Department of Education paid $84.1M for student loan debt collection services from Immediate Credit Recovery, Inc

Contract Overview

Contract Amount: $84,118,980 ($84.1M)

Contractor: Immediate Credit Recovery, Inc.

Awarding Agency: Department of Education

Start Date: 2009-07-01

End Date: 2014-10-21

Contract Duration: 1,938 days

Daily Burn Rate: $43.4K/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: POUGHKEEPSIE, DUTCHESS County, NEW YORK, 12601

State: New York Government Spending

Plain-Language Summary

Department of Education obligated $84.1 million to IMMEDIATE CREDIT 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 focused on debt collection and administrative resolution for federal student loans. 2. Immediate Credit Recovery, Inc. was the sole contractor for these services. 3. The contract duration was 1938 days, spanning from July 2009 to October 2014. 4. The contract type was Fixed Price Incentive, suggesting performance-based payment adjustments. 5. The North American Industry Classification System (NAICS) code 522310 indicates mortgage and nonmortgage loan brokerage services. 6. The contract was awarded as a competitive delivery order, implying a broader competitive framework. 7. The contract was not set aside for small businesses.

Value Assessment

Rating: fair

Benchmarking the value for money on this contract is challenging without specific performance metrics and recovery rates. The fixed-price incentive structure suggests an attempt to align contractor performance with desired outcomes. However, the total award amount of $84.1 million over nearly five years for debt collection services requires further analysis to determine if it represents a cost-effective solution for the Department of Education compared to internal efforts or other contractors.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded as a competitive delivery order, which suggests it was part of a larger, pre-competed contract vehicle. However, the specific details of the competition for this particular delivery order are not fully elaborated in the provided data. The number of bids received (26) indicates a degree of competition, but the nature of the 'delivery order' implies it might have been competed among pre-qualified vendors.

Taxpayer Impact: A competitive delivery order process, while not a full and open competition for the specific task, generally aims to leverage existing competition to secure better pricing and service. The 26 bids suggest that taxpayers benefited from a range of offers, potentially leading to more favorable terms than a sole-source award.

Public Impact

Federal student loan borrowers who have defaulted on their loans are directly impacted by these collection activities. The services delivered include the administrative resolution of debts, aiming to recover funds for the federal government. The contract was awarded to a company based in New York, suggesting a potential geographic focus for operations or administrative oversight. The contract supports the Department of Education's mission to manage and recover federal student loan assets, indirectly benefiting taxpayers by reducing the net cost of the student loan program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess the efficiency and effectiveness of the debt collection efforts.
The 'limited' competition level, even within a delivery order framework, warrants scrutiny to ensure optimal value.
The fixed-price incentive structure requires careful monitoring to ensure it effectively drives desired recovery outcomes without excessive cost overruns.

Positive Signals

The contract was awarded through a competitive delivery order process, indicating some level of market vetting.
The existence of 26 bids suggests a healthy interest from potential service providers in this market.
The fixed-price incentive contract type is designed to reward performance, potentially leading to more efficient debt recovery.

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 loan servicing and collection. The market involves numerous private companies competing to manage and recover defaulted federal debts. The total spending in this sector can fluctuate based on economic conditions and the volume of student loan defaults. Benchmarking against similar contracts would require access to data on recovery rates and administrative costs for other federal debt collection efforts.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'sb': false. Therefore, there are no direct subcontracting implications or specific benefits to the small business ecosystem stemming from a set-aside provision. The primary contractor, Immediate Credit Recovery, Inc., is likely a larger entity, and the contract's value suggests it was aimed at established players in the debt collection industry.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. As a federal contract, it is subject to standard government oversight mechanisms, including audits and reviews by the Department's Office of Inspector General (OIG). Transparency would depend on the Department's reporting practices regarding contract performance and financial outcomes. The specific details of accountability measures are not provided but would typically be embedded within the contract's terms and conditions.

Related Government Programs

Federal Student Loan Servicing Contracts
Department of Education Debt Collection Programs
Government Debt Recovery Services
Financial Services Contracting

Risk Flags

Contract Duration
Limited Competition Details
Performance Metrics Unclear
NAICS Code Ambiguity

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $84.1 million to IMMEDIATE CREDIT 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 IMMEDIATE CREDIT 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 $84.1 million.

