Department of Education's $235M Default Management system contract awarded to Maximus Federal Services, Inc

Contract Overview

Contract Amount: $235,388,657 ($235.4M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Education

Start Date: 2025-02-01

End Date: 2026-04-30

Contract Duration: 453 days

Daily Burn Rate: $519.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE PURPOSE OF DMCS IS TO MANAGE THE DEFAULT LOAN PORTFOLIO, AND STORE, MANAGE, PROTECT, AND PROVIDE STUDENT LOAN DEBTORS IN DEFAULT AVAILABLE INFORMATION UNDER THE HEA. DMCS ENABLES BORROWERS, WHO SO CHOSE, TO MAKE PAYMENTS ON THEIR ACCOUNTS AND SEN

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $235.4 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: THE PURPOSE OF DMCS IS TO MANAGE THE DEFAULT LOAN PORTFOLIO, AND STORE, MANAGE, PROTECT, AND PROVIDE STUDENT LOAN DEBTORS IN DEFAULT AVAILABLE INFORMATION UNDER THE HEA. DMCS ENABLES BORROWERS, WHO SO CHOSE, TO MAKE PAYMENTS ON THEIR ACCOUNTS AND SEN Key points: 1. Maximus Federal Services, Inc. holds a significant contract for managing the student loan default portfolio. 2. The contract is for Computer Systems Design Services, a critical area for managing sensitive financial data. 3. The lack of competition raises concerns about potential overpricing and limited innovation. 4. The sector is IT services, with a focus on government financial management systems.

Value Assessment

Rating: questionable

The contract's value of $235M over 453 days suggests a high per-diem cost. Without competitive bidding, it's difficult to assess if this pricing is aligned with market rates for similar system management services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for a contract of this magnitude could result in inefficient use of taxpayer funds if the pricing is not optimized.

Public Impact

Millions of student loan borrowers' default information is managed through this system. The system's effectiveness directly impacts the government's ability to manage and recover defaulted student loan debt. Ensuring data security and borrower privacy is paramount given the sensitive nature of the information handled.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High contract value
Potential for cost overruns due to sole-source award

Positive Signals

Essential service for managing student loan debt
Long-term contract duration provides stability

Sector Analysis

This contract falls within the IT services sector, specifically focusing on government IT management and data processing. Benchmarks for similar large-scale government IT system management contracts are often high, but competitive bidding is key to ensuring value.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine if opportunities were missed.

Oversight & Accountability

The Department of Education is responsible for oversight. Given the sole-source nature, robust oversight is crucial to ensure the contractor is performing effectively and at a reasonable cost.

Related Government Programs

Computer Systems Design Services
Department of Education Contracting
Department of Education Programs

Risk Flags

Sole-source award lacks competitive pressure on pricing.
High contract value warrants close scrutiny of costs.
Potential for vendor lock-in due to specialized system management.
Dependence on a single contractor for critical financial data management.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $235.4 million to MAXIMUS FEDERAL SERVICES, INC.. THE PURPOSE OF DMCS IS TO MANAGE THE DEFAULT LOAN PORTFOLIO, AND STORE, MANAGE, PROTECT, AND PROVIDE STUDENT LOAN DEBTORS IN DEFAULT AVAILABLE INFORMATION UNDER THE HEA. DMCS ENABLES BORROWERS, WHO SO CHOSE, TO MAKE PAYMENTS ON THEIR ACCOUNTS AND SEN

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL 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 $235.4 million.

What is the period of performance?

Start: 2025-02-01. End: 2026-04-30.

What is the justification for the sole-source award, and how does it ensure value for money?

The justification for a sole-source award typically involves unique capabilities or urgent needs. Without this information, it's difficult to assess if the Department of Education received fair value. A thorough review of the justification is necessary to understand why competition was bypassed and if alternative solutions were considered.

How does the contractor ensure cost-efficiency and prevent potential overpricing in a non-competed contract?

In a non-competed contract, cost-efficiency relies heavily on strong government oversight, detailed performance metrics, and potentially cost-plus elements or price negotiation strategies. The Department of Education must actively monitor Maximus Federal Services' expenditures and performance to ensure that costs are reasonable and that the services provided are essential and delivered efficiently.

What are the key performance indicators (KPIs) for this contract, and how are they measured to ensure effectiveness?

Key performance indicators likely focus on system uptime, data accuracy, borrower interaction success rates, and timely processing of loan information. The Department of Education should have clearly defined KPIs and a rigorous process for measuring Maximus Federal Services' performance against these metrics to ensure the system effectively manages the default loan portfolio.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: APPROVED OTFOC

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1600 TYSONS BLVD STE 300, MCLEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $394,625,335

Exercised Options: $359,223,579

Current Obligation: $235,388,657

Actual Outlays: $81,517,369

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline