Judge Denies Motion for TRO in FMS v. Department of ED

Since my article on Monday describing the beginning of Round 4 in the Department of Education (ED) private collection agency saga, there have been a few additional developments.

First, Alltran Education, Inc. (Alltran) filed a motion to intervene as a defendant along with the government (or ED). The company stands to gain at least some of the accounts that are to be recalled on July 3rd by ED from those firms that are operating under a 2015 Award Term Extension (ATE). Alltran claimed that its interests were not fully represented by the governement, or anyone else, so this move was required. 

Yesterday Judge Wheeler granted their request to intervene.

Second, last week FMS Investment Corp. (FMS), Account Control Technology, Inc. (ACT), GC Services Ltd. Partnership (GC), Continental Service Group, Inc. (ConServe), and Windham Professionals (Windham) requested a Temporary Restraining Order to prevent ED from recalling the accounts on July 3.

Yesterday Judge Wheeler denied that motion for TRO.

Finally, there was a scheduling hearing at the Court of Federal Claims yesterday. Here's what's going to happen next:

1. Defendant shall file the certified administrative record on or before Friday, June 29, 2018, providing a courtesy hard copy to the Court. The Government may file an electronic version of the administrative record using a CD.
2. Plaintiffs shall file their motions for judgment on the administrative record on or before Friday, July 13, 2018.
3. Defendant shall file its responses to Plaintiffs’ motions for judgment on the administrative record and its cross-motion for judgment on the administrative record on or before Friday, July 27, 2018.
4. Plaintiffs may file replies in support of their motions for judgment on the administrative record and responses to the Defendant’s cross-motion on or before Friday, August 3, 2018.
5. Defendant may file a reply in support of its cross-motion for judgment on the administrative record on or before Friday, August 10, 2018.

All current and prospective Defendant-Intervenors shall follow the Defendant’s briefing schedule. Oral argument, if necessary, will be scheduled at a later time.

I missed one other thing last week

Pioneer Credit Recovery, Inc. (Pioneer) also filed a complaint on June 22. They are situated similarly to, but not exactly like, the other plaintiffs (FMS, ACT, GC, ConServe, Windham), as Pioneer is also operating under a 2017 (vs. a 2015) ATE, and stands to gain some of the recalled accounts referenced above.

Nonetheless, Pioneer's case was consolidated with the others under FMS Investment Corp. v. The United States.

Pioneer made these claims:

• ED improperly canceled the Solicitation for debt collection services in the unrestricted (large company) category.
• There should be no need for a TRO or Preliminary Injunction, given that ED does not plan to issue any new solicitation in the short term covering the services at issue. Pioneer thinks the matter can be resolved through Motions for Judgment on the Administrative Record (AR).
• In the previous and extensive litigation over the Solicitation, ED has consistently taken the position that making awards under the Solicitation was crucial to ED and that without such awards, ED, borrowers, and the public would suffer significant harm. This position is in sync with ED's representations to this Court that the volume of defaulted accounts is increasing exponentially each month.
• ED's actions in cancelling the Solicitation are pretextual and were taken solely to avoid continued litigation. Therefore its determination to cancel the Solicitation is arbitrary, capricious, and unreasonable, and otherwise violates applicable federal procurement laws and regulations.
• Pioneer is materially prejudiced by ED's failure to properly evaluate its needs, ED's improper cancellation so as to avoid conducting a fair and reasonable evaluation, and ED's violation of the governing statutes and regulations.
• If ED had properly evaluated its needs, ED would have evaluated proposals under the Solicitation, Pioneer's proposal would have been evaluated and considered for award, and that information would have been considered during the tradeoff and best value determination. If ED had conducted a proper evaluation, Pioneer would have received an award.
• ED's May 3, 2018 notice of cancellation is based in part on a newly formed and unsupported notion that it wants a 90-day engagement process to reduce the number of defaulted borrower accounts. ED has presented no support for this unproven and new plan, or how this plan can be implemented.

Pioneer seeks relief in the form of a reinstatement of the Solicitation, re-evaluation of proposals, and a new award decision. The company also seeks an injunction to prevent ED from procuring these same PCA services under a related solicitation seeking defaulted loan collection services. Finally, Pioneer is requesting an award of costs, including bid and proposal costs and reasonable attorneys' fees as damages for the cancellation.

While the other plaintiffs likely made similar claims, their Complaints are sealed, so the details are not public.