REQUEST FOR PROPOSALS
       NO. 08-002




         PROPOSALS TO FURNISH

  INVESTMENT CONSULTANT SERVICES




          ...
TABLE OF CONTENTS

NOTICE TO OFFERORS

ADMINISTRATIVE OVERVIEW...............................................................
D.Authorized Signature.......................................................................................................
MANDATORY REQUIREMENTS CERTIFICATION................................................................37

FEE PROPOSAL.........
ADMINISTRATIVE OVERVIEW

I.      Background

          This Request for Proposals (“RFP”) is issued by the Hawaii Employer...
and approximately $52 million in reserves held by one of our insurance carriers.
           Under HRS § 87A-31, the EUTF m...
Hawaii Employer-Union Health Benefits Trust Fund
                  City Financial Tower
                  201 Merchant Str...
Questions will be accepted until 4:00 p.m. (Hawaii Standard Time) January 21, 2008.
          A written response to any qu...
Proposals will not be opened publicly, but will be opened in the presence of two or
         more procurement officials. P...
to enter into an agreement pursuant to an award, or provisions contrary to those
                  required in the solicit...
contract with the successful offeror; provided, however, that the EUTF shall have no
        obligation to accept terms an...
DOTAX Website (Forms & Information): http://www.state.hi.us/tax/alphalist.html

        DOTAX Forms by Fax/Mail: (808) 587...
Business registration.

        Hawaii business. A business entity referred to as a “Hawaii business” is registered
      ...
PROPOSAL

   I. Content of Proposal

        The offeror shall prepare a written proposal that will fully describe the qua...
The cover letter must be signed by an individual or individuals authorized to
                  legally bind the offeror. ...
J. EUTF Rights Regarding Contractor’s Recommendations

                  A statement that the offeror understands that the...
PROPOSAL EVALUATION

   I. Introduction

        The EUTF seeks to retain the highest quality organization to provide inve...
The stability, relevant history, and experience of the offeror’s organization and the
                 consultants and ser...
reports.
             •    Submission of Mandatory Requirements Certification.

  V. Phase 2 – Establishment of Priority L...
CRITERIA
        POINTS

          Abilities and limitations of the offeror’s organization to perform the
          servic...
SCOPE OF WORK

   I. Introduction

        The purpose of the contract resulting from this RFP is to obtain comprehensive ...
standard operating procedures of the EUTF.

        Funds are not presently available for performance under this contract ...
Upon selection, draft, present, answer questions, and facilitate the review and
                  approval of an Investmen...
investment styles, capitalization ranges or strategies within the public market
                  portfolios (e.g., passiv...
appropriate benchmarks, investment guidelines, performance-based fees, etc.

                  Perform investment manager ...
Conduct up to two (2) trustee and staff education workshops annually on
                  specific issues designated by th...
insurance hereunder shall not limit the contractor’s liability to the EUTF nor
                    shall it fulfill the in...
QUESTIONNAIRE

        A. Profile and Experience

             1. Provide a brief history of your firm and its operation. ...
classification?
             18. Provide an organizational chart diagramming the relationship between the
                ...
as the time of other dedicated consultants, to the EUTF account.
             16. List the Primary Consultant’s current cl...
Public Fund Investment Consulting Clients Only
                                              Total Number of              ...
Public Fund Investment Consulting Clients Only
                     Clients Gained    Clients Gained   Clients Lost    Cli...
a.   Fund Name
                          b.   Contact Name
                          c.   Address
                        ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...
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INFORMATIONAL DOCUMENT FOR PROPOSALS TO FURNISH INVESTMENT ...

