Section_L.doc

SECTION L

INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS

L. 1 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (FEB 1998)

This solicitation incorporates one or more solicitation provisions by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. The Offeror is cautioned that the listed provisions may include blocks that must be completed by the Offeror and submitted with its quotation or offer. In lieu of submitting the full text of those provisions, the Offeror may identify the provision by paragraph identifier and provide the appropriate information with its quotation or offer. Also, the full text of a solicitation provision may be accessed electronically at https://www.acquisition.gov/far.

L. 2 PBGC-15-007 EXPENSES RELATED TO PROPOSAL SUBMISSION (OCT 2004)

The Government is not liable for any costs incurred by any Offerors in submitting proposals in response to this solicitation.

L. 3 ADDENDUM to 52.212-1 Instructions to Offerors – Commercial Items (April 2014)

A. Addendum to Paragraph (e) “Multiple offers.” Paragraph (e) “Multiple offers” is deleted in its entirety. Multiple offers will not be accepted.

L. 4 52.233-2 SERVICE OF PROTEST (SEP 2006)

(a) Protests, as defined in section 33.101 of the Federal Acquisition Regulation, that are filed directly with an agency, and copies of any protests that are filed with the General Accountability Office (GAO), shall be served on the Contracting Officer by obtaining written and dated acknowledgment of receipt. Copies of any protests must be sent to the Contracting Officer, Roland Thomas, at thomas.roland@pbgc.gov.

(b) The copy of any protest shall be received in the office designated above within one day of filing a protest with the GAO.

L.5 Questions Concerning the Solicitation

Questions/inquiries for information about any aspect of the solicitation shall be submitted to the Contract Specialists Fiorela Kvalevog at kvalevog.fiorela@pbgc.gov and David Poppe at poppe.david@pbgc.gov. Responses to all inquiries/questions will be published by amendment to the solicitation at www.fbo.gov, giving due regard to the proper protection of proprietary information. Offerors shall be responsible for assessing www.fbo.gov for the agency’s responses. No information concerning this solicitation shall be provided in response to telephone calls. Prospective Offerors are warned against contacting any PBGC personnel outside the Procurement Department prior to award of a Contract resulting from this solicitation. If such contact occurs and is found to be prejudicial to competing Offerors, the Offeror making such contact may be excluded from award consideration.

Prospective Offerors are asked to submit their questions grouped by solicitation section and making reference to the particular paragraph in that section. Questions shall be submitted in writing, no later than 9:00 a.m. EST on March 2, 2015, to allow the PBGC an opportunity to respond. Any questions received after this deadline shall be considered late and may not be answered.

L.6 Proposal Submission Instructions

Proposals shall be submitted in both electronic and hard copy versions.

L.7 Printed Copies

Offerors must provide a total of 7 copies of the Proposal to PBGC prepared in accordance with the Instructions.

L.8 Hand Carried Offers

Proposals which are hand carried are to be delivered to the same address shown below in a sealed outer wrapper and must be received by the due date and time.

L.9 Markings

It is important that the outer envelope or wrapping of your offer be addressed as follows.

Failure to so mark the outer core could be the cause of your offer being misdirected and received too late for consideration at the required destination.

(Offeror's Return Address)

PENSION BENEFIT GUARANTY CORPORATION

SOLICITATION NO.: (See block 5 of SF1449)

Closing Date: (See block 8 of SF1449)

1200 K STREET, NW

Mail Stop: Alley Entrance – Procurement

WASHINGTON, DC 20005-4026

L.10 Electronic Submission

Proposals must also be submitted electronically via the PBGC Secure Proposal site. To submit your proposal, follow the steps below:

1. Encrypt your file(s) (password protect).

2. Go to http://pbgc.leapfile.com

3. Select "Secure Upload."

4. Enter the email addresses of the Contract Specialists Fiorela Kvalevog at kvalevog.fiorela@pbgc.gov and David Poppe at poppe.david@pbgc.gov, and click "Start."

5. Enter your contact information.

6. Enter your message and a description of the submission (this information will be included in the notification to the Procurement Officer.) Click the notification checkbox to ensure you receive notification when the file is downloaded by the Procurement Officer.

7. Select the upload method, Regular or Enhanced. Regular upload works with all browsers and enhanced upload works with Java enabled browsers.

8. Select the file(s) to send (use the Browse buttons).

9. Press the Upload & Send button.

10. Send a separate email to the Contract Specialists with your encryption password.

You will receive an automated system confirmation of a successful upload, and an automated system email when the Procurement Officer downloads your submission.

L.11 Facsimile Submission Proposals submitted via facsimile will not be considered.

L.12 Late Proposals

Complete hard copy versions and electronic versions must both be received before the time and date specified for receipt. If either the hard copy or electronic version, or both versions, of the proposal is received at the physical or virtual destination after the time and date specified for receipt, the proposal will be considered late and will be dealt with in accordance with the late proposal provision of FAR 52.212-1.

