Attachment 1 - Statement of Work.pdf

TABLE OF CONTENTS

C.1. INTRODUCTION

C.2. SCOPE

C.3. CUSTODY SERVICES

C.3.1. In General

a. Hours of Operation

b. Proper Instructions

c. Investment Manager

d. Agents and Subcustodians

e. Limitation on Liability

f. Advances of Funds

C.3.2 Settlement

a. Settlement of Transactions

b. Collection of Income and Other

Payments

c. Income and Settlement Crediting

d. Cash Management Services

e. Daily Valuation of Assets

C.3.3. Safekeeping

a. Delivery of Securities and Payment of Moneys

b. Registration of Securities

c. Central Depository and Nominee

Holder

d. Proxies and Communications

Relating to Securities

e. Tax Law

f. Foreign Tax Filings

C.3.4. Accounting, Internal Controls, Reporting

a. Compliance with GAAP

b. Internal Controls

c. Portfolio Reporting

C.3.5. Customer Service

a. Online Access to Data About the Library Portfolio

b. Ad Hoc Reports

c. Automated System Interface

d. Educational Conferences/Events

C.1. INTRODUCTION.

The United States Library of Congress (the “Library”) is the nation’s oldest federal cultural institution and serves as the research arm of the Congress. It is also the largest library in the world, with more than 130 million items. The Library’s mission is to make its resources available and useful to the Congress and the American people and to sustain and preserve a universal collection of knowledge and creativity for future generations.

In support of that mission, in 1925, Congress statutorily established the Library of

Congress Trust Fund Board (the “Board”) to accept gifts, bequests, or devises for the benefit of the Library, its collections and its services (see 2 U.S.C. §§ 154-160) in addition to the Librarian’s authority to accepts gifts of cash (see XXXX). The Board is chaired by the Librarian of Congress. Donations accepted by the Board must also be approved by the Congressional Joint Committee on the Library of Congress for establishment of a trust while a gift may be established immediately upon Librarian approval. The donations fund a variety of Library efforts – acquisition of special materials; websites, exhibitions, and K-12 lesson plans featuring Library collections; and researcher fellowships, for example. The current total value of the Library gift and trust funds is approximately $250 million, of which nearly two thirds is in invested outside the Library facilitated through custodial banking services.

In administering the Library trust funds, the Board is statutorily authorized to invest, reinvest and retain money and securities. The Board is not authorized to make any investments that could not lawfully be made by a trust company in the District of Columbia, except that it may make any investments directly authorized by the instrument of gift, and may retain any investments accepted by it. The amount currently invested in private securities through the Library’s Growth and Income (G & I) Pool is approximately $190 million.

The Library’s gift and trust funds portfolio is actually composed of the assets of approximately 300 discrete Library accounts, each of which reflects the specific requirements of an individual instrument of gift and provides income for the Library to operate a discrete activity or project. Within the Library, the individual trust funds are managed by the Library’s Chief Financial Officer (CFO) and a designated Fund Manager. The Fund Manager is an individual in the Library department benefitting from the fund or charged with implementing the activity supported by the fund. Together, the CFO and the Fund Manager develop an annual multi-year budget for each fund with a spending plan that will carry out the purpose of the individual trust.

The Board has adopted an investment policy to guide its investment in private securities. The overall objectives of the Board’s investment policy are to support the Library programs that are financed with trust funds by:

A. Providing a stable, growing stream of payouts (from income and capital appreciation) for current and future expenditures;

B. Providing for the liquidity of investments to make payouts; and

C. Maintaining the “purchasing power” of endowment trust funds.

The Policy addresses permissible and prohibited types of investments, investment objectives, payout provisions, liquidity goals, asset allocation targets, and so forth. Under the Board Bylaws and the Investment Policy, an Investment Committee of the Board selects individual fund managers (investment vehicles) within the asset allocations established by the Board in the Investment Policy. The Library’s Chief Financial Officer (CFO) and his staff implement the Board’s investment decisions and payout policies.

