Phase_2_Q.A..pdf

PERKINS LOAN SERVICING

Questions and Answers

Phase II – Solicitation

9/21/12

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 1 of 8

QUESTIONS ANSWERS

1 Is it possible to get the names of other bidders?

We have an email list but would be interested in the number of vendors who are in the second phase and if all firms in the email list are bidding separately or in combination as teaming partners.

Phase 1 successful offerors are Posted to FBO.

2 How often would the vendor report and update

NSLDS on the Perkins Loan activity?

Refer to the ED Servicer Data Provider Instructions (DPI) identified on page 40 of the solicitation.

3 What is the requirement to become NIST certified for FISMA compliance? Will funding be provided?

Refer to the below link identified in the System Security

Package deliverable on page 29 of the solicitation.

http://csrc.nist.gov/publications/PubsSPs.html and http://csrc.nist.gov/drivers/documents/FISMA-final.pdf.

The Government has not yet determined whether they will include a one-time payment of start-up costs with the final pricing schedule.

4 Are paper billings and late charges notices required to be mailed or just posted on the website?

34 CFR 674.43 Billing procedures.

(a) The term billing procedures, as used in this subpart, includes that series of actions routinely performed to notify borrowers of payments due on their accounts, to remind borrowers when payments are overdue, and to demand payment of overdue amounts. An institution shall use billing procedures that include at least the following steps:

(1) If the institution uses a coupon payment system, it shall send the coupons to the borrower at least 30 days before the first payment is due.

(2) If the institution does not use a coupon system, it shall send to the borrower—

(i) A written notice giving the name and address of the party to which payments are to be sent and a statement of account at least 30 days before the first payment is due; and

(ii) A statement of account at least 15 days before the due date of each subsequent payment.

(3) Notwithstanding paragraph (a)(2)(ii) of this section, if the borrower elects to make payment by means of an electronic transfer of funds from the borrower's bank account, the institution shall send to the borrower an annual statement of account.

5 CaCan the vendor go on the website and see if incumbent contractor performed in a satisfactory manner?

Offerors may visit incumbent websites. Those websites will probably not let Offerors know whether the incumbent is working in a satisfactory manner nor will the expectations under this contract be the same as they were under the last solicitation used to procure the work as it is done today.

6 Are there any Tier 2 loan portfolios? (over 250 Yes, there are other ED Servicers with Tier 2 loan portfolios.

http://csrc.nist.gov/publications/PubsSPs.html http://csrc.nist.gov/drivers/documents/FISMA-final.pdf

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 2 of 8

Million)

7 On page 29 of the Perkins Servicing

Solicitation Phase II, the goal/expectation is that the new Perkins servicer will begin servicing the transferred portfolio from Xerox in November 2012. Is this likely to change?

A period of 4-6 months from award would be more ideal, and potentially more consistent with the other deliverable dates in the current deliverables table. Even with an award and start date of Sept 30 as specified, this would be quite a challenge to ensure all systems and processes are in place that quickly.

Refer to the Deliverables section, page 27 of the solicitation.

Date was changed to April 2013.

This date may change based on the speed of which the successor

Perkins Servicer can obtain an Authority to Operate (typically 4-

6 months).

8 In reference to the 10,000 accounts to be transferred from Xerox, were these accounts part of a prior liquidation process? If so has voluntary liquidation occurred in the past?

Yes, many schools voluntarily liquidate their Perkins portfolio.

There are currently 355 schools in the process, which is a combination of voluntary and non-voluntary. These accounts were from both prior school liquidations and from rehabilitated defaulted Perkins Loans held by ED.

9 Have any of the schools expressed interest to the Department to voluntarily liquidate their portfolio? If so, can the Department provide the estimated volume to be liquidated within

FY2013?

Many schools are voluntarily liquidating their portfolios. There are 2540 active schools in the program. There is not a way to project how many will liquidate in the next year. In early 2011 there were 198 schools liquidating, so in the last year approx.

150 additional schools began the process. There is potential for up to 2540 more schools liquidating.

10 If a federal servicer is currently set up for a lockbox for borrower payments i.e. Direct

Loans, can this same lockbox be used for

Perkins?

FSA will work with servicer to determine whether it is more efficient to use the same lockbox or set up a separate lockbox.

11 If a federal servicer is currently reporting to

FMS, will the servicer be expected to incorporate Perkins into this process (same files, different fund)?

A federal servicer currently reporting to FMS on a non-Perkins portfolio will be required to report on Perkins in a separate file and with a different fund for the reconciliation process.

12 The Phase 2 document refers to DMCS, is this

DMCS2?

For purposes of this solicitation, DMCS and DMCS2 are used interchangeably.

