ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM MEMORANDUM DATE: August 5, 2015 TO: Members of the Board of Retirement FROM: Brenda Shott, Assistant CEO, Finance and Internal Operations SUBJECT: Request for Proposal for Actuarial and Consulting Services Recommendation: Take appropriate action. Staff recommends considering one of the following two actions: 1. Approve the commencement of a procurement process for a Consulting Actuary as described in the Request for Proposal drafted by staff (in substantially final form) OR 2. Approve an amendment to the current contract with Segal Consulting extending the contract term by one year. (Note this alternative recommendation is being proposed as a means to reduce a risk associated with changing actuaries at the same time OCERS implements a new pension administration system) Background: The 1937 Act requires that the Board of Retirement take certain actions only after receiving advice/recommendation from an actuary. One of the most notable recommendations required from the actuary is establishing the annual funding required from the employers and employees sufficient to pay the promised benefits. To accomplish this task the actuary works with the Board in establishing demographic and economic assumptions and a funding policy, performing experience studies to adjust assumptions and assisting in the interpretation of benefit provisions. Other tasks that a consulting actuary performs for retirement systems such as OCERS include (but are not limited to): provide general advice on benefit issues and plan design, analyze prospective legislative changes, calculate benefit adjustments such as STAR COLA or optional benefit amounts that are actuarial equivalent to the unmodified benefit, and special projects as requested. The Board of Retirement Charter and the Procurement and Contracting Policy calls for the Board to approve, upon the recommendation of the CEO, the appointment of Named Service Providers which includes the Consulting Actuary. The policy also calls for a request for proposal to be conducted every six years for Named Service Providers. I-4 Consulting Actuary Services Request for Proposal Page 1 of 4 Regular Board Meeting May 11, 2015
OCERS has utilized Segal Consulting as their Consulting Actuary since August 2004. Segal was selected through competitive proposal processes in both 2004 and again in 2010. In May 2015, the Board of Retirement approved an amendment to the current contract with Segal to change the contract end date from August 26, 2015 to December 31, 2015 to accommodate a Board educational session with outside actuaries which is scheduled for September 2015 without compromising the planned procurement s integrity. Discussion: Staff is prepared to conduct a procurement process for a Consulting Actuary to provide a full range of actuarial services necessary to comply with the 37 Act as described above but also in recognition of requirements in the Board s Charter and policies as well as for requirements related to financial reporting. The proposed procurement process consists of issuing a Request for Proposal, evaluation of proposals by a staff panel and finalist interviews to be conducted by the full Board of Retirement. The schedule below was approved by the Board at its May 11, 2015 meeting and shows the key tasks and dates of the process. Task Date Preview RFP with Board of Retirement August 17, 2015 Release RFP September 11, 2015 Deadline to submit questions September 25, 2015 Response to submitted questions posted to OCERS website October 6, 2015 Proposals Due October 19, 2015 Review and ranking of proposals (staff committee) October 20 November 3, 2015 Selection of finalists to be interviewed by Board November 4, 2015 Board interviews finalists/selection of Consulting Actuary November 16, 2015 Estimated contract start date January 1, 2016 The attached draft RFP includes the description of the specific actuarial scope of services being requested, the minimum qualifications of firms to be considered as well as detailed proposal submission requirements. Based on the proposed process, staff will review the proposals submitted. All proposals meeting the requirements set forth in the RFP will then be evaluated by a review panel consisting of OCERS staff. Proposals will be evaluated and scored based upon the quality of responses to all of the items included in Section 10 of the RFP as well as the results of the reference checks to be performed by the evaluation committee. The following weighted factors will be considered when evaluating and scoring the responses: Firm s Experience, Capabilities and References 30% Quality and Experience of Assigned Professional Personnel 25% Communication and Quality of Proposal submitted 25% Fee Proposal 20% The panel will then make a recommendation of at least two finalists who will then make an oral presentation to the Board at the regularly scheduled meeting on November 16, 2015. The Board I-4 Request for Proposal for Actuary Consultant Services Page 2 of 4 Regular Board Meeting, August 17, 2015
will make their selection based on the oral presentation, the responsiveness of the firm representative s to the Board s questions during the Board meeting while also considering the written proposal submitted. No consultant will be required to assist staff for this procurement. Staff intends to directly mail the RFP to the following firms who are known to be active in providing public pension plan actuarial consulting services: 1. Segal Consulting 2. Milliman Inc. 3. Cherion 4. Bartel Associates 5. Buck Consultants 6. Gabriel, Roeder, Smith & Co. In an effort to get a wide distribution of the procurement, in addition to the direct mailing, the RFP will be posted on OCERS website, sent to SACRS and FINdaily for distribution to its affiliates, and posted on BidNet (government procurement and RFP website). RISK TO BE CONSIDERED POSSIBLE ALTERNATE RECOMMENDATION OCERS is currently in the process of implementing a new Pension Administration System called V3. The new system functionality includes the extracting of the data required by the Consulting Actuary to perform the annual actuarial valuations (for both reporting and funding purposes). Staff has and will continue to do extensive testing of the processes in V3 related to providing data to the actuary. The testing in this area is aimed at verifying the completeness and accuracy of the actuarial export files. However, as past experience here at OCERS has demonstrated (2004), having a change in pension administration systems at the same time that a new Consulting Actuary is brought on board can insert some significant risks to the system. An experienced Consulting Actuary with historical knowledge and experience with OCERS and its membership data has a strong advantage and are is positioned to be able to identify and report any problem, issues, anomalies, inaccuracies or incompleteness of data that will be extracted from the new system. Introducing a new Consulting Actuary to the complexity of OCERS, its members, plans and contribution arrangements in the same year that a newly implemented pension administration system is used to produce its very first set of actuarial data creates a significant risk that material errors could result in the annual actuarial valuation. Staff recommends the Board consider mitigating the risk of switching actuaries and systems in the same year by retaining the existing Consulting Actuary (Segal Consulting) for an additional year. Retaining Segal for one more year, which is allowable under the Procurement and Contracting Policy, would allow the historical knowledge and current detailed experience with I-4 Request for Proposal for Actuary Consultant Services Page 3 of 4 Regular Board Meeting, August 17, 2015
OCERS data to act as another line of defense in ensuring the data extracted from V3 and used in the annual actuarial valuation as of December 31, 2015 will be accurate and complete. Conclusion OCERS Procurement Policy calls for a RFP to be conducted every six years for Named Service Providers including a Consulting Actuary. Staff is prepared to commence a procurement process for a Consulting Actuary in September 2015 as the current contract with Segal Consulting expires in December 2015. The attached draft RFP includes the requirements, qualifications, evaluation criteria and schedule for the procurement of actuarial consulting services required by OCERS. HOWEVER, the Board of Retirement may wish to consider extending Segal Consulting s contract for one year in order to mitigate the risks associated with switching the Agency s Consulting Actuary at the same time the Agency implements a new Pension Administration System. Submitted by: Approved by: Brenda Shott Assistant CEO, Finance and Internal Operations Steve Delaney Chief Executive Officer I-4 Request for Proposal for Actuary Consultant Services Page 4 of 4 Regular Board Meeting, August 17, 2015
Request for Proposal Actuarial and Consulting Services September 2015 RFP: 2015 Actuarial and Consulting Services Page 1 of 23
Table of Contents SECTION 1: INTRODUCTION... 5 SECTION 2: BACKGROUND... 5 SECTION 3: GENERAL INFORMATION... 6 SECTION 4: MINIMUM REQUIREMENTS... 6 SECTION 5: SCHEDULE OF EVENTS... 7 SECTION 6: SCOPE OF SERVICES... 7 SECTION 7: OCERS POINT OF CONTACT... 11 SECTION 8: VENDOR QUESTIONS REGARDING RFP... 12 SECTION 9: GENERAL PROPOSAL SUBMISSION REQUIREMENTS... 12 SECTION 10: DETAIL PROPOSAL REQUIREMENTS... 12 SECTION 11: REVIEW AND EVALUATION OF PROPOSALS... 17 SECTION 12: RIGHT TO REJECT PROPOSAL... 18 SECTION 13: INCOMPLETE RESPONSES... 18 SECTION 14: ADDENDA... 18 SECTION 15: NOTICE REGARDING THE CALIFORNIA PUBLIC RECORDS ACT AND THE BROWN ACT... 18 APPENDIX A: ORGANIZATION CHART... 21 RFP: 2015 Actuarial and Consulting Services Page 3 of 23
SECTION 1: INTRODUCTION The Orange County Employees Retirement System (OCERS) is issuing this Request for Proposals to solicit proposals from qualified actuarial firms to provide a range of actuarial services and actuarial advice to the OCERS Board of Retirement and OCERS staff (refer to Section 5 of this document for a description of the Scope of Work). This search seeks to identify a potential full-service actuarial consultant. It is anticipated that OCERS will enter into a three year contract with up to three one year extensions with the contract term beginning in 2016. SECTION 2: BACKGROUND The Orange County Employees Retirement System (OCERS) is a public retirement system established in 1945 that provides service retirement, disability, death and survivor benefits, administered in accordance with the County Employees Retirement Law of 1937 (Government Code Section 31450, et seq.) to its members. There are approximately 41,000 members served by OCERS, of which over 15,000 are retirees. Net assets as of December 31, 2014 were $11.5 billion. OCERS, like most public sector plans, offers a defined benefit retirement plan, which provides its members with a guaranteed lifetime income benefit as well as certain benefits for designated beneficiaries upon the member s death. OCERS also provides a disability retirement benefit for members who become permanently incapacitated from performing their usual and customary duties (whether the disability was caused or related to providing service or not), subject to certain eligibility requirements, as well as death benefits. OCERS funding is provided by three sources: employer contributions, member contributions by active employees, and investment earnings. OCERS is governed by the Board of Retirement which consists of nine members and one alternate. Four members of the Board of Retirement are appointed by the County s Board of Supervisors, four members are elected by the active members of OCERS, one of which is the alternate member, one member is elected by the retirees, and the County Treasurer serves as an ex officio member. The Board of Retirement is responsible for establishing policies, regulations and guidelines for the investment of the assets of the pension fund. OCERS is legally and fiscally independent of the County of Orange. OCERS is a cost-sharing multiple-employer, defined benefit pension plan consisting of the following participating plan sponsors: The County of Orange City of San Juan Capistrano Orange County Children and Families Commission Orange County Cemetery District Orange County Department of Education (closed to new members, no current active) Orange County Employees Retirement System Orange County Fire Authority Orange County IHSS Public Authority Orange County Local Agency Formation Commission Orange County Public Law Library Orange County Sanitation District Orange County Superior Courts RFP: 2015 Actuarial and Consulting Services Page 5 of 23
