PBGC Pays State Street $66M for Paying Agent Services Over 6 Years

Contract Overview

Contract Amount: $66,173,762 ($66.2M)

Contractor: State Street Corporation

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2006-10-01

End Date: 2012-09-30

Contract Duration: 2,191 days

Daily Burn Rate: $30.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE

Sector: Other

Official Description: COO - BAPD PAYING AGENT SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20005

State: District of Columbia Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $66.2 million to STATE STREET CORPORATION for work described as: COO - BAPD PAYING AGENT SERVICES Key points: 1. The contract awarded to State Street Corporation for paying agent services represents a significant expenditure for the Pension Benefit Guaranty Corporation (PBGC). 2. The services provided fall under financial transaction processing, reserve, and clearinghouse activities, a critical function for managing pension obligations. 3. The fixed-price award fee contract structure suggests an attempt to control costs while incentivizing performance. 4. The duration of the contract (6 years) indicates a long-term need for these specialized financial services.

Value Assessment

Rating: fair

The contract's fixed-price award fee structure aims for cost control. However, without specific performance metrics or benchmarks for paying agent services, it's difficult to definitively assess value for money. The total award value of $66.17 million over six years needs to be compared against industry standards for similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive sign for price discovery and potentially achieving a competitive price. The specific details of the bidding process and the number of bidders are not provided, which limits a deeper analysis of the competitive landscape.

Taxpayer Impact: The use of full and open competition suggests efforts to secure a reasonable price for taxpayers. However, the total cost of over $66 million warrants scrutiny to ensure efficiency and avoid overpayment for the services rendered.

Public Impact

Taxpayers are indirectly impacted through the PBGC's mission to protect defined benefit pension plans. Efficient financial operations are crucial for the PBGC to manage its liabilities and ensure timely payments to beneficiaries. The use of a large financial institution like State Street indicates reliance on established infrastructure for complex financial transactions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics for award fee assessment.
Limited transparency on the competitive bidding process beyond 'full and open'.

Positive Signals

Awarded under full and open competition.
Contract aims to manage costs through fixed-price award fee structure.

Sector Analysis

The financial services sector, particularly in areas like paying agent services and financial transaction processing, is characterized by high specialization and significant regulatory oversight. Benchmarks for such services can vary widely based on the complexity and volume of transactions managed.

Small Business Impact

The data does not indicate any specific provisions or considerations for small businesses in this contract award. The nature of paying agent services often requires the scale and infrastructure typically found in larger financial institutions.

Oversight & Accountability

The contract's duration and significant value suggest it would be subject to standard oversight mechanisms within the PBGC and potentially the Office of Management and Budget. However, specific oversight activities or reports are not detailed in the provided data.

Related Government Programs

Financial Transactions Processing, Reserve, and Clearinghouse Activities
Pension Benefit Guaranty Corporation Contracting
Pension Benefit Guaranty Corporation Programs

Risk Flags

Potential for cost overruns if award fee structure is not rigorously managed.
Lack of transparency on specific performance metrics.
Long contract duration may reduce flexibility to adapt to changing market conditions.
Limited insight into the competitive intensity of the bidding process.

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $66.2 million to STATE STREET CORPORATION. COO - BAPD PAYING AGENT SERVICES

Who is the contractor on this award?

The obligated recipient is STATE STREET CORPORATION.

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $66.2 million.

What is the period of performance?

Start: 2006-10-01. End: 2012-09-30.

How does the $66.17 million cost compare to industry benchmarks for similar paying agent services provided to pension funds of comparable size and complexity?

Assessing the value for money requires comparing the contract's total cost against industry benchmarks for paying agent services. Without specific data on the volume and complexity of transactions managed by State Street for PBGC, a precise benchmark is difficult. However, for large pension funds, annual costs for such services can range from hundreds of thousands to millions of dollars, depending on the scope. A detailed analysis would involve examining the specific services rendered and comparing them to fee structures of other major financial institutions offering similar services.

What are the key performance indicators (KPIs) tied to the award fee component of this contract, and how were they measured?

The provided data indicates a 'fixed price award fee' contract type, suggesting performance incentives. However, it does not specify the key performance indicators (KPIs) used to determine the award fee. Understanding these KPIs is crucial for evaluating whether State Street met performance expectations and if the award fee component truly reflects value delivered. Without this information, it's challenging to assess the effectiveness of the incentive structure in driving optimal service delivery and cost efficiency.

What was the competitive landscape during the 'full and open competition' for this contract, and did multiple bids significantly drive down the price?

While the contract states 'full and open competition,' the provided data lacks details on the number of bids received or the pricing strategies of competing firms. A robust competitive process, with multiple qualified bidders, typically leads to more favorable pricing for the government. Further investigation into the solicitation documents and award decision would be needed to confirm the extent of competition and its impact on the final negotiated price of $66.17 million.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Financial Transactions Processing, Reserve, and Clearinghouse Activities

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Address: ONE LINCOLN ST, BOSTON, MA, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $74,000,000

Exercised Options: $74,000,000

Current Obligation: $66,173,762

Timeline