13 Will a different ALC code be necessary or can the existing ALC code be used for the federal servicer?

Prefer that an existing servicer use their existing servicer & ALC codes; however, if this would cause an issue for the servicer, we can set up a new code & ALC.

14 If validation artifacts were already provided to meet specific requirements for federal servicing i.e. Direct Loans, will this satisfy the validation artifacts to service Perkins?

This would depend on how the bidder proposes to use its current

Direct Loan servicing system to service the Perkins Loans and how much separate development is needed to support the unique attributes of the Perkins Program.

15 If IST was already completed to meet specific requirements for federal servicing i.e. Direct

Loans, will this satisfy the IST to service

Perkins?

This would depend on how the bidder proposes to use it current

Direct Loan servicing system to service the Perkins Loans and how much separate development is needed to support the unique attributes of the Perkins Program and how the files that are exchanged between systems for Perkins loans vary from the

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 3 of 8 current non-Perkins files.

16 How many staff members are currently performing the work?

ED purchases services under the current contract and pays a fixed unit price. The Government does not maintain a list of the number of staff its current servicer employs specifically for

Perkins loan servicing.

17 What are the labor categories for the

Perkins Loans Servicing requirement?

The Government anticipates that each offeror will identify the types of employees they believe are necessary to meet the requirements (e.g. all Tier 1 and Tier 2 requirements, any potential requirements that may be necessary to modify their systems to accommodate a significant influx in the number of borrowers being serviced, etc.) identified in the solicitation.

18 What are the types and frequency of the reports?

Types and frequency of reports are identified in the Deliverables section starting on page 27 and the System Reporting

Requirements section starting on page 34 of the Phase II solicitation.

19 Can you provide more clarity as to what is entailed in the loan liquidation process?

See http://ifap.ed.gov/eannouncements/080511CBPerkinsLiquidatio nAssignmentProc.html

For the servicer, a requirement is to receive Perkins Loan

Assignments and establish them in a servicing environment.

20 Will ED provide a facility for customer support/call center?

No. The servicer will be expected to provide a facility to support its customer support/call center.

21 What is meant by “those with experience receiving assignments and loan transfers may be rated more favorably than those lacking experience” in the Past Performance section?

Bidders with prior experience receiving Title IV student loan assignments and transfers might receive more favorable ratings under Past Performance than those that do not.

22 Section (c) Volume II – Price Proposal, discusses who ED would like pricing submitted for this solicitation. Can ED provide more clarity on pricing and pricing format? i.e. does

ED want pricing on a per unit basis, cost/plus, time/materials?

Pricing information is identified in the Instructions to Offerors

(Business Proposal), page 49 of the solicitation. The government anticipates establishing fixed unit rates per borrower status/deliverable.

23 Since the official document has not been issued, do you anticipate this date being pushed back?

Solicitation Response date is updated to October 9, 2012

24 Also can you offer some further clarification of how you want proposals structured?

See Instructions to Offerors Section starting on page 43 of the

Final Perkins Phase II solicitation posted on FBO.

25 The instructions indicate that Volume I –

Technical Proposal should not exceed 20 pages, and the RFP also explains the items not counted towards the 20 page limit. How does the Servicing and Financial Reporting spreadsheet fit into our response?

See Instructions to Offerors Section starting on page 43 of the

Final Perkins Phase II solicitation posted on FBO.

26 Is ED requiring bidders to submit Tier II with its final Pricing Proposal?

Yes. Tier One proposed pricing should identify portfolios <

$250,000,000 and Tier 2 proposed pricing should identify portfolios > $250,000,000. (See page 48 Instructions to Offerors http://ifap.ed.gov/eannouncements/080511CBPerkinsLiquidationAssignmentProc.html http://ifap.ed.gov/eannouncements/080511CBPerkinsLiquidationAssignmentProc.html

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 4 of 8

As we understand it, ED is asking bidders to focus on the Tier 1 portfolio, which contains

10,000 borrowers with loans valued at $19.3 million. Specifically, ED is asking bidders to price out how much it would cost to service only non-defaulted loans in the Tier 1 portfolio.

Therefore, will ED be providing bidders a breakdown (borrowers and values) between the defaulted and non-defaulted loans?

Section).

28 If a borrower has more than one loan, are they reported to the credit bureau individually or combined?

ED prefers the borrowers loans be reported in aggregate at the borrower level to the credit bureaus.

29 What is the proper application of payments? 34 CFR 674.33(a) Repayment

(4) The institution shall apply any payment on a loan in the following order:

(i) Collection costs.

(ii) Late charges.

(iii) Accrued interest.

(iv) Principal.

