Q A I Final.NFP-RFP-2010.10252010.pdf

No. Topic Question Response Note GENERAL

1 SOLICITATION/CONTRACT Being new to the Federal contracting process, is it possible for an otherwise "eligible" and "qualified" entity to not receive a contract award?

Yes. No award shall be made unless the contracting officer makes an affirmative determination of responsibility. In the absence of information clearly indicating that the prospective contractor is responsible, the contracting officer shall make a determination of nonresponsibility. See FAR 9.1 for a detailed prescription concerning this topic.

2 ALLOCATION Will Federal Student Aid provide on an annual basis the potential pool of loans to be allocated to the NFP’s?

Eventually, yes. At this time there are too many unknown variables.

3 ALLOCATION In the evaluation process, if the Department decreases a not‐for‐ profit’s allocation or eliminates the allocation in its entirety, how will the Department reallocate the loans? Will it be reallocated to other not‐for‐profits or to the TIVAS or both?

This will depend on the timing of the reallocation and volume of the loans to be reallocated. The Department will reallocate loans in the best interest of the borrowers and the Government.

4 ALLOCATION The RFP uses scoring where eligible not‐for‐profits are measured against TIVAS to receive additional volume allocations. However the RFP allocation method could result in no annual allocation for a NFP in certain circumstances. The TIVAS’ allocation method results in no additional volume only if the TIVAS scores a total of zero (0). Please explain why eligible not‐for‐profit entities are treated differently?

Entities will be measured in a manner consistent with that of the existing TIVAS agreements, as provided in the solicitation, and as within the parameters prescribed in the

HCERA.

5 ALLOCATION The on‐going allocation language in the RFP may be in conflict. Item 14a refers to Attachments A‐4 and A‐5. Attachments A‐4 and A‐5 contain an on‐going allocation methodology that is different than the method described in Item 14. There appears to be a mismatch in the contract due to the fact that Attachment A4 does not reflect the same allocation method that Section 14 of the contract does. Which allocation method is the method the Department intends to use?

There is no conflict. Section B.13.N.14 identifies the performance measure that will be utilized to determinate allocation for the entities. Attachments A‐4 and A‐5 provide sample language of how the allocation may occur, as well as additional detail of how the performance measures may be calculated.

PLEASE NOTE THAT THE SOLICITATION HAS BEEN AMENDED TO INCLUDE BOTH A "NATIONAL OPTION" AND "STATE OPTION". THE AMENDED SOLICITATION SHOULD BE REVIEWED PRIOR TO REVIEWING THE RESPONSES PROVIDED HEREIN IN ORDER TO GET A

CLEAR UNDERSTANDING OF THE CONTEXT IN WHICH THESE RESPONSES ARE PROVIDED.

PLEASE SEE #19 BELOW FOR FURTHER DETAIL.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 1 of 26

6 ALLOCATION The RFP indicates that a COD interface will not be utilized until an eligible not‐for‐profit servicer reaches 2 million loans. Is this an indication that not‐for‐profit servicers will continue to only receive loans that are currently held by ACS – even after the initial allocation?

Entities will not receive newly originated loans until a COD interface has been successfully established.

7 ALLOCATION The RFP does not require an eligible not‐for‐profit servicer to be ready to receive COD loans until it reaches 2 million accounts serviced. Many eligible not‐for‐profit servicers will use systems that are ready to receive COD loans from day one. Is it possible the Department will deliver COD loans to eligible not‐for‐profit servicers before anyone reaches 2 million accounts?

This is not the Department's intent at this time.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 2 of 26

8 ALLOCATION Is it correct to interpret that an eligible not‐for‐profit servicer will receive and maintain at least the 100,000 throughout the course of the 5 year period? Section B.13(A) of the RFP supports this in that it indicates "during the course of the basic ordering period the minimum IDIQ is 100k accounts provided that the servicer is "in compliance with the servicing requirements".

No. Section B.13.N.6 provides, "National Option‐‐The Government makes no guarantee to any Contractor that their organization will retain their current loan servicing volume. The Government will provide an initial allocation of 100,000 borrower accounts under this IDIQ contract, in accordance with the Health Care and Education Reconciliation Act of 2010 (Pub.L. 111‐152, 124 Stat. 1029) (herein referred to as “HCERA” and/or “SAFRA”). However, the ability of the Contractor to retain and/or increase its allocation volume shall depend on the Contractor’s compliance with contractual/regulatory requirements, and performance. In the event of an inability to comply with contractual/regulatory requirements and/or a lack of satisfactory performance, the Government reserves the right to reduce the Contractor’s allocation at no additional cost to the Government."

The National Option carries an IDIQ base period minimum of $2,532,000, provided that the Contractor is in compliance with the terms of the solicitation/contract. There is no minimum provided under the State Option.

9 ALLOCATION The account allocation described in the RFP allows for the first 100,000 accounts. However, there is not a clear description as to how the second allocation will be made to each entity. The first allocation and transfer of accounts to individual entities will occur at different times.

