Department of Education awards $50.4M for loan consolidation services to MAXIMUS EDUCATION LLC

Contract Overview

Contract Amount: $50,415,501 ($50.4M)

Contractor: Maximus Education LLC

Awarding Agency: Department of Education

Start Date: 2024-04-01

End Date: 2027-03-31

Contract Duration: 1,094 days

Daily Burn Rate: $46.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: THIS TASK ORDER, ENTITLED CONSOLIDATION ORIGINATION AND ADJUSTMENTS (COA), IS ISSUED FOR THE CONTRACT SERVICES ASSOCIATED WITH USDS CONTRACT CLIN 11 LOAN CONSOLIDATION ORIGINATION AND DISBURSEMENT.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $50.4 million to MAXIMUS EDUCATION LLC for work described as: THIS TASK ORDER, ENTITLED CONSOLIDATION ORIGINATION AND ADJUSTMENTS (COA), IS ISSUED FOR THE CONTRACT SERVICES ASSOCIATED WITH USDS CONTRACT CLIN 11 LOAN CONSOLIDATION ORIGINATION AND DISBURSEMENT. Key points: 1. Contract focuses on loan consolidation, origination, and disbursement services. 2. Awarded under a full and open competition, suggesting a competitive bidding process. 3. The contract duration is approximately three years, indicating a medium-term service requirement. 4. The fixed-price structure with economic price adjustment aims to manage cost fluctuations. 5. This task order is part of a larger contract for credit intermediation activities. 6. The vendor, MAXIMUS EDUCATION LLC, is a significant player in government contracting. 7. The contract is categorized under 'Other Activities Related to Credit Intermediation'.

Value Assessment

Rating: good

The total award of $50.4 million over approximately three years for loan consolidation and disbursement services appears reasonable given the scope. Benchmarking against similar large-scale federal student loan servicing contracts suggests that the per-annum cost is within expected ranges. The fixed-price with economic price adjustment (EPA) mechanism is a standard approach for long-term service contracts to account for potential inflation and changes in operating costs, which can help ensure service continuity while providing some cost predictability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was awarded under a full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 3 bidders suggests a moderate level of competition for this specific service. While not a highly contested bid, the open competition framework generally promotes price discovery and encourages contractors to offer competitive terms to secure the award.

Taxpayer Impact: A full and open competition provides taxpayers with assurance that the government sought the best value by allowing multiple vendors to compete, potentially leading to more favorable pricing than a sole-source or limited competition award.

Public Impact

Benefits federal student loan borrowers by facilitating loan consolidation and origination processes. Ensures the smooth disbursement of consolidated student loans. Supports the Department of Education's mission to manage and service federal student loan programs. Likely impacts a large number of student loan borrowers across the United States. May involve a workforce dedicated to loan processing and customer support within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost increases due to economic price adjustment clause if inflation is high.
Reliance on a single contractor for critical loan servicing functions could pose a risk if performance issues arise.
The complexity of loan origination and consolidation may lead to processing errors if not managed meticulously.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely yielded a fair price.
The fixed-price structure provides a degree of cost certainty for the government, with EPA mitigating extreme market shifts.
MAXIMUS EDUCATION LLC has experience in government contracting, potentially indicating a capable and reliable service provider.

Sector Analysis

This contract falls within the financial services and credit intermediation sector, specifically focusing on government-backed student loan programs. The market for federal student loan servicing is dominated by a few large, experienced contractors. Spending in this area is substantial and directly tied to federal education policy and the volume of student lending. Comparable contracts would involve other large-scale loan servicing or administration agreements within federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, MAXIMUS EDUCATION LLC, will likely handle the majority of the work. There is no explicit information on subcontracting plans for small businesses within this specific task order, but large prime contractors are often encouraged or required to have small business subcontracting goals on broader contract vehicles.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of Education's contracting officers and program managers. Performance will be monitored against the CLIN 11 requirements and the terms of the delivery order. Transparency is generally maintained through contract award databases and reporting requirements. While specific IG jurisdiction isn't detailed here, the Department of Education's Office of Inspector General would have oversight over potential fraud, waste, or abuse related to federal funds.

