20-PA1858 SOW Pension Fund Consulting Services.pdf

PA1858 Pension Fund Consulting Services

SPECIFICATIONS / SCOPE OF WORK

1 GENERAL OVERVIEW

1.1 The Dallas Fort Worth International Airport Board (hereafter called the “Airport”) seeks a pension consultant to support the Dallas Fort Worth International Airport Board Retirement Trust (hereinafter referred to as “the Trust”). The Trust serves as the master trust for the Airport’s two defined benefit plans, and it also oversees the defined contribution plans offered by the Airport.

2 BACKGROUND

2.1 As of year-end 2024, the Trust supports approximately 3,000 active and retired members across the two defined benefit plans. The general employees’ plan, established in 1978, was closed to new entrants in 2010. The public safety plan was incorporated into the Trust in 1999. In addition, the Airport sponsors a 457 voluntary deferred compensation plan and a 401(a) mandatory money purchase plan for general employees (collectively referred to as “DC Plans”), which served approximately 900 participants as of September 30, 2024.

2.2 The Trust is a qualified plan under Section 401(a) of the Internal Revenue Code and operates under the oversight of the Airport Board of Directors and the Texas Pension Review Board. The Board is the governing body of the Airport and serves as the trustee for the defined benefit retirement plans. The Retirement Trust is administered by the Chief Financial Officer and the Vice President of Treasury Management, with day-to-day management carried out by the Retirement Funds Portfolio Manager.

2.3 The Airport also offers 457 voluntary deferred compensation plans and 401(a) mandatory money purchase plans for general employees (the “DC Plans”). As of December 31, 2024, the DC Plans included approximately 900 employee participants. While the Board approves the Defined Benefit (DB) Plans, it is not involved in the management or investment decisions of the DC Plans. Instead, the DC Plans are overseen by the internal DFW Defined Contribution Committee (the “DC Committee”), which is comprised of the Chief Financial Officer, Executive Vice President of Administration & Diversity, Vice President of Treasury Management, Vice President of Human Resources, and Assistant Vice President of Total Rewards.

3 SCOPE OF WORK

3.1 The Airport seeks an investment consulting firm(s) (the “investment consultant” or “Contractor”) to provide fiduciary guidance and strategic support for both the defined benefit and defined contribution plans. The consultant must deliver comprehensive investment advisory services including, but not limited to, policy development, asset allocation strategy, investment manager due diligence, performance measurement, alternative asset support, risk management, and compliance reporting.

These services are to be rendered over a five-year contract period, with the consultant acting as a fiduciary to the Board and subject to all applicable provisions include in the Special Provisions and General Terms and Conditions.

3.2 The investment consultant is expected to attend four to six Investment Committee meetings per year at the Dallas Fort Worth International Airport headquarters.

Employee DPS Employee DPS Active Members 348 379 361 369 Retirees and Beneficiaries 1,616 248 1,605 243 Inactive, vested 325 52 342 48 Total 2,289 679 2,308 658

2024 2023

3.3 Plan benefits as of December 31, 2024 are included as follows:

3.3.1 Attachment A – Defined Benefit Portfolio

3.3.2 Attachment B – DC Plans Portfolio

3.3.3 Attachment C – Actuarial Reports

3.3.4 Attachment D – Audited Financial Statements

4 MONTHLY SERVICE SCOPE

4.1 The fee structure for the investment consulting services shall adhere to the following requirements:

4.1.1 All-Inclusive Fees: All proposed management fees must be fully inclusive. No separate charges will be permitted for travel, administrative expenses, or any other incidental costs.

4.1.2 No Additional Up-Front Fees: The investment consultant shall not assess any up-front fees related to custodial services, fund management, or transitions between investment funds.

4.1.3 Best Efforts on Cost Efficiency: The investment consultant shall use its best efforts to recommend and maintain the most cost-effective custodial and fund management fee structures available, consistent with the investment objectives of the Retirement Trust and DC Plans.

4.2 Fiduciary Responsibility and Contractual Obligations:

4.2.1 The investment consultant shall serve as a fiduciary to both the Board and the Airport. The consultant shall be bound by, and subject to, the indemnification provisions and all other applicable terms and conditions outlined inSpecial Provisions and General Terms and Conditions , with respect to services provided for both the Retirement Trust and the Defined Contribution (DC) Plans.

5 CONTRACTOR RESPONSIBILITIES AND DELIVERABLES

5.1 Services shall include, but are not limited to, the following:

5.1.1 Investment Policy Review and Development

5.1.1.1 Assist in the development, review, and periodic updates of Investment Policy Statements (IPS) for both defined benefit and defined contribution plans.

5.1.1.2 Ensure policies reflect fiduciary standards, strategic objectives, and regulatory compliance.

5.1.2 Asset Allocation and Liability Analysis

5.1.2.1 Conduct asset-liability studies and provide strategic asset allocation recommendations.

5.1.2.2 Model risk and return scenarios to support long-term funding and benefit objectives.

5.1.3 Investment Manager Search and Due Diligence

5.1.3.1 Recommend, identify, and evaluate investment managers across asset classes.

5.1.3.2 Conduct thorough due diligence, including qualitative and quantitative analysis, and assist in manager transitions as necessary.

5.1.4 Performance Monitoring and Reporting

5.1.4.1 Provide detailed quarterly performance reports for all investment options, benchmarks, and total fund performance.

5.1.4.2 Offer attribution and risk analysis to evaluate the effectiveness of investment strategies.

5.1.5 The Contractor shall deliver timely, accurate, and comprehensive investment performance reports on a quarterly basis, or more frequently as required. Reports shall include, but not be limited to:

5.1.5.1 Net and gross returns for each investment option, manager, and the total fund

5.1.5.2 Comparisons against appropriate market benchmarks and peer groups

5.1.5.3 Performance attribution by asset class, manager, and strategy

5.1.5.4 Risk metrics such as standard deviation, Sharpe ratio, beta, and drawdown

5.1.6 The Contractor shall provide written and verbal commentary summarizing market conditions, key drivers of performance, and strategic recommendations.

5.1.7 Upon request, the Contractor shall support performance audits or due diligence reviews by providing documentation and explanations of assumptions, methodologies, and data sources used.

5.1.8 The Contractor shall maintain consistent reporting formats and terminology to facilitate long-term tracking and comparison, while remaining flexible to accommodate evolving client preferences.

5.1.9 Alternative Investments and Private Markets

5.1.9.1 Support sourcing, evaluation, and ongoing monitoring of alternative investments including private equity, private credit, real assets, and hedge funds.

5.1.9.2 Assist in reviewing and negotiating fund terms and fee structures.

5.1.10 Fee Analysis and Benchmarking

5.1.10.1 Provide periodic benchmarking of investment manager fees and other plan costs.

5.1.10.2 Recommend cost-saving opportunities without compromising investment quality.

5.1.11 Defined Contribution Plan Support

5.1.11.1 Advise the DC Committee on fund lineup design, default investment strategies (e.g., target-date funds), and provider searches.

5.1.11.2 Support fiduciary oversight, education efforts, and fee benchmarking for the DC Plans.

5.1.12 Education and Client Support

5.1.12.1 Attend Retirement Committee meetings (normally held quarterly) and any other meetings as necessary.

5.1.12.2 Provide education to the Airport, DC Committee, and staff on investment topics, fiduciary responsibilities, and governance best practices.

5.1.12.3 Assist with the development of Board and Committee presentations and participate in regular meetings as requested.

5.1.13 Ad Hoc Analysis and Special Projects

5.1.13.1 Conduct research, analysis, or implementation support for emerging investment strategies, governance matters, or regulatory changes at the request of the Trust or DC Committee.

5.1.14 Fiduciary Responsibility

5.1.14.1 Acknowledge fiduciary status in writing and perform services in the best interest of plan participants and beneficiaries in accordance with applicable laws and standards.

5.2 Investment Consulting Philosophy and Process

5.2.1.1 The Contractor shall articulate a clear and consistent investment consulting philosophy that guides all strategic and tactical recommendations provided to the Airport and its governing bodies. This philosophy shall include a prudent, long-term approach to asset management aligned with fiduciary principles.

5.2.1.2 The Contractor shall maintain a defined investment consulting process that is transparent, research-based, and repeatable. This process shall include:

5.2.1.3 Identification and evaluation of client objectives, constraints, and risk tolerance

5.2.1.4 Development of customized investment strategies that reflect plan demographics, funding status, and market conditions

5.2.1.5 Ongoing assessment of economic, capital market, and regulatory environments that may impact plan strategy

5.2.1.6 Integration of environmental, social, and governance (ESG) considerations, as applicable and desired by the Airport

5.2.3 The Contractor shall tailor its approach to align with the unique characteristics and needs of both defined benefit and defined contribution plans and provide proactive guidance that anticipates market trends and regulatory changes.

5.2.4 Recommendations shall be based on the best available data, tools, and analytics, and be presented in a manner that is clear and understandable to both technical and non-technical stakeholders.

5.3 Research

5.3.1 The Contractor shall maintain a robust, independent research capability to support all investment consulting services. This includes both proprietary research and the integration of third-party data and analytics.

5.3.2 Research responsibilities include, but are not limited to:

5.3.2.1 Monitoring of global economic trends, capital market forecasts, and legislative or regulatory developments

5.3.2.2 In-depth evaluation of asset classes, investment styles, and manager strategies

5.3.2.3 Comparative analysis of traditional and alternative investment options, including risk/return tradeoffs, liquidity characteristics, and implementation costs

5.3.2.4 Identification of innovative or emerging investment opportunities relevant to pension portfolios

5.3.3 The Contractor shall proactively share key research findings with the Airport and provide tailored insights that support decision-making and long-term planning.

5.3.4 Upon request, the Contractor shall produce research reports or white papers on topics of interest to the Trust, Board, or Committees, including new investment structures, ESG integration, risk management frameworks, and plan governance practices.

5.3.5 Research must reflect a commitment to independence, transparency, and alignment with the fiduciary interests of plan participants and beneficiaries.