Therefore, the number of surveys that an entity may participate in during the first year (before July 2012) could vary by entity. Will Federal Student Aid consider a different structure for eligibility for the second year’s allocation given that some NFP entities may have limited performance results?

Not at this time. Ongoing allocations will be managed in accordance with the allocation methodology provided in the solicitation. An entity's initial and, if applicable, subsequent allocation will depend on its "eligibility" and the timing of when it will become "qualified".

The Government reserves the right to periodically review and unilaterally adjust the allocations metrics and/or methodology to maintain effectiveness of the services provided.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 3 of 26

10 ALLOCATION The resources of TIVAS organizations are significantly greater than NFP organizations. TIVAS servicing organizations were each national servicers prior to being selected by Federal Student Aid. NFP entities are state or regional organizations with varying levels of resources. For the NFP entities to be required to compete against TIVAS and to manage repayment accounts at the same time is a significant difference. Will Federal Student Aid allow for or consider a different performance structure until the portfolio composition of NFP entities and TIVAS (based on account status) is similar?

Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume. However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not "compete against

TIVAS".

11 ALLOCATION The current Direct Loan portfolio, serviced by ACS, is approximately 10 million borrower accounts. Assuming 30 NFP’s are allocated 100,000 accounts in the initial allocation (for a total of 3,000,000), that would leave 7 million accounts to be assigned to qualified NFP servicers in subsequent years. However, if access to COD originated loans is dependent on servicing 2,000,000 accounts, where will the subsequent volume come from since it appears there will be sufficient volume for only two or three entities to reach the 2 million account level from the ACS portfolio.

The Government will determine the source from which borrower account allocations will be made, consistent with the terms of the solicitation and resulting contract(s).

12 ALLOCATION Considering the volume of accounts already being serviced by the TIVAS, contractual and legislative volume obligations for NFP’s and TIVAS, unduplicated new borrowers entering the student loan system annually (COD), and the accounts anticipated to transfer from ACS, we believe that FSA will need to place approximately 19 million borrower accounts for servicing during the next 4 years in excess of contractual and legislative obligations. Does FSA agree with this information?

The Government will allocate loans in accordance with the solicitation/contract, and the HCERA/SAFRA legislation.

13 ALLOCATION Attachment A‐4 states: “Servicers will be informed of their allocation percentage of new volume by July 15 of each year. This allocation will become effective on August 15 of each year. The first ongoing allocation will be provided no earlier than August 15, 2012”. Will FSA consider awarding volume in excess of 100,000 accounts to NFP’s prior to August 15, 2012?

The Government will allocate loans in accordance with the solicitation/contract, and the HCERA/SAFRA legislation.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 4 of 26

14 ALLOCATION FSA has indicated that the initial 100,000 borrower accounts will be transferred from the Direct Servicing System (ACS) versus new disbursements via COD. Will FSA consider comparing the results of surveys and default percentages and numbers among NFP’s for volume allocation in excess of 100,000 accounts versus the methodology noted in the solicitation involving TIVAS results?

Entities will be measured in a manner that is consistent with that of the existing TIVAS agreements, as provided in the solicitation.

15 ALLOCATION Will the Department provide a breakdown of how many accounts will be in each status, as listed on the common pricing chart under item 3 of page 13, before the accounts are assigned to the eligible not‐for‐ profit servicers as part of the initial allocation?

Due to unknown factors that may impact the composition and volume of the borrower account portfolio at the time of allocation, this information cannot reasonably be provided in advance of allocation.

16 ALLOCATION Will the Department provide eligible not‐for‐profit servicers with the account characteristics, including the school types, geographic regions of the borrowers, repayment status of the loans, remaining repayment term, ACH (automated monthly payment) participant, valid email address, and e‐servicing account status that will be transferred from ACS to comprise the initial allocation? This could impact both pricing and performance evaluation. This will also assist the NFP entities plan for how to service borrower accounts.

Due to unknown factors that may impact the composition and volume of the borrower account portfolio at the time of allocation, this information cannot reasonably be provided in advance of allocation. To the maximum extent practicable, the Government will issue similar portfolio mixes.

17 ALLOCATION Will Federal Student Aid provide the selection criteria and/or parameters and account characteristics that will be used to identify the 100,000 accounts that a NFP entity will receive?

Final decisions about the specific loans to be allocated will not be made until more information is available on the number and structure of the not‐for‐profit servicers.

18 ALLOCATION Federal Student Aid and NFP entities have discussed repayment account conversion at a high level referencing the 100,000 allocation.

Will Federal Student Aid support account conversions in increments of less than 100,000 (for example, four conversions of 25,000 accounts each for an entity) to support efficient and reduced risk conversions? A second scenario may be to support a small first account conversion (20,000 accounts) followed by a second, large account conversion (80,000 accounts).

