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North Central Texas Council of Governments RFP –Actuarial ...

  1. 1. North Central Texas Council of Governments RFP –Actuarial Consulting for Pending TMRS changes January 11, 2008 Dear Potential Proposer: You are one of three actuarial firms receiving this letter and RFP based on your reputation, prior experience with government pension issues and your participation as a finalist in the June, 2006 NCTCOG OPEB Shared Services RFP. The time frame for the attached RFP is very compressed and accordingly the decision was made to abbreviate the evaluation of the written response portion of the proposal and to guarantee each of the three firms an interview if they choose to propose. Your preparation of the written response to the RFP should be brief as the responses will be identical in many ways to your earlier shared services proposal. As you read the background section, you will notice the unique nature of the work being performed as your clients will be individual agent members of TMRS but not TMRS itself. You will also note that significant actuarial changes have these member cities facing rate increase for 2009 in the 60% range. Given these circumstances, it is important to note that: TMRS has reviewed and provided feedback to the NCTCOG on this RFP before it was issued TMRS has assured full access to the necessary census data in electronic format for the contracted actuary. Since TMRS has not yet finalized or issued their RFP for actuarial services, it is impossible to say whether performance of this work for individual cities may disqualify the winning actuary from proposing on the TMRS work. Therefore in the interest of being conservative the winning actuary should be willing not to propose on the TMRS Actuarial RFP on award of this work. TMRS staff is expected to attend the Pre-bid conference and be available to answer questions on this subject. The purpose of this RFP is to provide individual cities an independent, timely and qualified source of actuarial advice in a coordinated fashion that will not overwhelm TMRS with multiple requests for information. It is also intended to assist cities in gauging the impact of TMRS switching actuarial firms after 17 years with the same firm. Thank you in advance for your quick response to this RFP. Sincerely Monte Mercer Bob Scott Deputy Executive Director Chief Financial Officer, Carrollton TX Page 1 of 29
  2. 2. North Central Texas Council of Governments Shared Request for Proposal for Defined Benefit Pension Actuarial Valuation Various TMRS Member Governments Issued: January 11, 2008 Proposal Deadline: Friday, 5:00 p.m. January 25, 2008 Pre-Proposal Meeting 10:30 a.m. Friday, January 18, 2008 NCTCOG Offices 616 Six Flags Drive, Suite 200 (Centerpoint Two) Arlington, TX 76005-5888 Contact: Monte Mercer, Deputy Executive Director (817) 695-9121 mmercer@nctcog.org Bob Scott, Chief Financial Officer City of Carrollton (972) 466-3110 bob.scott@cityofcarrollton.com Page 2
  3. 3. OVERVIEW OF THIS REQUEST FOR PROPOSAL (RFP) Background Texas Municipal Retirement System (TMRS) is a joint contributory, multi-employer, agent system comprised of 828 member cities. Originally structured as money purchase plan, the benefit structure has evolved over the years to become more and more defined benefit in nature. A significant part of this evolution was the 1970’s addition giving cities’ the option of updating service credits (USC) and providing annuity increases (AI) to retirees. In 1991, cities were allowed to adopt these features on an “annually repeating” basis and today over 72% and 59% of member cities respectively automatically adopt USC and AI each year on an annually repeating basis. However, given that larger employers tend to have more generous benefits, 92 and 93% of the system’s 133,000 employee members and 30,000 retirees respectively are subject to annually repeating USC and AI. Until recently, TMRS utilized the (unprojected) Unit Credit actuarial method with 25 year level percent of payroll, open amortization. A large number of TMRS cities grew rapidly throughout the decades of the 1970’s and 1980’s but many are now approaching build out and overall system growth has slowed but the number of retirees has begun increasing rapidly as the large number of employees hired in the 1970’s are now eligible for retirement. These changing demographics combined with the actuarial methods used have resulted in a deteriorating funding status and increasing rate situation for many member cities. On an aggregate level in the ten year period 1997 to 2006 the average rate has increased from 10.2% to 11.9%, UAL divided by payroll has increased from 55.1% to 73.6% and percent funded has decreased from 83.1 to 82.1%. Recognizing these issues, the TMRS Board voted on December 8, 2007 to adopt new actuarial assumptions, to change actuarial methods from Unit Credit to Projected Unit Credit and to close the amortization period. All these changes will be effective for the 12/31/07 valuation which will be reflected in the funding status for the member cities’ 2008 financial statements and for the calendar year 2009 rate that cities pay. To assist cities with the rate impact, they will be allowed to phase in the new rates over an 8 year period and any city experiencing a rate increase greater than 0.5% will automatically have its amortization period extended to 30 years. To further mitigate the rate impact of these changes, TMRS has also begun to transition from their 100% fixed income portfolio to a more diversified portfolio that will provide a higher investment rate of return. As a vast majority of cities have September year ends, these cities will need to know how much to budget for their 2009 TMRS contribution no later than summer of 2008. Prior to adoption of the actuarial changes, TMRS initiated an extensive information and education process including generating projected rate and funding impacts under the new methodologies. In a November 19, 2007 letter to each member city with annually repeating USC and AI, TMRS reported the changes in rates and funding status. On average cities saw their unfunded liabilities double and their rates increase by 60% or Page 3
