FI RFP 12-17-09 Final CID.doc

SECTION B

B.1 PBGC-11-002 DESCRIPTION OF SERVICES (AT CONTRACTOR SITE) (FEB 2009)

The Contractor shall provide the personnel, facilities, equipment, and other materials and services necessary to perform the effort described in Section C, the Statement of Work.

B.2 FEE SCHEDULE – Core Fixed Income Fund Manager

BASE YEAR

Asset Based Fees _____% on first $____ million

_____% on next $____ million

_____% on balance

OPTION YEAR 1

OPTION YEAR 2

_____% on next $____ million

_____% on balance

OPTION YEAR 3

OPTION YEAR 4

OPTION YEAR 5

OPTION YEAR 6

_____% on next $____ million

_____% on balance

B.3 FEE SCHEDULE – Global Fixed Income Fund Manager

BASE YEAR

OPTION YEAR 3

B.4 FEE SCHEDULE – Long Duration Fixed Income Fund Manager

BASE YEAR

B.5 FEE SCHEDULE – Emerging Markets Debt Fixed Income Fund Manager

B.6 FEE SCHEDULE – High Yield Fixed Income Fund Manager

SECTION C STATEMENT OF WORK

I. INTRODUCTION

The Employee Retirement Income Security Act of 1974 (ERISA) established Pension Benefit Guaranty Corporation (PBGC) as a federal corporation to encourage the growth of defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum. Defined benefit pension plans promise to pay a specified monthly benefit at retirement, commonly based on salary and years on the job. PBGC, a wholly owned United States Government corporation, administers the insurance program and termination process for most private-sector defined benefit pension plans that are tax-qualified under the Internal Revenue Code. PBGC is headed by a Director who reports to a board of directors consisting of the Secretaries of Labor, Commerce, and Treasury, with the Secretary of Labor as Chairman. General tax revenues do not fund PBGC. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives the assets of the pension plans it terminates.

PBGC intends to increase its roster of fixed income managers from its current level to provide more manager diversification. PBGC anticipates hiring multiple managers capable of managing fixed income assets in two or more fixed income strategies. Award allocations will vary based on the investment skill and ability of the managers to meet the needs of this contract. PBGC expects the allocation awards to range from US $100 million to $1 billion for each manager selected, but makes no guarantees as to the size of any award. These allocations may change over time due to the investment results generated by the contractor and the needs of PBGC.

Investment Mandate The investment manager (hereinafter referred to as contractor) shall provide active investment management services for fixed income portfolios that will, over a full market cycle, provide a total rate of return which exceeds the benchmark of the respective portfolio, consistent with appropriate levels of risk.

Investments of Trust Fund assets for this mandate may include fixed income and derivative products that are obligations of both domestic (U.S.) and non-U.S. issuers. The contractor shall exercise best efforts to select securities suitable and appropriate to the PBGC's mission. Diligent effort shall be exercised to avoid the purchase of a security where the PBGC is likely to terminate the issuer’s underfunded pension plan.

II. SCOPE OF WORK

The contractor shall be responsible for providing active investment management and related services for fixed income portfolios. The portfolios shall be invested in one or more of the five fixed income strategies listed below:

Strategies:

1. Core Fixed Income

2. Global Fixed Income

3. Long Duration Fixed Income

4. Emerging Markets Debt

5. High Yield

Objective

The investment objective is to construct portfolios of fixed income assets to earn superior returns which exceed the portfolio benchmarks of these strategies, consistent with the risk parameters outlined in the investment guidelines for the respective portfolios.

Activities

The contractor shall use a highly structured investment process which may incorporate, but is not limited to, the following elements in the investment decision making process:

· Establishing an interest rate forecast for short term and long term time periods

· Conducting yield curve analysis

· Determining the proper maturity and duration allocations

· Performing sector analysis and making sector investment decisions

· Conducting credit analysis of issuers

· Selecting securities within the realm of permissible investments described in the PBGC investment guidelines

The contractor shall evaluate potential investments using disciplined, thorough investment analysis and due diligence. Assets shall be managed with full discretion, in accordance with the policies, of PBGC, and the strategies and objectives mutually agreed upon between the contractor and PBGC. Investment guidelines will be negotiated between PBGC and the contractor subsequent to contract award. After the guidelines are negotiated, PBGC shall deliver them in final form to the contractor.

The contractor shall employ the investment philosophy, styles and strategies for which it was retained, unless otherwise directed by the PBGC. PBGC , under this contract and not separately priced, may receive any of the contractor's internal or external investment, market and economic research training materials and support capabilities and services in the performance of PBGC's investment responsibilities. These materials and services do not include proprietary models or information unique to the contractor's investment process.

The contractor shall maintain close contact with PBGC’s Corporate Investments Department and serve as a resource of economic and investment information and research. The contractor shall keep PBGC fully informed of the rationale for investment decisions and changes in the portfolio under its management. Under this contract, PBGC, at its discretion, may utilize other investment advisory services offered by the contractor.

The contractor shall be responsible for immediate notification to the PBGC of significant changes in personnel, ownership, resources, or firm direction. The contractor shall discharge its duties under this contract solely in the interest of the PBGC with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. Moreover, the contractor shall utilize best practices of the investment industry, such practices to include but not limited to the standards issued by the Chartered Financial Analyst Institute.

The contractor shall provide PBGC with immediate notification of any potential issue that could hinder the contractor’s ability to trade with full discretion on behalf of PBGC. The contractor shall maintain appropriate operational separation (i.e. a Chinese Wall) between trading and investment duties on behalf of PBGC portfolios and any engagement such as creditor committee representation which could affect the contractor’s full discretion to buy or sell in the marketplace.

The contractor shall work closely with PBGC’s custodian bank to facilitate the efficient and timely recording of purchases, sales and other activity, reconcile securities and cash balances and provide information necessary to calculate performance results. PBGC will delegate its proxy voting authority to the investment manager. The investment manager shall maintain records of its votes and report the results, at least annually, to PBGC.

Educational Conferences Contractor shall provide up to six (6) slots in any educational conferences it may offer to clients as part of the normal contract cost. This opportunity would include the cost of related meals offered as part of the formal conference program. Non-training or non-educational activities offered at the conference including, but not limited to, golf, fishing, tours, entertainment, etc., would not be included, as PBGC can neither pay for nor may individual employees accept these items. PBGC will pay the travel, lodging, per-diem, and other subsistence expenses (e.g., if meals are not offered to all attendees as part of the conference) for its employees who participate at such conferences. PBGC will advise the contractor of its acceptance or declination of slots offered at educational conferences.

Fidelity Bond and Insurance Coverage The contractor shall have or acquire within 6 months of contract award a fidelity bond, with the PBGC as a loss payee, in the minimum amount of $5,000,000.00 with maximum deductible of $1,000,000.00. The bond shall cover, at a minimum, losses due to dishonest or fraudulent acts or omissions by the contractor. Proof of the existence of such fidelity bond shall be provided to PBGC immediately upon its acquisition and then annually thereafter.

The contractor shall have SEC-required (17g-1) fidelity bonds, or acquire within 6 months of contract award, errors and omissions coverage, and any other fiduciary coverage in the minimum amount of $10,000,000.00 with a maximum deductible of $1,000,000.00 per claim. The policy shall cover, at a minimum, losses caused by errors, omissions, or negligent acts of the contractor. Proof of the existence of such policy shall be provided annually by the contractor.

Disaster Recovery The Contractor shall have or develop and maintain a disaster recovery plan, which includes critical business operations, computer systems, and telecommunications. Such plan shall be tested and/or updated annually, as necessary. The contractor shall provide a copy of the annual test report to the PBGC within 30 calendar days of the completion of the test. A copy of the current and/or revised plan must be provided to PBGC within 60 calendar days of the completion of the revised plan.

The disaster recovery plan shall include, but not be limited to, the following:

1. Emergency response procedures, including:

a. Step-by step instructions identifying explicit techniques to be used for responding to various emergency situations;

b. Identification of disaster recovery teams; and

c. An organizational chart and list of key personnel responsible for performing the disaster recovery actions as well as the priority of duties and lines of authority.

2. Backup site activation procedures which identify:

a. Backup site location; and

b. Backup site activation processes.

(If the backup site is operated by an organization other than by the Contractor, a copy of the Alternative Site Processing Agreement must be provided to the PBGC within 30 days after being added to the plan or at the same time as the contractor’s disaster recovery plan is revised, whichever is earlier. Backup site activation procedures must contain a list of key personnel and the recovery team(s) they support.)

3. Primary site recovery procedures, including:

a. Instructions for accomplishing salvage operations;

b. A replacement acquisition strategy for hardware, software, telecommunications, etc.;

c. Facility reconstruction plans; and

d. Identification of personnel supporting the primary site recovery and the team(s) they support.

4. Primary site reactivation/normalization, including:

a. Procedures to ensure a smooth transition from the alternative processing site to the primary site; and

b. A list of teams performing the various functions and the personnel assigned to those teams.

Deliverables/Reports

The contractor shall provide:

1. Preliminary monthly statements and reports, on or before the seventh business day following month end, which detail the following information:

a. Portfolio Comparison vs. the Benchmark Index – Results must include, but not be limited to, returns for the month, latest three months, calendar year to date, PBGC’s fiscal year to date (the fiscal year runs from October 1 through September 30), and since inception. As the performance history expands, returns for one year, two year, three, five, and ten year should be provided, when applicable.

b. Holdings Report

c. Investment philosophy

d. Portfolio-level Characteristics

e. Performance Attribution

f. Economic and Market Commentary

g. Derivatives Report - If the fund or separate account utilizes derivatives in the portfolio, provide a detailed report.

2. Monthly holdings data, electronic copy format to be determined, as required for PBGC risk system, including detailed characteristics of securities. Provide details, as required, of OTC derivatives contracts to the Risk Management System vendor.

3. Quarterly statements and reports that detail the following information (due within thirty calendar days after quarter end):

a. Portfolio Comparison vs. the Benchmark Index – See 2a above.

b. Holdings Report

c. Performance Attribution

d. Economic and Market Commentary

e. Contract Compliance Certification Report – detailing all non-compliance events throughout the quarter which violated the investment guidelines. If there are internal constraints that are not stipulated in the investment guidelines and were violated during the quarter, please provide those as well.

f. Guideline Compliance Status Report – detailing the status of all guideline risk parameters being monitored for compliance.