L.13 Written Proposal Requirements

The written technical proposal shall use the specific format below. These directions assist in providing a fair and equitable evaluation of all proposals. The Government may determine those proposals not following the directions are unacceptable and may reject such offers from further consideration.

· 8.5 by 11 inch paper;

· 12 point, Times New Roman style font;

· 1 inch margins for each page;

· all pages single spaced; and

· the pages are sequentially numbered.

L.14 Table of Contents

Each volume must include a table of contents reflecting only the contents of that volume. The response to each technical factor must be separated by labeled tabs in Volume 2. All pages should be sequentially numbered per volume.

L.15 Binding

Each Volume of the proposal must be submitted separately in 3-ring binders.

L.16 Letter of Transmittal

The proposal shall be accompanied by a cover letter (letter of transmittal) prepared on the company’s letterhead stationery. The letter of transmittal shall identify all enclosures being transmitted as well as a table of contents for all volumes. The first or title page shall be in accordance with FAR 52.212-1(b). Specifically, the first page of the proposal must show—

1. The solicitation number;

2. The name, address, and telephone and facsimile numbers of the Offeror (and electronic address if available);

3. A statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation and agreement to furnish any or all items upon which prices are offered at the price set opposite each item;

4. Names, titles, and telephone and facsimile numbers (and electronic addresses if available) of persons authorized to negotiate on the Offeror’s behalf with the Government in connection with this solicitation; and

5. Name, title, and signature of person authorized to sign the proposal. Proposals signed by an agent shall be accompanied by evidence of that agent’s authority, unless that evidence has been previously furnished to the issuing office.

L.17 Compliance

All proposals shall be evaluated preliminarily to ensure compliance with the requirements set forth in this solicitation which include the following:

1. Timely receipt of the offer.

2. Information presented in the manner required by Proposal Submission Instructions above.

3. Inclusion in the offer of all information required by Mandatory Requirements, and Technical Proposal and Business / Price Proposals below.

L.18 Proposal Volumes

Offeror’s proposal shall be evaluated in two separate phases, Phase 1 and Phase 2. The proposals shall be divided into three separate Volumes – Volume 1, Volume 2 and Volume 3, as described in further detail below.

Volume 1 – Mandatory Requirements (Attachment A and supporting documentation) and will be the only Volume evaluated in Phase 1; the evaluation team will review Volume I as a standalone document.

Volume 2 – Technical Proposal – shall contain only responses to: Factor 1 – Technical Approach, Factor 2 – Corporate Experience, and Factor 3 – Past Performance.

Volume 3 – shall contain only the Offeror’s response to the Business / Price Proposal. Volumes 2 and 3 shall be evaluated during Phase 2 only if the Offeror meets all requirements of Phase 1.

Phase 1 – Volume 1: Mandatory Requirements (Attachment A & Supporting Documents) Phase 2 – Volume 2: Technical Proposal Phase 2 – Volume 3: Business / Price Proposal

L.19 PAGE LIMITS

Below are the page limits associated with each section of the contractor proposal. PBGC will not evaluate or consider any pages that exceed the page limits listed for each item in the table below. Cover pages, table of contents, and tabs are not included in the count.

L.20 Phase 1, Volume 1 Mandatory Requirements (Limited to 50 pages in addition to the completed Attachment A)

During Phase 1, the Government will evaluate the Offeror’s response to the Mandatory Requirements, Section J, Attachment A. Offerors are required to complete Attachment A by circling a Yes or No answer. The completed Attachment A must be accompanied by supporting documentation that provides convincing evidence of how all Mandatory Requirements are met. The supporting documentation for Attachment A must be a standalone document and should be included in Volume 1, references or supplemental information included in Volume 2 will not be considered. Proposals that do not include supporting documents that provides convincing evidence of how all Mandatory Requirements are met will not advance to Phase 2. The required supporting documentation shall not exceed a total of 50 pages.

Offeror shall also include in Volume 3, any exceptions to the terms and conditions, assumptions, or proposed supplemental terms to the contract.

L.21 Phase 2, Volume 2

Written Technical Proposal

Instructions

All information necessary for the review and evaluation of an Offeror’s proposal must be contained in the proposal Volumes set forth above. Section M of the request for proposal (RFP) sets forth the evaluation criteria and describes how the factors shall be evaluated and their relative order of importance. The Offeror’s proposal will be evaluated using only the evaluation criteria as stated in Section M of the RFP. The Government will not assume Offeror(s) possess any capability, understanding, or commitment not specified in its proposal. It is an Offeror’s responsibility to submit a well-written proposal, with adequately detailed information which clearly demonstrates an understanding of and the ability to comply with the SOW requirements to allow for a meaningful review.

Offerors who include a high level of detail that substantiates how their proposal meets the requirements of the SOW will be rated higher than Offerors whose proposal contains unclear or ambiguous language, or merely paraphrases or restates the Government’s requirements. The amount of clarification required to rate the proposal will be taken into consideration; those that require less clarification will be rated higher.

To ensure each specific element of each factor is addressed, Offerors are encouraged to structure their descriptions in the same general order and manner as the elements are articulated in the SOW.

Offer Validity Statement

Offeror(s) shall make a clear statement in their proposal that the proposal is valid for no less than 240 calendar days from the closing date of the solicitation.

The Offeror's Technical Proposal consists of the written technical information related to the technical evaluation factors shown in Section M.

(a) General

(1) In order that your technical proposal may be evaluated strictly on the merit of the material submitted, no pricing information is to be included in your technical proposal.

(2) No materials shall be incorporated by reference that are not included in the technical proposal. Each proposal section should stand alone.

(3) Technical Proposal Exceptions and Deviations. Identify any exceptions or deviations taken, or conditional assumptions made with respect to the technical requirements of the solicitation. Any exceptions taken must contain sufficient description, including explanation of benefits to the Government, to permit evaluation. A large number of exceptions or one or more significant exceptions which do not provide significant benefit to the Government may result in rejection of the proposal as unacceptable.

VOLUME 2 - PHASE 2 - TECHNICAL PROPOSAL

· I. TECHNICAL APPROACH

· II. CORPORATE EXPERIENCE

· III. PAST PERFORMANCE

PLEASE RESPOND TO EACH OF THE QUESTIONS IN THE

FORMAT BELOW

I. TECHNICAL APPROACH

Offerors shall provide responses to the questions listed below.

A. CONSTRUCTION

1. Describe the portfolio construction process for each of the subject index fund products. If stratified sampling or other optimization approaches are employed, describe in detail. Explain why your firm believes the chosen construction methodology is best. Address the decision making process including the titles and responsibilities of the various individuals involved at each stage of the process. Describe any quantitative models your firm utilizes in management of each of the proposed subject portfolios.

2. Given the large amount of external, security-level data being incorporated into your internal database, discuss the quality controls in place to ensure the integrity of this data. Describe how your firm confirms the efficacy of its data scrubbing efforts.

3. For each proposed subject product, list any stocks or bonds which meet your construction criteria, but have been excluded for any reason. Please describe your policies and procedures that allow for such exclusions.

4. Describe your firm’s investment guidelines for handling:

a. tenders, mergers and other corporate actions;

b. cash management;

c. dividend and income reinvestment;

d. (international portfolios) tax reclamation

e. (bond index products) ratings downgrades/upgrades.

5. For each proposed subject product, describe the rebalancing process, the frequency of rebalancing, and how the respective approach is an optimal rebalancing process. What are the expected transactions costs for this rebalancing activity on an annual basis expressed in basis points?

6. For each proposed subject product, at what point is a security added/removed from the respective index fund due to a change in index composition and why? Include the usual time span needed to achieve a proper weighting. Describe your approach in dealing with illiquid index issues and your process for finding alternatives.

7. Describe how transaction costs are considered when constructing the respective portfolios.

8. For each of the proposed subject products, describe any use of futures, swaps, or other derivative instruments, in the management of the respective index fund. Describe the extent that derivatives are used in the subject products and the firm’s guidelines relevant to the use of derivatives in the subject products.

9. Please describe in detail the risk controls that you employ in the portfolio construction process to limit tracking error in each of the proposed subject products. Provide the discretionary tracking error ranges established for each required index product and describe how these ranges were determined and whether they are reviewed and revised periodically. Describe any risk measurement models used and how this analysis is incorporated in the portfolio management process.

10. How has the indexing methodology and implementation process been improved upon over the time period presented?

11. Describe the initiatives currently underway to enhance your process.

12. Under what circumstances would your firm deviate from the disciplines and procedures thus far?

13. What unique attributes or competitive advantage does each of the proposed subject products have that distinguish it from its competitors’ respective offerings in the fulfillment of this assignment?

14. For any required index fund that you currently do not offer but are willing to create for PBGC, please describe your proposed construction methodology, rebalancing process, planned usage of futures, swaps, or other derivative instruments, and risk controls that will be implemented to limit tracking error. Explain how asset size may impact the portfolio construction and rebalancing process as well as how flows in and out of the fund might be limited relative to more established index fund products.

B. BENCHMARK

1. What index/benchmark is recommended for performance evaluation purposes for each of the subject index fund products you would manage?

a. What specific factors led to the selection of this recommended index/benchmark?

b. State the associated pros and cons of the recommended benchmark for each respective index fund mandate.

2. For each proposed index fund, name the entity responsible for construction of the index (e.g. MSCI, Barclay’s, Russell, etc.) and detail the index construction methodology and the rationale behind the methodology.