  4. 4. more with many cities having projected rates in the mid to high 20% range. While cities are very hesitant to cut benefits, they also recognize that given these projected rates, it may be necessary to adjust benefits for current or future employees. Extensive information regarding the recent changes as well annual reports containing extensive actuarial information is available at www.tmrs.com. At the December meeting, the TMRS Board also voted to issue an RFP for future actuarial services. The current actuary is eligible to re-propose but this action creates at least the possibility that a different actuary may be performing the December 31, 2008 valuation. Accordingly, member cities would like to ensure a smooth transition and reduce the likelihood that the 2008 valuation and resulting 2010 rate are significantly different due solely to differences in professional judgment and actuarial methods that are used by the new actuary. Approach of this RFP This RFP is being issued with the following goals: Provide a high quality procurement process for governments that have not had to utilize this type of actuarial service previously. Obtain competitive pricing that will reduce the government’s cost of obtaining independent actuarial advice. Identify viable options for modifying individual city plans that will produce the least impact on that city’s employees. Coordinate the timing of the actuarial valuations among its participants to allow individual cities to meet their specific budget deadlines. Provide a standard engagement letter that the actuary can use for all of the RFP participants. The resulting contractual relationships will be between the actuary and the individual government. Provide a “menu” of services that will provide flexibility among the participants for choosing the services that best fits their needs. Reduce the number of actuaries that TMRS will need to respond to by reducing the number of independent actuaries performing work for individual cities. Reconcile material differences, if any, in actuarial results including any proposed plan changes between TMRS’s actuary and the individual city actuary. 1 Identify any potential issues in file layouts of census data or in the existing actuary’s methodology that a new actuary may take exception to that could produce a significant difference if TMRS chooses to change actuaries for the 2008 valuation. Allow additional governments to contract with the winning proposer under the same terms as the original participants. Engagement Term & Selection Criteria 1 TMRS has the statutory authority to determine the required contribution rate for each member city. Therefore, the consulting actuary on this engagement must ensure the rate and liability impact of any proposed plan changes are consistent with those produced by TMRS and agreed to by TMRS before presentations are made to that government’s city council or employees group. Page 4
  5. 5. This RFP is for a one year period. A Timetable of Events is included on the following page. The winning proposer will be chosen based on the best overall combination of experience with state and local government defined benefit pension plans, firm capacity and ability to meet participant’s time schedules, references and overall reputation and price. Selection will be made by a committee of five to seven participant city representatives based on a diversity of city sizes, demographic makeup, funding status and other criteria. Page 5
  6. 6. REQUEST FOR PROPOSAL ACTUARIAL VALUATION OF INDIVIDUAL TMRS AGENT PLANS TIMETABLE OF EVENTS January 11, 2008 RFP Issued January 18, 2008 Pre-proposal Meeting January 25, 2008 Proposals Due: 5:00 p.m. January 31, 2008 Interviews with proposing firms February, 2008 NCTCOG Contract Award February, 2008 TMRS releases 12/31/07 census data, work begins April, 2008 TMRS actuary completes their 12/31 valuation for all 828 TMRS cities and presents valuation to the TMRS Board for approval. April, 2008 Following TMRS Board approval, actuary confers with TMRS outside or staff actuary to reconcile any differences in the base valuation and to receive TMRS actuary’s agreement on the impact of any proposed plan changes that individual member cities are considering. May-September, 2008 Deliver a valuation and options report on a timetable mutually agreed to by actuary and client. May-September, 2008 Assist cities in proposing any plan changes to that respective cities’ employees and city council in time to adopt those changes and identify the necessary TMRS contribution rate and pension expense for the 2009 budget. October-December 2008 Complete any remaining work for cities that is not timed to the annual budget process. Page 6
  7. 7. Table of Contents I. MANDATORY REQUIREMENTS 8 II. INTRODUCTION 8 III. RELATIONSHIP TO PARTICIPATING GOVERNMENTS 9 IV. SCOPE OF SERVICES 9 V. PROPOSER INFORMATION/PROPOSAL FORMAT 11 VI. RFP EVALUATION & AWARD PROCESS 13 VII. PRICING OF SERVICES 13 VIII. GENERAL TERMS AND CONDITIONS 14 IX. APPENDICES TO THIS DOCUMENT 18 A. List of Participating Governments B. Proposed Engagement Letter C. Pricing Sheet D. Mandatory Requirements Declaration E. Conflict of Interest Questionnaire Page 7
  8. 8. I. Mandatory Requirements In order to facilitate efficient award and negotiation process interested proposers will be required to complete the mandatory requirements form at Appendix D. This form will assure the evaluators that the proposer has read the proposed engagement letter which includes the General Terms and Conditions listed at IX and is ready to sign the engagement letter without modification unless proposed changes are specifically noted on the form. Proposers will not be asked to fill out the state mandated conflict of interest form out in advance but will be expected to commit on the mandatory requirements form of a willingness and ability to complete the form within 15 days of notice of award. Finally, the mandatory requirements form will assure the evaluators that individual representing the proposer is at a sufficient level in the organization to bind the firm. II. Introduction 2 Although NCTCOG serves a 16 county region in north central Texas, occasionally a Council of Government that offers a unique program or service will make that service available to jurisdictions statewide. This RFP is designed to provide a state-wide alternative to individual governments contracting with actuaries on a one by one basis. NCTCOG believes that this approach offers several advantages to both local governments and to actuaries that will ultimately lead to better actuarial information that governments can use to manage their TMRS plans. This approach parallels the June 2006 RFP for Other Post Employment services. The services in this RFP can be divided into the following categories: a) Perform a valuation as of 12/31/07 of the individual city’s plan as it currently exists using Projected Unit Credit actuarial method, 25-30 year closed LPP