4. Annual statements and reports that detail the following information:

a. Evidence of fidelity bond and errors and omissions professional liability coverage, within 60 calendar days of renewal.

b. Revised Securities and Exchange Commission Form ADV Parts I and II, within 30 calendar days of revision, if an ADV is filed.

c. Policy on Creditors Committee participation and a record of those personnel who served on such committees where securities held in the PBGC portfolio were involved

d. Revised Ethics Policy (within 30 calendar days of revision).

5. Other reports, research and publications as required by PBGC from time to time.

6. Copies of all PBGC reports noted above must be provided to PBGC’s investment consultant

The contractor shall provide other reports, research and publications as required by PBGC from time to time. The contractor may provide the above reports electronically and through secure online access to its website.

SECTION D PACKAGING AND MARKING (OCT 2004)

The Contractor is responsible for the cost of all packing, packaging and mailing, or posting to a portal accessible by PBGC staff in accordance with the best commercial practices. All information submitted to the Contracting Officer or the COTR must be clearly marked with the company name, the PBGC contract number, and identification of the item.

SECTION E INSPECTION AND ACCEPTANCE

E. 1 52.246-4 INSPECTION OF SERVICES--FIXED-PRICE (AUG 1996)

(Reference 52.246-4)

E. 2 PBGC-46-001 INSPECTION AND ACCEPTANCE OF DELIVERABLES (OCT 2004)

All deliverable items are to be furnished to the Contracting Officer's Technical Representative (COTR) or to PBGC personnel designated by the COTR to receive a specific deliverable. PBGC's receipt of a deliverable does not constitute acceptance by the Government. Final acceptance of any reports or other deliverable items required under this contract will be made in writing and may only be made by the COTR or Contracting Officer.

SECTION F DELIVERIES OR PERFORMANCE

F. 1 52.242-15 STOP-WORK ORDER (AUG 1989)

(a) The Contracting Officer may, at any time, by written order to the Contractor, require the Contractor to stop all, or any part, of the work called for by this contract for a period of 90 days after the order is delivered to the Contractor, and for any further period to which the parties may agree. The order shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Within a period of 90 days after a stop-work is delivered to the Contractor, or within any extension of that period to which the parties shall have agreed, the Contracting Officer shall either--

(1) Cancel the stop-work order; or

(2) Terminate the work covered by the order as provided in the Default, or the Termination for Convenience of the Government, clause of this contract.

(b) If a stop-work order issued under this clause is canceled or the period of the order or any extension thereof expires, the Contractor shall resume work. The Contracting Officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if--

(1) The stop-work order results in an increase in the time required for, or in the Contractor's cost properly allocable to, the performance of any part of this contract; and

(2) The Contractor asserts its right to the adjustment within 30 days after the end of the period of work stoppage; provided, that, if the Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon the claim submitted at any time before final payment under this contract.

(c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order in arriving at the termination settlement.

(d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order.

(End of Clause)

F. 2 PERIOD OF PERFORMANCE

The contract award shall include a base year plus six option years. The base year will be from the date of contract award to one year later. SECTION G CONTRACT ADMINISTRATION DATA

G. 2 PBGC-42-001 CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE (OCT 2004)

The Contracting Officer's Technical Representative (COTR) is who may be reached at PBGC. The COTR is authorized to assist in monitoring the work under this contract. The COTR is responsible for the technical administration of the contract and technical liaison with the contractor. The COTR IS NOT authorized to change the scope of work or specifications as stated in the contract, to make any commitments or otherwise obligate the Government or authorize any changes that affect the contract price, delivery schedule, period of performance or other terms or conditions. The Contracting Officer is the only individual who can legally commit or obligate the Government for the expenditure of public funds. The technical administration of this contract shall not be construed to authorize the revision of the terms and conditions of this contract. Any such revision shall be authorized in writing by the Contracting Officer. The COTR is authorized to review and recommend approval of: (a) Technical matters not involving a change in scope, price, terms and conditions of the contract (b) Progress reports (c) Inspection and acceptance of services and deliverable products and (d) Invoices.

The COTR is not authorized to sign any contractual instruments or to direct any action that results in a change in the scope, price, terms or condition of the contract.

G. 3 PBGC-42-002 OBSERVANCE OF LEGAL HOLIDAYS (OCT 2004)

The Contractor shall establish a holiday schedule for personnel performing under this contract that exactly coincides with the Government's schedule. Holidays peculiar to or dynamically declared by the Government shall be considered as holidays for Contractor personnel and are not billable unless work is actually performed on these days. No work will be performed by Contractor personnel on Government holidays without prior approval of the Contracting Officer's Technical Representative. Work performed on holidays shall be billable at the regular rate.

Government holidays are:

(1) New Year's Day,

(2) Martin Luther King, Jr. Day,

(3) President's Day,

(4) Memorial Day,

(5) 4th of July,

(6) Labor Day,

(7) Columbus Day,

(8) Veteran's Day, (9 Thanksgiving Day,

(10) Christmas Day

(11) Any other day designated by Federal Statute,

(12) Any other day designated by Executive Order,

(13) Any other day designated by the President's Proclamation.