As with the TIVAS, initial conversion volumes will be scaled to ensure efficient implementation.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 5 of 26

19 ALLOCATION We share with the Department the objective of ensuring the highest level of delinquency and default prevention. An effective way to support this goal is through the allocation of accounts on a state or regional basis. We request the opportunity to work with Department on this important matter.

During the market research phase of this procurement, the Government reviewed a broad range of information‐‐ including current Cohort Default Rate (CDR) data and regional and State economic and demographic data‐‐and also considered proposals for possible State or regional allocation methodologies. This analysis did not support the contention that servicing by State or regional entities has a consistently positive impact on the quality and effectivess of borrower servicing. Our research also failed to identify an operationally feasible way to fairly compare servicer performance in cases where accounts are allocated on a non‐random basis. To offer maximum opportunity to each Entity, however, the solicitation will be amended to allow for a choice of either State or National Initial allocation options.

Please note that the State Option will not be afforded competitive increases to the initial allocation of 100,000 borrower accounts. Therefore, all discussion relevant to allocation growth within any Q&A under this solicitation process only apply to the National Option.

20 ALLOCATION What is the minimum borrower balance, the minimum loan term remaining, and the maximum delinquency that will be used in the initial 100,000 allocation?

Borrowers with an entire account balance of less than $25.00 will not be transferred. Remaining loan term and maximum delinquency will be reviewed to determine if they should be considered when identifying loans for allocation.

21 IT AND SECURITY 6C Background checks take longer than 2‐6 weeks and may be backlogged even longer if multiple eligible not‐for‐profit servicers are provided contracts. Will Federal Student Aid provide authorization for eligible not‐for‐profit servicers to service direct loans (like they did with the TIVAS) once the background check requests have been submitted?

The Department will follows its standard practices and procedures.

22 IT AND SECURITY Are eligible not‐for‐profit servicers required to comply with NIST 800‐ 53 Rev 2 or Rev 3?

Servicers will required to comply with NIST 800‐53 Rev 3.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 6 of 26

23 IT AND SECURITY Attachment A‐2, Question 64, please clarify that the documentation requested in this requirement is to be provided after the not for profit has been identified as qualified and not as part of the delivery of the initial proposal.

Delivery schedule of documentation will be required as a term within the MOU, not submitted with each offerors proposal.

24 IT AND SECURITY Attachment A‐2, Question 61, are the Program Management controls required to be completed as part of 800‐53 self assessment or like the TIVAS this control is not required by Federal Student Aid?

The self assessment is required, but the program management controls will not need to be addressed. The self‐assessment should state that the servicer will be in compliance with these controls once FSA provides the policies.

25 IT AND SECURITY Attachment A‐2, requirement 58 states “The servicer shall provide previous security information from the past three years to include a discussion of security incidents.” Does this only require a narrative/summary of the security information or the actual detailed reports? If the actual reports, can sensitive information be redacted?

The NFP should provide a narrative explaining the artifacts presented; the artifacts themselves must be the entire, un‐ redacted, detailed reports. Some items may be redacted if they are of concern to other clients but a justification for the redaction must be included in the narrative.

26 IT AND SECURITY The TIVAS received the Interim Authority to Operate (IATO) prior to FSA completing the necessary certification and accreditation. Within the past year FSA completed the certification and accreditation process and the TIVAS received the Authority to Operate (ATO). If NFP’s are using a servicing system provider (system of record) that has already received the ATO, will FSA grant an IATO for the NFP’s to begin receiving loan volume prior to the NFP’s undergoing FSA’s certification and accreditation process for their system boundaries?

Servicers will be required to receive an Authority to Operate prior to receiving federal loans to be serviced.

27 MEMORANDUM OF

UNDERSTANDING (MOU)

At what stage in the procurement process will pricing be established? If the Memorandum of Understanding (MOU) is issued before the contract is awarded, will the pricing be determined after the organization meets the requirements outlined in the MOU or before?

We request the Department provide eligible not‐for‐profits a timeline

– e.g., a layout of the process from the point of initial response of the RFP to the awarding of the contract – describing what happens at each step of the solicitation in terms of pricing and allocation.

Pricing will be established prior to the issuance of the MOU.

The MOUs will outline agreed‐upon terms for the proposing entity/team to receive a contract award, including pricing.

E.g., proposal is received from the Offeror with acceptance of TIVAS pricing, proposal evaluated, technical negotiations occur (if applicable), MOU established, terms of MOU satisfied, contract award. The actual timeline will depend on the quality and number of proposals received.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 7 of 26

28 MEMORANDUM OF

UNDERSTANDING (MOU)

What is the framework of the MOU? When will the Department provide the eligible not‐for‐profits with a description of what will be included in the MOU so not‐for‐profits are aware of the elements that should be incorporated into its proposal? For example will the MOU include elements such as federal prevailing wage standards? Will the terms of the MOU apply to subcontractors?

