Department of Education awards $43.5M for Title IV student aid servicing, with 13 bids received

Contract Overview

Contract Amount: $43,504,936 ($43.5M)

Contractor: Missouri Higher Education Loan Authority

Awarding Agency: Department of Education

Start Date: 2015-10-01

End Date: 2016-09-30

Contract Duration: 365 days

Daily Burn Rate: $119.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF // CRITICAL FUNCTION BASE AWARD: 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: THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE TITLE IV AID SERVICING.

Place of Performance

Location: CHESTERFIELD, SAINT LOUIS County, MISSOURI, 63005

State: Missouri Government Spending

Plain-Language Summary

Department of Education obligated $43.5 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY for work described as: IGF::CT::IGF // CRITICAL FUNCTION BASE AWARD: 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: THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE TITLE … Key points: 1. Contract focuses on critical function of servicing federal student financial aid. 2. Awarded through full and open competition, indicating a broad market approach. 3. Fixed price contract with economic price adjustment suggests some cost volatility is anticipated. 4. Performance period of one year, with a potential for follow-on work. 5. Contractor is a state-affiliated entity with experience in loan authority. 6. Spending aligns with legislative mandates for student financial aid programs.

Value Assessment

Rating: good

The contract value of $43.5 million for a one-year period for student financial aid servicing appears reasonable given the critical nature of the service. Benchmarking against similar large-scale federal IT or financial servicing contracts would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure aims to balance cost control with market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 13 bids received. This high level of competition is a positive indicator, suggesting that the government sought a broad range of potential contractors and likely achieved competitive pricing. The number of bidders implies a healthy market for these specialized servicing functions.

Taxpayer Impact: A competitive bidding process for essential student aid servicing ensures that taxpayer dollars are used efficiently, driving down costs and potentially improving service quality through market forces.

Public Impact

Benefits millions of students and families relying on federal financial aid. Ensures the continued operation and integrity of the Title IV student financial aid system. Supports the Department of Education's mission to promote educational opportunity. May involve a workforce in Missouri, the contractor's home state, for servicing operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs due to economic price adjustment clause.
Dependence on a single contractor for a critical function could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Contractor is an established entity with a specific mission related to loan authority.
Focus on a critical government function suggests a high priority for reliable service delivery.

Sector Analysis

This contract falls within the financial services and credit intermediation sector, specifically focusing on government-backed student loan servicing. The market for federal student loan servicing is substantial, involving complex IT systems and regulatory compliance. This award represents a portion of the broader federal spending on managing and servicing student debt.

Small Business Impact

Information on small business set-asides or subcontracting is not explicitly detailed in the provided data. However, given the scale and specialized nature of federal student aid servicing, it is possible that larger prime contractors may engage small businesses for specific components of the work, though the primary awardee is a state-affiliated authority.

Oversight & Accountability

Oversight would typically be conducted by the Department of Education's program offices responsible for student financial aid. Accountability measures would be embedded in the contract's performance standards and reporting requirements. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly disclosed.

Related Government Programs

Federal Student Loan Program Administration
Higher Education Act Programs
Department of Education IT Services
Credit Intermediation Services

Risk Flags

Critical Function Dependency
Potential for Cost Escalation (Economic Price Adjustment)
Data Security and Privacy Risk
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $43.5 million to MISSOURI HIGHER EDUCATION LOAN AUTHORITY. IGF::CT::IGF // CRITICAL FUNCTION BASE AWARD: 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: THE PURPOSE OF THIS TASK ORDER IS TO PROVIDE TITLE IV AID SERVICING.

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 $43.5 million.

What is the period of performance?

Start: 2015-10-01. End: 2016-09-30.

What is the track record of the Missouri Higher Education Loan Authority in servicing federal student financial aid?

The Missouri Higher Education Loan Authority (MOHELA) is a state-affiliated entity with a long history of participating in the federal student loan programs. While specific details of their federal contract performance are not provided here, MOHELA has historically been a significant player in the student loan market, both in origination and servicing. Their experience with state-level programs and federal regulations suggests a foundational capability for managing Title IV aid servicing. Further analysis would require examining their past performance reviews, any audit findings, and their specific role in servicing federal loans prior to this award.

How does the $43.5 million award compare to historical spending on student aid servicing?

The $43.5 million award for a one-year period for Title IV aid servicing represents a significant investment in a critical function. To benchmark this, one would need to compare it against the Department of Education's total budget allocation for student aid administration and servicing over previous years. Historical data would reveal trends in spending, the number and value of contracts awarded for similar services, and whether this award is consistent with, higher than, or lower than previous expenditures. Factors such as changes in student enrollment, loan volume, and program complexity would influence year-over-year spending.

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

The primary risks associated with this contract include potential performance failures by the contractor, which could disrupt student aid disbursement and repayment processes, impacting millions of students and educational institutions. Another risk is cost overruns, particularly if the economic price adjustment clause leads to significant increases beyond initial projections. Cybersecurity risks are also paramount, given the sensitive financial and personal data handled. Finally, a lack of sufficient competition in future contract renewals could lead to higher prices and reduced innovation.

How effective is the current model of contracting out federal student aid servicing?

The effectiveness of contracting out federal student aid servicing is a complex question with arguments on both sides. Proponents argue that private and state-affiliated entities can offer specialized expertise, economies of scale, and technological innovation that government agencies might struggle to replicate internally. This can lead to more efficient operations and better service for borrowers. However, critics point to potential conflicts of interest, the risk of prioritizing profit over borrower welfare, and the challenges of ensuring consistent oversight and accountability across multiple contractors. The effectiveness ultimately depends on robust contract management, clear performance metrics, and strong regulatory oversight by the Department of Education.

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

Historical spending on Title IV student financial aid servicing by the Department of Education has been substantial and has evolved significantly over time, particularly with the transition to a direct loan program. Spending encompasses various aspects, including loan servicing, default management, and administrative functions. The Department has utilized a mix of in-house operations and contracted services. Analyzing past contract awards for servicing functions would reveal fluctuations in spending based on legislative changes, program expansions or contractions, and shifts in servicing models. Understanding these patterns is crucial for assessing the current $43.5 million award in a broader fiscal context.

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: 13

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: $43,504,936

Exercised Options: $43,504,936

Current Obligation: $43,504,936

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