FINAL_JA_DMCS-SS-Legacy_111324_SPE.pdf

CONTROLLED UNCLASSIFIED INFORMATION

Sensitive in accordance with 32 CFR 2002 Controlled by U.S. Department of Education, Federal Student Aid

Debt Management and Collection System (DMCS)

(EDFSA-13-C-0021)

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

1. Agency and contracting activity.

U.S. Department of Education, Office of Federal Student Aid (FSA) Acquisitions.

2. Description of the action.

FSA plans to enter into a sole source fixed-price contract with the current (Legacy) contract ED-FSA-13-C-0021 incumbent, Maximus Federal Services, Inc. (MFS), to continue servicing and maintenance for FSA’s Government Owned Contractor Operated (GOCO) Debt Management and Collection System (DMCS). This sole source action will prevent a gap in critical services.

DMCS is the system of record (SORN) for all federally-held defaulted student loans and consists of the system, processes, coding, and operations that support a portfolio of nearly six million student borrowers with a current value of more than $120 billion. FSA expects the portfolio size to increase by 4-6 million accounts in October 2025 as a result of additional defaulted students loans and the return to involuntary collection.

3. Description of the services required to meet the agency’s needs.

To meet FSA’s need of collecting on student loans, servicing student borrowers currently in default, and the expected increase to the portfolio, this sole source contract will include, but not be limited to, System Management and Operations, Development, Modernization, and Enhancements (DME), cybersecurity and information technology (IT) protection, a help desk, financial reporting and reconciliation of the portfolio, a fulfillment center, and a default resolution inbound call center.

The new sole source contract will continue all current Legacy requirements. for eighteen months from February 1, 2025, when the Legacy FAR 52.217-8 extension of service ends.

The period of performance (February 1, 2025, to July 31, 2026) will be an initial twelve (12) months plus two, three (3) month options. This performance period structure decreases the risk of a termination for convenience action which would avoid additional costs to the Government. Based on historical payment data, the total estimated value for the period of performance, including options, is $150 to $180 million.

4. Statutory authority permitting the sole source acquisition.

41 U.S.C. §3304(a)(1) – Only one responsible source and no other services will satisfy agency requirements.

5. Demonstration the proposed contractor’s unique qualifications and nature of the acquisition requires the use of the cited authority.

Anticipating DMCS Legacy contract expiration, FSA initiated a competitive process in late summer 2022 using FAR 16.5 to issue a single award contract for the new DMCS contract under solicitation 910031-24-R-0002 (DMCS-Next). The agency conducted market research using the GSA Market Research As a Service (MRAS) to review multiple GSA solutions. FSA selected ALLIANT II which has 39 qualified other than small business (OTSB) vendors. The agency intended to award a single DMCS-Next task order with a performance period of eight years. The DMCS-Next requirements included the current Legacy requirements plus a requirement for the operational system and the awardee to fully comply with Third Party Debt Collection regulations (e.g. Fair Debt Collection and Practices Act (FDCPA), the Debt Collection Improvement Act (DCIA), etc.), culminating in a Fair Opportunity Task Order Request (FOTOR) on April 5, 2024. The agency received one responsive submission from MFS on June 27, 2024; however, despite best efforts, there is no agreement on the new DMCS-Next requirements.

The incumbent contractor’s historical knowledge, current Authority to Operate (ATO), and qualifications support the cited authority to award a sole source contract. The incumbent has satisfactorily operated and maintained DMCS since 2013. The agency’s minimum needs to operate and maintain DMCS are based on the unique service DMCS provides to student borrowers. The need for a responsible contractor to maintain a Cybersecurity Infrastructure Security Agency (CISA) designated High Value Asset (HVA) IT SORN containing borrower data and historical account details necessitates the incumbent’s experience servicing system and borrower accounts and the unique and essential technology protections of borrowers’ Personally Identifiable Information (PII) and system data. There is no other responsible and knowledgeable vendor ready to assume the expected call center volume (assisting borrowers), operations and maintenance, and IT protections on February 1, 2025.

FSA will not conduct further market research, nor will it issue a new solicitation for other offers, due to its unique needs and the unique ability of MFS to fill those needs.

MFS was also the sole ALLIANT II vendor to submit a response to the Fair Opportunity Task Order Request (FOTOR).

Unless this sole source contract is awarded to begin February 1, 2025, the agency will not have a qualified and system knowledgeable vendor with an active ATO to perform the Legacy requirements and provide nearly 6 million borrowers the opportunity to resolve their loans in default.

6. The action’s estimated cost and determination by the contracting officer the anticipated cost to the Government will be fair and reasonable.

Based on historical payment data, the total estimated value for the period of performance, including options, is $150 to $180 million.

The Contracting Officer will determine the final negotiated price is fair and reasonable based on historical DMCS Legacy pricing information.

7. Future effort to obtain competition.

The agency has already undertaken a competitive procurement to meet the default management requirements and is in the process of finalizing an award under that competitive procurement.

8. Program Office certification of accuracy and completeness. I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Mark LaVia Date DMCS Program Manager Federal Student Aid

9. Contracting Officer certification of accuracy and completeness. I certify that the data supporting the recommended use of other than full and open competition is accurate and complete to the best of my knowledge and belief.

Joshua Burris Date Contracting Officer Federal Student Aid rk LaVia

11/13/2024

JOSHUA

BURRIS

2024.11.13 13:43:31 -05'00'

10. Senior Procurement Executive approval.

Calvin Mitchell Date Senior Procurement Executive U.S. Department of Education

CALVIN MITCHELL Digitally signed by CALVIN MITCHELL Date: 2024.11.14 12:27:11 -05'00'