ED Update: RFP Process and Litigation Continues in Private Collection Agency Selection

insideARM last wrote about the Department of Education (ED) RFP on June 26, 2017. In that article, we reported that ED had filed a Notice of Appeal  to the U.S. Court of Appeals in the litigation originating in the Court of Federal Claims regarding the May 31st Preliminary Injunction issued in the litigation over the Department of Education (ED) RFP for private collection agency services.

We had provided a more detailed review on June 15, 2017.  In that article, we reported on the then current status of the RFP and associated litigation over the RFP.

On the RFP front, we noted in that the ED RFP “Do-Over” was in progress. Since that article was written ED has been evaluating RFP responses, including review of past performance and management approach, selecting the most advantageous proposals, making responsibility determinations and addressing other pre-award activities. That process is set to continue through August 24, 2017. ED says it will make awards on August 25, 2017. 

On the litigation front, in that same June 15^th article, we discussed the various legal machinations to date by the multiple parties involved.  We noted that Chief Judge of the United States Court of Federal Claims, Susan G. Braden, issued an order extending indefinitely her Preliminary Injunction prohibiting ED from placing any accounts to any ED Private Collection Agency (PCA) “until the viability of the debt collection contracts at issue is resolved.”  That Order still stands.

ED has not placed any new business with any PCA since the Preliminary Injunction was first issued. Accounts that should have been placed with PCA are sitting in a holding pattern. The ED account placement strategy has been effectively highjacked by the court. Consumers are suffering harm. Collections on these accounts are not occurring. It is an untenable situation.

But, as it relates to the ED RFP, litigation never sleeps.

Yesterday, August 2, 2017, Judge Susan G. Braden, issued an Order that is completely puzzling to this writer. In the Order Judge Braden references the ED announcement regarding the RFP ED just cancelled for SERVICING of student loans.  insideARM wrote about the ED announcement regarding the RFP for Loan Servicing yesterday.

The Order reads:

“On August 1, 2017, however, the Department of Education announced that it was no longer seeking to select a single student loan servicer and would be pursuing a new proposal that would award separate contracts to one or more companies. Once again, the Department of Justice has failed to inform the court of these developments.

Since the date of the Government’s proposed action is only twenty-three days away, the court orders the Government to provide the court and the parties a status report in the above captioned case no later than the close of business on August 4, 2017.”

What is puzzling about this Order is the fact that the cancelled servicing solicitation is separate and distinct from the ED RFP for PCA services. It would seem to this writer that one has nothing to do with the other.

The parties to the RFP litigation have not been idle during the past 6 weeks. Since our last article there has been plenty of activity. The following are just a few items of interest:

• On July 7^th Judge Braden issued an Order Denying Several Motions to Intervene. Judge Braden denied requests to intervene filed by F.H. Cann & Associates, Inc., Immediate Credit Recovery, Inc., Credit Adjustments, Inc., Professional Bureau of Collections of Maryland, Inc., and National Recoveries, Inc.

• On July 18^th the Court of Appeals for the Federal Circuit issued an Order holding in abeyance Alltran Education, Inc.’s (“Alltran”) and the Government’s motions in that court pending decisions from Judge Braden and the Court of Federal claims on Alltran’s earlier motion to stay the preliminary May 31, 2017 injunction as to Alltran.

• On July 21^st Pioneer Credit Recovery, Inc., filed its Notice of Appeal from the Court’s May 31, 2017 preliminary injunction.

• On July 24^th Alltran filed a Motion for an Expedited Ruling on its earlier Motion for stay of the May 31, 2017 preliminary injunction.

• On July 28^th Continental Service Group, Inc. (ConServe) filed pleadings opposing the above referenced July 24^th request from Alltran and a Cross Motion for court to rule on motions previously filed by ConServe.

 insideARM Perspective

There is really no new/fresh perspective insideARM can provide at this time. This RFP was and is a mess. Even if ED announces results for the RFP “Do-Over” on August 25, 2017, there is still the pending litigation described above to be resolved. Plus, there will likely be new protests filed by disappointed parties.  This roller coaster ride may never end.

Editor’s Note: See here for a link to an insideARM page that provides a history of our ED-related articles. The page is automatically updated as new stories are written.