Bid Amendment 1T3070 RISP Consultant 021517.docx

State of New Jersey

February 15, 2017

To: All Interested Vendors {Bidders}

Re: Bid Solicitation {RFP} # 17DPP00088 T3070 Replacement Investment System Platform (RISP) Consultant Quote {Proposal} Submission Due Date: February 24, 2017 (2:00 p.m. ET) Revised: Quote {Proposal} Submission Due Date: March 8, 2017 (2:00 p.m. ET)

Bid Amendment {Addendum} #1

The following constitutes Bid Amendment {Addendum} #1 to the above referenced Bid Solicitation {RFP}:

· This Bid Amendment {Addendum} includes answers to questions; and

· Please note that for all additions, deletions, clarifications and modifications to the Bid Solicitation {RFP} # 17DPP00088, please refer to the Revised Bid Solicitation {RFP} titled “Revised RFP T3070 Replacement Investment System Platform (RISP) Consultant 021517”.

It is the sole responsibility of the Vendor {Bidder} to be knowledgeable of all of the additions, deletions, clarifications, and modifications to the Bid Solicitation {RFP} and/or the New Jersey Standard Terms and Conditions relative to this Bid Solicitation {RFP} as set forth in all Bid Amendments {Addenda}.

All other instructions, terms, and conditions of the Bid Solicitation {RFP} shall remain the same.

T3070 Replacement Investment System Platform (RISP) Consultant Bid Solicitation {RFP} Number: 17DPP00088

Answers to Questions

Note: Some of the questions have been paraphrased in the interest of readability and clarity. Each question is referenced by the appropriate Bid Solicitation {RFP} page number(s) and section where applicable.

A: As stated in Bid Solicitation {RFP} Section 1.3.1: Questions regarding the State of NJ Standard Terms and Conditions and exception to mandatory requirements must be posed during this Electronic Question and Answer period and should contain the Vendor’s {Bidder’s} suggested changes.

As stated in Bid Solicitation {RFP} Section 4.1 General: “Proposals including supplemental terms and conditions may be accepted, but supplemental terms or conditions that conflict with those contained in this Bid Solicitation {RFP} or the State’s NJ Standard Terms and Conditions (“Bid Solicitation {RFP}/SSTC”), as may be amended by addenda, or that diminish the State’s rights under any contract resulting from the Bid Solicitation {RFP} will be considered null and void.”

Sheet Q: Does the State require cost+ markup or standard retail pricing for materials to be priced?

A: The State does not understand the question as submitted. However, the State requires a fully loaded firm-fixed price for each task as stated on the Price Sheet/Schedule.

Current Assessment of Systems and Infrastructure Q: Please provide the number of professional by function, including IT, in the DOI.

A: The number of professionals by function will include the following:

Administration – six (6); Compliance - three (3); Operations – four (4); Alternative Investments – twelve (12); Cash Management – four (4); Cashiers – three (3); Accounting – nine (9); International Portfolio Management – four (4); Risk Management – one (1); Domestic Portfolio Management – ten (10); Traders – eleven (11).

It is anticipated that approximately 30-40% of the Division of Investment (DOI) staff will be interviewed as part of Phase 1 — Current Assessment of Systems and Infrastructure.

Current Assessment of Systems and Infrastructure Q: Please describe the amount of documentation available the DOI has for both operations and technology that will inform the current state assessment.

A: There is minimal documentation available for operations and technology to assist in the current state assessment.

Current Assessment of Systems and Infrastructure Q: In addition to the SCM, will the DOI offer a dedicated resource throughout the project to assist our team, whether from an administrative point of view or as an analyst?

A: No, the DOI will not offer an additional dedicated resource throughout the project to assist the Vendor {Contractor}. As stated in Bid Solicitation {RFP} Section 8.1 State Contract Manager: “The State Contract Manager (SCM) is the State employee responsible for the overall management and administration of the Blanket P.O. {Contract}.”

Quote {Proposal} Content Q: Please provide clarity around the form and content of 'Volume 1'.

A: As per Bid Solicitation {RFP} Section 4.4, Volume 1 should contain the forms as specified in Bid Solicitation {RFP} Sections 4.4.1 and 4.4.2.

Organizational Support and Experience Q: Is there a minimum number of references you require?

A: There is no minimum number of references required. However, Vendors {Bidders} are encouraged to submit as many references to convey its ability to successfully complete the scope of work as specified in the Bid Solicitation {RFP}.

Evaluation of the Quotes {Proposals} Q: Please provide insight into the timeline post submission of our Quote. For example, when do you see the project kicking off?

A: The anticipated Blanket P.O. {Contract} start date is May 5, 2017. However, a Notice of Intent to award will be issued once the evaluation is complete and the intended award complies with the Division’s statutes and regulations.

Background Q: Please provide a comprehensive list of asset types (Bloomberg asset codes if possible) that is in scope for this program. Please include asset types currently managed on platform as well as asset types that are not, that will be part of the scope of the program

A: The scope of this project encompasses all asset types. Currently, all asset types are managed on the aforementioned systems that comprise the DOI’s investment platform. The intent is to maximize efficiency.

Background Q: Please describe shortcomings of each of the systems listed (InData, Bloomberg, Barra, FactSet) that has led to generation of this RFP. Are the challenges attributed to workflow across the multiple systems, capability limitation of individual system(s), or staff overhead due to limitations of automation?

A: The generation of this Bid Solicitation {RFP} is not the result of shortcomings, but rather a desire to evaluate all the systems holistically to determine the needs when re-procuring the current systems.

Background Q: Bloomberg is noted as the primary source of data. What other vendors provide data and what mechanism is used for the aggregation (internal data aggregation or external vendor)? Is potential replacement of primary data source included in scope of the engagement?

A: Market data is primarily sourced from Bloomberg, FactSet, and International Data Corp (IDC). Data is aggregated both internally and as requested externally by external Vendors {Contractors}. As stated in Bid Solicitation {RFP} Section 1.1 Purpose and Intent: “The DOI seeks to move toward an operating model with integrated systems, automated processes, a customizable and flexible platform to support areas of investment decision making, risk management, and reporting.” The primary data source will be dependent on the future state architecture recommendation.

Background Q: Is Barra risk modeling used for macro event scenario modeling (e.g. flash crash, natural disaster etc.), or portfolio specific (e.g. interest change impact, ratings change etc.) or both?

A: Barra risk modeling is used for both macro event scenario modeling as well as portfolio specific event modeling.

Background Q: InData order management system responsible for all trading, trade compliance and reporting; a) Does the version of the order management system (OMS) that you current use have an execution management system (EMS) within the system? b) If not, which EMS system do you use today and that that system provide you with both pre- and post-trade transaction cost analysis (TCA) for best execution? c) Do you manage cash flow amortizations in your OMS directly or outside the system and then upload them into the OMS? d) Do you leverage a compliance rules library to create rules from in your systems?

A:

a) The current OMS does not have an EMS, nor does the DOI utilize one;

b) The DOI contracts with a post-trade transaction cost analysis (TCA) Vendor {Contractor} for quarterly review;

c) Cash is managed outside the system and then uploaded into the OMS; and

d) The current OMS does leverage a library of compliance rules.

Background Q: FactSet portfolio position management, performance analytics, attribution and reporting; a) Do you attribute performance by asset style, including fixed income duration, convexity and spread effects? b) Are you using FactSet for research?

A:

a) Yes, to the extent possible within the system’s capabilities; and

b) Yes, some DOI staff utilizes FactSet for research to a limited extent.

Phase II – Bid Solicitation

{RFP}

Development Q: Can the State clarify or provide more specifics around what level of involvement the contractor will have in working with the DOI to develop a Bid Solicitation? What tasks will the DOI be responsible for, as opposed to the Contractor, with respect to Task 3.3?

