ESBD_File_319471_RFP 233a TTF Investment Consultant 3-17-23 Final.docx

GLENN HEGAR

TEXAS COMPTROLLER OF PUBLIC ACCOUNTS

Request for Proposals (RFP No. 233a) for Investment Consulting Services for the Texas Prepaid Higher Education Tuition Board

RFP 233a Investment Consulting Services Texas Prepaid Higher Education Tuition Board Page 26 of 59

TABLE OF CONTENTS

PART I

GENERAL INFORMATION

1.1 Introduction

The Texas Comptroller of Public Accounts (Comptroller), on behalf of the Texas Prepaid Higher Education Tuition Board (Board), issues this Request for Proposals No. 233a (the “RFP”) to solicit responses (Proposals) from qualified, independent investment consultants to provide comprehensive investment consulting services to Comptroller and the Board. All references in this RFP to “Comptroller” include the “Board.”

All requisite services are referred to as “Services” in this RFP. Each individual or firm submitting a proposal in response to this RFP shall be referred to as a “Respondent.” The selected Respondent or Respondents, if any, are hereinafter referred to as the “Successful Respondent.” As a result of this RFP, Comptroller anticipates executing a contract with Successful Respondent to perform the Services (the “Contract”), but may choose not to at its sole discretion.

Successful Respondent shall advise and assist Comptroller and the Board in administering all of the Board’s investment activities related to the Texas Guaranteed Tuition Plan (a prepaid tuition plan also known as the Texas Tomorrow Fund® that is closed to new enrollment), the Texas College Savings Plan® (a direct-sold 529 college savings plan), the LoneStar 529 Plan® (an advisor-sold 529 college savings plan), the Texas Tuition Promise Fund® (an open prepaid tuition plan), the Texas Save and Match Program (a prepaid tuition unit matching program) and the Texas ABLE ® Program (“ABLE Program”); referred to collectively herein as “the Funds.”

The term “plan manager” shall also mean “program manager” for purposes of this RFP.

1.2 Background

The Texas Prepaid Higher Education Tuition Board (the “Board”)

The Board administers the Funds. The Board is established as a state agency and resides in Chapter 54, Subchapters F, G, H, I and J of the Texas Education Code. More information about the Board and minutes of previous meetings can be found at:

https://comptroller.texas.gov/programs/education/texastuitionboard.php.

By statute, the Board is required to meet at least quarterly. Typically, board meetings are in-person meetings held in Austin, Texas. The fiscal year of the Funds is September 1 through August 31.

The Texas Guaranteed Tuition Plan, also known as the Texas Tomorrow Fund

The Texas Guaranteed Tuition Plan (“TGTP” or the “Guaranteed Plan”) was launched in 1995. It has been closed to new enrollment since 2003. The TGTP is a prepaid college tuition plan staffed by employees of Comptroller. As of December 31, 2022, it had approximately 23,000 active contracts and assets of approximately $175 million. Approximately 158,400 prepaid tuition contracts were sold while the Guaranteed Plan was still open to new enrollment. The Board has no plans to re-open the TGTP to new enrollment or additional purchases. It does have the right to do so and by statute must consider re-opening the TGTP on an annual basis.

TGTP was based on the assumption that contributions paid by purchasers plus earnings on those contributions would be sufficient to keep pace with tuition costs at Texas colleges and universities. However, TGTP was closed to new enrollment in 2003. As of August 31, 2022, TGTP’s unfunded liability (i.e., the difference between the market value of assets plus the present value of expected future contract payments less the present value of expected future benefit payments and expenses) was $239.4 million.

TGTP’s assets totaled $229.2 million as of August 31, 2022. Based on key assumptions for future tuition inflation and investment returns, the Texas Guaranteed Tuition Plan Actuary’s Report on Program Soundness as of August 31, 2022 projected that TGTP’s assets will be depleted in fiscal year 2023, but that benefit payments would continue into fiscal year 2040.

TGTP contract obligations are guaranteed by the full faith and credit of the state of Texas. A constitutional amendment passed by Texas voters in November 1997 allows for transfer of funds as necessary to pay contract obligations. To date, the state has appropriated $570 million to the Comptroller for payment of TGTP benefits.

TGTP funds are on deposit with the Texas State Treasury and invested through the Texas Treasury Safekeeping Trust Company’s Treasury Pool.

The Texas College Savings Plan and the LoneStar 529 Plan

The Board administers two Internal Revenue Code Section 529 college savings plans, the direct-sold Texas College Savings Plan (“TCSP”) and the advisor-sold LoneStar 529 Plan (“LoneStar 529 Plan” and, together with the TCSP, the “Savings Plans”).