  1. 1. REQUEST FOR PROPOSALS NO. 08-002 PROPOSALS TO FURNISH INVESTMENT CONSULTANT SERVICES Issued by Hawaii Employer-Union Health Benefits Trust Fund City Financial Tower 201 Merchant Street, Suite 1520 Honolulu, Hawaii 96813 State of Hawaii January 2008
  2. 2. TABLE OF CONTENTS NOTICE TO OFFERORS ADMINISTRATIVE OVERVIEW.....................................................................................................4 I. Background...................................................................................................................................................4 II.Purpose..........................................................................................................................................................5 III.Authority......................................................................................................................................................5 IV.Procurement Officer and Contract Administrator...................................................................................5 V.Procurement Timetable................................................................................................................................6 VI.Communications with the EUTF; Questions.............................................................................................6 VII.Submission of Proposals............................................................................................................................7 VIII.Receipt, Opening and Recording of Proposals.......................................................................................7 IX.Best and Final Offer....................................................................................................................................8 X.Costs for Proposal Preparation....................................................................................................................8 XI.Disqualification of Proposals......................................................................................................................8 XII.RFP Amendments and Addendum...........................................................................................................9 XIII.Cancellation of Request for Proposals/Rejections of Proposals............................................................9 XIV.Uncertainties Beyond the Control of the EUTF.....................................................................................9 XV.Proposal Bonds; Performance and/or Payment Bonds...........................................................................9 XVI.Acceptance of Proposal and Execution of Contract...............................................................................9 PROPOSAL.........................................................................................................................................13 I.Content of Proposal......................................................................................................................................13 II.Cover Letter.................................................................................................................................................13 A. Contact Information...............................................................................................................................13 B.Terms and Conditions of RFP....................................................................................................................13 C.Legal Entity.................................................................................................................................................13 The information contained herein is for use only by persons expressly authorized by EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  3. 3. D.Authorized Signature..................................................................................................................................13 E. Federal Tax ID No...................................................................................................................................14 F.Hawaii General Excise Tax ID No..............................................................................................................14 G.Current Licenses and Registration............................................................................................................14 H.Subcontracting of Services.........................................................................................................................14 I.Non-discrimination.......................................................................................................................................14 J.EUTF Rights Regarding Contractor’s Recommendations.......................................................................15 K.Terms and Conditions of Contract............................................................................................................15 III. Confidential or Proprietary Information..............................................................................................15 I.Introduction..................................................................................................................................................16 II.Evaluation Process......................................................................................................................................16 III.Evaluation Criteria....................................................................................................................................16 IV.Phase 1 – Evaluation of Mandatory Requirements................................................................................17 V.Phase 2 – Establishment of Priority List of Offerors...............................................................................18 VI.Phase 3 – Interviews with Priority-Listed Offerors................................................................................18 VII.Phase 4 – Final Evaluation of Proposals................................................................................................18 VIII. Phase 5 – Award....................................................................................................................................19 SCOPE OF WORK............................................................................................................................20 I.Introduction .................................................................................................................................................20 II.Contract Period...........................................................................................................................................20 III.Compensation............................................................................................................................................20 IV.Multi-Term Solicitation.............................................................................................................................21 V.Liaison and Authorization to Proceed.......................................................................................................21 VI.Scope of Services........................................................................................................................................21 QUESTIONNAIRE.............................................................................................................................27 The information contained herein is for use only by persons expressly authorized by EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  4. 4. MANDATORY REQUIREMENTS CERTIFICATION................................................................37 FEE PROPOSAL................................................................................................................................38 APPENDICES.....................................................................................................................................39 APPENDIX A: HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND ANNUAL REPORT............................................................................................................................39 APPENDIX B: EUTF FINANCIAL STATEMENTS.....................................................................39 APPENDIX C: CONTRACT AND GENERAL CONDITIONS....................................................39 APPENDIX A......................................................................................................................................40 HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND ANNUAL REPORT...40 APPENDIX B......................................................................................................................................41 EUTF FINANCIAL STATEMENTS................................................................................................41 Notice to Offerors The Hawaii Employer-Union Health Benefits Trust Fund (“EUTF”) seeks qualified offerors to furnish Investment Consultant Services. Sealed proposals for this project, No. 08-002, will be received at: Hawaii Employer-Union Health Benefits Trust Fund City Financial Tower 201 Merchant Street, Suite 1520 Honolulu, Hawaii 96813 Proposals will be accepted up to 4:00 p.m., Hawaii Standard Time (“HST”), March 3, 2008. Proposals received after this time will not be accepted. The Request for Proposals (“RFP”) may be examined at or obtained from the office listed above. The RFP is also available online at www.spo.hawaii.gov in Acrobat Reader format and at www.eutf.hawaii.gov in native file formats, Microsoft Word and Acrobat Reader, as applicable. For further information, call James Williams, Procurement Officer, at (808) 587-5434. LEGAL AD DATE: January 7, 2008 The information contained herein is for use only by persons expressly authorized by EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  5. 