NEUBERGER BERMAN INVESTMENT ADVISERS LLC awarded $23.3M contract for portfolio management services to Pension Benefit Guaranty Corporation

Contract Overview

Contract Amount: $23,274,041 ($23.3M)

Contractor: Neuberger Berman Investment Advisers LLC

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2010-10-25

End Date: 2016-10-24

Contract Duration: 2,191 days

Daily Burn Rate: $10.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 15

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CFO/CID

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 $23.3 million to NEUBERGER BERMAN INVESTMENT ADVISERS LLC for work described as: CFO/CID Key points: 1. The contract value of $23.3 million over approximately six years suggests a significant investment in specialized financial advisory services. 2. Full and open competition was utilized, indicating a broad market search and potential for competitive pricing. 3. The fixed-price contract type aims to provide cost certainty for the agency. 4. The duration of the contract (2191 days) points to a long-term need for these portfolio management services. 5. The contract was awarded to a single entity, NEUBERGER BERMAN INVESTMENT ADVISERS LLC, suggesting they were the most qualified or offered the best value. 6. The absence of small business set-asides indicates the primary focus was on obtaining specialized expertise rather than promoting small business participation.

Value Assessment

Rating: good

The contract value of $23.3 million over nearly six years for portfolio management services appears reasonable given the specialized nature of the work. Benchmarking against similar contracts for large-scale investment advisory services would provide a more precise value-for-money assessment. However, the fixed-price nature of the contract suggests an effort to control costs. The agency's selection of a single, presumably experienced, contractor implies a focus on quality and expertise, which can justify the expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The fact that a definitive contract was ultimately awarded suggests that the competitive process yielded a suitable candidate. The number of bids received (10623 is likely a typo and should be a smaller number of bidders) would be crucial to fully assess the strength of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring the government secures services at the best possible value. It reduces the risk of overpayment compared to sole-source or limited competition scenarios.

Public Impact

The Pension Benefit Guaranty Corporation (PBGC) benefits directly from enhanced portfolio management, aiming to secure its financial obligations. The services delivered are critical for managing the agency's investment assets effectively. The geographic impact is primarily national, as the PBGC operates nationwide to protect pensions. Workforce implications are likely minimal for the agency, as the contract outsources specialized investment management functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the contractor's systems become deeply integrated.
Reliance on a single contractor for critical financial management functions.
Market fluctuations could impact the effectiveness of the managed portfolio, irrespective of contractor performance.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Fixed-price contract type provides cost predictability.
Long contract duration indicates a stable, ongoing need and potential for established working relationship.
Contractor is a specialized investment adviser, implying relevant expertise.

Sector Analysis

This contract falls within the Financial Services sector, specifically investment management and advisory. The market for these services is large and highly competitive, with numerous firms offering expertise in managing institutional assets. The PBGC's spending represents a portion of the federal government's overall expenditure on financial services, which includes asset management, consulting, and administrative support for various agencies and programs. Comparable spending benchmarks would involve analyzing other large federal agencies' contracts for similar portfolio management services.

Small Business Impact

The contract details indicate that small business participation was not a primary consideration, as the 'sb' field is false and there is no mention of small business set-asides. This suggests that the requirement was likely for highly specialized services where large, established firms are typically the primary providers. There is no explicit information on subcontracting plans, but given the nature of the service, it's less likely to involve significant subcontracting to small businesses unless for ancillary support.

Oversight & Accountability

Oversight for this contract would primarily reside with the Pension Benefit Guaranty Corporation's contracting officers and program managers. Accountability measures are embedded in the contract terms, including performance standards and reporting requirements. Transparency is facilitated by the contract's award under full and open competition, making the process publicly visible. Inspector General jurisdiction would typically cover investigations into fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Employee Retirement System (FERS) Thrift Savings Plan Management
Department of the Treasury Investment Management
Office of Management and Budget (OMB) Financial Management Guidance

Risk Flags

Potential for vendor lock-in
Reliance on single source for critical function
Performance risk associated with market fluctuations

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $23.3 million to NEUBERGER BERMAN INVESTMENT ADVISERS LLC. CFO/CID

Who is the contractor on this award?

The obligated recipient is NEUBERGER BERMAN INVESTMENT ADVISERS LLC.

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 $23.3 million.

What is the period of performance?

Start: 2010-10-25. End: 2016-10-24.

What is the specific expertise and track record of NEUBERGER BERMAN INVESTMENT ADVISERS LLC in managing public pension funds or similar large institutional portfolios?

NEUBERGER BERMAN INVESTMENT ADVISERS LLC is a well-established global investment management firm with a long history of managing assets for institutional clients, including pension funds, endowments, and foundations. Their expertise spans various asset classes, including equities, fixed income, and alternative investments. The firm is known for its research-driven approach and commitment to long-term investment strategies. While specific details of their track record with public pension funds are proprietary, their extensive experience and the fact that they were awarded this significant contract by the PBGC suggest a strong capability and a history of successful performance in managing large, complex portfolios. The PBGC likely conducted thorough due diligence on the firm's financial stability, investment performance, and compliance record prior to awarding the contract.

How does the $23.3 million contract value compare to industry benchmarks for portfolio management services for an organization of the PBGC's size and complexity?

Determining an exact benchmark for this contract requires detailed comparison with similar services procured by other large federal agencies or quasi-governmental entities managing substantial assets. However, the value of $23.3 million spread over approximately six years (2191 days) suggests an average annual cost of roughly $3.9 million. This figure needs to be evaluated against the size of the assets under management by the PBGC. Industry standards for investment management fees often range from basis points (hundreds of a percent) of assets under management (AUM), depending on the asset class and complexity. If the PBGC's portfolio is in the tens or hundreds of billions, this fee structure could be competitive. Without knowing the AUM, a precise comparison is difficult, but the fixed-price nature suggests the PBGC sought predictable costs.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this portfolio management contract?

While the specific KPIs and SLAs are not detailed in the provided data, typical performance indicators for portfolio management contracts include investment return relative to a benchmark index (e.g., S&P 500, relevant bond indices), risk-adjusted returns (e.g., Sharpe Ratio), tracking error, portfolio volatility, and adherence to investment guidelines and policies. Service Level Agreements often cover aspects like reporting frequency and accuracy, response times to inquiries, and compliance with regulatory requirements. The PBGC would have established these metrics to ensure NEUBERGER BERMAN INVESTMENT ADVISERS LLC is meeting its fiduciary responsibilities and achieving the desired investment objectives for the agency's assets.

What is the historical spending pattern of the Pension Benefit Guaranty Corporation on portfolio management services over the last 5-10 years?

Analyzing the historical spending patterns of the Pension Benefit Guaranty Corporation (PBGC) on portfolio management services would provide crucial context for the $23.3 million award. This includes examining previous contracts, their values, durations, and the contractors involved. Understanding whether this contract represents an increase, decrease, or stable level of spending can indicate changes in the PBGC's investment strategy, asset size, or outsourcing approach. For instance, if previous contracts were significantly smaller or shorter, it might suggest an expansion of outsourced management. Conversely, if this contract is a renewal or replacement of a similar-sized prior award, it indicates continuity. Accessing historical contract databases (like FPDS or USASpending) would be necessary to perform this analysis.

What is the potential risk associated with relying on a single contractor for such a critical financial function like portfolio management?

Relying on a single contractor for critical financial functions like portfolio management introduces several potential risks. Firstly, there's the risk of 'key person dependency,' where the departure of essential personnel from the contractor's team could disrupt service delivery. Secondly, a lack of ongoing competition could lead to complacency or reduced incentive for the contractor to innovate or offer the most competitive pricing in the future, although this is mitigated by the initial full and open competition. Thirdly, operational risks exist, such as system failures or cybersecurity breaches at the contractor's end, which could impact the PBGC's assets. Finally, there's the reputational risk if the contractor underperforms or is involved in any ethical or compliance issues. The PBGC would typically mitigate these risks through robust contract oversight, clear performance expectations, contingency planning, and potentially requiring the contractor to maintain business continuity and disaster recovery capabilities.

Industry Classification

NAICS: Finance and Insurance › Other Financial Investment Activities › Portfolio Management

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: 15

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 190 S LASALLE ST 24 FL, CHICAGO, IL, 60603

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,878,156

Exercised Options: $23,878,156

Current Obligation: $23,274,041

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline