(AP/Carolyn Kaster)

Education Department chooses firm with ties to Betsy DeVos for debt-collection contract

Despite its questionable past ratings, the Education Department awarded a contract to Performant Financial Corp.


Charlie May
January 14, 2018 7:19PM (UTC)

Education Secretary Betsy DeVos once had financial ties to one of the two companies selected by the Department of Education to assist the agency in collecting unpaid student loans. The company, Performant Financial Corp., has also been criticized by other contract bidders for having inadequate ratings in the past.

Performant and Windham Professionals were the two firms that were awarded contracts, out of almost 40 other bidders, and the deal is expected to be worth as much as $400 million, the Washington Post reported. The decision was touted by the Education Department as "the most advantageous to the government," however, Performant's past ratings have contrasted that assessment.

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Prior to her job with the Trump administration, DeVos was listed as an investor to LMF WF Portfolio, a limited liability company linked to Performant. It was "one of several firms involved in providing Performant with a $147 million loan in 2012, according to regulatory filings."

DeVos' confirmation hearing was rushed, and Democrats felt they didn't have enough time to complete necessary background checks, such as DeVos' potential conflicts of interest. Last year, Senate Democrats noted the unprecedented potential corruption of Trump's nominees, as Salon reported in the video below.

In 2016, the Education Department chose seven firms — one being Windham — to collect student loans, and the decision was met with protests and lawsuits from losing bidders, including Performant.

The Post elaborated:

The department selected seven companies to manage the portfolio two years ago, sparking protests at the Government Accountability Office, which faulted the agency with mismanaging some of the bids. A few firms filed complaints with the federal claims court, leading authorities to put a hold on all new assignments. The Education Department had estimated that the order cost taxpayers $640,000 in collections in one month.

The newly awarded contracts are supposed to resolve the litigation, but the selection of Performant could raise eyebrows.

In a response to Performant's protests about the 2016 decision, the GAO outlined its reasoning with ratings for the bidding firms. Windham's management received a satisfactory rating, while past performance was deemed "exceptional." Performant, however, received a "marginal" rating for its management, and its past performance was rated as "satisfactory," the Post reported.

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"It simply does not make sense that the agency would choose to work with lower-rated [companies] with marginal ratings that do not have an exceptional past performance record," said Todd Canni, an attorney for another bidding firm. "While we continue to await more facts, we are deeply troubled by the optics and appearance issues associated with the agency’s award decisions."

Canni added, "Given the fact that Performant was not a highly rated [company] and, in fact, was rated fairly low . . . the agency will be under intense scrutiny and will need to explain how suddenly these ratings changed so significantly to allow Performant to leap frog over so many other qualified [companies]."

Nathan Bailey, the Education Department's spokesperson, said on Thursday that DeVos had "no knowledge, let alone involvement," in the selection process for the debt-collection contract," the Post reported.

Conflicts of interest have been a central component in the opposition to President Donald Trump, and who he has chosen to work for his administration.

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Charlie May

Charlie May is a news writer at Salon. You can find him on Twitter at @charliejmay

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