Custody Services RFP_ Final.pdf

TABLE OF CONTENTS

Section I: Request for Proposal

Section II: Instructions to Proposers

Section III: Form of Proposal

Section IV: RFP Questions

Section V: Evaluation Criteria

Section I. Request for Proposal

A. Intent and Scope for the Auburn University Custody Services Contract

• Background o This Request for Proposals (RFP) is being issued by Auburn University, Office of

Cash Management and Treasury for the purpose of soliciting quotations from a competent, experienced and qualified institution to provide security custody services for its fixed-income portfolio(s) for the general investment fund of Auburn University (hereafter referred to as the “University”).

• Overview of Investment Activities o The University’s Office of Cash Management and Treasury is responsible for investing excess University funds, consistent with safety and liquidity requirements. The day-to-day responsibility of investing the University funds is shared between internal staff and delegated third-party investment brokers. The institution providing custody securities will have no responsibility for investing or reinvesting these monies except for providing an overnight investment vehicle.

The University practices a conservative investment strategy, seeking the highest yield available, consistent with safety and liquidity requirements and in accordance with University’s Investment Policy (See Attachment A). The University’s annual operating budget is approximately $1.541 billion. The University’s cash flow may fluctuate due to various timing differences between receipts and disbursements.

o The University maintains 7 custody accounts with assets totaling approximately $1.362 billion for its Non-Endowed Investment accounts. The portfolio is invested exclusively in high-quality fixed-income assets with a minimum credit rating of AAA. In aggregate, approximately 532 individual positions are owned.

Over the last 12 months, there were 235 purchases, 40 sale transactions and 125 maturities that occurred.

o As of December 31, 2022, the portfolio was diversified as follows:

% of Portfolios # of Positions U.S. Treasuries 0.75% 5

Federal Agencies 98.74% 502 Commercial Paper 0% 0 Corporate Notes 0% 0 Negotiable CDs 0.44% 24

Municipal Obligations 0.07% 1 Money Market Fund 0% 0 o The maximum maturity for an individual security within the portfolio is 3.32 years weighted average life.

• Scope of Work The selected vendor shall provide all investment custodial services necessary to discharge the University’s investment program. The services being requested are as follows:

o Segregate all securities and cash from the assets of others. The custodian shall have only the bare custody thereof and securities shall be and remain the sole property of the University. The securities held by the custody bank shall, unless payable to the bearer, be registered in the name of the University, or in the bank's nominee name for the benefit of the University. Securities delivered to the custody bank shall be in due form for transfer or already registered as provided above.

o Settle and deliver securities as directed through any broker, investment manager or advisor selected by the University.

o Act upon proper instructions from authorized persons received by fax or other acceptable methods by the University to affect the receipt, transfer and delivery of assets.

o Assign a dedicated day-to-day person that is familiar with the University’s portfolio, who is also available for phone conversations to address various questions.

o Create, maintain and retain all records relating to securities held in custody in the University accounts to meet the requirements and obligations under generally accepted accounting principles.

o Provide an overnight investment vehicle (that complies with the attached Investment Policy) for cash balances in the custody accounts.

o Provide on-line reporting of portfolio activity and holdings on a real-time or next day basis.

o Provide on-line monthly activity statements and reports including the market value of all portfolio holdings.

o Provide monthly activity statements and reports for all accounts. The statement cut off should be the last day of the month. Statements must be sent by no later than five (5) business days after the close of each month.

• Compensation o Situations may occur where securities will not be received or delivered in a timely manner, which may cause the broker/dealer, the investment custodian, or the University to fail on a transaction. In those instances, the investment custodian is responsible for working with the University’s Office of Cash Management and Treasury and the relevant broker/dealers to determine the cause of the failure.

Upon determination of how the failure occurred, the party that suffered a monetary loss will initiate a written request for compensation and forward to the party that caused such a loss. In a situation where the University is responsible for the monetary loss by the investment custodian or the respective broker/dealer, the amount of the compensation will be sent to the relevant party.

• Separate Account o The University requires that all securities, either owned as direct purchases, or held pursuant to repurchase agreements or as collateral, be held in an account in the name of The University.

• University’s Investment Individuals o The University will maintain a list of authorized investment individuals. An updated list will be provided as changes occur. The investment custodian will be informed in writing of all such changes. The investment custodian is not authorized to execute any transactions or accept instructions from any individual that is not included on the current listing.

• Reporting The University requires that the investment custodian provide the following reports and statements.

E.1. A monthly statement of the account no later than five (5) business days following the end of the month containing:

o A description of all securities held in the account.

o Cost of the securities held.

o Market value of the securities held.

E.2. A statement of all transactions for the month.

E.3. A monthly or quarterly billing statement, which lists at a minimum:

o Total number of all security transactions.

o Total price for each transaction.

o Total price for all transactions.

o Total for other charges.

o Total charges.