The framework of the MOUs will be unique to each entity/team seeking a contract award, and will likely reflect elements of each offeror's proposal. The MOUs will outline agreed‐upon terms for the proposing entity/team to receive a contract award and will apply accordingly.

29 MEMORANDUM OF

UNDERSTANDING (MOU)

The MOU may be a positive step in the RFP process and may help to expedite rather than delay the process if it is specific to each eligible not‐for‐profit rather than a general standardized document. Will the Department individualize the MOU based on the responder’s submission and provide an opportunity for respondents to identify the shortcomings in their proposal so that it may be remedied in order for the contract to be finalized? What is the methodology and process FSA will follow in determining the acceptance process for the MOU and the “requirements for federally‐held debt”? Will this be done independently by FSA? Will FSA use the same acceptance process that was utilized for the TIVAS contracts?

The framework of the MOUs will be unique to each entity/team seeking a contract award, and will likely reflect elements of each offeror's proposal. The MOUs will outline an agreed‐upon approach for the proposing entity/team to receive a contract award and will apply accordingly. The Department anticipates that the acceptance process will be similar to the one that was utilized for the TIVAS contracts.

30 MEMORANDUM OF

UNDERSTANDING (MOU)

What legal obligation is assumed by an eligible not‐for‐profit when it is issued a MOU?

There is no legal obligation assumed by an Entity when issued an MOU. However, contract award will depend on an offeror's successful compliance with the terms of the MOU.

Please note that the Government's acceptance of a proposal and all terms incorporated therein is legally binding.

31 MEMORANDUM OF

UNDERSTANDING (MOU)

The 2009 TIVAS contracts included a requirement for a SAS70 Type II internal control review, enhanced for the FISCAM procedures. This requirement does not appear to be in the RFP. Is this intentional, or will this requirement be issued at a later point in the process?

Alternatively, is the requirement present in one of the documents incorporated by reference that we have not yet seen, or is this part of the MOU?

A SSAE 16 review (which has replaced SAS70) will be required for NFPs; additional details will be provided at the time of the MOU.

32 MEMORANDUM OF

UNDERSTANDING (MOU)

When does the security clearance process start? Is it after the MOU is executed? Who will pay for these clearances?

Delivery schedule for security clearance requests will be an element within the MOU. FSA will bear the cost of security clearances.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 8 of 26

33 MEMORANDUM OF

UNDERSTANDING (MOU)

Will MOU agreements require the NFP organizations to comply with the 2009 Title IV Servicing Requirements in addition to the 64 high level requirements contained in the RFP?

Entities shall comply with the requirements provided in this solicitation, as well as more detailed requirements issued in order to receive a contract award.

34 MEMORANDUM OF

UNDERSTANDING (MOU)

Assuming an MOU is issued, what are the criteria for the evaluation of the elements of an MOU? Once a contract is awarded, what are the likely steps (if any) and timing, that FSA would perform in order to certify a servicer to begin servicing loans under an award. Please outline both operational as well as security related steps that may be done in order to get an ATO.

The results of an evaluation of the offeror's proposal, demonstrating its "eligibility" and ability to become "qualified", will determine whether the Department will enter into an MOU with the offeror. The MOU will outline an agreed‐upon approach for the proposing entity/team to become "qualified", and to receive a contract award.

Offerors must be "eligible" and "qualified" prior to receiving a contract award. Upon contract award, the entity may begin servicing, in accordance with Solicitation Section B.13.N.13.

35 MEMORANDUM OF

UNDERSTANDING (MOU)

Will receiving an Authorization to Operate (ATO) be an element of the Memorandum of Understanding (MOU)?

It is anticipated that an ATO will be an element of the MOU.

36 PERFORMANCE What is the real impact of a not‐for‐profit falling below the TIVAS in one of the performance evaluation categories? Would the Department consider evaluating the TIVAS against each other and the not‐for‐ profits against the other not‐for‐profits? The portfolios are very different compositions, statuses and size and to evaluate a not‐for‐ profit portfolio against a TIVAS portfolio is not a fair or accurate comparison. There is precedence for separating the evaluations of the TIVAS and not‐for‐profits under the way the Department evaluates the collection agencies.

See Section B.13.N.14 for information on performance measurement. Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume or keep its existing portfolio. However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not compete against TIVAS.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 9 of 26

37 PERFORMANCE With regard to performance measurement and subsequent allocation, has Federal Student Aid considered that the eligible not‐for‐profit entities will initially be receiving allocated volumes from ACS’ seasoned portfolio. As a result, more (all) borrowers will be in repayment and will experience their loans being transferred from one servicer to another. Has Federal Student Aid considered how this type of “seasoned” portfolio may differ (either negatively or positively) in ratings received by borrowers and schools in performance surveys compared to the TIVAS ratings?

Entities will be measured in a manner that is consistent with that of the existing TIVAS agreements, as provided in the solicitation.