TCSP is a Section 529 plan for tax-advantaged savings trust accounts from which distributions can be made for qualified higher education expenses at an eligible educational institution, for apprenticeship programs, for student loan repayment and for payment of tuition at eligible K-12 schools. To benefit fully from TCSP, the designated beneficiary must attend an eligible educational institution and use the funds for qualified education expenses. The LoneStar 529 Plan is a Section 529 plan designed for tax-advantaged savings trust accounts established by account owners through a financial advisor.

Orion Advisor Solutions, Inc. (“Orion”) is the plan manager and responsible for the day-to-day operation of TCSP and the LoneStar 529 Plan. The Plan is distributed by Northern Lights Distributors, LLC (“NLD”) and administered by Ultimus Fund Services, LLC (“Ultimus”). NLD and Ultimus are not affiliated with Orion.

Assets of the TCSP and LoneStar 529 Plan on December 31, 2022, were as follows:

Plan

Assets Under Management Number of Accounts

The Texas Tuition Promise Fund

The Texas Tuition Promise Fund (“TTPF”) is a prepaid tuition plan established by the Texas Legislature in 2007. TTPF pays only undergraduate resident tuition and schoolwide required fees. The structure of TTPF is different than that of TGTP in that the amount paid to colleges and universities is based on contributions (amounts paid by purchasers for tuition units) plus or minus net earnings or losses on those contributions. Therefore, payments to colleges and universities, or for apprenticeship programs, career schools, K-12 tuition and student loan repayment will never exceed contributions as adjusted for net earnings.

Additional safeguards in the plan include a three-year holding period before benefits can be redeemed, a cap on refunds of 2% less than actual net earnings not to exceed 5%, and a one-time administrative fee on enrollments to be used directly in maintaining the actuarial soundness of the plan.

The market value of TTPF assets as of December 31, 2022 was $1.05 billion. Enrollment opened in November 2008 and there were approximately 41,000 active accounts as of December 31, 2022. The plan’s funded status at August 31, 2022 was 122.1%. General enrollment is open each year from September through February and newborn enrollment is extended through July.

TTPF is managed by Orion. Investments are held in trust by the Constellation Trust Company, an affiliate of Orion. All underlying investment funds are 100% non-proprietary.

The Texas Save and Match Program

The Texas Save and Match Program (“TSMP”) was created by the Texas Legislature in 2007 to increase access to higher education by encouraging Texas families to save for higher education expenses. Funds appropriated to the program by the Legislature for that purpose may be used to provide matching TTPF tuition units. No funds have been appropriated to the TSMP to date.

The Texas ABLE Program

The federal Stephen J. Beck Jr. Achieving a Better Life Experience (“ABLE”) Act of 2014 (the “ABLE Act” or “Act”) signed into law in December 2014 amended the Internal Revenue Code of 1986, as amended (the “Code”), by inserting Section 529A (“Section 529A” or “529A”) to provide for tax-advantaged savings accounts established under a state’s ABLE program for individuals with disabilities. The ABLE Act’s stated purposes are:

a. To encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence and quality of life.

b. To provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, the Medicaid program under title XIX of the Social Security Act, the supplemental security income program under title XVI of such Act, the beneficiary’s employment, and other sources.

“Qualified ABLE program” means a program established and maintained by a state, or agency or instrumentality thereof in accordance with Section 529A. A qualified ABLE program is exempt from taxation. The ABLE Act only authorized states to establish ABLE programs. In June 2015, Texas Governor Greg Abbott signed Senate Bill 1664 into law creating the Texas ABLE Program.

The Texas ABLE Program opened for enrollment in May of 2018. As of December 31, 2022, there were 2,618 accounts and assets totaling $17.7 million.

Investment Policy Statements and Quarterly Performance Reports

The Board adopts Investment Policy Statements for each of the Funds. The current investment policies for the Funds have been posted on the Electronic State Business Daily with this RFP as Bid Package 2. Respondents should note that these Investment Policy Statements are subject to revision and substantive change by the Board at any time.

The most recent quarterly investment performance reports for the Funds for the quarter ending December 31, 2022 are posted on the Electronic State Business Daily with this RFP as Bid Package 3. The Board receives these reports quarterly for each of the Funds.

Annual Financial Statement and Actuarial Reports

The Board’s Annual Financial Statements and actuarial reports for the fiscal year ended August 31, 2022 are available at:

https://assets.comptroller.texas.gov/tgtp/96/96-481_TPHETP_AnnualReport2022_FINAL.pdf.

Individual Audited Financial Statements for TTPF, the Savings Plans and Texas ABLE for the fiscal year ended August 31, 2022, are available at:

TTPF: https://www.texastuitionpromisefund.com/wp-content/uploads/dlm_uploads/2022/11/2022-TTPF-Report-Final.pdf Savings Plans: https://www.texascollegesavings.com/wp-content/uploads/dlm_uploads/2022/11/Texas-Financial-Statements-2022-Combined-Final-w-report.pdf Texas ABLE: https://www.texasable.org/wp-content/uploads/dlm_uploads/2022/11/Able-Financial-Statements-2022-Final.pdf

PART II

SCOPE OF WORK

2.1 Service Description

Successful Respondent shall provide the Services as described in this Section 2.1 for the Funds and Texas ABLE, as applicable. All Services will be provided on an as-needed basis unless otherwise noted.