amortization as applicable and the exact same assumptions as the TMRS actuary. Deliver a valuation report in conformance with existing Actuarial Standards of Practice (ASOP) and Governmental Accounting Standards Boards (GASB) standards. b) Using the information gained in the base valuation, help the individual city to identify viable options for modifying the plan to both improve funding status and reduce rate impact. Some changes may be currently allowed under TMRS statutes and can be incorporated into the 2009 rate. Other changes may need to be part of a legislative platform that cities are developing for the 2009 legislative session. Deliver an options report (can be included as part of the valuation report) that lists the options considered including for each option a) impact on the 2009 rate and 2008 reported Actuarial Accrued Liability (AAL), b) approximate number of affected employees and retirees and typical/average impact, c) the impact of making the change in ten and twenty years. 1 This section is intended to complement but not repeat the overview section at the front of this RFP. To gain a basic understanding regarding the overall approach of this RFP, the proposer should read both sections. Page 8
  9. 9. c) Reconcile the results of the 12/31/07 valuation to the results of the TMRS actuary including the impact of any changes that the city is planning to implement for its 2009 rate. Identify any potential issues to communicate to TMRS regarding file formats and methodologies used by current actuary that may be an issue if TMRS chooses to change actuaries. Include in the above mentioned report a description of any major issues or material reconciling items that were encountered and issues that TMRS should consider if changing actuaries. d) Meet with employee groups and city councils as requested by the individual cities to explain proposed plan changes. III. Relationship to Participating Governments A list of participating governments is included in Appendix A. All contractual relationships will be between the winning proposer and the individual government. Participating governments are not contractually obligated to sign engagement letters with the winning proposer. NCTCOG will charge an administrative fee and asked affected governments to express interest in writing. Upon award of the RFP, NCTCOG will also make these services available to other governments. The winning proposer will not be obligated under this RFP to contract with these additional governments but will be expected to notify NCTCOG whenever they accept or decline additional clients and they will be expected to honor all pricing and service levels specified by the engagement letter. If winning proposer elects to decline serving a potential government under the engagement letter, NCTCOG will immediately end all promotion of the joint services. Due to the availability on-line of the TMRS Comprehensive Annual Financial Report which contains the results of each actuarial valuation and the plan provisions in place for each member city, that information will not be included in this RFP. IV. Scope of Services Valuation of Existing Plan Actuarial valuation as of 12/31/07 of individual member cities TMRS plan in compliance with the requirements of GASB 25 and 27 using the Projected Unit Credit actuarial method and 25-30 year closed level percent of payroll amortization as applicable. Valuations will be performed using census data obtained directly from TMRS. The exact same assumptions should be used as were approved by the TMRS Board and as are being used by the TMRS actuary. Basic services will include two in person or conference call meetings as mutually agreed upon by the government and actuary. The first meeting will be prior to the initiation of the study and the second will be to present the findings of the draft Page 9
  10. 10. report. Out of pocket travel expenses for governments located 100 miles or more from downtown Houston or Downtown Dallas would be an extra charge. Additional coordination will be by phone or electronic communications. Evaluation of Options The actuary will provide a comprehensive list of options for reducing the impact of the actuarial methodology changes. These options will be divided into three categories; 1) Phase-in options, 2) plan modifications-currently available and 3) plan modifications requiring legislative changes. Phase in options include the following: Phasing in the rate over not more than eight years. Requesting a longer amortization period of up to 40 years. Making additional one time or periodic contributions to “buy down” the liability. Turning off the annually repeating feature and approving USC and AI “ad hoc” while making additional voluntary contributions to eventually “build up” to a sustainable rate. 3 When phase in is utilized, there may be a difference between the TMRS required contribution and the pension expense under Generally Accepted Accounting Principles that must be recognized in the financial statements resulting in either a net pension obligation or asset. The actuary should provide projections of the impact of the phase in on the city’s Statement of Net Assets over time including strategies for reducing/eliminating any net pension obligations that may result. If the phase in could have adverse affects on agent plan’s cash flows including extremely low balances in the Municipality Accumulation Fund (MAF) or the sponsoring city’s financial statements including negative “Unrestricted Net Assets” being reported in the Entity-Wide Statement of Net Assets, this should be clearly disclosed. Plan Modifications-Currently Available include but are not limited to: Changing the employer matching percentage prospectively. Dropping USC and AI either on an annually repeating basis or altogether. Reducing the USC or AI to one of the lower levels currently authorized (50, 75 from 100% for USC or 30, 50 from, 70% for AI) Dropping the buyback provision. Dropping the USC transfer provision. Any other change currently authorized by statute. 3 The current actuary has tentatively agreed to view these ad hoc increases as one time events even if they occur several years in a row. Accordingly, there is an assumption that they will not be granted again in future years. Page 10
