Questions and Answers.doc

Questions and Answers – Fixed Income RFP PBGC01-CT-10-0003

1. Question: In the RFP is mentioned that we need to answer for two strategies. We meet the criteria for the emerging market debt with one exception that we don’t have a US tax exempt client. Would you accept us to answer for the global fixed income part only?

Alternatively would you accept us to answer for both the global fixed income and emerging market debt? Knowing that the only criteria missing, is a US tax exempt client for emerging market debt.

Answer: All firms must meet all the mandatory requirements for at least two of the products in order to qualify for further consideration and technical evaluation.

2. Question: With respect to references, and most of these are confidentiality issues, would it be possible to supply them after the selection process is further down the road?

Answer: No, all references will be kept confidential.

3. Question: Do you truly expect us to list the names and phone numbers have the folks that have taken assets away from our funds?

Answer: Yes

4. Question: The emerging market space are you looking for a hard currency manager, a local currency manager, or a combined fund? We offer all three types of funds, although given the fact that the local currency index only came into existence three years ago it isn’t possible to have a five year track record.

Answer: Please offer your best EMD product that qualifies for all the mandatory requirements.

5. Question: With respect to GIPS accounting, we use the methodology (although we don’t have it verified by an outside vendor) and would be happy to show our work, is that acceptable to you?

Answer: Yes

6. Question: In our high yield business we do have $100m+ segregated mandates, although they are with European pension funds not US clients, does that meet your criteria?

Answer: No

7. Question: Item C states the firm must have at least $20 Billion in AUM as a fiduciary, however, the product level minimum is $400 million without the inclusion of advisory assets. With that said, does the $20 Billion AUM for firm level mandatory requirements include advisory assets?

Answer: No. AUM means the same as for the product level mandatory it excludes advisory assets.

8. Question: If awarded this mandate, is the investment manager defined as a Federal Contractor, does that trigger subsequent obligations such as a requirement to institute a formal affirmative action plan?

Answer: Yes, the investment manager will be a Federal Contractor. In accordance with FAR 22.804 Affirmative Action Programs, each prime contractor with 50 or more employees and either a contract of $50,000 or more is required to develop a written affirmative action program for each of its establishments. Each contractors shall develop its written affirmative action program within 120 days from the commencement of its first such Government contract.

9. Question: PBGC has requested very specific performance calculations (starting on page 64). In order to supply the performance, we would have to manually calculate these data elements since our systems do not support the requested formula. While we are prepared to manually calculate the performance (Information Ratio) for the proposes of the search, we would like to know if PGBC requires this calculation going forward should we be awarded the mandate. Within the "Deliverables/Reports" section (page 16), the listed performance requirements include standard returns, but do not require the use of the specific formula supplied for the information Ratio calculation. Please confirm whether or not the formula for the information ratio is an ongoing requirement or if it is for the purposes of the search. Furthermore, we are GIPS compliant and can provide standard GIPS composite returns, separate account returns and our standard calculations for risk/return statistics as needed.

Answer: The Information Ratio Calculation is only for the purpose of the solicitation, and will not be an ongoing requirement in the deliverables section of the SOW.

10. Question: Is there a data whereby we must signal our intent on submitting a proposal?

Answer: No, proposals are due on February 5, 2010.

11. Question: Section I of the RFP, Contract Clauses, references almost 100 contract clauses. Are contractors with PBGC subject to all of these clauses, or as a federal corporation does PBGC have the ability to waive some of these clauses? If so, which ones?

Answer: The contractors are subject to all of the clauses listed in the RFP. If awarded the contract and the contractor would like to request a waiver, the waiver request would be sent to the Contracting Officer, and the specific clauses can be discussed at that time.

12. Question: Section G of the RFP, Contract Administration Data, subsection G. 3 PBGC-42-002 mandates that contractors establish a holiday schedule for it’s personnel that exactly coincides with the federal Government's schedule. How would this apply to contractors hired for mandates where markets may be open for trading on such federal holidays? Is this a clause that may be waived in individual circumstances for particular mandates so as to effectively carry out the terms of the mandate?

Answer: The clause can be modified, however PBGC does adhere to the holiday schedule and PBGC personnel will not be available.

13. Question: Section H. 2 PBGC-03-001, Confidentiality of Information, requires the specific treatment of confidential or proprietary information belonging to the Government. Under subsection H. 2 (b), will the PBGC require the contractor to execute a separate written agreement with each employee regarding these specified matters, or would it suffice that such matters are generally covered in the contractor's employee handbook which is a condition of employment? Also, does the PBGC contemplate under subsection H. 2 (c) that it will request the contractor to obtain such agreements from "each company supplying information to the contractor"?

Answer: The clause states: To the extent that 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.

