Purdue University’s System-wide OPM Contract With Kaplan Higher Ed
Purdue University made its big announcement in Spring 2017 about the agreement to acquire Kaplan University and turn it into what is now known as Purdue University Global. Purdue further made news one year ago by announcing a centralized office to coordinate all online activities of the system – Purdue Online. What has not been made public is that Purdue also signed a Master Services Agreement one year ago with Kaplan Higher Education (KHE) to make it effectively a system-wide Online Program Management (OPM) vendor for online programs across all four campuses.
Historically OPM partnerships were program-specific, made with little oversight in a period that has been called “deans gone wild”. As online opportunities expanded and the OPM market grew, there were cases of multiple OPM contracts within the same institution, either a mix of OPM providers, multiple programs using the same OPM provider, or a mix. This trend towards centralization, or coordination, is now leading to institution-wide OPM contracts. This Purdue – Kaplan agreement represents perhaps the most significant case, while 2U’s recent agreement with the University of North Carolina represents another. Thanks to a public records request, we can get a much better understanding of this new OPM model.
Continuation of a Vision
While this institution-wide OPM contract has not been made public before today, there have been hints that this move might happen, including Purdue president Mitch Daniels’ presentation of the Purdue Global case to state officials in 2017.
If we jump forward to December 2018, Purdue officials received approval from the Purdue Board of Trustees to establish Purdue Online as a new organization. As described by Inside Higher Ed a year ago:
Not mentioned with the announcement of Purdue Online, however, was that the university signed a Master Services Agreement – dated January 1, 2019 – with Kaplan Higher Education. This contract gives Kaplan essentially the right of first refusal to be the OPM partner for online programs across the system.
The services to be provided are separated into basic and enhanced (pp 2-3), where basic is the minimum set of services to be provided and enhanced are optional services.
Exhibits A shows the basic services that include program and portfolio strategy, student recruitment, and reporting and analytics.
Exhibit B shows the enhanced services that can include, well, almost anything to be done in an online program. Including teaching and delivery. Everything except application decision and admissions policy.
Kaplan is now the limited exclusive provider of program services for Purdue’s online initiatives (p 5):
This contract has reversed the dynamic of an OPM being selected for a program. KHE is now the provider for all online programs unless they are listed as an exception in the contract, or in the case that Purdue and Kaplan mutually agree to not work together on a program.
Exclusivity and Non-Competition
In section 6.2.1 on p 6, the contract specifies that for any new statement of work (SOW) governing a specific online program, Purdue may not use another vendor for similar services.
Furthermore, Purdue has agreed to not allow programs to compete with each other (section 6.2.2 on p 6).
What is almost as interesting as what the contract says is what Purdue University chose to redact as part of the public records request.
One example is section 4.1.1 (p. 4), which describes Purdue’s obligations on which programs that Kaplan has the exclusive right to bid upon and the mechanics of how this limited exclusive provider works out in practice. I am not sure how this is considered a trade secret or confidential information.
Another example of redactions is the mechanics of payments. It is perhaps not surprising, however, that Purdue chose to redact the entirety of Exhibit F, which describes the “distribution waterfall” of how Kaplan gets paid. In the case of Purdue Global, the waterfall is mix of fee-for-service and revenue sharing provisions, with defined priorities of which party gets paid first, second, etc based on program revenue. None of this information was shared in the response to the public records request. I could see redacting specific revenue sharing percentages, but the basics of the distribution waterfall should be a public Purdue issue, not a proprietary Kaplan issue.
The net effect is that Kaplan has an institution-wide OPM contract for almost all of the system’s online offerings moving forward, with Kaplan provided exclusivity and non-competition status. I do not believe that any of this information has been competitively bid or shared with the university community, and it certainly has not been described publicly.
I have requests out to both Purdue University official channels and with several faculty member on the following. When I get answers from Purdue I will share an update.
The Kaplan agreement (the one for OPM services outside of PG) is significant. Can you describe how Kaplan was selected as your institution-wide partner? In other words, was there a competitive process, or was this tied to PG contract, or some other decision process?
Which university groups have been briefed on the agreement and its implications?
I was surprised that the entire section on distribution waterfall was redacted. Can you describe how the mechanics are different than PG waterfall (don’t need specific numbers like rates or rev share percentages)?
How many programs outside of PG are using Kaplan for OPM services now that the contract is a year old?
The Master Services Agreement
I have further thoughts on this agreement, what it means for Purdue, and what it means for the OPM market. But I will leave this commentary for a future post while waiting to see if I can get answers on some of the questions above.
I appreciate Purdue University’s timely response to the public records request. You can download the MSA here or view below.
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