Education expands data center outsourcing

The Education Department takes another step closer to completely outsourcing the operation of its mainframe systems this week as it turns over the management of another of its major mainframe systems to Computer Sciences Corp.

The 10-year, $97 million deal for management of the Central Processing System, which the agency uses to calculate student aid, is the largest of a series of task orders that Education has awarded through the General Services Administration's Virtual Data Center program.

The task order, awarded last September, represents one of the final pieces in a strategy to save money and improve services by consolidating and outsourcing the management of the major systems used for processing student loans and grants.

Education oversees about $52 billion in financial aid per year for close to 9 million students.

Greg Woods, chief operating officer of Education, said bringing the systems together under one contractor should make it easier for the department to improve its performance by combining related data that now lies "stovepiped" within the various systems.

For example, Education officials could determine if an applicant for one financial aid program already has failed to make payments on loans under another program. "It'll certainly help with the checks and balances on borrowers who might not be entitled to funding," he said.

Data sharing also will help the department provide better customer service, Woods said.

Education officials hope eventually to put in place software that will let them search across the various systems and compile complete financial aid profiles for students, who then could access those profiles via the World Wide Web.

"We ought to be able to pull up our account and see our account in total," he said. That approach will help students better manage their financial aid, according to Woods.

Education began outsourcing its mainframe operations in February 1998, awarding CSC a $72 million task order to manage the National Student Loan Data System. Since then, Education has awarded five other task orders through the Virtual Data Center program.

Task orders for two major systems remain to be awarded: the system for the Federal Family Education Loan program, which provides students loans through financial institutions rather than directly from the department, and the Central Database System, which is part of the system used for servicing direct loans.

The $97 million task order that CSC is working to fulfill this month covers the department's Central Processing System, which is used to calculate the eligibility of applicants for federal financial aid. That system, as well as the other Education systems, is being moved to a data center that CSC operates in Meriden, Conn.

Bringing the systems together with one contractor offers "economies of scale," enabling Education to cut down on the overhead required to manage individual systems, according to Thomas O'Hare Jr., director of outsourcing and seat management in CSC's civilian agencies group.