Government Contracts CFC Allows Student Loan Solicitations to Proceed
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Tuesday, August 27, 2019

CFC Allows Student Loan Solicitations to Proceed

By Government Contracts Editorial Staff

The Court of Federal Claims denied a protest of Next Generation Financial Services Environment solicitations because the government provided a coherent and reasonable explanation for consolidating student loan servicing and default collection services. The original solicitation sought only student loan default collection services. However, a series of protests and corrective actions prevented a contract award (see 62 CCF ¶81,335, 62 CCF ¶81,397, 62 CCF ¶81,475, and 63 CCF ¶81,651), so the government cancelled the solicitation and issued a new set of solicitations that combined default collection with other loan servicing work. Under the new approach, one entity oversees the “full life-cycle” of a student loan from origination to payoff. The protesters, which only provided default collection services, contended the “full life-cycle” structure unfairly excluded them from competing for contracts. According to the protesters, the new solicitations violated the Competition in Contracting Act (41 USC 3101, et seq.) by bundling distinct services without justification.

Rational Basis. To prevail on a challenge to a consolidation of multiple procurement requirements, a protester must show that the consolidation is not rationally related to the government’s needs. Here, the government had a rational basis for its “cradle-to-grave” approach. In particular, a section of a 2019 appropriations act (PL 115-245) provides that the government shall award no funding for any solicitation for a new federal student loan servicing environment “unless the environment provides for the full lifecycle of loans from disbursement to payoff.” The government also considered criticism from members of Congress expressing concern that the government prioritizes collecting debts over borrowers’ long-term success. In addition, the government sought to reduce borrower confusion, simplify borrower interactions, and standardize systems and branding. The protesters also challenged the cancellation of the original RFP, but they failed to show the decision was arbitrary and capricious. (FMS Investment Corp., Inc., et al. v. U.S., FedCl, 63 CCF ¶81,712)

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