Department of Education's $230M contract with Performant Recovery for student loan debt collection shows fair value and limited competition
Contract Overview
Contract Amount: $230,192,008 ($230.2M)
Contractor: Performant Recovery, Inc.
Awarding Agency: Department of Education
Start Date: 2009-07-01
End Date: 2015-04-21
Contract Duration: 2,120 days
Daily Burn Rate: $108.6K/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: SAN LEANDRO, ALAMEDA County, CALIFORNIA, 94577
Plain-Language Summary
Department of Education obligated $230.2 million to PERFORMANT RECOVERY, 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 awarded to Performant Recovery, Inc. for student loan debt collection services represents a significant investment in recovering federal funds. 2. Competition for this contract was limited, potentially impacting price discovery and overall value for taxpayers. 3. Risks include the effectiveness of debt collection strategies and ensuring fair treatment of borrowers. 4. The sector involves financial services, specifically debt collection, which is crucial for managing federal loan portfolios.
Value Assessment
Rating: fair
The total award amount of $230,192,007.99 over its period suggests a substantial investment. Benchmarking against similar debt collection contracts is difficult without more granular data on recovery rates and administrative costs per dollar collected.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded as a competitive delivery order, indicating some level of competition, but the specific details of the competition are not provided. Limited competition can sometimes lead to higher prices than a fully open market.
Taxpayer Impact: The effectiveness of this contract directly impacts taxpayers by either recovering funds owed to the government or incurring costs for collection efforts.
Public Impact
Federal student loan borrowers may experience increased contact from Performant Recovery regarding outstanding debts. The success of this contract contributes to the financial health of federal student aid programs. Taxpayers benefit from the recovery of defaulted student loans, reducing the overall burden on federal finances.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition
- Potential for aggressive collection tactics
- Data privacy and security of borrower information
Positive Signals
- Dedicated focus on student loan debt recovery
- Established agency with experience in collections
Sector Analysis
This contract falls within the miscellaneous financial investment activities sector, specifically focusing on debt collection for federal student loans. Benchmarks for this specific niche are hard to establish due to the unique nature of government debt.
Small Business Impact
The data indicates this contract was not set aside for small businesses, suggesting larger, established firms were likely the primary competitors.
Oversight & Accountability
The Department of Education is responsible for overseeing this contract. Accountability would involve tracking recovery rates, collection costs, and adherence to fair debt collection practices.
Related Government Programs
- Miscellaneous Financial Investment Activities
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Potential for high administrative costs relative to recovered debt.
- Risk of borrower complaints regarding collection practices.
- Dependence on the effectiveness of a single, limited-competitor provider.
- Data security and privacy concerns with sensitive borrower information.
Tags
miscellaneous-financial-investment-activ, department-of-education, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $230.2 million to PERFORMANT RECOVERY, 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 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 $230.2 million.
What is the period of performance?
Start: 2009-07-01. End: 2015-04-21.
What is the cost-effectiveness of Performant Recovery's collection efforts compared to industry averages or previous government contracts?
Assessing cost-effectiveness requires detailed data on the percentage of debt recovered, the cost per dollar collected, and the efficiency of administrative resolution activities. Without this granular information, it's challenging to benchmark Performant Recovery's performance against industry averages or prior government contracts. A thorough analysis would involve comparing key performance indicators like recovery rates and operational expenses.
What are the specific risks associated with the limited competition for this debt collection contract?
Limited competition can reduce the incentive for the awarded contractor to offer the most competitive pricing, potentially leading to higher costs for the government. It may also limit the pool of innovative solutions or specialized expertise available. Furthermore, a lack of robust competition could raise concerns about the fairness of the procurement process and the ultimate value achieved for taxpayer funds.
How effectively does this contract contribute to the overall financial health and sustainability of federal student aid programs?
The effectiveness of this contract is directly tied to its ability to recover defaulted student loan debt, thereby replenishing funds available for future student aid. Successful debt collection reduces the financial burden on the government and ensures the long-term viability of programs like Pell Grants and federal student loans. Performance metrics on recovery rates and the net financial return are crucial indicators.
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
Parent Company: Performant Financial Corporation (UEI: 784424728)
Address: 555 MCCORMICK ST, SAN LEANDRO, CA, 94577
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $240,401,261
Exercised Options: $240,401,261
Current Obligation: $230,192,008
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS23F0286K
IDV Type: FSS
Timeline
Start Date: 2009-07-01
Current End Date: 2015-04-21
Potential End Date: 2015-04-21 00:00:00
Last Modified: 2020-04-14
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