Department of Education's $35.3M contract for student financial aid servicing awarded to Missouri Higher Education Loan Authority

Contract Overview

Contract Amount: $35,335,794 ($35.3M)

Contractor: Missouri Higher Education Loan Authority

Awarding Agency: Department of Education

Start Date: 2014-10-01

End Date: 2015-09-30

Contract Duration: 364 days

Daily Burn Rate: $97.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF / CRITICAL FUNCTION IDIQ: 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). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09/30/2015. PROVIDES FUNDING FOR SERVICING AND DEVELOPMENT&MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014.

Place of Performance

Location: CHESTERFIELD, SAINT LOUIS County, MISSOURI, 63005

State: Missouri Government Spending

Plain-Language Summary

Department of Education obligated $35.3 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY for work described as: IGF::CT::IGF / CRITICAL FUNCTION IDIQ: 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). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09… Key points: 1. Contract focuses on critical function IDIQ for Title IV student financial aid servicing. 2. Performance period spans one year, from October 1, 2014, to September 30, 2015. 3. Funding allocated for servicing, development, and maintenance through December 31, 2014. 4. Awarded under full and open competition, indicating a broad solicitation process. 5. Contract type is Fixed Price with Economic Price Adjustment, allowing for cost fluctuations. 6. The contract value is approximately $35.3 million for the specified period.

Value Assessment

Rating: fair

The contract value of $35.3 million for a one-year period of student financial aid servicing appears to be within a reasonable range for such critical functions. Benchmarking against similar contracts for financial aid administration services would provide a clearer picture of value for money. The fixed-price with economic price adjustment structure suggests an attempt to control costs while accounting for potential market shifts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. The presence of 6 bidders suggests a competitive environment, which typically leads to better pricing and service offerings for the government. The level of competition is a positive indicator for price discovery and ensuring taxpayer value.

Taxpayer Impact: The full and open competition with multiple bidders indicates that taxpayers likely benefited from competitive pricing and a robust selection process, rather than potentially higher costs associated with less competitive solicitations.

Public Impact

Benefits students and educational institutions by ensuring the proper servicing of Title IV federal student financial aid programs. Services delivered include the maintenance and development of systems crucial for financial aid administration. The geographic impact is national, as Title IV programs serve students across the United States. Workforce implications may include the need for skilled personnel in financial aid administration and IT support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the 'economic price adjustment' clause if market conditions change unfavorably.
Reliance on a single contractor for critical financial aid servicing functions could pose a risk if performance falters.
The relatively short one-year duration might limit long-term strategic planning and investment in system improvements.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield fair pricing.
The contractor, Missouri Higher Education Loan Authority, has experience in student loan servicing.
The contract addresses a critical function for the Department of Education's student financial aid programs.

Sector Analysis

This contract falls within the financial services and credit intermediation sector, specifically related to government-backed student loans. The market for student loan servicing is substantial, involving government agencies, private lenders, and specialized servicing companies. The Department of Education's role in managing these programs is significant, and contracts like this are essential for their operational efficiency. Comparable spending benchmarks would involve analyzing other contracts for similar financial aid administration and loan servicing functions across federal agencies.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not explicitly detailed in the provided data. However, given the nature of the contract and the size of the award, it is possible that subcontracting opportunities for specialized services could exist. Further analysis would be needed to determine the extent of small business participation.

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 the performance standards outlined in the contract. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Student Aid Programs
Higher Education Act of 1965
Credit Intermediation Services
Student Loan Servicing Contracts

Risk Flags

Potential for cost increases due to economic price adjustment.
Reliance on a single contractor for critical function.
Need for ongoing monitoring of performance against service level agreements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $35.3 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY. IGF::CT::IGF / CRITICAL FUNCTION IDIQ: 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). TASK ORDER: SERVICING OF TITLE IV FINANCIAL AID, FROM 10/01/2014 TO 09/30/2015. PROVIDES FUNDING FOR SERVICING AND DEVELOPMENT&MAINTENANCE, THROUGH APPROXIMATELY 12/31/2014.

Who is the contractor on this award?

The obligated recipient is MISSOURI HIGHER EDUCATION LOAN AUTHORITY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $35.3 million.

What is the period of performance?

