Department of Education awards $507M contract to PHEAA for loan services, impacting higher education finance
Contract Overview
Contract Amount: $506,850,408 ($506.9M)
Contractor: Pennslyvania Higher Education Assistance Agency
Awarding Agency: Department of Education
Start Date: 2019-12-06
End Date: 2024-11-01
Contract Duration: 1,792 days
Daily Burn Rate: $282.8K/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 - PHEAA FROM 12/15/2019 THROUGH 12/14/2020
Place of Performance
Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17102
Plain-Language Summary
Department of Education obligated $506.9 million to PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY for work described as: PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - PHEAA FROM 12/15/2019 THROUGH 12/14/2020 Key points: 1. The contract value of $507M over five years is substantial, indicating a significant reliance on external providers for critical financial services. 2. Competition was full and open, suggesting a competitive bidding process that should have yielded favorable pricing. 3. The primary risk lies in the potential for service disruptions or quality degradation impacting student loan borrowers. 4. This spending falls under 'Other Activities Related to Credit Intermediation', a sector crucial for economic stability and access to education.
Value Assessment
Rating: good
The contract's fixed-price nature provides cost certainty. Benchmarking against similar large-scale loan servicing contracts would be beneficial to confirm optimal pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, allowing multiple bidders to propose solutions. This method generally promotes competitive pricing and innovation.
Taxpayer Impact: Taxpayer funds are being used efficiently through a competitive process for essential student loan servicing.
Public Impact
Students and borrowers will experience the direct impact through call center services and financial reporting accuracy. The efficiency of these services affects the overall accessibility and management of higher education financial aid. PHEAA's performance directly influences the government's ability to manage its student loan portfolio effectively.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for service degradation impacting borrowers.
- Reliance on a single vendor for critical financial operations.
Positive Signals
- Awarded through full and open competition.
- Long-term contract provides stability for services.
Sector Analysis
This contract falls under 'Other Activities Related to Credit Intermediation', a sector vital for financial markets and economic activity. Spending benchmarks for similar loan servicing contracts are typically in the hundreds of millions over several years.
Small Business Impact
The data indicates that small businesses were not directly awarded this contract, which is a large prime contract. Further analysis would be needed to determine if small businesses are involved as subcontractors.
Oversight & Accountability
The Department of Education is responsible for oversight. Regular performance reviews and audits are crucial to ensure service quality and adherence to contract terms.
Related Government Programs
- Other Activities Related to Credit Intermediation
- Department of Education Contracting
- Department of Education Programs
Risk Flags
- Vendor lock-in potential.
- Dependence on a single entity for critical functions.
- Risk of service quality decline over contract duration.
- Potential impact of regulatory changes on loan servicing.
Tags
other-activities-related-to-credit-inter, department-of-education, pa, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Education awarded $506.9 million to PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY. PROVIDE DIRECT LOAN SERVICES SUCH AS CALL CENTER AND FINANCIAL REPORTING - PHEAA FROM 12/15/2019 THROUGH 12/14/2020
Who is the contractor on this award?
The obligated recipient is PENNSLYVANIA HIGHER EDUCATION ASSISTANCE AGENCY.
Which agency awarded this contract?
Awarding agency: Department of Education (Department of Education).
What is the total obligated amount?
The obligated amount is $506.9 million.
What is the period of performance?
Start: 2019-12-06. End: 2024-11-01.
What is the specific performance metric for the call center and financial reporting services?
The contract details likely include specific performance metrics and service level agreements (SLAs) for call center wait times, resolution rates, and the accuracy and timeliness of financial reporting. These metrics are crucial for ensuring the quality of service provided to borrowers and for the Department of Education's oversight.
What are the contingency plans if PHEAA fails to meet performance standards?
Contingency plans typically involve contractual remedies such as penalties, corrective action plans, or even termination of the contract. The Department of Education would likely have procedures in place to address performance deficiencies, ensuring minimal disruption to borrowers and the continuity of essential services.
How does the cost of these services compare to in-house government provision?
Comparing the cost of external provision to in-house government operations involves analyzing direct and indirect costs for both scenarios. While outsourcing can offer specialized expertise and economies of scale, in-house provision might reduce profit margins and offer greater direct control, though potentially at a higher operational cost.
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: 1200 NORTH SEVENTH STREET, HARRISBURG, PA, 17102
Business Categories: Category Business, Government, U.S. National Government, Not Designated a Small Business, U.S. Regional/State Government
Financial Breakdown
Contract Ceiling: $516,494,533
Exercised Options: $516,494,533
Current Obligation: $506,850,408
Actual Outlays: $591,363,884
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: EDFSA09D0014
IDV Type: IDC
Timeline
Start Date: 2019-12-06
Current End Date: 2024-11-01
Potential End Date: 2024-11-01 00:00:00
Last Modified: 2025-09-24
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