TIB-2018-RFP-0002-01.pdf

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TIB-2018-RFP-0002-01

Ms. Lauren Phelps, Contracting Officer 202-864-8985

See Block No. 9

Federal Retirement Thrift Investment Board (FRTIB) Accounting Office 77 K Street NE, Suite 1000 Washington, DC 20002

See attached Schedule.

Lauren M. Phelps

11/22/2017

12/11/2017

4:00 PM ET

Federal Retirement Thrift Investment Board (FRTIB) Contracting Office 77 K Street NE, Suite 1000 Washington, DC 20002

Questions & Answers

TIB-2018-RFP-0002-01

Solicitation No. TIB-2018-RFP-0002-01

November 22, 2017

1. In response to Question #25 in the TSP F Fund Investment Management Questionnaire:

“Describe compliance with Federal information security regulations, including the Federal Information Security Management Act (FISMA) as well as the Federal Information Processing Standards (FIPS) and Special Publications (SP) issued by the National Institute of Standards and Technology, or commensurate policies. (300 words)”

Will an overview of how our enterprise cybersecurity program aligns with the above referenced Federal standards be deemed an acceptable response for this section?

Yes, an overview of how your enterprise cybersecurity program aligns with the above-referenced Federal standards is an acceptable response. Responses will be evaluated for their level of compliance or commensurate-nature with the referenced standards.

2. What is the cash collateral yield for TSP G Fund vs OBFR?

Please find the cash collateral yield for the TSP G Fund vs. OBFR in the table below.

Cash Collateral Yield Beginning of Month G Fund OBFR

May-17 2.250% 0.91% June-17 2.250% 0.91% July-17 2.250% 1.16%

August-17 2.250% 1.16% September-17 2.125% 1.16%

October-17 2.250% 1.16% November-17 2.375% 1.16%

3. Is noncash collateral accepted? If so, please specify type (US Treasuries, Agencies, OECD debt with credit rating of AA- and above)

No, non-cash collateral is not accepted.

4. Is there a minimum spread for new loans?

No, there is not a minimum spread for new loans.

5. Are there any restrictions to borrowers (already assumed limited to ERISA qualified borrowers)

No, there are no specific restrictions to borrowers, already assuming limitation to ERISA-qualified borrowers. However, the contractor is expected to consider its fiduciary and indemnification responsibilities when selecting borrowers (see solicitation sections C.2.1, first bullet, and C.2.3, fifth bullet, for fiduciary and indemnification requirements).

6. Are there any restrictions to markets? Percent of total asset on loan restrictions?

No, there are no restrictions to markets or to percent of total assets on loan.

7. Are the assets custodied at BONY Mellon? Could the assets be custodied with the same firm that is selected for this mandate?

No, the assets are not custodied at BONY Mellon. Assets shall be custodied with the same firm that is selected for this mandate (please see solicitation section C.2.1, second bullet).

8. What are your current transaction costs for the Fund for the past year?

Please find historical transaction costs for the F-Fund in the table below.

Historical Transaction Costs - F-Fund Month Dollars Basis Points Nov-16 $ 54,111.00 0.50 Dec-16 $ (3,581.00) 0.00 Jan-17 $ (63,157.00) (1.10) Feb-17 $ 2,686.00 0.00 Mar-17 $ 61.00 0.60 Apr-17 $ 1,315.00 0.00 May-17 $ 4,251.00 0.10 Jun-17 $ 23,914.00 0.60 Jul-17 $ 37,853.00 0.40 Aug-17 $ 65,166.00 0.60 Sep-17 $ 17,762.00 0.40 Oct-17 $ 4,513.00 0.10

Note -- Transaction Costs are comprised of commissions, fees, and the differences between when a security is traded and the closing index price.

9. What is your current fee split or basis point fee with your lending agent?

This information is proprietary and shall not be made available.

10. What is your timeline for transition to a new provider?

A thirty (30) day transition timeline is anticipated in the event a new provider is selected.

11. Are the assets held in one account or multiple account numbers?

Assets are held in one account.

12. What is your average loan volume in 2017 (by asset class, if available)?

The average F-Fund loan volume from October 1, 2016 through September 30, 2017 is $8,931,415,700.

13. What is your average redemption volume for 2017 (Question 41)?

Please see Attachment 004: F-Fund Liquidity Analysis for this information.

14. Is there an Investment Management fee embedded in the Net Administrative Expenses for Fund F? If so, are you able to disclose the IM fee?

No, there is not an Investment Manager fee embedded in the Net Administrative Expenses for the F-Fund.

The FRTIB is unable to disclose the Investment Manager fee as it is proprietary.

15. To what extent would in kind securities be available if you were to change managers?

100% of in-kind securities would be available if the FRTIB were to change investment managers for the F-Fund.

16. Would you be using a transition manager if you were to change managers?

No, the FRTIB would not use a transition manger if it were to change investment managers.

17. Are there any issuer restrictions or trading requirements?

No, there are no issuer restrictions or trading requirements.

