Attachment_1_PWS_Industry_Database_3_July_2017.docx

EXPORT-IMPORT BANK ON BEHALF OF

The Enterprise Risk Committee TO PROVIDE a Corporate Scorecard / Integrated Industry Database for use with EXIM Bank’s Corporate Risk Rating Model

PERFORMANCE WORK STATEMENT (PWS)

7/3/17

1.0 INTRODUCTION

· The Contractor shall provide all personnel, equipment, supplies, facilities, transportation, tools, materials, supervision, incidental expenses and other items and non-personal services necessary to provide an Integrated Industry Database for use with EXIM Bank’s Long-term Corporate Risk Rating Model as defined in this Performance Work Statement (except for those items or services specified herein as Government furnished property and services).

2.0 BACKGROUND

· EXIM Bank is in the process of evaluating and implementing risk rating model improvement recommendations resulting from a FY 2015 validation review of the Bank’s risk rating models. In line with the recommendations, EXIM Bank is pursuing the integration of an industry database for use with its existing Long-term Corporate Risk Rating Model and, as an option, for use with its Commercial Airline Risk Rating Model as well.

3.0 SCOPE

· EXIM Bank seeks to integrate an industry database into its existing Long-term Corporate Risk Rating Model, which is used to “risk rate” corporate obligors. The integrated industry database shall address the following model recommendations: (1) provide emerging market-focused, industry-specific financial ratio benchmarks for comparison with obligors and (2) integrated industry-specific weights and ranges for each financial ratio benchmark that is validated and linked to indicative risk ratings so as to yield more objective scoring criteria. Given the intent to build in objective scoring criteria, the modified Long-term Corporate Risk Rating Model, as described above, must be able to replace the Bank’s quantitatively-driven short and medium-term risk rating models, allowing for the transition to a single corporate risk rating model. Accordingly, the Vendor’s integrated industry database must be validated for use with both large corporate and small & medium-sized enterprise obligors. As an option to the contract, the integrated industry database may be integrated into EXIM Bank’s commercial airline risk rating model to update and validate the financial metrics used in said airline model. As with the Bank’s Long-term Corporate Risk Rating Model, under this airline model option, the integrated industry database should provide defined weights and scoring parameters around each financial metric linked to an indicative risk rating.

4.0 OBJECTIVES (NATURE OF WORK)

Desired Outcome: EXIM Bank’s existing Long-term Corporate Risk Rating Model (LTCRRM) (currently Excel based) will be modified with the Vendor provided integrated industry database so as to enhance this LTCRRM with emerging market focused, industry-specific financial ratio benchmarks with defined weighting and ranges that are validated and linked to indicative risk ratings for more objective scoring criteria. The end-product must enhance the existing LTCRRM, per the model improvement recommendations discussed infra, and be a sufficient replacement for the Bank’s existing short and medium-term risk rating models, thereby allowing the Bank to transition to a single corporate risk rating model. As an option to the contract, the industry database maybe integrated into EXIM Bank’s Commercial Airline Risk Rating Model to update and validate the financial metrics used in the airline model. As with the Bank’s LTCRRM, under this option, the integrated industry database should provide defined weights and scoring parameters around each financial metric linked to an indicative risk rating.

Constraints: The modified single corporate risk rating model needs to retain sufficient flexibility to allow for objective indicative risk scores to be adjusted by qualitative underwriter judgment. The intent of this PWS for an integrated industry database and model modification is not to purchase or create a purely mechanical risk rating model, but to acquire a flexible application.