Orange County Transportation Authority Transportation Corridor Agencies UCI Medical Center (closed to new members) Capistrano Beach, Cypress Recreation & Parks District, Orange County Vector Control District and the City of Rancho Santa Margarita are no longer active plan sponsors, but retired members and their beneficiaries, as well as deferred members, remain in the System. Plan retirement benefits are tiered based upon date of OCERS membership. Tier I members who were hired prior to September 21, 1979 use their highest twelve months of earnings to determine their retirement allowance. Tier II members who were hired on or after September 21, 1979 use their highest thirty-six months of earnings to determine their retirement allowance. Rate Groups are a collection of members who are or were employed by plan sponsors that offer similar pension benefit formula(s). Rate Groups exist for the purpose of risk-pooling. The contribution rates developed by the actuary for each Rate Group should, in the long-term, fairly and accurately reflect the benefit plan offered/promised to members in each group. Rate Groups are determined by employer, bargaining unit and benefit plan. OCERS has ten active rate groups that offer a total of 21 different benefit plan formulas. For more information about OCERS Rate Group and the various benefit plans offered please refer to the OCERS Comprehensive Annual Financial Report (CAFR) at http://www.ocers.org/pdf/finance/cafr/2014cafr.pdf SECTION 3: GENERAL INFORMATION All terms, conditions, requirements and procedures included in the RFP must be met for a response to be qualified as responsive. A submission that fails to meet any material term, condition, requirement or procedure of this RFP may be disqualified. OCERS reserves the right to waive or permit cure of non-material errors or omissions. OCERS reserves the right to modify, amend, or cancel the terms of the RFP at any time. All responses must be submitted in accordance with the specific terms of this RFP. The submission requirements for this RFP are set forth below. In the event that none of the proposals are satisfactory to OCERS, no selection will be made. There is no express or implied obligation for OCERS to reimburse Respondents for any expenses incurred in preparing proposals in response to this RFP A proposal shall constitute an irrevocable offer for 180 business days following the deadline for submission. Reference to a certain number of days in this RFP shall mean business days unless otherwise specified. SECTION 4: MINIMUM REQUIREMENTS To be considered for the actuarial services described in the RFP, the firm must meet the following minimum requirements: 1. The firm must be a professional actuarial services firm whose primary line of business includes providing actuarial valuation, experience investigations and analysis, actuarial audits, and pension consulting services to public pension plans or similar entities of substantial size; RFP: 2015 Actuarial and Consulting Services Page 6 of 23
2. The Primary Actuary performing the work must be a Fellow of the Society of Actuaries and an Enrolled Actuary. Any Supporting Actuary must be either a Fellow of the Society of Actuaries, an Enrolled Actuary or have five years of actuarial pension consulting experience; 3. The Primary Actuary performing the services under the Contract must have a minimum of ten years of experience as an actuary providing pension consulting services experience analysis, valuation assignments and actuarial audit assignments for multiemployer retirement plans. Experience with county retirement systems under the County Employees Retirement Law of 1937 is highly desirable; 4. The firm must have all necessary permits and licenses. Liability as well as errors and omissions insurance must be in full force at the time the proposal is submitted and must be maintained throughout the term of the contract; 5. The firm must provide its own work facilities, equipment, supplies and support staff to perform the required services; 6. All actuaries performing the work must meet the professional qualification standards of the American Academy of Actuaries SECTION 5: SCHEDULE OF EVENTS Deliverable/Event Date Release RFP September 11, 2015 Deadline to submit questions September 25, 2015 Response to submitted questions posted to October 6, 2015 OCERS website Proposals Due October 19, 2015 Proposal Evaluation October 20 - November 4, 2015 Selection of finalists to be interviewed by Board November 4, 2015 Finalist Presentations and Board Selection November 16, 2015 Estimated Contract Start Date January 1, 2016 OCERS reserves the right to modify this schedule at any time. SECTION 6: SCOPE OF SERVICES OCERS seeks one qualified actuarial firm to perform the following actuarial services: 6.1 Consulting and Advisory Services 6.1.1 Consult and advise the Board of Retirement on actuarial matters or questions, which arise out of or from the operations of the System. Services may be required in person, by telephone or by written correspondence (hard copy and/or electronic). 6.1.2 Provide in-person presentations of, and public testimony on, all actuarial reports/issues to the OCERS Board of Retirement or other public bodies on any RFP: 2015 Actuarial and Consulting Services Page 7 of 23
