Department of Education Spends $232.5M on Student Loan Debt Collection Services
Contract Overview
Contract Amount: $232,546,674 ($232.5M)
Contractor: FMS Investment Corp
Awarding Agency: Department of Education
Start Date: 2009-07-01
End Date: 2015-04-21
Contract Duration: 2,120 days
Daily Burn Rate: $109.7K/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: BETHESDA, MONTGOMERY County, MARYLAND, 20814
State: Maryland Government Spending
Plain-Language Summary
Department of Education obligated $232.5 million to FMS INVESTMENT CORP 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 for miscellaneous financial investment activities, specifically debt collection, was awarded to FMS Investment Corp. 2. This contract represents a significant portion of the agency's spending in this category. 3. The fixed-price incentive contract type suggests a focus on performance-based outcomes. 4. The duration of the contract (2120 days) indicates a long-term need for these services.
Value Assessment
Rating: good
The total award amount of $232.5 million over approximately 5.8 years suggests a substantial investment in debt collection services. Benchmarking against similar contracts for debt collection services would be necessary for a precise valuation, but the scale indicates a significant operational need.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
The contract was awarded via a competitive delivery order, indicating that multiple vendors likely competed for this work. This competitive process is expected to have driven a more favorable price discovery compared to non-competitive methods.
Taxpayer Impact: Taxpayer funds are being used to recover defaulted student loan debt, aiming to offset losses and maintain the financial health of federal student aid programs.
Public Impact
Ensures recovery of federal funds lost to student loan defaults. Supports the financial sustainability of federal student loan programs. Provides employment for individuals involved in debt collection and administrative resolution. Potential for consumer impact related to debt collection practices.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for aggressive collection tactics impacting borrowers.
- Reliance on a single vendor for a critical function.
Positive Signals
- Competitive award process.
- Fixed-price incentive contract aligns cost with performance.
Sector Analysis
The sector involves financial services, specifically debt collection for government-backed loans. Spending in this area is driven by the volume of defaulted student loans, which can fluctuate based on economic conditions and student enrollment.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to assess small business participation.
Oversight & Accountability
The Department of Education is responsible for overseeing this contract. The competitive delivery order process suggests established procurement procedures were followed. Accountability would be tied to the performance metrics within the fixed-price incentive contract.
Related Government Programs
- Miscellaneous Financial Investment Activities
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Potential for aggressive collection tactics.
- Long contract duration may reduce flexibility.
- Dependence on a single vendor for a critical function.
- Limited transparency on specific performance metrics.
Tags
miscellaneous-financial-investment-activ, department-of-education, md, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $232.5 million to FMS INVESTMENT CORP. 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 FMS INVESTMENT CORP.
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $232.5 million.
What is the period of performance?
Start: 2009-07-01. End: 2015-04-21.
What is the historical success rate of FMS Investment Corp in recovering student loan debt for the Department of Education under this contract?
The success rate of FMS Investment Corp in recovering student loan debt is a critical performance metric. While the contract value is high, the actual effectiveness in recouping funds directly impacts the return on investment for taxpayers. Understanding this rate would require access to performance reports and potentially comparing it against industry benchmarks for debt recovery.
What are the specific performance metrics and incentive structures within the fixed-price incentive contract that drive FMS Investment Corp's actions?
The fixed-price incentive contract likely includes specific targets for debt recovery amounts, resolution times, and potentially borrower satisfaction metrics. The incentive structure would reward FMS for exceeding these targets, while penalties or reduced profit might occur if targets are not met. This aims to align the contractor's financial interests with the government's goal of efficient and effective debt recovery.
How does the Department of Education ensure ethical and compliant debt collection practices by FMS Investment Corp, given the potential for borrower distress?
The Department of Education is expected to have established compliance protocols and oversight mechanisms to ensure FMS adheres to all federal and state regulations regarding debt collection, such as the Fair Debt Collection Practices Act. This includes regular audits, review of complaint logs, and potentially site visits to ensure ethical treatment of borrowers and proper handling of sensitive financial information.
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: 4938 HAMPDEN LN STE 218, BETHESDA, MD, 20814
Business Categories: Category Business, Small Business, Woman Owned Business
Financial Breakdown
Contract Ceiling: $232,546,675
Exercised Options: $232,546,675
Current Obligation: $232,546,674
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS23F0063J
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: 2020-05-07
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