Statement of Work - Independent Business Valuation Expert Services.pdf

STATEMENT OF WORK

C1. INTRODUCTION

The Internal Revenue Service (IRS or Service) requires the services of an independent expert knowledgeable in business valuation (Expert) to determine the fair market value (FMV), for Federal estate tax purposes, of a 100% interest in an entity that holds a 2% minority interest in a National Football League franchise. The applicable valuation date is February 7, 2023.

The Expert shall prepare an Independent Full Narrative Appraisal Report, Location: Chicago Illinois.

The Expert shall also review the taxpayer’s appraisal report(s) and provide a written analysis of each such appraisal (Review Appraisal Report). Finally, if needed, the Expert shall respond to any rebuttal of the Expert’s Full Narrative Appraisal Report by the taxpayer. Also, if needed, the Expert shall attend any Appeals Conference.

C.2 BACKGROUND

The IRS requires independent business valuation services in connection with a federal estate tax examination. The subject interest consists of a 100% interest in an entity that holds a 2% minority interest in a National Football League franchise. The applicable valuation date is February 7, 2023.

C.3 SCOPE

Federal estate tax issues associated with the foregoing valuation are potentially significant.

Litigation is possible and may be anticipated. To maintain the independence of the Expert, the Service will not unnecessarily disclose applicable Internal Revenue Code Sections, rulings or opinions that might sway the Expert. The Expert shall follow Uniform Standards of Professional Appraisal Practice and the Internal Revenue Code when performing the valuations. The Service shall only offer guidance and definitions to the Expert that are necessary for the Expert to accomplish the requirements of the contract.

In Phase 1, the Expert shall conduct the Expert’s own independent research and analysis to determine the fair market value of the subject equity interest in the company. The Expert will then provide a preliminary value to the Estate Tax Attorney.

In Phase 2, the Expert shall prepare a Full Independent Narrative Appraisal Report stating the FMV of the subject interest, to the extent possible based on the information available.

In Phase 3, the Expert shall review the taxpayer’s appraisal report(s) and provide a written analysis of each such appraisal. If the taxpayer chooses to protest any proposed adjustment, the Service may also elect to have the Expert review and evaluate the taxpayer’s protest and any rebuttal of the Expert’s Full Narrative Appraisal Report. Other expert services shall be rendered during the Appeals process.

Alternative Work Path: Due to assessment-statute considerations, the Government may elect not to order Phase 2 and instead authorize Phase 3 review/rebuttal services. Any such election shall be made in writing by the Contracting Officer. The applicable Phase 3 performance requirements and delivery schedule will govern work ordered under this alternative path.

The following support and reports shall be delivered under this contract:

• Draft copies of Full Narrative Appraisal Report

• Final copies of Full Narrative Appraisal Report

• Draft copies of the Review Report – Written analysis of the taxpayer’s appraisal report

• Final copies of the Review Report – Written analysis of the taxpayer’s appraisal report

• Memorandum (if needed) – Review & Rebuttal of the taxpayer’s disagreement with Expert’s findings.

• Consultation services, including meetings with the IRS, Appeals and the taxpayer.

Schedule Alignment: The shopping cart, IGCE, contract Schedule, Delivery Schedule, and Performance Requirements Summary Table shall use the same five corresponding line items: CLIN 0001 - Phase 1 - Research and Analysis; CLIN 0002 - Phase 2 - Full Narrative Appraisal Report; CLIN 0003 - Phase 3 - Review, Rebuttal, Protest and Appeals Support;

CLIN 0004 - Travel - Authorized Travel; and CLIN 0005 - Miscellaneous Expenses - Authorized Miscellaneous Expenses. Each item description shall clearly identify the corresponding service or cost category.

C.4 APPLICABLE DEFINITIONS, DIRECTIVES and/or DOCUMENTS

C.4.1 Definitions

C.4.1.1 “Fair Market Value” Defined

Treasury Reg. § 20.2031-1(b) defines fair market value, for purposes of this requirement, as the price at which property would change hands between a willing buyer and a willing seller, neither under compulsion to buy or sell and both having reasonable knowledge of relevant facts.

C.4.1.2 “Generally Accepted Valuation Standards” Defined

The Expert shall perform the work in accordance with the current professional valuation standards applicable to the engagement, including applicable IRS guidance, Revenue Ruling 59-60, and current standards of the professional organization(s) governing the

Expert’s credentials. The Contractor shall identify the standards relied upon in each report.

• Revenue Ruling 59-60 (Internal Revenue Service)

• Current Uniform Standards of Professional Appraisal Practice (USPAP), to the extent applicable to the engagement

• Current applicable business valuation standards are associated with the Expert’s professional credentials.

Approaches used to value an NFL Franchise would include general valuation approaches including cost, income and market. The credentials of the Expert would include at least one of the following: CFA, AVA, ABV, ABAR, ASA.

C.4.1.3 “Third Party Contacts” Defined

“Third Party Notification” requirements are defined and explained in Section 3417 of the 1998 Revenue Reform Act (RRA98) and in Internal Revenue Code (IRC) Section 7602(c).

The Service shall provide additional guidance as needed on a specific case-by-case basis.

C.4.1.4 “Privacy Act” Requirements and Definitions

“Privacy Act” (5 USC 552a) requirements are described in detail in IRM Part 11, IRC 6103, 6104, 6110, 7213, 7213A, and 7431. Applicable clauses are incorporated herein.

C.4.1.5 Government Property and Records Defined

C.4.1.5.1 Government and Taxpayer Records

Government property shall include all records and documents, including taxpayer records and documents provided to the Expert by the Government or by the taxpayer and shall include all contractor generated work products and work papers associated with the requirements of this contract.

C.4.1.5.2 Reference Materials and Purchased Documents

Government property shall include reference materials, books, documents, and supplies purchased by the Contractor as necessary for performing the requirements of this contract if the Contractor is reimbursed by the Government for such purchases on an actual cost basis documented with copies of receipts for the purchases.

C.4.1.6 “Expert” - All Inclusive

For requirements under the terms of this contract, the term “Expert” shall include the contractor, contractor employees and sub-contractors performing work under the terms of this contract who will have access to sensitive information.

C.4.2 Directives

C.4.2.1 Disclosure of Actual or Potential Conflicts of Interests

The Expert shall immediately notify the Estate Tax Attorney or Contracting Officer’s Representative (COR) of any real or apparent conflicts of interest that potentially could affect the Expert’s quality of work and unbiased expert opinion. A check of existing relationships would include the following:

• The taxpayer

• The subject franchise

• NFL-related entities

• Investors in the franchise

• Financial advisors involved in sports franchise transactions

The Expert and all contractor personnel with access to Federal Tax Information or other sensitive information shall comply with all current, applicable Department of the Treasury and IRS security, privacy, disclosure, and safeguarding requirements incorporated into the solicitation or contract.

C.4.2.2 Litigation May Be Anticipated

All work performed under the requirements of this contract may be subject to potential litigation.

C.4.2.3 Reimbursement for Expert Services

Reimbursement of Expert Services shall be on a firm fixed basis. Reimbursement of Contractor’s travel and miscellaneous expenses will be made based upon the terms outlined below under “Travel Expenses and Miscellaneous Expenses.”

The contractor shall provide detailed documentation on its invoices, describing all services rendered on a firm-fixed basis. Minimally, invoice documentation shall include the contract or purchase order number; the name and title of each contractor employee providing services during the invoice period; fixed price and description of services provided by each employee. Expert shall provide any additional information requested by the Service, as deemed necessary to document that amounts charged for the Expert’s services are reasonable and fair.

C.4.2.4 Travel Expenses and Miscellaneous Expenses

Reimbursement of Contractor’s cost for authorized travel and miscellaneous expenses associated with contract performance shall be in accordance with terms outlined below.

Reimbursement of these costs applies to Expert services rendered on a firm fixed price basis.

Authorized costs shall be itemized by the Contractor and submitted with supporting documents (receipts, paid invoices, etc.) for reimbursement by the Government, not to exceed limitations specified herein.

C.4.2.4.1 Travel Expenses

Contractor personnel may be required to travel to perform duties as specified in this contract. The Service will be responsible for reimbursement of travel costs only when such travel has been authorized in advance of travel by the COR, not to exceed the funding limitation established by the Contracting Officer at time of contract award or through contract modification.

Travel expenses will be limited to travel and per diem expenses at rates established in the Federal Travel Regulations for official Government travel. The Government reserves the right to determine modes of transportation, routes, etc., for purposes of travel cost reimbursement.