actuarial or actuarially-related issue arising during the course of operations of the System. OCERS expects the consulting actuary to attend a minimum of five OCERS Board of Retirement meetings per calendar year to give presentations and/or answer questions, including two meetings to review the annual actuarial valuation (the first review of the draft valuation and a second meeting for the final approval). 6.1.3 Conduct educational discussions with the OCERS Board of Retirement, OCERS staff and/or OCERS Plan Sponsors and stakeholders. The presenting actuary must have the ability to discuss actuarial theory and other actuarial or pension subjects in layperson s terms. 6.1.4 Make recommendations of possible improvements in regards to OCERS Actuarial Funding Policy and the benefit structure of OCERS. 6.1.5 Keep OCERS informed of any significant regulatory, legal or legislative changes and trends with respect to the public pension industry or actuarial issues and the potential impact on the System s funding and benefit structure. This may require providing estimates of the cost of potential changes in benefit provisions for multiple plans and Rate Groups. 6.1.6 Provide actuarial consulting services for administration consultation, unusual benefit calculations, auditor requests (including an annual actuarial certification letter for inclusion in OCERS annual financial report) and actuarial project costs estimates. 6.1.7 Review, reconcile and evaluate data files OCERS will provide the actuary with all data and statistical information deemed necessary to perform specified contract services, provided the data is available in the records and files of the System. The actuary shall load all the data in their own actuarial/statistical software and reconcile it back to the OCERS database. The Actuary shall analyze the data and inquire with OCERS regarding any data anomalies that are discovered. The Actuary shall determine if the content of the information is complete and adequate to provide the specified services below and will make suggestions for modifications to ensure that the full range of data needed for costing proposed benefits or funding methods, performing actuarial valuations and reviewing experience studies is maintained. 6.2 Studies and Valuations 6.2.1 Annual Actuarial Valuation Report for Funding Purposes 6.2.1.1 Annual actuarial valuations for funding purposes are to be performed as of each December 31, beginning with the December 31, 2015 valuation. Valuations shall be prepared in accordance with Actuarial Standards of Practice and will determine funding status, funding requirements and recommend employer and employee contribution rates for the various Rate Groups. Such valuations shall consider the actual changes of economic and no-economic experience since the prior valuation. A copy of OCERS most recent Actuarial Valuation Report that provides the respondent with the minimum amount of information needed is available on OCERS website at http://www.ocers.org/pdf/finance/actuarial/valuation/2014actuarialvaluation.pdf RFP: 2015 Actuarial and Consulting Services Page 8 of 23
6.2.1.2 The Board of Retirement requires a two month process of presenting and approving the annual actuarial valuation for funding. The first presentation that the actuary gives includes key valuation results such as contribution rates by rate group (employer and employee), changes in UAAL and funding progress. The first presentation of this information occurs no later than the Board of Retirement s regularly scheduled meeting in May and allows for the Board members to ask questions and for the Plan Sponsors and stakeholders to have ample time to review the information and provide feedback or ask questions prior to the Board of Retirement approving the valuation and the contribution rates. The second and final presentation of the annual valuation shall occur no later than at the Board of Retirement s regularly scheduled meeting in June. 6.2.1.3 While maintaining the integrity of its work product, the actuary will work with staff and the Board of Retirement during the development process to provide a clear explanation and understanding of cost impacts of the assumptions used, actuarial gains and losses and the reasoning underlying the actuary s recommendations regarding contribution rates at the Rate Group and benefit level. 6.2.1.4 Actuarial Required contributions shall be calculated by Rate Group and for each benefit plan within each Rate Group. Provide the detailed components of each contribution rate including Normal, COLA and UAAL for both employers and employees. All employee contributions rates are set based on the members age at entry into the System. 6.2.1.5 Include an actuarial gains and loss analysis and prepare concise schedules and descriptions of why actuarial liabilities changed from the previous year as a result of economic and non-economic risk areas. These risks would include assumptions regarding salary/pay increases, investment return, service and disability retirements, mortality and terminations. 6.2.1.6 Perform the calculation of the unfunded actuarial accrued liability (UAAL) by Rate Group as of the valuation date. Provide a breakdown of the UAAL amortization tables for each Rate Group. 6.2.1.7 Include schedules of participant counts included in the study by Rate Group and plan. Charts and tables shall be included showing the distribution by age and service for active members, and by year of retirement by retirees. 6.2.1.8 The Valuation report shall include the Basic Disclosure elements recommended by the California Actuarial Advisory Panel for actuarial valuation reports on public retirement system in California. 6.2.2 Annual Actuarial Valuation for Reporting Purposes 6.2.2.1 The Annual Actuarial Valuation for Reporting Purposes shall provide the necessary Total Pension Liability, Fiduciary Net Position, Net Pension Liability and Pension expense and other related disclosure information in compliance with Government Accounting Standards Board Statement Number 67 Financial Reporting for Pension Plans (GASB 67). OCERS measurement date for GASB 67 is December 31 and in the first year of implementation the existing actuary used the roll-forward approach by taking the 2013 Valuation and rolling forward the liabilities to December 31, 2014. RFP: 2015 Actuarial and Consulting Services Page 9 of 23