5.0 SPECFIC REQUIREMENTS/TASKS

· Vendor shall present EXIM Bank with an integrated industry database that must:

· (i) set forth the composition of the industry database that shall be used for benchmarking purposes, including a breakdown of geographic and sector concentrations;

· (ii) set forth the financial ratio benchmark rating weights and ranges and explain validation methodology;(iii) be ready for integration of the Vendor’s industry database into the existing LTCRRM and document how the integrated industry database would function within that LTCRRM (same would apply to the Commercial Airline Model if the contract option is exercised); and

· address (i) how EXIM Bank’s internal country risk assessment would be integrated with the vendor’s industry financial ratio benchmarks and weights, (ii) how default rates associated with industry database benchmark ratings can be integrated with EXIM Bank’s internal default experience, and (iii) how industry-specific weightings derived from the industry database would be incorporated.

· Vendor shall present EXIM Bank with the draft risk rating results that would be produced by the integrated database.

· Results must show the ratings associated with each financial ratio benchmark, including the relevant weighting.

· Results must be tested against a sample of existing EXIM Bank short-term, medium-term and long-term corporate transactions as well as EXIM Bank’s airline transactions, if the option is exercised.

· Upon government’s acceptance of the rating results outlined immediately above, the vendor shall work with EXIM Bank staff to integrate the Vendor provided industry base into the Bank’s existing LTCRRM (as well as the Commercial Airline Model, if the option is exercised).

· Vendor shall provide EXIM Bank with documentation regarding the industry database including at a minimum its composition, development and operational use guidelines.

· Vendor shall provide training to EXIM staff regarding the integration of the Vendor’s industry database into the Bank’s existing LTCRRM (as well as the Commercial Airline Model, if the option is exercised).

· Vendor will develop a training agenda and be responsible for providing sufficient training materials to successfully conduct the training.

· Training must include classroom as well as hands-on use of the integrated model and database.

· Training must include an oral explanation and written documentation of operational use guidelines.

· Once the database is accepted and training complete, Vendor shall provide updates to its industry database on an “as needed” basis to ensure its industry database, as integrated into the LTCRRM, remains up-to-date, for the remainder of the 12 month period commencing on the date of contract award.

· Vendor will be required to undertake or provide, as the case may be, during each of four (4) one year option periods:

· Database updates, including benchmark ratings and weights, to be completed at a minimum of annually. Additional updates to be performed during each option period on an “as needed” basis to ensure database is up-to-date.

· Validation of the financial ratio benchmark rating ranges to be completed at a minimum of annually. Additional validations to be performed during each option period on an “as needed” basis to ensure database is up-to-date.

· Training to be provided to new EXIM Bank model users gaining employment during each option period along with remedial training for existing employees. This training shall be consolidated to not exceed one (1) training session per option period.

6.0 APPLICABLE DIRECTIVES

· N/A

7.0 GOVERNMENT FURNISHED ITEMS

· EXIM Bank shall provide its existing LTCRRM for the purpose of modifying this model with the Vendor’s integrated industry database. EXIM Bank shall also provide its Commercial Airline Model for the purpose of modifying this model with an integrated industry database, if this option is exercised.

· The selected vendor will be required to sign a non-disclosure agreement prior to receiving access to EXIM’s Long-term Corporate Risk Rating Model (and the Commercial Airline Model, if the option is exercised), as noted above.

8.0 DELIVERABLES

9.0 PERFORMANCE REQUIREMENT SUMMARY (PRS)

The Vendor will provide a copy of its plan to control quality within this project.

Documents noted in Section 8.0 – Deliverables of this PWS must be reviewed and accepted by the Government before Vendor shall be considered to have met the Agency’s requirements.

10.0 PERIOD OF PERFORMANCE

Review of validation material and model testing: 60 calendar days after date of award.

Training of EXIM Bank staff: 60 calendar days after acceptance by EXIM of the integrated model.

Maintenance updates to System: from acceptance of database and training to completion of 12 month period after date of award.

Following the base year for purchase of the integrated industry database, there will be four 1 year option periods for updates, validation and training to the database.

11.0 PLACE OF PERFORMANCE

Work is expected to take place primarily at the Vendor’s work site. If any travel to EXIM Bank is required, the cost is considered a part of the firm fixed price. EXIM will not separately reimburse for travel expenses of any kind.