5. ADMINISTRATIVE OVERVIEW I. Background This Request for Proposals (“RFP”) is issued by the Hawaii Employer-Union Health Benefits Trust Fund (“EUTF”), an agency of the State of Hawaii ("State"). The EUTF was established by Act 88, 2001 Session Laws of Hawaii. Act 88 is partially codified as Chapter 87A, Hawaii Revised Statutes (“HRS”). Under HRS Chapter 87A, the EUTF is authorized to design, provide, and administer health and other benefit plans for State and county employees, retirees, and their dependents (aka “employee- beneficiaries and dependent-beneficiaries). The benefit plans include medical, prescription drug, vision, dental, and life insurance. The EUTF currently provides benefit plans to approximately [insert number] employee-beneficiaries and dependent-beneficiaries. The EUTF’s plan and fiscal year is July 1 through June 30. The EUTF is administered by a board of ten trustees (“Board”) who are appointed by the Governor. Five trustees represent the employee-beneficiaries, one of whom represents retirees. These five trustees are selected by the Governor from a list of candidates provided by the exclusive employee representative organizations. The remaining five trustees, also appointed by the Governor, represent the public employers. The Board’s responsibilities include, among other things, determining the nature and scope of benefit plans, entering into contracts to provide such plans, administering the trust fund used to provide such plans and to pay for EUTF administrative expenses, and overseeing all EUTF activities. In several of these activities, the Board is assisted by a benefits plan consultant ("Consultant"). The EUTF’s day-to-day operations are administered by an administrator appointed by the Board (“Administrator”). The Administrator is assisted in managing the EUTF by an assistant administrator, a financial management officer, and an information systems analyst. EUTF staff has a total of 26 permanent and 3 temporary employees (including management staff and the Administrator). The EUTF is organized under three branches; Financial Services Branch, Information Systems Branch, and Member Services Branch. A health benefits program manager oversees the Member Services Branch and is supported by employees assigned to customer service duties to answer phones and e-mails from members and to handle all processing for retirees and process all active employee enrollment submissions. The financial management officer oversees the Financial Services Branch and is supported by accountants and account clerks who reconcile employee accounts, collect employer/employee contribution for health benefits and process all payments. The EUTF information system analyst is supported by one IT specialist and provides internal IT support services, HIPAA security responsibilities, and coordinates additional support services provided by Department of Accounting and General Services / Information and Communication Services Division. During FY2006, the EUTF collected $572 million in employer and employee- beneficiary contributions and paid out $565 million in premiums for the EUTF health and other benefit plans. As of June 30, 2006, the EUTF had approximately $42 million in reserves, i.e., premiums that were returned by insurance carriers as being in excess of what was needed to cover the cost of EUTF health and other benefit plans 4 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  6. 6. and approximately $52 million in reserves held by one of our insurance carriers. Under HRS § 87A-31, the EUTF may use such reserves to provide health and other benefit plans for EUTF employee-beneficiaries and dependent-beneficiaries, to stabilize rates for such plans, and for administrative expenses. Under Act 57, 2006 Session Laws of Hawaii, it was clarified that contributions to the trust fund could be used as a reserve to pay for the future costs of providing health and other benefits plans for EUTF employee-beneficiaries and dependent-beneficiaries. The EUTF Board’s authority regarding investments and securities is stated in HRS §§ 87A-24(2) and 87A-24(3). The Government Accounting Standards Board (“GASB”) has issued two new accounting and financial reporting standards, i.e., Statement No. 43 (Financial Reporting for Post employment Benefits Other Than Pension Plans) and Statement No. 45 (Accounting and Financing Reporting by Employers for Post employment Benefits Other Than Pension Plans). In connection with these new standards, the State and counties may decide to “pre-fund” the cost of providing health and other post-employment benefits to State and county employees and retirees who participate in the EUTF. If such a decision is made, the EUTF could receive a significant amount of funds that it would have to invest with a long term horizon. The EUTF FY 2006-2007 Annual Report is included as Appendix A of this RFP. EUTF Annual Reports are available on-line at www.hawaii.gov/budget/LegReports/. The most recent audited financial statements of the EUTF are attached in Appendix B. II. Purpose The EUTF is soliciting proposals from qualified firms to provide domestic and international investment consulting services to the EUTF and EUTF Board. A more detailed description of these services is set forth in Paragraph VI of the Scope of Work section. When responding to this Request for Proposal (“RFP”), we encourage you to describe the ways in which you believe your organization’s service capability is unique or would add particular value. Please be succinct in your answers and, if certain services cannot be provided, please so state where appropriate. III. Authority This RFP is issued under the provisions of Chapters 87A and 103D, Hawaii Revised Statutes, and the implementing Administrative Rules. All prospective offerors are charged with presumptive knowledge of all requirements of the cited authorities. Submission of a proposal by any prospective offeror shall constitute a representation of such knowledge on the part of such prospective offeror. IV. Procurement Officer and Contract Administrator This RFP is issued by the EUTF. The individual listed below is the Procurement Officer and Contract Administrator for this procurement. Mr. Jim Williams, Administrator 5 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  7. 7. Hawaii Employer-Union Health Benefits Trust Fund City Financial Tower 201 Merchant Street, Suite 1520 Honolulu, HI 96813 Phone: (808) 587-5434 Fax: (808) 586-2320 V. Procurement Timetable Listed below are the important actions and corresponding final dates by which the actions must be taken or completed. Offerors are notified that these dates are estimated by the EUTF and are subject to change at the discretion of EUTF. The EUTF reserves the right to change any date(s) as deemed necessary and in the best interest of the EUTF. If the EUTF decides to change a date for any reason, notification will be given via the addendum process described in Paragraph XII of this section. Actions Date Release of the RFP January 7, 2008 Last date for questions January 21, 2008 EUTF response to questions February 11, 2008 Deadline to submit proposals March 3, 2008 4:00 p.m. (HST) Determination of priority-listed offerors (if any) April 1, 2008 Presentations by priority-listed offerors (if any) April 16 - 18, 2008 Best and final offers (if needed) April 30, 2008 Contractor Selection and Award May 14, 2008 Contract Start Date June 1, 2008 Priority-listed offerors selected in accordance with Paragraph V of the Proposal Evaluation section of this RFP will be required to make a presentation during the period of April 16 – 18, 2008 in Honolulu, Hawaii. Priority-listed offerors will be contacted by the EUTF staff to arrange a specific time and location for the presentation. VI. Communications with the EUTF; Questions Offerors and potential offerors (including agents of offerors or potential offerors) should not contact any member of the EUTF Board or any member of the EUTF staff. An exception to this rule applies to firms who currently do business with EUTF; provided that any contact made by any such firm should be related to that business, and should not relate to this RFP. If additional information is required regarding this RFP, requests for such information must be submitted in writing (fax and email are acceptable) to the Procurement Officer. The Procurement Officer, listed in Paragraph IV of this section, is the sole point of contact from the date of release of this RFP until the selection of the offeror or offerors to whom a contract will be awarded. 6 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  8. 8. Questions will be accepted until 4:00 p.m. (Hawaii Standard Time) January 21, 2008. A written response to any questions will be provided by the EUTF via the addendum process described in Paragraph XII of this section. VII. Submission of Proposals Offerors must carefully examine this RFP, all amendments via the addendum process (if any), all required contract forms, and other documents, laws and rules, as necessary, before submitting a proposal. The submission of a proposal shall be considered to be a warranty and representation that the offeror has made a careful examination and understands the work and the requirements of this RFP. Each qualified offeror may submit only one (1) proposal. Alternate proposals will not be accepted. The proposal should be labeled "Hawaii Employer-Union Health Benefits Trust Fund Investment Consulting Services RFP 08-002." A master (so marked), twenty (20) copies (one copy must be unbound and ready to photocopy), and one (1) electronic copy (MS Word or Adobe Acrobat format on a 650MB/74 minute format CD) of the response must be received no later than 4:00 p.m. (Hawaii Standard Time) March 3, 2008. The sealed package should be addressed to the Procurement Officer listed in Paragraph IV of this section. The outside cover of the package containing the proposal shall be marked as indicated below: Hawaii Employer-Union Health Benefits Trust Fund Investment Consulting Services Proposal RFP 08-002 (Name of Firm) No faxed or e-mailed proposals will be considered or accepted! VIII. Receipt, Opening and Recording of Proposals Proposals and modifications will be time-stamped upon receipt and held in a secure place by the Procurement Officer until the established due date. Proposals may be modified or withdrawn, prior to the deadline for submission of proposals, by the following: • Modifications - a written notice accompanying the actual modification received by the Procurement Officer; or a written notice accompanying the actual modification by facsimile machine sent to the Procurement Officer, provided that the offeror submits the written notice accompanying the actual modification within two working days of the Procurement Officer’s receipt of the facsimile. • Withdrawal - a written notice received by the Procurement Officer; or a notice by facsimile machine sent to the Procurement Officer. 7 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  9. 