30 Are all loans due on the first of the month? The awardee may select as many due dates during the month as is desirable to make their operations run smoothly. However, each borrower must be set up with the same monthly payment cycle and due date.

31 How are payment due dates determined?

Monthly, bimonthly or quarterly

Borrowers make monthly payments on their loans. However, the servicer may establish as many due dates within the month as is appropriate for its servicing operations.

32 Is the late charge added to the principal balance or held in a late charge field?

Currently ED does not charge late charges. However the servicer is required to be able to accept late charges because sometime in the future ED may change its position on late charges. Refer to

34 CRF 374.31 which describes how to calculate late charges for the different Perkins loans.

33 Can the servicer charge for any services?

Example: fax fees, payoffs, workout agreements, etc.

No separate fees will be permitted under this agreement.

34 How many loans a month are coming out of

Treasury because they are back on track paying?

Loans do not return to non-default servicing from Treasury. ED operates its own default and collections systems. Borrower would return to non-default servicing upon rehabilitation.

35 What type of items would the servicer have to order from ED to mail to the borrowers?

ED is procuring a service. The awardee shall provide all supplies, postage, etc., to support servicing the Perkins portfolio.

36 At the bottom of page 44 is a paragraph regarding IDIQ Response. Could you provide some additional information regarding what’s required? Does this information count as part of the 35 page limit?

The government places task orders for services against the IDIQ contract for individual requirements. The IDIQ is the umbrella of the contract which at a minimum identifies the overall period of performance, unit prices, labor categories and fixed hourly rates and minimum and maximum quantity limits by dollar values for the requisite services. Refer to page 44 Instructions to

Offerors Section of the solicitation on what information should be provided.

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 5 of 8

37 Page 46, items d through j – please clarify if the bundling of the requested information stated in item j refers to items d through I, or does it include anything else? Does this document count towards the 35 page limit?

Bundling of requested information stated in item j on page 46 of the Technical Approach (Factor 1) refers to items a through j.

Per the Instructions to Offerors Section of the solicitation, information identified under the bullet for NIST/FISMA and 504 and 508 compliance will not be counted toward the page limitation.

38 A SF 1449 was not supplied. Will a form be supplied prior to the submission deadline.

An SF 1449 form will be posted on FedBizOps NLT 9/21/12.

39 If we are to respond to all the tabs in the spreadsheet, is it just the Tier 1 items marked as Yes?

Offerors are to provide a proposal response that addresses both

Tier 1 and Tier 2 requirements as stated in the Instructions to

Offerors Sction of the solicitation.

40 Will any additional information be needed regarding the small business set aside requirement or has the determination already been made that all respondents approved for

Phase II meet the requirements in the solicitation?

Phase I successful offerors who met the small business evaluation criteria must continue to remain small business at the time of Phase II proposal submission. Refer to the Instructions to Offerors Section, Offerors are to complete the Representation and Certifications identified on page 52 of the solicitation.

In accordance with FAR subpart 19.301-1 (a) To be eligible for award as a small business, an offeror must represent in good faith, that it is a small business at the time of its written representation.

41 Do we use the spreadsheet to insert responses where required?

Offerors can use the spreadsheet as identified on page 3, Section

I Pricing Schedule to insert responses. Per the Instructions to

Offerors Section, Offerors are to propose unit prices in accordance with Section I Pricing Schedule.

42 If the spreadsheet is not to be responded to, is it acceptable to list all the items from the Scope on pages 24-25 and provide responses to those items, or do you prefer a straight 20 page narrative on how we will comply with all requirements?

The final Perkins Phase II solicitation identifies updated instructions. Refer to the Instructions to Offerors Section, starting on page 43 of the solicitation.

43 Would implementation be progressive, i.e.

converting 200,000 loans a month until all of them are on the winning bidder’s our system?

Or a trial period of say 10,000 loans and when

ED is confident, then they will start converting the rest over a period of time.

This will be dependent upon any legislation enacted.

44 Under “Instructions for Preparing Technical

Proposal” - #2, what does ED consider a

“major tasks/effort” for the purposes of including “sufficient detail for FSA to determine who on the team is performing the major tasks/efforts?

The Government anticipates that each offeror will provide unique solutions, and as such cannot provide a consistent answer to each offeror. However, an example of a major task may include the identification of the vendor (prime or subcontractor) providing the customer support/call center function.

45 How long after the award before the actual transfer?

This will be determined after the award, since each offeror may propose different solutions, schedules, etc.

46 How many interfaces are required monthly? System Interfaces are constant. Vendor must be prepared to

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 6 of 8 interface at a minimum with FMS, DMCS, NSLDS, Treasury, and Credit Bureaus.