38 PERFORMANCE The NFP RFP requires that NFP entities compete twice to be eligible for annual loan allocation. NFP entities are required to compete against TIVAS and then compete against each other for loan allocation. The requirement to meet or exceed TIVAS performance scoring then allows an entity to compete against other entities for volume. Will the TIVAS performance be measured against NFP entities at the same time or is the dual eligibility only required of NFP entities?

See Section B.13.N.14 for information on performance measurement. Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume.

However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not compete against TIVAS.

39 PERFORMANCE The service and delinquency/default performance of NFP entities is based on a 100% repayment portfolio. Service requirements for repayment portfolios are greater than in‐school and grace portfolios.

TIVAS portfolios are more than 90% in‐school and grace status accounts. Will Federal Student Aid consider a different performance structure given that the NFP and TIVAS portfolios initially will be comprised of accounts in significantly different statuses? (Primarily in repayment vs. primarily in‐school.) The period of time during which portfolio composition (percent of accounts in each status) does vary significantly between TIVAS and NFPs may require different service measures to better understand performance.

See Section B.13.N.14 for information on performance measurement. Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume.

However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not compete against TIVAS.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 10 of 26

40 PERFORMANCE What is the process for measuring customer satisfaction? How is the survey group selected, and what are the questions?

The process for assessing customer satisfaction for the not‐ for‐profit servicers will be identical to that used for the TIVAS and CSB. More detailed information will be provided at the time of the MOU.

41 PERFORMANCE What is the default rate of the ACS portfolio that the Department is using for the initial allocation and how does it compare to the default rates of the loans turned over to the TIVAS in their initial portfolio?

Final decisions about the specific loans to be allocated will not be made until more information is available on the number and structure of the not‐for‐profit servicers.

42 PERFORMANCE In comparing the lowest TIVAS ratings in each of the categories of the performance measurements to that of the eligible not‐for‐profits for purposes of determining of future allocations, will Federal Student Aid take into consideration that the percentages of loans in repayment allocated to the eligible not‐for‐profits from the ACS portfolio will be higher than the TIVAS and as a result negatively impact the formula for calculating performance percentages for defaulted loans?

See Section B.13.N.14 for information on performance measurement. Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume.

However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not compete against TIVAS.

43 PERFORMANCE When evaluating performance, will the Department take into consideration that TIVAS have loans that are primarily in‐school, not in repayment, and not in delinquency or default?

See Section B.13.N.14 for information on performance measurement. Entities are competing within the NFP allocation pool and not against the TIVAS, unless the terms of Section B.13.N.14.d are met. The lowest TIVAS score for each performance category is used as a baseline for comparison to ensure basic performance levels are met before an Entity is eligible to receive additional volume.

However, unless an Entity's allocation equals or exceeds two million borrowers, the Entity will compete against other Entities for allocation, as identified in the solicitation, and not compete against TIVAS.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 11 of 26

44 PERFORMANCE For determining on‐going allocations it appears that a not‐for ‐profit servicer could effectively score near perfect in all performance measurement categories but receive no additional allocation in the next allocation year because all TIVAS score exactly perfect in all performance categories. Is that correct?

Yes, that is a possibility.

45 PERFORMANCE When evaluating performance, will the Department perform a normalization analysis to weight the eligible not‐for‐profit’s portfolio by school‐type, risk of default of the loans based on their status at the time of distribution, and economic factors of the communities in which the borrowers live?

Entities will be measured in a manner that is consistent with that of the existing TIVAS agreements, as provided in the solicitation. And as within the parameters prescribed in

SAFRA.

46 PERFORMANCE While the default prevention measure used for the TIVAS has merit, its structure makes it difficult to understand how, when applied to eligible not‐for‐profit servicers, it could be affected positively. Can you explain steps that an eligible not‐for‐profit servicer can take to improve its score on this metric?

As with the TIVAS, not‐for‐profit servicers can affect this measure by implementing effective default prevention services.

47 PERFORMANCE Given that the TIVAS metric was for loans that “went into default” during a specified quarter, will the Department measure the performance of eligible not‐for‐profit servicers on the percentage of loans transferred from ACS that are delinquent at the time of transfer?

Performance will be measured as outlined in attachment A‐4 of the solicitation.

48 PERFORMANCE There is a slight difference between the ratings of the TIVAS on the customer satisfaction metric. Given the impact of this minor variance on future allocations for eligible not‐for‐profit servicer’s, how will the Department account for a statically insignificant difference in survey results between eligible not‐for‐profit servicer(s) and the TIVAS to prevent unnecessary loss of allocation?

Entities will be measured in a manner consistent with that of the existing TIVAS agreements, as provided in the solicitation and prescribed in the HCERA.

49 PERFORMANCE Given that the eligible not‐for‐profits will initially service repayment borrowers, how will Federal Student Aid conduct and receive reasonable school survey results to measure performance given a relationship has not existed in the past?