3. Identify the source of the index benchmark returns for each of the proposed subject products. Describe procedures if calculated in-house.

4. For each proposed subject product, what is the expected annualized tracking error for the anticipated portfolio over a one year period and over a market cycle (i.e., 3 to 5 years)? How is tracking error measured and managed?

5. How does your firm research indexes? Do you have a dedicated staff that does index research? If so, please provide a summary of their responsibilities and how the research agenda is set.

6. Does anyone at your firm sit on the advisory boards of any of the index providers? If so, state who and which board.

C. TRADING

1. Is your firm, its parent, or other affiliates a broker/dealer?

a. Does your firm trade for client accounts through this broker/dealer?

b. If so, state how much trading, and the reason for trading with this related party.

2. Outline your internal trading capabilities, as follows:

a. Number and experience of trading staff. Is the trading staff segmented by product/asset class?

b. Number of dedicated passive index fund traders for each of the subject products. Describe their experience and tenure at the firm as well as the sector(s) they are responsible for trading. Provide biographical information of the senior passive index fund trading personnel in an attachment.

c. Current actual trading volume.

d. Current capability for trading volume and asset levels.

e. Procedures for monitoring and minimizing trading costs of securities and foreign currencies. Are external transactions cost analysis firms used? Which ones?

3. Describe your crossing capabilities.

a. Has your firm been granted an exemption from the Department of Labor to internally cross for ERISA clients? If so, please provide the exemption. If not, please provide an explanation.

b. Please fill out the table below with the percentage of purchases that may be expected to be:

Percentage of trades

DOL cross

Crossed on external crossing networks

Placed in futures

Traded through brokers

Any other method (please explain)

4. For each trade type in (3) above, provide your estimate of average commissions per share, market impact per share, and any other transaction and custodian costs incurred for the different types of trades you have executed for these subject products. Provide the costs of futures contracts separately. Also, describe your trading cost calculation methodology (e.g. implementation shortfall, VWAP, etc.)

5. How do you choose to access restricted markets and what types of securities do you utilize? In what instances would you use proxy securities to build your desired portfolio (e.g. ADRs, ETFs, p-notes)?

6. Discuss your policy regarding, and current use of, "soft dollars", directed trades and recapture programs. If you have soft dollar relationships with broker-dealers, disclose the percent of trades executed tied to soft dollar relationships and a list of resources funded by soft dollars.

7. What would you expect the average portfolio turnover to be for each of the subject products?

8. Describe the firm’s passive index fund trading capabilities as they relate to derivatives for each of the subject products.

9. Provide a description of your passive trading platform, including systems (proprietary and off-the-shelf) for execution and processing. Describe the allocation objectives and implementation procedures across all accounts. What is the process by which trades are allocated? Describe both the tactic of allocating the initial trade as well as the strategy of building positions across accounts.

10. Describe how you monitor compliance with client and firm guidelines, including systems/software you use. What processes do you have in place for ensuring pre- and post-trade guideline compliance? What functions are automated? What process do you have in place for human verification? Who signs off on final trading? Describe the oversight procedures that would minimize the risk of traders acting outside of their given latitude in executing trades.

11. Has your firm violated an investment guideline over the past three years? Explain the violation(s) and how the issue(s) was (were) resolved.

12. Indicate any enhancements your firm is contemplating to its passive equity and/or fixed income trading capabilities.

13. Does your firm affirm its own trades? If not, who does and why?

14. For each subject product, provide a summary of trade execution performance over the last year. Describe how performance is measured and indicate if this is evaluated internally or externally. If externally, what service or services are used? Include details on how this information is integrated into the overall trading strategy.

15. Describe your method for monitoring and minimizing implementation shortfall, including any outside transaction cost monitoring services subscribed to.

16. FX

a. Do you manage your FX process actively or via a custodian? How do you measure FX transaction cost?

b. What methods do you use to validate you are receiving competitive rates from your FX providers?

c. PBGC considers you a fiduciary for all trades including FX. Do you have any concerns about this?

D. FUND FLOWS

1. Describe your requirements for the acceptance of transfers of assets in-kind into the respective proposed index funds.

2. Describe, in detail, the timing (dates the proposed fund is open) and procedures involved in accommodating a client’s cash flows. What are the charges and notice requirements for purchases and redemptions? How are transaction costs assessed to the client transacting?

3. Describe the typical fund flow for each product at each opening, delineating openings which have greater or lesser flow than the average in dollars and the reasons why. Describe the seasonality of client fund flows if applicable (i.e., is there a month or quarter that client flow is greater?). What percentage of client purchases and sales of each fund have been executed via unit level crosses in the past three years?

E. CUSTODY

1. Where are the respective index funds custodied?

2. Is the custodian affiliated with you? How many years has the firm been in the custody business? Provide total assets as well as equity and fixed income assets in custody by year, for each of the past 5 calendar years.

