Breaking News: Department of Education Announces Award of New Debt Collection Contracts

Late yesterday afternoon The Department of Education (ED) announced the long awaited results of the RFP for Debt Collection Services. A letter was transmitted via email to all companies that had participated in Solicitation No. ED-FSA-16-R-0009, Debt Collection Services for the U.S. Department of Education (ED), Office of Federal Student Aid (FSA). This was the award for the unrestricted size companies. A copy of the contents of that letter can be found here.

Seven companies received awards. (In October 2014 ED selected eleven companies for the new contract in the small business set aside category.) The announcement indicated that forty-eight (48) proposals were received in response to the solicitation. That leaves forty-one disappointed companies.

The companies that received the award are:

• Financial Management Systems Investment Corp
• GC Services Limited Partnership
• Premiere Credit of North America, LLC
• The CBE Group, Inc.
• Transworld Systems Inc.
• Value Recovery Holding, LLC
• Windham Professionals, Inc.

The award has tremendous financial implications.  Per the letter "The total estimated contract amount is NOT to Exceed $417,100,002.00!"

insideARM has written extensively about the ongoing twists and turns of the RFP.

Our December 14, 2015 article provided a detailed history of the RFP. That article highlighted the cancellation of the then current solicitation (ED-FSA-13-R-0010) and the issuance of a new RFP. The initial deadline for the response was January 22, 2016.  Our  January 14, 2016 article told of ED’s decision to extend the response deadline to February 16, 2016.  Our February 16, 2016 article reported about an additional extension, this time to February 29, 2016.

Things then became quiet on the ED front until July of this year. On July 14, 2016 we reported that two firms, Pioneer Credit Recovery Inc. (Pioneer) and Enterprise Recovery Systems Inc. (Enterprise), had won their appeal of a denied protest over their contracts not being extended in March of 2015.

Since July, interested parties have been waiting to hear from ED. There has been a great deal of speculation about what the Department would do, but that is all it was – speculation. The wait is now over.

insideARM Perspective

This announcement is stunning. Its ramifications will be felt throughout the industry.  It is not just who received the award, but also who was not selected.  A number of firms who have historically had the ED contract were not selected. Those companies include: Account Control Technology, ConServe, EOS-CCA, ERS (now part of Alltran), FAMS, Iqor, Performant, Pioneer, Progressive, VanRu, and West (now part of Alorica).

In February of 2015 ED gave two-year contract extensions to five existing vendors in the unrestricted category: Account Control Technology, Inc., ConServe, Financial Management Systems, GC Services, and Windham Professionals, Inc. It is interesting to note that only three of those five firms received this new award.  It is also interesting to note that neither Pioneer nor ERS, the two firms that had won the appeal of their denied protest, received an award.

insideARM will be following this matter closely in the coming days and weeks. Because of the nature of this contract, the bizarre RFP process, and the financial implications, we suspect there will be protests filed.

We will report additional developments.