfully execute this $200 million award.

How does the total contract value of approximately $200 million compare to other federal contracts for student loan debt collection services?

The total contract value of approximately $200 million for Account Control Technology Inc. represents a substantial investment in student loan debt collection. To benchmark this value, one would compare it against similar contracts awarded by the Department of Education or other federal agencies for comparable services. For instance, analyzing the average contract size and duration for debt collection services over the past five to ten years can provide context. If this contract is significantly larger or smaller than the average, it warrants further investigation. Factors such as the volume of defaulted loans, the complexity of the debt portfolio, and the specific services required (e.g., administrative resolution vs. legal action) influence contract values. A higher-than-average value might suggest a larger scope of work or potentially less competitive pricing, while a lower value could indicate greater efficiency or a more limited scope. Understanding these comparisons helps determine if the Department of Education secured a competitive price for the services rendered.

What are the key risk indicators associated with a contract of this size and nature, and how were they mitigated?

Contracts for debt collection, especially those involving large sums like $200 million for student loans, carry several inherent risks. Key indicators include the potential for non-compliance with consumer protection regulations (e.g., Fair Debt Collection Practices Act), data security breaches of sensitive borrower information, and reputational damage to the government if collection practices are perceived as overly aggressive or unfair. Performance risk is also significant, focusing on the contractor's ability to effectively collect debts while managing administrative costs. Mitigation strategies typically involve robust contract oversight, clearly defined performance metrics and penalties, stringent data security requirements, regular audits, and compliance training for the contractor's staff. The Department of Education would likely have established specific clauses within the contract to address these risks, including reporting requirements, limitations on collection methods, and protocols for handling borrower complaints. The competitive nature of the award also serves as a risk mitigation factor, as it implies a selection process based on capability and price.

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

Understanding the historical spending patterns for student loan debt collection services is essential for evaluating the current contract's context and potential value. This involves analyzing the Department of Education's budget allocations and actual expenditures on debt collection over several fiscal years. Key questions include: How much has the Department historically spent on similar services? Has spending increased or decreased over time, and why? What was the average contract size and duration? Were services previously outsourced to private collection agencies, or handled internally? Examining these patterns can reveal trends in the volume of defaulted loans, the effectiveness of past collection strategies, and the evolution of the Department's approach to debt management. For instance, a significant increase in spending might indicate a rise in loan defaults, while a decrease could suggest improved collection efficiency or policy changes. Comparing the $200 million award to this historical baseline provides insight into the scale and significance of the current contract within the Department's overall financial operations.

What specific metrics were used to measure the success and value-for-money of this debt collection contract?

Measuring the success and value-for-money of a debt collection contract like this hinges on specific, quantifiable metrics. Primary among these would be the 'recovery rate' – the percentage of defaulted debt successfully collected relative to the total amount owed. Another key metric is the 'cost per dollar collected,' which directly assesses efficiency. The contract likely also included targets for administrative resolution, such as the number of payment plans established or disputes resolved. Performance against these targets, often tied to incentive clauses in the contract, would determine the contractor's success. Value-for-money is assessed by comparing these performance outcomes against the contract cost. If the recovery rate is high and the cost per dollar collected is low, especially when benchmarked against industry standards or previous contracts, it indicates good value. Conversely, poor performance on these metrics, even with a seemingly reasonable contract price, would suggest questionable value.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 26

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 21700 OXNARD STREET STE 1400, WOODLAND HILLS, CA, 91367

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $217,707,609

Exercised Options: $217,707,609

Current Obligation: $200,437,609

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F0235K

IDV Type: FSS

Timeline