Any deviations from the specific requirements set forth in this Section 2.1 must be approved by Comptroller and Successful Respondent in a writing that specifically refers to the requirement and the reason for approval of the change. Comptroller will consider approving written requests for such deviations if Comptroller determines, in its sole discretion, that such deviations are consistent with applicable law and in the best interests of the State of Texas, the Board and the Funds, as applicable. Any decrease in level of Services must be accompanied by a decrease in approved fees.

The Services provided by Successful Respondent will include, but not be limited to, the following services and deliverables related to the Funds:

· Monitor the actuarial funding status of the Funds’ prepaid tuition plans on an on-going basis, and provide assistance to the Board and the Board’s actuary in the establishment of actuarial assumptions related to investment returns for the prepaid tuition plans;

· Assist the Board in developing and modifying investment policy objectives and guidelines, including the development of asset allocation strategies, recommendations on long-term asset allocation, and the appropriate mix of investment manager styles and strategies;

· Provide recommendations regarding the pooling of any or all of the assets of the Funds for investment purposes in order to maximize returns;

· Assist in the development and ongoing review of sound and consistent investment guidelines, with modifications to existing investment policy statements and investment guidelines to reflect changing conditions within the markets or Funds, and to refine them in order to make them more effective;

· Monitor the Funds’ compliance with derivatives policies, if applicable, and make the Board and Comptroller aware of instances when the Funds are out of compliance with such policies;

· Comply with all provisions of the Investment Policy Statements for the Funds pertaining to Successful Respondent’s duties and responsibilities as a fiduciary;

· At least annually, prepare and submit to the Board investment plans and long-range investment plans for the Funds, as and when requested by Comptroller or the Board;

· Prepare and submit to the Board an asset liability model for the Funds by November 14, 2023, and recommend future asset liability models as Successful Respondent considers appropriate or as requested by the Board;

· Monitor and evaluate, on an on-going basis, the performance of the Board’s investment strategies, instruments, and investment managers and other related issues; develop performance benchmarks for use in evaluating the performance of the Board’s investment managers; review the Board’s investment managers’ compliance with investment objectives and investment guidelines for the Funds; and prepare and submit to the Board investment manager performance reports on at least a quarterly basis; analysis should include performance versus benchmarks; the reports shall be in final form and ready for submission to the Board no later than sixty (60) days following the last day of the period to which the report relates, unless otherwise directed by the Board;

· Prepare and submit to the Board an annual report for the Funds comparing the Funds’ actual performance with the annual investment plan(s) indicating the Funds’ total return (after related fees are deducted), and showing the Funds’ allocation among asset classes; the annual report shall be in final form and ready for submission to the Board no later than sixty (60) days following the last day of the period to which the report relates unless otherwise directed by the Board; the annual report shall indicate data for both the calendar year and the state’s fiscal year (September 1st through August 31st);

· Prepare and submit to the Board quarterly reports indicating the Funds’ total returns (after related fees are deducted) and showing the Funds’ allocation among asset classes; the quarterly reports shall be in final form and ready for submission to the Board no later than sixty (60) days following the last day of the period to which the report relates unless otherwise directed by the Board; the quarterly reports shall indicate data for both the calendar year and the state’s fiscal year (September 1st through August 31st);

· Submit reports to the Board in an electronic reproduceable format specified by Comptroller staff at least five (5) business days prior to Board meeting dates unless an exception is approved in writing by Comptroller staff;

· Advise and assist the Board regarding the evaluation and selection of investment managers, plan managers, as applicable, and custodian banks; assist in developing requests for proposals for investment management, custodian, and plan management services, evaluate proposals received from potential investment managers, plan managers, and custodian banks; and prepare and submit to the Board a report on results of the foregoing evaluations;

· Provide assistance establishing guidelines to investment managers regarding their voting of proxies on investment securities owned on behalf of the Funds; recommend how Comptroller staff should vote proxies in the best interest of the Funds;

· Coordinate and interact with Comptroller staff to assist in administering and carrying out the Board’s daily investment activities and cash flow needs related to the Funds;

· Assist Comptroller staff in responding to requests for information on the Board’s investments from auditors, the Legislative Budget Board, the State Auditor’s Office, the Securities and Exchange Commission or other parties as determined by Comptroller;

· Provide information on an on-going basis to the Board concerning investment issues, market conditions, investment managers’ performance, key organizational changes or issues impacting investment management, and alternative strategies for achieving the Board’s investment objectives, including but not limited to, advice regarding portfolio valuation, portfolio diversification, new investment opportunities, evaluation, termination of investment management contracts, and risk analysis;

