I_1_b Life and Property Casualty Insurance PWS SS.pdf

Performance Work Statement (PWS) Project: Property and Casualty & Life Insurance Training

1.0 BACKGROUND

The Large Business & International (LB&I) organization is one of the primary operating divisions of the Internal Revenue Service (IRS). LB&I services corporations, subchapter S Corporations, and Partnerships with assets greater than $10 million. These businesses typically employ large numbers of employees, deal with complicated issues involving tax law and accounting principles and conduct business in an expanding global environment.

2.0 OBJECTIVES

The purpose of this requirement is to procure instructional training for the LB&I Organization Revenue Agents.

Revenue Agents are assigned to examine Property & Casualty and Life Insurance company tax returns and include instruction on statutory accounting, annual statements and Federal taxation of Property & Casualty and Life Insurance companies.

The contractor shall provide students with comprehensive instruction on

• Property & Casualty and Life Insurance to include industry terminology, concepts, system of records, statutory accounting, annual statements, reinsurance and federal taxation of insurance transactions

• Property & Casualty and Life insurance business practices and tax strategies

• Identifying tax issues and appropriately applying business principles learned, to conduct examinations to ensure full compliance of all tax laws, regulations, and guidelines

The contractor shall have qualified onsite/virtual instructors and provide relevant training materials to support LB&I’s mission to be a world class organization in a today’s global environment. The contractors shall have the flexibility to develop cost-effective solutions and the opportunity to propose innovative alternatives that meet the Government task requirements.

3.0 TECHNICAL REQUIREMENTS

The contractor shall have design, develop, and deliver up to four (4) comprehensive instructional courses.

Two (2) Property & Casualty and two (2) Life Insurance training courses each fiscal year which will enable Revenue Agents to understand industry terminology, concepts, systems of records, insurance accounting, annual statements, reinsurance, and federal taxation of insurance transactions. The course shall be delivered by the Contractor in a classroom setting or approved virtual learning environment, which will be observed by at least one IRS Subject Matter Expert (SME) at the IRS identified location(s).

Additionally, the classroom setting will provide the level of interaction among students and instructors that will assure success.

4.0 TRAINING REQUIREMENTS

4.1 The contractor shall provide “Statutory Accounting and Annual Statement”

Training for both Property & Casualty and Life Insurance. The objective of this training is to provide students with a basic understanding of insurance and its structure; and enable the students to understand statutory accounting principles, industry terminology and concepts, and contents of the annual statement with supporting schedules and exhibits.

A. Property & Casualty Insurance training shall include:

1. Introduction to Property & Casualty Insurance

2. Statutory Accounting Concepts:

a. Premiums

b. Expenses

c. Reinsurance

d. Losses & Loss Adjustment Expenses (LAE)

e. Loss and LAE Analysis and Schedule P

f. Investments

g. Other Assets and Asset Exhibits

3. Introduction to the National Association of Insurance Commissioners (NAIC) annual statement

a. Review of Statutory Financial Statements

4. Introduction to Generally Accepted Accounting Principles (GAAP) Financial Statements

a. Differences between Statutory Accounting Principles (SAP) and (GAAP).

5. National Association of Insurance Commissioners annual statement overview. The Contractor shall provide students with a sample of a current year annual statement for both Property & Casualty Insurance (Yellow Book) and Health Insurance (Orange Book). These annual statements will be bound, like the ones which would be submitted to the NAIC.

B. Life Insurance training shall include:

1. Industry overview

2. Framework of insurance accounting, Review of Statutory Financial Statements, including

General and Separate Accounts

3. Assets and the investment schedules and exhibits, including Non-admitted assets and the

Assets page

4. Interest maintenance and asset valuation reserves

5. Life insurance reserves and liabilities

6. Introduction to reinsurance

7. Operating statements

8. Supporting information and notes

9. Separate accounts, including Blue Book and Green Book relationships, policyholder reserves and liabilities, the summary of operations and surplus statements

10. Risk-based capital

11. Investment schedules

12. Introduction to derivatives, hedging transactions, Schedule DB

13. National Association of Insurance Commissioners (NAIC) annual statement Overview. The

Contractor shall provide students with a sample of a current year annual abatements for life insurance, including the General Account (Blue Book) and Separate Account (Green Book).

