Department of Education awards $45.8M for student financial aid servicing, highlighting critical function support

Contract Overview

Contract Amount: $45,793,493 ($45.8M)

Contractor: Missouri Higher Education Loan Authority

Awarding Agency: Department of Education

Start Date: 2016-10-01

End Date: 2017-09-30

Contract Duration: 364 days

Daily Burn Rate: $125.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

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 10/01/2016 TO 09/30/2017. PROVIDES FUNDING FOR DEVELOPMENT AND MAINTENANCE, THROUGH APPROXIMATELY 12/31/2016.

Place of Performance

Location: CHESTERFIELD, SAINT LOUIS County, MISSOURI, 63005

State: Missouri Government Spending

Plain-Language Summary

Department of Education obligated $45.8 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 10/01/2016 TO … Key points: 1. Contract supports essential student financial aid servicing, a critical government function. 2. The award was made under full and open competition, suggesting a robust bidding process. 3. A single task order was issued against an IDIQ contract, indicating a specific need. 4. The contract duration is one year, aligning with annual operational needs. 5. The fixed-price contract type aims to control costs for the government. 6. The contractor is a state-level authority, potentially offering specialized expertise.

Value Assessment

Rating: good

The contract value of $45.8 million for one year of student financial aid servicing appears reasonable given the critical nature of the service. Benchmarking against similar contracts for large-scale financial aid administration is challenging due to the specialized nature of this function. However, the fixed-price contract type suggests an effort to manage costs effectively. The award to a state authority may indicate a focus on established entities with proven experience in managing financial aid programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the work. The presence of 5 bidders suggests a healthy level of interest and competition for this critical function. This competitive environment is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are used efficiently by driving down costs through market forces, benefiting taxpayers by securing services at a potentially lower price than a sole-source or limited competition award.

Public Impact

Students and educational institutions benefit from the continued servicing of Title IV financial aid programs. The contract ensures the smooth operation of federal student loan programs. Services provided are crucial for the accessibility and administration of higher education funding. The geographic impact is national, as it supports federal student aid programs across the United States.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this IDIQ is heavily utilized by a single contractor over time.
Reliance on a single task order for a critical function could pose a risk if the contractor faces performance issues.

Positive Signals

Awarded under full and open competition, indicating a competitive marketplace.
Fixed-price contract type helps manage cost certainty.
Contractor is a state authority with likely experience in financial aid management.

Sector Analysis

The contract falls within the 'Other Activities Related to Credit Intermediation' sector, specifically focusing on the administration and servicing of federal student financial aid. This is a niche but critical area within the broader financial services and government contracting landscape. The market for such specialized servicing is likely dominated by a few experienced entities, including state authorities and specialized financial service providers. The total federal spending in this specific sub-sector is difficult to benchmark without more granular data, but the overall federal student loan portfolio is substantial.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. The award was made under full and open competition, and the number of bidders (5) does not specify the size of the businesses involved. It is possible that small businesses could have participated as subcontractors, but this contract does not appear to be directly set aside for them. Further analysis would be needed to determine subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. As a critical function, it is likely subject to regular performance reviews and audits. The Inspector General of the Department of Education would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly detailed.

Related Government Programs

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

Risk Flags

Critical Function Reliance
Single Task Order Risk
Data Security and Privacy

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $45.8 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 10/01/2016 TO 09/30/2017. PROVIDES FUNDING FOR DEVELOPMENT AND MAINTENANCE, THROUGH APPROXIMATELY 12/31/2016.

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 $45.8 million.

What is the period of performance?

Start: 2016-10-01. End: 2017-09-30.

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

The Missouri Higher Education Loan Authority (MOHELA) has a significant history of managing federal student loan programs. As a state agency, it has been involved in the origination, servicing, and collection of student loans for many years. While this specific award is for servicing Title IV financial aid, MOHELA's broader experience in the student loan sector suggests a foundational understanding of the operational requirements. Detailed performance data on previous federal contracts would provide a clearer picture of their track record, but their long-standing role in state-level student loan programs indicates a level of established capability and experience relevant to this contract.

How does the value of this contract compare to other federal student loan servicing contracts?

Directly comparing the $45.8 million value of this single task order to other federal student loan servicing contracts requires careful consideration of scope, duration, and the specific services rendered. Federal student loan servicing is a massive undertaking, and contracts can vary significantly. Some contracts might cover the entire lifecycle of millions of loans, while others, like this one, might focus on specific aspects or a defined period. Given that this is for one year of servicing Title IV financial aid, and considering the critical nature of maintaining student aid flow, the value appears to be within a reasonable range for a significant federal function. However, without a detailed breakdown of the services and the number of students/loans impacted, a precise benchmark is difficult.

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

The primary risks associated with this contract revolve around performance and continuity of critical services. Any failure in student financial aid servicing could directly impact students' ability to access and manage their educational funding, leading to significant disruption and public dissatisfaction. Operational risks include potential data breaches, system failures, or processing errors that could have financial and reputational consequences. Furthermore, reliance on a single task order against an IDIQ means that if MOHELA experiences severe performance issues or becomes unable to fulfill its obligations, the Department would need to quickly transition services, potentially incurring additional costs and delays. Ensuring robust oversight and contingency planning is crucial to mitigate these risks.

How effective is the fixed-price contract type in managing costs for student financial aid servicing?

The fixed-price contract type is generally effective in managing costs for predictable services like student financial aid servicing, as it shifts the cost-risk to the contractor. The Department of Education agrees to pay a set price for the defined services, providing budget certainty. This encourages the contractor, MOHELA, to manage its own costs efficiently to maintain profitability. For services with well-defined requirements and minimal expected changes, fixed-price contracts are often preferred. However, if unforeseen complexities arise in servicing financial aid that require significant scope adjustments, managing those changes under a fixed-price structure can become contentious and may require contract modifications, potentially impacting the initial cost-certainty.

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

Historical spending on federal student financial aid servicing by the Department of Education has been substantial and has evolved over time, particularly with shifts in loan programs (e.g., the transition to direct lending). The Department contracts with various entities, including loan servicers and guaranty agencies, to manage the lifecycle of federal student loans. Spending fluctuates based on the volume of loans, repayment statuses, and program changes. While specific annual figures for 'servicing' can be aggregated from various contract awards, the overall investment in managing the federal student aid portfolio represents billions of dollars annually. This particular $45.8 million award is one component of that larger spending picture, focused on a specific servicing function for a defined period.

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: 5

Pricing Type: FIRM FIXED PRICE (J)

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: $45,793,493

Exercised Options: $45,793,493

Current Obligation: $45,793,493

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