SECTION H SPECIAL CONTRACT REQUIREMENTS

H. 1 PBGC-00-001 PROFESSIONAL ATTIRE (OCT 2005)

The Pension Benefit Guaranty Corporation receives many visitors who conduct business with the Corporation. Consequently, the professional appearance of those who work in PBGC facilities is important to maintaining confidence in

PBGC and the pension insurance system. The Contractor shall ensure that its personnel who perform work in PBGC facilities present a neat, professional appearance appropriate to an office working environment. Some examples of inappropriate office attire include jeans, sneakers, sweat pants, lycra stretch pants, collar-less shirts, bare midriff tops, and spaghetti-strap tops. The Contractor shall ensure that its personnel exercise sound judgment in their choice of attire.

H. 2 PBGC-03-001 CONFIDENTIALITY OF INFORMATION (OCT 2004)

(a) To the extent that the work under this contract requires that the

Contractor be given access to confidential or proprietary business, technical, or financial information belonging to the Government or other companies, the Contractor shall, after receipt thereof, treat such information as confidential and agree not to appropriate such information to its own use or to disclose such information to third parties unless specifically authorized by the Contracting Officer in writing. The foregoing obligations, however, shall not apply to:

(1) Information which, at the time of receipt by the Contractor, is in the public domain;

(2) Information which is published after receipt thereof by the

Contractor or otherwise becomes part of the public domain through no fault of the Contractor;

(3) Information which the Contractor can demonstrate was already in his possession at the time of receipt from PBGC and was not acquired directly or indirectly from the Government or other companies;

(4) Information which the Contractor can demonstrate was received by it from a third party who did not require the Contractor to hold it in confidence.

(b) The Contractor shall obtain the written agreement, in a form satisfactory to the Contracting Officer or his designee, of each employee permitted access, whereby the employee agrees that he will not discuss, divulge or disclose any such information or data to any person or entity except those persons within the Contractor's organization directly concerned with the performance of the contract.

(c) The Contractor agrees, if requested by the Government, to sign an agreement identical, in all material respects, to the provisions of this clause, with each company supplying information to the Contractor under this contract, and to supply a copy of such agreement to the Contracting

Officer. From time to time upon request of the Contracting Officer, the

Contractor shall supply the Government with reports itemizing information received as confidential or proprietary and setting forth the company or companies from which the Contractor received such information.

(d) The Contractor agrees that upon request by PBGC it will execute a

PBGC-approved agreement with any party whose proprietary data it is given access to or is furnished, restricting use and disclosure of the data.

Upon request by PBGC, such an agreement shall also be signed by Contractor personnel.

(e) This clause shall flow down to all subcontracts.

H. 3 PBGC-03-002 ORGANIZATIONAL CONFLICTS OF INTEREST (OCT 2004)

(a) Purpose. The purpose of this clause is to ensure that the contractor

(1) is not biased because of its financial, contractual, organizational, or other interests which relate to the work under this contract, and

(2) does not obtain any unfair competitive advantage over other parties by virtue of its performance of this contract.

(b) Scope. The restrictions described herein shall apply to performance or participation by the contractor and any of its partners, affiliates or their successors in interest (after this collectively referred to as the

"contractor") in the activities covered by this clause as a prime contractor, subcontractor, cosponsor, joint venturer, consultant, or in any similar capacity. For the purpose of this clause, affiliation occurs when a business concern is controlled by or has the power to control another or when a third party has the power to control both.

(1) Use of Contractor's Work Product.

(i) The contractor shall be ineligible to participate in any capacity in PBGC contracts, subcontracts, or proposals therefor (solicited and unsolicited) which stem directly from the contractor's performance of work under this contract. Furthermore, unless so directed in writing by the Contracting Officer, the contractor shall not perform any advisory and assistance services work under this contract on any of its products or services or the products or services of another firm if the contractor is or has been substantially involved in their development or marketing. Nothing in this subparagraph shall preclude the contractor from competing for follow-on contracts for advisory and assistance services.

(ii) If, under this contract, the contractor prepares a complete or essentially complete statement of work or specifications to be used in competitive acquisitions, the contractor is ineligible to perform or participate in any capacity in any contractual effort which is based on such statement of work or specifications. The contractor shall not incorporate its products or services in such statement of work or specifications unless so directed in writing by the Contracting Officer, in which case the restriction in this subparagraph shall not apply.

(iii) Nothing in this clause precludes the contractor from offering or selling its standard commercial items to the Government.

(2) Access to and use of information.

(i) If the contractor, in the performance of this contract, obtains access to information, such as Corporate plans, policies, reports, studies, financial plans, internal data protected by the Privacy Act of 1974 (5 U.S.C. 552a), or data which has not been released or otherwise made available to the public, the contractor agrees that without prior written approval of the Contracting Officer it shall not:

(A) use such information for any private purpose unless the information has been released or otherwise made available to the public;

(B) compete for work for PBGC based on such information for a period of six months after either the completion of this contract or until such information is released or otherwise made available to the public, whichever is first;

(C) submit an unsolicited proposal to the Government which is based on such information until one year after such information is released or otherwise made available to the public; and

(D) release such information unless such information has previously been released or otherwise made available to the public by PBGC.

(ii) In addition, the contractor agrees that to the extent it receives or is given access to proprietary data, data protected by the Privacy Act of 1974 or other confidential or privileged technical, business, or financial information under this contract, it shall treat such information in accordance with all restrictions imposed on disclosure and use of such information.

(c) Disclosure after award.

(1) The contractor agrees that if changes, including additions, to the facts disclosed by it prior to award of this contract, or occur during the performance of this contract, it shall make an immediate and full disclosure of such changes in writing to the Contracting Officer. Such disclosure may include a description of any action which the contractor has taken or proposes to take to avoid, neutralize, or mitigate any resulting conflict of interest. PBGC may, however, terminate the contract for convenience if it deems such termination to be in the best interest of the Government.

(2) In the event that the contractor was aware of facts required to be disclosed or the existence of an actual or potential organizational conflict of interest and did not disclose such facts or such conflict of interest to the Contracting Officer, PBGC may terminate this contract for default.

(d) Remedies. For breach of any of the above restrictions or for nondisclosure or misrepresentation of any facts required to be disclosed concerning this contract, including the existence of an actual or potential organizational conflict of interest at the time of or after award, the

Government may terminate the contract for default, disqualify the contractor from subsequent related contractual efforts, and pursue such other remedies as may be permitted by law or this contract.

(e) Waiver. Requests for waiver under this clause shall be directed in writing to the PBGC Office of General Counsel and a copy provided to the

Contracting Officer, and shall include a full description of the requested waiver and the reasons in support of the request. If it is determined to be in the best interests of the Government, the Contracting Officer may grant such a waiver in writing.

(f) Subcontracts.

(1) The contractor shall include a clause, substantially similar to this clause, including this paragraph (f), in subcontracts expected to exceed the simplified acquisition threshold in FAR Part 13. The terms "contract, "contractor," and "Contracting Officer" shall be appropriately modified to preserve the Government's rights.

(2) Prior to the award under this contract of any such subcontracts for advisory and assistance services, the contractor shall obtain from the proposed subcontractor or consultant a disclosure of all existing or potential organizational conflicts of interest and shall determine in writing whether the interests disclosed present a significant potential for an organizational conflict of interest. Where an actual or significant potential organizational conflict of interest is identified, the contractor shall take actions to avoid, neutralize, or mitigate the organizational conflict to the satisfaction of the contractor. If the conflict cannot be avoided or neutralized, the contractor must obtain the approval of the PBGC Contracting Officer prior to entering into the subcontract.

H. 4 PBGC-03-003 SUITABILITY DETERMINATION REQUIREMENTS (SEPT 2006)

This contract clause serves as the policy for investigating and adjudicating the suitability of contractors for employment or continued employment with the Pension Benefit Guaranty Corporation. PBGC will employ and/or retain only those persons whose suitability for employment is found to be clearly consistent with our Orders.

(1) The Contractor's employees governed by this contract may need to access sensitive information. PBGC reserves the right, in its sole discretion, to determine suitability for contractor personnel at the project site and deny access to any sensitive information or project specific area to any personnel for any cause.

(2) The Contractor shall notify the Contracting Officer in writing providing the name and the nationality of non-U.S. citizens who are legal residents, providing a copy of their VISA (work permit) or an alien who has been lawfully admitted for permanent residence as evidenced by Alien Registration Receipt Card Form I-151, or who presents other evidence from the Immigration and Naturalization Service that employment will not affect his/her immigration status. PBGC reserves the right to refuse any foreign national participation on this contract and to refuse them permission to enter PBGC premises.

(3) The Contracting Officer or the Contracting Officer's Technical Representative (COTR) will provide the appropriate background investigation forms to the contractor and give the contractor instructions for completing the background investigation process. These responsibilities may be delegated to the Contract Manager or the Contract Security Representative with the understanding that the COTR holds ultimate responsibility.

Completed background investigation forms shall be submitted two (2) weeks from Entrance on Duty date to:

Pension Benefit Guaranty Corporation

PBGC Security Officer

Facilities and Services Department

1200 K Street, NW, Mail Stop: FASD

Washington, DC 20005-4026

Forms shall be submitted for replacement employees at least two (2) weeks before entrance on duty.

(4) PBGC will exercise full and complete control over granting, denying, withholding, or terminating clearances for employees. The PBGC may, as it deems appropriate, authorize and grant temporary clearance to employees of the contractor. However, the granting of a temporary clearance to any such employee shall not be considered as assurance that full clearance will follow as a result or condition thereof, and the granting of either a temporary or full clearance shall in no way prevent, preclude or bar the withdrawal or termination of any such clearance by the PBGC.

(5) If the adjudication is unfavorable on a contract employee, or if PBGC finds a contractor to be unsuitable or unfit for his or her assigned duties, the Personnel Security Officer will contact the Contractor to effect the immediate removal of the contract employee from the PBGC contract and premises.

(6) At PBGC's sole discretion, PBGC may waive suitability determinations for contractor personnel who have had recent background investigations at the appropriate suitability determination risk level established by either the COTR or the Personnel Security Officer. PBGC will inform the contractors where such is the case. The Contractor will be provided a copy of the PBGC Order PM 05-6, "Personnel Security and Suitability Program" and PBGC Order PM 05-1, "PBGC Entrance on Duty and

Separation Clearance Procedures" to provide guidance and facilitate the Suitability Determination process.

H. 5 PBGC-03-004 DISPLAY OF PBGC IDENTIFICATION BADGES (APR 2007)

The Contractor shall comply with PBGC Directive Number GA-10-9, "Display of

PBGC Identification Badges," the full content of which is located at http://www.pbgc.gov/docs/GA_10_9.pdf - Directive GA-10-9.

All contract and sub-contract employees whose duties under this contract require their presence on designated PBGC facilities shall be clearly identifiable by a distinctive badge furnished by PBGC and shall observe and otherwise be subject to such security regulations as are in effect for the particular premises in accordance with PBGC Directive Number GA-10-9.

The PBGC-issued photo Identification Badge must be visible and be displayed at or above the waist. Badges may be displayed from either lanyard or clip style holders. The badge must be available for building security officer inspection in order to authenticate and validate.

Contractors that arrive to work without their Badge must: report to the

Security Desk located in the 1200 K Street lobby; sign-in to the appropriate Log Book; present a valid government-issued form of photo identification to the security officer; contact a co-worker to vouch for him/her by signature in the log book; and, receive and display a temporary badge which shall be visible at all times and displayed at or above the waist. Contractors shall be responsible for the care and protection of their Badge and promptly report all instances of loss or theft and initiate immediate action to replace the lost or stolen Badge. Contractors must relinquish their Badge upon separation or upon any circumstances which make the continued possession or use inappropriate.

Failure to comply with this Directive can result in refusal of admittance to PBGC designated facilities.

(End of Clause)

H. 7 PBGC-04-004 PBGC INFORMATION SECURITY (JUN 2007)

The provider of information technology shall adhere to:

1)Federal statutes, 2)Office of Management and Budget (OMB) guidance, 3)National Institute of Standards and Technology Federal Information Processing Standards and PBGC implementation of Security Guidelines (800 Series), (See 5a -- IM 05-2 below.)

4)Federal Information Systems Controls and Audit Manual (FISCAM), and

5)PBGC Orders relating to information security including:

a)IM 05-2 Information Assurance Handbook (IAH), http://www.pbgc.gov/docs/im_05_2.pdf b)IM 05-7 Information Technology Solutions Life Cycle Methodology (ITSLCM), http://www.pbgc.gov/docs/im_05_7.pdf and c)IM 05-4 Use of Information Technology Resources.

http://www.pbgc.gov/docs/Im_05_4.pdf

The provider of information technology shall comply with PBGC’s implementation of the following control frameworks including the:

a)Capability Maturity Model - Integrated (CMMI), b)Control Objectives for Information and Related Technologies (COBIT), and c)Information Technology Infrastructure Library (ITIL); and

In addition, the provider of information technology shall certify the following:

1)Applications are fully functional and operate correctly as intended on systems using the FederalDesktop Core Configuration (FDCC). Once PBGC approves for implementation, this also includes Internet Explorer 7 configured to operate on Windows XP and Vista (in Protected Mode on Vista).

a)For the Windows XP settings, see: http://csrc.nist.gov/itsec/guidance_WinXP.html, and b)for the Windows Vista settings, see:

http://csrc.nist.gov/itsec/guidance_vista.html.

2)The standard installation, operation, maintenance, updates, and/or patching of software shall not alter the configuration settings from the approved FDCC configuration. The information technology should also use the Windows Installer Service for installation to the default ?program files? Directory and should be able to silently install and uninstall.

Applications designed for normal end users shall run in the standard user context without elevated system administration privileges.

H. 8 PBGC-09-001 RESTRICTIONS AGAINST DISCLOSURE OF INFORMATION (OCT 2004)

(a) The Contractor agrees that it will take such measures as are necessary to restrict access to pension plan and participant records as well as any other information related to work pursuant to this contract (including, but not limited to, any information relating to legal, policy, program, operational or other issues, whether concerning existing, proposed or contemplated legislation, regulations, policy issuances or similar matters or otherwise) to those employees and/or subcontractors of the Contractor needing such information to perform the work required on a "need-to-know" basis. This Clause does not apply to information which has been released to the public by PBGC or which is available to the public other than by the Contractor's breach of this Agreement.

(b) The Contractor agrees to keep the restricted information in the strictest confidence. The Contractor also agrees not to publish, reproduce or otherwise divulge the Information in whole or in part, in any manner or form, nor to authorize or permit others to do so, taking such reasonable measures as are necessary to restrict access to the Information, to those employees and/or subcontractors needing such information to perform the work required under the contract, i.e., on a "need-to-know" basis. The obligation to maintain confidentiality continues after completion, termination, or expiration of this contract. The Information shall be made available only at the discretion of the PBGC and subject to the Freedom of Information Act (5 U.S.C. Sec. 552), as amended, The Privacy Act, (5 U.S.C. Sec. 552a), as amended, The Trade Secrets Act, (18 U.S.C. Sec. 1905, as amended), and any other applicable laws or regulations. Further, the Contractor shall notify the PBGC of the transfer to subcontractors of any information prior to any such transfer. Upon completion of the Contractor's obligations, the Contractor shall return or destroy all copies of restricted information, whether furnished by PBGC or created by the

Contractor and any subcontractor.