These annual statements will be bound, like the ones which would be submitted to the NAIC.

4.2 The contractor shall provide “Federal Taxation of Property & Casualty, and Life Insurance Companies” training. The objective of this training is to enable the students to build upon the training provided as described in 4.1 above, and to then understand federal taxation of property & casualty and life insurance companies. This includes the code sections, regulations, IRS pronouncements, and court cases.

The students should have the necessary instruction and course materials to enable them to examine Form

1120-PC, U.S Property & Casualty Insurance Company Income Tax Return or Form 1120-L, U.S. Life Insurance Company Income Tax Return.

A. Property & Casualty Insurance training shall include:

1. Property and Casualty and Health Insurance Overview

2. NAIC annual statement and taxation

3. Form 1120 PC Overview

4. Updates for the most recent tax law changes

5. Taxation of premiums - Schedule E

a. Premiums Written - The premium portion will include the new regulations

b. Unearned Premiums

c. Unearned Premiums for IRC 833 Organizations

i. Medical Loss Ratio (MLR) qualification under IRC 833(c)(5)

d. Advance Premiums

e. Commissions on Deferred Premiums

f. Retrospective Policies

g. Earned but Unbilled Audit Premiums

h. Changes based on Section 832 Regulations effective January 2, 2000

6. Investment Income Taxation

7. Losses Incurred Deduction - Schedule F

a. Discounting of Unpaid Losses and Loss Adjustment Expenses

b. Salvage and Subrogation

c. Discounting of Salvage and Subrogation

d. Proration Adjustment

e. Example for evaluating unpaid losses & loss adjustment expenses

8. Special Deduction for Blue Cross-Blue Shield Organizations – Schedule H

a. Overview

b. Medical Loss Ratio (MLR) qualification under IRC 833(c)(5)

c. Net operating losses

d. Example of Calculation

9. Other Underwriting Items

a. Reconciliation to Exhibit 4 (Expenses) of the annual statement

b. Schedule M 1 Items

c. Section 847 (Repealed)

d. Schedule G

e. Form 1120-PC Review

10. Determination of Taxable Investment Income for Electing Small Companies

a. Schedule B

11. Computation of Income Tax

a. Applicable Corporate Tax Rates

b. Alternative tax for certain small companies – IRC 831(b)

c. Tax Credits foreign & domestic

d. Base Erosion minimum tax

e. Prior year minimum tax

12. Election by Reciprocals – IRC 835

13. Case Study - Preparation of Form 1120-PC, using the annual statement provided by the

Contractor.

14. Case Study – Evaluation of Unpaid Losses and Loss Adjustment Expenses using the annual statement provided by the Contractor.

B. Life Insurance training will include:

1. Life Insurance Tax History Overview

2. NAIC annual statement and taxation

3. Form 1120-L Overview

4. Assets

5. Investment Income and Capital Gain (Losses)

6. Reinsurance, including annual statement reporting, schedule S, distinction between risk transfer and financing

7. Statutory and Tax Reserves

8. Gross Premiums and Other Income

9. Proration

10. Deductions for Benefits to Policyholders

11. Death Benefits and Other Deductions

12. Policy Acquisition Expenses, DAC tax

13. Differences between Tax Accounting, Statutory Accounting Principles and Generally

Accepted Accounting Principles

14. Case Study - Preparation of Form 1120-L, using the annual statement provided by the

Contractor.

15. Review of non-consolidated Schedule M-3

16. Changes effective with the TCJA

5.0 SPECIAL COURSE REQUIREMENTS

5.1 Contractor training course material shall contain no Personal Identifiable Information (PII) or Taxpayer data.

5.2 The contractor shall modify the annual statement and course material in the option years (if options are exercised) to reflect any current tax law changes relating to the taxation of Property & Casualty and Life Insurance companies or modifications by the NAIC. The course delivered under the options shall be the course approved in the base year inclusive of changes incorporated as provided elsewhere in the PWS.

6.0 INSTRUCTIONAL METHODOLOGY

As a result of COVID-19 the contractor must be able to deliver in a virtual or face to face training environment at the IRS facility. The virtual platforms are Cisco WebEx, Zoom.gov or the IRS virtual environment.

The virtual delivery should consist of online modules, facilitated group work, and other items as directed by the Government Program Manager (GPM). Face to face delivery will provide 32 hours of face-to-face classroom training. Four hours on Monday, eight hours Tuesday-Thursday and four hours on Friday. The method of delivery and/or virtual platform will be determined by the GPM.

7.0 COURSE DESIGN

The IRS requires the Contractor to provide and deliver an already developed course. The IRS is NOT requesting the contractor to design a course.

The contractor shall provide the syllabus from the already developed course that identifies the detailed course design, course outline, objectives, lessons, activities and timeframes.

8.0 DATA RIGHTS

The Contractor shall permit the IRS to use the Contractor's annual statement and associated data required below for current and future IRS in-house training at no additional cost. This will allow the IRS to use the Contractor's annual statement and records. To that end, the Contractor shall provide the following in support of its annual statement:

• Share loss reserve development and agree that the IRS instructors may contact Contractor for any additional information as needed, at no additional cost to the IRS.

• Provide runoffs using the paid loss, incurred loss and Bornheutter-Ferguson Method of development. These runoffs shall be obtained from the current annual statement as well as historical data provided by the Contractor. This material shall be provided in the latest version of Microsoft office products.

• Reconciliation of Statutory Reserve to Tax Reserve, including detailed schedules showing what makes Account Balance Reserves, Schedule F, Line 1 through 6, Form 1120-L; Reconciliation of Statutory Reserve Increase to Tax Reserve Increase and agree that the IRS instructors may contact Contractor for any additional information, as needed, at no additional cost to the IRS.

9.0 SERVICE/SUPPLIES

The contractor shall provide all course material including any pre-reads for a class up to 35 Revenue Agent participants, and other key personnel including the program manager, SME and GPM. Key personnel and attendees will be allowed to keep all training materials at the end of the class.

10.0 TOOLS AND RESOURCES

The Contractor shall provide tools and resources for each student that includes comprehensive text with sections specific to Life, Health and Property & Casualty Insurance. PowerPoint presentation outlining the curriculum being covered. The Contractor will also supply each Revenue Agent participant with a completed life, health and property & casualty model of company annual statements, completed Forms 1120-L & 1120-PC for life, property & casualty, respectively, model companies along with Schedule M- 3s and case study exercises that support class content that allow the RAs to work through Forms 1120-L

& 1120-PC.

No textbook is required at this time. If later, it’s determined a textbook is required, the program office Large Business & International (LB&I) will be responsible for the purchase and distribution of textbooks for students only.

11.0 WELCOME LETTER

The Contractor shall develop and provide a “Welcome Letter” to all training class participants. The “Welcome Letter” shall explain the training and all related forms including any pre-reads required. This letter must be delivered to the Contracting Officer Representative (COR)/GPM 30 days prior to the start of any course and to the class participants at least 21 days prior to the start of any course.

12.0 TRAINING FACILITY AND LOCATION

The Internal Revenue Service will be responsible for providing the training facility for all training classes.

Training will be conducted in the Atlanta, GA. The Training facility has multiple training and breakrooms. Each training room is equipped with multiple LAN (Local Area Network). Each training room has a computer podium for the instructor’s usage and available to contractor personnel at no charge by the government.

13.0 CHANGE IN TRAINING FACILITY AND LOCATION

In the event the Government determines it necessary to change the location of the training facility during the life of the contract, the Government will provide notification to the contractor of the anticipated change and allow the contractor up to 60 days to make and implement arrangements for the change.

14.0 CLASS LENGTH AND COURSE SIZE

Total class size will be up to 35 Revenue Agents participants and 32-hours in length for face to face. Each 32-hour course shall be conducted during official business hours (i.e., 8:30 AM to 4:30 PM EST) beginning on Monday and end on Friday as outlined in PWS section 6.0. All courses shall be conducted at IRS site locations approved by the GPM in advance of the schedule training.

The training dates and time will be set as agreed to by the GPM and Contractor Project Manager.

15.0 REPORTS

The Contractor shall provide a report to the GPM certifying student attendance within 30 days after completion of the course. The Contractor shall provide this report using Microsoft Office Products.

16.0 KEY PERSONNEL

Government Program Manager (GPM) Bennae Donnell-Cobette bennae.donnell-cobette@irs.gov

IRS Learning and Education (L&E) Project Manager Paxton Williams paxton.williams@irs.gov

Contracting Officer Representatives (COR) Shantell L. Brown Shantell.l.brown@irs.gov

Contractor Program Manager (CPM)

TBD

16.1 KEY PERSONNEL QUALIFICATIONS

Contractor Project Manager, at a minimum, must have five years of experience managing projects of the same size, scope and complexity in order to clearly demonstrate an ability to coordinate, oversee and manage the timeliness and quality of all resources and activities performed under this contract. Contractor Project Manager must demonstrate the capability to create and maintain a highly effective project management plan and project management document in Microsoft Office products so that all activities performed under this contract can be effectively reported.

Instructors/Facilitator: At a minimum, each member of the Instructor team must have at least five years of extensive work or experience instructing in finance/accounting. At least one instructor shall be a Certified Public Account (CPA) and one Instructor that possesses a master’s degree in finance/accounting.

mailto:bennae.donnell-cobette@irs.gov mailto:paxton.williams@irs.gov mailto:Shantell.l.brown@irs.gov

16.2 SUBSTITUTION OF CONTRACTOR KEY PERSONNEL

Should it become necessary to replace any key personnel already approved and working under the Task Order, the Contractor shall submit to the COR a key personnel resume on the proposed substitute at least 30 calendar days (for Instructor) prior to the start of any awarded course and 30 calendar days (for Contractor Project Manager) prior to the Contractor Project Manager's start date under the contract.

Contractor Key Personnel substitutes must be approved, in writing, by both the COR and GPM, before they may work under this contract or any Delivery Order issued against the contract.

17.0 INTERACTIONS AND GUIDANANCE

The Contractor shall routinely interact with and receive work guidance from key IRS Leadership, Enterprise Talent Planning & Development (ETPD) personnel in the IRS Human Capital organization (who will oversee and manage the contract on behalf of the Department of Treasury), including, but not limited to the following:

• IRS Contracting Officer's Representative; and

• Government Project Manager(s)

18.0 GOVERNMENT FURNISHED INFORMATION

No government furnished information or equipment will be provided to contractor.

19.0 PRODUCTS DEVELOPED

The Contractor shall agree any product developed exclusively for the Department of Treasury under this Task Order shall be the sole property of the Department of Treasury and shall not be reused or repurposed for the benefit of the contractor.

20.0 DELIVERABLES AND DUE DATES

The contractor shall provide the following deliverables at the due dates indicated below:

Deliverables Description Due Date

Kick-off Meeting To review the initial draft of the curriculum to be presented

Within 10 days of the Contract Award

Final Course Material Final edits of curriculum adding SME/GPM feedback

Within 14 workdays after receipt of SME/GPM feedback

Quality Control Plan A plan designed to ensure high quality services.

Within 30 Calendar days of Contract award.

Delivery of Course Class Dates TBD Draft course material for subsequent classes and all option years

Course material for subsequent classes and options years reflecting current tax law changes

12 weeks prior to delivery of course.

