Attachment 1 - RFP QandA.xlsx
XLSX spreadsheet 30 KB Posted
- Solicitation number
- 1554
- Issued by
-
Pension Benefit Guaranty Corporation
About this file
This document is a set of Questions and Answers related to a Request for Proposal (RFP) issued by the Pension Benefit Guaranty Corporation (PBGC) for Custodian Banking Services. The RFP seeks a custodian bank to provide global master custody services for the safekeeping and asset servicing of the PBGC's plan assets.
Key details include:
- The RFP will result in a single contract award for the required Custodian Banking Services.
- The PBGC will not accept securities lending on a non-custody basis.
- The custodian will be required to provide daily pricing and valuation of assets, as well as accounting services for any private market investments held.
- The PBGC currently utilizes various benchmark indices and may use custom benchmarks.
- Pricing is requested on a menu-based fee structure, with annual volumes provided for various services.
- The PBGC is open to considering the custodian's securities lending program but will not use a third-party securities lender.
- The current contract ends on 3/30/2025 and the PBGC has not determined a specific conversion date for a new provider.
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Sheet1
| ATTACHMENT 9 | ||||
| Questions and Answers | ||||
| Amendment 00002 - Custodian Banking Services | ||||
| Solicitation Number: | 16PBGC24R0010 | |||
| PART # | PARAGRAPH # | PARAGRAPH TITLE | QUESTION | GOVERNMENT RESPONSE |
| N/A | N/A | N/A | Why is this RFP being issued? | The Request for Proposal Attachment 1 - Statement of Work provides the PBGC requirements and the need for these service. |
| N/A | N/A | N/A | Are there any pain points or challenges that the plans are looking to address? | It is an Offeror’s responsibility to submit a well written proposal that establishes its capability and the technical merits of its proposed approach, that clearly demonstrates compliance with the solicitation, and allows for meaningful review by the agency in accordance with the terms of the solicitation. |
| N/A | N/A | N/A | Would PBGC consider multiple providers for this RFP, specifically for optional services? | No, in accordance with the Request for Proposal, Section M.2 - Single Contract Award, the PBGC will only award a single contract to fulfill the Custodian Banking Services requirements. |
| N/A | N/A | N/A | Please describe any upcoming material changes in the way the organization might invest going forward – changes in consultants, portfolio construction, and/or asset allocation | PBGC's most recent Investment Policy Statement was approved in August 2023 and is publicly available. The Board will review the Investment Policy Statement at least every two years and approve the Investment Policy Statement at least every four years. An investment objective of the current policy is to utilize Liability Driven Investment (LDI) techniques to minimize the risk of future deficits. |
| N/A | N/A | N/A | We noticed benefit payments is not in scope for this RFP, is there a plan to issue an RFP for that? if so, what is the timeline? | The Benefit Payments requirement is covered under another contract. |
| Attachment 4 | Attachment 4 – Phase II Procedures, Processes, and Policies Verification | N/A | Please clarify the requirement to make current and prior fiscal year data available online. Will the incumbent service provider maintain these records, or will the incumbent service provider send the data to the new service provider to be uploaded onto their platforms? If the latter, will the new service provider be expected to answer questions related to accounting data for which they were not responsible? Also, how much detail will need to be stored, simple data like NAVs and shares or complex data like complete GLs and trial balances? | Section 13.0 Transition of the SOW provides the requirements for this service. The new service provider will not be expected to answer questions related to accounting data for which they were not responsible but the historical data will need to be available for PBGC. |
| Custodian Banking Services | L.8.1 | L.8.1 Phase II, Factor 2 – Technical Approach | Can you please provide a sample of the current QCP? | No, it is an Offeror’s responsibility to submit a well written proposal that establishes its capability and the technical merits of its proposed approach, that clearly demonstrates compliance with the solicitation, and allows for meaningful review by the agency in accordance with the terms of the solicitation. |
| 6 | All | Will you accept securities lending on a non-custody basis? | No. | |
| N/A | N/A | N/A | What would a custodial bank need to offer or demonstrate for each plan to consider moving away from its current provider? | The Custodian Banking Services Request for Proposal is to seek a custodian bank to service the PBGC's requirements in accordance with Attachment 1 - Statement of Work. It is an Offeror’s responsibility to submit a well written proposal that establishes its capability and the technical merits of its proposed approach, that clearly demonstrates compliance with the solicitation, and allows for meaningful review by the agency in accordance with the terms of the solicitation. |
| N/A | N/A | N/A | Please describe the organization’s overall approach to portfolio management, including the following information: |
1. Does the organization use consultants or OCIOs to make investment decisions or does the organization retain investment & manager selection in-house?
A. If the latter, is the organization directly trading securities with in-house portfolio managers, or largely using external managers?
| B. Are there any other unique constructs to the portfolio construction, such as master/feeder structures, comingled pools, portable alpha strategies, or overlay programs? | As noted in the Investment Policy Statement (IPS), PBGC staff will be responsible for the hiring, firing, conducting due diligence and oversight, and contract management of the external professional money managers. All discretionary investment decisions (other than short-term cash holdings in the Revolving Fund) will be managed by external professional money managers. The PBGC's lead LDI manager has responsibility for maintaing a Liability Driven Investment hedge ratio consistent with the IPS. PBGC does have a general investment consultant. | ||||
| N/A | N/A | N/A | If the organization allocates to alternative investments, please note whether these investments are through funds of funds, direct limited partnerships, co-investments, and/or direct investments into private companies? | The IPS allows Private Equity, Private Debt and Private Real Estate to be retained after they have been received from terminated and trusteed pension plans. The current IPS also allows for new investments in private real estate but, to date, the PBGC has not allocated to this area. While the PBGC could receive or hold private market investments or the types of investments noted in the question, it has historically not been a material portion of the program. PBGC’s custodian provides accounting services for these inherited private assets, but not custody services. | |
| N/A | N/A | N/A | Please list any software used by the organization today in the following areas: |
a. Portfolio Accounting
b. Alternative Investments / Private Assets
c. Portfolio Management / Investment Book of Record
d. Performance Measurement
e. Risk Measurement
f. Liquidity and/or Exposure Management
g. Document Management / CRM
| h. ESG | No, software are used for a through h areas. | |||
| N/A | N/A | N/A | Please list any other service providers in the below categories: |
a. Investment Consultants
b. Fund Administrators
c. Prime Brokers or other custodians
d. Recordkeepers
e. Market Data & Analytics Providers
| f. Class action monitoring service provider. | The Custodian Banking Services Request for Proposal is to seek a custodian bank to service the PBGC's requirements in accordance with Attachment 1 - Statement of Work. It is an Offeror’s responsibility to submit a well written proposal that establishes its capability and the technical merits of its proposed approach, that clearly demonstrates compliance with the solicitation, and allows for meaningful review by the agency in accordance with the terms of the solicitation | ||||
| N/A | N/A | N/A | Please describe any processes the organization uses today to shadow and/or reconcile current custodial data, including systems & methods utilized as well as frequency. | The firm will utilize custom reports prepared by PBGC to reconcile custodian data. | |
| Custodian Banking Services | Section L.8.6 | Business/Price Proposal | Are the fees intended to be flat annual fees or are they just totals of the Menu Based fees? | The fees are not intended to be flat annual fees. The offeror is required to provide a fixed fee or rate for each menu based service and optional service listed in Attachment 2 – Pricing Schedule of the contract and an annual firm fixed-price for the on-site consultant services. | |
| Custodian Banking Services | Section L.8.6 | Business/Price Proposal | Please confirm SF 33 is required and confirm the sections the Contractor should complete. | The PBGC has revised the language of the Request for Proposal, Section L.8.6 pagraprah d. to read: "If Amendments to the solicitation are issued, all Offerors must acknowledge the Amendments by signing the accompanying Standard Form 30 and returning the signed Standard Form 30 for all Amendments issued with the Offeror’s proposal submission. Failure to acknowledge all Amendments issued by the Government may result in the proposal submitted in response to the RFP being found non-responsive by the Government." | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | How will the Contractor receive the information on holdings and transactions given an automated feed will not be provided? What data elements will be provided? | Information and needed data elements for the Revolving Fund would be provided to the Contractor by PBGC's Financial Operations Department. There is no automatic feed. | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | How many accounts hold the assets? How many positions are there? | Revolving Fund investments are currently held four accounts. The number of positions vary (typically less than 150) but assets are held in a predominately buy and hold limited trading account. | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | What is an annual transaction volume? | Transaction volume varies but assets in the Revolving Fund are held in a predominately buy and hold limited trading account. | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | What is the frequency of performance? | Performance is measured on a monthly basis. | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | Does the Contractor need to reconcile with the Bureau of Public Debt? | No, the reconcilation is with PBGC's Financial Operations Department. The Bureau of Public Debt is the Custodian for the Revolving Fund assets. Information needed for performance reporting will be provided to the Contractor. | |