Schools continue to interact with federal servicers once a borrower’s loan is in repayment. Schools will be requested to provide responses based on these interactions.

50 PERFORMANCE Section C.1.4.2 on pg. 23 of 45 states “Performance measures will help ensure that the complete service operates as efficiently and effectively as possible and that it is achieving the desired business outcomes."

What are the business outcomes that Federal Student Aid has for this service?

See the performance metrics identified in the solicitation.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 12 of 26

51 PERFORMANCE Attachment A‐4, Allocation Metric #4 ‐ With respect to school surveys, how will Federal Student Aid ensure that schools are able to accurately identify the not‐for‐profit servicers involved with their borrowers’ loans? Once a loan is in repayment, the borrower is no longer in school, and the school has no contact with the servicer. When the school does not have a relationship with the servicer, how will it have any basis on which to provide feedback?

Schools continue to interact with federal servicers once a borrower’s loan is in repayment. Schools will be requested to provide responses based on these interactions.

52 PRICING Are any upfront costs incurred by the eligible not‐for‐profit to be included in the pricing structure?

Sections B.13.N.3 and B.13.N.5 identify all costs that the Government will be responsible for in performance of these contracts.

53 PRICING Is the unit price provided in the common pricing chart on page 13 inclusive of all services (e.g., billing, collections, default aversion) the eligible not‐for‐profit entities would be providing?

Yes.

54 PRICING Are default aversion services contemplated in the common price or are these services excluded from common pricing and solely a means of meeting the required performance measure under the evaluation process?

As provided in Section B.13.N.2, "Each Contractor will provide, at a minimum, the services provided within their proposal, including all necessary and appropriate Default Aversion services, in accordance with the pricing identified in Term #3 below."

55 PRICING In the TIVAS contract, are all services, including billing, collection, record keeping, and default aversion services included in their pricing?

Yes.

56 PRICING Federal Student Aid references TIVAS pricing as the benchmark. These prices were determined with assumptions of significant loan volumes, not the lower loan volume levels at which eligible not‐for‐profits will receive for initial allocations. How does Federal Student Aid believe that it has established competitive market pricing for low loan volume levels of serviced volume, i.e., 100,000 accounts as required by HEA Section 456(a)(4)(A)(ii) created by Section 2212(a) of HCERA?

The TIVAS contracts provided an IDIQ minimum over the base ordering period of $5,000,000, and no other volume guarantees were provided. The NFP contracts awarded under the "National Option" are also IDIQ contracts with a minimum over the base ordering period of $2,532,000, and no other volume guarantees are provided. The "State Option" contracts are Requirements contracts and carry no minimum.

The Government will evaluate whether any proposed unit pricing that deviates from the established unit pricing in this solicitation is fair and reasonable.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 13 of 26

57 PRICING Will the Department take into consideration the (or lack of) economies of scale when evaluating alternative pricing for eligible not‐for‐profits with portfolios limited to 100,000 loans versus the TIVAS pricing for portfolios of over a million loans.

The TIVAS contracts provided an IDIQ minimum over the base ordering period of $5,000,000, and no other volume guarantees were provided. The NFP contracts awarded under the "National Option" are also IDIQ contracts with a minimum over the base ordering period of $2,532,000, and no other volume guarantees are provided. The "State Option" contracts are Requirements contracts and carry no minimum.

The Government will evaluate whether any proposed unit pricing that deviates from the established unit pricing in this solicitation is fair and reasonable.

58 PRICING The RFP states that the Department will also entertain alternative pricing with supporting evidence of cost. What is the effect if an eligible not‐for‐profit submits an alternative price and the Department rejects it? Will the not‐for‐profit be prevented from receiving its initial allocation? If the eligible not‐for‐profit does not agree to common pricing on first offering, will there be an opportunity to negotiate price, or is that the end of the proposal process?

The Government will evaluate whether any proposed unit pricing that deviates from the established unit pricing in this solicitation is fair and reasonable. If alternative pricing is not accepted by the Government, and offeror will most likely have an opportunity to revise their offer.

59 PRICING The example of the common pricing and tier structure is the same as the TIVAS (Section B.13.N.3), however the RFP also states, “If an offeror believes alternative pricing to the current TIVAS pricing is justified, that offeror may provide proposed unit prices in accordance with Attachment A‐3, Servicing Pricing Model, of alternative pricing (Section D.2.(b).(i)).” The TIVAS are guaranteed volume for a 4 year period, however the NFP’s are not guaranteed volume to substantiate the TIVA pricing model. Will Federal Student Aid consider modifying the RFP to include guaranteed volume in excess of 100,000 borrower accounts? i.e. 1,3,5 million borrower accounts? Will FSA strongly consider a pricing model that includes TIVAS pricing based on guaranteed volume?

The Government will evaluate whether any proposed unit pricing that deviates from the established unit pricing in this solicitation is fair and reasonable.

