2 New Developments Today in ED Collection RFP

In the past 24 hours insideARM has learned of two new developments in the seemingly endless battle over the Department of Education RFP for private collection agency (PCA) services. 

ONE - Litigation Related to the December 2016 Awards 

Yesterday, the Honorable Susan G. Braden, Chief Judge of the Court of Federal Claims issued an order for a Preliminary Injunction that continues most (but not all) of the terms of the Temporary Restraining Order (TRO) previously issued in the multiple lawsuits over the Department of Education (ED) RFP for Private Collection Agency work under Solicitation No. ED-FSA-16-R-0009. insideARM wrote about the terms of that TRO in our article on May 1, 2017 and noted that a hearing was scheduled for May 2, 2017 at 10:00 AM to address various motions that were filed in the case. 

The hearing held yesterday was to address the following matters: 

1. A May 1, 2017 Motion from the Government (ED) to Dismiss Count VII of Continental Services Group, Inc.’s (ConServe) March 28, 2017 Complaint Continental Services Group, Inc v. United States, No 17-499. 
2. Continental Services’ March 29, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction (ECF No. 7), filed in Continental Services Group, Inc v. United States, No 17-499 and renewed on May 1, 2017; 
3. Pioneer Credit Recovery, Inc.’s April 28, 2017 Motion For Preliminary Injunction (ECF, filed in Continental Services Group, Inc v. United States, No 17-499; 
4. Account Control Technology, Inc.’s April 28, 2017 Motion For Preliminary Injunction, filed in Account Control Technology, Inc. v. United States, No. 17-493;
5. Progressive Financial Services, Inc.’s (“Progressive Financial”) April 21, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction, filed in Progressive Financial, Inc. v. United States, No. 17-558; and
6. Collection Technology, Inc.’s (“Collection Technology”) May 1, 2017 Motion For Temporary Restraining Order and/or Preliminary Injunction, filed in Collection Technology, Inc. v. United States, No. 17-578. 

insideARM was not present at yesterday’s hearing. But, from reading the Order, it appears there was a packed house of participants.

In addition to the parties named above, two other additional named plaintiffs (Pioneer Credit Recovery, Inc., Collection Technology, Inc., Progressive Financial, Inc.) and six intervenors (The CBE Group, Inc., Premiere Credit of North America, LLC, GC Services Limited Partnership, Financial Management Systems, Inc., Value Recovery Holdings, LLC., and Windham Professionals, Inc.) participated in the hearing. The 6 intervenors were companies that were awarded PCA contacts in December, 2016. The 7^th company selected at that time, Transworld Systems, Inc., was not listed as an intervenor but is surely an interested party. The court also noted that Performant Recovery Inc. had filed an appearance in the case.

It appears that the parties could not agree on much. As a result, Judge Braden reacted.

Per the Order: 

“After argument in Continental Services v. United States, No. 17-449, the court invited all Plaintiffs, Intervenor-Plaintiffs and the Government to convene in the court’s chambers to prepare a draft order to preserve the status quo until the United States Department of Education (“ED”) issues corrective action, in response to the Government Accountability Office’s (“GAO”) March 27, 2017 Decision in Gen. Revenue Corp., B-414220.2, Mar. 27, 2017, 2017 WL 1316186. Upon circulating the draft order, other Plaintiffs and/or Intervenor-Plaintiffs who did not elect to participate in that process objected. Counsel for some of the Intervenor-Defendants also objected. 

Under these circumstances, after reading all pending motions and considering argument on May 2, 2017, as well as prior arguments by the parties, the court has decided to grant the Government’s May 1, 2017 Motion To Dismiss (Count VII). Accordingly, Count VII of Continental Services’ March 28, 2017 Complaint is dismissed, without prejudice to being re-raised at a later date. In addition, the court has decided to enter a preliminary injunction.”

Editor’s Note: All other counts in the complaint remain.

The full order outlined the Judge’s reasoning for issuing the order.

Judge Braden’s Order is as follow:s 

“Accordingly, it is ordered that the United States of America, the United States Department of Education, and their officers, agents, servants, employees, and representatives are enjoined, pursuant to Rule 65(d), from:

(1) authorizing the purported awardees to perform on the contract awards under Solicitation No. ED-FSA-16-R-0009; 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.

