Feds Pull ACS’ Largest Government Contract

Complaints over a lack of open bidding has prompted the Department of Education to pull a contract with Affiliated Computer Services and put the deal for the service and support of the agency’s Internet-based student loan processing system up for bid. ACS’ contract with Education was its largest with the federal government and represents approximately four percent of the Dallas-based company’s consolidated revenue.

The contract was originally scheduled to run through September 2003 and was extended by Education in November 2001 on a sole source basis through September 2006, with an option for extension through September 2007. The extension was protested by SLM Corp, which is also known as Sallie Mae.

A sole source contract allows a federal agency under certain circumstances to grant awards to private contractors without competitive bidding. The original contract was granted through a process known as “share-in-savings” where contractors agree to provide services for free and hope to profit on any savings relaized by the agency using the services.

An ACS official said the company would bid on the new contract extension.

“We have enjoyed a long-term, outstanding relationship with the Department of Education,” said Jeff Rich, CEO of ACS. “We began supporting the Direct Student Loan program in 1993 and have worked in partnership with the Department to provide services to more than six million student borrowers. We look forward to the opportunity to provide continued support to the Department and the students who benefit from their services and are confident we are competitively positioned for the bidding process.”

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