18. Will this mandate potentially be split amongst multiple providers or will one provider be selected?

No, this mandate will not be split amongst multiple providers. One provider will be selected.

19. Will the FRTIB consider selecting multiple fixed income managers and accept proposals for only a portion of the F Fund assets?

No, the FRTIB will not consider selecting multiple fixed income managers, or proposals for only a portion of the F-Fund assets.

20. Will the FRTIB consider an index approach which seeks to optimize major risks factors to provide modest excess returns with index-like tracking error?

No, the FRTIB will not consider an index approach that seeks to optimize major risk factors to provide modest excess returns with index-like tracking error.

21. Can you kindly clarify if the minimum criteria of managing at least $15b benchmarked to US domestic fixed-income is inclusive of passive and active strategies?

The minimum criteria of managing at least $15B benchmarked to U.S. domestic fixed-income shall be inclusive of passive strategies only.

22. Section C.2(5), First Bullet, Disaster Recovery Plan: Our firm keeps the results of its annual disaster recovery testing confidential. Please confirm whether it would be sufficient to provide an annual high-level summation of our testing results for mission critical functions related to this assignment. If not, please confirm what would be the minimum requirements for annual disaster recovery test results reporting.

Yes, it is sufficient to provide an annual high-level summation of testing results for mission critical functions related to this requirement.

23. Section H.1.F(b) Incident Response: Section H.1.F(b) references the FRTIB policies and procedures regarding Incident Response. Please confirm whether the FRTIB policies and procedures regarding Incident Response will be provided for review or if they are not applicable.

The FRTIB Incident Response policies are applicable. Please see the attached Incident Response Policy.

24. Section H.2(a): The Non-Disclosure Agreement at Attachment 0001 is only required to be executed by a Contractor representative. However, Section H.2(a) states that the Non-Disclosure Agreement at Attachment 0001 “shall be completed by each Contractor (and subcontractor) employee.” Please confirm whether it is sufficient for a duly authorized representative of the Contractor to execute the Non-Disclosure Agreement at Attachment 0001 on behalf of the Contractor, given that each Contractor employee and each subcontractor has entered into an agreement obligating them to maintain the confidentiality of confidential or non-public documents or information of the FRTIB that the employee or subcontractor may have access to in the performance of duties underlying the Contract.

Yes, it is sufficient for a duly authorized representative of the Contractor to execute the Non-Disclosure Agreement at Attachment 0001 on behalf of the Contractor.

25. Sections H.12(C)(4) and (5) Records Management Obligations, Requirements: Please confirm whether the agency records schedules will be provided for review or if they are not applicable.

Agency records schedules are not applicable. Please see updates to Sections H.12(c)(4) and (5) of the solicitation.

26. Section H.12(C)(6) Records Management Obligations, Requirements: Please confirm whether the Government and FRTIB guidance for protecting sensitive, proprietary information, classified, and controlled unclassified information will be provided for review or if it is not applicable.

Government and FRTIB guidance for protecting sensitive, proprietary information, classified, and controlled unclassified information is not applicable. This language has been removed from the solicitation.

27. Section H.12(D) Records Management Obligations, Flowdown of requirements to subcontractors: Please confirm whether “subcontractor” shall mean a person or entity that is engaged to provide services solely as a result of this Contract (and that agreements with service providers to provide services to many of Contractor’s clients shall not be considered “subcontractors”).

Confirmed. “Subcontractor” shall mean a person or entity that is engaged to provide services solely as a result of this Contract (and agreements with service providers to provide services to many of Contractor’s clients shall not be considered “subcontractors”).

TIB-2018-RFP-0002 Amendment 0001 Investment Management – F Fund

Section B: Supplies or Services and Prices

B.1. Background

The Federal Retirement Thrift Investment Board (FRTIB) is an independent Federal government agency in the Executive Branch created by the Federal Employees’ Retirement System Act of 1986 (FERSA). The FRTIB administers the Thrift Savings Plan (TSP), a defined contribution savings and investment plan for Federal employees similar to 401(k) plans in the private sector. Five investment funds are offered within the TSP. Each fund is held as a separate account with the TSP as each fund’s sole owner.

B.2. Supplies or Services

The purpose of this Request for Proposal (RFP) is to select a Contractor to provide the Agency with professional investment management services for the TSP Fixed Income Index Investment Fund (F Fund). The FRTIB intends to award a single contract for these services and work shall be performed in accordance with all sections of this RFP.

Note that release of this RFP does not guarantee issuance of an award.

B.3. Contract Structure

Contract Structure

CLIN Contract Period Description Quantity Unit Fee

0001 Base Period Investment Management Services - F Fund

12 Months See Section J - Attachment 002: Fee/Pricing Schedule

1001 Option Period 1 Investment Management Services - F Fund

12 Months See Section J - Attachment 002: Fee/Pricing Schedule

2001 Option Period 2 Investment Management Services - F Fund

12 Months See Section J - Attachment 002: Fee/Pricing Schedule

3001 Option Period 3 Investment Management Services - F Fund

12 Months See Section J - Attachment 002: Fee/Pricing Schedule

4001 Option Period 4 Investment Management Services - F Fund

12 Months See Section J - Attachment 002: Fee/Pricing Schedule

Section C: Descriptions and Specifications

C.1. Scope of Work

1. Mission

The Federal Retirement Thrift Investment Board (FRTIB, Board, TIB, or Agency), created by the Federal Employees’ Retirement System Act of 1986, administers the Thrift Savings Plan (TSP) for Federal employees. The TSP is a defined contribution plan similar to 401(k) plans in the private sector.