The TIVAS contracts provided an IDIQ minimum over the base ordering period of $5,000,000, and no other volume guarantees were provided. The NFP contracts awarded under the "National Option" are also IDIQ contracts with a minimum over the base ordering period of $2,532,000, and no other volume guarantees are provided. The "State Option" contracts are Requirements contracts and carry no minimum.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 14 of 26

60 PRICING Would Federal Student Aid consider pricing proposals of different fee structures such as borrowers on ACH, E‐Servicing, or valid email addresses? Would it be open to a price differential for borrowers with valid email address versus no email address?

No, not at this time. See Section B.13.N.7.

61 PRICING Is the unit/tiered pricing – common pricing outlined in the Department’s RFP the same for all not‐for‐profit servicers or is it a baseline from which each not‐for‐profit servicer will receive it own price based on its proposal?

See Section D.2(b)(i).

62 PRICING If all the NFP’s will be paid on the same pricing schedule, how will this schedule be determined? And how will Federal Student Aid ensure that the cost analyses of the NFP’s who don’t respond to the initial RFP are reflected in the final price determination?

See Section D.2(b)(i).

63 PRICING NFP entities may not capture account costs in the same categories as referenced in the RFP Section B.13.N.3. Can account servicing prices and related costs be presented to Federal Student Aid in different categories to justify alternative prices and then apply assumptions to “apply” prices in the proposed price structure?

No.

64 PRICING How will Federal Student Aid account for the divergent range of price and cost structures when determining one price structure for all NFP entities? Federal Student Aid may want to ensure a NFP provides the portfolio size and status characteristics from which price/cost proposals are based.

See Section D.2(b)(i).

65 PRICING Will there be any concessions/benefits to NFP’s applying as part of a consortium?

The Government will evaluate each proposal in accordance with Section D.4. However, as provided in the September 13, 2010 Question and Answers, "Because consortia or other arrangements resulting in new entities that were not loan servicers or affiliated entities as of July 1, 2009, will not meet statutory eligibility requirements, we will require teams to be structured such that one eligible not‐for‐profit servicer or affiliated entity serves as prime contractor with other eligible entities serving as sub‐contractors." See FAR Subpart

9.6 also for Teaming Arrangement information.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 15 of 26

66 PRICING Page 30, D.4.b, references ‘Options.’ Please give an example of what this means.

See FAR 2.101 for "Option". In this case, "Options" refers to the optional ordering period identified in this solicitation.

67 PRICING The amount of effort and resources required to manage repayment conversions is significant. Examples of repayment conversion costs include: borrower payments are received by the initial servicer and must be forwarded to the new servicer and applied to the account – either manually or with special system programs; borrower accounts appear delinquent resulting in required collection due diligence (notices) until payments are applied from the prior servicer; borrower calls increase because of account movement and because of delinquent account condition. The current repayment structure and schedule proposed by Federal Student Aid assumed in‐school conversions (PUT loans) or COD originated loans (in‐school status).

Given the nature of repayment conversions, what additional information does Federal Student Aid require to approve a conversion fee for the not for profit entities?

See Section D.2(b)(i).

68 REQUIREMENTS Attachment A‐2 59 requests we provide existing security documentation. Can we deliver this to Federal Student Aid by 12/1/10 as an appendix on the cd containing the RFP or do we submit this at a later date as a separate piece of the proposal requirements? If this is a later date, our work plan included in the RFP can reflect a date by when this documentation will be available.

This would need to be delivered at a later date, and will be captured as an element of the MOU. The date when this documentation can be provided should be part of the proposed workplan, which will become an element in the

MOU.

69 REQUIREMENTS Attachment A‐2 ‐ Does Federal Student Aid plan on using, transferring, and assigning borrower auto debit (ACH) info to the new ENFP servicer?

Yes.

70 REQUIREMENTS Attachment A‐2 ‐ During and post conversion, borrower payments will be made to the previous lockbox address and posted to the deconverting servicer’s system. Does Federal Student Aid have an electronic method to have these borrower’s payments accurately redirected and applied to the new servicer so there is little disruption to the borrower?

An electronic process exists that will provide the new servicer with a roster of the payments and borrowers to receive those payments. Servicers will be responsible to make sure those payments are applied appropriately.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 16 of 26

71 REQUIREMENTS Federal Student Aid has consistently referenced the 2009 Title IV Servicing Requirements when discussing the preparation NFP organizations will need to complete. However, the RFP only references 64 high level requirements. If the NFP entities are to compete against TIVAS, will Federal Student Aid require that the more than 300 detailed requirements the TIVAS had to meet also need to be met by the NFP entities? Please provide the timeframe for Federal Student Aid to define the detailed requirements for NFP servicers. Clarification regarding the necessity to meet the detailed requirements allows NFP entities to better understand the cost of preparing for Direct Loan servicing.

NFPs will be required to meet the requirements of the other federal servicers. Additional details will be provided at the time of the MOU.

