REQUEST FOR PROPOSAL

REQUEST FOR PROPOSAL INVITATION TO SUBMITT A PROPOSAL FOR THE APPOINTMENT OF A PANEL OF FUND MANAGERS DATE PUBLISHED IN GOVERNMET TENDER BULLETIN 13 JUNE 2014 RFP NO.: NHBRC IAC/1117/2014 CLOSING DATE: 09 JULY 2014 CLOSING TIME: 11H00 NAME OF COMPANY: RFP: NHBRC IAC/1117/2014 Page 1

TABLE OF CONTENTS PAGE NO. 1. TERMS AND CONDITIONS TO BE TAKEN INTO ACCOUNT BY SERVICE PROVIDERS... 3 2. PART A NHBBRC BACKGROUND... 5 3. PART B TERMS OF REFERENCE... 8 4. PART C EVALUATION PROCESS... 11 5. PART D RFP SUBMISSION INSTRUCTIONS... 15 6. PART E ADDENDUMS TO THE RFP... 17 RFP: NHBRC IAC/1117/2014 Page 2

TERMS AND CONDITIONS TO BE TAKEN INTO ACCOUNT BY SERVICE PROVIDERS This Request for Proposal (RFP) has been compiled by the NHBRC and it is made available to the Bidders on the following basis. Bidders submitting a Bid in response to this RFP are deemed to do so, on the basis that they acknowledge and accept the terms and conditions set out below: 1. The NHBRC reserves the right to amend, modify, withdraw this RFP or any of the procedures or requirements set out herein at any time without prior notice and without liability to compensate or reimburse any person. If the NHBRC amends this RFP, the amendment will be sent to each Bidder in writing or publicized as the case maybe. No oral amendments by any person will be considered or acknowledged. 2. The premises of the bidder should be open at all reasonable hours for inspection by representatives of the NHBRC. This is done in order to confirm any information provided by a Bidder in the RFP Bid. 3. This RFP is not intended to form the basis of a decision to enter into any transaction involving the NHBRC, and does not constitute an offer or recommendation to enter into such transaction, or an intention to enter into any legal relationship with any person. 4. A Bid submitted in response to this RFP will constitute a binding offer which will remain binding and irrevocable for a period of six months from the date of submission to the NHBRC. The offer constituted by the Bid will be deemed not to have been accepted and no agreement will be deemed to be reached with any Bidder, unless and until a definitive Agreement and other related transaction documents are concluded between the NHBRC and the Preferred Bidder. 5. Neither the NHBRC nor any of their respective directors, officers, employees, agents, representatives or advisors will assume any obligation for any costs or expenses incurred by any party in or associated with preparing or submitting a Bid in response to the RFP. All costs associated with the preparation and submission of the Bid is the responsibility of the Service Provider. The costs shall not be chargeable to the NHBRC by successful or unsuccessful Bidder. 6. No entity may be involved, whether directly or indirectly, in more than one Bid in response to this RFP. A failure to comply with this requirement may, within the sole discretion of the NHBRC, result in disqualification of the relevant entity. 7. Any material change in the control and/or composition of any Bidder or any core member of a Bidder after submission of a Bid, shall require the prior written approval of the NHBRC, and any failure to seek such approval from the NHBRC shall result in the NHBRC being entitled, in its sole discretion, to exclude the relevant Bidder from any further participation in the bid process. The NHBRC shall be the sole arbiter as to what constitutes a material change in the control and/or composition of any Bidder, and as to what constitutes a core member of a Bidder for purposes of such approval. Any request for such approval shall be made to the NHBRC in writing and shall provide sufficient reasons and information to allow the NHBRC to make an informed decision. The NHBRC reserves the right to accept or reject any such request for approval at its sole discretion. RFP: NHBRC IAC/1117/2014 Page 3

8. The NHBRC and its advisors may rely on a Bid as being accurate and comprehensive in relation to the proposals provided therein by the Bidders. 9. All bids information submitted to NHBRC will become the property of the NBHRC and will as such not be returned to the bidder. The NHBRC will make all reasonable efforts to maintain proposals in confidence. Proprietary information should be identified as such in each proposal. 10. RFP shall be considered irregular if they show any omissions, alteration of form, additions, or conditions not called for, or irregularities of any kind. However, the NHBRC reserves the right to waive any irregularities and to make award in the best interest of the company. 11. The NHBRC reserves the right to appoint one or more service providers. 12. RFP s shall be rejected, among other reasons, for any of the following: RFP s received after the closing date and time as specified. Collusion among bidders and upon detecting that the B-BBEEE status level of contribution has been claimed or obtained in a fraudulent manner. Incomplete work that in the judgment of the company shall prevent or hinder the prompt completion of additional work, if awarded. All Bids must be formulated and submitted in accordance with the requirements of this RFP. RFP: NHBRC IAC/1117/2014 Page 4

PART A NHBBRC BACKGROUND 1. About NHBRC 1.1. Mandate of the NHBRC in terms of the Housing Consumers Protection Measures Act. 1.2. The National Home Builders Registration Council (NHBRC) has a mandate through the Housing Consumer Protection Measures Act (Act No. 95 of 1998) providing warranty protection against defects in new homes. The Act state that the objects of the Council are, inter alia: 3(b) 3(d) 3(e) to regulate the home building industry ; to establish and promote ethical and technical standards in the home building industry ; and to improve structural quality in the interests of housing consumers and the home building industry ; The Council is furthermore empowered by the Act: 5(5)(a) 5(5)(b) 5(5)(c) 5(h) to engage in undertakings to promote improved structural quality of homes constructed in the Republic; to engage in undertakings to improve ethical and technical standards in the home building industry; to keep a record of competent persons ; and to generally do all things necessary or expedient to achieve its objects and the objectives of this Act. 2. Risk Management by the NHBRC The NHBRC's primary mandate is to manage the risk of structural defects in the home building industry and in so doing, protect the consumer. A prime activity of the NHBRC is to manage its risk exposure in terms of the warranty scheme, in order to ensure that it is not unduly exposed to claims. The current risk management tools being used by the Council include the Registration of Home Builders, enrolment and inspection of homes, the Home Building Manual which incorporates design and construction rules and the appointment of competent persons by the Home Builder to perform certain tasks. RFP: NHBRC IAC/1117/2014 Page 5

3. Business overview The National Home Builders Registration Council is a statutory body with the responsibility to provide warranty cover (protection) and regulatory services to the home-building industry. This is done in terms of the Housing Consumers Protection Measures Act (No 95 of 1998). It is the NHBRC s mandate to provide protection to housing consumers against defined defects and to regulate the home building industry. Our mandate determines our scope of business as well as the principles and area of business in which we operate. As a consequence our business is focused on specific business models in defined geographical areas with specific business objectives for all South African Housing Consumers. The NHBRC is a medium sized organization with a staff complement of 420 employees. The NHBRC s Head Office is located in Sunninghill, Gauteng with 10 (Ten) regional offices of varying size, and 12 (twelve) satellite offices. RFP: NHBRC IAC/1117/2014 Page 6

NHBRC Office locations and number of user connection points No. OFFICES 1 Head Office (Sunninghill) 2 DR site (at Pretoria regional office) 3 KwaZulu Natal(Durban) Regional 4 Western Cape (Cape Town) Regional 5 Eastern Cape (Port Elizabeth) Regional 6 North West (Rustenburg) Regional 7 Limpopo (Pietersburg) Regional 8 Mpumalanga (Nelspruit) Regional 9 Gauteng (Woodmead) Regional 10 Pretoria (Pretoria) Regional 11 Free State (Bloemfontein) Regional 12 Shelly Beach 13 New Castle 14 East London 15 George 16 Northern Cape (Kimberly) 17 Klerksdorp 18 Tzaneen 19 Bela-Bela 20 Witbank 21 Bethlehem 22 Mafikeng 23 Eric Molobi (Shoshanguve) RFP: NHBRC IAC/1117/2014 Page 7

PART B TERMS OF REFERENCE 1. BACKGROUND 1.1. The NHBRC seeks proposals from investment management firms with appropriate expertise for the management of NHBRC s investment portfolio in compliance with the approved Investment Policy and Investment Strategy. 1.2. The proposals are required in respect of the following asset classes: I. Bond mandates; II. Equity Mandates; III. Money Market Mandates. IV. Structured Product 2. PORTFOLIO DESCRIPTION 2.1. The NHBRC s portfolio is a diversified local (South Africa) portfolio having a total market value R 4,5 billion as at 30 April 2014. The corresponding allocation of the investments into various asset classed is as follows: Mandate Number of managers Percentage allocation Equity 2 14% Bond 2 22% Money Market 4 50% Structured Product 2 14% 3. SCOPE OF THE SERVICE 3.1. The NHBRC continually seeks to employ investment Management firm who possess superior capabilities in the management of the assets for public funds. The NHBRC further requires those investment Management firms selected and working on its behalf to perform the following functions: 3.1.1. To manage the portfolio using their best professional judgment in the best interests of the NHBRC to meet the agreed investment objectives. 3.1.2. To select brokerage firms that are to act as a securities broker with respect to the purchase and sale of assets of the NHBRC. Any entity RFP: NHBRC IAC/1117/2014 Page 8

controlled by the investment manager, or affiliate with it, shall not act as a securities broker with respect to purchases and sales of assets allocated to the Fund, unless NHBRC specifically approves such action. Subject at all times to compliance with its fiduciary obligations, the investment manager shall select such firm or firms in accordance with NHBRC s policy on goals for the utilization of BBBEEE compliant broker-dealers as set forth in the Supply Chain Management Policy. Our current BBBEE brokerage utilization goal reads as follows: The goal of the NHBRC is to allocate not less than 20% of brokerage from actively managed segregated account portfolios to Majority black owned, women owned business and broker dealers of people living with disability broker/dealers. This goal will be reviewed annually. 3.1.3. In the selection of broker-dealers with whom to place orders for the purchase or sale of securities for the NHBRC, the primary objective of the investment Management firm shall be to obtain the most favourable results. The investment manager s selection of a broker-dealer may take into account such relevant factors as (1) price and/or commission; (2) the broker-dealer s facilities, reliability and financial responsibility; (3) the ability of the broker-dealer to effect securities transactions, particularly with respect to such aspects as timing, order size, execution of orders and the ability to complete a transaction through clearance, settlement and delivery; and (4) the research and other services provided by such broker-dealer to the investment manager which are expected to enhance general portfolio management capabilities, notwithstanding the fact that the NHBRC may not be the direct or exclusive beneficiary of such services. 3.2. Reporting The recommended Fund Management Firm will be expected to report to the Fund Advisory and Finance Committee on monthly basis as follows i. composition and relative performance, both gross and net of fees, of the investments in their designated portfolios; ii. investment outlook for the near and long term; significant changes in the portfolio during the month; and iii. reasons for any significant differences between the performance of their portfolios and the appropriate market indices or other performance benchmarks established by the NHBRC and the investment manager; iv. Additional responsibilities as detailed in each investment manager's agreement with the NHBRC. RFP: NHBRC IAC/1117/2014 Page 9

4. SELECTION PROCESS (i) The Bid Evaluation Committee shall objectively review the proposal s to identify qualified firms based solely on the criteria presented in the RFP. The Bid Evaluation committee may require the firms to present to the Committee, Interview all, some or none of the firms, undertake site visits to the firms. Offices and conduct such other due diligence as is prudent under the circumstances. 5. EVALUATION CRITERIA 5.1. During the selection process all respondents to the RFP will be evaluated and ranked on four primary factors: 5.1.1. Company - stability of the organization, ownership structure; 5.1.2. People - documented experience of key professionals; 5.1.3. Process - clearly defined, reasonable and repeatable investment strategy; 5.1.4. Performance - documented ability to meet investment performance benchmarks; 5.1.5. Pricing - fee schedule and associated costs. 6. Duration of the Panel. 6.1. The duration of the panel is one year depending of the performance of Fund Management firms 7. FEE STRUCTURE SERVICES FEES (INCL) VAT FULL ASSET MANAGEGEMT FEES Management of the Funds of the NHBRC Reporting on the portfolio structure and performance Reporting on the Investment outlook for the near and long term. RFP: NHBRC IAC/1117/2014 Page 10

PART C EVALUATION PROCESS In accordance with the Preferential Procurement Regulations, 2011, the bid evaluation process shall be carried out in two stages namely: Stage 1 : Evaluation of Functionality 1. Stage 1 : Evaluation of Functionality Functionality of bids will be evaluated according to the evaluation criteria set out in the bid documents- Terms Of Reference Error! Reference source not found. below. The minimum qualifying score for functionality is 70 percent (%) as set out below. Bidders who fail to achieve the minimum qualifying score for functionality will be disqualified from the bidding process/from the panel. Fund management firms may be required to do a presentation. The panel members will individually evaluate the bids received for functionality against the following criteria as set out below: The service provider must provide a proposal with the following headings: RFP: NHBRC IAC/1117/2014 Page 11

Factors Maximum points variable A Organisational Issues 31 Company 1 Provide your company ownership structure broken out by each individual and entity. Clearly identify BEE entities in your structure, if any. 7 2 Give details of recent changes or planned changes in the ownership structure. 3 Provide actual staff statistics for your compliance with Employment Equity Act of 1998. 1 7 Assets under management 4 Provide a breakdown of third party assets under management by mandate type. 5 Provide the size of third party assets gained over the past three years by mandate type. 6 Provide the size of third party assets terminated over the past three years by mandate type, give reasons for termination. 2 2 1 Indemnity cover 7 Provide the name of the insurance company, the rand amount of coverage and the coverage period. 2 8 What is the excess amount payable per claim. 2 9 What is the maximum amount claimable per event/ individual client. 2 Manager alternative business 10 Disclose any other sources of revenue other than third party asset management. 5 What percentage of total revenue is earned from the above stated source of revenue. B Investment philosophy and process 17 11 Describe in detail the investment philosophy and process employed by the 17 investment team in the management of the product. Include a description of how individual research ideas make it or don t make it to the portfolio. Describe any changes to the philosophy or process over the last three years, give reasons for changes. C Investment professionals 11 12 Give names of key decision makers in the management of the portfolio 6 including years experience. 13 Describe the structure of the bond investment management team. Include the following information: -Lead portfolio manager; -Portfolio manager s backup; -Role of each individual involved in decision making. 5 RFP: NHBRC IAC/1117/2014 Page 12

D Organisational Issues 2 14 How does your company ensure a stable work force? Give details of remuneration structure, incentives, rentention strategy, and succession planning. 2 E Performance factors 13 15 Rolling 1 year historical performance relative to benchmark >0, over 60% of 6 the time. Historical performance relative to the benchmark. 16 Rolling 1 year historical performance relative to peers>0, over 60% of the time. Historical performance relative to peers. 17 GIPS compliance. 1 F Operations 26 Outsourced admin 18 Give details of administration outsource partner if any, including a description of outsourced services. Give details of administration services retained inhouse, if any. or Insourced admin 19 Describe administrative systems utilised in your company. Specify if vendor system or inhouse developed. Specify frequency of replacement/upgrading. 20 Provide size of your administrative team (team size and ratio to number of clients). Provide number of individuals with accounting background in your team. Reporting 21 After how many days into the new month are the monthly reports presented to clients. Portfolio compliance 22 What systems are in place to ensure that portfolio managers are within their client mandates? Identify individuals responsible for the function. 6 2 4 11 3 Backup/ Recovery 23 How often do you perform a complete backup of all files? 4 24 In the event of a disaster, how long would it take to become fully functional? 2 Minimum Qualifying Score 70 TOTAL 100 18 and 19: a fund manager can only score under on one of the two criteria, since they can only fall into one category Table 1: Evaluation Criteria. RFP: NHBRC IAC/1117/2014 Page 13

Each panel member will rate the above-mentioned criteria using the following values: Value Description 5 Excellent Meets and exceeds NHBRC functionality requirements 4 Very Good Above average compliance to requirements 3 Good Satisfactory and should be adequate for stated element 2 Average Below average compliance to requirements 1 Poor Unacceptable, does not meet criteria The points for the panel members as well as for the reference questionnaire will be added and expressed as a fraction of the best possible score for each particular criterion as set out above. RFP: NHBRC IAC/1117/2014 Page 14

PART D RFP SUBMISSION INSTRUCTIONS 1. Availability of the RFP Document 1.1. Bid documents will be available from the 13 th June 2014, on NHBRC website Bid Number: NHBRC 1117/2014 Province Physical Address & Contact Number Head Office, Gauteng 5 Leeuwkop Road Sunninghill, Johannesburg Tel: 011 317 0000 2. Compulsory Briefing Session 2.1. Head Office. The Compulsory briefing session, which is mandatory to attend, shall be conducted at NHBRC Please note that Service Providers who do not attend shall be disqualified Date Bid No. Address Time (Briefing session) 20 th June 2014 NHBRC IAC/1117/2014 5 Leeuwkop Road Sunninghill, Johannesburg Tel: 011 317 0000 11H00 Suppliers are requested to bring along the RFP document to the briefing session, as the details of the specifications are captured therein. 3. RFP Closing Date 3.1. All Bid documents must be deposited into the Bid box situated at the NHBRC Head Office, NHBRC Central Office, 5 Leeuwkop Road, Sunninghill, Johannesburg on or before 09 July 2014, at 11h00 am. No late proposals will be accepted RFP: NHBRC IAC/1117/2014 Page 15

3.2. Bid documents should be marked for Attention: Supply Chain Manager, and deposited into the Bidboxes at the NHBRC Head Office, 5 Leeuwkop Road, Sunninghill, Johannesburg. No emailed or faxed Bids will be accepted. The Bid document should be supplied in a sealed envelope and clearly marked with the Bid number and the full name of the service provider. 4. Validity 4.1. The validity period of the Bid shall be for the duration of 90 days 5. Enquiries should be directed to: 1 = Kabelo Phalane Tel. 011 317 0448,email: kabeloph@nhbrc.org.za 2 = Tshiwela Madzaga Tel. 011 317 0281, email: tshiwelam@nhbrc.org.za 6. NUMBER OF BID ENVELOPES/FILES TO BE DEPOSITED: Submission of bid envelopes/files MUST include ONE (1) Original Copy of the submission and FOUR (4) copies of the submission. A Total of FIVE (5) envelopes/files per bidder. RFP: NHBRC IAC/1117/2014 Page 16

PART E ADDENDUMS TO THE RFP The following documents as listed will be made available with the distribution of the RFP. DOCUMENTS TO BE SUBMITTED No. Please note; the items marked with an (X) are mandatory requirements and failure to meet the requirements will result in your bid being disqualified. 1. Original and valid B-BBEE Status Level or certified copy 2. X SBD2 (Tax Clearance Certificate) Certificate must be original and valid 5. X SBD 4 (Declaration of interest) (Make sure it is signed) and thoroughly completed) SBD 6.1 (Preference claim in terms of the Preferential Procurement 6. X Regulations, 2011) Must be signed regardless if points are claimed or not. (Make sure it is signed and thoroughly completed) 7. X SBD 8 (Declaration of Bidder s past supply chain management practices) (Make sure it is signed and thoroughly completed) 8. X SBD 9 (Certificate of independent bid determination Make sure it is signed and thoroughly completed ) 9. SBD 7.1 General Conditions of the contract (GCC) 10. X FSB (Financial Services Board), FAIS (Financial Advisory and Intermediary Service), and other relevant bodies. Yes/No 11 X Supplier data base forms 12 Other documents as mentioned in the bid terms of reference RFP: NHBRC IAC/1117/2014 Page 17