ACS Lengthens Ed. Department Outsourcing Work

Affiliated Computer Services Inc. has signed an agreement with the Department of Education to extend a direct loan servicing system contract for four more years, the Dallas-based company announced Nov. 27.

The contract, originally set to expire in September 2003, will now continue through September 2007, company officials said.

The performance-based contract involves upgrades to the system, which processes student loans, under a modernization program led by Accenture Ltd. of Hamilton, Bermuda.

The contract so far has been worth an average of about $150 million a year to ACS, said Lee Allen, a company spokesman. It is the company's largest business process outsourcing deal in either the commercial or government market, he said.

The direct loan servicing system provides application, payment collection, accounting and reconciliation of government-sponsored loans to students for higher education tuition payments.

The modernization process includes establishing a Web-based system that will allow borrowers and schools to conduct most of the their business transactions electronically, thus reducing unit costs, extending services hours and enhancing service quality, according to ACS.

Under a share-in-savings arrangement, Accenture, ACS and AFSA Data Corp. Inc. of Long Beach, Calif., will make an initial technology investment and recoup it from savings the system generates. The savings would be shared between the partners and the department, ACS said.

ACS has provided the Department of Education with business process management services since 1994, including systems development, integration, management, application and payment selection to support its student loan program.

ACS provides business process and technology outsourcing solutions to commercial and government clients. The company has 21,000 employees and had annual revenue of $2 billion in fiscal 2001, according to Hoover's Online of Austin, Texas.