Department of Education awards $52.7M for student aid servicing, highlighting a 105-day task order

Contract Overview

Contract Amount: $52,757,715 ($52.8M)

Contractor: Great Lakes Educational Loan Services, Inc

Awarding Agency: Department of Education

Start Date: 2019-09-01

End Date: 2019-12-15

Contract Duration: 105 days

Daily Burn Rate: $502.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THIS TASK ORDER ALSO SERVES TO PROVIDE FUNDING UNDER CONTRACT ED-FSA-09-D-0012 FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/15/19.

Place of Performance

Location: MADISON, DANE County, WISCONSIN, 53704

State: Wisconsin Government Spending

Plain-Language Summary

Department of Education obligated $52.8 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC for work described as: THIS TASK ORDER ALSO SERVES TO PROVIDE FUNDING UNDER CONTRACT ED-FSA-09-D-0012 FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/15/19. Key points: 1. Value for money assessed through comparison to similar contracts and market rates. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators are monitored through performance context and sector positioning. 4. Performance context is tied to existing Title IV aid servicing. 5. Sector positioning is within credit intermediation services.

Value Assessment

Rating: good

The contract value of $52.7 million for a 105-day period suggests a significant operational scope. Benchmarking against similar student loan servicing contracts would provide a clearer picture of value. However, the fixed-price nature of the contract offers some cost certainty for the government. The relatively short duration may indicate a specific, time-bound need or a bridge to a longer-term solution.

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 submit proposals. The presence of four bidders suggests a reasonably competitive environment. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of obtaining services at the best possible price due to the pressure of multiple competing firms.

Public Impact

Benefits students and educational institutions by ensuring the continued servicing of Title IV federal student aid. Services delivered include the administration and management of federal student loan programs. Geographic impact is national, covering all recipients of Title IV aid. Workforce implications may involve the personnel at Great Lakes Educational Loan Services, Inc. dedicated to these tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration (105 days) may indicate a temporary need or potential for future re-competition.
Reliance on a single task order for a significant amount could warrant close monitoring of performance.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
Firm fixed-price contract provides cost predictability.
Contractor has a track record in aid servicing, implying familiarity with the requirements.

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, often involving large, specialized firms. The Department of Education is a primary client for such services, with spending often tied to legislative mandates and program funding levels. Comparable spending benchmarks would involve analyzing other contracts for similar loan servicing operations.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it appear to have explicit subcontracting requirements for small businesses mentioned. The primary contractor, Great Lakes Educational Loan Services, Inc., is a large entity. Further analysis would be needed to determine if any small business subcontracting opportunities were part of the overall contract structure or if the competition itself allowed for small business participation as prime contractors.

Oversight & Accountability

Oversight for this contract would typically reside with the Department of Education's contracting officers and program managers. Accountability measures are embedded in the firm fixed-price structure and the defined period of performance. Transparency is generally facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Student Loan Program Administration
Title IV Aid Servicing Contracts
Credit Intermediation Services

Risk Flags

Short contract duration
Potential for service disruption during transition

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $52.8 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC. THIS TASK ORDER ALSO SERVES TO PROVIDE FUNDING UNDER CONTRACT ED-FSA-09-D-0012 FOR TITLE IV AID SERVICING THROUGH APPROXIMATELY 12/15/19.

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 $52.8 million.

What is the period of performance?

Start: 2019-09-01. End: 2019-12-15.

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

The Department of Education has historically allocated significant funds towards the servicing of federal student aid. This spending is driven by the large volume of federal loans and grants disbursed under Title IV of the Higher Education Act. Over the years, the department has utilized various contracting mechanisms, including large-scale servicing contracts, to manage loan portfolios, process payments, and provide borrower assistance. Spending levels can fluctuate based on legislative changes, student enrollment trends, and the overall economic climate affecting student borrowing. Analyzing historical data reveals a consistent need for these services, often awarded through competitive processes to specialized loan servicing companies.

How does the per-unit cost of servicing federal student loans compare across different contractors and contract types?

Benchmarking the per-unit cost of servicing federal student loans is complex due to variations in contract scope, duration, and the specific services required. Contracts can range from basic payment processing to comprehensive borrower support, including default prevention and repayment plan management. Full and open competition generally drives down per-unit costs compared to sole-source or limited competition awards. However, the efficiency and scale of the contractor also play a significant role. Analyzing data from similar contracts, particularly those with comparable service level agreements and contract durations, is crucial for an accurate comparison. The Department of Education's procurement history provides a basis for understanding these cost variations.

What are the key performance indicators (KPIs) typically used to evaluate federal student loan servicing contracts?

Key performance indicators for federal student loan servicing contracts are designed to ensure efficient and effective management of the loan portfolio and borrower interactions. Common KPIs include loan default rates, borrower satisfaction scores, timeliness of payment processing, accuracy of account information, and responsiveness to borrower inquiries. For contracts involving origination or disbursement, KPIs might also track application processing times and data accuracy. The Department of Education establishes specific metrics within each contract, often tied to financial incentives or penalties, to hold contractors accountable for meeting program objectives and maintaining borrower support.

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

Great Lakes Educational Loan Services, Inc. has a substantial track record in managing federal student aid programs. As a long-standing participant in the student loan servicing industry, the company has handled significant volumes of federal loans under various Department of Education contracts. Their experience typically encompasses loan origination support, repayment processing, customer service, and default aversion strategies. Companies like Great Lakes are often evaluated based on their operational capacity, technological infrastructure, compliance adherence, and historical performance metrics, such as borrower retention and successful repayment rates. Their continued engagement in this sector suggests a demonstrated ability to meet the complex requirements of federal student aid administration.

What are the potential risks associated with a short-duration task order for critical financial services like student aid servicing?

A short-duration task order for critical financial services like student aid servicing can introduce several risks. Firstly, there's the risk of service disruption if the transition to a new contractor or the completion of the task is not managed seamlessly. This can impact borrowers, leading to issues with payments or account information. Secondly, short durations may limit the contractor's ability to implement long-term efficiency improvements or invest in system upgrades, potentially leading to less optimal service delivery. Thirdly, frequent short-term contract awards can increase administrative burden and procurement costs for the government. Finally, it might signal an ongoing uncertainty in program requirements or a lack of strategic planning for long-term servicing needs.

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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nelnet, Inc. (UEI: 134960447)

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: $105,002,185

Exercised Options: $105,002,185

Current Obligation: $52,757,715

Actual Outlays: $52,757,715

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: EDFSA09D0012

IDV Type: IDC

Timeline