· Design, plan, and present educational seminars to the Board regarding investment activities as Successful Respondent deems necessary or as requested by Comptroller;

· Appear before the Board and Comptroller and meet with the Board’s contractors on an as-needed, as-requested basis to report on investment matters;

· Advise the Comptroller Staff regarding liquidation or transfer of fund assets for purposes of rebalancing or disbursement of funds including, but not limited to payments to universities, colleges, purchaser(s) or beneficiaries and payment of operating expenses;

· At least annually, perform a review of the number and types of portfolios offered to account owners by the Board for the Funds, including any managed by plan manager(s), and make recommendations to the Board and Comptroller for changes, when necessary;

· At least annually, perform a review of the asset allocations underlying the age-based portfolios, target enrollment year portfolios, and other multi-class portfolios of Texas ABLE, TCSP, and the LoneStar 529 Plan and make recommendations for change, when necessary;

· At least annually, provide the Board with an assessment of each of the underlying investments owned by the Funds; highlight the likelihood of each underlying investment meeting its performance objective, as well as detail the risks inherent in each of the underlying investments;

· Monitor and provide ongoing due diligence on each of the underlying investments offered in the Funds, including any managed by a plan manager, financial institution or portfolio manager; evaluate any changes to the investment management of the underlying investments, as well as changes to the investment philosophy and process used, any changes to the overall underlying investments’ organization and any abnormal investment performance experienced; recommend changes or replacement of underlying investments to the Board as necessary, first looking to utilize mutual funds or investment vehicles offered by the plan manager, financial institution, portfolio manager, or their affiliates, as applicable, or if research suggests that the plan manager, financial institution or portfolio manager’s offerings in a particular area are not appropriate for the plans managed by the plan manager, financial institution or portfolio manager, recommend an outside mutual fund or investment vehicle;

· Assist the Board with transition of fund assets between investment managers, financial institutions or plan managers as and when necessary, or upon request of the Comptroller or the Board;

· Request that investment managers confirm in writing compliance with economic and trade sanctions administered and enforced by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury upon request of the Comptroller or the Board;

· Coordinate with Comptroller Staff and plan manager(s) prior to presenting to the Board new or changes to investment managers, funds, or policies of the Texas Tuition Promise Fund, the College Savings plans or Texas ABLE Program;

· Coordinate with Comptroller staff and plan manager(s) to implement Board-approved changes to investment managers, funds, or policies of the Texas Tuition Promise Fund, the College Savings plans or Texas ABLE Program;

· Support the Board and Comptroller through written and/or oral presentations at meetings with members of the Texas Legislature and legislative and executive branch staff and other parties as determined by Comptroller;

· Unless Comptroller approves otherwise, attend all meetings of the Board;

· Evaluate and advise the Board on its ability to achieve its long-range investment objectives given the structure of the Funds, legislative basis and resources, and make recommendations as to legislative or administrative changes that could improve the Board’s ability to meet its investment objectives for the Funds; and

· Maintain current investment policies for all Plans.

2.2 Term of Contract; Sample Contract

The initial term of the Contract shall begin September 1, 2023, or as soon thereafter as practical, and terminate August 31, 2026. In accordance with the terms of the Contract, Comptroller has the option, in its sole discretion, to extend the Contract for up to two (2) additional one (1) year periods, one year at a time. Those periods are: (1) September 1, 2026 through August 31, 2027 and (2) September 1, 2027 through August 31, 2028.

The Contract shall be based on the Sample Contract included as Exhibit A of this RFP and shall incorporate this entire RFP. The Sample Contract includes boilerplate provisions, and Comptroller reserves the right, in its sole discretion, to make a contract award without negotiation of these provisions. In the event Comptroller requires negotiations with Respondents, any modifications or clarifications agreed to with Successful Respondent during contract negotiations, if any, shall also be incorporated into the final executed Contract. Each Respondent must review these terms and conditions in Exhibit A and otherwise in this RFP and address any concerns or issues in its transmittal letter, including alternate language. Terms and conditions not specifically objected to in the transmittal letter will be deemed to be accepted by Respondent. Comptroller has final approval of any Contract. Comptroller reserves the right, in its sole discretion, to modify the terms and conditions of the Sample Contract in the best interests of the State prior to signature by the parties. Notwithstanding any exceptions or any other provision of Respondent’s Proposal to the contrary, Successful Respondent shall indemnify Comptroller and the State of Texas, as specified in the Sample Contract. The State of Texas, Comptroller and their respective employees, officers, agents and representatives, will not indemnify Successful Respondent for any amount for any purpose, and any provisions to the contrary are void.