9. Proposals will not be opened publicly, but will be opened in the presence of two or more procurement officials. Proposals and modifications will be shown only to personnel having a legitimate interest in them. After the date established for receipt of proposals, a register of proposals will be prepared which will include the name of each offeror and the number of modifications received, if any. The register of proposals shall be open to public inspection only after a contract has been awarded. An offeror may withdraw and resubmit a proposal prior to the final submission date. No withdrawals or re-submissions will be allowed after the final submission date. IX. Best and Final Offer Best and final offers may be requested by the Evaluation Committee. The Evaluation Committee will provide guidance and additional instructions at the time best and final offers are requested. Any best and final offers must be received by the Procurement Officer at the time and date specified in the Procurement Timetable. If best and final offers are not requested by the Evaluation Committee, of if requested, and it is not submitted by an offeror, the offeror’s previous submittal will be construed as the offeror’s best and final offer. After best and final offers are received, final evaluations will be conducted for an award. X. Costs for Proposal Preparation Expenses for the development and submission of proposals and other responses to the RFP are the sole responsibility of the organization submitting the proposal or other response. Travel and expenses to and from the State of Hawaii are also the sole responsibility of the organization submitting a proposal or otherwise responding to this RFP. XI. Disqualification of Proposals The EUTF reserves the right to consider as acceptable only those proposals submitted in accordance with all requirements set forth in this RFP and which demonstrate an understanding of the scope of work. Any proposal offering any other set of terms and conditions, or terms and conditions contradictory to those included in this RFP, may be disqualified without further notice. An offeror may be disqualified and a proposal rejected for any one or more of the following non-exclusive reasons: • Proof of collusion among offerors, in which case all proposals and offerors involved in the collusive action will be rejected. • The offeror's lack of responsibility and cooperation as shown by past work. • The proposal shows any noncompliance with applicable law. • The proposal is conditional, incomplete, or irregular in such a way as to make the proposal incomplete, indefinite, or ambiguous as to its meaning. • The proposal has any provision reserving the right to accept or reject award, or 8 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  10. 10. to enter into an agreement pursuant to an award, or provisions contrary to those required in the solicitation. • The delivery of the proposal after the deadline specified in the timetable. • The offeror being in arrears on existing contracts with the State or having defaulted on previous contracts. • The offeror's lack of sufficient experience to perform the work contemplated. • The offeror’s conflicts of interest or lack of independence in judgment. XII. RFP Amendments and Addendum The EUTF may modify any part of the RFP, prior to the date fixed for award of the contract, by issuance of an addendum. The EUTF will respond to questions and inquiries via the addendum process. Addenda will be numbered consecutively. XIII. Cancellation of Request for Proposals/Rejections of Proposals This RFP may be cancelled and any or all proposals may be rejected in whole or in part, when it is determined to be in the best interests of the EUTF or for any other reason permitted by Chapter 103D, Hawaii Revised Statutes, and its implementing Administrative Rules.. XIV. Uncertainties Beyond the Control of the EUTF The EUTF recognizes that circumstances beyond the control of the EUTF may arise that may significantly affect the ability of the contractor to provide the services described in this RFP or as proposed by the contractor. Accordingly, the EUTF reserves the right to modify any contract resulting from this RFP to address such circumstances. XV. Proposal Bonds; Performance and/or Payment Bonds No bid bond is required to be submitted with the proposal, and no performance or payment bond will be required for the contract awarded pursuant to this RFP. XVI. Acceptance of Proposal and Execution of Contract Acceptance of a proposal, if any, will be made as provided in the Procurement Timetable. The offeror must have the ability to perform as called for in the RFP and in the contract. The EUTF shall be the sole judge of capability. The successful offeror will be notified by letter that its proposal has been accepted and that the offeror is being awarded the contract. The EUTF reserves the right to award a contract based upon the written responses received and without prior discussion or negotiations. Attachment C is the contract form that will be used by the EUTF for investment consulting services. In submitting a proposal, the offeror will be deemed to have agreed to each provision set forth in Attachment C unless the offeror specifically identifies the provision to which objection is made and submits alternative language. The EUTF reserves the right to further negotiate the terms and conditions of the 9 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  11. 11. contract with the successful offeror; provided, however, that the EUTF shall have no obligation to accept terms and conditions that vary from those set forth in Attachment C. The contract awarded pursuant to this RFP shall consist of the RFP and any amendments thereto, and the specific terms and conditions of the contract negotiated between the EUTF and the successful offeror. The EUTF shall forward a contract to the successful offeror for execution. The contract shall be signed by the successful offeror and returned within ten days after receipt by the offeror or within such further time as may be allowed by the EUTF. No contract shall be considered binding upon the EUTF until the contract has been fully and properly executed by all parties thereto. If the offeror to whom a contract is awarded shall fail or neglect to enter into the contract within ten days after award or within such further time as may be allowed, the Procurement Officer will consider the next highest ranked offeror or may call for new proposals, if it is deemed to be in the best interests of the EUTF. XVII. Requirements for Doing Business in the State of Hawaii Section 3-122-112, Hawaii Administrative Rules (“HAR”), requires that, before award of contract may be made, the successful offeror must provide proof of compliance with the requirements of the following chapters of the Hawaii Revised Statutes (“HRS”): 1) Chapter 237, general excise taxes 2) Chapter 383, unemployment insurance 3) Chapter 386, workers’ compensation 4) Chapter 392, temporary disability insurance 5) Chapter 393, prepaid health care And one of the following: 1) Be registered and incorporated or organized under the laws of the State of Hawaii, or 2) Be registered to do business in the State of Hawaii. Reference Responsibility of Offerors in §3-122-112, HAR. Offeror shall produce documents to the Procurement Officer to demonstrate compliance with this section. HRS Chapter 237 tax clearance requirement for award and final payment. Pursuant to §103D-328, HRS, the successful offeror shall be required to submit a tax clearance certificate issued by the Hawaii State Department of Taxation (DOTAX) and the Internal Revenue Service (IRS). The certificate is valid for six (6) months from the most recent approval stamp date on the certificate and must be valid on the date it is received by the purchasing agency. The tax clearance certificate shall be obtained on the State of Hawaii, DOTAX TAX CLEARANCE APPLICATION Form A-6 (Rev.2003) which is available at the DOTAX and IRS offices in the State of Hawaii or the DOTAX website, and by mail or fax: 10 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  12. 12. DOTAX Website (Forms & Information): http://www.state.hi.us/tax/alphalist.html DOTAX Forms by Fax/Mail: (808) 587-7572 1-800-222-7572 Completed tax clearance applications may be mailed, faxed, or submitted in person to the Department of Taxation, Taxpayer Services Branch, to the address listed on the application. Facsimile numbers are: DOTAX: (808) 587-1488 IRS: (808) 539-1573 The application for the clearance is the responsibility of the offeror, and must be submitted directly to the DOTAX or IRS and not to the purchasing agency. Contractor is required to submit a tax clearance certificate for final payment on the contract. A tax clearance certificate, not over two months old, with an original green certified copy stamp, must accompany the invoice for final payment on the contract. In addition to a tax clearance certificate an original “Certification of Compliance for Final Payment” (SPO Form 22), attached, will be required for final payment. A copy of the Form is also available at www.spo.hawaii.gov. HRS Chapters 383 (Unemployment Insurance), 386 (Workers’ Compensation), 392 (Temporary Disability Insurance), and 393 (Prepaid Health Care) requirements for award. Pursuant to §103D-310(c), HRS, the successful offeror shall be required to submit an approved certificate of compliance issued by the Hawaii State Department of Labor and Industrial Relations (DLIR). The certificate is valid for six (6) months from the date of the issue and must be valid on the date it is received by the purchasing agency. The application for certificate of compliance (Form LIR #27) can be obtained from the DLIR website: http://www.dlir.state.hi.us/forms/ApplicationforCertificateofCompliance.pdf or from: DLIR Administrative Services Office 830 Punchbowl Street, Room 309 Honolulu, HI 96813 Phone: (808) 586-8888 Fax: (808) 586-8899 The DLIR will return the form to the offeror who in turn shall submit it to the purchasing agency. The application for the Certificate is the responsibility of the offeror, and must be submitted directly to the DLIR and not to the purchasing agency. 11 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  13. 