Judge Issues 30-Day Halt To Proceedings in ED Contract Debacle

Yesterday, Judge Susan G. Braden, Chief Judge of the U.S. Court of Federal Claims, issued an order putting a 30-day halt to all proceedings in four separate but related lawsuits involving bid protests in the Department of Education (ED) RFP for Private Collection Agency services on government-guaranteed student loans. The judge issued the order to “maintain the status quo while the parties attempt to reach a global solution.” 

insideARM has written extensively about the RFP process, the protests and the GAO decision regarding the protests. See the March 29, 2017 article here and our April 10, 2017 article here for a summary of prior activity regarding the protests and the GAO findings. For a thorough review of the RFP process see our December 14, 2015 article.

Background  

On March 27, 2017, the Government Accountability Office (“GAO”) partially sustained several protests over a multiple-award $2.8 billion student-loan collection contract, awarded under Solicitation No. ED-FSA-16-R-0009, because ED failed to properly evaluate certain bids. 

Between March 28 and April 12, Continental Services Group, Inc. (ConServe), AccountControl Technology, Inc. (ACT), Pioneer Credit Recovery, Inc. (Pioneer), and Alltran Education, Inc. (Alltran)  (collectively “the Protestors”) filed related Bid Protests in the U.S. Court of Federal Claims, challenging ED’s decision not to award the Protestors contracts for student-debt collection services, under Solicitation No. ED-FSA-16-R-0009. Continental Services v. United States, No. 17-449; Account Control Technology v. United States, No. 17-493; Pioneer Credit Recovery v. United States, No. 17-499; Alltran Education v. United States, No. 17-517.

On March 29, 2017 the court issued a Memorandum Opinion and Temporary Restraining Order (“TRO”), to prohibit, pursuant to Rule of the U.S. Court of Federal Claims (“RCFC”) 65(d), the ED from:

1. authorizing the purported awardees to perform on the contract award under Solicitation No. ED-FSA-16-R-0009 for a period of fourteen days, i.e. until April 12; and
2. transferring work to be performed under the contract at issue in this case to other contracting vehicles to circumvent or moot this bid protest for a period of fourteen days, i.e. until April 12. Continental Services, No. 17-449. 

On April 10, the court extended the March 29 TRO until April 24. Continental Services, No. 17-449. 

On April 13, the court convened a Status Conference in Alltran, No. 17-517, during which the Government proposed a thirty-day stay of proceedings in four Bid Protests related to Solicitation No. ED-FSA-16-R-0009. The Government advised the court that the proposed stay would maintain the status quo while ED explored a global solution. On the same day, the court informed all of the parties in Continental Services, No. 17-449, Account Control Technology, No.17-493, Pioneer Credit Recovery, No. 17-499, and Alltran Education, No. 17-517 of the proposed stay. 

On April 17, the Government advised the court by email that all of the parties in Continental Services, No. 17-449, Account Control Technology, No. 17-493, Pioneer Credit, No.17-499, and Alltran, No. 17-517 agreed to the proposed stay, except intervenor-defendants Windham Professionals, Inc. (“Windham”) and Premiere Credit of North America, LLC (“Premiere”). 

Windham and Premiere argued that the court should not enjoin the ED from authorizing the awardees, under Solicitation No. ED-FSA-16-R-0009, to perform on contracts that were properly awarded. Windham and Premiere also argue that the Protestors do not have standing to seek injunctive relief, because Solicitation No. ED-FSA-16-R-0009 was an indefinite quantity procurement and the Protestors therefore were not prejudiced by the ED’s decision to award contracts to other bidders. But, Judge Braden determined: 

“The objections raised by Windham and Premiere, however, do not address the need for a stay. Instead, they attempt to re-litigate the merits of the March 29, 2017 TRO and April 10, 2017 TRO Extension.” 

