Department of Education awards $33.2M contract for student financial aid servicing to Educational Services of America, Inc

Contract Overview

Contract Amount: $33,218,805 ($33.2M)

Contractor: Educational Services of America, Inc.

Awarding Agency: Department of Education

Start Date: 2012-01-23

End Date: 2013-03-31

Contract Duration: 433 days

Daily Burn Rate: $76.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TASK ORDER 0001- SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB. L. 111-152, 124 STAT. 1029).

Place of Performance

Location: KNOXVILLE, KNOX County, TENNESSEE, 37922

State: Tennessee Government Spending

Plain-Language Summary

Department of Education obligated $33.2 million to EDUCATIONAL SERVICES OF AMERICA, INC. for work described as: TASK ORDER 0001- SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB. L. 111-152, 124 STAT. 1029). Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of 433 days indicates a medium-term service requirement. 3. The fixed-price with economic price adjustment structure aims to manage cost fluctuations. 4. Awarded to a single contractor, Educational Services of America, Inc., for specialized services. 5. The contract value of $33.2 million falls within a moderate spending range for IT and support services. 6. The North American Industry Classification System (NAICS) code 522390 points to credit intermediation activities. 7. The contract is a task order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or framework.

Value Assessment

Rating: fair

The contract value of $33.2 million for a 433-day period averages approximately $76,718 per day. Benchmarking this against similar contracts for student financial aid servicing is challenging without more specific service details. However, the fixed-price with economic price adjustment (FP-EPA) contract type suggests an attempt to control costs while accounting for potential market shifts. The awarded amount appears to be within a reasonable range for specialized administrative and IT support services of this nature, though a direct comparison to market rates for identical services is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The specific number of bidders is not provided, but the designation suggests a robust competitive process was intended. Full and open competition generally promotes price discovery and can lead to more favorable pricing for the government by encouraging multiple vendors to offer their best terms.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically drives down costs through market forces, ensuring the government receives competitive pricing for services rendered.

Public Impact

Students and educational institutions benefit from the continued servicing of Title IV student financial aid programs. The contract ensures the operational continuity of essential financial aid processes, supporting access to higher education. Services delivered are critical for the administration and management of federal student loan programs. The geographic impact is national, affecting all recipients and administrators of federal student financial aid. Workforce implications may include the employment of individuals in administrative, IT, and customer support roles related to financial aid processing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause if market conditions fluctuate significantly.
Dependence on a single contractor for critical financial aid servicing functions could pose a risk if performance issues arise.
Lack of specific performance metrics in the provided data makes it difficult to assess service quality and efficiency.
The task order nature means its integration with a broader contract vehicle is not detailed, potentially obscuring overall value.

Positive Signals

Awarded through full and open competition, suggesting a competitive market for these services.
The fixed-price component of the contract provides a baseline cost control measure.
The contract addresses a critical government function related to student financial aid, ensuring program continuity.
The contractor, Educational Services of America, Inc., is likely experienced in providing such specialized services.

Sector Analysis

The contract falls within the broader financial services and credit intermediation sector, specifically focusing on the administrative and IT support aspects of federal student financial aid. This niche involves managing complex data, ensuring regulatory compliance, and facilitating the flow of funds for educational purposes. The market for such services is characterized by specialized expertise in government contracting and financial processing. Comparable spending benchmarks would typically be found within the Department of Education's IT and administrative support procurements, as well as other agencies managing large-scale financial assistance programs.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary contractor, Educational Services of America, Inc., will be responsible for fulfilling the contract requirements. Any subcontracting would be at their discretion, and the extent to which small businesses might be involved is not specified in this award data.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. As a task order, it is likely governed by the terms of a larger contract vehicle, which would have its own oversight mechanisms. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Federal Student Loan Programs
Department of Education IT Services
Financial Aid Administration
Credit Intermediation Services
Government Administrative Support Contracts

Risk Flags

Potential for cost escalation due to economic price adjustment.
Contract performance risk for critical financial aid servicing.
Data security and privacy concerns with sensitive financial information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $33.2 million to EDUCATIONAL SERVICES OF AMERICA, INC.. TASK ORDER 0001- SERVICING OF TITLE IV STUDENT FINANCIAL AID, IN ACCORDANCE WITH SECTION 2212 OF THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (PUB. L. 111-152, 124 STAT. 1029).