13. Business registration. Hawaii business. A business entity referred to as a “Hawaii business” is registered and incorporated or organized under the laws of the State of Hawaii. As evidence of compliance, offeror shall submit a CERTIFICATE OF GOOD STANDING issued by the Department of Commerce and Consumer Affairs Business Registration Division (“BREG”). A Hawaii business that is a sole proprietorship, however, is not required to register with the BREG, and therefore not required to submit the certificate. An offeror’s status as sole proprietor or other business entity and its business street address indicated on Proposal Letter will be used to confirm that the offeror is a Hawaii business. Compliant non-Hawaii business. A business entity referred to as a “compliant non- Hawaii business” is not incorporated or organized under the laws of the State of Hawaii but is registered to do business in the State. As evidence of compliance, offeror shall submit a CERTIFICATE OF GOOD STANDING. To obtain a CERTIFICATE OF GOOD STANDING go online to www.businessregistrations.com and follow the instructions. To register or to obtain a “Certificate of Good Standing” by phone, call (808) 586-2727 (M-F 7:45 am to 4:30 pm- HST). The “Certificate of Good Standing” is valid for six (6) months from date of issue and offerors are advised that there are costs associated with registering and obtaining a “Certificate of Good Standing” from the BREG. The above certificates should be applied for and submitted to the purchasing agency as soon as possible. If a valid certificate is not submitted on a timely basis for award of the contract, an offeror otherwise responsive and responsible may not receive the award. Alternately, instead of separately applying for these certificates at the various state agencies, vendors may choose to use the Hawaii Compliance Express (HCE), which allows businesses to register online through a simple wizard interface at http://vendors.ehawaii.gov to acquire a “Certificate of Vendor Compliance.” The HCE provides current compliance status as of the issuance date. The “Certificate of Vendor Compliance” indicating that vendor’s status is compliant with the requirements of Chapter 103D-310(c), HRS, shall be accepted for both contracting and final payment purposes. Vendors that elect to use the new HCE services will be required to pay an annual fee of $15.00 to the Hawaii Information Consortium, LLC (HIC). Vendors choosing not to participate in the HCE Program are required to submit the paper certificates as instructed in previous paragraphs 12 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  14. 14. PROPOSAL I. Content of Proposal The offeror shall prepare a written proposal that will fully describe the qualifications and availability of the offeror to provide the services requested and the compensation the offeror proposes in response to this RFP. The proposal shall include, without limitation, the following: • Cover Letter • Questionnaire Answers • Form ADV (Parts I and II) • Code of Ethics • References • Fee Proposal • Sample Reports (performance, research, manager search, asset/liability modeling, etc.) • Financial Statement • Mandatory Requirements Certification II. Cover Letter The RFP response must include a cover letter addressed to the Procurement Officer. The letter, which will be considered an integral part of the Proposal, must contain the following: A. Contact Information The cover letter shall include the offeror’s name, address, telephone/fax numbers, and e-mail address. B. Terms and Conditions of RFP A statement that the offeror fully understands and will comply with all terms and conditions contained in the RFP. The offeror must include written acknowledgement of receipt of any and all amendments or addenda made to this RFP. C. Legal Entity A statement indicating that the offeror is an individual, a partnership, a limited liability company or a corporation. If the offeror is a corporation, a partnership, a limited liability company or other legal entity, include a statement indicating the jurisdiction where the offeror is organized. D. Authorized Signature 13 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  15. 15. The cover letter must be signed by an individual or individuals authorized to legally bind the offeror. If the offeror is a corporation, evidence in the form of a certified copy of a corporate resolution or certified copy of articles of incorporation or bylaws shall be submitted showing the individual's authority to bind the corporation. If the offeror is a partnership, the proposal must be signed by all the partners or evidence in the form of a certified copy of the partnership agreement shall be submitted showing the individual's authority to bind the partnership. Similar evidence must be submitted for an individual signing the proposal letter on behalf of any other kind of entity. E. Federal Tax ID No. The cover letter shall include the offeror's federal tax identification number. F. Hawaii General Excise Tax ID No. A Hawaii General Excise Tax (GET) ID must be provided or a representation that a Hawaii General Excise Tax ID will be obtained prior to commencement of the work. G. Current Licenses and Registration A statement that the offeror maintains the current licenses necessary to provide the services required. In addition, an offeror must provide evidence that the offeror is registered to do business in the State of Hawaii prior to commencement of the work. True and accurate copies of the offeror's license(s) and certificates must be provided. H. Subcontracting of Services A statement by the offeror indicating that the work described in the RFP will not be subcontracted, except as described in the proposal, or assigned. The extent to which the work will be subcontracted and the qualifications of any subcontractor will be considered in evaluating the offeror's ability to perform the service referred to in the RFP. I. Non-discrimination A statement of affirmative action that the offeror does not discriminate in employment and practices with regard to race, color, religion, age (except as provided by law), sex, marital status, political affiliation, national origin, handicap or disability. 14 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  16. 16. J. EUTF Rights Regarding Contractor’s Recommendations A statement that the offeror understands that the EUTF reserves the right to disapprove contractor recommendations without penalty when they conflict with the policy or fiscal interests of the EUTF, as determined by the EUTF Board. K. Terms and Conditions of Contract Affirm that the provisions of the sample contract in Attachment B are acceptable or state any proposed modifications. The EUTF reserves the right to decline or classify as “unresponsive” any substantive changes, modifications, or revisions to the provisions of the sample contract. III. Confidential or Proprietary Information The offeror shall designate those portions of the proposal that contain trade secrets or other proprietary data/information that the offeror wishes to remain confidential. This information must be clearly marked and readily separable from the proposal to facilitate public inspection of the non-confidential portions. Any request for public inspection is subject to the requirements of Chapter 92F, Hawaii Revised Statutes. The entire proposal CANNOT be considered confidential. The fee proposal CANNOT be considered confidential. 15 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  17. 17. PROPOSAL EVALUATION I. Introduction The EUTF seeks to retain the highest quality organization to provide investment consulting services. Throughout the selection process, the EUTF reserves the right, in its sole discretion: 1. To not award the contract to the lowest cost offeror. 2. To not award the contract at all. II. Evaluation Process An Evaluation Committee selected by the Procurement Officer and the EUTF Board will review and evaluate all proposals submitted by the deadline specified in this RFP. The evaluation process will be conducted in five phases: Phase 1 - Evaluation of Mandatory Requirements Phase 2 - Establishment of Priority List of Offerors Phase 3 - Interviews with Priority-Listed Offerors Phase 4 - Final Evaluation of Proposals Phase 5 – Award III. Evaluation Criteria The evaluation criteria listed below will be used to evaluate and rank offerors’ proposals. Abilities and limitations of the offeror’s organization to perform the services referred to in the RFP. This criteria includes, but is not limited to: the organization’s external and internal resources; the nature and extent of the organization’s personnel, systems, and databases; the capabilities of the organization’s research department; the nature and amount of any errors and omissions and/or professional liability insurance maintained by the organization; the organization’s code of ethics; the organization’s methods for preventing conflicts of interest; the nature of any existing or potential conflicts of interest; and the organization’s general structures, policies and procedures. The soundness of the offeror’s proposal, the philosophies and processes underlying the proposal, and the extent to which the proposal shows an understanding of the needs of the EUTF. This criteria includes, but is not limited to: the offeror’s approach to client servicing; the offeror’s investment consulting philosophy and approach to investment consulting; the offeror’s asset allocation models and processes; the offeror’s approach to establishing benchmarks for performance of portfolios; the offeror’s process for evaluating, selecting, and monitoring investment managers; the structure of the proposed servicing team; and the proposed reporting and reports to be provided by the offeror. 16 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  18. 