Education Dept. affirms ASC direct loan servicing contracts

Affiliated Computer Services Inc. has prevailed in a protest over its winning a contract extension for a $150 million a year contract for loan servicing services with the Department of Education.

SLM Corp. of Reston, Va., commonly known as SallieMae, protested the award to ACS of Dallas when it was announced in November 2001. SallieMae is the leading provider of funding and servicing support for education loans.

In January, the Department of Education announced that it would conduct market research to determine whether it was appropriate to extend the contract with ACS. On Thursday, the agency announced that it would keep ACS as its contractor.

ACS has held the contract for the Department of Education Direct Loan Servicing Systems since 1994, and will now continue to provide those services through Sept. 30, 2007.

The contract has been worth an average of about $150 million a year to ACS, company officials said. As such, the contract represents about 4 percent of ACS' annual revenues. It is ACS' largest business process outsourcing contract in either the commercial or government market, they said.

Since the system was initially deployed in 1994, ACS has provided business process outsourcing services for the Direct Loan Servicing System, including systems development, integration, management, operations and customer service.

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

ACS provides business process and technology outsourcing solutions to commercial and government clients. The company has about 40,000 employees and had annual sales of $3.2 billion in 2002.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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