True Rivalry Building on ED Debt Collection Contract

Collection Technology, Inc. (CTI) reclaimed first place in May in the U.S. Department of Education’s private student loan debt collection performance ranking for small businesses. But CTI’s statistical tie with Coast Professional places the two debt collection agencies almost lock step with each other in the all-important final rankings for the second quarter.

CTI, of Monterey, Calif., scored 96.78 points in May, just ahead of April’s winner Coast Professional of West Monroe, La., which scored 96.74 points during the period. Delta Management Associates finished third in the small business category with a score of 86.59.

“The entire CPCS (competition performance & continuous surveillance) will be decided on the final day of June,” said Everett Stagg, Coast Professional’s president and chief operating officer. “Both companies (CTI and Coast) have finished first or second on every CPCS final. I am confident both companies will finish the quarter strong.”

Results for June and the second quarter are expected later in July.

Performance results for the Education Department’s private collections are determined by a weighted average of contractors’ performance in total dollars collected; total accounts serviced, and total administrative resolutions. The department awards 70 points to the top performer in the dollars collected category. Twenty points are awarded to the top performer in the total accounts serviced category, while the top performer in administrative resolutions receives 10 points.  The other agencies are scored against the top performers in each category.

Stagg said the contractors should know by mid-July which agencies won the quarter in their category, giving them a larger number of new accounts when distributed for the following quarter.

CTI has won the last five quarterly performance competitions in the small business category.  But like what the unrestricted contractors witnessed months ago, small business contractors are discovering that as the contract ages, the competition intensifies and it becomes harder for any one agency to win two or more categories each month. While Coast Professional or CTI is favored on paper to win the small contractor category, it is still a tight race.

“The entire small business pool is scoring well. Everyone is expected to score 80 or more points this period,” Stagg said.

With little changed from April to May in the performance results for the unrestricted contractors, Diversified Collections also is favored on paper among its peers to win the quarter’s bounty. The Livermore, Calif.-based company took first place in May, this time with a score of 99.67 points. Pioneer Credit Recovery won second place with 95.92 points, and FMS Investment Corp. completed the trio of top finishers among large companies with 95.11 points.

It is still any agency’s quarter to win as Pioneer proved last quarter. The debt collection subsidiary of student loan giant Sallie Mae upset frontrunner Van Ru Credit Corp. last quarter with solid performances across all three categories in March, and squeezed out a come from behind victory.

“I think success on this contract for the next few years is tied to each organization’s average inventory and how well each company executes their strategy to deal with the inventory size,” said CTI President Chris Van Dellen.

The growing competition among the contractors has yielded the Education Department more than $1.5 billion in collections — not including other revenue streams such as approved litigation accounts and pending rehabilitated loans — from the 22 collection agencies over the last 19 months.

Performance Scores and Rankings for May 2011