| Attachment 1 - Statement of Work | Section 2. Introduction | The Revolving Fund | Who is PBGC's Risk Management provider? | PBGC's risk management provider is BlackRock Financial Management, Inc. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | Does the ‘Check Processing Services’ refer to Collections? | No. Per Section 3.1.8 of the Statement of Work, Check Processing Services refers to the collection of deposits. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | Are the checks USD or Foreign Currency? | USD. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | Do you require credit to the account within several days? | credit must be in the account when the funds are setlled or available. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | Is the volume of 260 in the pricing schedule annual or monthly? | Monthly | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | If these are domestic check deposits, would you consider using a scanner or mobile device to deposit them? | No. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | As it relates to check processing, is it a requirement for work to be done in a separate area from other clients? | Yes. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.8 Check Processing Services | Is work permitted to be completed outside of the US? | No. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.9. Accounting Capabilities, item h and 3.3.6 Daily Valuation of Assets | Does the PBGC require the striking of an audited daily NAV or is monthly valuation required along with daily pricing of assets? | Daily pricing of assets is required. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.18. Bank Loans | Please provide market values of the bank loans by the tiers provided in the pricing schedule as well as annual transaction volumes by tier. | No. Please refer to the assumptions provided in the Pricing Schedule. | |
| Attachment 1 - Statement of Work | Section 3.1 Custodian Bank Services | 3.1.18. Bank Loans | Please provide clarification on what is meant by the requirement for the Contractor to service the loans as agent. What are the responsibilities of the contractor? | The requirements are provided in the SOW section 3.1.18. | |
| Attachment 1 - Statement of Work | Section 3.3 Custodian Bank Services | 3.3.13 Liquidations | What is the average number of acquisition or liquidation events that happen in a typical month? | There is no typical month but we average 67 acquistions/liquidations per month. | |
| Attachment 1 - Statement of Work | Section 5 Investment Services and Support | 5.2.1.5 Ad hoc Securities Lending Services | Do you intend to continue to participate in the custodian's securities lending program or are third party lenders being considered? | The PBGC intends to utilize the custodian's securities lending program. | |
| Attachment 1 - Statement of Work | Section 13 Transition | 13.1.3 Transition Plan | Is the Transition Plan included in the 300 page limit for the Technical Response? | Yes, per Request for Proposal, Section L.8.1 and table L.6.1. | |
| Performance Measurement and Analytics Questions | |||||
| Attachment 1 - Statement of Work | General Question on Performance Measurement and Analytics | Is Look Through Analytics required for the commingled funds? | No. | ||
| Attachment 1 - Statement of Work | General Question on Performance Measurement and Analytics | What vendor indices are required for benchmarking? Please provide your benchmarks as well as any custom benchmarks. | PBGC currently utilizes Bloomberg, JP Morgan, MSCI, FTSE Russell and Dow Jones S&P indices. PBGC utilzes certain custom benchmarks, primarily via Bloomberg. | ||
| Attachment 1 - Statement of Work | Section 6 Custodian Bank Support | 6.2.2 TUCS reporting | Can you please provide a sample of histogram style reports? | No. PBGC would work with the Contractor as part of any transition to a new provider to arrive at needed reporting. CID exhibits S, T, U, and V relate to TUCS reports. | |
| Attachment 5 PM&A Questionnaire | Question 23 | Please provide additional detail on the intent of this question. Is this related to Compliance Monitoring? | The question is not related to Compliance Monitoring | ||
| Attachment 7-Exhibits | CID R | Transition Account Performance | What do the abbreviations AW DVA, AW ABAL, and PNA stand for? | The "abbreviation" AW is a weight metric while ABAL refers to average balance. Average Balance (ABAL) is the denominator in the Modified Dietz approximation of an Internal Rate of Return (IRR). Modified Dietz approximates the IRR by dividing the total Dollar Value Added (DVA) by the ABAL. The ABAL is the sum of the portfolio’s beginning market value plus weighted (discounted) daily net cash flows into or out of the portfolio. The PBGC generally utilizes these calculations as proofs to confirm IRR calculations on its monthly investment reporting. |
PNA stands for Performance & Analytics.
