Treasury Awards Contracts for Collection of Non-Tax Debt; Could Student Loans Be Next?

Last Friday the U.S. Treasury Department announced the selection of Private Collection Agency (PCA) awards resulting from Solicitation Number TFSAFSA17Q0001. That solicitation - an RFP for the collection of non-tax debts - was released on September 13, 2016. insideARM wrote about that RFP last fall.

Five firms were selected:

1. Pioneer Credit Recovery, Inc (Pioneer)
2. The CBE Group, Inc (CBE)
3. Performant Recovery, Inc. (Performant)
4. Continental Service Group, Inc. (ConServe)
5. Coast Professional, Inc. (Coast)

Four of the firms, CBE, ConServe, Performant, and Pioneer have serviced this contract since the last procurement held in 2011. Coast was the only new company selected.

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As outlined in our previous article, placements under the contract originate from more than 40 different federal agencies, and are broadly characterized as fines, fees, overpayments, loans, penalties, grants, employee advances, and miscellaneous debts.  Slightly more than half are commercial. Procurement documents indicate that, during FY 2015, Treasury placed more than 360,000 accounts with PCAs with an average balance close to $20,000. Over the last five fiscal years, it has averaged 449,000 placements per year. 

An announcement on FedBizOpps.gov says the contract has a value "not to exceed $32 million."  

An October 13, 2016 podcast from Kaulkin Ginsberg featuring Randy Kamm of Collection Quotient Consulting focused on the Treasury RFP. Randy did an excellent job describing the RFP, the type of work that had been placed in the past under this contract, and the potential for additional placement volume under the new contract. He noted that this contract differs from prior Treasury contracts in one critical area; under this new contract, the companies will, for the first time, be required to subcontract 15% of the contract value to small businesses.

insideARM Perspective

According to insideARM records, Treasury has outsourced non-tax collection efforts to PCAs since at least 1998. This contract has always been tightly managed and limited to a small number of firms. 

To be clear, this project will not involve IRS or student loan debt. The IRS contracts to PCAs were awarded in September of 2016. The outsourcing of student loan collections to PCAs is managed by the Department of Education (ED). However, over the past several years there have been rumors floating around the ARM industry that Treasury would like to manage the ED collection process. If that were to eventually occur, the value of these contracts would increase exponentially.