2. Scope The Contractor shall receive and invest monies representing cash flows in a manner consistent with the specifications, terms, and conditions set forth in the Statement of Work (SOW) and the contract. The work to be performed under this SOW applies to the management of the TSP Fixed Income Index Investment Fund (F Fund).

3. Statutory Requirements Title 5 of the United States Code, §§ 8438, 8472, and 8475, provides the major statutory requirements for TSP investments.

4. Definitions

a. Contractor

Use of the term “Contractor” in this document and the contract is intended to apply collectively to the investment manager and any subcontractors or other entities, regardless of the affiliation with the manager, whom the manager may retain to provide the services described in this document, including custodian duties.

b. Thrift Savings Plan (TSP) The TSP, which is administered by the FRTIB, is a retirement plan, similar to a 401(k) plan, offered to Federal employees. The following investment funds are offered within the TSP. Each fund is held as a separate account with the TSP as each fund’s sole owner.

Fund Description/Benchmark

Government Securities Investment Fund (G Fund)

G Fund invests exclusively in a nonmarketable short-term U.S.

Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security. The G Fund interest rate calculation is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity and is reset monthly.

Fixed Income Index Investment Fund (F Fund)

Bloomberg Barclays Capital U.S.

Aggregate Bond Index

Common Stock Index Investment Fund (C Fund)

S&P 500 Index

Small Cap Stock Index Investment Fund (S Fund)

Dow Jones U.S. Completion Total Stock Market Index

International Stock Index Investment Fund (I Fund)

MSCI EAFE Index

In addition to the above fund options, the TSP offers participants Lifecycle Funds options (L Funds) with predetermined investment mixes across major asset classes designed to meet participants’ investment objectives over various time horizons. There are currently 5 L Funds that provide a range of target retirement dates. The L Funds invest exclusively in the G, F, C, S, and I Funds.

All of the TSP funds are pre-notified funds, meaning that participant orders are received by 12:00 noon ET and transmitted, in aggregate, to the index fund manager by 2pm ET for settlement the next business day. Participants receive the closing net asset value (NAV) of the funds on the day the trade is initiated.

The C, S, I, and F Funds participate in securities lending. The cash collateral received against securities loans made from those Funds is invested in a pool that is primarily invested in the G Fund. The cutoff for G Fund transactions is 1:30 PM, ET. That is, in order for the Agency to redeem cash collateral from the G Fund, the Agency must have notice by 1:30 PM one business day prior to the transfer. Similarly, for cash collateral to be deposited into the G Fund, the credit to the Agency’s Treasury account must be received by 1:30 PM ET, in order to be included in that day’s investment in the G Fund.

C.2. Summary of Requirements

1. Provide Investment Management Services for the TSP F Fund

• Accept responsibility as a fiduciary pursuant to § 8477 of Title 5 of the United

States Code for its acts and omissions in connection with the selection, purchase, investment, retention, management, and disposition of TSP assets and handle all fiduciary responsibilities described in § 8477 and § 8474 or other applicable laws related to the management or handling of financial assets. Award of this contract shall constitute an allocation by the Executive Director of certain responsibilities in accordance with § 2584.8477(e)-3(b) of title 29, Code of Federal Regulations. The Executive Director and the appropriate representative of the Contractor shall complete this allocation by affixing their signatures to Attachment 4.

• Manage a daily-valued, passive, Bloomberg Barclays US Aggregate Bond Index strategy in a separate account vehicle that accommodates daily cash flows.

• Achieve, on a time-weighted basis, investment performance that closely tracks that of the underlying index, as measured and published by the index provider. The Board members will monitor tracking error relative to the index on a monthly basis.

• Accommodate a daily deadline for trading on a pre-notified basis by 2:00 p.m.

ET, with settlement the next business day. Participants receive the closing net asset value (NAV) of the funds on the day the trade is initiated.

• Receive (or disburse) by wire transfer, and invest (or divest) TSP cash flows from (or to) the FRTIB as frequently as daily. The contractor shall manage the assets so as to minimize tracking error to the index while also providing for the potential for daily cash flows. A history of the assets and daily TSP cash flows is provided as an appendix. Please see Request for Proposal Attachment 004: F Fund Liquidity Analysis for details.

• Execute all trades efficiently, with an emphasis on seeking best execution and compliance with fiduciary standards. Minimize trading costs, and upon request, provide an explanation of transactions incurring trading costs above the average trading costs associated with managing assets benchmarked to the respective index.