3. Describe your firm’s pricing and your custodian’s pricing (if appropriate) of individual securities for fund valuation, including source of price information. If a discrepancy exists between your pricing and the custodian’s, how is the discrepancy reconciled?

4. Describe the internal and external (custodian) accounting audit and statement reconciliation process. Note the staff involved and their specific duties.

5. Describe the controls over the trade settlement process and the income collection/reinvestment process and how your firm monitors the custodian bank in these areas.

6. Describe any procedures you use for ensuring the information security of your systems and of your custodian.

F. PROXY VOTING

1. Describe your proxy voting process.

2. Do you use third parties to assist in the process?

3. Do you have a committee that sets proxy voting policies? If so, name the members, their titles and provide bios.

4. Do you have a separate committee that addresses proxy votes? If so, name the members, their titles and provide bios.

5. Please provide a copy of your most recent proxy voting policies.

G. SECURITIES LENDING

1. Do any of the proposed index funds participate in a securities lending program? If so, who administers the program and what has been the gross and net return to the funds (annualized in basis points) attributed to the lending function for each of the years for which you have provided return history? Indicate the lending split to the firm/fund and detail how lending program costs are absorbed.

2. Describe the nature and scope of the securities lending program in the proposed index funds (intrinsic value program only or what type of reinvestment vehicle is used). Include a detailed description of the controls and a list of firms to which the respective proposed commingled fund currently lends.

3. How is revenue generated from securities lending reflected in performance attribution?

4. How are these borrowers selected?

5. What are the collateral requirements?

6. What is the frequency of mark-to-market?

7. Do you provide insurance or guarantee participants against loss? Is this guarantee for counterparty defaults and/or cash collateral losses?

8. Has your firm ever had to add credit support to maintain a $1 valuation for a cash collateral fund? Has your firm ever broken the $1 valuation?

9. Has the firm ever experienced a counterparty default or a principal loss in a cash collateral account?

10. Provide the holdings of the cash collateral reinvestment fund most often used with the required equity and fixed income funds with the following fields provided for each security as of 12/31/2014. Please provide in an excel spreadsheet: Security Name, Cusip, Market Value, % of Total Market Value, Original Value, Country, GICS Industry, Yield.

11. Summary characteristics of the cash collateral reinvestment fund most often used with the required equity and fixed income funds with the following fields provided as of 12/31/2014: WAM, WAL, Yield, % Floating, Next Business Day Liquidity, 1 Week Liquidity, 90 Day Liquidity.

H.

TRANSITION MANAGEMENT

1. Describe your transition management services, including:

a. The responsible organization

b. Staffing

c. Coordination with other parts of the firm

d. Internal controls and monitoring process

e. Crossing opportunities, both internal and external, for both domestic and international securities and real estate securities

f. External crossing networks utilized

2. Who provides brokerage services if required? How are brokers selected? How do you evaluate their ability to provide best-execution? How often is this evaluation performed?

3. Provide a copy of pre and post trade transition reports for a recent multi-asset class transition. Please include the Volume Weighted Average Price for the open market transactions.

4. Is your firm able to provide daily reporting during a portfolio transition? If so, please provide a copy of such reports.

5. For all transitions performed over the past 36 months, provide in the tables below the weighted average percentage of the assets which were transitioned via internal DOL cross, other internal cross, external cross and open-market transaction. What is the size of assets transitioned each calendar year for the past five years? Provide definitions of each type of transaction.

Crossing Percentage by Asset Class

Please provide the requested information for each execution method for each asset class for the three-year period ended 12/31/14. Percentages should represent the percentage of the total market value for the period for each execution method.

Asset Class: U.S. Equities

DOL Cross

Other Internal Crossing

External Crossing

Open Market Trading

Total

100%

Asset Class: International Equities

DOL Cross

Other Internal Crossing

External Crossing

Open Market Trading

Total

100%

Asset Class: U.S. Fixed Income

DOL Cross

Other Internal Crossing

External Crossing

Open Market Trading

Total

100%

Asset Class: Non-U.S. Fixed Income

DOL Cross

Other Internal Crossing

External Crossing

Open Market Trading

Total

100%

6. Fill out the table below for each of the last three years.

Actual Transition Costs vs. Pre-trade Estimates

U.S. Equities

International Equities

U.S. Fixed Income

Non-U.S. Fixed Income

TOTAL

U.S. Equities

International Equities

U.S. Fixed Income

Non-U.S. Fixed Income

TOTAL

U.S. Equities

International Equities

U.S. Fixed Income

Non-U.S. Fixed Income

TOTAL

(1) Provide the mean transition cost (in basis points) of all transitions completed in the calendar year. Transition cost must include explicit costs (such as commissions, taxes and fees) and implicit costs such as market impact and timing of execution.