Related Government Programs

Federal Student Loan Servicing
Department of Education IT and Administrative Support
Credit Intermediation Services
Loan Origination and Disbursement Contracts

Risk Flags

Potential for cost increases due to EPA clause.
Contractor performance risk.
Data security and privacy concerns.
Reliance on a single vendor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $50.4 million to MAXIMUS EDUCATION LLC. THIS TASK ORDER, ENTITLED CONSOLIDATION ORIGINATION AND ADJUSTMENTS (COA), IS ISSUED FOR THE CONTRACT SERVICES ASSOCIATED WITH USDS CONTRACT CLIN 11 LOAN CONSOLIDATION ORIGINATION AND DISBURSEMENT.

Who is the contractor on this award?

The obligated recipient is MAXIMUS EDUCATION LLC.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $50.4 million.

What is the period of performance?

Start: 2024-04-01. End: 2027-03-31.

What is the track record of MAXIMUS EDUCATION LLC in performing similar federal contracts, particularly those involving loan consolidation and disbursement?

MAXIMUS EDUCATION LLC, a subsidiary of Maximus, Inc., has a significant history of performing large-scale federal contracts, including those related to student loan servicing and administration for the Department of Education. They have been involved in various aspects of the federal student aid program, managing loan servicing, repayment, and customer support functions. Their experience often includes handling complex processes like loan consolidation, origination, and disbursement, as well as managing large call centers and online portals for borrowers. While specific performance metrics for this exact task order are not yet available, the company's extensive background in the sector suggests a capacity to manage such requirements. However, like any large contractor, they may have faced scrutiny or performance challenges on past contracts, which would be detailed in contract performance reports and agency evaluations.

How does the awarded amount of $50.4 million compare to historical spending on similar loan consolidation and origination services by the Department of Education?

The $50.4 million award for approximately three years of service represents an annual average of roughly $16.8 million. To compare this to historical spending, one would need to examine prior contracts for loan consolidation, origination, and disbursement services awarded by the Department of Education. Historically, the Department has contracted with multiple large servicers for various aspects of student loan management. The total annual spending on student loan servicing can fluctuate significantly based on program volume, policy changes, and the number and size of active contracts. Without specific historical data points for comparable task orders or contracts, it's difficult to definitively state if this award is higher or lower. However, given the scale of federal student loan programs, this amount appears to be within a plausible range for a significant service component.

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

Primary risks include potential performance failures by the contractor (MAXIMUS EDUCATION LLC) in processing loan applications accurately and timely, leading to borrower dissatisfaction or program inefficiencies. There's also a risk of data security breaches given the sensitive financial information handled. The economic price adjustment (EPA) clause introduces a risk of cost overruns if inflation significantly outpaces projections. Mitigation strategies likely involve robust performance monitoring by the Department of Education, including key performance indicators (KPIs) for accuracy, timeliness, and customer service. Contractual remedies for non-performance and strong cybersecurity protocols are essential. The fixed-price nature of the base contract, with EPA as a controlled adjustment, aims to balance cost certainty with flexibility.

How effective is the 'full and open competition' approach likely to be in ensuring value for money for this specific contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value for money, as it allows the widest possible pool of qualified vendors to bid. This increases the likelihood of receiving competitive pricing and innovative solutions. In this case, with 3 bidders, the competition was present, which should have driven the price down compared to a sole-source award. However, the 'value for money' is also dependent on the clarity of the solicitation requirements, the evaluation criteria used, and the actual performance of the selected contractor. If the requirements were well-defined and the evaluation process robust, the full and open competition likely yielded a good outcome for taxpayers. The long-term effectiveness will also depend on ongoing contract management and performance oversight.

What are the potential implications of the 'fixed price with economic price adjustment' (FPEPA) contract type on overall cost and contractor performance?

The FPEPA contract type aims to strike a balance between cost certainty for the government and protection for the contractor against unforeseen economic fluctuations, such as inflation. The 'fixed price' component means the base cost is set, providing a predictable budget line item. The 'economic price adjustment' allows for modifications to the price based on specific economic indices (e.g., Consumer Price Index, industry-specific cost drivers), typically capped or tied to objective measures. This can incentivize contractor efficiency by rewarding cost savings below the adjusted price, while protecting them from significant losses due to external economic factors. For the government, it means potential cost increases beyond the initial fixed price, but it also helps ensure contractor stability and willingness to perform long-term, complex services without constant renegotiation.

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

Solicitation ID: 91003123R0COA

Offers Received: 3

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 1891 METRO CENTER DR, RESTON, VA, 20190

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $281,885,989

Exercised Options: $50,415,501

Current Obligation: $50,415,501

Actual Outlays: $5,927,833

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 91003123D0001

IDV Type: IDC

Timeline