Department of Education's $273M contract with Windham Professionals Inc. for student loan debt collection shows fair value

Contract Overview

Contract Amount: $272,863,924 ($272.9M)

Contractor: Windham Professionals Inc

Awarding Agency: Department of Education

Start Date: 2015-04-22

End Date: 2017-04-21

Contract Duration: 730 days

Daily Burn Rate: $373.8K/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: SALEM, ROCKINGHAM County, NEW HAMPSHIRE, 03079

State: New Hampshire Government Spending

Plain-Language Summary

Department of Education obligated $272.9 million to WINDHAM PROFESSIONALS INC 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 represents a significant investment in managing federal student loan portfolios. 2. Competition dynamics suggest a competitive bidding process for this service. 3. Performance indicators will be crucial to assess the effectiveness of debt recovery. 4. The contract's duration and fixed-price nature provide cost predictability. 5. This service is essential for maintaining the financial health of federal student aid programs. 6. Oversight will be key to ensuring compliance and ethical collection practices.

Value Assessment

Rating: fair

The contract value of approximately $273 million over two years for collection agency services appears reasonable given the scale of federal student loan debt. Benchmarking against similar contracts for debt collection services is challenging without more specific data on recovery rates and the complexity of the debt portfolios. However, the fixed-price contract type suggests a degree of cost control. The cost per unit is not directly applicable here as it's a service contract for debt collection, not a procurement of goods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. This competitive process is generally expected to drive down prices and encourage efficiency among bidders. The number of bidders is not specified, but the 'full and open' designation suggests a robust competition.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by selecting the most cost-effective and capable vendor for student loan debt collection.

Public Impact

Federal student loan borrowers who have defaulted on their loans are the primary service recipients, facing collection efforts. The services delivered include collection and administrative resolution activities for delinquent federal student loans. The geographic impact is national, covering all federal student loan programs. The contract supports the financial stability of the federal student aid system, indirectly benefiting future students and taxpayers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting borrowers.
Ensuring data privacy and security during the collection process.
Monitoring contractor performance to meet recovery targets and compliance standards.

Positive Signals

Contract awarded through full and open competition, suggesting market responsiveness.
Fixed-price contract provides budget certainty for the Department of Education.
The contract addresses a critical function of managing federal student loan portfolios.

Sector Analysis

The collection agency sector is a vital part of the financial services industry, supporting government and private entities in recovering outstanding debts. This contract fits within the broader category of business support services. Comparable spending benchmarks are difficult to establish without detailed performance metrics and the specific nature of the debt portfolios being managed. The federal government frequently contracts for these services to manage large volumes of delinquent accounts.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed here. The focus appears to be on securing the most effective large-scale collection services.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the Department of Education. Accountability measures would be tied to performance metrics outlined in the contract, such as collection rates and compliance with regulations. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be sensitive.

Related Government Programs

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

Risk Flags

Potential for aggressive collection practices
Data privacy and security concerns
Contractor performance monitoring required

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $272.9 million to WINDHAM PROFESSIONALS INC. "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 WINDHAM PROFESSIONALS INC.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $272.9 million.

What is the period of performance?

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

What is the historical spending pattern for federal student loan debt collection services by the Department of Education?

Historical spending on federal student loan debt collection services by the Department of Education has varied over time, influenced by factors such as the volume of outstanding federal student loan debt, changes in federal policy regarding loan servicing and collection, and the contracting strategies employed. The Department utilizes a mix of in-house collection efforts and contracts with private collection agencies. Contracts like the one with Windham Professionals Inc. represent a significant portion of the department's efforts to manage delinquent and defaulted loans. Analyzing past contract awards, their values, durations, and the number of bidders can reveal trends in the department's reliance on external collection services and the competitive landscape for these contracts. For instance, periods of increased student loan origination or economic downturns may lead to higher default rates, prompting increased spending on collection efforts. Specific data on historical spending would require a review of the Federal Procurement Data System (FPDS) or similar databases for contracts awarded over multiple fiscal years.

How does the performance of Windham Professionals Inc. on this contract compare to other debt collection agencies contracted by the federal government?

Direct comparison of Windham Professionals Inc.'s performance on this specific contract to other federal debt collection agencies is challenging without access to detailed performance metrics, such as recovery rates, cost-effectiveness, borrower complaint data, and compliance audit results for all relevant contracts. The Department of Education would have internal data to assess Windham's performance against contractually defined goals. Publicly available data often focuses on contract awards and basic financial information rather than granular performance outcomes. To conduct a robust comparison, one would need to analyze key performance indicators (KPIs) stipulated in various debt collection contracts across different agencies (e.g., Treasury, HHS, VA) and evaluate how Windham's results align with or deviate from those benchmarks. Factors such as the age and type of debt being collected, the specific collection strategies employed, and the regulatory environment can significantly influence performance, making direct apples-to-apples comparisons complex.

What are the primary risks associated with contracting for federal student loan debt collection services?

Key risks associated with contracting for federal student loan debt collection services include reputational damage to the government if contractors engage in unethical or illegal collection practices, potential for borrower harm due to aggressive tactics, data security breaches compromising sensitive borrower information, and contractor underperformance leading to lower-than-expected recovery rates. There's also a risk of non-compliance with federal regulations (e.g., Fair Debt Collection Practices Act) and contract terms. Ensuring robust oversight, clear performance standards, and stringent compliance monitoring are crucial to mitigate these risks. The Department of Education must carefully vet potential contractors, establish clear performance expectations, and maintain active oversight to ensure that collection efforts are both effective and conducted ethically and legally, protecting both the government's financial interests and the rights of borrowers.

What is the typical profit margin or cost structure for collection agencies performing services for the federal government?

The typical profit margin or cost structure for collection agencies performing services for the federal government can vary significantly based on the contract type, the complexity and age of the debt, the volume of accounts, and the agreed-upon fee structure. Many federal debt collection contracts operate on a contingency fee basis, where the agency earns a percentage of the debt successfully collected. These percentages can range widely, often from less than 10% for older or larger portfolios to over 25% for more challenging or newer debts. Fixed-price contracts, like the one awarded to Windham Professionals Inc. (though the 'pt': 'FIRM FIXED PRICE' might apply to specific task orders or the overall contract structure), aim to provide cost certainty. The agency's costs include personnel (collectors, administrative staff, legal), technology (CRM systems, skip tracing tools), compliance, and overhead. Profit margins are influenced by the agency's efficiency in managing these costs and its success rate in collections. Without specific details on Windham's fee structure or operational costs, precise profit margins cannot be determined, but they are generally expected to be competitive within the industry.

How does the 'full and open competition' award method impact the overall cost-effectiveness of this contract?

The 'full and open competition' award method is designed to maximize cost-effectiveness by encouraging a wide range of qualified vendors to submit bids. This broad competition typically drives down prices as companies vie for the contract, potentially leading to more favorable terms for the government. It also allows the government to select the offer that provides the best value, which may not solely be the lowest price but could include factors like technical approach, past performance, and management capability. For a service like debt collection, where efficiency and effectiveness are key, full and open competition increases the likelihood that the Department of Education will secure a vendor capable of achieving high recovery rates at a competitive price point. This process helps ensure that taxpayer funds are utilized efficiently by leveraging market forces to obtain quality services at a reasonable cost.

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: 380 MAIN ST, SALEM, NH, 03079

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $272,863,925

Exercised Options: $272,863,925

Current Obligation: $272,863,924

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS23F0030U

IDV Type: FSS

Timeline