Honorable Peter Hoekstra
Subcommittee on Oversight and Investigations
Committee on Education and the Workforce
U.S. House of Representatives
Washington, DC 20515

Dear Congressman Hoekstra:

Thank you for your letter of February 25, 1999, expressing concerns regarding the Department of Education's student aid processing contracts. As you know from our discussions, I share your concerns and am committed to working with experts from business and industry, as well as our partners in the student aid community, to improve efficiency and streamline our contract operations.

Since taking over as Chief Operating Officer of the Office of Student financial Assistance (OSFA) (SFA) last December, I have created a Customer Service Task Force to identify ways we can better meet the needs of students, parents, and schools. I am also in the process of developing a systems architecture, and a modernization blueprint showing step-by-step how we move from our current cumbersome processes and stovepipes to a streamlined, integrated system on which our customers and partners can rely. I will be sharing the results of these efforts with you in September as part of the PBO's five-year performance plan and budget.

I take my stewardship of SFA's management funds very seriously; ensuring cost-effective and efficient operations is perhaps my most important responsibility as Chief Operating Officer. That said, however, it is important to recognize that increased costs, particularly in the near term, do not always indicate inefficient management. For example, the National Student Loan Data System's $50 million "cost overrun" mentioned in your letter primarily reflects investments in enhanced system capabilities and much broader system usage by the higher education community than was anticipated at the time original cost estimates were developed. Partly as a result of these additional investments, NSLDS has prevented the award of over $1 billion in grants and loans to ineligible students since coming on-line in 1994.

Regarding your specific contract questions, my staff is currently assembling information on individual contracts and task orders; you will receive this material by March 26, 1999.

In response to your questions on Access America, the Department is in the process of awarding a task order with National Computer Systems (NCS) of Iowa City, Iowa, to develop a Student Account Manager as part of the Access America pilot project. We have completed the requirements analysis for this project and are currently awaiting an implementation proposal from NCS. Specific costs for the task order have yet to be established, but we do not expect to spend more than $3 million on this project in FY 1999. These costs will be reflected in SFA's April budget plan. While the Department's FY 2000 budget proposal did not include specific funding levels for Access America, which were not available at the time the budget was prepared, the project was identified as a major element of SFA's system modernization strategy.

In response to your questions on PBO staffing, I am working to ensure that SFA's staff includes the broad technical expertise needed to successfully manage both system operations and a comprehensive reengineering effort. These efforts include:

Beyond these steps SFA is developing a performance based acquisition strategy for both current contract services and those needed to carry out our modernization blueprint.

I hope this letter and the supporting information we will soon be sending addresses your concerns. I would welcome the opportunity to discuss these matters further at your convenience. 

                                              Sincerely,                                                  Greg Woods                                               Chief Operating Officer                                               Office of Student financial Assistance (OSFA)
   cc:  Rep. Howard "Buck" McKeon      Rep. Matthew G. Martinez

Return to Title IV Modernization page