Education Department chooses firm with ties to Secretary DeVos in debt-collection deal

The optics don't look good.

Education Secretary Betsy DeVos attends an event to celebrate Congress passing the Tax Cuts and Jobs Act with Republican members of the House and Senate on the South Lawn of the White House December 20, 2017 in Washington, DC. (CREDIT: Chip Somodevilla/Getty Images)
Education Secretary Betsy DeVos attends an event to celebrate Congress passing the Tax Cuts and Jobs Act with Republican members of the House and Senate on the South Lawn of the White House December 20, 2017 in Washington, DC. (CREDIT: Chip Somodevilla/Getty Images)

The Department of Education on Thursday selected two firms to help collect unpaid student loans — one of which, Performant Financial Corp., once had financial ties to Education Secretary Betsy DeVos.

According to The Washington Post, the Education Department said that the proposals offered by Performant, which DeVos invested in prior to becoming secretary, as well as the other firm, Windham Professionals, were “the most advantageous to the government.”

But the firm’s past performance puts that claim into question. The Department faced protests by losing bidders in 2016 after choosing seven firms, one of which was Windham, to collect overdue loans. It responded to objections by noting Windham’s past “exceptional” rating that led to its selection among the seven firms, as well as Performant’s rating as “marginal” and its past rating as “satisfactory,” which resulted in the firm not being selected.

“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 Continental Service Group, one of the bidders, according to The Washington Post.

The two firms were selected out of nearly 40 others for a deal that could be worth $400 million. But, given the Department’s history, the decision could again be subject to protests and appeals from losing bidders.

“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 said.

When DeVos was nominated, the Republican-controlled Senate took the unprecedented move of advancing her confirmation hearing before the paperwork was complete about her potential conflicts of interest. Thus, the senators had no opportunity to question her about her investments in companies like Performant.

Nathan Bailey, spokesperson for the Education Department, told the Washington Post that DeVos had “no knowledge, let alone involvement,” in the new deal.