EME Bridges - JOFOC - LA Capital Final.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

FOR OPEN MARKET ACQUISITIONS USING FAR 12.201-2 PROCEDURES

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Identification Number (purchase request/solicitation number): 16PBGC26Q0012

1. Identification of the agency and contracting activity.

A. Agency: Pension Benefit Guaranty Corporation (PBGC)

B. Contracting activity: Procurement Department (PD)

C. Program Office (full name & acronym): Corporate Investments Department (CID)

2. Nature and/or description of the action being approved: This justification for other than full and open competition (“J&A”) supports the award a logical follow-on contract to Contract No. PBGC01-CT-15-0041 and with a performance period of a base period of 12 months (3/30/26 – 3/29/27) and an option period of 3 months (3/30/27 – 6/29/27). The follow-on contract will provide investment management services for the assets assigned to Los Angeles Capital Management LLC “LA Capital” under Contract No. PBGC01-CT-15-0041.

This J&A seeks approval of a logical follow-on contract in accordance with FAR 12.102(b).

Corporate Investments Department (CID) requests a:

Firm-fixed-price, Fixed Rate, variable quantity (FRVQ), Time-and-materials/labor hour, Hybrid

Select one:

Contract Contract modification

The Government projects award for March 2026 and fiscal year 2026 funds will be used.

3. A description of the supplies or services required to meet the agency’s needs, including the estimated value. (including all options)

The PBGC Office of Chief Financial Officer (OCFO) through its Corporate Investments Department (CID) is the program office responsible for providing investment management services for plans trusted by PBGC and for assets managed by the Corporation.

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CID has utilized active quantitative asset managers in the Emerging Markets Equity sleeve since November of 2015. The EME sleeve has two quant asset managers: AQR Capital Management LLC (“AQR”) under PBGC contract no. PBGC01-CT-15-0040, and LA Capital under PBGC contract no. PBGC01-CT-15-0041. These contracts were awarded off a FAR Part 12 solicitation that utilized FAR Part 15 evaluation procedures after a competition among firms.

CID continues to provide investment management services for the assets assigned under Contract No. PBGC01-CT-15-0041 via the use of contractor support made available by this contract. Specifically, the investment firm manages the PBGC assigned assets with full discretion in accordance with the fund documents, the policies of PBGC, and the strategy and objectives mutually agreed upon between the investment manager and PBGC.

The current total contract value of Contract No. PBGC01-CT-15-0041 is . The current contract ends on 3/29/2026.

PBGC solicitation no. 16PBGC25R0052 was issued on Sam.gov on 5/13/25 via full and open competition for the next iteration of emerging market investment management services.

proposals were received by solicitation closing on 6/9/25.

As a result, PBGC opted to issue a new solicitation to award contracts for EME quantitative strategies. PBGC will include additional quantitative strategies in this new solicitation. It is anticipated that the solicitation will be issued via full and open competition on sam.gov by April 2026. Therefore, additional time is required via a follow-on bridge contract prior to the award of the resultant emerging market contracts.

The total estimated price for this follow-on, with an expected base period of 12 months (3/30/26 – 3/29/27) and an option period of 3 months (3/30/27 – 6/29/27) is

4. An identification of the statutory authority permitting other than full and open competition.

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This action is being taken under the authority of Simplified Procedures for Commercial Items, 41 U.S.C. 1901, Simplified Acquisition Procedures, as implemented by RFO FAR 12.102(b).

41 U.S.C. 3304(a)(1) as implemented FAR 6.302-1 “Only one responsible source and no other supplies or services will satisfy agency requirements”

5. A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

The investment management services provided by LA Capital are highly specialized and not inherently governmental in nature. After a competition among proposals, LA Capital was awarded Contract No. PBGC01-CT-15-0041. This contract funded with in three tranches in October 2015 (10/8, 10/13 and 10/16).

LACM has continuously provided active emerging markets equity investment management services under this contract since 2015. PBGC currently has only one other quantitative active EME manager (AQR) under contract.

The work for the next iteration of 10-year quantitative strategy contracts is currently underway, with a solicitation release expected by April 2026 and award expected by February 2027. Final awards will not be made before the current contracts expire on March 29, 2026. As a result, a short-term bridge contract is required to ensure continuity of investment management services until the new competitive awards are completed and funded.

While the possibility exists that other contractors may provide these investment management services, market research indicates

. Furthermore, the rationale for this bridge contract reflects both financial and non-financial considerations. An unwinding of the program and transitioning these assets to another manager would be costly, and likely inefficient from an investment perspective.