The Librarian has accepted the Investment Committee’s recommendation that the

Library use a custodial bank to handle the private investment transactions and accounting of Library trust funds. This solicitation invites offers for custodian bank services.

C.2 SCOPE.

The Library of Congress requires custody services for the assets held in the Library of Congress Gift and Trust Fund investments held outside of Treasury (internally managed as a Growth & Income Pool, and Short-Term Income Pool [the “G&I Pool” and “STIP”]).

Custody services shall include, but not be limited to, settlement, safekeeping, accounting, and reporting of all transactions associated with the STIP and G&I Pool portfolios. Trust accounting services shall be provided in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP).

The current market value of these investment pools is approximately $190 million.

The pool is composed of the assets of more than 100 discrete Library gift and trust funds (accounts) that participated in investment outside of Treasury These investments are pooled for the purpose of investment; each reflecting the specifics of an individual instrument of gift that provides income and appreciation for the Library to operate a discrete activity or project.

The G&I Pool is invested in an array of assets, including but not limited to domestic and foreign equities (including Common Trust Funds and Separately Managed Accounts), corporate bonds, and US Government securities. The G&I Pool portfolio includes accounts for separately managed assets as well as an account to hold mutual funds (approximately 15 accounts). . The STIP consists of two mutual fund accounts. Accounts may be added or deleted as required by the Library.

The Library of Congress requires a knowledgeable, seasoned, stable and responsive servicing team assigned to its account. This is a key element of this contract.

If determined necessary by the Library, an optional one-month phase-in period will be exercised to overlap with the incumbent vendor.

C.3 CUSTODY SERVICES.

C.3.1 In General.

a. Hours of Operation. At a minimum, the Custodian shall provide custody services as described herein between core operating hours of 8:30 a.m. to 5:00 p.m. Eastern Time.

b. Proper Instructions.

(1) Definition. “Proper Instructions” means instructions received from the Librarian of Congress as Chair of the Trust Fund Board, the Library of Congress Chief Financial Officer, the Contracting Officer’s Representative, or any person duly authorized by either of them. Proper instructions may be in writing signed by the authorized person or may be in a communication utilizing security codes effected via computer systems (including electronic mail) or may be by such other means as may be agreed to from time to time by the Custodian and the authorized party giving such instructions (including, without limitation, oral instructions, provided that such oral instructions shall be followed by a written verification within one business day.) The Library reserves the right to limit, as necessary, what constitutes Proper Instructions for certain transactions from time to time upon prior written notification to the Custodian.

(2) Individuals Authorized to Give Proper Instructions. The Library shall cause its duly authorized officer to certify to the Custodian in writing the names and specimen signatures of persons authorized to give Proper Instructions and to the extent to which the Custodian may act on such authority. The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives notice from the Library to the contrary.

(3) Actions Permitted Without Proper Instruction. The Custodian may, at its discretion, without Proper Instructions from the Library:

(a) Make payments to itself or others for all nondiscretionary items relating to its duties in settling international transactions under this contract, provided that all such payments shall be accounted for to the Library.

(b) Surrender securities in temporary form for securities in definitive form, endorse for collection checks, drafts, and other negotiable instruments; and in general attend to all nondiscretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Library.

c. Investment Manager.

(1) Appointment and Termination of Appointment. The Library at anytime may appoint one or more Investment Managers to manage the investment of all or any portion of the assets of the Library. In such event, the Library shall notify the Custodian in writing of the appointment of such Investment Manager, and of the portion of the Library’s assets over which the Investment Manager may exercise its authority, if any. The Library similarly shall notify the Custodian in writing of the termination of the appointment of any Investment Manager.

(2) Authority. The Custodian, in performing its duties under this contract, shall be entitled to rely upon Proper Instructions from the Investment Manager, with such limitations as the Library and the Custodian by written agreement provide. In the absence of such limitations, the Custodian shall accept Proper Instructions from the Library if no Investment Manager had been appointed.

d. Agents and Subcustodians.

(1) The Custodian may at its discretion appoint and remove agents or subcustodians to carry out such of the provisions of this contract as the Custodian may from time to time direct;

provided, however, that such appointment shall not relieve the Custodian of its responsibilities or liabilities under this contract.

(2) Property or assets of the Library shall be held only with

Sub- custodians —

(i) that are “Eligible Foreign Custodians” as defined in Rule 17f-5 promulgated by the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Investment Company Act of 1940, as amended (“Investment Company Act”), which are branches of banks organized under the laws of the United States or any state thereof or which have otherwise been approved by the SEC (by “no-action” letter or exemptive order) for holding securities pursuant to the Investment Company Act or which are otherwise approved in writing by the Library;

and,

(ii) that have entered into a written agreement (“Sub-custodian Agreement”) with the Custodian.

e. Limitation on Liability. Provided always that the Custodian, its agents and sub-custodians act in good faith and without negligence or willful misconduct, in the performance of such duties as would ordinarily be expected of a financial institution in the relevant market and subject to the terms of the Contract, the Custodian shall not be liable for any loss or damage resulting from or caused by events or circumstances beyond its reasonable control.

f. Advances of Funds. The Library shall provide such funding as may be necessary from time to time in connection with proper disbursements made by the Custodian under the terms of this contract or in the event that such a disbursement would cause the Custodian to advance moneys or securities for any such purpose, including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian shall incur or be assessed taxes, interest, charges, expenses, assessments, or other liabilities in connection with the performance of this contract, except such as may arise from its own negligent act or negligent omission. In the event that Library funds are insufficient for any such transaction that is proper under the terms of this contract and should the Library fail to provide such funding as may be required for the Custodian to make a proper disbursement as provided hereunder, then Custodian may refuse to complete such transaction, or if applicable, the Custodian shall be entitled to such remedies as are available under the Disputes Clause (FAR 52.233-1

ALT 1).

C.3.2 Settlement

a. Settlement of Transactions.

(1) Portfolio Transactions. The Custodian shall arrange for timely settlement of portfolio transactions, including Library initiated trades, for the Library’s “holding accounts.”

(2) Security Transactions. The Custodian shall settle security transactions on actual settlement date.

b. Collection of Income and Other Payments. The Custodian, its agents or subcustodians shall collect all income and other payments with respect to the securities held hereunder to which the Library shall be entitled.

(1) Pre-determined income credit only applies to the Library’s domestic assets held in the Custodian’s safekeeping. For all non- US markets, income shall be credited in local currency to the Library’s accounts upon receipt.

(2) Pre-determined income credit shall not be provided on open or failing trades or positions on loan with third party agents.

(3) The following items are exceptions to pre-determined income credit and shall be paid on an actual or as collected basis:

(i) Income on private placement securities;

(ii) Income on bonds in default or that are suspected to present a risk of default or payment delay;

(iii) Securities for which the amount of income and redemption cannot be calculated in advance of payable date, or determined in advance of actual collection. This includes variable rate instruments and securities lacking valid asset identifiers.

c. Income and Settlement Crediting.

(1) The Custodian shall credit or debit the appropriate money account of the Library in connection with the purchase, sale, maturity, redemption, income, dividends or other disposition of securities and other assets held for the time being on behalf of the Library in said accounts on an actual settlement basis.

(2) The Custodian may make available provisional credit of income and dividends on a contractual settlement basis in markets deemed appropriate for such a practice by the Custodian. The Custodian reserves the right to reverse any such crediting at any time before actual receipt of the item associated with the credit when the Custodian determines that actual receipt will not be received in due course for such an item. In such instances, the Custodian may charge the appropriate money account of the Library for the expense of providing funds associated with such advance in an amount not to exceed the rate paid by the Custodian to the Library on such funds. Any such charge to the Library shall be accounted for as a reduction of the income earned.

d. Cash Management Services. On a daily basis, the Custodian shall credit income and trade settlements to accounts and manage the investment of both income and principal excess cash balances. Cash balances equaling or in excess of $1, including U.S. dollars and foreign currency deposits that have been repatriated into U.S. dollars, shall automatically be swept into a short-term investment fund or equivalent daily, thereby ensuring that all cash of the Library is invested overnight. It is expected that the Library will select the short-term investment fund that meets the Library’s investment criteria.

e. Daily Valuation of Assets. The Custodian shall determine portfolio market value on a daily basis.

C.3.3 Safekeeping. The Custodian shall provide safekeeping of all segregated and commingled securities (in nominee name F/B/O Library of Congress) and non- commingled assets (e.g. original notes receivable), as directed by the Library.

a. Delivery of Securities and Payment of Moneys. The Custodian shall release and deliver or direct its agents or its subcustodians to release and deliver, securities and moneys of the Library of Congress held by the Custodian, its agents or its subcustodians with the Federal Reserve System, in a clearing agency which acts as a securities depository or in another book-entry system for the central handling of securities (collectively a “Securities System”) only upon receipt of Proper Instructions, which may be standing instructions in the following cases:

(1) Upon sale of such securities for the Library, unless otherwise directed by Proper Instructions; (i) in accordance with the customary or established practices and procedures in the jurisdiction or market where the transaction occur, including, without limitation, delivery to the purchaser thereof or to the dealer therefore (or an agent of such purchaser or dealer) against expectation of receiving later payment; or (ii) in the case of a sale effected through a Securities System, in accordance with the rules governing the operations of the Security System.

(2) Upon the purchase of securities for the Library, unless otherwise directed by Proper Instructions; (i) in accordance with the customary or established practices and procedures in the jurisdiction or market where the transactions occur, including, without limitation, delivery of moneys to the seller thereof or to the dealer therefore (or an agent for such seller or dealer) against expectation of receiving later delivery of such securities; or (ii) in the case of a purchase effected through a Securities System, in accordance with the rules governing the operation of such Securities System;

(3) Upon the receipt of payment in connection with any repurchase agreement related to such securities;

(4) To the depository agent in connection with a tender or other similar offer for securities;

(5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, unless otherwise directed by Proper Instructions, the moneys or other consideration is to be delivered to the Custodian, its agents or its subcustodians;

(6) To the issuer thereof, or its agent, for transfer into the name of the Custodian or of any nominee of the Custodian or into the name of any of its agents or subcustodians or their nominees or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;

(7) To brokers, clearing banks or other clearing agents or examination in accordance with standard customary delivery instructions;

(8) For exchange or conversion to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities or pursuant to any deposit agreement; provided that, unless otherwise directed by Proper Instructions, the new securities and moneys, if any, are to be delivered to the Custodian, its agents or its sub-custodians;

(9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities; provided that, unless otherwise directed by Proper Instructions, the new securities and moneys, if any, are to be delivered to the Custodian, its agents or its sub-custodians;

(10) For the payment of any expense or liability including but not limited to the following payments: interest, taxes, management, accounting, transfer agent fees, legal fees and operating expenses; and,

(11) For the sale or purchase of foreign exchange or foreign exchange contracts for the account of the Library, including transactions executed with or through the Custodian, its agents or its sub- custodians.

b. Registration of Securities. Securities held by the Custodian, its agents or its subcustodians (other than bearer securities or securities held in a Securities System) shall be registered in the name of the Custodian F/B/O Library of Congress or in the name of any nominee of the Custodian or in the name of any of its agents or its subcustodians or of their nominees.

c. Central Depository and Nominee Holder. The Custodian shall act as the central depository and nominee holder of the Trust Fund assets of the Library and as the transaction clearing component of the Trust Fund assets.

d. Proxies and Communications Relating to Fund Securities.

(1) The Custodian shall, with respect to the securities held hereunder, cause to be promptly executed by the registered holder of such securities proxies received by the Custodian from its agents or its subcustodians or from issuers of the securities being held for the Library, without indication of the manner in which such proxies are to be voted, and, upon receipt of Proper Instructions, shall promptly deliver such proxies, proxy soliciting materials and other notices relating to such securities.

