Last Friday the Department of Education (ED) filed its proposed plan to remedy problems identified by the Government Accountability Office (GAO) in its March 27 decision on the multiple protests filed by bidders on it’s the December 2015 ED RFP for Debt Collection Services. The 18-page document, labeled Defendants Notice of Corrective Action, was filed with the United States Court of Federal Claims in conjunction with the consolidated lawsuits filed by unsuccessful bidders in the RFO process (Case Nos. 17-449C and 17-499C, U.S. Court of Claims). 

The proposal was submitted in response to the court’s Order for Preliminary Injunction of May 2, 2017. In short, ED notified the court that it intends to take corrective action by making minor amendments to Solicitation No. ED-FSA-16-R-0009 (the solicitation), requesting revised proposals, and conducting a new evaluation. 

ED argues: “As a result of ED’s decision to take corrective action, plaintiffs’ challenges to the evaluation of their proposals are moot, because plaintiffs will have the opportunity to submit revised proposals and ED will conduct an evaluation of their proposals in accordance with the amended solicitation.” 

Background 

In December 2015, ED’s Federal Student Aid (FSA) department issued the solicitation, seeking proposals for debt collection services on defaulted federal student loans. The solicitation, provided for the evaluation of proposals under three factors: 1) past performance, 2) management approach, and 3) small business participation plans. (Emphasis added) 

ED received 47 timely proposals in response to the solicitation. In December 2016, ED awarded contracts under the solicitation to seven contractors: Premiere Credit of North America, LLC (Premiere), Financial Management Systems, Inc. (FMS), GC Services Limited Partnership (GC Services), The CBE Group, Inc. (CBE), Transworld Systems, Inc. (TSI), Value Recovery Holdings, Inc. (Value Recovery), and Windham Professionals, Inc. (Windham). 

Of the 47 offerors, 22 protested their non-selection for award to the GAO, and one other offeror submitted an agency-level protest. The protestors generally challenged ED’s evaluation of proposals and resulting award decisions. 

On March 27, 2017, GAO issued its decision on the protests. 

Past Performance Evaluation 

In its decision, GAO determined that, in several instances, the agency had neglected to consider relevant past performance information. GAO determined that the evaluators gave undue weight to the internal Government evaluations on past contracts, to the exclusion of other past performance information supplied by the offerors. 

Management Approach 

With respect to ED’s evaluation of the offerors’ management approach, GAO identified a number of errors in ED’s evaluation and sustained some of the protests on this basis. Some of the errors affected the evaluation of several proposals; other errors were limited to individual proposals. In addition, there were instances of unstated evaluation criteria that affected many offerors.

Small Business Participation Plan

GAO did not find any errors in the agency’s evaluation of the third evaluation factor, the small business participation plan, rejecting the claims of two protestors that there were errors in that part of the evaluation. 

GAO’s Recommendations 

GAO recommended that the agency amend the solicitation, as appropriate, to accurately reflect the agency’s needs. GAO also recommended that the agency conduct and adequately document a new evaluation of proposals under the past performance and management approach factors. GAO suggested that, after conducting its new evaluation, the agency prepare and adequately document a new source selection decision. Notably, GAO also recommended that, in the event that any of the current awardees are not evaluated as having a proposal among the most advantageous to the Government, the agency terminate any such awards for the Government’s convenience. 

The Lawsuits 

On March 28, 2017, Continental Service Group, Inc (Continental) filed a complaint in this Court challenging ED’s determination in the RFP process. 

On April 10, 2017 Pioneer Credit Recovery, Inc (Pioneer) filed its complaint. Similar to Continental’s complaint, Pioneer alleged that ED treated offerors disparately and erred in determining that Pioneer was non-responsible because its subcontracting plan neither reflected nor was consistent with the commitments Pioneer made in its small business participation plan. Pioneer’s complaint was consolidated with the Continental case. 

In separate but related cases, Account Control Technology, Inc. (ACT) (Fed. Cl. No. 17-493C), and Alltran (Fed. Cl. No. 17-517C) allege that ED violated statutes and regulations in its evaluation of their proposals submitted in response to the solicitation. ACT claimed error in the evaluation under the small business participation factor. Alltran Education, Inc. (Alltran) alleged error in the evaluation of past performance. 

Finally, Progressive Financial Services, Inc. (Progressive) (Fed. Cl. No. 17-558C), Collection Technology, Inc. (CTI) (Fed. Cl. No. 17-578C), and Van Ru Credit Corporation (Van Ru) (Fed. Cl. No. 17-633C), filed suits alleging that ED should refrain from recalling student loan accounts on prior, now expired contracts, because GAO sustained their protests in its decision dated March 27, 2017.