What is the period of performance?

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

What was the specific performance of Immediate Credit Recovery, Inc. in recovering defaulted student loan debt under this contract?

The provided data does not include specific performance metrics such as the total amount of debt recovered, the recovery rate achieved, or the cost per dollar recovered. While the contract was a Fixed Price Incentive (FPI) type, which typically includes targets and potential adjustments based on performance, the actual outcomes are not detailed. To assess performance, one would need access to the Department of Education's internal performance reports, recovery data, and any incentive payments or penalties applied under the contract. Without this granular data, it's impossible to definitively state how effectively Immediate Credit Recovery, Inc. performed its debt collection duties beyond fulfilling the basic contractual requirements.

How does the total contract value of $84.1 million compare to other federal student loan debt collection contracts?

Comparing the $84.1 million total award value requires context regarding the contract's duration (1938 days, approximately 5.3 years) and the volume and age of the debt portfolio assigned. Federal student loan debt collection contracts can vary significantly in value based on the number of borrowers, the total amount of debt, and the specific collection strategies employed. Without data on comparable contracts awarded during the same period (2009-2014) for similar portfolios, it's difficult to make a direct benchmark. However, $84.1 million over five years suggests a substantial effort, indicating a significant volume of defaulted loans were managed under this agreement. Further analysis would involve comparing cost-per-dollar-recovered or administrative cost ratios against industry standards and other government contracts.

What were the primary risks associated with this student loan debt collection contract, and how were they managed?

Key risks for this contract likely included: 1) Performance Risk: The possibility that Immediate Credit Recovery, Inc. might not achieve the desired debt recovery rates, impacting the government's financial return. This was partially mitigated by the Fixed Price Incentive (FPI) structure, which incentivizes performance. 2) Compliance Risk: Ensuring that all collection activities adhered to federal regulations (e.g., Fair Debt Collection Practices Act) and Department of Education policies to avoid legal challenges and reputational damage. 3) Data Security Risk: Protecting sensitive borrower information handled during the collection process. 4) Contractor Viability Risk: Ensuring the financial stability and operational capacity of the contractor throughout the contract term. Management of these risks would involve contract surveillance, performance monitoring, compliance reviews, and potentially audits by the Department of Education.

What was the historical spending pattern for federal student loan debt collection services by the Department of Education around the period of this contract (2009-2014)?

Historical spending on federal student loan debt collection services by the Department of Education during the 2009-2014 period would likely show a significant allocation of resources. This era saw a rise in student loan borrowing and, consequently, potential increases in default rates, especially following the 2008 financial crisis. The Department typically utilizes a mix of in-house collection efforts and contracts with private collection agencies. Spending patterns would reflect the volume of defaulted loans, the effectiveness of different collection methods, and policy decisions regarding loan servicing and recovery. Analyzing spending across multiple contracts and years would reveal trends in outsourcing, contractor performance, and overall investment in debt recovery operations.

What is the significance of the NAICS code 522310 (Mortgage and Nonmortgage Loan Brokers) for a student loan debt collection contract?

The NAICS code 522310, 'Mortgage and Nonmortgaged Loan Brokers,' is somewhat unusual for a primary debt collection contract. Typically, debt collection services fall under NAICS codes related to Credit Bureaus and Related Activities (e.g., 561440 - Collection Systems) or Business Support Services. However, loan brokers are involved in the origination and sometimes servicing of loans. It's possible that Immediate Credit Recovery, Inc. had capabilities that spanned aspects of loan servicing or administrative resolution that aligned with this classification, or that the classification was applied broadly within a larger contract vehicle. The 'broker' aspect might imply an intermediary role in facilitating the resolution or transfer of debt rather than direct, aggressive collection.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Mortgage and Nonmortgage Loan Brokers

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: 6 NEPTUNE RD - SUITE 110, POUGHKEEPSIE, NY, 12601

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

Financial Breakdown

Contract Ceiling: $86,787,702

Exercised Options: $86,787,702

Current Obligation: $84,118,980

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F0015U

IDV Type: FSS

Timeline