A: As referenced in Bid Solicitation {RFP} Section 3.3, and based on the recommended future state architecture, the Vendor {Contractor} shall assist the DOI in developing the required technical specifications for the Bid Solicitation {RFP} RISP that are compliant with State procurement laws and regulations.

Phase III – Bid Solicitation {RFP} Evaluation Q: Please clarify or offer specifics as to what tasks the state is responsible for with respect to these tasks.

A: The State is responsible for the overall evaluation and recommendation. The Vendor {Contractor} will act as an advisor to the Evaluation Committee and provide specific industry expertise in the evaluation of the Quotes {Proposals} in light of the State’s technology infrastructure.

Phase IV –

RISP

Implementation Q: Will the State consider allowing the Contractor's attendance at some of the weekly status meetings to be remote via web conference?

A: Yes, please reference the modifications to the Revised Bid Solicitation {RFP} titled “Revised RFP T3070 Replacement Investment System Platform (RISP) Consultant 021517” Section 3.5 (d).

No Subcontractor Certification Q: Can the state confirm that no subcontracting is allowed per section?

A: Yes, as stated in Section 4.4.1.2 and 5.7: “The Vendor {Contractor} shall not subcontract any of the tasks/services identified in this Bid Solicitation {RFP} to a third-party (Reference Section 3.1.1 of the Bid Solicitation {RFP}).

Phase IV –

RISP

Implementation Q: What is the on-site expectation for the implementation phase of this project v. the other earlier phases?

A: The DOI does not anticipate the need for on-site attendance during Phase IV, other than the initiation and close-out meetings. The Vendor’s {Contractor’s} role will predominantly be advisory to the DOI staff.

Purpose and Intent Q: Will only one vendor be awarded this contract?

A: Yes, the State’s intent is to award to one (1) Vendor {Contractor} as stated in Bid Solicitation {RFP} Section 1.1.

Background Q: Barra plan risk assessment, portfolio risk analysis and portfolio modeling; and a) Do you currently measure and monitor sensitivities in your portfolio such as DV01, greeks, and duration? b) Are you currently measuring and monitoring VaR and tracking error? c) For VaR, what methodology are you currently using? d) Do you conduct scenario analysis and how often? Do you utilize credit spread shirts, interest rate tilts and FX changes in stressing portfolio? Do the Portfolio Managers perform this on demand or is it part of a batch process?

A:

a) Yes, DOI currently conducts various sensitivity and stress tests;

b) Yes, the DOI currently measures and monitors VaR and tracking error;

c) The DOI utilizes parametric methodology for equities; and historical for fixed income;

d) Yes, the DOI does conduct scenario analysis as frequently as needed;

The DOI conducts stress testing using the listed inputs as well as various other inputs, depending on the analysis required.

Stress test are conducted on demand or requested as part of a batch process.

Background Q: Bloomberg primary source for market data and research and also used for portfolio management. a) Is reference, ratings and analytic data all sourced from Bloomberg? b) How about benchmark data: is that sourced from each benchmark provider or sourced through Bloomberg or FactSet c) Do you use blended (i.e.: custom) benchmarks and if so, is that handled manually or in FactSet today?

A:

a) No, a combination of Bloomberg, FactSet and IDC;

b) Benchmark data is sourced from benchmark providers and transmitted through Bloomberg and FactSet; and

c) Yes, the DOI uses blended benchmarks that are blended manually and externally.

Background Q: Has the state prepared an operating impact statement for the program described in the RFP? Can you please forward a copy of this statement?

A: No, an operating impact statement has not been prepared.

Submission of Quotes {Proposals} Q: Please confirm that we may only submit an electronic copy and we do not have to submit a hard copy too.

A: Yes, Vendors {Bidders} may elect to only submit an electronic quote {Proposal}. As stated in Bid Solicitation {RFP} Section 4.3.1: “If the Vendor {Bidder} is submitting a NJSTART Quote {Proposal}, hard copy submission is not required.”