47 What advances the due date? Refer to 34 CFR 374.43(e)

Loan Acceleration

You may accelerate a loan if the borrower misses a payment or does not file for deferment, forbearance, or cancellation on time.

Acceleration means immediately making payable the entire outstanding balance, including interest and any applicable late charges or collection fees. Because this marks a serious stage of default, the borrower should have one last chance to bring his or her account current. For that reason, if the school plans to accelerate the loan, it must send the borrower a written acceleration notice at least 30 days in advance. The notice may be included in the final demand letter or in some other written notice sent to the borrower. If the loan is accelerated, you must send the borrower another notice to inform him or her of the date the loan was accelerated and the total amount due.

Remember that acceleration is an option, not a requirement.

However, if you plan to assign the loan to the Department for collection, you must first accelerate the loan. Once a loan has been accelerated, the borrower loses all rights to deferment and cancellation benefits for qualifying service performed after the date of acceleration.

48 Are all late charges the same? See Question 36 response.

49 How many loans are at Treasury? The Treasury does not have Perkins loans. As of 9/30/2011, the

Department of Education was responsible for servicing 993,886 loans.

50 How many mailings a year are required outside of the normal servicing items of billing statements, privacy notices, IRS, collection letters etc?

Refer to 34 CFR 674.33 Perkins Repayment

51 How many of the accounts are in bankruptcy? Refer to TITLE 34—Education Code of Federal Regulations.

See below link:

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr674_main_02.tpl

A Servicer may not assign a loan to FSA Collections under the voluntary assignment procedures if:

• the borrower has received a discharge in bankruptcy— unless the bankruptcy court has determined that the student loan obligation is non-dischargeable and has entered a judgment against the borrower or unless a court of competent jurisdiction has entered judgment against the borrower on the loan after the entry of the discharge order;

There is a difference for Perkins between Chapter 7 and Chapter http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr674_main_02.tpl http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr674_main_02.tpl

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 7 of 8

13 Bankruptcy. Information can be found in the regulations.

52 What are the differences in the types of loans held in the Federal Perkin Loan Portfolio?

The differences are the Levels of Delinquency.

Differences also include – Type of Perkins Loan, interest rate charged, partial/total cancellation for some borrowers

53 Below is a paragraph copied from the Phase I

RFP document. The part underlined regarding defaulted loans is not mentioned in the Phase II draft – only the 10,000 non-defaulted borrowers are mentioned. Does this project still include the Federally held defaulted borrowers/loans?

The Perkins Loan Servicing requirement does not include defaulted borrowers/loan.

54 Page 45, Technical Approach (Factor 1) – One of the bullets states, ‘Demonstrate experience with loan transfers from incumbent servicer, and assigned loans and time required by volume.’ Please clarify the second part of this item and what is meant by ‘assigned loans and time required by volume.’

Refer to 34 CFR 674.8(d)(3) Schools assign loans per below or per mandatory assignment.

PERKINS ASSIGNMENT

You may assign a defaulted Perkins Loan or NDSL to FSA

Collections if:

• the school has not been able to collect despite having followed due diligence procedures (including at least a first level of collection and litigation, if required by the regulations in effect on the date the loan entered default);

• the total amount of the borrower’s account to be assigned, including outstanding principal, accrued interest, collection costs, and late charges, is $25 or more; and

• the loan has been accelerated.

You may not assign a loan to FSA Collections under the voluntary assignment procedures if:

• the borrower has received a discharge in bankruptcy— unless the bankruptcy court has determined that the student loan obligation is nondischargeable and has entered a judgment against the borrower or unless a court of competent jurisdiction has entered judgment against the borrower on the loan after the entry of the discharge order;

• your school has sued the borrower (unless the judgment has been entered and assigned to the United

States); or

• the loan has been discharged because the borrower has died.

Upon notification by the Department, you may be required to as-sign a Perkins loan if:

• the loan’s outstanding principal balance is $100 or more;

• the loan has been in default for 7 or more years; and

Phase II – Solicitation

Phase I – Perkins Loan Servicing Q&A – 9/21/2012 Page 8 of 8

• a payment has not been received on the loan in the preceding twelve months, unless payments were not due because the loan was in forbearance or deferment

55 Several areas of the RFP state that defaulted loans are to be transferred to DMCS. In these cases, are the loans to be coded with DMCS but remain on the servicer’s system for tracking purposes (similar to coding accounts with collection agencies), or will such loans be removed entirely from the servicer’s system?

Currently there is no tracking of loans sent to the Debt

Management Collection System; however, tracking of this information would be extremely helpful for the FSA Perkins

Liquidation Team.