PART III

GENERAL INFORMATION

3.1 Authority

This RFP is issued pursuant to authority granted in Chapter 2254, Subchapter B of Texas Government Code; and Chapter 54, Subchapters F, G, H, I and J of the Texas Education Code. In accordance with Section 2254.029(b) of the Texas Government Code, Comptroller provides notice that the Services are similar to services previously procured.

3.2 Comptroller Rights

In the best interest of Comptroller and the State, Comptroller, in its sole discretion, may amend or modify any provisions of this RFP, or withdraw this RFP at any time prior to award of a Contract. Comptroller reserves the right, in its sole discretion, to reject any or all submitted Proposals or to select one or more qualified Respondents without discussion of Proposals with the respective Respondents.

The decision of Comptroller, or its designee with regard to the above, shall be administratively final. Comptroller, in its sole discretion, may waive administrative deficiencies and/or minor technicalities in Proposals received. All Proposals shall become a part of Comptroller’s official procurement files and may be available for public inspection upon execution of a Contract.

3.3 Respondent Obligations

Respondents are responsible for any expense related to the preparation and submission of a Proposal. Comptroller shall not pay for any cost that is incurred by Successful Respondent prior to the effective date of the Contract. Qualified firms with the requisite experience are invited to submit Proposals in accordance with this RFP. Proposals must address all specifications.

3.4 Successful Respondent Obligations

Comptroller shall look solely to Successful Respondent for performance of the Contract. Successful Respondent shall provide the requested Services under the direction of Comptroller. Successful Respondent shall be the sole point of Contract responsibility. Successful Respondent shall be liable, both individually and severally, for the performance of all obligations under the awarded Contract and shall not be relieved of the non-performance of any subcontractor.

3.5 Schedule of Events

Comptroller anticipates that the selection of Successful Respondent and execution of the Contract, if any, will proceed according to the following approximate schedule:

March 17, 2023 - Issuance of RFP (after 10:00 a.m. CT)

March 31, 2023 - Deadline for Submission of Questions (2:00 p.m. CT)

April 7, 2023 - Electronic Posting of Official Responses to Questions (or as soon thereafter as practical)

May 9, 2023 - Possible Oral Presentations to the Board

August 1, 2023 - Contract Execution (or as soon thereafter as practical)

September 1, 2023 - Commencement of Work (or as soon thereafter as practical)

The times stated herein refer to Central Time (CT), Austin, Texas, where appropriate. Comptroller’s regular office hours are 8:00 a.m. to 5:00 p.m., Monday through Friday, except national and official State of Texas holidays. All deadlines are subject to change at Comptroller’s sole discretion.

Notices of changes to items directly impacting the original RFP or proposal process will be posted on the Electronic State Business Daily (ESBD) located at: http://www.txsmartbuy.com/esbd. Any amendment to this solicitation will be posted as an addendum on the ESBD. It is the responsibility of interested parties to periodically check the ESBD for updates to the procurement prior to submitting a Proposal. Respondent’s failure to periodically check the ESBD for updates will in no way release Successful Respondent from compliance with any requirements in the “addenda or additional information” even if such compliance results in additional costs to meet the requirements.

3.6 Issuing Office

Comptroller, through its Contracts Section, is the Issuing Office and the sole point of contact for this RFP. The Contracts Section is the only office authorized to clarify, modify, amend, alter or withdraw the specifications, terms and conditions of this RFP and any Contract. Upon issuance of this RFP, other employees of Comptroller shall not answer questions or otherwise discuss the contents of this RFP with any Respondents or their representatives. Failure to observe this restriction may result in disqualification of any pending or subsequent Proposal. This restriction does not preclude discussions unrelated to this RFP or communications for assistance in completing the required Historically Underutilized Business (HUB) forms. Except as otherwise indicated, all communications concerning this procurement must be in writing and addressed to the Issuing Office as follows:

Vicki L. Rees Contracts Attorney Texas Comptroller of Public Accounts E-mail: contracts@cpa.texas.gov

3.7 Submission of Questions

Respondents may submit questions to the Issuing Office no later than 2:00 p.m. by the deadline set forth in the Schedule of Events. Questions concerning this RFP must be in writing and addressed to the Issuing Office. Respondents are encouraged to email questions to the Issuing Office to ensure timely receipt. On or about the date set forth in the Schedule of Events, Comptroller expects to electronically post answers to the written questions on the ESBD located at: http://www.txsmartbuy.com/esbd.

3.8 Deadline for Submission of Proposals; Delivery Instructions; Number of Copies Required

One electronic copy of the Proposal in searchable PDF format must be submitted to the email address in Section 3.6 (Issuing Office). The electronic copy must be received in the Issuing Office no later than 2:00 p.m. on the deadline set forth in the Schedule of Events. The email must be labeled with “RFP No. 233a Investment Consulting Services” and include the name and address of Respondent in the body of the email.