(2) Provide the mean pre-trade estimated transition cost (in basis points) of all transitions completed in the calendar year. Transition cost must include explicit costs (such as commissions, taxes and fees) and implicit costs such as market impact and timing of execution.

7. Will your firm act as an ERISA fiduciary with respect to transition management services?

8. In what percent of transitions and how much have you been contractually obligated to serve as an ERISA fiduciary over the past three years?

9. Please explain how you minimize the ability for any other market participant to obtain trade lists which would disadvantage your transition clients.

10. How do transition clients benefit from flows resulting from index fund products or other products your firm manages and vice versa?

11. How do you evaluate your transition results? Describe any changes made to this methodology during the past five years.

12. Have your transition results ever been evaluated by an independent 3rd party? If so, when was this done last and what were the summary results for a post-trade transition review? Do you contract with any independent 3rd party to provide transition clients with an independent evaluation of the transitions you perform? If so, describe the terms of such arrangement.

13. How do you manage potential conflicts that may exist between your asset management and transition business?

I. COMMINGLED FUND DOCUMENTATION

1. Provide copies of all pooled vehicle documentation for our review (declaration of trust, participating trust agreement, etc.).

2. Also provide any documentation that identifies internal constraints that are utilized in managing the each of the subject products, but are not identified in the documentation provided above.

3. Provide the most recent fund audit results.

J. SAMPLE PORTFOLIO

1. Submit a sample portfolio (preferably an actual portfolio) as of 12/31/14, in the following format, for each proposed index fund. Provide in an Excel or comparable format spreadsheet. Preferably, the following list should sort the holdings by country for those indexes focused on global or international markets.

CUSIP #

Cost

Total Market Value

K. PERFORMANCE AND CHARACTERISTICS (Simulated characteristics are only acceptable for index funds that will be created specifically for PBGC.)

(Note: All performance data must also be provided on a computer disk in a Microsoft Excel file where all formulas are visible.)

Provide quarterly, annual and long-term performance on a total return basis in a manner consistent with the Global Investment Performance Standards (GIPS) as espoused by the Chartered Financial Analyst Institute (CFAI) to the extent possible. Respond to questions #1 through #5 separately for each of the proposed index fund products. If you do not have an existing index fund with a live track record for one of the required index funds, but are willing to create the fund, please note that in your response. You may list forecasted tracking error and other characteristics for those funds where there is not yet a live track record. Clearly denote which products are using live history and which are simulated/forecasted:

1. Provide quarterly and annual performance on a total return basis GROSS OF FEES for each proposed index product. Indicate if returns are net or gross of custody costs. Certify that all performance is GIPS compliant and provide required disclosures. If they are not compliant, explain why not. Simulated returns are not acceptable for those funds that have a live track record and the proposed index fund must include a continuous track record. In the table, please provide data to at least two decimal places. Please use composite performance.

Average Number of Holdings in Fund

Average Number of Holdings in Benchmark

2. Provide the same information on an annualized basis over the following periods.

3. Provide in the format below the risk statistics (using a monthly basis) for EACH proposed product (both equity and fixed income funds). See definitions and required formulas in your calculations below table.

Tracking Error

Beta

R2

Beta - This is a measure of a portfolio’s volatility. Statistically, beta is the covariance of the portfolio in relation to the market.

Beta (β) = [(n)*Σ(xi*yi)] - (Σ xi)(Σ yi)]/[(n)*Σ(yi2) – (Σ yi) 2] n = the number of observations xi = the return of the first data series (ith observation) yi = the return of the second data series (ith observation)

Generally, xi = the portfolio's return series and yi will be a specified index (benchmark) R-Squared - Otherwise known as the Coefficient of Determination, this statistic, like beta, is a measure of a portfolio’s movement in relation to the appropriate benchmark.

R-Squared = (r)2

(r) = {[(n)*Σ (xi*yi)] - (Σ xi)(Σ yi)}/{[(n)*Σ(yi2) - (Σ yi)] *[(n)*Σ(xi2) - (Σ xi)]} n = the number of observations xi = the return of the first data series (ith observation) yi = the return of the second data series (ith observation)

Generally, xi = the manager's return series and yi will be a specified index (benchmark) Standard Deviation - A measure of the average deviations of a return series from its mean.

StDev = [[ Σ (xi-X)2 ] ½]/n

Ann StDev = SD * √(Ny) xi = the ith observation

X = mean return for series n = the number of observations

Ny = the number of periods in a year (4 if quarterly data, 12 if monthly data) Tracking Error – The standard deviation of the excess returns of the portfolio versus its benchmark.

4. For the annualized tracking error information, please explain any significant levels of tracking error, discussing why your historical tracking error deviated from forecast tracking error. Detail the reasons for and/or sources of tracking error in each calendar year presented in question 1 of this section.