18. The stability, relevant history, and experience of the offeror’s organization and the consultants and servicing team proposed for the EUTF account. This criteria includes, but is not limited to: the organization’s and the proposed consultants’ general experience in providing investment consulting advice; the organization’s and the proposed consultants’ experience in providing investment consulting advice to entities similar to the EUTF; the stability of the organization and the proposed consultants and servicing team; the client load of the proposed consultants and servicing team; the nature of any proposed subcontracting; the nature of any regulatory problems (past or current) involving the organization and/ or the proposed consultants and servicing team; the professional certifications and registrations of the organization and proposed consultants and servicing team. Fees Client References The EUTF reserves the right to modify the evaluation criteria, or any other part of this RFP, prior to the date fixed for award of the contract. IV. Phase 1 – Evaluation of Mandatory Requirements The evaluation of the mandatory requirements shall be on a "pass/no pass" basis. The purpose of this phase is to determine whether an offeror's proposal is sufficiently responsive to the RFP to permit a complete evaluation. Each proposal will be reviewed for responsiveness. Failure to meet the mandatory requirements ("no pass") will be grounds for deeming the proposal non-responsive to the RFP and rejection of the proposal. Only those proposals meeting the following mandatory requirements ("pass") of Phase 1 will be considered in Phase 2: • Offeror must be an investment advisor registered under the Investment Advisors Act of 1940. • Offeror must have been in business for a minimum of five (5) years. • Offeror must provide investment consulting services to at least one public health and welfare plan with assets greater than $500 million or at least one retirement system that includes at least one health and welfare plan with assets greater than $500 million. • Offeror must be based in the United States. “Based in the United States” means that offeror’s principal place of business is in the United States and that offeror is subject to service of process in the United States. • The primary consultant assigned to the EUTF account (the “Primary Consultant”) shall have a minimum of seven (7) years experience providing domestic and international investment consulting services to public health and welfare plans. • Submission of Financial Statement. • Submission of a complete Cover Letter. • Submission of a proposal that contains references, fee proposal and sample 17 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  19. 19. reports. • Submission of Mandatory Requirements Certification. V. Phase 2 – Establishment of Priority List of Offerors All offerors who pass Phase 1, Evaluation of Mandatory Requirements, shall be classified as "acceptable." If there are more than three "acceptable" offerors, the Evaluation Committee will evaluate all proposals and establish a priority list of no more than three (3) offerors who received the best preliminary evaluations. The order, priority and points to be applied to each evaluation criteria is as follows: CRITERIA POINTS Abilities and limitations of the offeror’s organization to perform the services referred to in the RFP (further described above) 30 Fees 25 The soundness of the offeror’s proposal, the philosophies and processes underlying the proposal, and the extent to which the proposal shows an understanding of the needs of the EUTF (further described above) 20 The stability, relevant history, and experience of the offeror’s organization and the consultants and servicing team proposed for the EUTF account (further described above) 20 Client references 5 TOTAL 100 VI. Phase 3 – Interviews with Priority-Listed Offerors In this phase, the Evaluation Committee and the Procurement Officer will conduct interviews with the priority-listed offerors in Honolulu during the period of April 16-18, 2008. VII. Phase 4 – Final Evaluation of Proposals In this phase, the Evaluation Committee will conduct final evaluations of the priority- listed offerors' proposals in accordance with the following criteria: 18 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  20. 20. CRITERIA POINTS Abilities and limitations of the offeror’s organization to perform the services referred to in the RFP (further described above) 30 Fees 25 * Lowest fee for first 2 years = 15 points **Lowest fee for 6 years = 10 points The soundness of the offeror’s proposal, the philosophies and processes underlying the proposal, and the extent to which the proposal shows an understanding of the needs of the EUTF (further described above) 20 The stability, relevant history, and experience of the offeror’s organization and the consultants and servicing team proposed for the EUTF account (further described above) 20 Client references 5 TOTAL 100 *Formula for determining allocation of points for fee for the first 2 years: allocated points = ($ amount of the lowest fee proposal x 15) ÷ $ amount of the fee proposal being evaluated **Formula for determining allocation of points for fee for 6 years: allocated points = ($ amount of the lowest fee proposal x 10) ÷ $ amount of the fee proposal being evaluated For the purposes of evaluation of fees, the offeror’s proposed all-inclusive annual flat fee shall be used not the proposed fee for parts A, B and E of the Scope of Services. VIII. Phase 5 – Award The EUTF Board and the Procurement Officer will make the final selection. 19 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  21. 21. SCOPE OF WORK I. Introduction The purpose of the contract resulting from this RFP is to obtain comprehensive health and welfare fund investment consulting services for the EUTF. The contractor must be an investment advisor registered under the Investment Advisors Act of 1940, as amended, and shall provide investment advisory and consulting services as described in this RFP. The contractor will enter into a contract in substantially the form set forth in Appendix C which will obligate the contractor to provide investment consulting services. II. Contract Period The term of the contract is two (2) years with two (2) possible two-year extensions exercisable at the sole option of the EUTF Board. The term of the contract will commence on or around June 1, 2008. The EUTF Board will have the sole discretion to determine whether or not to exercise each of the two (2) two-year extension options. The EUTF Board will make these determinations in 2010 and 2012, respectively. The last payment due to the contractor will be issued after the quarterly performance report and other contracted materials, for May 31 of the expiring year, have been received. The term of the contract may be extended by the EUTF Board, at its sole option, to facilitate the completion of any investment manager or custodian bank searches in progress at the end of the then existing term. Such extension shall be solely for the purpose of completing the searches and shall be at no additional cost to the EUTF. III. Compensation The annual fixed fee shall be either the all-inclusive annual flat fee or the fee for parts A, B and E of the Scope of Services, depending on whether the EUTF requests all services or only those in parts A, B and E of the Scope of Services. The annual fixed fee shall be paid in equal monthly installments. The contractor shall submit to the EUTF a monthly statement for the work covered under the annual fixed fee. Any work not covered by the annual fixed fee shall be submitted for payment upon completion of the work. The contractor shall submit to EUTF a statement upon completion of the work not covered by the annual fixed fee. The statements shall include the work performed by the contractor in sufficient detail to justify payment. The EUTF shall process the claim for payment in accordance with the 20 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  22. 22. standard operating procedures of the EUTF. Funds are not presently available for performance under this contract beyond the current fiscal year. The EUTF’s obligation for performance of the contract beyond the fiscal year is contingent upon the availability of funds from which payment for contract purposes can be made. No legal liability on the part of the EUTF for any payment may arise for performance under the contract beyond the current fiscal year until funds are made available for performance of the contract. IV. Multi-Term Solicitation This solicitation is for a multi-term contract. The proposed annual fixed fees shall be the same throughout the contract, except to the extent that price adjustments are or may be provided for in this RFP or the resulting contract. As of the date of this RFP, funds have been appropriated and are available for only the first year of the contract, and the contractual obligation of both parties in each year or fiscal period succeeding the first year of the contract is subject to the appropriation and availability of funds. The multi-term contract will be cancelled only if funds are not appropriated or otherwise made available to support continuation of performance in any fiscal period succeeding the first; however, this does not affect the State's rights or the contractor's rights under any termination clause of the contract. The head of the purchasing agency must notify the contractor on a timely basis if funds are not available for the continuation of the contract for each succeeding fiscal period. Offerors must submit prices for the entire time of performance only. In the event of cancellation, the contractor will be reimbursed unamortized reasonably incurred nonrecurring costs, if applicable. V. Liaison and Authorization to Proceed The EUTF Financial Management Officer will serve as the primary liaison with the contractor during the term of the contract. The Financial Management Officer will chair status meetings, assist in scheduling, and monitor and assess the contractor's performance. The Primary Consultant will serve as the contractor’s primary liaison with the EUTF during the term of the contract. The EUTF does not encourage, and will not in any way be bound by, work performed on behalf of the EUTF without approval by the EUTF. Any work performed by the contractor prior to approval by the EUTF to proceed is done at the contractor's own risk. VI. Scope of Services The contractor shall not bind or purport to bind the EUTF for any contractual commitment in excess of the contract period. Contractor shall comply with all applicable EUTF policies and procedures. The investment consultant will provide the following services: A. Investment Policies and Procedures 21 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  23. 