Final course material for subsequent classes and all option years

Final edits of curriculum adding SME/GPM feedback

Within 14 workdays after receipt of SME/GPM feedback

21.0 QUALITY ASSURANCE SURVEILLANCE PLAN (QASP)

Please see attached QASP

22.0 QUALITY CONTROL PLAN

Contractor receiving award under this RFP shall establish and deliver electronically a Quality Control Plan (QCP) to the COR and Contracting Officer (CO) no later than two (2) weeks after contract award.

The QCP must be a written plan that ensures the "Property and Casualty Life Insurance" course will be provided to the IRS. As specified, the QCP shall sets forth procedures and responsibilities for controlling, maintaining and providing high quality work to the IRS. This plan shall include but not be limited to the following:

1. An Inspection Program covering all the services stated in this PWS. It must specify the areas to be inspected on a scheduled or unscheduled basis and the names, titles and qualifications of the individuals performing inspections and the extent of their authority. Their functional roles shall be depicted in an organizational chart.

2. Methods of identifying deficiencies in the quality of services performed before the level of performance becomes unacceptable and the corrective actions needed to be taken; procedures for notifying the COR when deficiencies are encountered; and descriptions of proposed sampling techniques.

3. Methods of documenting and enforcing quality control operations of both the Contractor's and

Subcontractors' (if any) work, including inspection and testing.

4. Copy of format of Contractors Quality Control Reports; and File of all Quality Control Inspections, inspection results and any corrective action required and/or performed during the life of this contract. This file shall become the property of the IRS and shall be made available to the COR and CO upon request. The file shall be provided to both parties within ten (10) days after completion or termination of the contract.

The COR and GPM will accept/reject Contractor's submitted (QCP) after review. Contractor may be required to make revisions.

23.0 CONTRACT TYPE

Firm-Fixed Priced

24.0 PERIOD OF PERFORMANCE

The requirement will be for one (1) 12-month base period, with four (4) 12-month option years. The anticipated date of award is April/May 2022.

25.0 KICKOFF MEETING

The Contractor shall contact the identified IRS COR to coordinate a Kick-Off Meeting one day after the contract award. The Contractor shall schedule and conduct the "kick-off meeting" with the Government within ten days after the award.

26.0 TRAVEL

For any travel to be authorized or reimbursed, the Contractor travel must be pre-approved in writing by the Internal Revenue Service (IRS) Contracting Officer’s Representative (COR). Orders contemplating travel will have a specific CLIN. Travel and per diem will be reimbursed at actual cost in accordance with the limitations set forth in FAR 31.205-46 and the General Services Administration’s Federal Travel Regulations. Profit shall NOT be applied to the travel costs. The Contractor shall attach the travel voucher statement and receipts to the monthly invoice for both allowable and reasonable cost in accordance with the regulation FAR 31.205-46

27.0 DEFINITIONS

27.1 Enterprise Talent Planning & Development (ETPD) is an organization within the Human Capital Office responsible for administering the education programs at the IRS. ETPD ensures all agency personnel receive relevant training timely and in an effective manner.

27.2 Government Program Manager (GPM) is designated by ETPD as the IRS official with the role and responsibility for administering or managing the course, scheduling classes, and selecting IRS instructors.

27.3 Technical Advisor is the IRS Examination national coordinator recognized by the LB&I organization as an expert for the Property & Casualty and Life Insurance Industry.

27.4 Subject Matter Expert (SME) is an IRS employee designated as an expert on development of course curricula. SMEs are charged with the responsibility to review and approve all training material that is developed by the Contractor before it is taught to the RAs.

27.5 Instructors are contractor personnel who are responsible for providing instruction to IRS Revenue Agents training participants on insurance accounting, annual statement, reinsurance, and federal taxation.

Instructors must be experts in the field of the subject matter(s) taught.

27.6 Key Personnel are the essential contractor personnel identified having a role and responsible for the successful performance of the Task Order issued under the contract.