If applicable in connection with the performance of the work set forth in this contract, the Contractor may be reimbursed actual cost of travel and subsistence expenses subject to the following limitations:

1. Costs incurred for lodging, meals, and incidental expenses, as defined in FAR 31.205-

46, are allowable only to the extent that they do not exceed, on a daily basis, the maximum per diem rates in effect at the time of travel as set forth in the Federal Travel Regulations prescribed by the General Services Administration.

2. Travel and subsistence expenses are subject to the following:

a. A subsistence allowance covering reasonable expenditures for lodging and meals, not to exceed applicable Government per diem rates.

b. Actual cost of public transportation, limited to less than first class.

c. Expenses for transportation by privately owned vehicle on a mileage basis at the current standard Government rate, plus toll and ferry charges.

1. Travel and subsistence expenses are subject to the following:

a. A subsistence allowance covering reasonable expenditures for lodging and meals, not to exceed applicable Government per diem rates per day.

b. Actual cost of public transportation, limited to less than first class.

c. Expenses for transportation by privately owned vehicle on a mileage basis at the current standard Government rate, plus toll and ferry charges.

d. Cost of transportation from terminal to hotel, or hotel to property (including comparable property) location, or terminal to either Government office or local or Federal Courthouse, or other location approved in advance by the Contracting Officer.

e. Invoices must be itemized as to all expenses incurred. Each authorized travel and subsistence expense must be supported by a copy of paid receipt.

f. No reimbursement will be made for time spent in travel status.

C.4.2.4.2 Exception to Per Diem Maximum

In special or unusual situations, actual costs that exceed the maximum per diem rates referenced above may be allowable, provided that such amounts do not exceed the higher amounts authorized for Federal civilian employees under the Federal Travel Regulations. To receive reimbursement at a higher rate, the Contractor shall submit adequate justification to the Contracting Officer and obtain the Contracting Officer’s written approval prior to incurring costs more than the applicable maximum per diem rates. Invoices shall itemize all expenses incurred and include the supporting documentation required by the contract.

C.4.2.4.3 Miscellaneous Expenses

The Contractor’s actual cost of miscellaneous expenses directly associated with contract performance may be reimbursable. Expenses include, but are not limited to, postage, express mail, facsimile, photocopying, online research, and outside research materials.

C.4.2.5 Optional Services

It shall be the Government's option to order services beyond Phase 1. The Government makes no guarantee that any optional phase will be ordered. The Expert shall not proceed with an optional phase unless the Contracting Officer provides written authorization in accordance with the contract's applicable option and ordering provisions.

C.4.2.5.1 Ordering Procedures for Optional Services

The Expert shall commence Phase 1 upon written notice to proceed from an authorized Government official. Phases 2 and 3, when included as optional work, may be ordered only through written authorization by the Contracting Officer.

Ceiling Price and Other Limitations: Each applicable line item in the Schedule (CLINs 0001 through 0005) is governed by the pricing and funding limitations established in the contract.

The Expert shall not exceed an applicable ceiling or funding limitation without the Contracting Officer’s prior written authorization. Any increase requiring a contract change shall be accomplished by written contract modification.

Ordering Authority: Only the Contracting Officer may exercise an option, authorize optional work, increase a line-item ceiling or funding limitation, or otherwise modify the contract. The COR will monitor performance only within the authority delegated in writing by the Contracting Officer.

C.4.2.6 Security and Safeguard Requirements – General Policy and Requirement

The Contractor shall comply with all current IRS security, privacy, disclosure, personnel-security, physical-security, and information-system safeguarding requirements incorporated into the solicitation or contract. Requirements applicable to access, storage, processing, transmission, incident reporting, training, background investigations, and disposition of sensitive information shall be those identified by the Government for this acquisition.

Detailed security and safeguarding procedures, forms, training, technical controls, and incident-reporting requirements shall be provided or incorporated by the Government using the current requirements applicable at the time of solicitation and award.

• Contractor security controls shall comply with the current IRS security and safeguarding requirements incorporated into the contract.

The contractor shall ensure the return of all IRS IT or other government resources provided to the contractor in connection with this contract.

