Bond Collateral Assistance Fund RFP. Information Session January 25, 2017

Transcription

1 Bond Collateral Assistance Fund RFP Information Session January 25, 2017

2 Agenda 1. RFP Background 2. Program Goals & Target Audience 3. Challenges Accessing Surety Bonding 4. Components of Program 5. Consultant Responsibilities 6. Sample Cost Schedule 7. Selection Criteria 8. Submission Requirements 9. Timeline 10. Q&A 2

3 Background Mayor s goals for M/WBE programs Award 30% of City contracts ($) to MWBEs by Double the number of certified and re-certified MWBEs from 4,500 to 9,000 by Increased access to bonding is necessary to achieve M/WBE goals Sureties often require businesses to provide cash as collateral and/or an assurance of liquidity before providing access to surety bonding. Such an allocation of resources presents an obstacle for many businesses: as a result, companies are unable to access the surety bonds they need to bid or perform on contracts. In Fiscal Year 2017, NYCEDC and SBS intend to select one vendor to deliver the Bond Collateral Assistance Fund, funded with $10M. 3

4 Goals & Target Audience Bond Fund Goals Enhance the ability of business owners to access surety bonds, including bid, payment, performance and ancillary bonding, to perform on construction contracts. Increase M/WBE utilization among City agencies system-wide. Support surety companies in serving a broader market. Target Audience M/WBE Certified businesses or businesses in the process of applying for M/WBE Certification; OR Small businesses that have earned less than $10 million in revenue the previous fiscal year (or otherwise meets alternative parameters proposed by Consultant). ALL businesses must be applying to be, or engaged as, a prime contractor or subcontractor under a contract with a City agency or NYCEDC, or another Cityfunded entity determined by SBS at a later date. 4

5 Challenges The Bond Fund will help benefit contractors who have trouble meeting the following requirements: High Credit Score: On average credit score must be above 680. Past Experience: Extensive experience handling City and/or large contracts needed for bonding. Solid Financial Credentials: Business must have strong cash flow/liquidity to get bonded to show that they can perform on contract and pay employees. Collateral: Lack of assets or available cash can prohibit Businesses from accessing securing bonding. Access higher level of bonding Win increasing size of contracts Gain Experience 5

6 Expectations for a Proposed Approach Collateral Assistance is monetary collateral to the Surety in the event of a project default, and thereby enhances the bond application. Through the Bond Fund, the Consultant should propose an approach that: Assists M/WBEs and Small Businesses that cannot meet the cash requirement needed as collateral for surety bonds. Provides Collateral Assistance, whether it is through an irrevocable letter of credit or another mechanism. Broadens sureties traditional reach through the utilization of Collateral Assistance. Enables qualified businesses to access Collateral Assistance funds of up to $500,000, or up to 50% of the Contract (whichever is less). The agreement term with the Consultant is three years. The Consultant, SBS and EDC will agree upon the amount of time the bonded contracts will need to be serviced beyond the term of the agreement. 6

7 Consultant Responsibilities NYCEDC & SBS are looking for a Consultant for the following: RFP Proposal Describe collateral assistance mechanism (ILOC, Escrow or other mechanism) Design the Program Develop intake process in collaboration with SBS Create minimum requirements for Eligible Businesses Obtain term sheets from at least two Sureties, and identify where the Sureties are willing to be flexible Administer Program Provide technical assistance to businesses that are referred by City agencies or community partners, technical assistance to businesses recommended by Sureties is not required, but should be available. Maintain a comprehensive recruitment plan Obtain approval from SBS for each Eligible Business Provide quarterly reports, including status of bonded projects, outcomes and recommendations for program improvement Deploy at least $3 million of the Bond Fund the first year, and $4 million the second 7

8 Selection Criteria Respondents must show evidence of their capacity to deploy and efficiently manage the Bond Fund, according to the following selection criteria: 30% - Quality of the respondent s proposed approach for the design and structure of the Bond Fund Program: Capacity to facilitate and service at least $3M in Collateral Assistance funds the first year Thoroughness of Respondent s proposed approach, including technical assistance, Collateral Assistance disbursement method, plan for flow of funds Proposal of the new, more flexible, underwriting criteria that sureties would adopt for Eligible Businesses with Collateral Assistance Expected number of businesses served 25% - Experience and Relationships with Sureties: Experience in providing technical assistance to M/WBEs and Small Businesses in the construction industry, and in surety bonding Depth of understanding of target audience for Bond Fund Experience working with Sureties, demonstrated through letters of interest from at least two sureties 8

9 Selection Criteria 20% - Outreach and Marketing Strategy: Strategic insight and creative concepts to create demand for the Bond Fund Knowledge of challenges and opportunities faced by businesses when accessing Bond Funds Willingness to work with SBS and other City Agencies on developing processes to facilitate outreach 15% - Proposed fee and cost schedules Sound rationale behind proposed fee and cost schedule, utilizing Sample Fee & Cost schedule as a guide 10% - Quality of the respondent s proposed staff Qualifications of proposed team who will manage and implement the program Experience as evidenced by team s resumes 9

10 Sample Cost Schedule Task NYCEDC Proposal Program Design and Development Procedure Manual with implementation & intake plan $20,000 approved by SBS Forms, instruction documents & other written control $20,000 mechanisms for disbursement approved by SBS Two Sureties with submitted term sheets $10,000 Subtotal $50,000 First surety bond to an Eligible Business signifies activation of partnership Program Administration (Program Launch) Surety participates in the Bond Fund Program (upon provision of bonding to first Eligible Business)* Second Surety participates in the Bond Fund Program (upon provision of bonding to first Eligible Business)* $10,000 $10,000 Fees available for additional Sureties onboarded & $30,000 delivering first Eligible Business (at no more than $10K per Surety and capped at the amount at right) Subtotal $50,000 Program Administration (Generally) Maximum cumulative fee for bonded Eligible Businesses** $550,000 Technical assistance*** $150,000 Subtotal $700,000 Fee per business bonded (to be paid after project completion Technical Assistance grant for new programing or staff time Total Amount for Full Contract Term $800,000 10

11 RFP Submission Requirements Exhibit 1A Respondent s Proposal Certification Exhibit 1B Proposal Questions Exhibit 2 Sample Fee & Cost Schedule, including Technical Assistance budget Doing Business Data Form Cover Letter Attachments Letters of interest from at least two sureties Copies of last three years audited financial statements Existing underwriting criteria and a copy of existing promissory notes Resumes of key program personnel Description of the history of the respondent s organization, and organization chart A list and detailed explanation of all work or services to be performed by Subcontractors, if applicable 11

12 Timeline Deadline for submitting questions: January 27, 2017 at 5:00 PM Responses to questions by: February 7, Deadline for RFP: February 17, at 4:00PM 6 hard copies and one electronic copy required Program Launch: By May 30, 2017 Please read entire RFP carefully! 12

13 Q&A 13