• Vote all proxies and address all corporate actions in a manner which will result in maximum financial benefits to TSP participants and in accordance with fiduciary responsibilities.

2. Provide Custody and Administrative Services

• The Contractor (which as defined in Section C.2.1. can include subcontractors) shall provide a separate account vehicle for the custody of the above portfolio and shall perform necessary administrative services relating to custody of the portfolio.

• The Contractor shall act as a depository and custodian holding all assets as received from FRTIB. The contractor shall hold such assets and provide services including fund valuation, the filing of claims on shareholder class action litigation and the processing of amounts thereby received, and “middle office services” such as trade confirmations and reconciliations.

3. Serve as a Securities Lending Agent

• The contractor shall lend securities in the separate account index fund portfolio managed on behalf of the TSP so as to generate additional income for the TSP F Fund.

• Manage a custom cash collateral reinvestment portfolio for the reinvestment of a portion of the cash collateral received against security loans.

• Provide a solution that meets ongoing liquidity needs associated with cash collateral reinvestment activities, given the liquidity constraints of the G Fund.

• Be responsible for all investment and operational activities relating to securities lending, including, but not limited to, approving counterparty borrowers, monitoring counterparty exposure, processing security recalls, etc.

• Indemnify the TSP against losses resulting from counterparty/borrower default.

• Establish a list of eligible borrowers and their agents and a maximum amount that may be borrowed by each borrower. Conduct ongoing reviews of borrowers' qualifications.

• Require that all loans of securities be collateralized by either cash or U.S.

Government securities.

• Require competitive market levels of collateralization for domestic and international securities, including accrued income. Monitor collateral levels daily. Obtain additional collateral if mark-to-market values fall below acceptable levels.

• Collect all interest or other distributions with respect to all loaned securities.

• To the extent TSP’s securities are lent to the provider’s affiliated entities, the provider shall have processes to ensure that loans made to such affiliates are in accordance with applicable laws and regulations, and are not economically disadvantageous to the TSP. The contractor will disclose the existence of any such loans to FRTIB within 30 days.

4. Access to Data and Contractor Personnel

• Provide a primary point of contact to work with the FRTIB Contracting

Officer’s Representative (COR) for items required in this contract.

• Provide a primary point of contact to work with the FRTIB Contracting Officer (CO) for contract related items or issues.

• Provide Board staff access to all senior investment personnel.

• Provide the Board’s auditor access to the firm’s personnel, operations, and records to perform the Board’s annual financial audit and semiannual financial reviews. This includes providing direct confirmations requested by the independent auditor, audited financial statements, and other documents such as audit reports on internal controls.

• Provide the Department of Labor, and its authorized contractor(s), access to the firm’s personnel, operations, and records to perform fiduciary compliance audit(s).

• The FRTIB may require that contractor personnel attend meetings in Washington, D.C. or other locations as required. Travel costs will not be reimbursed separately, rather the negotiated fees under the contract shall include all expenses including travel, lodging, and other allowable costs.

5. Disaster Recovery Plan

• The Contractor is required to have and maintain a disaster recovery plan, which includes critical business operations, computer systems, and telecommunications. Such plan shall be tested and/or updated annually. The contractor shall provide a copy of the annual test report to the FRTIB within 30 calendar days of the completion of the test. The disaster recovery plan shall include, but not be limited to emergency response procedures and backup site activation procedures.

C.3. Deliverables The deliverable reports listed below shall be reviewed and updated every year to reflect changes in policies and procedures and any applicable regulatory guidance.

1. Daily Reports Daily Reports shall be submitted and include information as follows:

a. Provide, no later than 3:00 p.m. ET the next business day after each trade date, a statement of assets and transaction summary report. The asset statement shall be comprised of a summary of the cost and market value of the assets held in the separate account reported in terms of the number of units of the unitized separate account that are held, and their cost, current unit value and total market value. The transaction summary report detailing each trade shall include the number of units purchased or sold, unit value, and trading costs (including purchased/sold accrued interest where applicable) and trading cost per unit. The unit value shall reflect dividends and other income credited since the last trade.

b. The Contractor shall submit earnings for each separate account daily, electronically in a format provided by the FRTIB. Earnings are calculated as of each TSP business day. Total net earnings include capital gain or loss (net of trading costs), dividend income, securities lending income, any income from the cash account, or any other income. The daily earnings figures are to be transmitted as soon as available each business day, but no later than 6:00 p.m. ET. Procedures must be established for notification of the Board and the

TSP record keeper if the earnings figures are not transmitted by 6:00 p.m. ET.

c. The contractor shall submit the market value of the assets as of the close of each TSP business day. The market value shall be reported in terms of the number of units held in the separate account and the current value of the units.

d. The contractor shall provide the estimated income from securities lending activity each day by 6 am the next morning.

e. Make available a daily report of collateral, identifying daily collateral required and pledged.