  11. 11. Plan changes requiring legislative action include but are not limited to: Two tiered plans with a combined contribution rate but different benefit levels for employees starting after a certain date. Indexing USC and AI in increments of 5% rather than the current 100, 75, 50% for USC and 70, 50, 30% for AI. Changing the way AI is calculated to allow for prospective changes. Reconciling the actuarial valuation results to that of the TMRS actuary. Upon approval of the official TMRS valuation by the TMRS Board in April, the actuary will need to reconcile results of the independent valuation to the official TMRS valuation for any material differences. The ultimate goal is to obtain a rate for 2009 that TMRS will accept. The secondary goal is to identify any specific issues that may arise if TMRS changes actuaries for the 12/31/08 valuation that could affect the 2010 rate. Meeting with Employee Groups or City Council to discuss plan changes These service will be as requested by the individual city and will be paid based an hourly rate. V. Proposer Information/Proposal Format The submission requirements for this RFP are described below. A response to this RFP must be made according to the specifications set forth in this section, both for content and sequence. Any response failing to comply with these instructions and deemed to be non- responsive shall be subject to rejection by NCTCOG. A. Introduction 1) Cover Letter - This should be a maximum of one page introducing the proposing entity. It should include the Proposer's name and address and the telephone number for the Proposer's representative authorized to act on behalf of the Proposer, certifying the correctness of the proposal and authorizing the City to treat the proposal as public information. 2) Table of Contents - A table of contents shall be included referencing significant sections and their corresponding page numbers including all attachments. 3) Summary of Proposal - Provide a brief synopsis of the proposal, prepared in such a manner as to be easily understood. This should be a brief statement of the most significant features of the proposal, including an Page 11
  12. 12. overall summary of benefits to NCTCOG and the participating governments. 4) If the proposal is signed by anyone other than the chief executive officer of the corporation or firm, a statement shall be added affirming that that individual has been given authority to bind the entity B. Identity, Pension Actuarial Experience and Qualifications of Proposer This section shall contain a description of the proposing entity including size, lines of business, primary locations, actuarial experience and state and local government defined benefit actuarial pension plan experience. Specific items to address: 1) Provide a brief history of the proposing organization including when it was founded, how it grew and its current size and market penetration both nationwide and in Texas. 2) Describe the company’s lines of business including the relative prominence of the governmental (GASB 25 & 27) actuarial practice. 3) Provide summary information on the proposer’s governmental pension client base. Include Texas government clients first, governments outside the state next and private sector entities by large to small next. Specify which of these clients are serviced from the same offices and same actuaries that are included in this proposal. 4) Describe the proposer’s office or offices that will service the participating governments. Describe the number of staff at the office and the ability of the staff to handle additional workload. Include as an attachment, a list of ten current and five former clients including contact information. Defined benefit pension plan clients are preferred. Include contact information for these clients. C. Proposed Service Plan 1) Briefly describe the management/actuarial team that will be assigned to the NCTCOG account in the event that the proposal is successful. Describe their qualifications including relevant experience. Provide their resumes as an Attachment. Describe proposers plan for substituting engagement team due to turnover or other considerations. 2) Describe in narrative or flowchart format the actuarial valuation process. Include the software used and the general timeframe required for the review from first receipt of the required census data to draft report to final report. Page 12
  13. 13. 3) Describe the quality control process that ensures a quality product that meets all professional standards. 4) Include as an attachment samples of any value added reports that could be of value to participating governments. 5) List all sub-contractors to be used by the proposer over the course of the engagement Describe plan for substituting sub-contractors in the future. 6) Additional material including brochures, graphs pictures, magazine or newspaper articles, etc. may be provided as an Attachment to the proposal. D. Required Declaration Proposer must formally acknowledge willingness to comply with all RFP requirements by signing the declaration contained at Appendix D and including as an Attachment to their proposal. VI. RFP Evaluation and Award Process Evaluation of the proposals received will be performed by a five to seven member committee chosen by the participating governments. The winning proposer will be chosen based on the best overall combination of experience with GASB 25 & 27 pension experience, firm capacity and ability to meet participant’s time schedules, references and overall reputation and price. VII. Pricing of Services Proposer should complete the following pricing table in Appendix C: INDIVIDUAL AGENT PLAN Governments by Total Participants Base Services including base Hourly Rate for (Active, Retired, Terminated) valuation, options study and Additional Services reconciliation to TMRS by consultant level 1 Less than 100 2 Between 101 and 250 3 Between 251 and 500 4 Between 501 and 1000 5 Between 1001 and 2000 6 Between 2001 and 4000 7 Between 4001 and 6000 8 Between 6001 and 8000 9 Between 8001 and 10,000 10 Over 10,000 Page 13