6.2.2.2 A copy of OCERS most recent GASB 67 Actuarial Valuation which contains the minimum amount of information required can be found on OCERS website at http://www.ocers.org/pdf/finance/gasb/gasb67actuarial-valuation123114.pdf 6.2.2.3 The actuary shall also prepare the calculations of proportionate share, net pension liability by employer, pension expense and deferred inflows and outflow by employer along with related disclosures in compliance with Government Accounting Standards Board Statement Number 68 Accounting and Financial Reporting for Pensions (GASB 68). The actuary will also prepare and maintain the amortization schedules for each employer s deferred inflows and deferred outflows. 6.2.2.4 A copy of OCERS most recent GASB 68 Actuarial Valuation which contains the minimum amount of information required can be found on OCERS website at http://www.ocers.org/pdf/finance/gasb/gasb_68_valuation.pdf 6.2.2.5 In coordination with OCERS, prepare responses to questions and data request from OCERS independent auditors, Plan Sponsors and Plan Sponsors auditors regarding GASB 67 and GASB 68 valuation reports and the assumptions, methods and data used. 6.2.3 Triennial Experience Study 6.2.3.1 Perform an actuarial experience study for the period from January 1, 2014 through December 31, 2016 and prepare an actuarial investigation to consider economic and non-economic experience, assess appropriateness of assumptions and assess and recommend potential changes in experience and contribution rates. Such recommendations shall include, but are not limited to, the earnings rate, inflation rate, compensation, mortality, retirement, withdrawal, and disability experience of members and beneficiaries by Rate Group. Prepare an in-depth analysis of and provide a comprehensive model and methodology for developing an assumed rate of return to be used prospectively. Future experience studies will be performed every three years. The System s most recent experience analysis for the period ending December 31, 2013 can be found at http://www.ocers.org/pdf/finance/actuarial/experience_study/actuarial_experience_st udy_2011-2013.pdf. 6.2.3.2 Provide sufficiently detailed cost impact analysis on each Rate Group for the results of the experience study and for any recommendations for changing assumptions. 6.2.3.3 Compare actual experience for each Rate Group and compare it to the actuarial assumptions, provide a historical perspective of the experience and make any recommendations for adjustment to assumptions. 6.3 Other Actuarial Services RFP: 2015 Actuarial and Consulting Services Page 10 of 23
6.3.1.1 Determine the annual Cost of Living Adjustment (COLA) for retirement benefits based on the Consumer Price Index for the Los Angeles-Riverside-Orange County Area and update and maintain COLA bank balances for retired members. 6.3.1.2 From time to time, provide actuarial table updates to OCERS systems for benefit calculations under the plans, including those Federal and State governmental related tables necessary for system operation. 6.3.1.3 Occasional actuarial reviews of individual benefit applications (i.e. optional survivor benefit calculations, complex marriage dissolutions) and perform complex computations related to these cases. 6.3.1.4 Other actuarial related services as requested. 6.4 Actuarial Audit 6.4.1 A firm, other than the firm selected as the System s Consulting Actuary, will perform a comprehensive review of the System s actuarial assumptions and methodology for reasonableness given financial objectives of the System. The review will also include an audit of the valuation results for as many years as the firm deems appropriate based on generally accepted actuarial standards and practices. 6.4.2 The selected Consulting Actuary will work cooperatively and will be responsive to the actuary audit firm while they conduct their audit and develop their audit report. SECTION 7: OCERS POINT OF CONTACT From the date of issuance of this RFP until the selection of a vendor is completed and announced, vendors are not permitted to communicate, for any reason, with any OCERS staff member or Board Member regarding this procurement, except through the Point of Contact named herein. For violation of this provision, OCERS shall reserve the right to disqualify the offending vendor from further participation in this procurement. The Point of Contact for questions and all matters relating to this RFP is: Name: Michelle Brinker Title: Executive Secretary Address: 2223 E. Wellington Ave., Suite 100 Santa Ana, CA 92701 Telephone: (714) 569-4818 Email: ActuarialRFP@ocers.org Proposals are due by 5:00 PM PDT on October 19, 2015 and are to be received by OCERS, marked to the attention of the above-listed Point of Contact. It is the responsibility of the respondent to ensure that the proposal arrives on or before the time and date written herein. Failure to comply with this provision will result in disqualification of the RFP response. RFP: 2015 Actuarial and Consulting Services Page 11 of 23
SECTION 8: VENDOR QUESTIONS REGARDING RFP Vendors may submit questions regarding this RFP in writing to the Point of Contact named in Section through 5:00 PM PDT on Friday, September 25, 2015. E-mail is the preferred method of communication for questions. All written questions must include the name of the firm and the person submitting the question(s). A compilation of all questions and answers, along with any RFP addenda, will be posted on OCERS website, www.ocers.org, no later than 5:00 PM PDT on Tuesday October 6, 2015 SECTION 9: GENERAL PROPOSAL SUBMISSION REQUIREMENTS Respondents to this RFP should make a single submission of their proposal in the following manner: 1. An original proposal and four hard copies on standard 8.5 x 11 inch paper. All pages should be numbered and identified sequentially by section. Proposals must be bound, tabbed and indexed in accordance with the information requested in Section 10 Detail Proposal Requirements 2. One (1) CD ROM containing all required elements of the proposal as specified in Section 10 of this RFP, files should be either Microsoft Word or Adobe Acrobat PDF format. 3. Responses must be received on or prior to the deadline listed in Section 13. Note that vendor responses will be subject to disclosure to the public upon written request under the California Public Records Act. See Section 14: Notice Regarding the California Public Records Act and the Brown Act below for additional information. A standard format for proposal submission is provided herein. Adherence to this format will help ensure a fair and objective analysis of submitted proposals. The requested information is organized into individual sections, which should correspond to individual sections in the submitted proposals. Proposals must respond to each topic in the order presented, and responses should be numbered as stated in Section 10 of this RFP. OCERS reserves the right to declare as nonresponsive and reject any proposals in which information is requested and is not furnished or when a direct or complete answer is not provided. SECTION 10: DETAIL PROPOSAL REQUIREMENTS 1. Cover Letter: The cover letter must include the following: a) Legal business name, address, telephone number and business status (individual, limited liability partnership, corporation, etc.) of the Proposer. b) The person(s) authorized to represent the Proposer in negotiations with OCERS with respect to the RFP and the subsequently awarded contract. Provide the representatives name, title, address, telephone number, e-mail address and any limitation of authority for the person named. c) OCERS requires that the Proposal be valid for at least one hundred eighty (180) days from the RFP s submission deadline. Proposals that are not valid for at least 180 days will be considered non-responsive and subject to rejection. Indicate in the cover letter how long this Proposal is valid for. d) OCERS assumes no responsibility for any understanding of the Proposer or representation made by any of its Board members, executives, employees or RFP: 2015 Actuarial and Consulting Services Page 12 of 23
agents during or prior to the execution of any Contract resulting from this RFP unless: i. Such understanding or representations are expressly stated in the Contract and; ii. The Contract expressly provides that OCERS assumes the responsibility Please include a statement in the cover letter acknowledging the above. e) Clearly state if there are any exceptions to, or deviations from, the minimum proposal requirements, and any exceptions to the terms and conditions of this RFP. Such exceptions or deviations will be considered in evaluating the proposals. Proposers are cautioned that exceptions taken to this RFP may cause their proposal to be rejected. f) Signed by a person(s) authorized to bind the Proposer to all provisions of this RFP, to any subsequent changes and to the contract if an award is made. 2. Table of Contents: Table of Contents should list the sections included in the Proposal. 3. Questionnaire: Provide responses to the following questions and requests for information: a) Provide a description of your firm including: i. Year firm was formed and began providing actuarial consulting services to institutional clients and brief history of the firm s involvement in the actuarial consulting business ii. Ownership structure and affiliations, if any ownership changes are planned or anticipated please include pertinent information on such changes. Also include any succession planning for the retirement of key executives iii. List the locations of the firm s offices from which actuarial consulting services are provided. For each office, provide the function(s) performed and the number of professionals in that office. Indicate which office will be primarily responsible for servicing OCERS account. iv. Description of the scope of services the firm provides. What are the firms consulting specialties, strengths and limitations? What distinguishes your firm from your competitors? v. Annual revenues of the firm, percentage of firm s revenue from actuary consulting services vi. Organization Charts vii. One that diagrams the ownership of your firm and any interrelationships between the parent-subsidiary, affiliate and joint venture entities One that depicts the structure of the actuarial consulting group and identifies the key personnel and other people that will be involved in providing services to OCERS. Indicate the total number of actuaries employed by the firm. Provide biography/profile/resume for each key manager/officer/principal of the firm RFP: 2015 Actuarial and Consulting Services Page 13 of 23
viii. ix. Describe the turnover in key professional personnel in each of the last five years. Indicate the number of people lost and/or hired in the following areas: (1) actuaries (2) key technical personnel. Has any officer or principal of your organization been involved in litigation or legal proceedings related to any actuarial or other consulting activities? If so, provide a brief explanation and indicate the current status of proceedings. x. Has your firm, within the last ten years been censured or fined by any regulatory body? If so, please indicate the dates and describe the situation. xi. xii. xiii. xiv. Briefly summarize your philosophy relating to the consultant s relationship with Boards and individual Board Members, staff, legal counsel etc. List and describe any professional relationship your firm or any of your actuarial consulting group staff have with any member of the OCERS Board of Retirement, OCERS staff or legal counsel, or OCERS Plan Sponsor. Please indicate your experience with major disruption(s) of your business and how they impacted your clients. Please provide a copy of your Business Continuity Plan (BCP) as an appendix to your response. If you do not have a formal BCP, indicate what contingencies your firm has made to address potential disruptions to client services in the event of a natural or man-made disaster, or pandemic. Why should OCERS hire your firm? What is the firm s competitive advantage? Why is your firm the most qualified to perform the services being requested by OCERS? b) Actuarial Services Staffing Proposal i. List the name, title and office location of the primary individual(s) who would be responsible for the OCERS account. ii. Provide biography/profile/resume for each person identified above. iii. For the each individual assigned to OCERS, provide a description of his/her responsibilities within the firm, years of relevant experience for this engagement, years with the firm, degrees and professional designations (and the name of the awarding institution) and any publications authored. iv. Describe what role each key person will play in providing the required OCERS services v. For the primary Actuary and all secondary Actuaries list their actuarial valuation assignments for the past five years. Include for each assignment the date of final report, whether the Actuary served as the primary or secondary Actuary, and the client s name and size (number of pension plan members and annuitants). RFP: 2015 Actuarial and Consulting Services Page 14 of 23