2. Monthly Reports Monthly Reports shall be submitted and include information as follows:

a. Investment Activity – At a unitized level, all investment activity for the period:

purchases and sales, with number of units, price, total cost/proceeds and realized gain or loss. This report must be available on a daily basis showing cumulative month to date activity.

b. Holdings – Provide website access to detailed holdings on a security level basis as of month end.

c. Investment Performance Tracking Reports and Attribution Reports - Performance results shall be time weighted rates of return for the separate account by month, calendar year to date, and for the last 12 months, presented with the corresponding benchmark returns and differences in period performance on the first business day after month end. If the Contractor has performance over longer periods, they should also provide 3, and 10 year rates of return.

d. A performance attribution report by month and year to date within ten business days of each month end.

e. Provide the board with a report showing the characteristics of the portfolio at month end as compared to the benchmark.

f. Provide the board with a report showing any class actions opened, settled and the settlement amounts.

g. Securities Lending Reports – Provide a monthly report that includes amount of assets on loan, utilization rate, revenue earned, total spread attributed to intrinsic or reinvestment spread, collateral levels, and borrower exposure.

h. Provide a monthly report on investment characteristics of securities lending collateral.

i. A monthly report on securities lending activity and outstanding loans, including amounts by borrower.

j. Shall provide the TSP regular reporting that provides evidence that loans made to its affiliated entities were not economically disadvantageous to the TSP and that loans were made at rates that are comparable to the rates for loans of similar securities to non-affiliated entities and/or are in line with market rates for such loans.

k. Provide the Board a monthly report of class action settlement activity.

l. Fees - Provide detailed bills covering management fees, custodian fees (if applicable), and any other fees.

3. Quarterly Reports Quarterly Reports shall be submitted and include information as follows:

a. Provide a report prepared by an independent third party assessing the compliance of the fund with the Contractor’s proxy voting policy/guidelines.

b. Provide a report of all derivatives exposures in the Fund.

c. Provide a report showing compliance with Proxy voting policies

d. If the firm is not publicly held, provide firm level quarterly financial statements that are audited and are prepared on an accrual basis of accounting by an independent certified public accountant licensed by the contractor’s state of incorporation to perform such services.

4. Annual Reports Annual Reports shall be submitted and include information as follows:

a. Provide the Board with a statement of proxy voting policies and periodic reports explaining any votes that are exceptions to stated policies. Provide updates as policies are revised.

b. Evidence of fidelity bond and errors and omissions professional liability coverage.

c. Current Form ADV Parts 1 and 2.

d. An annual report regarding the diversity of the Contractor’s workforce in accordance with Pub. Law 111-31, Div. B, tit. I, sec. 105 to be provided to the FRTIB no later than April 30 of each year, relating to the previous calendar year.

e. Annual financial statements for the separate account that are audited and reviewed by an independent certified public accountant licensed by the contractor’s state of incorporation to perform such services.

f. If the firm is not publicly held, annual firm level financial statements that are audited and are prepared on an accrual basis of accounting by an independent certified public accountant licensed by the contractor’s state of incorporation to perform such services.

C.4. Deliverables Management The contractor shall provide the deliverables identified in Section C.3. per the schedules specified herein. If a deliverable date falls on a weekend or holiday, the Contractor shall submit the deliverable on the last business day prior to the due date. Deliverables shall be submitted to the COR in an agreed upon format.

The deliverable schedules listed below shall be reviewed and updated every year to reflect changes in policies and procedures and any applicable regulatory guidance.

Frequency SOW Paragraph Delivery Date/Time Daily Reports C.3.1.a

C.3.1.b C.3.1.c C.3.1.d C.3.1.e

T+1; 3:00 pm EST 6:00 pm EST 6:00 pm EST T+1: 6:00 am EST T+1: 6:00 am EST

Monthly Reports C.3.2.a C.3.2.b C.3.2.c C.3.2.d C.3.2.e C.3.2.f C.3.2.g C.3.2.h C.3.2.i C.3.2.j C.3.2.k C.3.2.l

M+1 M+1 M+1 M+10 M+10 M+10 M+10 M+10 M+10 M+10 M+10 M+10

Quarterly C.3.3.a C.3.3.b C.3.3.c C.3.3.d

Q+60 Q+10 Q+60 Q+60

Annual Reports C.3.4.a C.3.4.b C.3.4.c C.3.4.d C.3.4.e C.3.4.f

Y+90 Y+90 Y+90 Y+90 Y+90 Y+90

C. 4 Requirements for FRTIB Visits to the Contractor Site

At least annually, the FRTIB shall perform and document a due diligence site visit at the Contractor site. The review topics shall include, but not be limited to, a discussion of the firm (e.g., firm status, firm-wide operational changes, new initiatives or new developments), investment staff review (personnel changes/realignments), process review (e.g., changes in strategy, enhancement of processes, and trading issues, if any), and a review of fund performance (e.g., performance relative to the appropriate benchmark. It is expected that each site visit agenda will also include one or more special topics reflective of initiatives, structural changes, or other matters deemed important by either the FRTIB or the Contractor.

The Contractor shall provide the FRTIB with data and site access for the purpose of due diligence visits.