Current Assessment of Systems and Infrastructure Q: How many staff do you anticipate will be interviewed from DOI and IT? What are the functional areas for DOI's current operating model?

A: See response to Question #3.

Quote {Proposal} Content Q: Please confirm that the Volume 1 proposal can be submitted electronically only, like the other volumes.

A: See response to Question #24.

General Requirements Q: What is the overall budget allocated for this program? Target budget breakdown by phase would be helpful.

A: The estimated cost for this Blanket P.O. {Contract} is $400,000. However, this cost shall not be construed as either the maximum or minimum amount which the State shall be obliged to order as the result of the Bid Solicitation {RFP} or any Blanket P.O. {Contract} entered into as a result of the Bid Solicitation {RFP}.

A: No, the DOI does not currently use a data warehouse for internal reporting.

A: No, there are no requirements preventing the NJ State Pension from using a Saas model for portfolio management, compliance, and trading.

Phase IV –

RISP

Implementation Q: In this section, the bidder is asked to bid on the implementation of the proposed Target Operating Model. This seems premature in that in order to accurately forecast the estimated amount of effort and cost, one would first need to have a firm understanding of what the Target State looks like. There are many variables that could impact the implementation effort depending on the recommended architecture and potential vendors. Would the DOI consider a delay in requesting this phase until after Phases I-III are complete?

A: No, the DOI will not consider a delay in requesting this phase of the project. The role of the Vendor {Contractor} in the implementation phase will be predominantly advisory to the DOI staff providing guidance and industry specific technical expertise.

Hard Copy Submission Q: This section calls for a copy of the RFP submission to be sent in soft copy on a CD or DVD. Is a thumb/flash drive an acceptable means of deliver the soft copy as well?

A: No, a thumb/flash drive is not acceptable.

Price Sheet/ Schedule Attachment Instructions Q: This sections indicates the DOI would prefer a fixed price bid. Given the unknowns around travel related expenses, would the DOI consider a fixed price bid exclusive of T&E? If not, are there any preferred hotels in Trenton where the state has a pre-negotiated nightly rack rate that could be used to estimate expenses?

A: No, the State will not consider a fixed price Quote {Proposal} exclusive of travel and expenses (T&E).

No, the State does not have pre-negotiated hotel rates for Vendors {Bidders}.

Business Registration Q: This section indicates a deadline to be registered. What is that date?

A: Business Registration is required prior to the award of a Blanket P.O. {Contract}.

Technical Quote {Proposal} Q: Please confirm that we should upload just three volumes for this proposal. Can this include more than three documents or should we merge our documents for each volume as one PDF for each volume?

A: The Quote {Proposal} should be submitted in three (3) volumes with the content of each volume as specified in the Bid Solicitation {RFP} Section 4.4.

The State does not require the Vendor {Bidder} to merge the documents for each volume.

Blanket P.O. {Contract} Schedule Q: Is the Gantt optional or required for the proposal?

A: Yes, Gantt is optional for the Quote {Proposal}.

Resumes Q: Do you require references with contact information for all proposed staff or just key staff?

A: See response to Question #7.

Experience with Blanket P.O. {Contracts} of Similar Size and Scope Q: Can these references be the same as listed in Section 4.4.4 or is this the same request (just a subset)? Will you accept experience from other systems similar to investment management systems as well for this section?

A: The references in Bid Solicitation {RFP} Section 4.4.4 are for the firm relating to organizational support and experience.

The references in Bid Solicitation {RFP} 4.4.4.5 are contact information names and telephone numbers of contracts of similar size and scope that the Vendor {Bidder} has successfully completed.

Yes, these references may overlap.

Financial Capability of the Vendor {Bidder} Q: As a privately held firm, Vendor {Bidder} is not required to prepare audited or un-audited financial statements. Is a statement around this and our condensed financial information and yearly revenue as well as a bank letter fulfill this requirement?