  14. 14. Pricing assumes 20% paid upon acceptance by the government of the engagement, 50% upon receipt of the draft report and 30% upon acceptance of the final report. Actuarial firm agrees to assess and collect on behalf of NCTCOG a $100 administrative fee to offset the costs associated with this RFP. VIII. General Terms and Conditions A. Contracting Government is exempt from manufacturer’s federal excise tax and states sales tax. Tax exemption certificates will be issued upon request. B. NCTCOG reserves the right to accept or reject any and/or all proposals or to cancel this notice at any time. C. A response to this Request for Proposal (RFP) does not commit NCTCOG or Contracting Governments to a purchase agreement or contract, or to pay any costs incurred in the preparation of such response. D. Unless the proposer specifies in its proposal, the NCTCOG may award the engagement for any items/services or group of items/services in the RFP and may increase or decrease the quantity specified. E. NCTCOG reserves the right to hold and accept any proposal for a period of ninety (90) days after the response deadline. F. NCTCOG reserves the right to negotiate the final terms of any and all purchase agreements with bidders selected and such agreements negotiated as a result of this RFP may be re-negotiated and/or amended in order to successfully meet the agency needs. G. NCTCOG reserves the right to waive any defect in this procurement process or to make changes to this solicitation as it deems necessary. NCTCOG will provide notifications of such changes to all bidders recorded in the official record (Distribution Log/Receipts Record) as having received or requested an RFP. H. NCTCOG reserve the right to contact any individual, agencies or employers listed in a proposal, to contact others who may have experience and/or knowledge of the bidder's relevant performance and/or qualifications; and to request additional information from any and all proposers. I. NCTCOG reserves the right to conduct a review of records, systems, procedures, etc., of any entity selected for funding. This may occur prior to, or subsequent to the award of a purchase agreement. Misrepresentation of the proposer's ability to perform as stated in the proposals may result in cancellation of the purchase agreement award. Page 14
  15. 15. J. NCTCOG reserves the right to withdraw or reduce the amount of an award, or to cancel any engagement resulting from this procurement if adequate funding is not available. K. Proposers shall not, under penalty of law, offer or provide any gratuities, favors or anything of monetary value to any officer, member, employee or agent of NCTCOG for the purpose of or having the effect of influencing favorable disposition toward their own proposal or any other proposal submitted hereunder. L. No employee, officer or agent of NCTCOG shall participate in the selection, award or administration of a engagement if a conflict of interest, real or apparent, exists. M. Proposers shall not engage in any activity that will restrict or eliminate competition. Violation of this provision may cause a proposer's bid to be rejected. This does not preclude joint ventures or subcontracts. N. All proposals submitted must be an original work product of the proposers. The copying, paragraphing or other use of substantial portions of the work product of others and submitted hereunder, as original work of the proposer is not permitted. Failure to adhere to this instruction may cause the proposal(s) to be rejected. O. The only purpose of this RFP is to ensure uniform information in the selection of proposals and procurement of services. This RFP is not to be construed as a purchase agreement, contract or engagement letter, or as a commitment of any kind, nor does it commit the NCTCOG to pay for costs incurred prior to the execution of a formal engagement letter unless such costs are specifically authorized in writing by NCTCOG. P. The contents of a successful proposal may become a contractual obligation, if selected for award of an engagement. Failure of the proposer to accept this obligation may result in cancellation of the award. No plea of error or mistake shall be available to successful proposer(s) as a basis for release of proposed services at stated price/cost. Any damages accruing to the NCTCOG as a result of the proposer's failure to contract may be recovered from the proposer. Q. An engagement with the selected provider may be withheld at sole discretion if issues of engagement compliance or questioned/disallowed costs exist, until such issues are satisfactorily resolved. Award of engagement may be withdrawn by NCTCOG if resolution is not satisfactory to NCTCOG. R. Procurement Dispute Resolution Policy. NCTCOG is the responsible authority for handling complaints or protests regarding the proposal selection process. This includes, but is not limited to, disputes, claims, protests of award, source evaluation or other matters of a contractual nature. Matters concerning violation of law shall be referred to such authority, as may have proper jurisdiction. Page 15
  16. 16. Once NCTCOG has agreed upon selection(s), all bidders will be notified in writing of the results. Any protest regarding this process must be filed with NCTCOG in accordance with the following procedure. NCTCOG would like to have the opportunity to resolve any dispute prior to the filing of an official complaint by the protester. The protester should contact NCTCOG’s Deputy Executive Director, at (817) 695-9121, P.O. Box 5888, Arlington, Texas 76005-5888, so that arrangements can be made for a conference between NCTCOG and the protester. Copies of the appeal process will be made available to the protester. S. At all times during the term of this engagement , the contractor shall procure, pay for and maintain, with approved insurance carriers, the minimum insurance requirements set forth below, and shall require all subcontractors and sub- subcontractors performing work for which the same liabilities may apply under this engagement to do likewise. The contractor may cause the insurance to be effected in whole or in part by the subcontractors of sub-subcontractors under their contracts. NCTCOG reserves the right to waive or modify insurance requirements at its sole discretion. 1. Workers’ Compensation: Statutory limits and employer’s liability of not less than $100,000 for each accident. 2. Commercial General Liability: a. Minimum Required Limits: $1,000,000 per occurrence; $1,000,000 General Aggregate b. Commercial General Liability policy shall include: (i) Coverage A: Bodily injury and property damage; (ii) Coverage B: Personal and Advertising Injury liability; (iii) Coverage C: Medical Payments (iv) Products: Completed Operations (v) Fire Legal Liability c. Policy coverage must be on an “occurrence” basis using CGL forms as approved by the Texas State Board of Insurance d. Attachment of Endorsement CG 20 10 - additional insured e. All other endorsements shall require prior approval by the NCTCOG. 3. Comprehensive Automobile/Truck Liability: Coverage shall be provided for all owned, hired and non-owned vehicles. Minimum required Limit: $500,000 combined single limit. 4. Professional Liability: a. Minimum Required Limits: Page 16