C.6. Phase-In/Phase-Out Requirements Services under this contract are vital to the FRTIB and must be continued without interruption. The Contractor is required to comply with the following:

1. The Contractor agrees to exercise its best efforts and cooperation to effect an orderly and efficient transition during both the phase-in and phase-out phases (if applicable).

2. The Contractor shall, upon the Contracting Officer's written notice, (1) furnish phase-in services for up to 90 days after award of this agreement, and (2) negotiate in good faith a plan with the previous predecessor to determine the nature and extent of phase-in services required. The plan shall be subject to the Contracting Officer's approval. The Contractor shall provide sufficient experienced personnel during the phase-in period to ensure that the services called for by this agreement are maintained at the required level of proficiency.

3. If the Contractor is not the successful offeror on a follow-on effort to this agreement then the Contractor shall, upon the Contracting Officer's written notice, (1) furnish phase-out services for up to 90 days after this agreement expires, and (2) negotiate in good faith a plan with a successor to determine the nature and extent of phase-out services required. The plan shall specify a date for transferring responsibilities of work described in the plan, and shall be subject to the Contracting Officer's approval. The Contractor shall provide sufficient experienced personnel during the phase-out period to ensure that the services called for by this agreement are maintained at the required level of proficiency.

The Contractor shall allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required by this agreement.

4. Transfer the assets to a separate or commingled account on the books of the

Contractor or to a separate or commingled account with another contractor at the request of the Board upon 30 days’ written notice.

5. In advance of receipt of the initial TSP assets, the Contractor must participate in testing the process for transmission of the electronic data file containing the daily earnings. Such testing may include earnings for the offered fund(s) based on hypothetical balances provided by the Board, and provision of any technical assistance required to establish the electronic data link with the Board’s recordkeeping system.

6. Accept the in-kind transfer of assets from the prior contractor into the proposed account at a minimal cost to the TSP.

7. Obtain from the Department of Labor any required exemptions from prohibited transaction restrictions contained in the Federal Employees’ Retirement System Act of 1986 (e.g., ability to utilize exchange traded funds), without charge to the

TSP.

8. Provide information on any insurance policies that protect TSP assets against loss resulting from violations of fiduciary duty or errors and omissions. Provide information demonstrating compliance with the bonding requirements of § 8478 of Title 5 of the United States Code.

C.7. Contractor Minimum Qualifications

The Contractor must meet the minimum qualifications to be considered for award in reference to this RFP:

1. Contractor must have at least fifteen (15) years of experience managing indexed assets.

2. Contractor must have at least ten (10) years of securities lending experience in domestic bond portfolios and managing cash collateral reinvestment vehicles associated with securities lending.

3. Contractor must have at least $15 billion indexed to U.S. domestic fixed-income including the Bloomberg Barclays U.S. Aggregate Bond Index as of the date of this solicitation.

Section D: Packaging and Marking Not Applicable.

Section E: Inspection and Acceptance

The basis for acceptance shall be in compliance with the requirements set forth in the award of this contract. The Contracting Officer Representative (COR) will have the right to reject or require correction of any deficiencies found in deliverables. In the event of rejection of any deliverable, the Contractor will be notified in writing by the COR of the specific reasons the deliverable was rejected. If no comments from the COR are provided within ten (10) business days of receipt, the deliverable will be deemed to have been accepted by the Agency. Documents not approved by the FRTIB must be resubmitted with changes within 10 business days and the FRTIB will have another 10 business-day review period. If after the third submission the deliverable is unacceptable to FRTIB, the Program Manager, COR, and CO will meet to discuss corrective actions.

Section F: Performance/Deliverables

F.1. Period of Performance

The period of performance for this contract shall be a twelve-month Base Period from the effective award date with four (4) twelve-month Option Periods. This contract shall expire 60 months from award or at the end of the agreement period, whichever is earlier. Periods of performance are identified as follows:

• Base Period – Twelve (12) months from award

• Option Period 1 – Twelve (12) months from the end of Base Period

• Option Period 2 – Twelve (12) months from the end of Option Period 1

• Option Period 3 – Twelve (12) months from the end of Option Period 2

• Option Period 4 – Twelve (12) months from the end of Option Period 3

F.2. Place of Performance

Work shall be performed at the Contractor’s facilities. The FRTIB may request that Contractor staff meet with FRTIB employees and board members. Access to the FRTIB Headquarters (77 K Street NE Washington, DC 20002) will be granted as needed based on mutually agreed upon times between the contractor and the FRTIB.

Section G: Contract Administration

G.1. Contracting Officer (CO)

Responsibility for contracting activities rests solely with the FRTIB CO. The CO is responsible for directing any changes in the terms, conditions, or amounts cited in the contract. No conversation, recommendations, or direction, whether given directly by, or implied by FRTIB personnel, that will affect the scope, schedule, or price of this contract, shall be acted upon by the Contractor unless specifically approved by the FRTIB’s CO. In the event that the Contractor implements changes to the contract at the direction of any person other than the CO, the Contractor will not receive reimbursement for work performed pursuant to those unauthorized changes.

