ACS wins $1 billion education deal

Federal Student Aid

The Education Department today awarded a $1 billion contract to ACS Education Solutions LLC for modernizing and consolidating back office systems for Federal Student Aid (FSA).

The Common Services for Borrowers five-year contract — which has five one-year options that could bring the total value to more than $2.3 billion — is for developing a single system to handle the department's direct loan servicing functions, loan consolidation processes and collection activities for $96 billion in student loan obligations. Those functions are currently handled by five separate systems.

According to Terri Shaw, chief operating officer at FSA, the project could save the department more than $1 billion. Those savings will come in part from eliminating redundancy between the five existing systems, but also from improved efficiency and accuracy as data is no longer handed between them, said Rich Galloway, contracting officer for the department. "By integrating the data into a single system and a single database, we avoid all of that," he said.

The contract is effective as of Jan. 1, 2004.

One of the benefits that ACS brings to the deal is its ability to quickly integrate systems, Shaw said. "Within 17 months, we're getting the benefit of the integrated approach," she said.

In order to bring functions into one system, the ACS team includes several contractors for the current systems, including EDS Corp., Raytheon, Corp. and Pearson Government Solutions. The team also includes more than 30 small businesses and minority-owned companies.

The contract includes many performance measures, with external ones focusing on issues such as reducing delinquency and avoiding defaults on loans. Internal measures concentrate on response time for inquiries, and on computer downtime, Galloway said.

Once this contract is underway, FSA officials plan to look at similar consolidation and integration on the front end systems, such as the central processing system and call centers, "so that we can reduce the complexity of the whole environment," Shaw said.