• Holidays o The observance of certain holidays varies between organizations and municipalities: hence the University will request the investment custodian to monitor holidays and how their observances may impact the University’s investment activities.

• Records o The investment custodian is required to maintain summary and detailed information and statistics of the University investment activities on a monthly, quarterly and year-to-date basis for both fiscal (September 30) and calendar year.

o Included in this information should be the number of trades, types of trades, dollar amount of trades, yield, average dollar amounts of investments, specific dollar amounts and times and dates of all wire transfers sent and received. In addition, the investment custodian is required to keep written records of all direct purchases of securities, descriptions of securities, compensation claims and the resolution thereof, principal and interest payments and any other relevant numbers, statistics and incidents. This is necessary for the use of the investment custodian to respond to inquiries from the University’s Office of Cash Management and Treasury and auditors.

• Commencement of Operations and Deliverables o Commencement of operations and the deliverables shall be as follows:

o The Offeror shall commence services within thirty (30) days from date of award and perform services in accordance with Section B: Statement of Work for the RFP and the Offeror’s technical proposal.

• Joint Proposals o University will review and may accept offers from joint proposers for the contemplated services.

• Agreements o Proposal submissions must include any contractual documents that the offeror requests University to execute. Joint proposals must include contractual documents that will bind all participating parties, which may take the form of individual agreements between University and each party or a multi-party agreement.

B. Proposal Overview and Definitions

• Proposals will be received until 10:30 AM CST on the specified date.

• Throughout the remainder of this Request for Proposal, all entities involved will be referred to as follows:

o Auburn University will be referred to as “University” or “AU”.

o Commodity/Service Provider will be referred to as “Contractor” or “Supplier”.

o This document will be referred to as “RFP”.

C. Term of Agreement

• This contract will be awarded for an initial term of one (1) year with the option to renew for four (4) additional one (1) year terms.

Section II. Instructions to Proposers

A. Proposal Response

• Proposals should be submitted to the Procurement & Business Services Sourcing Event Portal on or before the time and date set for closing.

• Pursuant to the provisions of the State of Alabama Competitive Bid Law rules and regulations adopted there under, sealed bids will be received on the items noted herein by Procurement and Business Services of Auburn University, until the date and time stated.

• All bids are to be "F.O.B. Destination - Freight Prepaid and Allowed."

• Alabama law (Section 41-4-116, code of Alabama 1975) provides that every bid submitted and contract executed shall contain a certification that the vendor, contractor, and all of its affiliates that make sales for delivery into Alabama or leases for use in Alabama are registered, collecting, and remitting Alabama state and local sales, use, and/or lease tax on all taxable sales and leases into Alabama. BY SUBMITTING THIS

BID, THE BIDDER IS HEREBY CERTIFYING THAT THEY ARE IN FULL

COMPLIANCE WITH ACT NO. 2006-557, they are not barred from bidding or entering into a contract pursuant to 41-4-116, and acknowledges that the awarding authority may declare the contract void if the certification is false.

Bidder certifies that neither it, nor any of its employees who will provide or perform services under this contract have been debarred, suspended or declared ineligible as defined in the Federal Acquisition Regulation (FAR 48 C.F.R. Ch. 1 Subpart 9.4). Bidder will immediately notify the University if the Bidder or any of its employees who will provide or perform services under this contract is placed on the Consolidated List of Debarred, Suspended, and Ineligible Bidders.

• AU reserves the right to award in whole or in part, by line item, or make multiple awards, where such action serves Auburn University’s best interest.

• Proposers may withdraw proposals at any time prior to the time and date set for opening.

• The University reserves the sole and exclusive right to reject or accept any or all proposals and to waive any informality in proposal. The best interest of the University and their subsequent facilities shall be considered as the number one determining factor in selecting or not selecting a Proposer.

• No department, school, or office at the University has the authority to solicit official proposals other than Procurement and Business Services. All solicitation is performed under the direct supervision of the Director of Procurement and Business Services and incomplete accordance with the University policies and procedures.

• The University reserves the right to conduct discussions with proposers, and to accept revisions of proposals, and to negotiate price changes. The University will make reasonable efforts to protect proprietary information but all records are subject to State of Alabama open records laws.

• Proposers submitting proposals which meet the selection criteria and which are deemed to be the most advantageous to the University may be requested to give an oral presentation to a selection committee. Procurement and Business Services will schedule the presentations.

• The University is committed to the development of Small Business and Small Disadvantaged business (SB & SDB) suppliers. If subcontracting is necessary, the contractor will make every effort to use SB & SDB in the performance of this contract.

Reporting will be required throughout the duration of the contract indicating the extent of SB & SDB participation.