Who is the contractor on this award?

The obligated recipient is EDUCATIONAL SERVICES OF AMERICA, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $33.2 million.

What is the period of performance?

Start: 2012-01-23. End: 2013-03-31.

What is the track record of Educational Services of America, Inc. in performing similar federal contracts, particularly for the Department of Education?

Educational Services of America, Inc. (ESA) has a history of performing contracts related to education and student services. While specific details on past performance for Title IV student financial aid servicing are not provided in this data, ESA's broader portfolio often includes services for educational institutions and government agencies. A deeper dive into their contract history, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any past issues or commendations would be necessary to fully assess their track record for this specific type of work. Their experience in managing large-scale administrative and IT-dependent programs is a key factor in evaluating their suitability for this task order.

How does the awarded amount of $33.2 million compare to historical spending on similar student financial aid servicing contracts by the Department of Education?

To compare the $33.2 million award, one would need to analyze historical spending data for similar task orders or contracts issued by the Department of Education for Title IV student financial aid servicing. This would involve identifying contracts with comparable scope, duration, and service requirements. Factors such as inflation, changes in program complexity, and evolving technological needs would need to be considered for a fair comparison. Without access to a comprehensive historical database of such contracts, it is difficult to definitively state whether this award represents an increase, decrease, or stable level of spending compared to previous periods. However, the fixed-price with economic price adjustment (FP-EPA) structure suggests an effort to manage costs within a defined budget while allowing for some flexibility.

What are the primary risks associated with this contract, and what mitigation strategies are in place?

Primary risks include potential performance failures by the contractor, leading to disruptions in student financial aid processing, and cost overruns due to the economic price adjustment (EPA) clause, especially if inflation is higher than anticipated. There's also a risk of data security breaches given the sensitive nature of financial aid information. Mitigation strategies typically involve robust contract oversight by the Department of Education, including regular performance reviews and audits. The EPA clause itself is a form of risk mitigation for the contractor against unforeseen economic changes, but it transfers some cost risk to the government. Data security protocols and compliance requirements mandated by the contract and federal regulations are crucial for mitigating data breach risks.

How effective is the fixed-price with economic price adjustment (FP-EPA) contract type in ensuring value for money for this specific service?

The FP-EPA contract type aims to balance cost certainty with flexibility. The fixed-price component provides a baseline cost, while the EPA allows for adjustments based on specific economic factors (e.g., inflation indices). This can be effective in ensuring value for money for services where input costs are volatile, such as labor or specific materials, potentially preventing contractors from inflating their base price to account for uncertain future costs. However, it also means the government may pay more than the initially fixed price if economic conditions worsen. For student financial aid servicing, where labor and IT infrastructure costs can be significant and subject to market fluctuations, FP-EPA can be a reasonable approach to achieving value by encouraging competitive bidding while acknowledging economic realities.

What are the implications of this contract being a task order under a larger contract vehicle?

Being a task order means this $33.2 million award is a specific order placed against a pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract or similar framework agreement. This implies that the foundational contract vehicle itself underwent a competitive process, and this task order was then awarded based on pre-negotiated terms, conditions, and potentially pricing structures. The implications include streamlined procurement for this specific need, potentially faster delivery, and that the overall value and performance of the larger vehicle influence this task order. It also means that oversight and management might be integrated within the broader framework's administration, and the contractor's performance on this task order contributes to their overall standing under the parent contract.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Other Activities Related to Credit Intermediation

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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 104 N SEVEN OAKS DR, KNOXVILLE, TN, 02

Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $33,218,805

Exercised Options: $33,218,805

Current Obligation: $33,218,805

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA12D0005

IDV Type: IDC

Timeline