Department of Education awarded $63.4M to Progressive Financial Services for debt collection services

Contract Overview

Contract Amount: $63,446,118 ($63.4M)

Contractor: Progressive Financial Services, Inc.

Awarding Agency: Department of Education

Start Date: 2004-11-01

End Date: 2009-09-30

Contract Duration: 1,794 days

Daily Burn Rate: $35.4K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 40

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: DEBT COLLECTIONS

Place of Performance

Location: TEMPE, MARICOPA County, ARIZONA, 85282, UNITED STATES OF AMERICA

State: Arizona Government Spending

Plain-Language Summary

Department of Education obligated $63.4 million to PROGRESSIVE FINANCIAL SERVICES, INC. for work described as: DEBT COLLECTIONS Key points: 1. Value for money appears fair given the fixed-price incentive contract structure, aiming to align contractor performance with collection outcomes. 2. Competition dynamics were not fully detailed, but the contract was awarded as a competitive delivery order. 3. Risk indicators are moderate, with contract duration and fixed-price incentive type suggesting potential for cost overruns if not managed closely. 4. Performance context is debt collection, a critical function for government revenue recovery. 5. Sector positioning is within financial services, specifically focused on government debt management.

Value Assessment

Rating: fair

Benchmarking the value for this specific debt collection contract is challenging without detailed performance metrics and comparable contract data. However, the fixed-price incentive (FPI) contract type suggests an attempt to control costs while incentivizing performance. The total award amount of $63.4 million over nearly five years indicates a significant investment in debt recovery operations. Further analysis would require comparing the effective collection rates and associated costs against industry standards and other government debt collection contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded as a competitive delivery order, implying that multiple vendors were solicited and evaluated. The presence of 40 offers indicates a robust level of competition for this requirement. A high number of bidders generally suggests a healthy market and can lead to more competitive pricing for the government.

Taxpayer Impact: Strong competition among bidders typically benefits taxpayers by driving down prices and encouraging more efficient service delivery.

Public Impact

Individuals and entities with outstanding federal debts are directly impacted by these collection services. The services delivered include the recovery of delinquent federal funds, contributing to government revenue. The geographic impact is national, as federal debt collection efforts span across the United States. Workforce implications are primarily within the contractor's organization, Progressive Financial Services, Inc., and potentially within the Department of Education's oversight teams.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation under fixed-price incentive contracts if performance targets are not carefully managed.
Reliance on a single contractor for a critical function like debt collection could pose a risk if performance falters.
The long contract duration (over 4 years) may lead to less agile adaptation to changing collection technologies or regulations.

Positive Signals

Awarded as a competitive delivery order with a significant number of offers, indicating strong market interest and potential for good value.
The fixed-price incentive structure aims to align contractor profit with successful debt recovery, incentivizing efficiency.
The contract supports a vital government function of recovering delinquent funds, contributing to fiscal responsibility.

Sector Analysis

The federal debt collection sector involves specialized financial services firms that assist government agencies in recovering outstanding debts. This contract falls within the broader financial services industry, specifically focusing on accounts receivable management and debt recovery. The market for these services is competitive, with numerous private sector companies vying for government contracts. Comparable spending benchmarks would involve analyzing other large-scale federal debt collection contracts awarded by agencies like the IRS, Treasury, or other departments with significant receivables.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Therefore, small businesses are unlikely to be directly awarded this prime contract. However, there may be opportunities for small businesses to participate as subcontractors to Progressive Financial Services, Inc., depending on the contractor's subcontracting plan and the nature of the services required.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. Accountability measures are embedded within the Fixed Price Incentive (FPI) contract type, which links contractor profit to achieving specific performance targets related to debt collection. Transparency is generally facilitated through contract award databases and reporting requirements, though detailed operational performance data may not always be publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Debt Collection Programs
Accounts Receivable Management Services
Financial Services Contracts
Department of Education Financial Operations

Risk Flags

Contract Duration
Performance Incentives
Debt Collection Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $63.4 million to PROGRESSIVE FINANCIAL SERVICES, INC.. DEBT COLLECTIONS

Who is the contractor on this award?

The obligated recipient is PROGRESSIVE FINANCIAL SERVICES, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $63.4 million.

What is the period of performance?

Start: 2004-11-01. End: 2009-09-30.

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

Analyzing historical spending patterns for debt collection services by the Department of Education is crucial for understanding the scale and consistency of their investment in this area. While specific historical data for this contract is not provided, the award of a $63.4 million contract over nearly five years suggests a substantial and ongoing need for these services. Typically, agencies like the Department of Education manage large portfolios of student loans and other receivables, necessitating continuous efforts in debt recovery. Past spending would likely show fluctuations based on legislative changes, economic conditions affecting borrowers, and the agency's internal collection strategies. Comparing this award to previous contracts would reveal trends in contract values, duration, and potentially the types of services procured, offering insights into the evolution of the department's debt collection approach and its financial commitment over time.

How does the performance of Progressive Financial Services, Inc. on other federal contracts compare?

Assessing the past performance of Progressive Financial Services, Inc. on other federal contracts is a key indicator of their reliability and capability. A thorough review would involve examining contract histories, performance evaluations (such as Contractor Performance Assessment Reporting System - CPARS), and any documented issues or successes. If the company has a track record of successfully managing similar debt collection contracts, particularly for government agencies, it suggests a lower risk for this award. Conversely, any history of poor performance, missed deadlines, cost overruns, or compliance issues would raise concerns about their ability to meet the Department of Education's requirements effectively. Without access to specific performance data for Progressive Financial Services, Inc., it is difficult to make a definitive judgment, but this would be a critical area for due diligence by the contracting agency.

What are the specific performance metrics and incentives tied to this contract?

The contract type, Fixed Price Incentive (FPI), indicates that specific performance metrics and corresponding incentives are established. These metrics likely revolve around the effectiveness of debt collection, such as the percentage of debt recovered, the cost per dollar collected, and adherence to timelines. The 'incentive' aspect means that the contractor's profit is directly tied to achieving or exceeding these targets. For instance, if Progressive Financial Services, Inc. collects more than a target amount of debt, they might earn a higher profit margin, up to a ceiling. Conversely, if they fall short, their profit could be reduced. The precise metrics, target values, and incentive/disincentive formulas would be detailed in the contract's Statement of Work (SOW) and pricing clauses, forming the basis for performance evaluation and payment adjustments.

What is the estimated cost-effectiveness of using external contractors for debt collection versus in-house efforts?

The decision to use external contractors like Progressive Financial Services, Inc. for debt collection is often driven by a cost-effectiveness analysis. Government agencies typically weigh the costs associated with maintaining and staffing an in-house collection unit against the fees paid to contractors. Contractors may offer specialized expertise, advanced technology, and economies of scale that can lead to higher recovery rates and lower per-dollar collection costs. However, contractor fees can also be substantial. The effectiveness is measured by comparing the net amount recovered (total collected minus contractor fees and internal costs) against what could be achieved internally. For the Department of Education, the scale of student loan debt likely makes specialized external services more efficient than a fully in-house operation, provided the contractor performs well and the contract terms are favorable.

Are there any known risks associated with the specific type of debt being collected under this contract?

The contract is for 'DEBT COLLECTIONS' with the Department of Education, implying the debt is likely related to federal student loans, grants, or other educational programs. Risks associated with collecting these types of debts can include economic hardship faced by borrowers, complex legal frameworks governing student loans, potential for disputes over loan amounts or terms, and the sheer volume of accounts. The effectiveness of collection efforts can be influenced by borrower demographics, employment status, and the age of the debt. Progressive Financial Services, Inc. must navigate these complexities while adhering to regulations like the Fair Debt Collection Practices Act (FDCPA) and specific departmental policies. The success of the contract hinges on the contractor's ability to manage these inherent risks and adapt their strategies to maximize recovery without alienating borrowers or violating regulations.

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

Offers Received: 40

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Address: 540 W BROADWAY RD STE 104, MESA, AZ, 85210

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $63,446,118

Exercised Options: $63,446,118

Current Obligation: $63,446,118

Parent Contract

Parent Award PIID: GS23F0239K

IDV Type: FSS

Timeline