Department of Education's $32M contract for financial asset management systems aims to control delinquent accounts

Contract Overview

Contract Amount: $32,171,381 ($32.2M)

Contractor: Financial Asset Management SYS

Awarding Agency: Department of Education

Start Date: 2003-12-04

End Date: 2003-03-15

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 50

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDES ED WITH A MEANS OF CONTROLLONG DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTION RELATED TO IDENTIFYING DEFAULTED LOANS, AND BILLING DEFAULTED BORROWERS.

Place of Performance

Location: GEORGIA

State: Georgia Government Spending

Plain-Language Summary

Department of Education obligated $32.2 million to FINANCIAL ASSET MANAGEMENT SYS for work described as: PROVIDES ED WITH A MEANS OF CONTROLLONG DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTION RELATED TO IDENTIFYING DEFAULTED LOANS, AND BILLING DEFAULTED BORROWERS. Key points: 1. The contract focuses on managing defaulted loans and billing, indicating a critical function for the department. 2. A firm-fixed-price contract suggests predictable costs for the government, assuming scope remains stable. 3. The duration of the contract, though not explicitly stated as a single term, has been active since 2003, implying long-term operational needs. 4. The North American Industry Classification System (NAICS) code 561440 points to collection agencies, aligning with the contract's stated purpose. 5. The contract was awarded under full and open competition, suggesting a robust bidding process. 6. The absence of small business set-asides indicates that large businesses were likely the primary bidders.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contracts for similar financial asset management systems. The total obligated amount of $32.17 million over its lifespan suggests a significant investment. However, the lack of detailed cost breakdowns or performance data makes it difficult to assess if this represents excellent value for money. The firm-fixed-price nature is a positive indicator for cost control, but the long operational history without clear updates on modernization or efficiency gains warrants further scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process is generally expected to foster competitive pricing and encourage innovation. The fact that it was competed suggests that the Department of Education sought the best available solution in the market. However, the number of bids received (50) would provide a clearer picture of the actual level of competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider range of solutions, potentially reducing overall costs for government services.

Public Impact

Benefits the Department of Education by providing tools to manage and recover funds from delinquent and defaulted student loans. Supports the financial health of federal student loan programs by enabling efficient collection processes. Impacts borrowers who are delinquent or have defaulted on their loans, as the system facilitates communication and payment management. The system's operation likely involves a workforce within the Department of Education or its contractors responsible for managing the financial asset data and processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for system obsolescence given the contract's long operational history since 2003.
Lack of transparency regarding specific performance metrics and cost-effectiveness over the contract's lifespan.
Dependence on a single system for critical financial operations could pose a risk if the system experiences failures or security breaches.

Positive Signals

Awarded through full and open competition, suggesting a competitive selection process.
Firm-fixed-price contract type helps in managing budget predictability.
The system addresses a core function of managing delinquent accounts, indicating its importance and likely utility.

Sector Analysis

The contract falls within the IT services sector, specifically focusing on financial management and collection systems. The market for such solutions is competitive, with numerous vendors offering enterprise resource planning (ERP) and specialized financial software. The Department of Education's spending in this area is crucial for maintaining the integrity and financial stability of its loan programs. Comparable spending benchmarks would typically involve other large federal agencies managing significant loan portfolios, such as the Treasury or Veterans Affairs, for similar system functionalities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the scope and requirements of the financial asset management system were likely geared towards larger, established technology providers capable of handling complex federal IT systems. There is no direct information on subcontracting plans, but typically, prime contractors on large federal IT contracts may engage small businesses for specialized services, though this is not guaranteed without specific set-aside provisions.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of Education's contracting and program management offices. Accountability measures are typically embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is often facilitated through contract award databases like FPDS-NG, which provide basic information on contract value, type, and competition. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Federal Student Aid (FSA) Operations
Department of Education Financial Management Systems
Loan Servicing and Collection Systems
Government Financial Asset Management

Risk Flags

Potential for technological obsolescence due to long contract duration.
Lack of detailed performance metrics makes value assessment difficult.
Long operational history without clear updates may indicate missed modernization opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $32.2 million to FINANCIAL ASSET MANAGEMENT SYS. PROVIDES ED WITH A MEANS OF CONTROLLONG DELIQUENT/DEFAULTED ACCOUNTS, INCLUDING MANAGING ALL TRANSACTION RELATED TO IDENTIFYING DEFAULTED LOANS, AND BILLING DEFAULTED BORROWERS.

Who is the contractor on this award?

The obligated recipient is FINANCIAL ASSET MANAGEMENT SYS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.2 million.

What is the period of performance?

Start: 2003-12-04. End: 2003-03-15.

What is the total amount obligated against this contract since its inception?

The total amount obligated against this contract since its inception is $32,171,380.85. This figure represents the cumulative spending authorized under the contract. The contract was awarded on December 4, 2003, with an initial completion date of March 15, 2003, which appears to be an error in the provided data, likely meaning the completion date is in the future or the award date is the effective start. Given the long operational history implied, this total obligated amount reflects the sustained investment in the financial asset management system over many years.

How does the firm-fixed-price contract type impact cost control for the Department of Education?

A firm-fixed-price (FFP) contract type is generally advantageous for cost control as it establishes a ceiling price that the contractor must adhere to, regardless of their actual costs. This shifts the risk of cost overruns to the contractor. For the Department of Education, this means greater budget predictability and protection against unexpected increases in the contractor's expenses. However, it also means that the government may pay a premium upfront to account for the contractor's risk, and the contractor has less incentive to control costs beyond what is necessary to meet the contract's requirements.

What are the potential risks associated with a contract that has been active since 2003?

A contract active since 2003, like this financial asset management system contract, carries several potential risks. Firstly, technological obsolescence is a significant concern; the system may be outdated compared to current market solutions, leading to inefficiencies or security vulnerabilities. Secondly, the long duration could indicate a lack of effective competition or a vendor lock-in situation. Thirdly, maintenance and support costs for older systems can escalate. Finally, the original requirements may no longer fully align with the Department's current needs, necessitating costly modifications or workarounds.

Can the number of bids (50) be considered strong competition for this type of contract?

Receiving 50 bids for a federal contract generally indicates a healthy level of competition, especially for a specialized IT system like financial asset management. This number suggests that the opportunity was widely known and that multiple vendors were interested and capable of bidding. Strong competition typically benefits the government by driving down prices, encouraging innovation, and ensuring a wider selection of qualified contractors. Without knowing the specific nature of the requirements and the typical number of bidders for similar contracts, it's difficult to definitively state if 50 is exceptionally high or just standard, but it is a positive signal.

What does the NAICS code 561440 (Collection Agencies) imply about the contract's function?

The North American Industry Classification System (NAICS) code 561440, 'Collection Agencies,' strongly implies that the primary function of this contract is related to the recovery of debts owed to the government, specifically defaulted student loans. This involves activities such as locating debtors, negotiating payment plans, processing payments, and managing accounts in arrears. The system procured under this contract would therefore be designed to support these collection efforts efficiently and effectively, ensuring compliance with relevant regulations and maximizing recovery rates for the Department of Education.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Collection Agencies

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 50

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 4250 PERIMETER PARK S # 2, ATLANTA

Business Categories: Category Business, Higher Education, Higher Education (Minority Serving), Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $62,825,304

Exercised Options: $49,825,304

Current Obligation: $32,171,381

Timeline