6 PROJECT TIMELINE

WEEK KEY ACTIVITIES & DELIVERABLES

WEEK 1: INITIATION & DATA

TRANSFER

- Kickoff meeting with Airport/Trust and prior consultant (if applicable)

- Finalize contract scope, key contacts, and expectations

- Collect essential documents (IPS, reports, asset data, manager info)

- Develop Change Management Plan: communication strategy, identify stakeholders, anticipate challenges

WEEK 2: INITIAL ASSESSMENT &

STAKEHOLDER ENGAGEMENT

- Conduct baseline portfolio and performance review

- Meet with Investment and DC Committees and staff to present initial findings

- Deliver fiduciary education and overview of consulting philosophy/process

- Begin regular transition communications and training sessions

WEEK 3: POLICY REVIEW &

PERFORMANCE REPORTING SETUP

- Review and draft updates to Investment Policy Statement

(IPS)

- Deliver first draft quarterly performance report template

- Conduct manager and fee benchmarking analysis

- Continue stakeholder feedback and training to address questions or concerns

WEEK 4: FINALIZE TRANSITION &

GOVERNANCE PLANNING

- Present updated IPS and performance reporting process

- Provide investment manager recommendations and fee benchmarking summary

- Finalize annual governance calendar and reporting schedule

- Confirm ongoing support expectations and next steps

- Wrap-up Change Management activities with feedback and support plan

7 MINIMUM QUALIFICATIONS

7.1 Contractor must meet all of the minimum qualifications listed below to be considered for award.

7.2 Minimum Qualifications

7.3 Defined Contribution Plan Consulting Experience – Large Clients The Investment Consultant must currently provide defined contribution investment consulting services to at least three (3) U.S. tax-exempt clients, each with total defined contribution plan assets of at least $1 billion as of December 31, 2024.

7.4 Defined Contribution Plan Consulting Experience – Mid-Sized Clients The Investment Consultant must have at least five (5) years of experience providing investment consulting services to U.S. tax-exempt clients, each with total defined contribution plan assets of at least $250 million.

7.5 Lead Consultant Experience

The individual serving as the Lead Consultant assigned to the Airport account must have a minimum of ten (10) years of experience in the public or private sector defined contribution plan area.

7.6 Fiduciary Responsibility

The Investment Consultant must agree to act as a fiduciary to the DFW Airport Board Retirement Trust.

7.7 Regulatory Registration

The proposing firm must be currently registered as an investment advisor under the Investment Advisers Act of 1940.

7.8 Confidentiality Requirement

7.8.1 All information contained in this Scope of Work, as well as any subsequent information disclosed regarding the DFW Airport Board Retirement Trust, is considered confidential and is intended solely for the purpose of preparing your response to this request. This information shall not be used for any other purpose or disclosed publicly without prior written consent from the Airport Board.

8 PAYMENT TERMS (A detailed breakdown of payment schedules, including upfront fees, monthly service charges, and any other associated costs.)

8.1 Contractor must provide a fee breakdown for the services outlined in this Scope of Work. If applicable, include any assumptions, hourly rates, and other relevant details. Clearly indicate whether fees are flat-rate, hourly, or project-based. All fees must be quoted in U.S. dollars and must be inclusive of all costs unless otherwise noted. Invoices are expected quarterly.

9 CHANGE MANAGEMENT – CONTRACTOR TO CONTRACTOR TRANSITION PLAN

9.1.1.1 Within 15-days of formal notification by the Airport of contract termination or transition to a new pension consulting contractor, the current Contractor shall:

9.1.1.2 Provide full and timely access to all relevant plan data, documents, reports, investment records, and related materials necessary for the uninterrupted continuation of pension consulting services.

9.1.1.3 Facilitate the secure transfer of electronic files and physical documents, including but not limited to: Investment Policy Statements, historical performance data, asset allocation and liability reports, manager contracts, fee schedules, meeting minutes, and correspondence.

9.1.1.4 Cooperate fully with the incoming Contractor and Client staff to answer reasonable questions and support the knowledge transfer process, including participation in joint transition meetings as requested.

9.1.1.5 Ensure that all data provided is complete, accurate, and delivered in a usable format consistent with industry standards to minimize disruption or delays.

9.1.1.6 Maintain confidentiality and data security protocols throughout the transfer process in accordance with applicable laws and contract requirements.

9.1.1.7 Failure to comply with this requirement may result in penalties or other remedies as specified in the contract.

10 INVOICING/BILLING

10.1 Contractor shall send invoices to Imaging@dfwairport.com.

10.2 Contractor shall bill one (1) lump sum amount – to be billed on a quarterly basis as indicated on Exhibit C – Pricing Sheet Form. Two separate invoices shall be submitted each quarter: one for services under the Defined Benefit (DB) Plan and one for services under the Defined Contribution (DC) Plan.

10.3 Contractor must indicate the following ALL invoices submitted for payment, Contract Purchase Agreement number, Purchase Order Number, date/s of service, description of service/s provided.

Failure to provide this information may subject delays in payment remittance.

END SPECIFICATIONS / SCOPE OF WORK