vi. For the Primary Actuary and all Secondary Actuaries, state the length of time these individuals have all worked together as a team. Also indicate the number of client relationships each is currently involved managing. c) Qualifications i. Provide evidence that your firm meets the minimum required qualifications (See Section 4). ii. Provide evidence that demonstrates that the Primary Actuary assigned to the OCERS account meets the minimum required qualifications (See Section 4). This can be provided with the resume and professional credentials included in item b) i. above). iii. Provide evidence that demonstrates that any Supporting Actuaries assigned to the OCERS account meet the minimum required qualifications (See Section 4). This can be provided with the resume and profession credentials included in item b) i. above. d) Methodology i. Describe your understanding of the scope and level of services required by this RFP (See Section 6) and provide a description of the specific methodology to be used for providing the scope of services. ii. Provide a timeline for completion of the work identified in Section 6 of this RFP. Include proposed dates for each key stage or event of the project, indicate dates by which your firm must have specific input data from OCERS and indicate points in the project when your firm would plan to meet with OCERS staff. Include a summary of the information which will be needed to complete the investigation and annual valuations. Specify the format and medium of transmission of data. iii. Describe the firm s theory and methodology used in recommending an appropriate actuarial cost method for a public pension fund. iv. Describe the firms theory and methodology for development of actuarial assumptions (expect for the interest rate assumption, which should be addressed separately). v. Describe the methodology you use to formulate a recommendation for a pension fund s actuarial interest rate assumption. How may this methodology vary from client to client? vi. Describe your firm s approach to recommendations regarding the amortization of unfunded liabilities. vii. Describe you firm s approach to measuring funded status and funding progress in order to facilitate the assessment of trends over several valuations of a client. viii. Describe the capabilities of your valuation system(s) and your computer system support. RFP: 2015 Actuarial and Consulting Services Page 15 of 23
ix. Describe the firm s quality control processes for actuarial valuation reports and recommendations. How are these services monitored and reviewed? x. Provide as an appendix to your proposal a sample of your firm s actuarial valuation report for funding purposes. xi. Provide as an appendix to your proposal a sample of your firm s actuarial valuation report for reporting purposes (both GASB 67 & GASB 68). e) Relevant Experience i. Complete the table below, reporting only those client relationships with full service actuarial consulting similar to this mandate: Total actuarial consulting clients Pension plan actuarial consulting clients Public pension plan actuarial consulting clients Total Number as of December 31 2010 2011 2012 2013 2014 ii. iii. iv. For all current public pension plan clients, state the client s name, the first year of your initial contract with the plan, and their asset and membership size as of their most recent valuation date. Designate which of the clients are multi-employer plans List of full service actuarial consulting clients that terminated their contract or significantly/materially reduced their business relationship with your firm in the last five years. Include the client s name, size (number of pension plan members and annuitants), date of contract termination, and reason(s) for contract termination or reduced scope. Within the last five years, has your firm been notified by any actuarial consulting services client that your firm is in default of its contracts, or that conditions exist endangering continuation of that contract? If so, state the client s name, year the notice was received, reason(s) for the notice, and resolution or current status of the relationship. v. Have your firm s actuarial consulting services products been audited by another actuarial firm within the last five years? If so, state the number of such audits, name of auditing firm and whether any resulted in revisions to your clients annual valuation results, actuarial assumptions, or actuarial cost methods. 4. Compensation/Fee Proposal: provide your firms fee proposal in the following format (note: failure to use the proposed format could result in disqualification of the Proposal) RFP: 2015 Actuarial and Consulting Services Page 16 of 23
Fee Proposed Service Provided Year 1 Year 2 Year 3 Consulting and Advisory Services (as stated in Section 6.1) Annual Actuarial Valuation for Funding Annual Actuarial Valuation for Reporting (GASB 67) Annual Actuarial Valuation for Reporting (GASB 68) Triennial Experience Study Total fixed fee proposal As-Needed Other Actuarial Services Loaded Fully Burdened Hourly Rate Class of Personnel Year 1 Year 2 Year 3 5. References: Provide three (3) references of other organizations similar in size and need of the scope of services required by this RFP for which the Primary Actuary and Secondary Actuary to be assigned to the OCERS account have provided full service actuarial consulting services. For each reference include client name, address, telephone number, name of contact and email address. 6. Proposed contract: provide a copy of your company s standard professional services contract. Please indicate if there are any terms in the contract that are not negotiable. 7. If applicable, a description of additional services your company offers which are not covered within this document. SECTION 11: REVIEW AND EVALUATION OF PROPOSALS OCERS will convene a review panel consisting of OCERS staff to evaluate all proposals and develop recommendations. Proposals will be evaluated on the quality of responses to all of the items included in Section 10. The following weighted factors will be considered when evaluating the responses: Firm s Experience, Capabilities and References 30% Quality and Experience of Assigned Professional Personnel 25% RFP: 2015 Actuarial and Consulting Services Page 17 of 23
