Department of Education awards $600M+ contract for direct loan services to Great Lakes Educational Loan Services, Inc

Contract Overview

Contract Amount: $600,163,197 ($600.2M)

Contractor: Great Lakes Educational Loan Services, Inc

Awarding Agency: Department of Education

Start Date: 2019-12-15

End Date: 2024-12-31

Contract Duration: 1,843 days

Daily Burn Rate: $325.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - GREAT LAKES FROM APPX 12/15/2019 THROUGH 12/14/2020

Place of Performance

Location: MADISON, DANE County, WISCONSIN, 53704

State: Wisconsin Government Spending

Plain-Language Summary

Department of Education obligated $600.2 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC for work described as: PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - GREAT LAKES FROM APPX 12/15/2019 THROUGH 12/14/2020 Key points: 1. Contract focuses on essential direct loan services, including call center operations and financial reporting. 2. The contract duration extends over multiple years, indicating a need for sustained service provision. 3. Awarded through full and open competition, suggesting a robust market for these services. 4. The firm-fixed-price structure aims to control costs and provide predictability. 5. This contract represents a significant portion of the agency's spending in this specific service category. 6. Performance is located in Wisconsin, potentially impacting the local economy and workforce.

Value Assessment

Rating: good

The total award amount of over $600 million for direct loan services is substantial. Benchmarking this against similar contracts for loan servicing is complex due to varying service scopes and contract lengths. However, the firm-fixed-price nature suggests a degree of cost control. The agency's historical spending patterns in this area would provide further context for assessing value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable vendors were likely solicited. The presence of four bidders suggests a competitive market for federal student loan servicing. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which is expected to drive down costs and ensure efficient service delivery for federal student loan programs.

Public Impact

Benefits federal student loan borrowers by ensuring continued access to essential services like call centers and financial reporting. Supports the operational continuity of the Department of Education's student loan programs. The geographic impact is primarily in Wisconsin, where the contractor is based, potentially creating or sustaining jobs. The contract ensures the smooth functioning of financial reporting and credit intermediation activities for student loans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to potential cost increases if market conditions change significantly.
Reliance on a single contractor for critical loan services poses a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a healthy market and competitive pricing.
Firm-fixed-price contract type helps to manage cost uncertainty.
Contractor has a significant history in loan servicing, suggesting experience.

Sector Analysis

The Other Activities Related to Credit Intermediation sector encompasses a range of financial services supporting credit. This contract falls within the broader financial services industry, specifically focusing on the administration and servicing of federal student loans. The market for loan servicing is substantial, with numerous private and public entities involved in managing loan portfolios for various government agencies and private lenders.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears limited unless the prime contractor voluntarily engages small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Education's contracting officers and program managers. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Student Loan Servicing Contracts
Department of Education Financial Services
Credit Intermediation Services
Government Call Center Operations

Risk Flags

Contract Duration
Performance Risk
Market Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $600.2 million to GREAT LAKES EDUCATIONAL LOAN SERVICES, INC. PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - GREAT LAKES FROM APPX 12/15/2019 THROUGH 12/14/2020

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 $600.2 million.

What is the period of performance?

Start: 2019-12-15. End: 2024-12-31.

What is the track record of Great Lakes Educational Loan Services, Inc. in performing federal loan servicing contracts?

Great Lakes Educational Loan Services, Inc. has a long-standing history of servicing federal student loans. They have been a significant player in the loan servicing industry for decades, managing large portfolios of federal and private loans. Their experience includes handling various aspects of loan administration, such as billing, payment processing, customer service via call centers, and financial reporting. The Department of Education has previously awarded contracts to Great Lakes, indicating a level of trust and proven performance in managing these complex financial operations. Their continued success in securing large federal contracts suggests a capacity to meet the demanding requirements of government loan servicing.

How does the pricing of this contract compare to similar federal loan servicing contracts?

Directly comparing the pricing of this $600M+ contract to similar federal loan servicing contracts is challenging without detailed service level agreements and performance metrics for each. However, the contract's firm-fixed-price structure is a positive indicator for cost control, as it shifts much of the financial risk to the contractor. The fact that it was awarded under full and open competition with four bidders suggests that the pricing achieved is likely competitive within the market for these specialized services. To conduct a more precise benchmark, one would need to analyze the per-loan servicing costs, call center efficiency metrics, and reporting accuracy across comparable contracts awarded by the Department of Education or other federal agencies over a similar timeframe.

What are the primary risks associated with this contract and how are they being mitigated?

The primary risks associated with this contract include potential performance failures by the contractor, leading to disruptions in student loan services, and the risk of cost overruns if the firm-fixed-price model is not adequately managed or if unforeseen issues arise. Another risk is the concentration of critical services with a single large provider. Mitigation strategies likely include robust performance monitoring by the Department of Education, clearly defined service level agreements (SLAs) with penalties for non-compliance, and regular audits. The competitive nature of the award process also serves as an indirect mitigation, as contractors are incentivized to perform well to secure future business. Contingency planning by the agency for potential contractor default would also be a key mitigation measure.

How effective is the Department of Education in overseeing contracts of this magnitude and complexity?

The Department of Education employs a range of oversight mechanisms for contracts of this magnitude. These typically include dedicated contract officers, program managers, and quality assurance specialists who monitor contractor performance against established metrics and deliverables. The use of firm-fixed-price contracts aims to simplify financial oversight by setting a ceiling on costs. Transparency is facilitated through public contract databases. However, the effectiveness can vary based on resource allocation within the agency and the specific expertise of the oversight team. Independent audits by the Inspector General's office also provide an additional layer of scrutiny to ensure accountability and identify potential issues.

What has been the historical spending trend for direct loan services by the Department of Education?

Historical spending trends for direct loan services by the Department of Education have generally been substantial, reflecting the significant volume of federal student loans managed. Over the years, the agency has relied on a mix of internal operations and external contractors to provide essential services like loan servicing, call center support, and financial reporting. Spending in this area can fluctuate based on legislative changes affecting student loan programs, shifts in loan origination volumes, and the specific contracting strategies employed by the Department. The trend has often involved consolidating services with fewer, larger contractors to achieve economies of scale, as seen with this large award to Great Lakes.

What is the potential impact of this contract on the broader federal student loan servicing market?

This contract, representing a significant portion of federal student loan servicing, reinforces the market dominance of large, established players like Great Lakes Educational Loan Services, Inc. Its award through full and open competition indicates that the market is capable of supporting such large-scale operations. However, it also highlights the high barriers to entry for smaller firms seeking to compete for major federal contracts in this space. The continued reliance on a few large contractors can lead to market concentration, potentially reducing future competition if these firms consolidate or exit the market. It underscores the importance of ongoing market analysis by the government to ensure sustained competition and innovation.

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: Great Lakes Educational Loan Services Inc

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: $602,102,120

Exercised Options: $602,102,120

Current Obligation: $600,163,197

Actual Outlays: $818,771,624

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: EDFSA09D0012

IDV Type: IDC

Timeline