Department of Education awarded $221.7M contract to Continental Service Group for student loan debt collection

Contract Overview

Contract Amount: $221,724,423 ($221.7M)

Contractor: Continental Service Group, LLC

Awarding Agency: Department of Education

Start Date: 2009-07-01

End Date: 2014-10-21

Contract Duration: 1,938 days

Daily Burn Rate: $114.4K/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: FAIRPORT, MONROE County, NEW YORK, 14450

State: New York Government Spending

Plain-Language Summary

Department of Education obligated $221.7 million to CONTINENTAL SERVICE GROUP, LLC 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. Contract focused on administrative resolution of defaulted federal student loans. 2. Performance period spanned over 5 years, indicating a sustained need for these services. 3. The contract was awarded via a competitive delivery order, suggesting multiple vendors were considered. 4. Fixed Price Incentive contract type aimed to align contractor performance with government objectives. 5. The geographic scope was primarily New York, as indicated by the state and city codes. 6. This contract represents a significant investment in managing the federal student loan portfolio.

Value Assessment

Rating: good

The total award amount of $221.7 million over approximately five years suggests a substantial operational scale. Benchmarking this against other federal debt collection contracts would require access to comparable data, but the duration and value indicate a significant program. The Fixed Price Incentive (FPI) contract type implies that the government sought to incentivize cost efficiency and performance, which can lead to better value if managed effectively. Without specific performance metrics and cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award mechanism provides some assurance.

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 larger, competitively awarded contract vehicle, and this specific order was placed after a competitive process among eligible vendors. The presence of 26 delivery orders suggests a robust competition at the base contract level, and potentially for this specific order as well, though the number of bidders for this particular order is not explicitly stated. A competitive process generally leads to better price discovery and potentially lower costs for the government.

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. This means more of the appropriated funds can be directed towards actual debt recovery rather than administrative overhead.

Public Impact

Federal student loan borrowers who have defaulted on their loans are the primary individuals impacted by these collection activities. The services delivered include administrative resolution and collection of debts, aiming to recover funds for the government. The geographic impact is primarily focused on New York, where the contractor is based and likely where a significant portion of the targeted debt resides. The contract supports jobs within the debt collection industry, specifically at Continental Service Group, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting financially distressed borrowers.
Ensuring data privacy and security of sensitive borrower information during collection processes.
Monitoring contractor performance to ensure compliance with all federal regulations and ethical standards.

Positive Signals

Contract awarded through a competitive process, suggesting potential for cost-effectiveness.
Use of an incentive contract type to align contractor performance with government goals.
The long duration of the contract implies a stable and potentially effective working relationship.

Sector Analysis

The federal student loan program is a massive sector within the U.S. economy, involving trillions of dollars in outstanding debt. Debt collection services are a critical component of managing this portfolio, particularly for defaulted loans. This contract falls under the broader financial services and administrative support sector for government programs. Comparable spending benchmarks would involve looking at other large-scale federal debt collection contracts across various agencies, such as IRS tax debt collection or other loan portfolio management contracts.

Small Business Impact

The contract details indicate that small business participation was not a primary focus, as the 'sb' (small business set-aside) flag is false. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This suggests that the primary contractor, Continental Service Group, LLC, likely handled the majority of the work internally, potentially limiting opportunities for small businesses to participate in this specific contract's execution.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's program managers and contracting officers. The use of a Fixed Price Incentive contract type necessitates close monitoring of performance metrics and costs to ensure the incentive structure is effective and that the contractor is meeting its obligations. Transparency would be facilitated through contract reporting requirements and potentially through public contract databases. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arose during the contract's performance.

Related Government Programs

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

Risk Flags

Potential for non-compliance with debt collection regulations.
Risk of data security breaches involving sensitive borrower information.
Contractor performance may not meet recovery targets.
Reputational risk to the agency due to contractor actions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $221.7 million to CONTINENTAL SERVICE GROUP, LLC. 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 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 $221.7 million.

What is the period of performance?

Start: 2009-07-01. End: 2014-10-21.

What is the track record of Continental Service Group, LLC in performing federal debt collection contracts?

Continental Service Group, LLC (CSG) has a history of performing debt collection services for the federal government. While specific performance details for this particular $221.7 million Department of Education contract (2009-2014) are not fully detailed in the provided data, CSG has been a significant player in the accounts receivable management industry. Their experience often includes handling large volumes of delinquent accounts across various sectors. To fully assess their track record, one would need to examine past performance evaluations, any documented disputes or contract terminations, and their success rates in comparable federal contracts, looking for consistency in meeting performance standards and compliance requirements.

How does the $221.7 million award compare to other federal student loan debt collection contracts?

The $221.7 million award to Continental Service Group, LLC over approximately five years represents a substantial contract for debt collection services. To benchmark this, one would need to compare it against the total spending on similar services by the Department of Education and other federal agencies managing loan portfolios. For instance, the Department of Education awards numerous contracts for servicing and collecting on federal student loans, with total annual spending often in the hundreds of millions or even billions of dollars when considering all aspects of loan management. This specific contract's value suggests it was a significant portion of the department's collection efforts during that period, likely targeting a specific segment or volume of defaulted loans.

What were the primary risks associated with this student loan debt collection contract?

Key risks associated with this contract likely included performance risk (failure to meet collection targets), compliance risk (violating borrower rights or privacy regulations), and reputational risk for the Department of Education if the contractor engaged in unethical practices. Financial risk for the government was mitigated by the Fixed Price Incentive structure, but ensuring the contractor's financial stability throughout the contract term was also a consideration. Operational risks, such as data breaches or system failures, were also present. The large volume of sensitive borrower data necessitated robust security protocols.

How effective was this contract in achieving its stated goals of debt resolution?

The provided data does not include specific performance metrics or effectiveness reports for this contract. However, the contract's objective was the 'collection and administrative resolution activities on debts resulting from non-payment of student loans.' Effectiveness would be measured by the amount of debt recovered relative to the contract cost, the efficiency of the administrative resolution process, and adherence to legal and ethical collection standards. A comprehensive assessment would require access to the Department of Education's internal performance reviews and financial recovery data related to this specific contract.

What are the historical spending patterns for federal student loan debt collection services?

Historical spending on federal student loan debt collection has been significant and has evolved over time, particularly with the increasing volume of student loan debt. The Department of Education utilizes a mix of in-house efforts and private contractors for servicing and collection. Spending fluctuates based on the number of borrowers entering default, the overall size of the loan portfolio, and policy changes regarding loan forgiveness and repayment options. Contracts like the one awarded to Continental Service Group are part of a larger, ongoing expenditure aimed at managing the financial health of the federal student loan program, often running into hundreds of millions annually across various contracts.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 26

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 200 CROSS KEYS OFFICE PARK, FAIRPORT, NY, 14450

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $221,724,423

Exercised Options: $221,724,423

Current Obligation: $221,724,423

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F0084P

IDV Type: FSS

Timeline