Late Proposals will not be considered under any circumstances.

Respondents are solely responsible for verifying Comptroller’s receipt of all Proposals by the deadline specified above. Comptroller shall not be liable or responsible for any costs whatsoever incurred in submission of a Proposal.

Faxed Proposals are not acceptable and will not be considered.

Respondents will not be permitted to hand deliver Proposals. Respondents are required to submit Proposals electronically.

For purposes of meeting the 2:00 p.m. delivery deadline, the Issuing Office’s electronic receipt date and time will be considered conclusive in all respects.

Under Section 322.020 of the Texas Government Code, the Legislative Budget Board (LBB) has implemented a database of State agency contracts. (See the LBB website at www.lbb.state.tx.us.) Comptroller will upload to the LBB contract database the text of the complete Contract, including Successful Respondent’s Proposal (with limited redaction and appendix) after the date of Contract award. In submitting a Proposal, Respondent acknowledges that it understands and accepts this requirement.

3.9 Confidential Information; Nondisclosure; Open Records

All information gathered, produced, derived, obtained, analyzed, controlled or accessed by Respondent in connection with a contract resulting from this RFP (Confidential Information), shall be and remain Confidential Information and shall not be released or disclosed by Respondent without the prior written consent of Comptroller, which consent must specifically identify the Confidential Information to be disclosed by Respondent and the nature of the disclosure for which consent is sought. Respondent must execute and return with its proposal a Nondisclosure Agreement with Comptroller, in the form of Exhibit D attached hereto.

Following the award of a Contract, responses to this RFP are subject to release as public information unless the response or specific parts of the response can be shown to be exempt from the Texas Public Information Act. All Respondents are advised to consult with their legal counsel regarding disclosure issues and take the appropriate precautions to safeguard trade secrets or any other proprietary information. Comptroller assumes no obligation or responsibility relating to the disclosure or nondisclosure of information submitted by Respondents.

Respondent must complete and return with its proposal the Certification Regarding Public Nature of the Proposal, Exhibit F of this RFP. In accordance with Exhibit F, Respondent must specifically identify any parts of its proposal it believes are confidential. Respondent must stamp in bold red letters the term “CONFIDENTIAL” on that specific part or page of the proposal that Respondent believes to be confidential. Respondent must submit in writing specific detailed reasons, including any relevant legal authority, stating why Respondent believes the material to be confidential. Vague and general claims as to confidentiality will not be accepted. Comptroller will be the sole judge as to whether a claim is general and/or vague in nature. All proposals and parts of proposals that are not marked as confidential will be automatically considered public information after the contract is awarded. A response resulting in an award may be considered public information even though parts are marked confidential.

In the event Comptroller receives a request for portions of a proposal marked as “CONFIDENTIAL” as specified above, Comptroller shall forward such request to the Office of the Texas Attorney General (“Attorney General”) for an opinion on whether such information may be withheld from disclosure under the Texas Public Information Act. Comptroller will notify Respondent whose proposal is the subject of the request when the information is forwarded to the Attorney General. Comptroller assumes no obligation for asserting legal arguments on behalf of Respondent. Respondents are advised that Comptroller is obligated to comply with the decision of the Attorney General, including any such decision calling for the release of information marked “CONFIDENTIAL” by a Respondent.

Copyrighted proposals are unacceptable and are subject to disqualification as non-responsive.

3.10 Media Releases

Comptroller does not endorse any vendor, commodity or service. Media releases pertaining to this RFP, the Contract or the Services to which they relate shall not be made without the prior written consent of Comptroller and then only in accordance with explicit written instructions from Comptroller. The disclosure of the contents of Proposals prior to the award of the Contract, or any other violation of this section, may result in disqualification.

3.11 Non-exclusivity

This RFP is not exclusive, and Comptroller reserves the right to issue additional solicitations regarding the Services or similar services at any time.

3.12 Incorporation of Exhibits

Exhibits A, B, C, D, E, F, and G are attached hereto and incorporated as part of this RFP for all purposes.

PART IV

PROPOSAL FORMAT

4.1 Introduction

Each Proposal shall contain a cover sheet with the following: “RFP No. 233a Investment Consulting Services for the Texas Prepaid Higher Education Tuition Board” and the name and address of Respondent. Proposal pages must be numbered.

Proposals must be organized as described in Section 4.2. Proposals not organized in this manner may be subject to disqualification. Conciseness and clarity of content are required; vague and general Proposals may be considered non-responsive and may result in disqualification. Proposals must be complete; failure to provide all required information may result in the disqualification of the Proposal.

ALL EXHIBITS TO THIS RFP ARE PREPARED EXCLUSIVELY FOR THIS RFP. RESPONDENT’S SUBMISSION OF OTHER EXHIBITS OR DOCUMENTS, INCLUDING PRIOR RFP EXHIBITS, MAY RESULT IN DISQUALIFICATION OF THE PROPOSAL.