Start: 2014-10-01. End: 2015-09-30.

What is the historical spending pattern for student financial aid servicing by the Department of Education?

Historical spending on student financial aid servicing by the Department of Education has been substantial and has evolved over time. Prior to the federal government fully taking over loan origination and servicing, there was a mix of federal and private sector involvement. In recent years, the Department has managed a significant portfolio of federal student loans, requiring extensive servicing operations. Spending in this area is driven by the volume of loans, the complexity of servicing requirements (e.g., income-driven repayment plans, deferments, forbearances), and the need for robust IT systems. Annual outlays can fluctuate based on legislative changes, economic conditions affecting student borrowing, and the efficiency of servicing contracts. Analyzing past contract awards for similar services, including the number of contracts, their values, and their durations, would provide a clearer picture of the Department's consistent investment in this critical function.

How does the pricing of this contract compare to similar student financial aid servicing contracts?

Directly comparing the pricing of this specific $35.3 million contract to 'similar' contracts is challenging without access to a broader dataset of contemporary awards for student financial aid servicing. Key factors influencing price include the scope of services (origination, servicing, default management, customer service), the volume of loans managed, the contract duration, and the specific performance metrics required. The 'Fixed Price with Economic Price Adjustment' (FP-EPA) structure adds another layer of complexity, as the final cost can vary. However, the fact that this contract was awarded under 'full and open competition' with six bidders suggests that the pricing was likely subjected to competitive pressures. To conduct a thorough benchmark, one would need to identify contracts with comparable loan volumes, service requirements, and contract types awarded around the same period (2014-2015) by the Department of Education or other federal agencies managing large loan portfolios.

What are the primary risks associated with this student financial aid servicing contract?

Several risks are associated with this student financial aid servicing contract. A primary risk is performance failure: if the contractor, Missouri Higher Education Loan Authority, fails to adequately service the Title IV financial aid, it could lead to disruptions for students and educational institutions, potentially impacting federal financial aid disbursement and compliance. The 'economic price adjustment' clause introduces financial risk, as unforeseen economic shifts could increase the contract's cost beyond initial projections. Operational risks include potential IT system failures or data breaches, given the sensitive nature of student financial information. Furthermore, reliance on a single contractor for critical functions creates a dependency risk; if the contractor encounters significant issues, finding and transitioning to a replacement could be disruptive and costly. Finally, ensuring compliance with evolving federal regulations and program requirements presents an ongoing risk that requires diligent management.

What is the track record of Missouri Higher Education Loan Authority as a federal contractor?

The Missouri Higher Education Loan Authority (MOHELA) has a significant track record as a participant in the federal student loan program. While this specific contract is for servicing, MOHELA has historically been involved in originating and servicing student loans, often in partnership with the Department of Education. As a state-based entity, it has operated within the regulatory framework for federal student aid. Its performance as a federal contractor would be assessed based on its ability to meet contractual obligations, adhere to federal regulations, manage loan portfolios effectively, and provide satisfactory customer service. Information on past performance evaluations, any contract disputes, or awards for exceptional performance would provide a more detailed understanding of its track record. Its continued involvement in federal student aid programs suggests a generally acceptable level of performance over time.

How effective are the oversight mechanisms for federal student financial aid servicing contracts?

Oversight mechanisms for federal student financial aid servicing contracts are generally robust, involving multiple layers of review and accountability. The Department of Education's Office of Federal Student Aid (FSA) is the primary entity responsible for managing and overseeing these contracts. This includes establishing performance standards, conducting regular reviews, and monitoring contractor compliance. Contracting officers play a crucial role in day-to-day oversight. Additionally, the Department's Inspector General (IG) conducts audits and investigations to detect and prevent fraud, waste, and abuse. Performance metrics, reporting requirements, and site visits are common oversight tools. The effectiveness of these mechanisms depends on adequate resourcing, clear performance expectations, and proactive identification and mitigation of risks. While generally effective, challenges can arise in ensuring consistent oversight across a large and complex portfolio of contracts.

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: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 633 SPIRIT DR, CHESTERFIELD, MO, 63005

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $35,335,794

Exercised Options: $35,335,794

Current Obligation: $35,335,794

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: EDFSA11D0012

IDV Type: IDC

Timeline