C.4.2.7 Return of Government Property

All property of the U.S. Government in the possession of the Expert in direct relation to the requirements of this contract shall be returned to the Government prior to final payment for services rendered by the Expert.

C.4.2.8 Contract Administration

All contacts by the Expert regarding the administration of technical details within the scope of any contract shall be addressed to the Contracting Officer for advice and coordination. All Expert contacts with the Service’s audit team shall be through the Estate Tax Attorney or COR. Contact with Taxpayer personnel, if needed, shall be coordinated through the COR or Estate Tax Attorney.

C.4.2.9 Meetings

Meetings involving the Expert may be by conference telephone calls, virtual meetings, or face-to-face meetings. The COR or Estate Tax Attorney shall provide reasonable advance notification to the Expert regarding the location and expected duration of meetings, conference calls, etc.

C.4.2.10 Contractor Background Investigations

Background investigations are required for contractor personnel when access to taxpayer data or other protected IRS information requires such investigation under current IRS personnel-security requirements.

The COR shall coordinate all arrangements

C.4.2.11 Contractor Training Requirements

Contractors and contractor employees shall be required to complete “Security” training and/or participate in “Security” briefings to be provided by the Service and shall complete other training or participate in other briefings as deemed critical by the Service.

C.4.2.12 Media Type for Reports and Deliverables

Appraisal reports and other professional deliverables shall be professionally prepared, readable, and submitted electronically using a Government-approved secure method.

Unless otherwise directed, reports shall use Arial 12-point font. Physical copies shall be provided only when specifically requested by the Government for litigation, administrative, or other official needs.

C.4.3 DOCUMENTS

C.4.3.1 Performance Requirements Summary Table (PRST)

The PRST describes how the Government will monitor the Expert’s performance. Any contractual remedy for nonperformance or unsatisfactory performance shall be administered only in accordance with the inspection, acceptance, payment, and other applicable terms of the contract.

C.4.3.2 Quality Assurance Surveillance Plan (QASP)

The QASP sets forth guidelines that will be used in evaluating the technical performance of the Expert. The procedures set forth in QASP are not contractually binding on the Service or on the Expert. The Expert is being provided with a copy of the QASP for informational purposes only.

C.4.3.2.1 Surveillance Activity Checklist

A “Surveillance Activity Checklist” may be used by the COR/Estate Tax Attorney to document expert performance.

C.4.3.2.2 Decision Table

A “Decision Table” may be used by the COR/Estate Tax Attorney in documenting symptoms and in identifying possible sources of performance problems as well as assisting in the determination of contributing factors.

C.5 PERFORMANCE REQUIREMENTS

C.5.1 – Phase 1 – Research and Preliminary Opinion of Value

The Expert shall commence work on Phase 1 upon written authorization from the Government after any required access or security prerequisites have been satisfied. The Service shall not provide the Expert with the taxpayer’s appraisal during the independent

Phase 1 research and preliminary value unless the Government directs otherwise under the alternative work path.

The Expert shall complete the research and preliminary value in Phase 1 within four weeks of authorization to commence Phase 1 work.

Alternative Work Path: Due to assessment-statute considerations, the Government may elect not to order Phase 2 and instead authorize Phase 3 review/rebuttal services. Any such election shall be made in writing by the Contracting Officer. The applicable Phase 3 performance requirements and delivery schedule will govern work ordered under this alternative path.

C.5.2 - Phase 2 - Preparation of Full Independent Narrative Appraisal Report

The Expert shall not proceed with Phase 2 until written authorization is provided in accordance with the contract.

The Expert’s report shall:

• Include a detailed opinion of the fair market value of the subject interest in the company.

The Expert shall be available for meetings with the Estate Tax Attorney and/or other Service personnel on an “as needed” basis via telephone or teleconference.

The Expert’s findings shall be documented in a draft Full Narrative Appraisal Report clearly labeled “DRAFT.” The report shall comply with the current professional valuation standards applicable to the engagement and the requirements of this SOW. The draft shall be submitted in accordance with the Delivery Schedule of C.7.1.

The Expert shall address Government comments and perform any additional tasks or research necessary to complete the final Full Narrative Appraisal Report. The final report shall comply with the current professional valuation standards applicable to the engagement and shall be submitted in accordance with C.7.1.