23. Upon selection, draft, present, answer questions, and facilitate the review and approval of an Investment Policy and Procedures Manual for the EUTF Board. On an annual basis thereafter, review, update and, if necessary, make reasoned recommendations for amendment to the Investment Policy and Procedures Manual. On a continuing basis, answer questions regarding the Investment Policy and Procedures Manual. B. Asset Allocation Plan After or in connection with the completion and approval of the Investment Policy and Procedures Manual, prepare and present to the EUTF Board, a written plan establishing investment objectives and a target asset mix for the EUTF and its trust fund (the “asset allocation plan”). The asset allocation plan shall at a minimum include the following: i. A report on asset allocation modeling (including methodology and specifics) linked to funding and liability management. ii. An analysis of the investment characteristics of available asset alternatives. iii. Recommendations for an optimum asset allocation for the EUTF and its trust fund. C. Annual Asset Allocation Optimization By March 31 of each year, prepare and present a report containing an evaluation and optimization analysis of the asset allocation plan, manager structure, and proposals to achieve the goals of that analysis during the next fiscal year beginning on July 1. D. Policy Analysis Review and analyze investment initiatives proposed by the EUTF Board, any of the Board’s committees, or the EUTF Financial Management Officer to ensure overall consistency with investment policies. E. Public Market Analysis After or in connection with the completion and approval of the Investment Policy and Procedures Manual and asset allocation plan, prepare and present to the EUTF Board a written plan: (a) establishing public market portfolios and an investment manager structure; and (b) reviewing the EUTF’s needs for particular investment styles, capitalization ranges or strategies within the public market portfolios (e.g., passive/active; growth/value; small/mid/large capitalization; government/corporate/mortgage, etc.). On an annual basis prepare and present a report containing: (a) an evaluation of the effectiveness of the current public market portfolios and investment manager structure; and (b) a review of the EUTF’s needs for particular 22 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  24. 24. investment styles, capitalization ranges or strategies within the public market portfolios (e.g., passive/active; growth/value; small/mid/large capitalization; government/corporate/mortgage, etc.) F. Performance Analysis Provide quarterly written performance analysis for each EUTF public market portfolio that may be established, as well as the aggregate of all of the public market portfolios. The quarterly performance analysis should include return attribution characteristics, style analysis, risk analysis, peer universe comparison and holdings analysis relative to the benchmarks. G. Manager Search and Selection Maintain or otherwise provide access to a broad data base of investment managers including their philosophies, styles, fee structure, organizations, firm characteristics, performance and client base. Manager information should be available for a wide range of investment managers including domestic and international equity managers; domestic, international and global fixed income managers; real estate managers; alternative investment managers; managers with related strategies, including currency overlay, option and futures managers; as well as small and emerging market managers and real estate managers. For each EUTF public market portfolio that may be established, provide services to assist the EUTF in conducting searches for public market managers as directed by the EUTF Board. These services shall include: i. Development of requests for proposals, including evaluation factors and methods. ii. Screening of prospective managers and recommendation of finalists. iii. Preparation of background material for the EUTF. iv. Assist in the interview of finalists. v. Providing seasoned analysis and recommendations concerning manager selection. vi. Assisting in negotiating fees, and terms and conditions of contracts. H. Manager Oversight Monitor each investment portfolio managers and provide quarterly written performance analyses, including performance evaluations against the appropriate benchmarks and investment objectives, as well as return attribution characteristics, style analysis and risk analysis. Review investment strategies, policies and annual tactical business plans of all real estate managers (if any), coordinate annual meeting of real estate managers and staff; and present annual tactical plan to EUTF Board. Provide analysis and advice on questions or issues that arise in the course of overseeing the investment managers. For example, advise the EUTF on 23 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  25. 25. appropriate benchmarks, investment guidelines, performance-based fees, etc. Perform investment manager due diligence. Provide advice and recommendations concerning investment manager probation and termination. Provide semi-annual analysis on public market manager’s trading costs, including comparison of each equity manager’s commission costs to peers and the marketplace; the relationship of each equity manager’s commission costs to the quality of “execution” obtained; and the utilization of EUTF trading dollars for purposes other than “execution” such as the direct or indirect purchase of services or research. A quarterly report containing trading costs paid by public market managers will be made available to the contractor by the EUTF’s bank custodian. I. Custodian Bank Search and Selection Maintain or otherwise provide access to a broad data base of custodian banks including their services, fee structure, organizations, firm characteristics, performance, client base, and other relevant attributes. Assist the EUTF in conducting searches for a custodian bank to provide custodial and securities lending services. Services relating to the custodian bank search and selection process include: i. Development of requests for proposals, including evaluation factors and methods. ii. Screening of prospective custodian banks and recommendation of finalists. iii. Preparation of background material for the EUTF. iv. Assist in the interview of finalists. v. Providing reasoned analysis and recommendation concerning custodian bank selection. vi. Assisting in negotiating fees, and terms and conditions of contracts. The EUTF anticipates having one custodian bank search during the contract term. J. Attendance at Board and Committee Meetings Attend meetings of the EUTF Board and committees in Hawaii. (At this time, it is not known whether the EUTF Board will establish a new committee or have one of its existing committee’s handle investment matters.) The meetings will take place on approximately fifteen (15) days per year and will require approximately twelve (12) trips to Hawaii by one or more members of the contractor’s staff; i.e., some meetings are held on consecutive days. K. Trustee and Staff Workshops 24 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  26. 26. Conduct up to two (2) trustee and staff education workshops annually on specific issues designated by the EUTF and /or recommended by the contractor. Work with staff to coordinate investment manager meetings and asset class roundtable discussions. L. General Research and Analysis Provide ongoing research, analysis and advice on specific matters related to portfolio management, specific investments, pension issues, etc. In addition, the contractor will be asked to perform such other duties or activities as may be required provided they are consistent with the foregoing. VII. Other Provisions A. Key Personnel. The contractor will not change the Primary Consultant or any member of the client servicing team identified in the contractor’s proposal without at least thirty (30) days advance written notice to the EUTF. Substitute or additional personnel shall not be used until: (a) the EUTF is provided with a resume and any other information requested regarding the substitution or addition of personnel; (b) if the change is to the Primary Consultant, the EUTF is given an opportunity to interview the new proposed Primary Consultant; and (c) the EUTF approves the substitution or addition of personnel. Unless a substitution or change in personnel has been approved by the EUTF, the EUTF shall have the right to terminate the contract if the Primary Consultant or any of the client servicing team personnel assigned to this contract are reassigned, leave the contractor’s employment, or otherwise become unable to perform the services required by the contract. B. Errors and Omissions/Professional Liability Insurance. The contractor shall maintain in full force and effect during the term of the contract, errors and omissions and/or professional liability insurance to cover losses or damages that the EUTF, the EUTF trust fund and/or the EUTF trustees or officers may suffer: (a) arising out of the contractor’s performance of the contract; (b) arising out of the contractor’s provision of investment consulting services for the EUTF; and/or (c) as a result of any acts or omissions of the contractor acting as an investment consultant to the EUTF. The contractor’s insurance shall have limits and other terms and conditions as shall be agreed upon between the EUTF and the contractor. The contractor’s insurance shall add the EUTF and its trustees and officers as additional insureds with respect to the services or operations that contractor performs for the EUTF. Any insurance maintained by the EUTF or State of Hawaii shall be in excess of, and not contribute with, the contractor’s insurance. The contractor’s insurance shall not be canceled, limited in scope, or non-renewed until after 30 days written notice to the EUTF. The contractor or its insurance carrier shall provide the EUTF with certificates of insurance or other evidence that the required insurance coverage is in effect and maintained during the term of the contract. The procuring of the required 25 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  27. 27. insurance hereunder shall not limit the contractor’s liability to the EUTF nor shall it fulfill the indemnification provisions and requirements of the contract. 26 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  28. 28. QUESTIONNAIRE A. Profile and Experience 1. Provide a brief history of your firm and its operation. Include the year formed, ownership structure, bios of the principals, affiliations and ownership changes in the last five years. 2. Describe any significant developments in the organization which have occurred in the last five years (changes in ownership, personnel reorganizations, etc.). 3. Describe any anticipated near term changes in the organization’s basic ownership structure or any other significant changes in the organization. 4. Are there any current or future organizational issues (i.e., mergers, acquisitions, etc.) about your organization that we should know? 5. Describe the overall business objectives of your firm with respect to future growth. Comment on any present or planned areas of emphasis over the near future. 6. State and describe your organization’s lines of business. Where does investment consulting for public health and welfare plans (or public retirement plans that include health and welfare) fit within your organization as a service or product offering? 