PBGC anticipates a confidential or proprietary information agreement to be covered in the contractor’s employee handbook or personnel documentation. A confidential or proprietary information agreement should also be obtained from a company supplying the information to the contractor.

14. Question: Section H. 3 PBGC-03-002, Organizational Conflicts of Interest, subsection H. 3 (f) requires subcontracts to contain these specified clauses if the subcontract is expected to "exceed the simplified acquisition threshold in FAR Part 13." Could you specify what this threshold is?

Answer: The threshold is $100,000

15. Question: Section H. 4 PBGC-03-003, Suitability Determination Requirements, directs contractors to submit background investigation forms. Could you describe this process? Is this for the contracting firm, its principals, or both? Does PBGC contemplate waiving this requirement per subsection H. 4 (6)? If not, may contractors obtain a copy of the referenced PBGC Order PM 05-6, "Personal Security and Suitability Program"?

Answer: The subject clause is for contractors working onsite and access sensitive information from PBGC. It is not anticipated that this contract requires the contractor to work on a PBGC site. The referenced PBGC Order is attached.

16. Question: Section H. 7 PBGC-04-004, PBGC Information Security, requires "the provider of information technology" to adhere to the various specified standards. Are contractors selected through this RFP being deemed to be "providers of information technology"? If so, what materials or information provided by the contractor is deemed to fall within the scope of this clause? Is this a provision that the PBGC may waive?

Answer: The contractors are not deemed as providers of Information Technology.

17. Question: Section K. 22 52.230-1, Cost Accounting Standards, references standards of the Cost Accounting Standards Board. Will contracts resulting from the RFP be subject to such requirements? If so, how would cost accounting standards impact the estimate of costs in pricing in an offerror's proposal under this RFP? Would this have any application to account reports submitted by contractors hired pursuant to the RFP?

Answer: Contracts resulting from this requirement will not be subject to Cost Accounting Standards, as this contract is exempt as it is anticipated to be a firm fixed price contract awarded on the basis of adequate price competition without submission of cost or pricing data.

It does not apply to account reports submitted by contractors hired pursuant to the RFP.

18. Question: Section C of the RFP, Statement of Work, the requirement that 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." Could you outline your specific expectation for this? Does PBGC maintain a "watch list" of such issuers for this purpose? Is this based on the issuer's credit rating?

Answer: The manager is expected to independently incorporate in their investment process a review procedure that demonstrates “diligent effort” to avoid the purchase of securities of issuers’ with underfunded pension plans that are likely to be terminated and will not be providing a list from PBGC.

19. Question: Will the PBGC require any pre-award clearance or certification by the Office of Federal Contract Compliance Programs?

Answer: Yes

20. Questions: May contractors obtain a copy of the PBGC's form of investment management agreement to review any other specific PBGC requirements or expectations?

21. Question: Can you confirm that the firm requirement for assets under management is $20,000,000,000.00.

Answer: The firm requirement is correct as stated.

22. Question: Source Selection Criteria:

Answer: The development of Source Selection information and evaluation criteria information is sensitive and cannot be released by PBGC.

23. Question: Will the PBGC be utilizing a consultant for this search? Can you share who that consultant will be?

Answer: No.

24. Question: Given that our Long Duration clients are typically managing to a specific actuarial asset liability target, the benchmarks for our Long Duration mandates are customized more often than not. Is it acceptable to submit data for a long-term track record based on these customized benchmarks, rather than a composite track record managed to the Barclays Long Government Credit benchmark?

Answer: No

25. Question: Should Section K be completed and submitted as part of the RFP, or is it included for reference only at this stage in the procurement process?

Answer: Section K should be completed and submitted as part of the proposal.

26. Question: For Global Fixed Income, our understanding is that we need to show the returns vs. the Barclays Capital Global Aggregate Index. However, could the representative account chosen to be profiled in the RFP have a track record benchmarked against a different Global Bond benchmark (i.e. Citi World Government Bond Index)?

Answer: Yes

27. Question: Our Emerging Markets Debt team has been investing in local currency, on a tactical basis, since the inception of the Emerging Markets strategy in 1993. However, a dedicated EMD local currency strategy was launched in February 2007. Could we present a proposal for an EMD local currency mandate with this track record? This asset class is relatively new and there are only a few managers with a dedicated strategy going back further than 3 to 5 years.

Answer: No

28. Question: For Volume IV, Past Performance, what is the preferred format for demonstrating past performance? Would client reporting schedules, strategy track records, and proposed meeting schedules suffice?

Answer: There is no defined format for demonstrating past performance, it is up to each company submitting a proposal.

29. Question: Is the PBGC’s preference for a separate account or a fund?

Answer: Separate Account