Building a collection agency’s portfolio can be challenging, but indeed, a key component to growing an agency’s success. In no vertical is this more challenging than government collections. Not only is it difficult to land a government contract but the rules and stipulations of the contract are numerous. Marc Chibnik, CEO of Harvard Collection Services notes several challenges involved with not only obtaining a government contract but collecting the debt as well.
“There are quite a few substantial challenges specific to collecting government debt,” said Chibnik. “First of all, there are several types of governmental debt at several levels including: federal, state, county and municipal. For example, before you may even begin to consider participating on the federal level, more often than not the agency must be registered with the GSA (General Services Administration), and on SAM (System for Award Management). This entails having both a FEIN and a DUNS number as well as an E-Verify number, not to mention licensing and bonding in all 50 states. Additionally, after work is secured, there is a considerable amount of administrative burden such as reporting requirements and compliance audits when collecting on a government debt contract. Lastly, there are fixed procurement cycles from one to five years, so a firm needs to be involved in new procurements in order to retain the work.”
Before an agency may even approach such a challenge, however, they must first meet an even larger one: becoming eligible to collect government debt. It is best if this monumental task is taken in small steps all the way to capitol hill.
“This is not an easy task,” said Chibnik. “Usually in order to successfully bid on government collection work, an agency has to have experience in that vertical, which is a bit of a catch-22. One way around that is to hire individuals with government experience and expertise. A firm may try to enter the vertical using a local nexus: pursuing local state, county and municipal work. Also, they may try to take advantage of small, woman or disadvantaged owned business set-asides. Often times states give “in-state preference” to firms in the state or in a state that reciprocates on preference. So looking locally, starting small and, of course, writing a good proposal all definitely help.”
Collection professionals are well acquainted with the optimal dynamic to maintain when working with consumers. However, as is the nature of government collections, the dynamic is different when approaching a consumer in the name of Uncle Sam. Unlike the majority of rules created in recent years to “improve” the collection industry, those particular to government collection work in the collection professional’s favor.
“The handling of statute of limitations does come into play while performing government collections, but in a positive way for the agency,” said Chibnik. “Some examples of this are: there is no statute of limitations on federal obligations, there are often differing or extended statute of limitations on state debt. This puts the agency in a good position because neither the agency nor the client has the ability to change the statute of limitations because it is legislated.”
Perhaps it is not all that surprising the government supplies extra legal fortitude to endeavors in which is has a financial interest. To that end, the government seems to be reaching for economic prosperity as many are after the recession of recent years.
“We foresee a bright future for government debt collection,” said Chibnik. “State and local governments are still ‘feeling the pinch’ as far as revenues are concerned, so they all continue to need our services. Additionally, with the Department of Education Student Loan collection contract out for bid and the possibility of the IRS outsourcing project being required to fire up once again, firms specializing in student loan and tax collections will have a lot of new potential opportunities in the near future.”
As with many things in life, both professional and personal, great effort must be made to reap great rewards. This is especially true in government collections.