  17. 17. (i) $1,000,000 Each Claim (ii) $1,000,000 Policy Aggregate T. Contractor covenants and agrees to indemnify and hold harmless and defend and does hereby indemnify, hold harmless, and defend NCTCOG and Contracting Governments, its officers and employees, from and against any and all suits or claims for damages or injuries, including death, to persons or property, whether real or asserted, arising out of any negligent act or omission on the part of the contractor, its officers, agents, servants, employees, or subcontractors, and the contractor does hereby assume all liability for injuries, claims or suits for damages to persons, property, or whatever kind of character, whether real or asserted, occurring during or arising out of the performance of an engagement as a result of any negligent act or omission on the part of the contractor, its officers, agents, servants, employees, or subcontractors to the extent permitted by law. U. A force majeure event shall be defined to include governmental decrees or restraints, acts of God (except that rain, wind, flood or other natural phenomena normally expected for the locality, shall not be construed as an act of God), work stoppages due to labor disputes or strikes, fires, explosions, epidemics, riots, war, rebellion, and sabotage. If a delay or failure of performance by either party to this engagement results from the occurrence of a force majeure event, the delay shall be excused and the time fixed for completion of the work extended by a period equivalent to the time lost because of the event, if and to the extent that: A. The delay or failure was beyond the control of the party affected and not due to its fault or negligence; and B. The delay or failure was not extended because of the affected party’s failure to use all diligence to overcome the obstacle or to resume performance immediately after the obstacle was overcome. If the failure to perform is caused by the failure of a subcontractor of the Provider to perform, and if such failure was beyond the control of both the Provider and the subcontractor, without their fault or negligence, the Provider shall not be deemed to be in default unless the subcontracted supplies or services were reasonably obtainable from other sources. C. No time extension shall be granted under this paragraph unless the party seeking relief has notified the other in writing within a reasonable time after commencement of the event, of the anticipated length and cause of the delay, the measures taken or to be taken to minimize the delay and the timetable by which the Provider intends to implement these measures. The party seeking relief shall also give written notice of the ending of the event within a reasonable time after the event has ended. Page 17
  18. 18. NCTCOG shall be responsible for costs related to a force majeure event, only if the Provider incurs them after prior written authorization by NCTCOG. Neither NCTCOG nor the Provider shall have, and both hereby waive, any claim whatsoever for any damages resulting from delays caused by force majeure events. IX. Appendices to this document A. List of Participating Governments B. Proposed Engagement Letter C. Pricing Sheet D. Mandatory Requirements Declaration E. Conflict of Interest Questionnaire Page 18
  19. 19. Appendix A List of Participating Governments This appendix includes the list of governments that have agreed to participate as of the issuance date of this RFP. Some of the governments listed may choose to not enter into a engagement with the winning proposer while other governments not included in this list may decide to participate once all arrangements have been finalized. Information on each cities TMRS plan may be obtained directly from TMRS’s annual report which is available at their website www.tmrs.com (click publications). City Contact Person E-Mail Phone 1 Addison Randy Moravec rmoravec@addisontx.gov 972-450-7050 2 Alamo Heights Cynthia Barr cbarr@alamoheightstx.gov 210-882-1502 3 Azle Lawrence Bryant lbryant@ci.azle.tx.us 817-444-2541 4 Belton Christy Daniell cdaniell@ci.belton.tx.us 257-933-5808 5 Brownsville Pete Gonzalez peteg@cob.us 956-548-6020 6 Brownwood Walter Middleton wmiddleton@ci.brownwood.tx.us 325-646-5775 7 Carrollton Bob Scott Bob.Scott@cityofcarrollton.com 972-466-3103 8 Cedar Park Joyce Herring herring@cedarparktx.us 512-401-5158 9 Cleburne Greg Wilmore gregw@cleburne.net 817-645-0911 10 Commerce Marc Clayton mclayton@koyote.com 903-886-1130 11 Coppell Jennifer Miller jmiller@ci.coppell.tx.us 972-304-3689 12 Copperas Cove Wanda Bunting wbunting@ci.copperas-cove.tx.us 254-547-4221 x222 13 Corpus Christi Constance Sanchez constancep@cctexas.com 361-826-3227 14 Balch Springs Debra Turner dturner@dc6.org 972-286-4477 x202 15 Dickinson Usha Mathew umathew@ci.dickinson.tx.us 281-337-6235 16 Farmers Branch Charles Cox Charles.Cox@farmersbranch.info 972-919-2518 17 Friendswood Roger Roecker rroecker@ci.friendswood.tx.us 281-996-3211 18 Georgetown Micki Rundell mrundell@georgetowntx.org 512-930-3677 19 Granbury Wayne McKethan wmckethan@granbury.org 817-573-1114 20 Hutto Laurie Brewer Laurie.brewer@huttotx.gov 512-759-4046 21 Irving Max Duplant mduplant@cityofirving.org 972-721-4615 22 Lancaster Carl Wessels cwessels@lancaster-tx.com 972-218-1333 23 LaPorte Phyllis Rinehart rinehartp@laportetx.gov 281-470-5086 24 Leander Sharon Johnson sharon@ci.leander.tx.us 512-528-2724 25 Lewisville Melinda Galler mgaller@cityoflewisville.com 972-219-3452 26 McKinney Jennifer Fung jfung@mckinneytexas.org 972-547-7531 27 Missouri City Wes Vela wvela@missouricitytx.gov 281-403-8610 28 Nacogdoches Jack Sparks sparkja@ci.nacogdoches.tx.us 936-559-2533 29 New Braunfels Dawn Butrym dbutrym@nbutexas.com 830-629-8468 30 Portland Sandra Clarkson sclarkson@portlandtx.com 361-777-4520 Page 19
  20. 20. City Contact Person E-Mail Phone 31 Richardson Kent Pfeil kent.pfeil@cor.gov 972-744-4145 32 Richmond Terri Vela tvela@ci.richmond.tx.us 281-342-5456 x21 33 Sealy Krisha Langton klangton@ci.sealy.tx.us 979-885-3511 x105 34 Sherman Mary Lawrence maryl@ci.sherman.tx.us 903-892-7218 35 Southlake Kevin Hugman KHugman@cityofsouthlake.com 817-748-8193 36 Sugarland Linda Symank lsymank@sugarlandtx.gov 281-275-2700 37 Taylor Rosemarie Dennis rosemarie.dennis@ci.taylor.tx.us 512-352-5997 x21 38 The Colony Tony Johnston tjohnston@thecolonytx.gov 972-624-3103 39 Tyler Daniel Crawford dcrawford@tylertexas.com 903-531-1140 40 Waxahachie Ginger Richardson grichardson@waxahachie.com 972-937-7330 x138 41 Weatherford Jennifer Fadden jfadden@weatherfordtx.gov 817-598-4205 42 Lubbock Andy Burcham aburcham@mylubbock.us 806-775-2149 43 Boerne Joe Tippett jtippett@ci.boerne.tx.us 830-248-1508 44 Haltom City C. Joel Welch jwelch@haltomcitytx.com 817-222-7706 45 Hurst Anita Thetford anitat@ci.hurst.tx.us 817-788-7011 46 Rockport Jacky Cockerham finance@cityofrockport.com 361-729-2213 x126 47 Rowlett Ann Honza ahonza@rowlett.com 972-412-6288 48 Huntsville Winston Duke wduke@huntsvilletx.gov 936-291-5437 Page 20
