Treasury's IRS awards $118M debt collection contract to Coast Professional, Inc. under full and open competition

Contract Overview

Contract Amount: $118,380,426 ($118.4M)

Contractor: Coast Professional, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2021-09-23

End Date: 2026-09-22

Contract Duration: 1,825 days

Daily Burn Rate: $64.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DEBT COLLECTION SERVICES

Place of Performance

Location: WEST MONROE, OUACHITA County, LOUISIANA, 71292

State: Louisiana Government Spending

Plain-Language Summary

Department of the Treasury obligated $118.4 million to COAST PROFESSIONAL, INC. for work described as: DEBT COLLECTION SERVICES Key points: 1. Contract value represents a significant investment in debt recovery operations. 2. Full and open competition suggests a robust market for these services. 3. The contract duration of five years allows for sustained debt collection efforts. 4. Fixed-price contract type shifts performance risk to the contractor. 5. The award is part of the IRS's broader strategy to enhance tax compliance and revenue collection. 6. Geographic scope is limited to Louisiana, indicating a targeted approach.

Value Assessment

Rating: good

The contract value of $118.4 million over five years for debt collection services appears reasonable given the scope and duration. Benchmarking against similar large-scale federal debt collection contracts is challenging without more granular data on recovery rates and specific service levels. However, the fixed-price nature of the contract suggests the government has negotiated a defined cost for services, which can be advantageous. The number of bidders (6) also indicates a competitive environment that likely drove pricing towards market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bids received. This indicates that the IRS actively sought proposals from a wide range of qualified vendors, fostering a competitive environment. The presence of multiple bidders suggests that the market for debt collection services is sufficiently developed and that the IRS was able to solicit proposals from various capable firms, likely leading to a more favorable price and service offering.

Taxpayer Impact: A competitive bidding process for debt collection services ensures that taxpayer dollars are used efficiently. It drives down costs and encourages contractors to offer the best possible service to secure the award, ultimately maximizing revenue recovery for the government.

Public Impact

The primary beneficiaries are the U.S. taxpayers, through increased revenue collection and improved tax compliance. The contract delivers essential debt collection services for the Internal Revenue Service. The geographic impact is focused on Louisiana, suggesting a localized or specific need for these services within that state. The contract supports jobs within the debt collection industry, particularly in Louisiana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting taxpayer relations.
Dependence on a single contractor for a critical function.
Geographic limitation might overlook broader national debt collection needs.

Positive Signals

Utilizes a competitive bidding process to ensure value.
Fixed-price contract aligns contractor incentives with government objectives.
Contract duration allows for consistent service delivery.
Focus on debt collection can improve government fiscal health.

Sector Analysis

The debt collection services sector is a critical component of government revenue management. Federal agencies often contract out these services to specialized firms to recover delinquent debts efficiently. The market includes a range of companies, from large financial services providers to niche collection agencies. The IRS, as a major revenue-generating agency, relies on such contracts to supplement its internal collection capabilities. Comparable spending benchmarks are difficult to establish without specific performance metrics and recovery rates, but the $118 million award over five years suggests a substantial program.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a small business set-aside. There is no explicit information regarding subcontracting plans for small businesses. The scale of this contract likely favors larger, established firms with the capacity to handle significant debt portfolios, potentially limiting direct opportunities for small businesses unless they are part of a larger subcontracting team.

Oversight & Accountability

Oversight for this contract is likely managed by the contracting officers and program managers within the Department of the Treasury's Internal Revenue Service. Accountability measures are embedded in the contract's performance standards and payment terms, tied to the fixed-price structure. Transparency is facilitated through the Federal Procurement Data System (FPDS), which reports contract awards. The Inspector General for Tax Administration (TIGTA) may also conduct audits or investigations into the effectiveness and efficiency of these debt collection services.