5. Discuss any performance attribution models or methodologies you use to analyze the sources of your returns.

6. Is your firm in compliance with the CFAI GIPS? Provide a description of any non-compliance. (IT IS IMPERATIVE THAT THIS QUESTION BE ANSWERED THOROUGHLY AND ACCURATELY).

7. Does your firm regularly reconcile the respective index funds’ returns with the custodian or client? If so, how frequently?

8. Provide in the format below the key characteristics on a quarter-end basis for the past 20 quarters (as of 12/31/14) for each proposed fixed income fund (both domestic and international). Please provide as an Excel spreadsheet.

Coupon (%)

Current Yield (%)

Yield to Maturity (%)

Weighted Avg Life (yrs)

Effective Duration (yrs)

Spread Duration

Option Adjusted Spread (bps)

Convexity

AAA or above

AA

A

BBB

NR/Cash

Sector Breakdown

Country Breakdown (if applicable)

9. For each proposed equity index fund, provide the portfolio characteristics for both the proposed products AND their respective benchmarks in the table below for the given periods. Please provide the table in an excel format. Please specify the benchmark used for each fund.

4Q14

3Q14

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

4Q09

3Q09

2Q09

1Q09

10. Provide the ACTIVE sector misweights of each proposed equity index fund versus its benchmark at the end of the periods indicated in the following table. Please provide the table in an excel format. Please specify the benchmark used for each fund:

4Q14

3Q14

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

4Q09

3Q09

2Q09

1Q09

11. Provide the ACTIVE percentage country misweights of the proposed emerging market equity index fund versus its benchmark at the end of the periods indicated in the following table. Please provide the table in an excel format. Please specify the benchmark used:

12. Provide the ACTIVE percentage country misweights of the proposed EAFE equity fund and EAFE small cap equity fund versus their respective benchmarks at the end of the periods indicated in the following table. Please provide the tables in an excel format. Please specify the benchmarks used:

II. CORPORATE EXPERIENCE

The Offeror’s corporate experience shall demonstrate (within the past five (5) years) successful corporate experience managing contracts of similar size, scope, and complexity. The Offeror shall describe its Corporate Experience providing similar investment services to other public or private clients. The Offeror shall describe its size, experience, organizational structure, lines of authority, and resources available to enable the Offeror to fulfill the requirements. When demonstrating experience, the Offeror shall describe the relevance of actual experience, complexity of the work, and comparability of experience of similar size and scope to that required by the Statement of Work. Offerors shall describe its sustained, stable and diversified growth in their client assets. Offerors shall provide responses to the questions listed below.

A. BACKGROUND

1. Provide the year the organization was founded and a brief history of the firm, including:

a. The date the firm was registered with the SEC as a registered investment advisor. Provide a link to the latest ADV Part I and Part II. If bank exempt, provide proof of bank exemption.

b. The date the firm began managing passive index funds for U.S. tax-exempt clients.

2. Provide the location and functions of each of your firm's investment management offices including the number and type of professionals in each office.

3. Describe the ownership structure of your organization. List any affiliated companies. Please provide an organization chart, and please also diagram the interrelationships between any parent-subsidiary, affiliate, or joint venture entities. If employees have the opportunity for equity ownership, please describe how broadly distributed the employee ownership is.

4. Within the past three years, have there been any significant developments in your organization (changes in ownership, personnel reorganization, divestiture of business, lift outs of investment teams, etc.)? If so, please describe.

5. Do you anticipate any near-term changes in your organization’s basic ownership structure or any other significant changes in your organization? If so, please explain.

6. Please list your firm’s lines of business and approximate contributions of each business to your organization’s total revenue.

a. If you are an affiliate or subsidiary of an organization, what percentage of the parent firm’s total revenue does your subsidiary or affiliate generate?

b. What percentage of revenues is derived from investment management?

c. What other services or products are offered by the parent?

7. Provide the most recent annual (10-K) and quarterly financial statements (10-Q) filed with the SEC, if applicable. If the firm does not currently file financial statements with the SEC, provide audited financial statements for the most recent fiscal year plus the period from the most recent fiscal year through 12/31/14. If audited financial statements are not available, please provide unaudited financials. If the firm does not provide its non-SEC financial statements, provide a letter that confirms a positive net worth for the firm from an independent CPA firm and provides details on the financial condition of the firm. Lastly, a description of any recent material changes to the firm since the most recent financial statement provided must be included.

8. Explain in detail any potential issues that could be created by the firm’s representation of PBGC, including issues with other client relationships, other services that your firm provides, or other revenue sources. Include other relationships that may inhibit services to PBGC.

9. Has your organization or any officer or principal been involved in any business litigation or other legal proceedings relating to your investment management activities or other activities of the firm? If so, provide a brief explanation and indicate the current status.

10. Has your firm been the subject of any Attorney General, SEC or regulatory inquiries, investigations or audits in the last five years? If so, provide an explanation and indicate the current status.