72 REQUIREMENTS The high level requirements for security mirror the security requirements established for the TIVAS, except for vulnerability scans.

The financial management and reporting requirements included in the NFP RFP do not mirror the financial requirements for the TIVAS. Will financial reporting, reconciliation, accounting, and Treasury requirements for the NFP entities be different than the TIVAS requirements? Understanding the different detailed requirements that the NFP entities will have to meet prior to servicing loans allows for a better estimate of preparation expenses.

Financial reporting requirements for NFPs will be similar to those required by the TIVAS.

73 REQUIREMENTS Some of the requirements in Attachment A‐2 are not explicit compared to TIVAS requirements. For example, requirements 11 and 16 state the servicer shall provide accounting and activity reports to support reconciliation. There is no reference of the specific types of reports, required data elements, or formats. If a NFP’s project schedule is to demonstrate compliance and readiness for loan servicing and financial reporting should the requirements be more detailed?

Additional details will be provided at the time of the MOU.

74 REQUIREMENTS Within the RFP, Federal Student Aid references interfaces with NSLDS, DLCS, TPD, SAIG, FMS, Treasury‐ (including Lockbox, Pay.gov, Remittance Express, IPAC, TRS). When will a comprehensive list of systems the servicer must exchange data with be provided?

Additional details will be provided at the time of the MOU.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 17 of 26

75 REQUIREMENTS What is "control mail" as used in item 8 of Attachment A‐2? Control mail is an official inquiry provided to the servicer from FSA that will require a timely response from the servicer. Control mail includes inquiries sent to the Department, especially to the Secretary or subcabinet level Officials from the Senate, Congress, or White House requesting a response on behalf of borrowers, the public, state or local government offices, associations, etc.

76 REQUIREMENTS What are the specifications needed for the “common format” in item 54 of Attachment A‐2?

Attached is the current transfer format used for transferring federally held loans amongst servicers. The final format will be provided at time MOU.

77 REQUIREMENTS Attachment A‐2, Requirement 1‐ Servicers are required to have the ability to service FISL loans. However, on page 12 of Addendum 1, section B.13.N.1. provides: “The initial task order will cover servicing of Direct Loans only.” At what point will not‐for‐profit servicers be expected to service FISL loans? And how many FISL loans are expected to be allocated among the not‐for‐profit servicers?

The solicitation will be amended to reflect that the initial task order will require servicers to have the ability to service Direct Loans, FFEL, and FISL loans.

78 REQUIREMENTS Attachment A‐2, Requirement 20 ‐ Please explain credit reform code (CRC) level within the context of this requirement. In particular, please elaborate on the extent to which manual processes may be required in order to comply with this requirement.

Each loan is assigned a credit reform code which is a 6 position code that signifies the calculated risk associated with the loan based on the loan type, school type, length of program and the years the borrower has been in school.

Financial activity is summarized at the CRC level for reporting. Additional details will be provided at the time of the MOU.

Manual processes required to comply with this requirement would depend on the offeror's solution.

79 REQUIREMENTS Attachment A‐2, Requirements 37 and 42‐ Does Federal Student Aid expect reinstatement/rehabilitation processes to be automated via interface for TPD and debt collection?

Reinstated & rehabilitated loans will be provided to servicers via an automated interface.

80 REQUIREMENTS Attachment A‐6, Requirement 1 ‐ Does the COD interface need to support consolidation loans, or will these handled by a different unit or process within Federal Student Aid?

Consolidation loan bookings will not be included within the COD interface at this time.

Q&A_I_Final.NFP‐RFP‐2010.102510 Sheet1 (2) 18 of 26

81 SERVICING The high level requirements state that the servicer shall have the ability to service FFEL, Direct and FISL loans. As referenced, does the ability to service FFEL loans equate to the ability to service FFEL loans purchased by Federal Student Aid (as through the PUT program) versus the ability to service FFEL loans still guaranteed by a guaranty agency?

Clarification on the intent of FFEL servicing capability will allow servicing system preparation expenses to be estimated.

The requirement is to service federally held loans only (not those guaranteed by a Guaranty Agency).

82 SERVICING The RFP states that initial task orders will cover servicing of Direct Loans only; however, the first high level requirement in Attachment A‐ 2 states the servicer shall have the ability to service FFEL, Direct and FISL loans as required by statutory and regulatory guidelines. We recommend that the entity prove the ability to service Direct Loans initially and achieve the ability to service FFEL and FISL loans after the first task order? Allowing for FFEL and FISL capability to be established after the first task order will allow initial costs to be managed.

The Department believes the best implementation strategy is for all servicers to have the ability to service Direct Loans, FFEL, and FISL loans before being awarded a contract. This approach simplifies testing and provides valuable flexibility in handling loan rehabilitations and borrower split across multiple servicers. The solicitation will be amended to reflect this approach.

83 SERVICING The high level requirements state that the servicer shall have the ability to support borrower benefit plans (attachment A‐2, requirement 3).