Related Government Programs

Treasury Debt Management
IRS Tax Enforcement
Federal Debt Collection Programs
Government Revenue Assurance

Risk Flags

Contract duration is long (5 years), requiring sustained oversight.
Geographic limitation may not address national debt collection needs.
Potential for reputational risk if contractor employs aggressive tactics.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $118.4 million to COAST PROFESSIONAL, INC.. DEBT COLLECTION SERVICES

Who is the contractor on this award?

The obligated recipient is COAST PROFESSIONAL, INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $118.4 million.

What is the period of performance?

Start: 2021-09-23. End: 2026-09-22.

What is the historical spending pattern for debt collection services by the IRS?

Historical spending on debt collection services by the IRS can vary significantly year over year, influenced by legislative changes, economic conditions, and agency priorities. While specific figures for this particular contract are tied to the award amount, the IRS has historically utilized both in-house resources and private contractors to pursue delinquent tax debts. The agency has faced scrutiny and undergone reforms regarding its debt collection practices. Analyzing past contract awards for similar services, the number of bidders, and the total value awarded over previous fiscal years would provide a clearer picture of the IRS's long-term investment in outsourced debt collection and how this $118 million award compares to previous commitments.

How does the performance of Coast Professional, Inc. on previous contracts compare to industry benchmarks?

Assessing the performance of Coast Professional, Inc. requires a detailed review of their past contract history, including performance evaluations, any past performance issues, and their success rates in debt recovery across different contract types and agencies. Benchmarking against industry standards would involve comparing their recovery rates, cost-effectiveness (e.g., cost per dollar collected), and compliance with regulations against those of other leading debt collection agencies. Without access to specific performance data and independent evaluations for Coast Professional, Inc., a definitive comparison is not possible. However, the fact that they were awarded this significant contract suggests they met the IRS's criteria for capability and past performance.

What are the key performance indicators (KPIs) for this debt collection contract, and how are they measured?

Key Performance Indicators (KPIs) for federal debt collection contracts typically revolve around the effectiveness and efficiency of the collection process. Common KPIs include the amount of debt recovered (recovery rate), the cost per dollar collected, the time taken to resolve delinquent accounts, and compliance with legal and ethical collection standards. For this specific contract with Coast Professional, Inc., the IRS would have defined measurable objectives within the contract terms. These KPIs are crucial for monitoring the contractor's performance and ensuring that the agency is achieving its revenue recovery goals while adhering to taxpayer rights and privacy regulations. The fixed-price nature of the contract implies that the contractor is incentivized to meet these KPIs to ensure profitability.

What is the potential impact of this contract on the overall tax gap and federal revenue?

This contract is intended to directly address the tax gap, which is the difference between the taxes taxpayers legally owe and the amount that is actually paid voluntarily and on time. By engaging Coast Professional, Inc. to collect delinquent debts, the IRS aims to recover funds that would otherwise remain uncollected. The success of this contract in reducing the tax gap and increasing federal revenue will depend on the effectiveness of the collection efforts, the types of debts being pursued, and the overall economic environment. A well-executed debt collection program can contribute significantly to the Treasury's coffers, funding essential government services and reducing the burden on compliant taxpayers.

Are there any specific risks associated with outsourcing debt collection services, and how are they mitigated?

Outsourcing debt collection services carries several potential risks, including damage to the agency's reputation if the contractor employs overly aggressive or non-compliant tactics, data security breaches of sensitive taxpayer information, and potential inefficiencies if the contractor is not performing effectively. To mitigate these risks, the IRS would have implemented stringent contract terms, including detailed performance standards, compliance requirements, and data protection protocols. Regular oversight, performance reviews, and the potential for contract termination for non-compliance are standard mitigation strategies. The selection process itself, involving full and open competition, also aims to mitigate risk by choosing a capable and reputable vendor.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Mortgage and Nonmortgage Loan Brokers

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4273 VOLUNTEER RD, GENESEO, NY, 14454

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

Financial Breakdown

Contract Ceiling: $118,380,426

Exercised Options: $118,380,426

Current Obligation: $118,380,426

Actual Outlays: $112,987,113

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS23F0009U

IDV Type: FSS

Timeline