05 JUSTIFICATION (JOFOC)_CreditSights (Redacted).pdf

1. Identification of the agency and contracting activity.

A. Agency: Pension Benefit Guaranty Corporation (PBGC)

B. Contracting activity: Procurement Department (PD)

C. Program Office (full name & acronym): Corporate Finance and Restructuring Department (CFRD)

2. Nature and/or description of the action being approved.

This will be a Firm Fixed Price contract. The Government anticipates an award date of August 24, 2025. FY 2025 funds will be obligated.

3. A description of the supplies or services required to meet the agency’s needs, including the estimated value. (inclusive of all options)

Supplies or services to be procured:

The Pension Benefit Guaranty Corporation (PBGC), through its Corporate Finance & Restructuring Department (CFRD), requires fifteen (15) commercial subscriptions to a web-based financial risk analysis platform that enables its analysts to perform independent credit assessments of plan sponsors with potentially terminating pension plans. These subscriptions must support the CFRD’s core responsibilities, which include evaluating the credit quality of PBGC-insured companies, preparing for bankruptcy-related credit committee meetings, and determining the financial viability of pension plan terminations.

To fulfill these objectives, the required service must include robust analytical tools and functionalities commonly used by commercial lenders and institutional credit risk analysts. Specifically, the platform must offer:

A suite of quantitative credit risk models capable of producing firm-level short- and medium-term credit risk assessments.

Bond-score models that estimate one-year forward probabilities of default for approximately 4,800 companies.

Proprietary ratings models that produce five-year probability of default term structures for approximately 5,400 companies, yielding stand-alone credit ratings.

Coverage of both public debt issuers and large private companies, including at least 120 significant privately held corporates.

These tools must provide real-time access to financial data, debt obligation information, and relevant market developments, ensuring analysts can benchmark sponsor risk in alignment with market participants such as commercial banks and investment professionals.

The impartiality of the underlying research is essential; the platform must demonstrate analytical independence from the entities it covers to ensure CFRD analysts receive unbiased credit assessments. These features allow CFRD to replicate the due diligence processes used by private-sector lenders, enhancing the defensibility and consistency of PBGC’s termination decisions.

Access shall be continuous during standard business hours throughout the performance period without independence is not just preferable—it is operationally necessary to ensure that pension termination decisions are based on unbiased risk evaluations.

Unique Functional Integration and Quantitative Tools

CreditSights is the only provider identified through market research that integrates the following capabilities into a single platform:

Proprietary Quantitative Risk Scoring: CreditSights scores up to 200 companies each quarter using a forward-looking, 5-point risk scale that evaluates probability of default over a 12-month horizon. These risk assessments include narrative analysis of company-specific liquidity, funding options, and near-term catalysts, providing PBGC with early warning indicators.

Custom Quarterly Reporting: Analysts receive bespoke quarterly reports focused on companies selected by CFRD, helping prioritize review of high-risk pension sponsors.

Bespoke Entity-Level Analysis: The subscription includes custom deep-dive reports on up to five specific entities annually, determined by CFRD based on emergent risk signals.

Integrated Legal Research Resources: CreditSights uniquely bundles access to ERISA and tax law content—including treatises by Perdue, Bittker & Lokken, and McNeil, as well as the RIA Pension & Benefits Week archive—enabling analysts to assess creditworthiness in light of legal obligations and precedents.

No other subscription-based platform evaluated—including S&P Capital IQ, BlackRock Aladdin, MSCI Barra, Moody’s Analytics, or JPMorgan Risk-as-a-Service—offers this combination of real-time credit analytics, integrated legal resources, and customized reporting within a single web-based service.

Summary of Market Research

A review of comparable commercial platforms confirmed that while several offer partial solutions—such as issuer coverage or market data—none replicate the full suite of features required by CFRD. The required combination of independent, conflict-free credit analysis; integrated ERISA/tax law access; and customized quarterly and entity-level reporting appears to be available solely through CreditSights. Further detail on the comparative research is provided in the Market Research Report

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies.

The Contracting Officer shall publish the notices required by FAR 5.2.

7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The cost or price to the Government for this contract action is anticipated to be fair and reasonable. This will be confirmed in accordance with FAR 13.106-3(a)(2).

8. A description of the market research conducted (see Part 10) and the results or a statement of the reason market research was not conducted.

