Department of Education awards $100M contract for student financial aid servicing to Great Lakes Educational Loan Services, Inc

Contract Overview

Contract Amount: $100,035,742 ($100.0M)

Contractor: Great Lakes Educational Loan Services, Inc

Awarding Agency: Department of Education

Start Date: 2013-12-17

End Date: 2014-12-31

Contract Duration: 379 days

Daily Burn Rate: $263.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF / CRITICAL FINCTION TASK ORDER 0008 - SERVICING OF TITLE IV STUDENT FINANCIAL AID.

Place of Performance

Location: MADISON, DANE County, WISCONSIN, 53704

State: Wisconsin Government Spending

Plain-Language Summary

Department of Education obligated $100.0 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC for work described as: IGF::CT::IGF / CRITICAL FINCTION TASK ORDER 0008 - SERVICING OF TITLE IV STUDENT FINANCIAL AID. Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations. 3. Contract duration of 379 days suggests a short-term operational need. 4. The contract value represents a significant investment in student financial aid administration. 5. Awarded to a single contractor, Great Lakes Educational Loan Services, Inc., for task order 0008. 6. The North American Industry Classification System (NAICS) code 522390 points to credit intermediation activities.

Value Assessment

Rating: fair

The contract value of approximately $100 million for a one-year period for student financial aid servicing appears substantial. Benchmarking against similar contracts for loan servicing is difficult without more specific details on the scope of services. The fixed-price with economic price adjustment structure introduces a degree of uncertainty regarding the final cost. However, the award was made under full and open competition, which typically drives more competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that multiple bidders were likely considered. The specific number of bidders is not provided, but this method generally allows for the widest possible participation, which can lead to better price discovery and a more competitive outcome for the government.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it increases the likelihood of securing services at the most competitive price available in the market.

Public Impact

Benefits students and educational institutions by ensuring the proper servicing of federal student financial aid. Facilitates the administration of Title IV student financial aid programs. The geographic impact is national, covering all recipients of federal student financial aid. Supports the workforce involved in student loan servicing and administration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause.
Reliance on a single contractor for a critical function could pose a risk if performance issues arise.
The fixed-price nature, even with adjustments, might not fully capture the dynamic costs of loan servicing over time.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The contractor, Great Lakes Educational Loan Services, Inc., is likely experienced in this domain.
The contract addresses a critical function within the Department of Education's mission.

Sector Analysis

This contract falls within the financial services sector, specifically focusing on credit intermediation and loan servicing. The market for federal student loan servicing is substantial, with significant government spending allocated annually to manage these programs. This contract represents a portion of that broader spending, aimed at ensuring the efficient operation of Title IV financial aid.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly detailed in the provided data. As this was a full and open competition, it is possible that small businesses could have participated directly or indirectly through subcontracting opportunities, but the extent of their involvement is not specified.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Education's contracting officers and program managers. Accountability measures would be defined in the contract terms and conditions, with performance metrics likely monitored. Transparency is generally maintained through federal procurement databases, though specific performance details may be internal.

Related Government Programs

Federal Student Loan Program
Title IV Student Financial Aid
Student Loan Servicing Contracts
Department of Education Procurement

Risk Flags

Economic Price Adjustment Clause
Single Contractor Reliance
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $100.0 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC. IGF::CT::IGF / CRITICAL FINCTION TASK ORDER 0008 - SERVICING OF TITLE IV STUDENT FINANCIAL AID.

Who is the contractor on this award?

The obligated recipient is GREAT LAKES EDUCATIONAL LOAN 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 $100.0 million.

What is the period of performance?

Start: 2013-12-17. End: 2014-12-31.

What is the track record of Great Lakes Educational Loan Services, Inc. in servicing federal student financial aid?

Great Lakes Educational Loan Services, Inc. has a long history of servicing federal student loans. As a major player in the student loan servicing industry, the company has managed large portfolios of federal loans for many years. Their experience typically includes loan origination support, repayment processing, customer service, default prevention, and compliance with federal regulations. While specific performance metrics for this particular task order are not publicly detailed, their established presence suggests a capacity to handle the operational demands of federal student aid servicing. However, like any large contractor, they may have faced scrutiny or performance reviews on other contracts, which would require a deeper dive into historical contract performance data.

How does the awarded amount compare to typical annual spending on student financial aid servicing?

The awarded amount of approximately $100 million for this task order represents a significant sum for a roughly one-year period. Federal spending on student loan servicing can fluctuate annually based on program needs, contract renewals, and the overall volume of federal student loans. Major loan servicers often manage portfolios worth billions of dollars, and their contracts can range from tens of millions to hundreds of millions of dollars annually, depending on the scope and duration. This $100 million award is substantial and likely covers a critical set of servicing functions for a large segment of federal student aid recipients. To provide a precise comparison, one would need to analyze historical aggregate spending by the Department of Education on loan servicing contracts over several fiscal years.

What are the primary risks associated with a fixed-price contract with economic price adjustment for loan servicing?

A fixed-price contract with economic price adjustment (FP-EPA) aims to provide cost certainty while acknowledging potential fluctuations in input costs. For loan servicing, the primary risks include: 1) Inflationary pressures: Economic adjustments can increase the contract price if inflation rises, impacting the government's budget. 2) Complexity of adjustments: Calculating and verifying the economic price adjustments can be administratively complex and may lead to disputes if not clearly defined. 3) Contractor profitability: While intended to protect the contractor from unforeseen cost increases, poorly structured FP-EPA clauses could lead to excessive profits if the adjustments are overly generous or if the base price was set too low. Conversely, if the adjustments are insufficient, the contractor might face financial strain, potentially impacting service quality.

What is the expected effectiveness of this contract in ensuring the smooth operation of Title IV student financial aid?

The effectiveness of this contract hinges on the contractor's ability to execute the defined servicing tasks efficiently and accurately. Title IV student financial aid programs are complex, involving disbursement, repayment tracking, deferments, forbearances, and default management. A well-executed servicing contract ensures that students receive timely information, payments are processed correctly, and the Department of Education maintains compliance with federal regulations. Given that Great Lakes Educational Loan Services, Inc. is an established servicer, the expectation is that this contract will contribute to the smooth operation of these critical functions. However, ongoing performance monitoring and quality assurance by the Department of Education are crucial to ensure sustained effectiveness and address any emerging issues.

How has federal spending on student loan servicing evolved over the past decade?

Federal spending on student loan servicing has undergone significant shifts over the past decade, largely influenced by policy changes and the transition of the federal student loan program from a guaranteed loan program to a direct loan program. Initially, spending was high as the government contracted with numerous private lenders and servicers. Following the 2010 HEOA legislation, the government moved towards direct lending, consolidating much of the servicing in-house or through fewer, larger contracts. This led to a restructuring of the servicing landscape and potentially a reduction in the number of large servicing contracts, though the overall volume of loans managed remained substantial. Spending has also been impacted by efforts to improve borrower outcomes and reduce defaults, requiring robust servicing capabilities. Analyzing specific annual outlays for loan servicing contracts would reveal trends in contractor payments and the evolving market dynamics.

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

Parent Company: Great Lakes Higher Education Corporation (UEI: 121598791)

Address: 2401 INTERNATIONAL LN, MADISON, WI, 53704

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

Financial Breakdown

Contract Ceiling: $100,035,742

Exercised Options: $100,035,742

Current Obligation: $100,035,742

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: EDFSA09D0012

IDV Type: IDC

Timeline