A: In absence of the audited or unaudited [compiled/reviewed] financial information, the Vendor {Bidder} can provide financials certified by its CEO/CFO detailing balance latest Balance Sheet, Profit & Loss (P&L) , and Cash Flow Statement.

Price Schedule/ Sheet Q: Is there a maximum budget for this project that you can publish?

A: See response to Question #27.

Phase I – Current Assessment of Systems and Infrastructure Q: Could you provide us more details/perspective on how well the current state is documented (e.g., architectural diagrams, data flows, process documentation, etc.)?

A: There is limited documentation on the current state of investment systems available.

Phase I – Current Assessment of Systems and Infrastructure Q: Is there an IT strategy defined to guide architectural decisions, RFP analysis, and other decisions?

A: The DOI does not have a defined Information Technology (IT) strategy to guide architectural decisions or RFP analysis. The State’s Office of Information Technology provides architectural guidance at the following web address: http://www.state.nj.us/it/ps/Shared_IT_Architecture.pdf.

Phase I – Current Assessment of Systems and Infrastructure Q: From a functional standpoint, would you like the RISP analysis to span the entire portfolio management value chain, i.e., from pre-trade (e.g., trade identification, capture) to trade (e.g., trade execution), to post trade (e.g., settlement, sub-ledger, G/L)?

A: Yes, at a minimum, the Replacement Investment System Platform (RISP) analysis shall span the entire portfolio management value chain.

Proposed Staffing Q: Page 30 / Section 4.4.4.3.1: Can you please clarify any difference between the client engagement manager and the project manager?

A: Client Engagement Manager is synonymous with Client Relationship Manager or the contract administrative liaison, whereas Project Manager is synonymous with the person in overall charge of the planning and execution of a particular project.

Phase IV –

RISP

Implementation Q: To develop resourcing and related fees to execute on Phase IV requires multiple assumptions which, in the end, will represent our best estimates. Therefore, it will be very difficult to give the DOI any useful information here. Considering this, is providing a rate card for the work in this phase, among certain assumptions, a reasonable solution for providing a fee quote for this phase?

A: No, a rate card is not acceptable for this phase.

3.1.1 Staffing

4.4.1.2 No Subcontractor Certification Q: I have a question regarding my firm’s eligibility to respond to this Bid Solicitation. I am the only employee of my firm, and have been since its founding in 2004. I have legal subcontracting agreements with consultants that I deploy to projects such as for this Bid Solicitation. In reading the RFP I noticed these terms in the cover letter. Please let me know if based on these items, if my firm is eligible or not to submit a response, as my intention will be to subcontract out a portion of the work, that I will not be doing myself, which would a good portion of this Bid Solicitation.

My firm is highly qualified for this Bid Solicitation, has executed many very similar projects, but I want to make sure my firm is eligible before making the effort to respond. I appreciate your feedback on this question.

Page 18 3.1.1 Staffing The Vendor {Contractor} shall maintain, the key personnel submitted in RFP Section 4.4.4.3.1 for the duration of the Blanket P.O. {Contract} or abide by Bid Solicitation {RFP} Section 5.6 – Substitution of Staff.

The Vendor {Contractor} shall not substitute or subcontract any of the tasks/services identified in this Bid Solicitation {RFP} to a third-party.

Page 24 4.4.1.1.2 No Subcontractor Certification The Vendor {Contractor} shall not subcontract any of the tasks/services identified in this Bid Solicitation {RFP} to a third-party (Reference Section 3.1.1 of the Bid Solicitation {RFP}).

A: No, the Vendor {Bidder} is not permitted to subcontract any of the tasks/services identified in this Bid Solicitation {RFP} to a third-party.

State of New Jersey Standard Terms and Conditions State of New Jersey Standard Terms and Conditions have been updated from Rev: 10/21/2011 ST&C to Rev: 12/15/2016 ST&C. Please reference the modifications to the Revised Bid Solicitation {RFP} titled “Revised RFP T3070 Replacement Investment System Platform (RISP) Consultant 021517” Section 9.0.

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