C.5.2.1 - Performance Standards

The following performance standards shall be met:

• Technical Compliance: The Expert demonstrates familiarity with the facts and requirements relevant to determining the FMV of the subject interest and applies the professional standards required by this SOW.

• Responsiveness: The Expert responds to authorized Government inquiries and comments within the timeframes established by the contract or otherwise agreed to in writing.

• Completeness: Required deliverables address all required elements, analyses, assumptions, sources, calculations, and conclusions.

• Accuracy and Support: Valuation conclusions are supported by documented analyses, sources, assumptions, and calculations sufficient for Government review.

• Timeliness: Services and deliverables are completed by the due dates established in C.7.1 or as modified in writing by the Contracting Officer.

C.5.3 - Phase 3 - Review, Rebuttal, Protest and Appeals Support

The Expert shall review the taxpayer’s appraisal report(s) and as ordered, evaluate the taxpayer’s protest or rebuttal of the Expert’s Full Narrative Appraisal Report. The Expert shall address material concerns identified by the Government, explain their implications, and discuss any potential impact on the valuation of conclusions. Required review/rebuttal memoranda and consultation or Appeals support shall be provided in accordance with the Delivery Schedule in C.7.1.

C.5.3.1 - Performance Standards

The following performance standards shall be met:

• Technical Compliance: The Expert addresses the material issues raised in the taxpayer appraisal, rebuttal, or protest that the Government directs the Expert to review.

• Responsiveness: The Expert responds to authorized Government inquiries and comments within the timeframes established by the contract or otherwise agreed to in writing.

• Completeness: Required Phase 3 deliverables address all Government-directed review, rebuttal, protest, and Appeals-support requirements.

• Accuracy and Support: Conclusions are supported by documented analyses, sources, assumptions, and calculations sufficient for Government review.

• Timeliness: Services and deliverables are completed by the due dates established in C.7.1 or as modified in writing by the Contracting Officer.

C.6 INVOICING AND STATUS REPORT

C.6.1 - Invoicing

An invoice shall include the following:

• contract number;

• phase(s) worked on;

• name, job title and fixed price per task;

• brief description of the work done, by phase, for each person, during that period.

For more information on the IPP see clause IR1052.232-7003 “Electronic Invoicing and Payment Requirements for the Invoice Processing Platform.”

The Contractor shall submit invoices through the Invoice Processing Platform (IPP) and provide any additional copy or supporting documentation to the COR using the contact information identified in the award or subsequent written Government direction.

C.6.2 Status Report

Beginning with the month the contractor begins Phase 1 efforts, it shall provide a monthly written status report to the COR when each invoice is submitted. The status report shall summarize that month’s work as of the final day of the month and minimally address the following items:

• Report on progress within the Phase(s) worked that month;

• Progress toward providing deliverable(s) for that Phase;

• Comment on any potential problems that might impact scheduled product delivery for that Phase;

• Notify the Service of any concerns in meeting Phase requirements with the allocated labor hours in that Phase.

The status report can be sent to the COR separately or as an attachment to the invoice.

No status report is required for months in which no invoice is submitted.

C.7 DELIVERABLES

Written deliverables shall be submitted electronically using the Government-approved secure method to the Government point of contact identified in the award or subsequent written direction. Physical copies shall be provided only when specifically requested by the Government.

All submissions to the Estate Tax Attorney shall be supplemented by password protected electronic copies.

C.7.1 Delivery Schedule

The delivery requirements below govern the schedule for CLINs 0001 through 0005. The Contractor shall not begin an optional phase until it is authorized in writing in accordance with the contract. Government review periods and final-deliverable due dates are stated within the applicable CLIN line.

CLIN ITEM DELIVERY TIME

0001 Phase 1 - Research and Analysis Within four weeks of authorization to start Phase 1.

Phase 2 - Full Narrative Appraisal Report

Draft: within six weeks of authorization to start Phase 2. Government review:

within two weeks of receipt of the draft.

Final: within two weeks of receipt of Government comments. Resubmission due to error, omission, or deficiency: as mutually agreed by the COR and Contractor, not to exceed 30 days after notification of an unacceptable deliverable.

Phase 3 - Review, Rebuttal, Protest and Appeals Support

Draft rebuttal/review memorandum:

within four weeks of authorization to start Phase 3. Government review:

within two weeks of receipt of the draft.