Contractual interpretation and assistance may be obtained by contacting the CO.

G.1.1. Contracting Officer

Name: Ms. Monique Mitchell Phone Number: 202-864-8608 Email Address: Monique.Mitchell@tsp.gov

Name: Ms. Lauren Phelps Phone Number: 202-864-8985 Email Address: Lauren.Phelps@tsp.gov

G.2. Contracting Officer's Representative (COR)

The CO shall designate in writing a COR who is responsible for administering the performance of work under this contract by:

a. Monitoring the Contractor's progress

b. Assessing performance

c. Recommending to the CO changes in requirements

d. Interpreting the scope of work

e. Performing inspections and acceptances of data items required by this order,

f. Assisting the Contractor in the resolution of technical problems encountered during the performance of the order.

G.2.1. Contracting Officer Representative

Name: To Be Determined (TBD) Phone Number: TBD Email Address: TBD

G.3. Contract Option Periods Award of an initial contract will not obligate the Agency to exercise any options. Prior to exercising any option, the Agency will determine that (1) funds are available, (2) the requirement covered by the options fulfills an existing need of the Agency, and (3) exercising the option is the most advantageous method of fulfilling the Agency’s needs, price and other factors considered. Failure to exercise an option will not obligate the Agency to pay any charges to the contractor or any other party.

G.4. Interpretation or Modification No verbal statement by any person, and no written statement by anyone other than the CO, or his/her authorized representative acting within the scope of his/her authority, shall be interpreted as modifying or otherwise affecting the terms of this contract. All requests for interpretation or modification shall be made in writing to the CO or Contract Specialist.

G.5. FRTIB Hours and Legal Holidays

Normal business hours for FRTIB personnel are 7:30 AM to 4:30 PM Eastern Standard Time, Monday through Friday, excluding Federal holidays and official Federal Government closures in the Metropolitan DC area. The following Federal holidays are observed by the FRTIB:

Holiday Date New Year’s Day January 1 Inauguration Day – National Capital Region only

January 20, as observed

Martin Luther King’s Birthday Third Monday in January President’s Day Third Monday in February Memorial Day Last Monday in May Independence Day July 4, as observed Labor Day First Monday in September Columbus Day Second Monday in October Veteran’s Day November 11, as observed Thanksgiving Day Fourth Thursday in November Christmas Day December 25

In events such as a Government closing due to severe weather or security issues, the Contractor is expected to complete and send deliverables on time. If the Contractor believes there is a Government caused (potential or actual) delay in completing the tasks and deliverables stated herein, the CO and COR are to be notified immediately in writing (via email). All delays that the contractor believes are caused by the Government shall be sufficiently documented so as to provide adequate proof of the cause of delay (i.e. include names, dates, subjects).

Section H: Special Contract Requirements

H.1 INFORMATION AND INFORMATION SYSTEM SECURITY REQUIREMENTS

FOR IT CONTRACTS

H.1.A General

(a) For the purpose of this clause, “Contractor” shall include all Prime and

Subcontractor organizations and their personnel

(b) As used in this Request for Proposal, “sensitive information” refers to FRTIB or TSP data and information that qualifies for an exception to the Freedom of Information Act, which is not currently in the public domain, and which may embody trade secrets or commercial or financial information, and which may be sensitive or privileged. The Contractor must protect and safeguard all sensitive information.

H.1.B Access to Agency Information and Information Systems

(a) The Contractor shall not have access to FRTIB information systems.

(b) The Contractor shall not have access to personally identifiable information (PII) maintained by FRTIB.

H.1.C Information Custodial Requirements

(a) Information made available to the Contractor by FRTIB for the performance or administration of this contract or information developed by the Contractor in performance or administration of the contract is FRTIB property and shall be used only for those authorized purposes and shall not be used in any other way without the prior written agreement of the Contracting Officer. This clause expressly limits the Contractor's rights to use data as described in Rights in Data - General, FAR 52.227-14(d) (1).

(b) The Contractor shall receive, gather, store, back up, maintain, use, disclose and dispose of FRTIB information only in compliance with the terms of the contract and applicable Federal and FRTIB information confidentiality and security laws, regulations and policies, or commensurate. Applicable Federal information security regulations include Federal Information Processing

Standards (FIPS) and Special Publications (SP) issued by the National Institute of Standards and Technology (NIST). If Federal or FRTIB information confidentiality and security laws, regulations and policies become applicable to the FRTIB information or information systems after execution of the contract, or if NIST issues or updates applicable FIPS after execution of this contract, the parties agree to negotiate in good faith to implement the information confidentiality and security laws, regulations and policies, including FIPS or SP, in this contract.

(c) If FRTIB determines that the Contractor has violated any of the information confidentiality, and security provisions of the contract, or if the Contractor collects or maintains PII obtained from FRTIB without FRTIB’s express prior written consent, it shall be sufficient grounds for FRTIB to terminate the contract for default or terminate for cause under Federal Acquisition Regulation (FAR) Part 12.

