ED to Extend Current Collection Contract for Only a Few

Only six collection agencies currently working on the U.S. Department of Education’s student loan debt collection contract will qualify for a six month extension at the end of the current contract term, according to criteria recommendations released last week by ED.

Richard Galloway, the contracting officer’s representative for the Federal Student Aid division that administers the contract, recommended that only collection agencies with an average score of 80 over the four quarters of 2008 receive extensions. After the first quarter, six companies have the required score ("Usual Suspects Top ED Collection Contract for First Quarter," April 21). Performance scores are based on total dollars collected, total accounts serviced and administrative resolutions for accounts forwarded.

The student loan collection contract, which has 17 collection agencies actively working ED accounts, will expire on March 31, 2009. The terms of the contract call for a six-month optional extension for selected collection vendors. The extension is intended to help serve as a back up for new collection agencies coming into the program after a new contract is awarded in September of this year (“ED Update: 2008 Contract Stakes are Higher,” Jan. 23).

The contract is divided into two categories: five companies are qualified as part of a small business set aside and the remaining 12 are on the unrestricted contract, intended for larger companies. Of the six firms that qualify for the extension, two companies are in the small business category – Continental Service Group and Account Control Technology, Inc. (ACT), and four are from the unrestricted group – Pioneer Credit Recovery, NCO Group, Van Ru Credit Corp. and Diversified Collection Services (DCS).

Performance measures for the contract in the first quarter of 2008 included a customer service component that will be eliminated for the remainder of the contract. This component pushed two companies – Van Ru and DCS – into the recommended threshold for the extension. But without the measure, the two companies fell short.

Galloway told insideARM that the department anticipates extending “between 3 and 6 current contractors” in March of next year. He also noted that these recommendations are not binding and that the contracting officer has the discretion to use his own criteria when determining which companies to extend.