Judge Braden then discussed her decision to stay the proceedings for 30 days:

“The court has determined that the proposed stay properly would maintain the status quo while the parties attempt to reach a global solution. Accordingly, the stay will preserve judicial resources without prejudicing the interest of any of the parties. For this reason, all proceedings in Continental Services, No. 17-449, Account Control Technology, No. 17-493, Pioneer Credit, No. 17-499, and Alltran, No. 17-517 are stayed for thirty days, i.e. until Friday, May 19, 2017. See Cherokee Nation of Oklahoma v. United States, 124 F.3d 1413, 1416 (Fed. Cir. 1997) (“The power of a federal trial court to stay its proceedings . . . is beyond question. This power springs from the inherent authority of every court to control the disposition of its cases. When and how to stay proceedings is within the sound discretion of the trial court.” (internal citations omitted)). On May 19, 2017, the parties will file a Joint Status Report and the court will convene a Status Conference thereafter at the earliest date convenient to all the parties. 

Under the Rules of the United States Court of Federal Claims, a TRO “expires at the time after entry—not to exceed 14 days—that the court sets, unless before that time the court, for good cause, extends it for a like period or the adverse party consents to a longer extension.” RCFC 65(b)(2). For this reason, on April 24, 2017, the court will extend the April 10, 2017 TRO until May 8, 2017. On May 8, 2017, the court will extend the TRO until May 22, 2017.

IT IS SO ORDERED.” 

insideARM Perspective 

So, the ED RFP remains a riddle.  In this matter, it is hard to separate fact from fiction. There are rumors swirling every day among the companies that would like to have the ED contract. What could possibly be a “global solution” with so many competing interests? 

Why would a “global solution” be difficult?  It is also hard to tell the “players” without a scorecard. In an effort to allow our readers to better understand who everyone is and where everyone stands, follow this below: 

Seven Companies received the ED contract award on December 9, 2016

1. Financial Management Systems Investment Corp
2. GC Services Limited Partnership
3. Premiere Credit of North America, LLC
4. The CBE Group, Inc.
5. Transworld Systems Inc.
6. Value Recovery Holding, LLC
7. Windham Professionals, Inc.

GAO Decision on Protests on March 27, 2017 

12 companies had their protests sustained:

1. Allied Interstate, Inc. (Iqor)
2. Automated Collection Services, Inc.
3. Collection Technology, Inc.
4. Collecto, Inc., dba EOS CCA
5. Delta Management Associates, Inc.
6. Gatestone & Co. International, Inc.
7. General Revenue Corporation
8. Performant Recovery, Inc.
9. Progressive Financial Services, Inc.
10. Texas Guaranteed Student Loan Corp
11. Van Ru Credit Corporation
12. Williams & Fudge, Inc. 

4 companies had protests denied:

1. Account Control Technology (2 of 3 protests denied, 1 not decided)
2. Alltran Education Inc. (formerly ERS) – 3 protests denied
3. Global Receivables Solutions, Inc. – 2 protests denied
4. Sutherland Global Services - 3 protests denied 

Two companies had no decision from GAO on their protest:

1. Continental Service Group, Inc. (ConServe)
2. Pioneer Credit Recovery 

4 companies filed lawsuits with the Court of Federal Claims 

1. Continental Service Group, Inc. (ConServe)
2. Alltran Education Inc. (formerly ERS)
3. Account Control Technology
4. Pioneer Credit Recovery 

Two companies had previously won an appeal of a denied protest over their contracts not being extended by ED in 2015.  But, no decision has been rendered in a request by ED to dismiss the lawsuit as moot because they have agreed to take “corrective” or “remedial action” with regard to the earlier decision not to issue contract extensions to the plaintiffs. 

1. Alltran Education Inc. (formerly ERS)
2. Pioneer Credit Recovery 

Oh, and let’s not forget the 11 small business that were selected by ED in October of 2014 under the small business set-aside on its Default Collection Services contract and private collection agency (PCA) program. These companies had been receiving placements from ED until the aforementioned TRO was issued.

The small business collectors are:

1. Action Financial Services
2. Bass & Associates
3. Central Research
4. Coast Professional
5. Credit Adjustments
6. FH Cann & Associates
7. Immediate Credit Recovery
8. National Credit Services, Inc.
9. National Recoveries
10. Professional Bureau of Collections of Maryland
11. Reliant Capital Solutions