4.2 General Organization of Proposal Contents

Proposals must be organized as follows:

a) Transmittal Letter;

b) Executive Summary;

c) Table of Contents;

d) Respondent Identifying Information;

e) Proposed Subcontractor(s) Identifying Information;

f) Respondent Qualifications and Experience;

g) Proposed Personnel;

h) Respondent Narrative;

i) Proposed Fee;

j) Insurance;

k) Financial Statements;

l) Execution of Proposal;

m) Historically Underutilized Businesses Subcontracting Plan;

n) Criminal Conviction Certification;

o) Nondisclosure Agreement;

p) Conflict of Interest Statement; and

q) Certification Regarding Public Nature of the Proposal.

A description of the information required for each of the items listed above is set forth below.

4.2.A Transmittal Letter

Respondent must submit a transmittal letter that identifies the entity submitting the proposal and includes a commitment by that entity to provide the Services required by Comptroller. The transmittal letter must state that the proposal is valid for one hundred eighty (180) days from the deadline for delivery of proposals to Comptroller. Any proposal containing a term of less than one hundred eighty (180) days for acceptance from this deadline will be rejected as non-responsive. The transmittal letter must be signed by a person legally authorized to bind Respondent. Respondent also must indicate in its transmittal letter why it believes it is the most qualified to provide the requisite Services and why it believes its proposed services best meet Comptroller’s objectives and RFP requirements.

The transmittal letter must include a statement of acceptance of the terms and conditions of the Sample Contract located in Exhibit A. If a Respondent takes exception to any of the proposed terms and conditions stated in the Sample Contract or this RFP, then the exception(s) must be specifically and clearly identified in the transmittal letter and an explanation of the requested change along with the proposed alternative language must also be included in the transmittal letter. However, failure to accept those terms and conditions may result in disqualification of the Proposal.

4.2.B Executive Summary

Respondent must provide an executive summary of its Proposal and a representation that the Proposal addresses all of the requirements of this RFP. The executive summary must not exceed three (3) pages, and must represent a full and concise summary of the contents of the Proposal. Respondent must identify any Services that are provided beyond those specifically requested. If Respondent is providing Services that do not meet the specific requirements of this RFP but in the opinion of Respondent are equivalent or superior to those specifically requested, any such differences must be noted in the executive summary. However, failure to provide the Services specifically required may result in disqualification of the Proposal.

4.2.C Table of Contents

Each Proposal must be submitted with a table of contents that clearly identifies and denotes by page number each section of the Proposal and the location of all enclosures of the Proposal. The table of contents must follow the RFP’s structure as much as possible and include a hyperlink to each section.

4.2.D Respondent Identifying Information

Respondent must provide the following identifying information:

· name and address of business entity submitting the proposal;

· names of all principals;

· type of business entity (e.g., corporation, partnership, etc.);

· state of incorporation or organization and principal place of business;

· name and location of Texas offices, other major offices, and other facilities that relate to Respondent’s performance under this RFP;

· name, address, business telephone number, cell phone number, email address, and fax number of Respondent’s principal contact person regarding the Contract;

· Respondent’s Federal Employer Identification Number (“FEIN” or “EIN”) and Texas Tax Identification/Registration Number, if any;

· all affiliated companies and subsidiaries, or any joint ventures or other affiliations; and

· full name and address for each member, partner, and employee of Respondent (and any subcontractors) who will perform Services.

4.2.E Proposed Subcontractor(s) Identifying Information

The Proposal must identify any subcontractors who will perform Services and outline the contractual relationship between Respondent and each proposed subcontractor. Respondent must provide statements for each of its proposed subcontractors signed by an individual authorized to legally obligate each subcontractor and attesting to the fact that it will provide the Services as represented in Respondent’s Proposal. Proposed subcontractors may be required to submit ownership information similar to that required of Respondents in Section 4.2.D. Respondent must disclose, at Comptroller’s request, any information regarding proposed subcontractors.

4.2.F Respondent Qualifications and Experience

1. Experience

Respondent must include a detailed overview of Respondent’s experience providing the requisite services in its Proposal. Respondent must demonstrate its knowledge of and experience with activities relevant to the Services. Respondent must provide a detailed profile that describes the following:

(3) Respondent’s experience in providing similar investment consulting services for public sector entities with $1 billion or more in assets under management;

a) the size and scope of all operations, including number of employees and years in business;

b) the general nature of previous similar work performed, particularly work in the last three (3) years;

c) depth and length of experience with state agencies; and

(6) any other information Respondent believes is pertinent to this RFP.

2. Cancellations or Terminations

Respondent must list all contracts or purchase orders that Respondent executed or accepted within the last three (3) years that were canceled or terminated prior to completion by any state agency or other entity with which Respondent contracted. For each such contract or purchase order, Respondent must include a detailed explanation for the cancellation or termination and final resolution of the matter as well as the names and telephone numbers of each such agency's or entity’s contact person. If none, specify none.