The purpose of this Preliminary Injunction is not to micromanage the ED’s debt collection efforts, but to protect the interest of all parties and afford the Government an opportunity to reach a global solution of the aforementioned cases. 

This order will remain in effect until COB May 22, 2017, the first business day after the Department of Justice represented that the ED will file a notice announcing corrective action, in response to the March 27, 2017 GAO Order, or until such time as all the parties agree to an alternative joint order. 

One key change to the terms of the April 24, 2017 TRO was included in yesterday’s Order. It related to a portion of the TRO that read: 

“This Order, however, does not prohibit The CBE Group, Inc., Premiere Credit of North America, LLC, and Transworld Systems, Inc. from continuing to service only “inrepayment” accounts, i.e., those accounts where the contractor and borrower have a mutually agreed upon repayment schedule (see Task Order No. ED-FSA-09-0-0008 at 48), pursuant to Contract Nos. ED-FSA-17-D-0006, ED-FSA-17-D-0007 and EDFSA-17-D-0009, awarded on December 9, 2016, for a period of sixty days, and without further consent of the court.” 

Judge Braden rescinded that provision in yesterday’s order: 

“In effect, this Preliminary Injunction rescinds the April 24, 2017 modification to the March 29, 2017 Temporary Restraining Order, because it provided a competitive advantage to CBE Group, Inc. and Premiere Credit of North America, LLC over Collection Technology, Progressive Financial and Performant Recovery, Inc. that filed appearances in this case after April 24, 2017.” 

TWO - Litigation Related to ED’s decision in April, 2015 to issue Award Term Extensions (ATE) to 5 private collection agency contracts initially awarded in 2009 

Yesterday insideARM also learned of new development in the 2015 litigation over the ATE’s issued to GC Services, Windham, FMS, ACT, and ConServe. insideARM last wrote about that case on March 13, 2017. That article provides a detailed background of the litigation. 

On April 28, 2017 ED filed a “Status Report” to the court. In that status report ED states: 

“On April 28, 2017, the contracting officer offered new award term extension task orders to plaintiffs Enterprise Recovery Systems, Inc. (ERS) and Pioneer Credit Recovery, Inc. (Pioneer). Both were asked to indicate their acceptance by signing and returning the task orders no later than noon on Monday, May 1, 2017.” (Editor’s Note: ERS is now known as Alltran Education.) insideARM has not learned whether or not ERS and Pioneer have accepted the award term extensions. 

“Also on April 28, 2017,the contracting officer informed plaintiffs Coast Professional, Inc. (Coast) and National Recoveries, Inc. (NRI) that -- in accordance with the terms of the small business set-aside contracts that both firms currently have with ED -- each firm must choose whether to retain their current set-aside contract or instead to receive an award-term-extension task order as a result of the corrective action. Coast and NRI informed ED on April 28, 2017, that they each have opted to continue to perform under their respective set-aside contract, and both firms also simultaneously objected to being forced to choose. Each firm relatedly requested that we state in this status report that the issue is still in dispute. 

In light of the on-going proceedings and the Court’s orders issued in Continental Services v. United States, Case No. 17-449, as well as the other recently-filed related cases, ED will not transfer any accounts to ERS or Pioneer under the newly issued award-term-extension task orders resulting from the corrective action in this case until further guidance is provided by the Court.

As the Government explained in its motion to dismiss and reply, the corrective action plan proposed by ED in this matter moots the claims of all four plaintiffs.” 

insideARM Perspective 

Just when you think this matter can’t get any more challenging or confusing, it does, in fact, get more challenging and more confusing. insideARM can’t even begin to hazard a guess on how this story ends. There are so many parties and so many competing interests, it is hard to believe that a global settlement can be reached that will accommodate all the parties. 

To assist in digesting the full set of ongoing developments, we have produced an infographic.

You can see the infographic here.

insideARM will continue to monitor and report on developments, and update the infographic.

The Preliminary Injunction runs through COB on May 22, 2017.  At the very least we expect an update on the various cases at that time.

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Editor's note: An earlier version of this story listed FMA as a company involved in litigation over the Award Term Extentions (ATE). That was incorrect; insideARM regrets the error.