| Attachment 7-Exhibits | CID W | PBGC Benchmark Proofs | Are there any calculations or just a visualization of the benchmark membership nesting? | This is a visualization but does provide context to the structure on PBGC investment reporting. |
| Attachment 7-Exhibits | CID N | Benchmark History | Can you please provide the data points included in the report, it is all blacked out including headers. | This would be viewed as proprietary but would be provided to the Contractor as part any transition to a new provider. |
| Attachment 7-Exhibits | CID SOW B | Cash Collateral Fund Holdings List | Can you please confirm this is for securities lending securities only? | Yes, this is a template that might be used for securities lending. |
| Attachment 7-Exhibits | CID P | Allocation Estimate Report | Can you please provide the calculation methodology of the 60/40 estimated MV and PBGC Return calculation? If selected, would PBGC be able to share actual excel file with calculations with BNY? | No, the PBGC will not provide the calculation methodology of the return calculation. Yes, the information needed would be provided to the Contractor as part of any transition to a new provider. |
| General FX Question | Do you plan to use a passive FX overlay program to hedge foreign currency/holding exposures, or a share class program? | No. | ||
| General Question | If a new provider is chosen, what is your anticipated conversion date. | The current contract ends on 3/30/2025. | ||
| Attachment 2-Pricing Schedule Questions | ||||
| Menu Based Services | 1. Custodian Account Fee | What do the 90 Standard Transaction accounts represent? Are these separately managed accounts? | This should say Standard Transition. We currently have 7 accounts that we are billed for monthly. The 90 represents an annual amount. Attachment 2 - Pricing Schedule is revised to reflect the change from Standard Transaction to Standard Transition. | |
| Menu Based Services | 1. Custodian Account Fee | For the account volumes listed in the Custodian Account Fee Section, please provide the number of separately managed accounts and number of line items broken down by commingled funds, mutual funds, LPs, hedge funds, etc.. | No. | |
| Menu Based Services | 2. Asset-Based Fee per Country | Please provide the market value of separately managed US assets. Please also provide the market value of all line items (commingled funds, mutual funds, LPs, hedge funds, etc..) | The market value for US assets is approximately $64 billion. | |
| Menu Based Services | General Question | Please provide the number of holdings/positions for the separately managed assets by country including the US. | As of 09/30/2024, approximatley 25,000 securities. | |
| Menu Based Services | 3. Custody Fees | What does the volume of 25,000 represent? | Annual transactions. Attachment 2 - Pricing Schedule is revised. Attachment 2 should reference 3.1.6 of the SOW - Provide custody, income collection and receivable accounting for any mortgages, notes, partnership interests, installment payouts, and other similar assets. And 3.1.7 of the SOW - Ad Hoc Services. Escrow Account Mortgages maintained on the books of the Custodian Bank shall require; an escrow account, (annual statement of escrow funding required to cover estimated escrow payments), payments of insurance, annual interest statements and payment of municipal taxes. | |
| Menu Based Services | 4. Transaction Fees per country, 6. Wire Transfer fees, 8. Foreign Exchange Transaction Fees, 9. Transition Cost, | Are all of the volumes provided annual volumes? | Yes, all of the volumes provided are annual volumes. | |
| Menu Based Services | 8. FX Transactions | Please provide FX volumes for 12 months, separately for Custody FX and Directly Negotiated. Please identify whether the volumes are in developed or emerging markets or provide volume by currency. | The number of FX transactions wa 9,100 in 3 months. PBGC has approximately 35-40 diff foreign currency and the average balance of foreign currency per month for FY24 is $49M. | |
| Menu Based Services | 8. FX Transactions | Please provide the annual volume of third party FX transactions. | The assumption on the pricing schedule is 17,000 annually. | |
| Menu Based Services | 11. Pricing of OTC and Centrally Cleared Derivatives | Is 4,000 the number of positions? Please provide the number of derivative positions broken down by type, i.e., futures, options, swaps, OTC derivatives, centrally cleared, etc.. | The 4,000 assumption is the number of annual transactions, not positions. | |
| Menu Based Services | 12. STIF Fee | What do you use today for a short term cash investment vehicle? | Custodian Bank STIF. | |
| Menu Based Services | General Question | The pricing schedule does not contain a section in which to provide fees for performance measurement and related services. If these are required services, please advise how you would like to have these fees included in the pricing schedules. Can we add a section to the Menu Based tab to include the pricing? | Any performance measurement fee should be included in the firm fixed fee per the transaction. | |
| Other Services Pricing | 2. Transition Management Services | For fixed income transitions, please provide your expectations for notional value transitioned by: Country; Fixed Income Asset Type: Gov't bonds, Investment Grade corporates, High Yield corporates and any other asset types. | This is unknown but not likely to include a meaningful proportion of High Yield corporates. | |
| Other Services Pricing | 2. Transition Management Services | For equity transitions, please provide your expectations for notional value transitioned by: Developed Markets and Emerging Markets. | This is unknown but could include both Developed and Emerging Market Equities. Please see the 2023 IPS for more information related to asset allocation. | |
| Other Services Pricing | 2. Transition Management Services | For U.S. and Canada equity transitions, please provide your expectations for number of shares to be transitioned. | Refer to Attachment 2 - Pricing Schedule. A breakdown per country will not be provided. | |
| Securities Lending | What is the aggregate value on loan per asset class? | Refer to securities lending tab. | ||
| Securities Lending | We understand that there is a high level summary of lendable assets that provides general characteristics of each asset type. In order to provide the most accurate and detailed revenue estimate, please provide a detailed asset listing (e.g. cusips/sedols, shares, market value, par value, security description, etc.) for all assets eligible for loan (in excel) for analysis. | No further detail will be provided. | ||
| Section I - Contract Clauses | I.39, PBGC 52.239-7007, Managed IT Services | If the contractor is in alignment with the NIST Framework for Improving Critical Infrastructure Cybersecurity and also meets ISO/IEC 27001, would this be sufficient for meeting the NIST 800 information security requirements set forth in the RFP or is explicit NIST 800 compliance a prerequisite? | The contractor is responsible for the NIST 800 compliance in accordance with PBGC 52.239-7007, Managed IT Services. | |
| Section I - Contract Clauses | I.39, PBGC 52.239-7007, Managed IT Services | Does PBGC require the contractor undergo a PBGC Security Assessment & Accreditation to achieve an Authority to Operate (ATO)? or FedRAMP Certification? If so, what is the timeline being given to obtain the ATO by? | No. | |
| Statement of Work | Section 3.1.8, Check Processing | Please describe the nature, source and purpose of the checks the Custodian will be receiving and processing as described in Section 3.1.8 of the Statement of Work. Will the checks contain Personally Identifiable Information (PII)? | The source of the checks are from Plan Sponsors, including payments for Employer Liabilities and Unpaid Employer Contributions. The checks do not contain Personally Identifiable Information (PII). |
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