• The Suppliers shall indemnify, defend, and hold harmless the University, its officers, agents, and employees from any claims, damages, and actions of any kind or nature arising from or caused by the use of any materials, goods, equipment, or services furnished by the Supplier, provided that such liability does not attribute to the sole negligence of the University.

• The successful supplier will have to attest to the following: By signing this contract, the contracting parties affirm, for the duration of the agreement, that they will not violate federal immigration law or knowingly employ, hire for employment, or continue to employ an unauthorized alien within the state of Alabama, Furthermore, a contracting party found to be in violation of this provision shall be deemed in breach of the agreement and shall be responsible for all damages resulting therefrom.”

• Read and comply with all instructions, specifications, General Terms and Conditions, and Bid Conditions.

Section III. Form of Proposal

A. Proposal Format

• Proposals should be submitted in Excel® and/or Adobe PDF® formatting only.

o If there is any information or required submittals, which due to size limitations cannot be incorporated following the preferred formatting, please note for the evaluator where the information can be found in the response.

B. Tabular / Paginated Format

• Tab 1: A one to two-page executive summary of the respondent’s proposal, including brief descriptions of the company’s expertise in procuring a contract the size and scope described in the RFP, and how the proposer plans to address the University’s requirements.

• Tab 2: Technical Approach o Understanding of the Scope of Work –

Offeror demonstrates an understanding of the requirements listed in the Scope of Work and satisfies the University’s goals and objectives outlined in the Scope of Work, Section II. The Offeror shall have the professional qualifications necessary for satisfactory performance of the required services.

o The Technical Approach shall consist of the Offeror’s detailed explanation of how the Offeror intends to perform each requirement as specified in the Statement of Work.

o Offeror shall identify by name key personnel with specialized experience and technical competence that will be assigned to the proposed contract.

o Offeror shall provide a letter of agreement for each subcontractor and a detailed subcontracting plan, which describes the functions and task to be performed by each subcontractor.

• Tab 3: Organizational Capacity o Firms will be evaluated on professional qualifications, specialized experience, technical competence, depth of firms’ relevant experience offering comparable services. The Offeror shall demonstrate to the satisfaction of the University, its capacity to perform the work, including many specialized services, within the time limitations, taking into consideration its current and planned workload.

Specialized experience and technical competence of the Offeror and its personnel (including joint venture, subcontracts, etc.) with the type of services required and the complexity of the project, including familiarity with the type of problems applicable to the project will receive special attention.

o Provide documentation of degree of experiences and qualifications of key personnel in terms of direct experience related to the specific area of expertise, and evidence that the proposed key personnel are capable of providing the required services. Provide a copy the firm’s most recent annual report and audited financial statements (include these materials in a separate appendix).

• Tab 4: Experience o The Offeror shall provide at least five (5) references where the Offeror has performed satisfactorily similar contracts for a public or commercial enterprise in the last five (5) years in terms of cost control, quality of work and compliance with performance schedule and all applicable Federal, State and local laws and regulatory requirements. The information should contain the name of the company, current address, telephone number, contact name, specific description of services provided, total dollar amount and contract dates.

• Tab 5: Price Evaluation o Offerors are to submit price of each item identified in the Request for Proposal

Price Schedule. Offers for service other than those specified will not be considered. The prices set forth in the Schedule will be used for evaluation purposes and for establishing a contract price. The lowest quoted price found to be responsive will be divided by the price of the quotation being evaluated and the resulting quotient will then be multiplied by the maximum points possible.

• Tab 5: Sample contract for review by Auburn University.

Section IV. RFP Questions

1. Identify the individuals that will be directly involved in the management of the relationship.

Please complete the following table:

Individual

Location

Years of Industry

Experience

Years of Experience with Firm

Proposed Role

2. Will a specific customer service representative be assigned to handle day-to-day transactions for this relationship?

a. Describe the responsibilities of the customer service personnel, including the chain of command for any resolutions.

b. What are the hours of operation of each customer service unit involved in supporting the proposed services?

3. List the total number and market value of institutional custody accounts as of December 31 for the following years: 2019, 2020, 2021, and 2022.

4. Describe your firm’s history and experience of providing custody services.

5. Please provide at least five (5) references where the Offeror has performed satisfactorily similar contracts for a public or commercial enterprise in the last five (5) years in terms of cost control, quality of work and compliance with performance schedule and all applicable Federal, State and local laws and regulatory requirements. The information should contain the name of the company, current address, telephone number, contact name, specific description of services provided, total dollar amount and contract dates.

6. Provide the cut off times for notification of a transaction settling the same day.

a. Fed Book Entry

b. DTC

7. Are security transactions settled on an actual or contractual basis? If trades are settled on an actual basis, how will you compensate the University for Fail Float?

8. At what time does the bank credit interest, dividends, and maturities?

9. Describe the process that the University would follow to wire funds from the custody account to its main depository account? What methods can the University use to instruct your firm to initiate outgoing wires (phone, e-mail, fax, online)?

