Education's $907M DMCS Contract Awarded to Maximus Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $906,920,531 ($906.9M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Education

Start Date: 2013-09-27

End Date: 2025-01-31

Contract Duration: 4,144 days

Daily Burn Rate: $218.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DEBT MANAGEMENT AND COLLECTIONS SYSTEM (DMCS) IGF::CT::IGF

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $906.9 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: DEBT MANAGEMENT AND COLLECTIONS SYSTEM (DMCS) IGF::CT::IGF Key points: 1. Significant contract value of $907M for debt management services. 2. Maximus Federal Services, Inc. holds the contract. 3. Competition method was 'FULL AND OPEN COMPETITION', but effectiveness is questioned. 4. Sector is IT/Financial Services, focusing on debt collection systems.

Value Assessment

Rating: questionable

The contract's value of $907M over its duration raises questions about cost-effectiveness for debt management services. Benchmarking against similar government contracts for collection systems is needed to assess if this price is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a broad search for qualified vendors. However, the long duration and significant value warrant an examination of whether this truly resulted in the best possible price discovery and value for the government.

Taxpayer Impact: Taxpayer funds are being utilized for a large-scale debt management system. Ensuring the contract delivers efficient and effective debt collection is crucial for maximizing return on investment and minimizing outstanding government debt.

Public Impact

Impacts individuals with federal student loan debt managed through the DMCS. Ensures the government's ability to collect on outstanding debts. Potential for improved efficiency in debt recovery processes. Concerns about the long-term cost to taxpayers for debt management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value over an extended period.
Potential for cost overruns or inefficiencies.
Limited transparency on performance metrics and value realization.

Positive Signals

Utilizes full and open competition.
Aims to improve debt management processes.
Contract supports a critical government function.

Sector Analysis

The IT and Financial Services sector, particularly concerning government debt collection, requires robust and efficient systems. Benchmarks for similar contracts often focus on recovery rates and cost per dollar collected, which are key indicators of success.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as 'sb' is false. Analysis should explore if subcontracting opportunities were provided to small businesses to ensure broader economic participation.

Oversight & Accountability

Oversight is critical for a contract of this magnitude and duration. The Department of Education must ensure rigorous performance monitoring, regular audits, and accountability for Maximus Federal Services, Inc. to guarantee effective service delivery and responsible use of funds.

Related Government Programs

Commercial Banking
Department of Education Contracting
Department of Education Programs

Risk Flags

High contract value.
Long contract duration.
Potential for vendor lock-in.
Lack of specific performance metrics in provided data.
No indication of small business subcontracting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $906.9 million to MAXIMUS FEDERAL SERVICES, INC.. DEBT MANAGEMENT AND COLLECTIONS SYSTEM (DMCS) IGF::CT::IGF

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 $906.9 million.

What is the period of performance?

Start: 2013-09-27. End: 2025-01-31.

What is the cost-effectiveness of this contract compared to industry standards for debt management systems?

Assessing the cost-effectiveness requires detailed analysis of the per-unit costs, service delivery metrics, and recovery rates achieved by Maximus Federal Services, Inc. Benchmarking against similar government and private sector contracts for debt collection and management systems is essential. Without specific performance data and comparative pricing, it's difficult to definitively state the cost-effectiveness, but the $907M value warrants close scrutiny.

What are the primary risks associated with the long-term duration and high value of this contract?

The primary risks include potential cost overruns due to the extended period, vendor lock-in making future transitions difficult and costly, and the possibility of declining service quality or innovation if performance incentives are weak. There's also a risk that the system may become outdated before the contract ends, requiring costly upgrades or replacements. Ensuring robust oversight and performance management is key to mitigating these risks.

How effectively does this contract contribute to the Department of Education's mission of managing federal debt?

The contract's effectiveness hinges on its ability to efficiently and successfully manage federal debt, leading to increased recovery rates and reduced outstanding balances. Key performance indicators related to debt collection, borrower satisfaction, and operational efficiency must be rigorously tracked. If the DMCS system demonstrably improves these metrics and supports the department's financial stewardship goals, it is effective; otherwise, its contribution is questionable.

Industry Classification

NAICS: Finance and Insurance › Depository Credit Intermediation › Commercial Banking

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

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: $945,084,132

Exercised Options: $906,920,531

Current Obligation: $906,920,531

Actual Outlays: $544,183,729

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,080,134

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline