Department of Education's $305M student loan collection contract awarded to Continental Service Group, LLC

Contract Overview

Contract Amount: $305,514,896 ($305.5M)

Contractor: Continental Service Group, LLC

Awarding Agency: Department of Education

Start Date: 2015-04-22

End Date: 2017-04-21

Contract Duration: 730 days

Daily Burn Rate: $418.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CRITICAL FUNCTION - IGF::CT::IGF 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 $305.5 million to CONTINENTAL SERVICE GROUP, LLC for work described as: CRITICAL FUNCTION - IGF::CT::IGF 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's value of over $305 million indicates a significant investment in debt collection services for federal student loans. 2. Awarded through full and open competition, this contract suggests a market with multiple capable providers for collection agencies. 3. The fixed-price contract type aims to control costs by establishing a set payment for services rendered. 4. The contract duration of two years provides a defined period for performance and evaluation. 5. The geographic location of the contractor in New York may influence operational reach and local economic impact. 6. The absence of small business set-asides suggests the primary focus was on securing the most capable large-scale provider.

Value Assessment

Rating: good

The contract's value of over $305 million for two years of student loan collection services appears substantial. Benchmarking against similar large-scale federal debt collection contracts would be necessary for a precise value-for-money assessment. However, the fixed-price nature of the award suggests an effort to manage costs predictably. The contractor's performance history and the efficiency of their collection methods would be key indicators of overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple vendors were likely solicited and allowed to bid. The presence of a competitive bidding process generally promotes price discovery and encourages vendors to offer their best terms. The number of bids received would provide further insight into the level of competition and the market's responsiveness to this type of federal requirement.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider selection of qualified contractors, potentially reducing the overall cost of services.

Public Impact

Federal student loan borrowers who have defaulted on their loans are the primary service recipients, as the contract aims to resolve outstanding debts. The services delivered include collection and administrative resolution activities for debts arising from non-payment of federal student loans. The geographic impact is national, covering all federal student loan programs administered by the Department of Education. Workforce implications may include employment opportunities within Continental Service Group, LLC, particularly in collection and administrative roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting borrower well-being.
Effectiveness of administrative resolution processes needs continuous monitoring.
Data security and privacy of borrower information are paramount concerns.

Positive Signals

Awarded through full and open competition, suggesting a robust market for these services.
Fixed-price contract helps in budget predictability for the agency.
Contractor's specialization in collection services indicates focused expertise.

Sector Analysis

The collection agency sector is a critical component of the financial services industry, supporting government and private entities in recovering outstanding debts. Federal contracts for debt collection, particularly for student loans, represent a significant market segment. This contract fits within the broader category of professional services and administrative support for government programs. Comparable spending benchmarks would involve analyzing other large federal contracts for debt collection services across various agencies.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'ss: false' and 'sb: false'. The award to a single entity suggests that the primary focus was on securing a large-scale provider capable of handling the volume and complexity of federal student loan debt. There is no explicit mention of subcontracting requirements for small businesses, implying that the prime contractor will likely manage the majority of the work internally.

Oversight & Accountability

Oversight of this contract would typically fall under the purview of the Department of Education's contracting officers and program managers. Accountability measures would be tied to performance metrics outlined in the contract, such as collection rates and administrative resolution timelines. Transparency is generally maintained through contract award databases and public reporting, though specific operational details may be sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

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

Risk Flags

Contract Performance Risk
Reputational Risk
Compliance Risk
Financial Risk (unrecovered debt)

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $305.5 million to CONTINENTAL SERVICE GROUP, LLC. CRITICAL FUNCTION - IGF::CT::IGF 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 $305.5 million.

What is the period of performance?

Start: 2015-04-22. End: 2017-04-21.

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

Continental Service Group, LLC (CSG) has a history of performing debt collection services for various government agencies. While specific performance metrics for this particular Department of Education contract are not detailed in the provided data, CSG's experience in the field suggests a foundational understanding of collection processes. A comprehensive review would involve examining past contract performance evaluations, any reported disputes or penalties, and their success rates in comparable federal programs. Their ability to manage large volumes of debt and adhere to regulatory requirements would be key indicators of their track record.

How does the awarded amount of $305.5 million compare to similar federal debt collection contracts?

The $305.5 million awarded to Continental Service Group, LLC for a two-year period is a substantial sum, reflecting the significant scale of federal student loan debt requiring collection. To benchmark this value, one would need to compare it against other large-scale contracts awarded by agencies like the Department of the Treasury, Department of Justice, or even other components within the Department of Education for similar debt recovery services. Factors such as the type of debt (e.g., tax, healthcare, student loans), the complexity of recovery, and the contract duration would influence comparability. Without specific data on comparable contracts, it's difficult to definitively state if this represents excellent or fair value, but the amount suggests a high-volume, high-stakes operation.

What are the primary risks associated with this contract for the Department of Education?

The primary risks for the Department of Education in this contract revolve around the effectiveness of debt recovery, contractor performance, and potential reputational damage. Ineffective collection efforts could lead to significant unrecovered debt, impacting program funding and government revenue. Poor performance by Continental Service Group, LLC, such as non-compliance with regulations or inadequate service delivery, could necessitate contract modifications or termination. Furthermore, aggressive or unethical collection practices by the contractor could lead to negative publicity and legal challenges, harming the Department's image and potentially impacting borrower relations. Ensuring robust oversight and performance monitoring is crucial to mitigate these risks.

How effective are collection agencies in recovering federal student loan debt, and how is this measured?

The effectiveness of collection agencies in recovering federal student loan debt is typically measured by key performance indicators (KPIs) such as the amount of debt recovered (recovery rate), the cost per dollar collected, the time to collect, and compliance with all relevant laws and regulations (e.g., FDCPA). The Department of Education would establish specific targets for these KPIs within the contract. While collection agencies can be effective, the success rate often depends on factors like the age and amount of the debt, the borrower's financial situation, and the agency's strategies. Continuous monitoring and performance reviews by the agency are essential to ensure the contractor is meeting its obligations and achieving satisfactory recovery rates.

What has been the historical spending trend for federal student loan collection services?

Historical spending on federal student loan collection services has generally trended upwards, driven by the increasing volume of outstanding federal student loan debt. The Department of Education utilizes a mix of in-house efforts and private collection agencies to manage this debt. Over the years, there have been shifts in policy and strategy regarding debt servicing and collection, influencing the reliance on and spending with third-party contractors. Analyzing past appropriations, contract awards, and the overall federal student loan portfolio size would provide a clearer picture of the historical spending trajectory and the proportion allocated to private collection agencies.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $311,845,571

Exercised Options: $311,845,570

Current Obligation: $305,514,896

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS23F0084P

IDV Type: FSS

Timeline