  21. 21. APPENDIX B PROPOSED ENGAGEMENT LETTER The attached engagement letter will be the standard agreement that participating governments have agreed to use for the provision of these services. These governments have been encouraged to have this draft engagement letter reviewed by their respective city attorney or others in the organization that will need to approve the engagement letter. The engagement letter will be between the winning proposer and the individual entity. Page 21
  22. 22. “MASTER AGREEMENT” Date Name of Government Dear Government Official Pursuant to the award of Joint Actuarial Services by the North Central Texas Council of Governments (NCTCOG), this letter confirms the terms under which the Name of Government has engaged the World’s Best Actuaries (WBA) to perform actuarial consulting services. In as much as this relationship will involve multiple actuarial reviews and other services that will be governed by the Request for Proposal issued by NCTCOG on January 11, 2008 and our subsequent response to that proposal, we have agreed to establish this “master agreement” defining the general terms and conditions for all work performed. This agreement will not, by itself, authorize the performance of any services. Rather specific services will be authorized through a separate engagement letter that references this master agreement and details the services to be provided and the timeframe and fees required. In the event of an inconsistency between this master agreement and an individual engagement letter, the master agreement will be followed. As described in the above referenced Request for Proposal the following terms apply: A. Tax Exempt Entities. Contracting Government is exempt from manufacturer’s federal excise tax and states sales tax. Tax exemption certificates will be issued upon request. B. Role of NCTCOG. NCTCOG has served as a facilitator to the RFP and award process but the contractual relationship is between WBA and the Contracting Government. at any time. C. Aggregate Information. WBA agrees to supply NCTCOG with the specified results from the valuations and to aggregate that information with that of other governments for the purpose of benchmarking. D. Fees. WBA agrees to follow the attached pricing schedule for pricing of its services. I. Review of Charges. Contracting Government has the right to review the supporting documentation for any hourly charges or out of pocket expenses assessed to the contracting government under the fee schedule. J. Termination. Both contracting government and WBA will have the right to terminate this agreement through written notice. Contracting government will pay any charges or prorate fees incurred to the date the termination notice is received and actuary will cease any in progress work unless specific stopping points are provided in the letter. Page 22
  23. 23. K. Work Product. The final work product will be the property of the contracting government to be used as stated in the specific engagement letter. Ancillary use of the product is permitted but WBA is not responsible for the reliability of those projections. It is understood that all reports are subject to the open records laws of the State of Texas and the contracting jurisdiction. L. Independent Contractor. All the services provided by WBA will be as an independent contractor. None of the terms in the engagement letter will be interpreted to create an agency or employment relationship. M. Term. The term of this master agreement will be governed by the afore referenced NCTCOG RFP and will expire on December 31, 2009. O. Complete Agreement. This letter combined with the specific engagement letter and as clarified by the RFP and Proposal set forth the entire agreement between the contracting government and WBA. P. Indemnification. Contractor covenants and agrees to indemnify and hold harmless and defend and does hereby indemnify, hold harmless, and defend NCTCOG and Contracting Governments, its officers and employees, from and against any and all suits or claims for damages or injuries, including death, to persons or property, whether real or asserted, arising out of any negligent act or omission on the part of the contractor, its officers, agents, servants, employees, or subcontractors, and the contractor does hereby assume all liability for injuries, claims or suits for damages to persons, property, or whatever kind of character, whether real or asserted, occurring during or arising out of the performance of a engagement as a result of any negligent act or omission on the part of the contractor, its officers, agents, servants, employees, or subcontractors to the extent permitted by law. Please review this master agreement letter and the attached schedules and indicate your acceptance by having an official of contracting government sign below. Q. Force Majeure. A force majeure event shall be defined to include governmental decrees or restraints, acts of God (except that rain, wind, flood or other natural phenomena normally expected for the locality, shall not be construed as an act of God), work stoppages due to labor disputes or strikes, fires, explosions, epidemics, riots, war, rebellion, and sabotage. If a delay or failure of performance by either party to this engagement results from the occurrence of a force majeure event, the delay shall be excused and the time fixed for completion of the work extended by a period equivalent to the time lost because of the event. Page 23
  24. 24. R. Professional Standards. WBA will provide qualified personnel for each engagement and follow all professional standards ascribed by the American Academy of Actuaries and the Governmental Accounting Standards Board. S. Administrative Fee. WBA will assess as part of its first billing to each client covered by this agreement a one time Administrative Fee of $100. This fee will compensate NCTCOG for the costs of administering this agreement and is due within a month of collection by WBA. World’s Best Actuaries By:________________________ Date:________________________ Title: ______________________ Contracting Government By ________________________ Date:________________________ Title:_______________________ Page 24