7. What percentage of your total business is represented by investment consulting services? 8. Describe your firm’s overall business strengths, weaknesses and competitive advantages. 9. List the office location (primary and secondary) from which the work is to be delivered. 10. Over the last five years has the firm, the Primary Consultant, or another officer or principal been involved in any business litigation, regulatory or other legal proceedings or government investigation involving allegations of fraud, negligence, criminal activity or breach of fiduciary duty relating to pension consulting activities? If so, describe and provide an explanation and indicate the current status. 11. Has your firm ever been censured by any regulatory body? If so, describe the situation. 12. Describe the levels of coverage for errors and omissions insurance or bonding and any other fiduciary or professional liability insurance the firm carries. List your insurance carriers. 13. If your firm maintains errors and omissions insurance coverage or any fiduciary or professional liability coverage, have any claims been filed in the last five years? If so, provide an explanation and indicate the current status. 14. State whether or not your firm’s employees comply with the Code of Ethics and Standards of Professional Conduct of the Association of Investment Management and Research (AIMR). 15. Does your firm maintain a code of ethics? If so, attach as Exhibit A. 16. Provide a detailed summary of your firm’s compliance policy. Identify senior or key personnel in the firm’s compliance process. 17. Is your firm, its parent, or affiliate a registered investment advisor with the SEC under the Investment Advisors Act of 1940? If not, what is your fiduciary 27 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  29. 29. classification? 18. Provide an organizational chart diagramming the relationship between the professional staff as well as the parent-subsidiary, affiliate, joint venture entities, or sub-advisory relationships. 19. Provide a copy of your most recent Form ADV (Part I & II). Attach as Exhibit B. B. Stability, Depth and Experience of Personnel 1. What is your approach to client servicing and what distinguishes this approach from other investment consulting service providers? 2. Explain how your firm controls the quality of service provided to your clients. 3. How are consultant’s recommendations to clients reviewed and monitored by your firm? Does your firm adhere to a level of consistency in consultant recommendations? Describe any benchmarks the firm has developed to evaluate the firm’s performance and the performance of the proposed primary consultant. 4. How is a servicing team structured around clients? 5. What is the typical client load of your client servicing/relationship manager? 6. Do any of the client servicing personnel proposed for the EUTF account have responsibilities other than providing consulting services? If awarded this contract will they continue to maintain those responsibilities? If not, which ones will be relinquished? 7. What is the last three (3) years’ turnover of the client servicing staff? 8. Provide the names and bios of the proposed client servicing team members for the EUTF account. 9. How will this team be structured to best serve the needs of the EUTF? 10. Does your organization subcontract any of the services required by the EUTF? If so, list the contract vendor and subcontracted service functions as well as how long have you had the subcontract relationship with the named vendor. Also describe the skills and qualifications of the subcontractor and its employees who will be providing services for EUTF. 11. Describe your firm’s back-up procedures in the event the key personnel assigned to this account should leave the firm. 12. Provide a brief description of your firm’s compensation arrangements. What incentives are in place to encourage key professionals to remain at the firm? 13. Complete the table below for the proposed client servicing team. Name Location Responsibility Number of Years with Years Client Organizatio Experience Relationships n and Credentials 14. Do any of the client servicing personnel proposed for the EUTF account service other public fund clients? If yes, specify the client names, contacts, and telephone numbers. 15. Provide an estimate of the percentage of the Primary Consultant’s time, as well 28 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  30. 30. as the time of other dedicated consultants, to the EUTF account. 16. List the Primary Consultant’s current clients and engagements by asset size, type of client and type of engagement. 17. Provide an organizational chart showing functions, positions, and titles of personnel involved in pension consulting services. C. Client Relations and References 1. Provide the number of your organization’s clients as categorized in the following matrix. Report aggregate values of their total asset market value in US$ millions for periods specified. Additionally, provide a list of current clients and attach as Exhibit C. Total Tax Exempt Investment Consulting Clients Only Total Number of Asset Value Clients (US$ millions) 2002 2003 2004 2005 2006 2007 YTD 2. Provide the number of your organization’s clients as categorized in the following matrix. Report aggregate values of their total asset market value in US$ millions for periods specified. 29 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  31. 31. Public Fund Investment Consulting Clients Only Total Number of Asset Value Clients (US$ millions) 2002 2003 2004 2005 2006 2007 YTD 3. Provide the number of investment consulting accounts gained and/or lost for the periods listed in the following matrix. For clients lost, please indicate why. Report corresponding market values in US$ millions as of initiation date for clients gained and termination date for clients lost. Total Tax Exempt Investment Consulting Clients Only Clients Gained Clients Gained Clients Lost Clients Lost (US$ (Number) (US$ millions) (Number) millions) 2002 2003 2004 2005 2006 2007 YTD 30 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  32. 32. Public Fund Investment Consulting Clients Only Clients Gained Clients Gained Clients Lost Clients Lost (US$ (Number) (US$ millions) (Number) millions) 2002 2003 2004 2005 2006 2007 YTD 4. Provide your organization’s client distribution as specified in the following table. Report aggregate market values of total assets in US$ million as of June 30, 2007. Tax-Exempt Client Asset Size Distribution Distribution Number of Number of Aggregate Market Clients Plans/Pool of Value Assets (US$ millions) Taft Hartley-Union Below $500 million $500 million to $1 billion $1 billion to $5 billion $5 billion and Up Corporate Below $500 million $500 million to $1 billion $1 billion to $5 billion $5 billion and Up Public Fund Below $500 million $500 million to $1 billion $1 billion to $5 billion $5 billion and Up Endowments & Foundations Below $500 million $500 million to $1 billion $1 billion to $5 billion $5 billion and Up TOTAL 5. Provide a list of three (not more) public fund client references (at least one of which must be or administer health and welfare funds). The list, attached as Exhibit D, should include the following information: 31 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.
  33. 33. a. Fund Name b. Contact Name c. Address d. Telephone Number(s) e. E-mail Address D. Research 1. Describe the internal structure and organization of your firm’s research department. If no separate department exists, describe how this function is structured. What percent of the firm’s revenues are annually reinvested in the firm’s research function? 2. Describe the manner in which internal and external resources and sources of information are used in the research process. How does the firm integrate internal and external research? 3. Describe in detail the type and frequency of research that would be provided to the EUTF. Through what media is it provided? Does the firm provide research reports other than those specifically requested by the client? If so, please describe. What research and analytical resources (including databases) does the firm possess that the firm would be willing to provide the EUTF? 4. Attach as Exhibit E one of the firm’s sample research reports. Provide a listing of research generated during 2006 and 2007, which includes title of research, date of issue, author and single line description of the subject. 5. Does your firm perform topical research on investment trends, products, strategies, etc.? If so, provide samples and attach with Exhibit E. 6. Outline the process for monitoring and reporting on market trends. Describe the capabilities for reporting and tracking international trends and influences. E. Manager Search Process 1. Does the firm maintain a database of investment managers and advisors? If your firm does not maintain an in-house database, what vendor do you purchase the database from? How many managers and advisors are contained in the database? Separate the managers and advisers by portfolio, style, capitalization and any other specialty designation (e.g. domestic equity, large cap, growth). How often is the database updated? 2. Is a fee charged to investment managers to be included in the database? 3. Describe how the firm gathers, verifies, updates, maintains and analyzes the data collected on managers for the database. Describe the screening variables and capabilities of the database. Describe the capability of providing custom client reports. Describe the peer groups included in the database. 4. Describe the firm’s process for the evaluation and selection of public market investment managers for a client. Include how the firm evaluates a manager’s personnel and organization, investment philosophy, investment style(s) and products, research and/or modeling capabilities, financial condition, and assets under management, type of clients, client service, and fees. Relate the process to a client’s goals, objectives, investment policy and fiduciary responsibility. 5. Describe your firm’s methodology and sources of data for analyzing and 32 of 44 The information contained herein is for use only by persons expressly authorized by the EUTF. The information shall be used only for responding to this RFP and is not for general distribution within or outside the respective companies. All Rights Reserved 2006.

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