With the exception of the Continental and Pioneer lawsuits, the above cases are not consolidated.  Nevertheless, because all the cases involve either directly or indirectly the solicitation at issue in this matter, the Court combined proceedings in these cases in many respects, including but not limited to participation in Court conferences and the issuance of injunctive and other orders. 

The Corrective Action 

ED agrees with the GAO analysis on the past performance analysis. The proposed response: 

“Upon a review of the past performance evaluations, ED acquisition officials agree with GAO, that ED’s evaluation of the offerors’ proposals primarily reviewed and considered an offeror’s past performance information in connection with only Government contracts, as opposed to all of an offeror’s past performance information, including non-Government work. Because a significant amount of time has elapsed since February 2016, when offerors submitted their original proposals, ED intends to allow offerors the opportunity to submit new past performance proposals, and then will reevaluate all past performance proposals in accordance with the solicitation.” 

ED also agreed with GAO that the evaluators applied evaluation criteria on past performance that were not reasonably encompassed by the solicitation language and appeared to apply those criteria inconsistently. The proposed response: 

“ED agrees that the solicitation did not require offerors to state the educational or certification requirements of quality control managers. ED intends to amend the solicitation to clarify the instructions on submission of information about the qualifications of proposed personnel. ED will also amend the solicitation to provide more specific instruction regarding the contents of the proposed management plan.” 

On the Subcontracting issue ED Proposed: 

“As part of the responsibility determination of every apparently successful offeror, ED will review the offeror’s subcontracting plan, if required to be submitted. Every offeror will be given an opportunity to revise its subcontracting plan to address any inconsistencies between the subcontracting plan and the offeror’s original, unrevised small business participation plan. Revisions to small business participation plans will not be permitted.” 

ED will invite all 47 firms who submitted timely offers to participate in the process 

After conducting the reevaluation, ED will prepare and document a new source selection decision. One or more contracts will be awarded to the responsible offeror(s) whose proposal(s) is/are the most advantageous to the Government. In the event that any of the current awardees are not evaluated as having a proposal among the most advantageous to the Government, ED will terminate those awards for the convenience of the Government. 

ED plans to conduct the reevaluation in accordance with the following schedule:  

  • May 26, 2017 - Solicitation amendment and request for revised proposals issued 
  • June 16, 2017 - Due date for the submission of revised proposals 
  • June 19, 2017 to August 24, 2017 - Evaluation of past performance and management approach; selection of most advantageous proposals, responsibility determinations and other pre-award activities 
  • August 25, 2017 - Notice of awards and notices of termination issued 

insideARM Perspective 

It would seem that the court must issue some type of order yet today. The preliminary injunction that was issued on May 2, 2017 is set to expire at the close of business today. insideARM will monitor and report. 

Winners and Losers

Meanwhile, the impact of the proposed corrective action will be felt by all firms involved in the process. Assuming the court agrees with this proposal, all 47 firms that originally responded to the Solicitation are theoretically back in hunt for a contract. It will be interesting to see if all 47 firms respond to the amended solicitation. The seven firms that were selected for new contracts in December 2016 are now back to square one, and seemingly on equal footing with all 40 other companies. 

If the Preliminary Injunction is lifted it appears that the 11 small business contractors that were awarded contracts in 2014 are big winners (at least in the short term). They will be getting more accounts placed with them then they ever imagined.  The 7 firms that were initially selected to receive contracts in December, 2016 are winners IF the Preliminary Injunction is lifted AND IF ED believes those awards are still valid even though the RFP solicitation that was the basis for the awards is starting anew.

There may also be two other “winners” in the short run. As insideARM reported on May 3, 2017, ED proposed to resolve litigation from 2015 relating to the 2-year contract extension granted to five of the larger 2009 ED contractors by awarding Pioneer and Alltran new 2-year extensions of their 2009 contacts. Assuming: 1) the court lifts the Preliminary Injunction, 2) the court approves the settlement of the 2015 litigation, and 3) ED decides to place work with Alltran and Pioneer, those two firms would join the 11 small business contractors in receiving new placements. 

Will the Circle Be Unbroken?

The real winners in this matter may be the lawyers involved in this RFP, the protests, and the litigation. They may have the dream client. The process may never end. If this proceeds as ED suggests, it is very likely there will be new awards, new protests, and new litigation. We may be writing about the same chaos in the fourth quarter of this year and beyond. This has the potential to be an infinite loop.

...Meanwhile, also in today's news, ED Secretary Betsy DeVos announced her new plan for the massive student loan servicing contract – including her intention to move to a single-servicer model.


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