  25. 25. SCHEDULE OF REQUIRED INSURANCE At all times during the term of this engagement, the contractor shall procure, pay for and maintain, with approved insurance carriers, the minimum insurance requirements set forth below, and shall require all subcontractors and sub-subcontractors performing work for which the same liabilities may apply under this engagement to do likewise. The contractor may cause the insurance to be effected in whole or in part by the subcontractors of sub-subcontractors under their engagement letters. NCTCOG reserves the right to waive or modify insurance requirements at its sole discretion. 1. Workers’ Compensation: Statutory limits and employer’s liability of not less than $100,000 for each accident. 2. Commercial General Liability: a. Minimum Required Limits: $1,000,000 per occurrence; $1,000,000 General Aggregate b. Commercial General Liability policy shall include: (i) Coverage A: Bodily injury and property damage; (ii) Coverage B: Personal and Advertising Injury liability; (iii) Coverage C: Medical Payments (iv) Products: Completed Operations (v) Fire Legal Liability c. Policy coverage must be on an “occurrence” basis using CGL forms as approved by the Texas State Board of Insurance d. Attachment of Endorsement CG 20 10 - additional insured e. All other endorsements shall require prior approval by the NCTCOG. 3. Comprehensive Automobile/Truck Liability: Coverage shall be provided for all owned, hired and non-owned vehicles. Minimum required Limit: $500,000 combined single limit. 4. Professional Liability: a. Minimum Required Limits: (i). $1,000,000 Each Claim (ii). $1,000,000 Policy Aggregate Page 25
  26. 26. SPECIFIC GOVERNMENT “ENGAGEMENT LETTER” Date Name of Government Dear Government Official Pursuant to the award of Joint Actuarial Services by the North Central Texas Council of Governments (NCTCOG), and the Master Agreement letter dated ___________ between Name of Government has engaged the World’s Best Actuaries (WBA) this letter confirms our agreement to perform the following services: A. B. C. These services will be performed by (name of actuary) pursuant to the standards ascribed by the American Academy of Actuaries and the Governmental Accounting Standards Board. We will perform these services during the month, or x quarter of 200x and expect to have a draft report for your review by x date. This timing is dependant upon receipt of the required census data necessary to perform our work. Our fees for these services is in accordance with the fee schedule contained in the master agreement and will be_________. Fees will be paid 20% upon initiation of the work. 50% upon receipt of the draft report and 30% upon acceptance of the final report. In addition to the fees listed above, we will assess a $100 one time fee per city in accordance with the master Agreement with NCTCOG. This one time fee will offset NCTCOG’s costs of issuing and administering this joint services arrangement. Please indicate your agreement regarding the scope and timing of this engagement by signing below. Sincerely I.B. Actuary WBA Accepted:___________________________ Date:________________________ Title:________________________________ Page 26
  27. 27. APPENDIX C PRICING SHEET The attached pricing sheet should be included as part of the proposal and shall also be an attachment to the Master Agreement Letter in APPENDIX C. Exceptions or features or services not anticipated by this sheet should be clearly stated. Pricing of Services Proposer should complete the following pricing table: INDIVIDUAL AGENT PLAN Governments by Total Participants Base Services including base Hourly Rate for (Active, Retired, Terminated) valuation, options study and Additional Services reconciliation to TMRS by consultant level 1 Less than 100 2 Between 101 and 250 3 Between 251 and 500 4 Between 501 and 1000 5 Between 1001 and 2000 6 Between 2001 and 4000 7 Between 4001 and 6000 8 Between 6001 and 8000 9 Between 8001 and 10,000 10 Over 10,000 Pricing assumes 20% paid upon acceptance by the government of the engagement, 50% upon receipt of the draft report and 30% upon acceptance of the final report. Actuarial firm agrees to assess and collect on behalf of NCTCOG a $100 administrative fee to offset the costs associated with this RFP. Page 27
  28. 28. APPENDIX D MANDATORY REQUIREMENTS DECLARATION This form is being completed in response to the requirements of the North Central Texas Council of Governments (NCTCOG) Request for Proposal (RFP) dated January 11, 2007. The undersigned, as Proposer, declares that the only persons/entities interested in this Proposal are those named herein, that no other person/entity has any interest in this Proposal or in the contract for services to which this Proposal pertains, that this Proposal is made without connection or arrangement with any other person/entity and that this Proposal is in every aspect fair, in good faith, and without collusion or fraud. The individual signing below further represents that they have the authority to contractually bind the company or firm submitting this proposal. The Proposer further declares that he has complied in every respect with all requirements of this RFP, that he has read the RFP and appendices including the “General Terms and Conditions,” and has satisfied himself fully relative to all matters and conditions with respect to the services to which the Proposal pertains. The Proposer further declares that the individuals included in this proposal and any that may be added later meet all professional standards required to perform actuarial valuations. The proposer agrees to complete the state mandated Conflict of Interest form contained in this Appendix. The proposer agrees to the general terms and conditions (section VIII) and Master Agreement (Attachment B) contained in the NCTCOG RFP-Shared Actuarial Services except for the following items (state contract section, nature of objection and required modifications) Firm/Corporation Address Name Signature Title Submittal Date Page 28
  29. 29. APPENDIX E MANDATORY REQUIREMENTS FORM STATE REQUIRED CONFLICT OF INTEREST FORM The Conflict of Interest Questionnaire form is required by the State of Texas for those vendors doing business with local governments. Unless otherwise required by the individual government, proposer can fill out the form once with an appendix listing all the governments to which form applies. In addition, unless required by the individual government, proposers with multiple offices should only consider those offices that will be providing the services in completing the form. http://intranet/share/aa/Procurement%20Forms/Conflict%20of%20Interest%20Questionn aire.pdf Page 29

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