Statement_of_Work_(Draft).pdf

1.0 SCOPE

The U.S. Securities and Exchange Commission (“SEC”) is searching for a contractor or contractors that will provide Trustee/Custodian and/or Recordkeeper services for eligible SEC employees in a Section 401(a) defined contribution program (referred to herein as the “Plan”). The SEC’s existing contract expires in July 2020. The contractor(s) selected must be able to begin performance—including completing all transfers of assets and records from the existing contractor—no later than July 2020.

The Plan does not allow for loans, participant contributions, participant selection or direction of investment(s), or annuities. The Plan permits in-service withdrawals of vested amounts as permitted by applicable IRS laws, rules, regulations, and policies (“IRS provisions”). Each in-service withdrawal must be for at least $500. The SEC will pay for two in-service withdrawals for each plan participant per calendar year; a plan participant bears the full cost of excess in-service withdrawals. The contractor must have the capability to track the number of in-service withdrawals by each plan participant each calendar year and have a method for charging any excess withdrawal fees to participants.

All investment decisions are and will be made solely by the SEC. The Plan’s objective is to safeguard the principal amount of employer contributions and any increases due to interest accumulation. The Plan’s objective does not include maximizing return on principal. The Plan’s assets are currently invested entirely in a Collateralized Institutional Bank Deposit Account that is insured within applicable FDIC deposit insurance limits and, to the extent funds are not FDIC-insured, is fully collateralized in accordance with applicable laws and regulations. The successful contractor for Trustee/Custodian must be able to hold the existing Plan assets and accept new Plan assets biweekly into a product that is likewise FDIC-insured and collateralized. If the contractor also offers a managed mutual fund solution comprised solely of broad fund classes (not, for example, sector or other limited funds), and employs advisers that are not directly regulated by the SEC who could advise the SEC with regard to its investment options in that product line, it should include detailed information of those services (including how and by whom the advisers are regulated) in its response.

The Plan’s assets currently exceed $80 million, and there are approximately 4,400 Plan participants. Over the past year, the total biweekly contribution has averaged approximately $850,000 and there have been an average of 100 withdrawals per month. On January 1, 2020, a significant number of vested participants will reach the 5-year Plan participation threshold (thereby gaining the right to withdraw the entire amount held on their behalf regardless of age or how long the money has been on deposit). As a result, beginning in January 2020, the average number of monthly withdrawals may increase, and/or the amounts withdrawn may cause the total assets held to decrease.

Ideally, one contractor will provide a single solution that encompasses both the Trustee/Custodian and Recordkeeper aspects of administering the Plan. However, to the extent administratively feasible (as determined by the SEC), contractors may partner to provide the requested services. Both teaming and subcontracting are permissible under this RFP. In this solicitation, the term “contractor” refers to each separate entity that proposes to work together to fulfill the SEC’s requirements. Contractors who choose to subcontract or team must have those arrangements in place prior to responding to this solicitation. If subcontracting is proposed, all labor and materials proposed must be contained within the prime contractor’s contract. Furthermore, the prime contractor must disclose to the SEC’s Contracting Officer a copy of the subcontract pricing, terms and conditions, or subcontracting agreement. The SEC will evaluate the acceptability of any teaming or subcontracting arrangement as part of its evaluation of price. Failure to provide sufficient supporting documentation may result in no further consideration of an offer.

The Government is seeking comments, feedback, and input from industry concerning this requirement. This is a DRAFT SOW and the Government anticipates future changes to this document. While it is preferred for one contractor to provide a single solution that encompasses both the Trustee/Custodian and Recordkeeper aspects of administering the Plan, the Government is seeking data about whether the industry can provide a single solution or whether the SOW should permit the award to be made to two different contractors, one to serve as Trustee/Custodian and one to serve as Recordkeeper.

The contractor selected to serve as Trustee/Custodian must not be directly regulated by the SEC, but a contractor will not be disqualified solely because it (or one or more partners) is part of a corporate structure that includes one or more entities that are directly regulated by the SEC. The contractor selected to serve as Trustee/Custodian must itself be an entity that is directly regulated by the Office of the Comptroller of the Currency, the National Credit Union Administration, the Federal Deposit Insurance Corporation, or other similar federal or state governmental regulator.

The contractor must be fully insured against any liability it may incur as a result of providing services to the Plan.

The Plan is an independently-designed Plan. The SEC does not anticipate amending the Plan to conform with prototype Plan documents customarily offered by the contractor (if any). The contractor must submit as part of its response to this solicitation any service agreement(s) it wants the SEC to consider incorporating into an award.

The contractor will be required to:

As Trustee and Custodian:

• Serve as the Plan Trustee in accordance with the requirements of Section 401(a) of the Internal Revenue Code.

• Keep the Plan assets in trust (i.e., exercise fiduciary responsibility).

• Provide advisory services to the extent necessary for the SEC to appropriately direct the Trustee to manage the Plan’s assets.

• Maintain auditable records of all Plan assets and submit to periodic audits as required by law, including as required to enable the SEC to respond to inquiries by Congress, the General Accountability Office, the Internal Revenue Service, or other similar entities.

• Receive plan assets every two weeks via electronic wire transfer from the SEC’s payroll provider (currently the Department of the Interior/National Business Center).

• Accept discretionary payments the SEC may choose to make, whether through the SEC’s payroll provider or directly from the SEC.

• Provide confirmation of funding for every deposit received. This is currently done with a Funding Confirmation Email sent by the existing Trustee/Custodian.

• Provide reconciliation reports or the ability for the SEC to access such reports on a biweekly basis.

• Receive existing Plan assets from the Plan’s current Trustee/Custodian.