(d) Contractor shall store, transport or transmit FRTIB sensitive information in an encrypted form, using an FRTIB-approved encryption technology or application that is commensurate with the requirements of NIST’s FIPS 140-2 standard.

(e) Except for uses and disclosures of FRTIB information authorized by this contract for performance of the contract, the Contractor may use and disclose FRTIB information only in two other situations: (i) after notifying the FRTIB, in response to a qualifying order of a court of competent jurisdiction, or (ii) with FRTIB’s prior written approval. The Contractor shall refer all requests for, demands for production of, or inquiries about, FRTIB information and information systems to the FRTIB Contracting Officer for response.

H.1.D RESERVED

H.1.E RESERVED

H.1.F Incident Response

(a) Definition

The term “incident” or “security incident” means an occurrence that actually or imminently jeopardizes, without lawful authority, the confidentiality, integrity, or availability or FRTIB’s information or an FRTIB information system; or constitutes a violation or imminent threat of violation of law, security policies, security procedures, or acceptable use policies with respect to FRTIB information or an FRTIB information system. See 44 U.S.C § 3552(b)(2).

(b) Incident Response

Contractor shall comply with FRTIB policies and procedures regarding Incident Response. Contractor shall cooperate with FRTIB and with law enforcement authorities in investigating any such incidents, at Contractor’s expense. Contractor shall not communicate with any third party regarding an incident without the prior, express written permission of FRTIB). The remedies and obligations set forth in this section are in addition to any others FRTIB may have.

(c) Notification to FRTIB

Even if outside regular business hours, the Contractor shall immediately (but not later than one (1) hour of first becoming aware of a potential incident) provide written notification to the COR and, simultaneously, FRTIB’s CISO, of any actual or suspected incidents involving FRTIB information or an FRTIB information system. Such notice shall identify: (1) the information involved; (2) the circumstances surrounding the incident (including to whom, how, when, and where the FRTIB information/assets were placed at risk or potentially compromised); and (3) any other relevant information.

Reporting an actual or potential incident, by itself, will not be interpreted as evidence that the contractor or any of its subcontractors failed to provide adequate safeguards for FRTIB information and/or FRTIB information systems.

(d) Notification to Law Enforcement

If instructed to do so by FRTIB, the Contractor shall simultaneously report the incident to the appropriate law enforcement entity(ies) of jurisdiction (e.g., in instances of theft or break-in or other criminal activity). The Contractor and its employees shall cooperate with FRTIB and any law enforcement authority responsible for investigating and potentially prosecuting any possible criminal law violation(s) associated with any incident. The Contractor shall cooperate with FRTIB in any civil litigation to recover FRTIB information; obtain monetary or other compensation from a third party for damages arising from any incident; or to obtain injunctive relief against any third party arising from, or related to the incident.

(e) Right to Participate

The FRTIB shall have the right to participate in any investigation relating to a suspected or actual incident and, pursuant to such an investigation, shall have access to any and all related data including but not limited to affected files, systems, briefings, devices (including hard drives), and interim as well as final reports and analyses.

(f) Duty to Mitigate

To the extent practicable, the Contractor shall mitigate any harmful effects on individuals whose information was accessed or disclosed in an incident. In the event of an incident with respect to any FRTIB Information processed or maintained by the Contractor under the contract, the Contractor is responsible for consequential damages to be paid to FRTIB.

H.1.G RESERVED

H.1.H RESERVED

H.1.I Contractor Requirements, Confidentiality and Non-Disclosure

(a) Contractor personnel will have access to some privileged and confidential materials of the FRTIB. These printed and electronic documents are for internal use only, are not to be copied or released without permission, and remain the sole property of the FRTIB. The contractor will not have access to PII or FRTIB information systems.

H.1.J Proprietary Information Requirement

(a) The Contractor shall limit access to the minimum number of employees necessary for order performance for all information considered sensitive or proprietary in nature. If the Contractor is uncertain of the sensitivity of any information obtained during the order then the Contractor has a responsibility to ask the FRTIB Contracting Officer for clarification.

H.1.K Security: Information System Security

(a) Contractor shall attest on an annual basis that their systems are commensurate with FISMA and NIST requirements. FRTIB reserves the right to evaluate any or all of the security controls or practices implemented by the Contractor under this contract on a periodic basis.

(b) The Contractor shall ensure adequate LAN/Internet, data, information, and system security in accordance with standard operating procedures, conditions, laws, and regulations. The Contractor shall follow all applicable laws and regulations governing information security, including, but not limited to FISMA and NIST, or commensurate.

H.1.L RESERVED

H.1.M Service Organizational Control (SOC) Audits

(a) At least once every twelve months following the contract signing date, Contractor, at its own expense, shall cause to be conducted a SOC 1 Type 2 or SOC 2 Type 2 audit (or any successor standard) on its operations, including the operations of its affiliates and subcontractors, that are involved in the provision of the Services under this Contract. The SOC 1 Type 2 or SOC 2 Type 2 Audit shall be performed by an independent auditing firm registered and in good standing with the Public Company Accounting Oversight Board and any successor thereto.