Final rebuttal/review memorandum:

within two weeks of receipt of Government comments. Resubmission due to error, omission, or deficiency: as mutually agreed by the COR and Contractor, not to exceed 30 days after notification of an unacceptable deliverable.

0004 Travel - Authorized Travel

As authorized in advance by the COR;

reimbursement subject to applicable Federal Travel Regulation/per diem limitations and contract funding limits.

Supporting receipts and documentation required.

Miscellaneous Expenses - Authorized Miscellaneous Expenses

As authorized in advance by the Contracting Officer; reimbursement limited to allowable contract performance expenses supported by required documentation.

C.8 QUALITY ASSURANCE SURVEILLANCE PLAN (QASP)

C.8.1 Introduction

This Quality Assurance Surveillance Plan (QASP) supports the Statement of Work associated with this contract and describes the Government’s approach for evaluating the technical performance of the Expert.

The procedures set forth in the QASP are not contractually binding on the Service or on the Contractor. The Contractor shall be provided a copy of the QASP for informational purposes.

C.8.2 Roles and Responsibilities of Government Officials

The following government officials will participate in assessing the quality of the Expert’s performance. Their roles and responsibilities are described as follows:

1. The Estate Tax Attorney assigned to the examination will serve as a government technical reviewer.

2. The Contracting Officer’s Representative (COR), or other officially designated Government point of contact, will monitor performance within the authority delegated by the Contracting Officer.

3. The Estate Tax Attorney and COR/POC will review, observe, assess, and document the technical performance of the Expert.

4. The Contracting Officer (CO) has overall responsibility for contract administration and retains authority for contractual actions, including modifications and exercise of options.

C.8.3 Primary Methods of Surveillance

Inspection of the report submitted for Phases 1-3 by the Government Agent or COR.

Discussions between the Expert and Estate Tax Attorney or COR.

C.8.4 Sampling procedures

Each work requirement will be evaluated when provided.

C.8.5 Evaluation Procedures

The Service will monitor the performance of the Expert through discussions with the Expert and review of reports and other documents required by the contract.

C.8.6 Service Requirements

CLIN 0001 - Phase 1 - Research and Preliminary Opinion of Value

Work Requirements Standards of Performance

a. Preliminary Opinion of Value. Paragraph C.5.1

CLIN 0002 - Phase 2 - Full Independent Narrative Appraisal Report

a. Full Narrative Appraisal Report. Paragraph C.5.2

CLIN 0003 - Phase 3 - Review, Rebuttal, Protest and Appeals Support

a. Review, Rebuttal, Protest and Appeals Support. Paragraph C.5.3

C.8.7 Analysis of Results of Performance Surveillance

a. The Estate Tax Attorney and/or COR may assess Expert’s work performance in accordance with the performance standards set forth in this Statement of Work and the surveillance methods described herein and maintain a written record of the assessment as services and deliverables are provided.

b. Any payment adjustment, rejection, re-performance requirement, or other contractual remedy resulting from documented defects shall be handled in accordance with the applicable inspection, acceptance, payment, and other terms of the contract.

c. The Estate Tax Attorney and/or COR will monitor the Expert’s overall performance and recommend appropriate administrative actions to the Contracting Officer when performance is less than satisfactory.

C.9 PERFORMANCE REQUIREMENTS SUMMARY TABLE

CLIN

REQUIRED

SERVICE

STANDARD

METHOD OF

INSPECTION

WEIGHT

Phase 1 - Research and Analysis C.5.1

100% review of required deliverable(s) against the SOW acceptance criteria and documented Government comments.

30% of contract

Phase 2 - Full Narrative Appraisal Report

C.5.2

100% review of required deliverable(s) against the SOW acceptance criteria and documented Government comments.

60% of contract

Phase 3 - Review, Rebuttal, Protest and Appeals Support

C.5.3

100% review of required deliverable(s) against the SOW acceptance criteria and documented Government comments.

10% of contract

Travel - Authorized Travel C.4.2.4

Review authorized travel costs and supporting documentation for compliance with contract requirements and applicable travel limitations.

N/A - Reimbursable

Miscellaneous Expenses - Authorized Miscellaneous Expenses

C.4.2.4

Review authorized miscellaneous costs and supporting documentation for compliance with contract requirements.

N/A - Reimbursable