10. If the University is depositing additional funds into the custody account, what notification by the University is required? If notification is required, what methods can the University use to notify your firm about incoming wires (phone, e-mail, fax, online)? Will the bank confirm the receipt of the wire? How will this confirmation occur (phone, e-mail, fax, online)?

11. Describe any sub-custodial arrangements that would be used for domestic, fixed-income securities belonging to the University.

12. Reporting

a. Describe the frequency and format of custody reports that the bank would provide to the

University. Include sample reports.

b. Does the bank provide information to clients through an on-line inquiry/reporting service? Describe the information available (e.g. pending trades, asset list by account, transaction history).

c. How many days after month-end are reporting available?

d. What pricing source does the bank use for market valuation of securities?

e. Can information be exported to Microsoft Excel? Please describe.

f. What is the lag time between trade execution, availability of on-line transaction data, and the settlement of the transaction to the bank’s reporting system?

13. Overnight Investment Sweep

a. What short-term investment vehicle(s) does the bank propose to use for the overnight sweep?

b. Does a reserve requirement apply for the proposed overnight sweep option?

c. What time of day is the cash sweep deadline? Is it end-of-day or next-day sweep?

d. Provide return history for the thirty-six month period ending December 31, 2021.

e. What fee (if any) is charged to sweep funds into the proposed investment vehicle(s)?

How is the fee calculated?

f. Is the sweep option automated? If not, what process does the bank use to ensure cash balances are invested?

14. Insurance

a. Describe the types of insurance and bonding carried.

b. Include a copy of the bank's most recent reports issued in accordance with the Statement on Standards for Attestation Engagements (SSAE) No. 16.

c. Provide sample agreements for the services you are proposing to provide to the University. Also provide copies of any other documents that will need to be signed/entered into related to the services, including any procedures manuals or terms and conditions that are incorporated, by reference, into the agreements.

15. Fees

a. Please complete the table below with your proposed fees and commissions. All fees and commissions related to all services described in the proposal must be disclosed and listed – even if the service is not shown in the table, and even if the fee or commission manifests itself as an increased cost passed on to the university by another entity. Include any one-time or set-up charges, research fees, minimum fees, concessions, fees for discontinuing the relationship, fees where the University is responsible for the monetary loss by the investment custodian or the respective broker/dealer, and all other fees that may be charged.

b. Are you able to send invoices on a monthly or quarterly basis electronically? How soon after month-end, do you invoice clients?

Assets Based Fee Schedule (apply for relationship) First $25 million $25 - 50 million $50 - 75 million $75 - 100 million $100+ million

What the Asset Based Fee for a $90 million Account?

Volume Account Maintenance Fee (Annual Charge) 1 # of Portfolio Holdings 53 Other Charges (reporting, etc.)

Annual Volume Unit Cost if

DTC / Fed Purchases 44 DTC / Fed Sells 31 DTC / Fed Maturities 2 Interest Payments 100 Incoming Domestic Wires 4 Outgoing Domestic Wires 4

c. For how long are the fees guaranteed?

Section V. Evaluation Criteria

• In awarding the contract, the University may take into consideration the skill, facilities, capacity, experience, ability, responsibility, previous work, reputation, financial standing of the bidder or respondents, and the amount of other work being carried on by the bidder. The inability of any bidder to meet the requirements mentioned above may be cause for rejection of proposal.

• Selection shall be made in the best interest of the University. An Agreement will be awarded to the successful respondent who, in the opinion of the University, has best demonstrated competence and qualification for the type of services required at fair and reasonable prices/compensation and whose proposal is deemed to be in the best interest of the University.

• Where contract negotiations with a respondent do not proceed to an executed contract within a time deemed reasonable by the University (for whatever reasons), the University may reconsider the proposals of other respondents and, if appropriate, enter into contract negotiations with one or more of the other respondents. Proposals shall remain valid and current for the period of 90 days after the closing date and time for submission of proposals.

• The respondent and University agree that time is of the essence in all respects concerning the award of contract and performance hereunder.

1) Technical Approach – 20 %

2) Organizational Capacity – 15 %

3) Experience – 15%

4) Price Evaluation (Cost) – 50%

Attachment A. Auburn University Investment Policy

Attachment B. Calendar of Events

TASK Date

RFP Bid Issue Thursday, January 26, 2023

Q&A Submission Deadline Wednesday, February 8, 2023

Responses to Q&A Friday, February 10, 2023

RFP Bid Opening Wednesday, February 22, 2023

Contract Negotiations & Executed Contract TBD

All inquiries regarding this proposal and its contents should be directed to:

Christalyn Thomas Strategic Sourcing Analyst

(334) 844-3711 E-mail: cmc0122@auburn.edu mailto:cmc0122@auburn.edu