CBCA 8250

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING PUBLICLY RELEASED IN ITS ENTIRETY ON SEPTEMBER 24, 2025 APPELLANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT GRANTED: September 17, 2025 CBCA 8250, 8251 GREAT LAKES EDUCATIONAL LOAN SERVICES, INC., Appellant in CBCA 8250, and NELNET SERVICING, LLC, Appellant in CBCA 8251, v. DEPARTMENT OF EDUCATION, Respondent. Stuart W. Turner, Amanda J. Sherwood, and Nicole A. Williamson of Arnold & Porter Kaye Scholer LLP, Washington, DC, counsel for Appellant. Candice Jackson and Tim Rushenberg, Office of the General Counsel, Department of Education, Washington, DC, counsel for Respondent. Before Board Judges BEARDSLEY (Chair), SULLIVAN, and VOLK. SULLIVAN, Board Judge. CBCA 8250, 8251 2 Great Lakes Educational Loan Services, Inc. (Great Lakes) and Nelnet Servicing, LLC (Nelnet) (appellants) contracted with the Department of Education (Education) to provide student loan processing services. In 2023, Education modified the contracts to require that appellants pay the federal contractor minimum wage and allow employees to earn paid sick leave. In 2024, Education denied appellants’ claims for the cost of these additional requirements, asserting that the Economic Price Adjustment (EPA) clause in the contracts precluded payment of these costs. We hold that appellants are entitled to recover the cost of those increases, and we will determine the amount in future proceedings. Background I. Contracts and Relevant Terms Pursuant to the contracts executed in June 2009, appellants were to provide “commercial contract services to manage all types of Title IV student aid obligations, including, but not limited to, servicing and consolidation of outstanding debt.” Exhibits 1 at 22, 2 at 95.1 The contracts were indefinite-delivery, indefinite-quantity contracts with a $5,000,000 guarantee for the five-year base period. Exhibits 1 at 3, 2 at 76. The contracts had an initial five-year term from June 2009 to June 2014 with an option to extend for an additional five years from 2014 to 2019. Exhibits 1 at 3, 2 at 76. Through a series of modifications, Education extended the period of performance through December 2023 for Great Lakes and through March 2024 for Nelnet. Exhibits 11, 18. On December 14, 2022, Education issued modifications to the contracts pursuant to FAR 52.217-9, Option to Extend the Terms of the Contract, extending the period of performance on the contracts from December 15, 2022, to December 14, 2023. Exhibits 11, 12. In June 2023, Great Lakes transferred all of its loan servicing volume to Nelnet. Exhibit 20 at 220. In April 2024, Nelnet began servicing borrowers on a new contract and ceased operations on the contract awarded in 2009. Notice of Appeal (CBCA 8251), Exhibit B (Nelnet claim) at 4. Appellants were paid on a per borrower basis pursuant to a common pricing structure established by Education. Exhibits 1 at 16, 2 at 89. The contracts included “an escalation methodology based upon the Bureau of Labor Statistics’ (BLS) Employment Cost Index (ECI) for Total Compensation, Private Industry, Service Occupations (Not Seasonally 1 Unless otherwise noted, “Exhibit XX at XX” refers to the exhibit numbers in the appeal file and the bates numbers appended by the parties. CBCA 8250, 8251 3 Adjusted), to account for significant inflation and/or deflation.” Id. (EPA clause).2 Pursuant to this clause, the Government was obligated to adjust “the established common pricing” by the amount that the cost index increase exceeded three percent. Id. Common pricing was defined to include “all supplies, services and other costs to deliver Title IV servicing under [the] contract.” Id. The contracts incorporated by reference the clauses from Federal Acquisition Regulation (FAR) 52.222-41 (Service Contract Act of 1965 (NOV 2007) (48 CFR 52.222-41 (2008))), and FAR 52.222-43 (Fair Labor Standards Act and Service Contract Act—Price Adjustment (Multiple Year and Option Contracts) (NOV 2006)), which implement the requirements of, respectively, the Service Contract Act of 1965, 41 U.S.C. §§ 351–358 (2006), and the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201–219. Exhibits 1 at 20, 2 at 93.