(c) The Contractor agrees to immediately notify the PBGC, in writing, in the event that the Contractor determines or has reason to suspect a breach of any part of this clause.

(d) The Contractor agrees to immediately notify the PBGC in writing, of any request received from any individual who is not a party to this contract, for access to information related to this contract. Those requests will be directed to PBGC's Disclosure Officer for processing under the provision of the Freedom of Information Act. This paragraph does not apply to a request by an individual for access to information contained in records pertaining to that particular individual. However, if the individual wants copies of the actual records pertaining to him, he first must contact PBGC's Disclosure Officer.

(e) The Contractor agrees that it will not knowingly violate any statutory or regulatory restrictions against the disclosure of government records, including 5 U.S.C. Sec. 552a, as amended, 5 U.S.C. Sec. 552, as amended, 18

U.S.C. Sec. 1905, as amended, and implementing regulations. The Contractor also agrees that it will take steps to ensure that any subcontractor will also adhere to these restrictions.

(f) The Contractor is bound by Section (m) of the Privacy Act, 5 U.S.C. Sec. 552a(m) and as such is considered under the act to be an employee of the agency. Accordingly, the Contractor and any of its employees are subject to the criminal penalties of the Privacy Act, 5 U.S.C. Sec.552a(i).

(g) The Contractor will designate and identify an individual who shall be responsible for the notifications required under sections b, c and d of this agreement and who shall receive all appropriate responses from the Contracting Officer's Technical Representative (COTR) or from PBGC's Disclosure Officer. The Contractor shall take those steps necessary to ensure that the provisions of paragraphs a-g, inclusive, are adhered to by all directors, officers, agents and employees of the Contractor.

(h) The Contractor shall place the provisions contained at Paragraphs a-g, above, in all subcontracts entered into pursuant to the contract where the subcontractor will have or may gain access to PBGC information and, further, the Contractor agrees to enforce the provisions of this Clause against any and all subcontractors under this contract.

H. 9 PBGC-31-003 TRAINING (OCT 2004)

All costs associated with training required to make a contractor employee qualified to perform any given task under this contract shall be borne by the Contractor. The Contractor may be reimbursed by the PBGC for the cost of a training course on PBGC specific applications, policies or procedures only when the training has been pre-approved by the COTR. The Contractor shall present to the COTR a written justification which clearly describes the training, its direct benefits to PBGC, the impact if the training is not provided and the total cost including

(1) salary or wages,

(2) travel and accommodations in accordance with federal travel regulations,

(3) tuition and fees when the training is in an institution not operated by PBGC or the

Contractor, and

(4) training materials and textbooks.

The request must be made and approval granted by the COTR prior to the training. The COTR is designated the authority to approve or disapprove the training or any of the inclusive costs.

H. 11 PBGC-39-001 ELECTRONIC AND INFORMATION TECHNOLOGY (OCT 2004)

The contractor shall ensure that all electronic and information technology (EIT) procured, developed, maintained, used or delivered under this contract meet the applicable accessibility standards at 36 CFR 1194, unless an agency exception to this requirement exists. 36 CFR 1194 implements Section 508 of the Rehabilitation Act of 1973, as amended, and is viewable at http://www.section508.gov and http://www.access-board.gov/508.htm

H.12

PBGC-37-001 KEY PERSONNEL (JAN 2006)

(a) PBGC defines key personnel as those personnel held responsible by the Contractor for making substantive, measurable contributions to the accomplishment of contracted work. They are those personnel essential to the ongoing conduct of the project and who will assure consistent control and direction.

(b) Investment Management Firms will propose Key Personnel to work the contract and will be evaluated by PBGC. At a minimum, Key Personnel shall include the Chief Investment Officer and the Portfolio Manager.

(c) These key personnel shall NOT be reassigned or diverted without the written consent of the Contracting Officer. Prior to removing any of the individuals identified in the Contractor's proposal as key personnel, the Contractor shall provide 30 calendar days advance notification to the Contracting Officer and shall submit justification (including resumes for proposed substitutions) in sufficient detail to permit evaluation of the impact on the project.

H.13 PBGC-37-002 STAFFING APPROVAL (JULY 2009)

The Contractor is responsible for providing personnel under this contract who meet or exceed the minimum qualifications. The Chief Investment Officer and the Portfolio Manager must have at least a Bachelor’s Degree and 10 years of experience working in investment management. Other personnel critical to the investment process must have a Bachelor’s Degree and three years of experience in investment management. All Contractor personnel assigned to this contract will be subject to review by the Contracting Officer or his representative. Contractor personnel found not to meet qualifications or performance standards are subject to removal from this contract.

SECTION I CONTRACT CLAUSES

52.202-1 DEFINITIONS (JUL 2004)

(Reference 52.202-1)

52.203-3 Gratuities 52.203-5 Covenant Against Contingent Fees

52.203-6 Restrictions on Subcontractor Sales to the Government.

52.203-7 Anti-Kickback Procedures.

