Department of Education awards $984M contract to Nelnet for loan servicing, spanning 5 years
Contract Overview
Contract Amount: $983,684,676 ($983.7M)
Contractor: Nelnet Servicing LLC
Awarding Agency: Department of Education
Start Date: 2019-11-26
End Date: 2024-12-31
Contract Duration: 1,862 days
Daily Burn Rate: $528.3K/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 - NELNET FROM 12/15/2019 THROUGH 12/14/2020
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20202
Plain-Language Summary
Department of Education obligated $983.7 million to NELNET SERVICING LLC for work described as: PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - NELNET FROM 12/15/2019 THROUGH 12/14/2020 Key points: 1. The contract focuses on essential direct loan services, including call center operations and financial reporting. 2. Nelnet Servicing LLC is the sole awardee, indicating a specific capability or existing relationship. 3. The significant contract value highlights the scale of federal student loan servicing operations. 4. The 'Other Activities Related to Credit Intermediation' NAICS code suggests a broad scope within financial services.
Value Assessment
Rating: good
The contract value of $984M over five years appears substantial for loan servicing. Benchmarking against similar large-scale federal loan servicing contracts would be necessary for a precise pricing assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair value.
Taxpayer Impact: Taxpayer funds are utilized for essential student loan servicing, aiming for efficient operations and compliance.
Public Impact
Millions of student loan borrowers will interact with the services provided under this contract. Efficient loan servicing impacts borrower satisfaction and the overall health of federal student loan programs. The contract ensures continued access to critical financial reporting and support for federal loan programs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in if competition is not robust in future solicitations.
- Reliance on a single vendor for critical loan servicing functions.
- Ensuring data security and privacy for sensitive borrower information.
Positive Signals
- Awarded under full and open competition.
- Long-term contract provides stability for essential services.
- Clear definition of services including call center and financial reporting.
Sector Analysis
This contract falls within the 'Other Activities Related to Credit Intermediation' sector, which encompasses a range of financial services beyond traditional banking. Federal spending in this area supports the administration of government programs and financial infrastructure.
Small Business Impact
The data indicates that Nelnet Servicing LLC received the award, and there is no specific mention of small business participation. Further analysis would be needed to determine if subcontracting opportunities were made available to small businesses.
Oversight & Accountability
The Department of Education is responsible for overseeing this contract. Robust oversight mechanisms are crucial to ensure performance, compliance, and value for taxpayer money, especially given the contract's duration and value.
Related Government Programs
- Other Activities Related to Credit Intermediation
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Significant contract value.
- Long contract duration (5 years).
- Reliance on a single vendor for critical services.
- No explicit mention of small business subcontracting.
Tags
other-activities-related-to-credit-inter, department-of-education, dc, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $983.7 million to NELNET SERVICING LLC. PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - NELNET FROM 12/15/2019 THROUGH 12/14/2020
Who is the contractor on this award?
The obligated recipient is NELNET SERVICING LLC.
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $983.7 million.
What is the period of performance?
Start: 2019-11-26. End: 2024-12-31.
What specific performance metrics are in place to ensure Nelnet provides high-quality call center and financial reporting services?
The contract likely includes detailed performance work statements (PWS) with specific metrics for call center wait times, resolution rates, and accuracy of financial reporting. The Department of Education's contract officers and quality assurance personnel would monitor these metrics regularly. Penalties for non-performance and incentives for exceeding expectations may also be included to ensure service quality and accountability.
How does the Department of Education ensure data security and privacy for student loan borrower information handled by Nelnet?
Federal contracts for services involving sensitive personal information typically mandate strict adherence to data security and privacy regulations, such as FISMA and relevant privacy acts. This includes requirements for secure data storage, transmission, access controls, and regular security audits. Nelnet would be required to implement robust cybersecurity measures and undergo periodic assessments to protect borrower data.
What is the projected cost savings or efficiency gain anticipated from outsourcing these direct loan services to Nelnet compared to in-house management?
The justification for outsourcing often centers on achieving economies of scale, leveraging specialized expertise, and potentially reducing overhead costs associated with in-house operations. While the contract value is high, the competitive bidding process aims to secure these services at a fair market price. A detailed cost-benefit analysis would have been conducted prior to award to quantify these projected savings.
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
Address: 121 S 13TH ST STE 201, LINCOLN, NE, 68508
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $983,684,676
Exercised Options: $983,684,676
Current Obligation: $983,684,676
Actual Outlays: $1,641,604,662
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: EDFSA09D0013
IDV Type: IDC
Timeline
Start Date: 2019-11-26
Current End Date: 2024-12-31
Potential End Date: 2024-12-31 00:00:00
Last Modified: 2025-09-30
More Contracts from Nelnet Servicing LLC
- Operations and Maintenance (O&M) Task Order for Student Loan Servicing in Accordance With the Requirements of the Usds Contract. ALL Work and Deliverables Provided Must BE in Accordance With the Requirements of the Contract for the Task Order — $398.5M (Department of Education)
- Operations and Maintenance (O&M) Task Order for Student Loan Servicing in Accordance With the Requirements of the Usds Contract. ALL Work and Deliverables Provided by the Usds Servicer Must BE in Accordance With the Requirements of the Contract F — $200.3M (Department of Education)
- Operations and Maintenance (O&M) Task Order for Student Loan Servicing in Accordance With the Requirements of the Usds Contract — $159.8M (Department of Education)
- Critical Function Base Award: 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) for the Period of 6/17/2014 to 6/16/2019. Task Order: 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) for the Period of 09/01/2018 to 08/31/2019. Modification: the Purpose of This Modification IS to Create a NEW Task Order for Contract Ed-Fsa-09-D-0013 With the Period of Performance: 9/01/2018 - 8/31/2019, and Provide Funding for Title IV AID Servicing Through Approximately 12/31/2018 — $139.3M (Department of Education)
- Critical Function Base Award: 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) for the Period of 6/17/2009 to 6/16/2019. Task Order: 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) for the Period of 9/01/2017 to 8/31/2018 — $137.7M (Department of Education)
Other Department of Education Contracts
- Administrative Action — $2.2B (Conduent Education Solutions, LLC)
- - Tivod Supports the Origination, Disbursement, and Reporting of Title IV Federal Student AID Programs, Including - BUT NOT Limited to - Direct Loans, Pell Grants, and the Teacher Education Assistance for College and Higher Education Grants. the Title IV Solution Shall Also Provide Ongoing Support for the Discontinued Title IV Federal Student AID Programs, Including - BUT NOT Limited to - Academic Competitiveness Grants and National Science and Mathematics Access to Retain Talent Grants — $1.5B (Accenture Federal Services LLC)
- Federal Student AID Common Origination and Disbursement Services — $1.1B (Accenture LLP)
- Debt Management and Collections System (dmcs) Igf::ct::igf — $906.9M (Maximus Federal Services, Inc.)
- This Task Order IS for an Enterprise-Wide Digital and Customer Care Platforms and Services Solution (enterprise-Wide Digital and Customer Care Solution, AKA Ewdccps, AKA DCC) That Will Enable an Fsa-Branded Omni-Channel Engagement Approach LED by a Mobile-First, Mobile-Complete, and Mobile-Continuous Digital Platform Supporting the Complete Lifecycle of Student Financing — $851.5M (Accenture Federal Services LLC)