Methodology

To identify a risk analysis subscription service that could meet CFRD’s technical need for timely, company-specific credit evaluations to support pension plan termination decisions, CFRD conducted market research on several commercially available web-based credit risk platforms. The evaluation criteria focused on the following core requirements:

- Integration with CFRD’s proprietary model for short- to medium-term probability of default analysis on a quarterly basis.

- Independent, non-conflicted credit research with an emphasis on distressed and high-yield debt issuers.

- Coverage of public and large private plan sponsors across multiple sectors.

- Deep-dive analysis of capital structure, liquidity, and bondholder recovery prospects.

- Access to legal commentary and pension-specific regulatory resources (ERISA, tax, and case law).

- Customizable entity-level reporting and analyst interaction.

The comparative review focused on five peer platforms commonly used by institutional credit professionals: Moody’s Analytics, S&P Global Market Intelligence, BlackRock’s Aladdin, MSCI Barra, and JPMorgan’s Risk as a Service.

Each was reviewed for functionality, coverage, and suitability to CFRD’s use case. The review involved user experience with existing subscriptions (e.g., Moody’s), vendor documentation, publicly available product information, and internal analyst feedback.

Summary of Market Research Findings

Moody’s Analytics (including RiskCalc and CreditEdge) provides robust, regulatory-grade credit scoring tools with broad issuer coverage and quantitative rigor. CFRD currently uses this system to support ratings-based credit monitoring. However, Moody’s approach is primarily model-driven, lacks real-time analyst commentary, and does not incorporate restructuring-specific legal analysis or plan sponsor-specific ERISA law integration. It is best suited for high-level credit monitoring rather than distressed case forecasting.

S&P Capital IQ and MSCI Barra offer aggregated market data and quantitative tools but do not provide analyst-written research tailored to distressed issuers. Their coverage focuses on portfolio-level risk, and legal insights are limited to broad compliance topics rather than plan sponsor-specific content.

BlackRock’s Aladdin and JPMorgan’s Risk as a Service are comprehensive for portfolio managers but are tightly integrated with internal investment research and trading strategies. These systems may not fully separate analytical content from investment bias, and they lack legal research modules relevant to pension plan terminations.

No vendor evaluated offered an integrated product that combines:

(a) objective, independent, analyst-driven credit research focused on financially distressed plan sponsors.

(b) real-time restructuring surveillance.

(c) pension-relevant legal content.

(d) customized quarterly reporting based on CFRD’s designated company list.

Distinction of CreditSights:

CreditSights was found to be the only vendor offering a consolidated solution that satisfies all identified requirements.

Its platform provides:

- Analyst-generated assessments of distressed companies, with restructuring alerts and scenario analysis tailored to high-risk entities.

- Integration with ERISA and tax legal references through an intuitive web interface.

- Custom quarterly summaries of companies identified by CFRD.

- No financial ties to covered entities, nor any investment or trading operations, ensuring independence in analysis.

CreditSights is not selected solely for brand recognition or market reputation; rather, it is the only platform, based on documented market research and internal usage feedback, that provides the functional integration and analytical depth necessary to support PBGC’s statutory responsibilities. While peer platforms offer value for portfolio-level or regulatory use cases, they do not satisfy the full spectrum of features CFRD requires for sponsor-specific, event-driven pension risk assessment.

9. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

Select applicable statement:

☒ See Paragraph 6 for synopsis information. To date, no other sources have written to express interest in the acquisition.

☐ See Paragraph 6 for synopsis information. The list of potential sources and analysis has been documented in the Market Research Report (attached).

10. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

It is critical to CFRD's mission to have access to the same financial information used by commercial lenders in a timely manner so that PBGC can stay ahead of the market. CFRD analysts have been utilizing various industry subscriptions that provide information on bankruptcies, company distresses, and credit ratings to make determinations for their caseloads. They must have access to multiple subscriptions because many of the available subscriptions are utilized by banks, and the unique/subjective focus of the information each source gathers and analyzes often have altering or contradictory analysis of real-time business intelligence. Relying wholly on one subscription’s services would not give CFRD a broad enough picture of the possible risks of a plan sponsor.

The need to have comparable information has led to and will continue to result in ongoing research into the various subscriptions available on the market, as well as product testing and eventually subscription contracts for most of the platforms. As different capabilities are developed and CFRD’s mission requirements change, PBGC and CFRD will re-evaluate the need to sole-source any recompete of this requirement.

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