52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity 52.203-12 Limitations on Payments to Influence Certain Federal Transactions 52.203-13 Contractor Code of Business Ethics and Conduct

52.204-1 APPROVAL OF CONTRACT (DEC 1989)

This contract is subject to the written approval of PBGC’s Contractng Officer, and shall not be binding until so approved.

52.204-3 Taxpayer Identification.

52.204-4 Printed or Copied Double-Sided on Recycled Paper 52.204-7 Central Contractor Registration

52.204-8 Annual Representations and Certifications

52.204-10 Reporting Subcontract Awards

52.207-1 Notice of Standard Competition (IBR, Section L) 52.209-5 Certification Regarding Responsibility Matters (In Full, Section K) 52.209-6 Protecting the Government’s Interest . . .

52.214-31 Facsimile Bids (IBR, Section L) 52.214-24 Multiple Technical Proposals

52.214-34 SUBMISSION OF OFFERS IN THE ENGLISH LANGUAGE (APR 1991)

(Reference 52.214-34)

52.214-35 SUBMISSION OF OFFERS IN U.S. CURRENCY (APR 1991)

(Reference 52.214-35)

52.215-1 Instructions to Offerors – Competitive (IBR, Section L) 52.215-2 Audit and Records—Negotiation

52.215-8 Order of Precedence—Uniform Contract Format

52.215-10 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (OCT 1997)

(Reference 52.215-10)

52.215-11 Price Reduction for Defective Cost or Pricing Data—Modifications

52.215-12 Subcontractor Cost or Pricing Data

52.215-13 Subcontractor Cost or Pricing Data—Modifications.

52.215-14 Integrity of Unit Prices.

52.215-19 Notification of Ownership Changes (In Full, Section I) 52.215-16 Facilities Capital Cost of Money

52.215-16 Facilities Capital Cost of Money

52.215-21 Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data—Modifications.

52.216-24 Limitation of Government Liability

52.216-25 Contract Definitization

52.217-3 Evaluation Exclusive of Options.

52.217-5 Evaluation of Options

52.217-8 Option to Extend Services

52.217-9 Option to Extend the Term of the Contract.

52.219-9 Small Business Subcontracting Plan

52.222-3 CONVICT LABOR (JUN 2003)

(Reference 52.222-3) 52.222-21 Prohibition Against Segregated Facilities 52.222-22 Previous Contracts and Compliance Reports (In Full, Section K) 52.222-25 Affirmative Action Compliance (In Full, Section K) 52.222-26 Equal Opportunity 52.222-35 Equal Opportunity for Special Disabled Veterans . . .

52.222-36 Affirmative Action for Workers with Disabilities

52.223-6 DRUG-FREE WORKPLACE (MAY 2001)

(Reference 52.223-6)

52.225-13 Restrictions on Certain Foreign Purchases

52.225-14 Inconsistency Between English Version and Translation of Contract.

52.227-23 Rights to Proposal Data (Technical)

52.223-14 Toxic Chemical Release Reporting (Required) 52.227-1 Authorization and Consent 52.227-3 Patent Indemnity 52.227-14 Rights in Data General 52.228-2 Additional Bond Security 52.229-6 Taxes – Foreign Fixed Price Contracts 52.229-3 Federal, State, and Local Taxes

52.230-2 COST ACCOUNTING STANDARDS (OCT 2008)

(Reference 52.230-2)

52 52.230-3 DISCLOSURE AND CONSISTENCY OF COST ACCOUNTING PRACTICES (OCT 2008)

(Reference 52.230-3)

52.230-6 Administration of CAS 52.230-7 Proposal Disclosure – Cost Accounting Practice Changes (In Full – Section K) 52.232-1 Payments.

52.233-2

Service of Protest (Required) (In Full, Section L)

52.232-8 DISCOUNTS FOR PROMPT PAYMENT (FEB 2002)

(Reference 52.232-8)

52.232-11

Extras

53 52.232-17 INTEREST (OCT 2008)

(Reference 52.232-17)

52.232-19

Availability of Funds for the Next Fiscal Year

54 52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986)

(Reference 52.232-23)

52.232-25 PROMPT PAYMENT (OCT 2008)

(Reference 52.232-25)

52.232-33 PAYMENT BY ELECTRONIC FUNDS TRANSFER--CENTRAL CONTRACTOR REGISTRATION (OCT 2003)

(Reference 52.232-33)

52.233-1 DISPUTES (JUL 2002)

(Reference 52.233-1)

52.233-3 PROTEST AFTER AWARD (AUG 1996)

(Reference 52.233-3)

52.233-4 APPLICABLE LAW FOR BREACH OF CONTRACT CLAIM (OCT 2004)

(Reference 52.233-4)

52.237-1 Site Visit

52.237-3 Continuity of Services.

52.242-1 Notice of Intent to Disallow Costs.

52.242-2 Production Progress Reports

52.242-13 BANKRUPTCY (JUL 1995)

(Reference 52.242-13)

52.242-15 Stop-Work Order.

52.243-1 Changes—Fixed Price.

52.244-6

Subcontracts for Commercial Items (Required)

52.246-4 Inspection of Services—Fixed-Price.

52.246-15 Certificate of Conformance.

52.246-25 Limitation of Liability—Services.

52.248-1 VALUE ENGINEERING…