11. Are your firm and/or the firm’s key personnel covered by insurance policies (or bonded) against liability for violations of fiduciary duty and/or for errors and omissions: If the answer is “yes,” please supply the name of the insurance carrier or carriers and the type and amount of coverage afforded by each policy. If the answer is “no,” how would the PBGC be protected against such occurrences?

12. Disaster Recovery - Do you have a plan and arrangements in place for an alternative work site should your facilities become inoperative because of fire, earthquake, etc.? Where are the alternative work sites and system backup locations for the passive team? Provide a summary of your firm’s most recent disaster recovery plan, and indicate the frequency of testing and the date of the last test. Please provide the results of the last test. If you are precluded from providing detail on the results, please provide a high level summary.

13. Has your firm ever been subjected to an independent evaluation of its internal control policies and procedures such as an SSAE 16 or SOC1 review? If so, please provide a copy. Have any of your clients had such an evaluation conducted on their behalf? If available, please provide copies. Please indicate whether such evaluations have identified any weaknesses within the firm and describe any corrective actions that have been implemented.

14. Does your firm claim compliance with the CFA Institute Asset Manager Code of Professional Conduct? If no, please explain why your firm has not adopted, or cannot claim compliance with, the Code. Does your firm maintain a written code of conduct, a “Code of Ethics” or a set of standards for professional behavior? If so, please provide this document.

a. In addition, describe your firm’s policies and procedures related to personal securities transactions by firm personnel, and identify the person responsible for monitoring compliance.

b. Explain what steps the firm has taken to eliminate conflicts of interest between client portfolios and securities transactions by firm personnel.

15. Discuss your organization’s succession plan. Does the firm anticipate any significant changes in its organizational leadership?

16. Will you acknowledge in writing that you have an ERISA fiduciary obligation as an investment adviser to PBGC?

B.

STAFFING

1.

List the total number of persons employed by discipline as of 12/31/14. Please provide the chart for the entire firm and for the passive investment line of business. Use the following format:

Personnel

Portfolio Managers

Research Analysts

Quantitative Analysts

Economists

Traders

Administration, Operations

Compliance

Client Service

Marketing, Sales

Other (Specify)

Total

2. Briefly describe your firm’s back office divisions covering general compliance, information technology, client service/portfolio accounting, and marketing. Provide an organizational chart of your firm’s back office divisions covering general compliance, information technology, client service/portfolio accounting, and marketing in an attachment.

a. Where do these divisions overlap across business units (investment products, retail vs. institutional, functional units) and where are there dedicated support functions for each of these units?

b. Provide a schematic of the reporting channel between back office and senior management in an attachment.

c. Make sure to include biographical information on key back office executives handling general compliance, information technology, client service/portfolio accounting, and marketing in an attachment.

d. Do you have a Chief Compliance Officer? If so, provide a biography and describe the individual’s reporting channel.

3. Indicate whether the passive investment management capability was developed in-house or derived through acquisition of investment talent from another firm. If the latter, indicate when this occurred.

4. Provide a detailed organization chart of the passive index fund investment professionals including names and titles in an attachment and which of the proposed products each is associated with.

5. List all principal officers, portfolio managers, research analysts, and client service officers involved with the respective subject products and provide detailed biographies for each individual in an attachment. . For any index funds that would need to be created on PBGC’s behalf, indicate the personnel that would be involved in managing that product. In the table below, highlight the person(s) who would be responsible for PBGC’s account including the lead and back-up portfolio managers and client-service professional(s).

With Firm Years

With

Product Education/ Degree/Year

Designations

6. Please list all other products the investment professionals in the chart above are also responsible for or associated with or provide advice for. Include number of clients and AUM for each product.

7. To the extent there are any formal teams or committees (e.g., investment committee, T-cost committee, etc...) involving investment professionals, provide the names of the persons on each committee. Describe the purpose of the meeting, its frequency and duration.

8. Fill out the tables below and indicate when and why any key investment personnel (e.g., portfolio managers, analysts, and traders) left or joined the firm in the last five years. List by asset class and function.

Departed

(name/title)

9. Describe your firm’s backup procedures and persons involved in the event the key investment professional assigned to this account should leave the firm.

10.

Discuss your organization's compensation and incentive program for investment professionals, including details of how bonuses are determined. How are professionals evaluated and rewarded? What metrics are most important in determining compensation? What incentives are provided to attract and retain superior individuals? If equity ownership is possible, on what basis is it determined and distributed?

11. Which of your firm's offices would service this account? What services would specifically be provided by each office? PBGC prefers to have its client service professionals located in the same office as the investment professionals managing our account.

12. The PBGC conducts in-person meetings at either its offices or the investment manager’s offices at minimum twice a year. Who shall be the client service officer assigned to the PBGC relationship? How often would he/she be available for client meetings? How often would the portfolio manager be available for client meetings?