(2) The Custodian shall, unless otherwise directed by Proper

Instructions by the Library, transmit promptly to the Investment Manager written information (including, without limitation, dependency of calls and maturities of securities and expirations of rights in connection therewith) received by the Custodian from its agents or its subcustodians or from issuers of the securities being held for the Library. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Investment Manager written information received by the Custodian from its agents or its subcustodians or from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer.

e. Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Library or the Custodian as custodian of the Library’s assets by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Library to notify the Custodian of the obligations imposed on the Library or the Custodian as custodian of the Library’s assets by the tax law of jurisdictions other than those mentioned in the preceding sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Library with respect to any claim for exemption or refund under the tax law of jurisdictions for which the Library has provided such information.

f. Foreign Tax Filings. Subject to receipt of proper documentation from the

Library, the Custodian shall make the necessary filings in connection with obtaining tax exemptions and tax reclamations for the Library in the foreign countries in which the

Library holds and trades securities.

C.3.4 Accounting, Internal Controls, and Reporting.

a. Compliance with Generally Accepted Accounting Principles (GAAP).

The Custodian shall provide accounting services for all assets held by the bank and all other transactions for the Library in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP).

b. Internal Controls. The Custodian shall maintain all necessary internal controls, including complete documentation on all custodial activities, and maintain records in accordance with generally accepted accounting principles, including double entry accounting.

c. Portfolio Reporting. The Custodian shall provide reports on a trade date accounting basis for each portfolio and in total. The reports shall be provided electronically (in an agreed upon format), hard copy, or any other medium acceptable to both parties. See Section C.4., Deliverables, for detail on required reports.

C.3.5 Customer Service.

a. Online Access to Data About the Library Portfolio. The Custodian shall provide the Library and the Library’s Investment Consultant with secure web-based online access to data about the Library portfolio, as follows:

1) Prior Business Day. All portfolio transactions, holdings data and market values (updated daily for publicly traded securities) with transactions, holdings and market values as of the prior business day.

This includes the recordation of all transactions (including dividends and capital gains on mutual funds) within one day of settlement. The Custodian shall ensure the online account for the Library is updated on a daily basis.

2) Open Corporate Actions. Information pertaining to any open corporate actions.

3) Historical Data. Historical accounting data for the Library’s current and prior fiscal year and additional history shall be restored for electronic or hardcopy access upon request. All correspondence and contractual documentation must be maintained for the life of the contract.

b. Ad Hoc Reports. The Custodian’s web-based online system shall enable the Library and the Library’s Investment Manager to create and modify ad hoc reports of data about the Library’s portfolio in an exportable format.

c. Investment Trading. The Custodian’s web-based trading capabilities must allow for the Library to purchase and sell market securities. The Custodian should have the ability to enact trade transactions manually as well as provide the Library the ability to buy and sell all readily tradable instruments such as stocks, ETFs and mutual funds should.

d. Automated System Interface. As requested by the Library, the Custodian shall provide data through an automated or user initiated system interface/download from the Custodian’s system of record to the Library’s Central Financial Management System (CFMS) or investment tracking system. The data is to be provided in a mutually agreed upon format that will enable the Library to directly load the data into the CFMS/endowment tracking system. Transactional information must be available at least monthly for purchases/sales, transfers, dividends/interest/capital gains, as well as realized and unrealized gains or losses.

e. Account Organization. The Custodian shall provide the ability organize investments into three separate accounts. The first account will facilitate receipt of incoming equity and cash transactions for gift and trust funds not invested in the STIP or G&I Pools. The second and third accounts will include investments pooled and managed as the STIP and G&I Pools.

f. Educational Conferences. The Custodian shall provide the Library with up to three (3) slots in any relevant educational conferences the Custodian may offer to its clients. Attendance at such conferences shall be provided to the Library either at no additional cost or for a charge explicitly listed in the proposal. This would include the cost of related meals offered as part of the formal conference program. Non-training or non-educational activities offered at the conference including, but not limited to, golf, fishing, tours, entertainment, etc., would not be included, as the Library can neither pay for nor may individual employees accept these items. The Library shall pay its own travel, lodging, per diem, and other subsistence expenses (e.g. if meals are not offered to all attendees as part of the conference) for attendees at such conferences. The Library will advise the Custodian of its acceptance or declination of such slots offered for any particular educational conference.