3. Vendor Reference Questionnaire Respondents must send the Vendor Reference Questionnaire (Exhibit G) to three (3) companies or government agencies. Instructions are included on the questionnaire. Respondents may send the questionnaire to references via email. Comptroller is not responsible for undeliverable emails or for non-responsive references. Respondents’ references will be evaluated in accordance with Section 5.2 (Selection Criteria) and 5.3 (Past Performance). Respondents must include all requested information in the top portion of the questionnaire. References must respond to Comptroller on the form provided by the due date provided in Section 3.5 (Schedule of Events) to be considered in Proposal evaluation. The questionnaire form must be submitted directly from the references to Comptroller. Respondents shall not submit the completed reference form directly to Comptroller. References may be contacted for clarification at Comptroller’s discretion. Comptroller is not obligated to contact Respondent in the event incomplete reference information is submitted.

4.2.G Proposed Personnel The Proposal must identify all key personnel who are to be part of the proposed team and detail their experience. Respondent must include in the Proposal résumés of all management, supervisory, and key personnel that will be involved in performing the Services, and must provide for each person:

· a full name (including full middle name);

· a five (5) year employment history;

· a specific description of relevant experience and skills that person has with this type of services, that must include at least three (3) years of experience performing work similar to the required Services (limit to one page);

· a specific indication of what role the individual will have in this project; and

· any additional pertinent information to indicate the individual's ability to aid Respondent in successfully completing the required Services (limit to one page).

In addition, Respondent must provide an organizational chart indicating lines of authority, names, titles, and functions of individuals responsible for the Services.

Résumés must present the required personnel information in sufficient detail to provide Comptroller with a convincing indication that the personnel involved can successfully provide the Services. The key personnel, as identified in the Proposal, are considered to be essential to the Services. Comptroller reserves the right, in its sole discretion, to approve each member of the team and to request substitutions. All replacements of personnel must be of equal or superior experience or skill as the person replaced.

4.2.H Respondent Narrative

Respondent must submit a narrative explanation of how the offered services will meet the requirements of this RFP. Roles and responsibilities of Comptroller, beyond those stated in the RFP, shall be clearly described by the Respondent. Respondent must describe its approach and methodology for meeting the requirements in Section 14.41 (CPA Data Safeguard Standards) of Exhibit A (Sample Contract). In its narrative, Respondent may also concisely describe any additional features, aspects, or advantages of its services in any relevant area not covered elsewhere in its Proposal.

4.2.I Proposed Fee

Comptroller is soliciting proposals to procure the Services for a firm fixed price. Respondents are encouraged to offer their best pricing at all times. Respondent must include all costs of providing all of the Services on a price sheet similar in format to the price sheet located in Attachment C (Authorized Personnel and Compensation) to Exhibit A (Sample Contract). All costs and expenses associated with the Services defined by the RFP including attendance at, and participation in, meetings as requested by Comptroller must be included on the proposed price sheet. Variable costs, such as travel-related expenses, must not be added as line items on the price sheet. Comptroller reserves the right to negotiate budget and budgetary constraints at the time of contract award. Any Contract shall include a total not-to-exceed fee for all costs associated with providing the Services.

4.2.J Insurance

Respondent must provide a statement of its intent to obtain and maintain for the term of the Contract the minimum insurance and bond coverage specified in the Sample Contract. Respondent should also describe other insurance coverage maintained by Respondent in the ordinary course of business and provide proof of same in its Proposal. Proof of insurance and bond coverage may be provided in the form of current certificates of insurance.

4.2.K Financial Statements

Respondent and its parent company, if applicable, must provide evidence of financial stability by providing audited financial statements for each of the last two (2) years of Respondent’s operations or, in the alternative, financial statements compiled, reviewed and attested by an independent certified public accountant or certified public accounting firm.

In lieu of providing audited financial statements in its Proposal, a Respondent may provide a statement regarding the Respondent’s financial stability and viability to perform under any Contract. If Respondent elects this approach, the Respondent must submit a statement, with appropriate supporting documentation, sufficiently detailed to demonstrate financial solvency and to verify the capacity to fulfill the requirements of this RFP.

4.2.L Execution of Proposal

Exhibit B must be completed and signed by Respondent.

4.2.M Historically Underutilized Businesses Subcontracting Plan

The State of Texas and Comptroller are committed to assisting Historically Underutilized Businesses (HUBs) through the procurement process. In accordance with Sections 2161.181 and 2161.182, Texas Government Code, each state agency shall make a good faith effort to increase the contract awards for the purchase of goods or services to HUBs based on rules adopted to implement the disparity study described by Section 2161.002(c), Texas Government Code.