Education Dept. awards debt-collection contract to company with ties to DeVos

Trump administration welcomes back student collectors fired by Obama]

“The choice of 3 [companies] paves the way to protests in the unsuccessful bidders,” Michael Tarkan, senior research analyst at Compass Point, authored inside a research note on Performant. “Based on prior contract awards, we wouldn’t be surprised to determine protests, lawsuits and appeals that could all delay the beginning date for that new contract.”

In the past, the department has utilized as much as 17 companies to extract past-due student education loans. Earlier attempts to whittle lower the amount of firms happen to be met with resistance. Companies that lost on a 2016 debt-collection contract happen to be embroiled inside a suit which has avoided the us government from assigning new accounts.

The department selected seven companies to handle the portfolio 2 yrs ago, sparking protests in the Government Accountability Office, which faulted the company with mismanaging a few of the bids. A couple of firms filed complaints using the federal claims court, leading government bodies to place a hang on brand new assignments. The Training Department had believed the order cost taxpayers $640,000 in collections in a single month.

The recently awarded contracts are supposed to solve the litigation, however the selection of Performant could raise eyebrows.

Performant is related to LMF WF Portfolio, a llc that when counted DeVos being an investor. LMF was one of many firms involved with supplying Performant having a $147 million loan this year, according to regulatory filings. DeVos was needed to divest from LMF within 3 months of her confirmation as secretary, but during the time of her appointment, Democrats stated these were uneasy concerning the influence she could still wield over companies with which she has already established rapport.

Education Department spokesman Nathan Bailey said Thursday that DeVos had “no understanding, not to mention participation,” within the new debt-collection contract. Richard Zubek, who heads investor relations at Performant, stated within an email that the organization “has didn’t have any direct or indirect connection with Secretary DeVos or anybody associated with Mrs. DeVos.”

Performant was one of the firms that protested towards the GAO about the training Department’s 2016 contract decision. In its reaction to the protests, the GAO outlined the Education Department’s look at the a large number of firms that posted bids at that time. Windham’s management was rated acceptable and it is past performance considered “exceptional,” earning the organization a place one of the seven firms selected then. Performant’s management was rated “marginal,” while its past performance like a contractor was considered “satisfactory.”

“It simply doesn’t seem sensible the agency would choose to utilize lower-rated [companies] with marginal ratings that don’t have a fantastic past performance record,” stated Todd Canni, a lawyer for Continental Service Group, certainly one of the bidders. “While we still await more details, we’re deeply troubled through the optics and search issues connected using the agency’s award decisions.”

Canni stated his client has requested the training Department for any briefing to describe how the organization was evaluated. Continental Service Group is weighing its options, including protesting anything award using the GAO or taking on the problem using the U.S. Court of Federal Claims.

“It is beyond dispute that the [Education Department’s] decisions have, at least, produced the look of a conflict of great interest,” Canni stated. “Given the truth that Performant wasn’t a very rated [company] and, actually, was rated fairly low . . . the company is going to be under intense scrutiny and will have to let you know that all of a sudden these ratings altered so considerably to permit Performant to leap frog over a lot of other qualified [companies].”

In awarding anything Thursday, the training Department stated in the court filings that Performant and Windham’s proposals were “the most beneficial towards the government.”

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