Statement_of_Work_v_1_0_Feb_2016.docx

DRAFT PERFORMANCE-BASED STATEMENT OF WORK

504 TRUSTEE FOR CERTIFIED DEVELOPMENT COMPANY PROGRAM

This Statement of Work details the functions required by the U. S. Small Business Administration (SBA) for contractor services to facilitate the delivery of debenture pool sales, custodial services and debenture and pool account administration of the Certfied Development Company program.

Required services include the establishment of a trust to support a debenture pooling program of government-guaranteed securities. Services also include the safekeeping of debenture instruments, the issuance of pool certificates, certificate registration and program administration involving certificate transfers and surrenders, debenture prepayment and default notification, program reporting and customer support.

The contractor shall have primary responsibility for its own operations, and shall have the requisite staff and resources to properly manage this system according to SBA instruction.

Finally, the contractor shall provide a full suite of web-based status reports that detail the condition of the SBA Certified Development Company debenture portfolio. The contractor shall be able to provide market information on the condition of all SBA debenture pools upon request.

Background The SBA is an independent agency of the United States, established on July 30, 1953, pursuant to the Small Business Act, as amended (the "Small Business Act"). The SBA derives its authority principally from the Small Business Act and the Small Business Investment Act of 1958, as amended (the "Small Business Investment Act").

SBA licenses nondepository institutions to provide a secondary source of funding to domestic small businesses that might not otherwise be able to obtain financing. The Certified Development Company (“CDC”) Loan Program is authorized by Congress to provide funding to support job growth and retention and to promote small business development. The program’s aim is to link a first mortgage loan with a subordinate SBA loan in a joint project development financing for a small business. Proceeds from the SBA loan are used primarily for fixed asset acquisitions and for limited debt refinancing. Funding of this subordinate loan is accomplished through the sale of CDC debentures in regularly-scheduled debenture offerings, with SBA extending a full-faith and credit guarantee to each debenture and related debenture pool sold. Currently, SBA identifies an aggregate unpaid principal balance of debentures outstanding as of December 31, 2015 of $26.5 billion (the “504 Debenture portfolio”) comprised of approximately 134,000 active and inactive debenture accounts in approximately 299 pools.

CDC debentures are sold through a monthly debenture pooling process. Debentures are purchased and placed with a Trustee (“504 Trustee”) in consideration for a pool certificate. These SBA debenture pool certificates carry both a timely payment and full-faith and credit guarantee of the U.S. government, with undivided fractional interests in the pool offered for sale.

Specific Contract Requirements

1. Trust Account Formation. The contractor shall have the ability to establish an indenture trust instrument that will accept, for custodial care, all program debentures now and hereafter transferred to the trust for safekeeping.

2. Registration and Market Information Systems. The contractor shall employ, at its own expense, a best-in-class, information systems application centered on securities custody, account administration, and the delivery of a book-entry form of investment security to investors. The contractor shall provide market participants including CDCs, investors and broker-dealers with real-time access to debenture pool portfolio information. The contractor is expected to have a website interface available that provides a full suite of data analytics on the condition of the 504 Debenture portfolio.

3. Central Registrar for Debenture Company Pool Certficates. The contractor shall provide for the central registration of all 504 debentures and pool certficates. Duties shall include, but not be limited to:

· Acceptance and registration of all Certified Company Development debentures;

· Issuance of guaranteed debenture pool certificates;

· Confirming book-entry form of tradable securities with Depository Trust Clearing Corporation;

· Prepare and deliver to SBA all data elements underlying acquired debentures in trust;

· Coordinate certificate transfers and early debenture payouts and provide SBA with appropriate notice. The contractor will have an audit-verifiable trail of prepayment and acceleration activity.

4. Customer Support: The contractor shall provide full support to the SBA Fiscal Transfer Agent and debenture underwriters in their ability to respond to telephone, electronic and written correspondence from market and program participants.

5. Bonding Requirements: The contractor shall carry and maintain fidelity bond or similar insurance in the form of a standard Financial Institutions Bond Insurance policy or its equivalent. The policy shall provide the SBA with a minimum coverage amount of $250,000,000. This policy shall provide for protection against loss caused by or resulting from any actions of the contractor, its employees, or its agents. The contractor shall have this policy in place no later than at the time of contract award. The contractor shall also maintain first class mail insurance coverage of not less than $1,000,000. Finally, the contractor shall maintain professional liability insurance for losses associated with errors or omissions performed by the contractor throughout the term of the contract. This coverage shall be for individual actions of no less than $5,000,000 per action.

6. Audit Requirements: At its own expense, contractor shall engage an independent certified public accountant to perform periodic SSAE-16 SOC-II assessments of its custody and fiscal transfer agent operations. These reports shall be prepared for delivery to SBA within the first week following SBA’s fiscal year end of September 30th.

7. Compensation: The contractor shall be compensated for services rendered through a fixed-fee schedule based on a percentage level of debenture and pool certificate activity. Service invoices are issued to the SBA through a Fiscal and Selling Agent, and are paid as other agent fees as noted in §120.971(c) of 13 C.F.R.

Deliverables

1. The contractor shall act as a central registry for owners of Guaranteed Interests of SBA guaranteed loans and loan pools, and shall have an audit-verifiable system for the recordation, transfer, and disposition of all SBA certificates.

2. At no cost to the Government, the contractor shall deliver a website platform accessible by internet access that provides a full suite of data analytics on the condition of the SBA secondary market and on the characteristics of the each of the debenture pools sold. Given the proprietary nature of the reported information, all access rights shall be subject to FISMA-compliant, user-authentication standards.

Travel The contractor shall incur periodic travel expenses associated with various participant training and outreach events hosted by SBA, or national lender trade associations. These expenses will be borne by the contractor and are at no cost to the Government.

Other Direct Costs As a no-cost contract to the Government, all direct and indirect costs shall be borne solely by the contractor. Contractor’s fees, as shown on the contractor’s Schedule of Pricing, are its sole form of compensation. These fees are inclusive of all costs.

Period of Performance SBA anticipates awarding this contract with a single 2-year base period, followed by three 1- year options periods.