Without a bridge, PBGC would be forced to liquidate the assets managed by LA Capital and reinvest the proceeds into the MSCI Emerging Markets Index Fund available under the BlackRock Index Contract (16PBGC25C0051, CLIN 0007). Once the new active EME

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Alternatives are not available. PBGC cannot internally manage an active emerging markets equity portfolio and no other active quant EME managers are currently under contract.

Transitioning to the index fund solely due to a timing gap in contract coverage would be operationally inefficient, financially detrimental, and inconsistent with prudent asset management practices.

The service needs to be provided continuously and without interruption. The portfolios require daily oversight, trading, risk management, and compliance monitoring. Any lapse in coverage would expose PBGC to operational, fiduciary, and market risks. The bridge contract must therefore commence immediately upon expiration of the current contract on March 29, 2026. The anticipated period of performance for the bridge is March 30, 2026, through March 29, 2027, with a three-month option period if needed to complete fund doc negotiations and transition of assets.

Given the absence of viable alternatives, the need to avoid unnecessary transaction costs, and the requirements to maintain uninterrupted investment management services, awarding a short-term bridge contract to LA Capital as the incumbent manager is the only practicable and cost-effective solution continuity of services.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Subpart 5.101(a) and, if not, which exception under 5.101(b) applies.

Choose the applicable statement:

The Contracting Officer shall publish the notices required by FAR 5.101.

In accordance with FAR 5.201(b)(1), this action will not be synopsized.

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7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The current contract’s PBGC01-CT-15-0041 pricing schedule consists of direct payments to the contractor for investment management performance in accordance with established benchmarks and pre-negotiated fees. This contract was competed on a full and open basis.

In the absence of competition, the Contracting Officer will rely on comparisons to the Government’s independent cost estimate (IGCE), comparisons to the existing contract’s prices, and comparisons to similar contracts’ prices to ensure the anticipated price will be fair and reasonable.

8. A description of the market research conducted (see Part 10) and the results or a statement of the reason market research was not conducted.

CID began conducting market research in the summer of 2023, concluding in February 2025.

The data was compiled into a market research report titled “MARKET RESEARCH REPORT Active Emerging Markets Equity Updated February 2025” which is included in the file. Based on PBGC’s further market research for the purposes of this bridge contract,

9. Provide a narrative of any other facts supporting the use of other than full and open competition, such as:

i. Procurement History:

a. Contract numbers and dates of the last several contracts for the same requirement.

Los Angeles Capital Management LLC Contract no: PBGC01-CT-15-0041 PoP: 9/30/2015 – 3/29/2025

b. Competitive status of the actions listed above in 9.i.a.

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Competitive – full and open competition

c. If any prior contract for this requirement was accomplished using full and open competition, include a detailed explanation of the changed circumstances causing this action to now limit the sources.

There is insufficient time to complete the active emerging markets equity manager search before the option to extend services has reached it’s end date of 3/29/2026.

It is expected that the award can be completed before 1/31/2027. It is important to keep the existing quant EME managers on contract to maintain a balanced, diversified sleeve of active EME managers and to minimize transactions costs.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

Select applicable statement:

See Paragraph 6 for synopsis information. To date, no other sources have written to express interest in the acquisition.

See Paragraph 6 for synopsis information. The list of potential sources and analysis has been documented in the Market Research Report (attached).

Responses from the synopsis described in Paragraph 6 only amounted to requests for the solicitation and no additional information was provided. The below vendors requested copies of the solicitation but provided no information to determine whether these firms can satisfy this requirement. These firms will be provided with a copy of the solicitation and their offers considered if submitted in an appropriate and timely manner.

The below vendors provided responses with information sufficient to conduct a preliminary evaluation:

Preliminary technical information submitted by the interested sources in response to the notice _________ has been reviewed by the Program Office who have advised that the source(s) do not appear to meet the requirements in the RFP due to an inability to meet all three aspects of the required services

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(reporting and oversight AND recommendations for LP agreement changes AND selling distributed stock).

OR

The RFI responses submitted by the interested parties (insert notice ID/RFI number) has been reviewed by the Program Office who has advised that the source(s) are potentially capable of meeting the government’s needs.

11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

No actions will be necessary to remove any barriers to competition before a subsequent acquisition for these services will be required. This is a risk mitigation to avoid unnecessary transaction costs.

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CERTIFICATIONS

“I hereby certify that the description of the requirement meets the Government’s minimum needs and that the technical data and supporting information, which form the basis for this Justification for Other than Full and Open Competition, are accurate and complete to the best of my knowledge and belief".”

“I hereby certify that this Justification for Other than Full and Open Competition is accurate and complete to the best of my knowledge and belief.”

REVIEWS AND APPROVALS

Based upon the foregoing justification, I hereby approve the above-mentioned procurement on an other than full and open competition basis, subject to the availability of funds, and provided that the services or property herein described have otherwise been authorized for acquisition.