• Hold all Plan assets in an account that (1) meets the requirements for full FDIC insurance to “pass through” to each individual Plan participant, and (2) to the extent any amount is not fully FDIC-insured, is fully collateralized in accordance with applicable laws and regulations.

• Disburse Plan assets to Plan participants in strict compliance with applicable IRS provisions and the Plan’s vesting requirement. Note that many participants elect to rollover funds periodically to the Thrift Savings Plan, which does not accept rollovers electronically. (A check to the TSP f/b/o the named participant must be mailed to the participant.)

• For the purposes of plan asset verification, reconciliation of records, etc., provide a secure, web-based environment for the SEC-OHR’s SRP Program Manager/COR and additional SEC OHR personnel to review the plan asset balance.

As Recordkeeper:

• Separately account for any amounts forfeited by non-vested participants, and notify the

SEC any time that amount approaches $250,000 (or the then-applicable FDIC insurance limit). Additionally, provide quarterly forfeiture reports that outline the names of the non-vested participants and the associated forfeited amount for each.

• Process all relevant paperwork (including associated tax forms) for new and departing participants, in-service withdrawals, beneficiary designation(s) and change(s), etc.

• Create and maintain individual participant records containing all pertinent financial data (e.g., account balance, bi-weekly deposits, in-service or other withdrawals, allocations of interest or other earnings on the omnibus trust account, vested amounts, and non-vested amounts). This information must be sufficient to meet the FDIC’s “pass-through” insurance rules for retirement plans.

• Notify the SEC any time any participant’s account balance approaches $250,000 (or the then-applicable FDIC insurance limit).

• Provide a secure platform (ideally web-based) for participants to manage and verify all aspects of their individual account, including the ability to make withdrawal requests (as permitted by law or by the Plan), submit initial or changed beneficiary designations, review amounts credited to their account (including, at least quarterly, the participant’s share of interest or other earnings on the omnibus trust account), review amounts deducted from their account, review amounts that are vested and amounts that are not vested, review total individual participant balance, view or request statements, and submit account inquiries.

• Provide call center services with hours that allow participants in any continental U.S.

time zone reasonable access to those services, including support for account inquiries, for initial dispute management, and for escalation to SEC-OHR. The contractor must be willing to work with the SEC on the customization of support representatives’ scripts to ensure accurate and consistent information is provided to plan participants.

• Provide participants with an account statement at least annually, and ideally provide participants the option to receive any such statement(s) electronically or in hard copy.

• Review the Trustee/Custodian’s biweekly reconciliation reports (if that service is provided by a different contractor) to ensure there are no discrepancies with the Recordkeeper’s records.

• If the Trustee/Custodian service is provided by a different contractor, verify all requests for withdrawal and, if the withdrawal is permissible, transmit the disbursement instructions to the Trustee/Custodian.

• Submit to periodic audits of all Plan records and documentation as required by law or upon request by the SEC.

• Ensure compliance with applicable IRS benefit and other limitations, correct plan errors (as needed), and ensure corrections are properly recorded with the IRS and/or other appropriate entities.

• Collaborate with the SEC’s Office of Human Resources (SEC-OHR) to develop required and optional informational materials. On an annual basis or as otherwise needed, collaboratively review and update any of the materials that need to be revised.

• Present plan information to employees when needed (i.e. Contract Transition, Annual Health Fair, etc.) to assist SEC-OHR in ensuring employee’s understanding of plan provisions and procedures.

• Provide all services in a secure environment (ideally web-based) that is Section 508 Compliant.

• Successfully complete the SEC’s information technology security assessment process. A detailed description of the process is in section 4.3.3 Security Assessment.

• For purposes of account verifications, record reconciliations, dispute resolutions, etc., provide secure web-based access to plan participant records to the SEC-OHR’s SRP Program Manager/COR and additional personnel as determined by the SEC.

The contractor(s) will not make any decisions as to employee eligibility, contribution amounts, or disputes (other than regarding clerical or similar issues). Authorized Federal employees from the SEC retain all responsibility for making determinations as to eligibility, contribution amounts, and resolution of disputes.

Whether serving as Trustee/Custodian and/or Recordkeeper, the contractor’s expertise must include:

• Understanding contribution and matching principles of the federal government’s Thrift Savings Plan program. The SEC’s contribution for each employee is based on that employee’s contribution to the TSP.

• Experience with governmental or large-company payroll operations and transmittal and receipt of payroll-related file data.

• A proven service model that provides a high-quality and transparent participant experience; an efficient and high-quality plan sponsor experience; and consistent plan sponsor reporting mechanisms.

• Reliability and an ongoing commitment to quality and user-friendly secure technology.

• High level of data integrity to ensure maximum security of Personally Identifiable Information (“PII”), and the ability to provide annual internal-control attestations as a service provider to the

SEC.

• Significant understanding of qualified defined contribution plans, common plan features, and provisions of law.

2. Background

The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC oversees the key participants in the securities industry, including securities exchanges, securities brokers and dealers, and investment advisors.

As part of the SEC's compensation model, it has established a supplemental retirement program in addition to standard federal retirement programs such as the Federal Employees Retirement System (FERS), the Civil Service Retirement System (CSRS), and the Thrift Savings Plan (TSP), for eligible employees. SEC-OHR manages the Plan and currently provides services to approximately 4,400 SEC employees nationwide. Nearly all of the SEC’s employees, who are located in Washington, DC as well as in regional offices throughout the U.S. in nearly every time zone, are Plan participants. A list of SEC locations is available on the SEC’s public website: www.sec.gov.

Occasional travel to the SEC’s headquarters in Washington, DC may be required.