Communication and Quality of Proposal submitted 25% Fee Proposal 20% One or more of the respondents may be selected as a finalist. Finalists will be required to make an oral presentation to the Board of Retirement on Monday, November 16, 2015. The Board of Retirement will make their selection based on the quality and responsiveness of the oral presentation and the information provided in the written proposal. SECTION 12: RIGHT TO REJECT PROPOSAL By submitting a proposal, vendors acknowledge that they have read this RFP, understand it, and agree to be bound by its requirements unless clearly and specifically noted in the response submitted. OCERS reserves the right without prejudice to reject any and all responses. OCERS reserves the right to modify the terms and requirements of this RFP. Any such changes or corrections will be posted on OCERS website, available at www.ocers.org. SECTION 13: INCOMPLETE RESPONSES If the information in the firm s response is deemed to be insufficient for evaluation, OCERS reserves the right to request additional information or to reject the submittal outright. False, incomplete or unresponsive statements in connection with a submittal may be sufficient for its rejection. The selection of the fulfillment of the requirements will be determined by OCERS and such judgment shall be final. SECTION 14: ADDENDA OCERS may modify the RFP prior to the date fixed for submission by posting, mailing, emailing or faxing an addendum to the bidders known to be interested in submitting a proposal. If any bidder determines that an addendum unnecessarily restricts its ability to bid, it must notify OCERS in writing no later than three (3) days before the deadline for submitting proposals. Failure of a bidder to receive or acknowledge receipt of any addendum shall not relieve the bidder of the responsibility for complying with the terms thereof. SECTION 15: NOTICE REGARDING THE CALIFORNIA PUBLIC RECORDS ACT AND THE BROWN ACT The proposal your firm submits in response to this RFP will become the exclusive property of OCERS. It will not be returned to you, and it will be subject to public disclosure pursuant to the California Public Records Act (Cal. Gov. Code Sections 6250 et. seq., the Act ). The Act provides generally that all records relating to a public agency s business are open to public inspection and copying, unless specifically exempted under one of several exemptions set forth in the Act. If you believe that any portion of your proposal is exempt from public disclosure under the Act, such portion must be marked TRADE SECRET, CONFIDENTIAL, or PROPRIETARY. OCERS will deny public disclosure of any portions so designated, provided that such designation is, in OCERS reasonable discretion, in accordance with applicable law. Proposals marked TRADE SECRET, CONFIDENTIAL, or PROPRIETARY in their entirely will not be honored, and OCERS will not deny public disclosure of all or any portion of proposals so marked. By submitting a proposal with specifically selected portions marked RFP: 2015 Actuarial and Consulting Services Page 18 of 23
TRADE SECRET, CONFIDENTIAL, or PROPRIETARY you represent you have a good faith belief that such material is exempt from disclosure under the Act, and you agree to reimburse OCERS for, and to indemnify, defend and hold harmless OCERS, its officers, fiduciaries, employees and agents from and against: (a) any and all claims, damages, losses, liabilities, suits, judgments, fines, penalties, costs and expenses including, without limitation, attorneys fees, expenses and court costs of any nature whatsoever (collectively, Claims ) arising from or relating to OCERS non-disclosure of any such designated portions of your proposal; and (b) any and all Claims arising from or relating to OCERS public disclosure of any such designated portions of your proposal if OCERS reasonably determines disclosure is deemed required by law, or if disclosure is ordered by a court of competent jurisdiction. In addition to the foregoing, OCERS Board and committee meetings are subject to California open-meeting requirements set forth in the Ralph M. Brown Act (Gov. Code 54950-54962) (the Brown Act ). Your proposal and/or contract (if your firm is selected as a finalist) may be presented or discussed at a public meeting of the OCERS Board of Retirement (or at a Board committee meeting). Among other things, that means that, regardless of whether you mark portions of your proposal as TRADE SECRET, CONFIDENTIAL, or PROPRIETARY, that information may be discussed or presented at a meeting that is open to the public under the Brown Act. OCERS appreciates your time and looks forward to receiving your proposal. All RFP packages should be submitted to: Orange County Employees Retirement System Attention: Michelle Brinker 2223 E. Wellington Ave., Suite 100 Santa Ana, CA 92701 RFP: 2015 Actuarial and Consulting Services Page 19 of 23
APPENDIX A: ORGANIZATION CHART RFP: 2015 Actuarial and Consulting Services Page 21 of 23
Organizational Chart Board of Retirement Chief Executive Officer Director of Internal Audit Executive Secretary I Chief Investment Officer Assistant CEO External Operations Chief Legal Officer Assistant CEO Finance & Internal Operations Internal Auditor Staff Specialist Secretary II Director of Investment Operations Investment Officer Investment Analyst Director of Member Services Communications Manager Staff Specialist (1) Staff Attorney (3) Director of Finance Director of Administrative Services Director of Information Technology Staff Specialist (1) Staff Assistant (1) Member Services Manager Member Services Manager Disability Coordinator Senior Staff Development Specialist Finance Manager Finance Manager Finance Manager Staff Assistant PT (1) Store Clerk (1) IT Manager IT Supervisor Operations IT Supervisor Programming Member Services Supervisor Member Services Supervisor Account Technician (1) Sr. Account Assistant (1) Accountant Auditor II (1) Vacant Accountant Auditor II (1) Accountant Auditor II (1) Senior Applications Developer (1) IT Project Contractors (11) Information Technologist II (1) Network Engineer II (1) Systems Programmer Analyst II (2) Senior Retirement Program Specialist (1) Retirement Program Specialist (7) Office Technician (3) Office Specialist (1) Benefits Technician (2) Accounting Technician (2) Disability Investigator (2) Office Specialist (2) Account Technician (1) Systems Engineer II (1) RFP: 2015 Actuarial and Consulting Services Page 23 of 23