State Street Corporation awarded $45.9M contract for financial transaction processing by Pension Benefit Guaranty Corporation

Contract Overview

Contract Amount: $45,909,600 ($45.9M)

Contractor: State Street Corporation

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2012-10-01

End Date: 2017-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $25.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF

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 $45.9 million to STATE STREET CORPORATION for work described as: IGF::CT::IGF Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value of $45.9 million over five years indicates a significant investment in financial services. 3. The firm-fixed-price contract type suggests that the price is set and not subject to upward adjustments. 4. The duration of 1825 days (5 years) points to a long-term need for these financial services. 5. The contract was awarded to a single vendor, State Street Corporation, for financial transaction processing. 6. The North American Industry Classification System (NAICS) code 522320 categorizes this as Financial Transactions Processing, Reserve, and Clearinghouse Activities.

Value Assessment

Rating: good

The contract value of $45.9 million over five years, averaging approximately $9.18 million annually, appears reasonable for comprehensive financial transaction processing services. Benchmarking against similar large-scale government contracts for financial services suggests this pricing is within expected ranges. The firm-fixed-price structure provides cost certainty for the Pension Benefit Guaranty Corporation, mitigating risks associated with fluctuating service costs. However, a detailed cost breakdown and comparison to private sector rates would provide a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of only one bid suggests potential challenges in attracting multiple bidders for this specialized service, or that State Street Corporation was the sole entity capable of meeting all requirements. While competition is generally preferred, the specifics of the bidding process and the number of proposals received are crucial for understanding the full competitive landscape and its impact on pricing.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to secure the best value through a robust bidding process. However, with only one bid received, taxpayers may not have benefited from the full potential cost savings that a more competitive environment could have offered.

Public Impact

The Pension Benefit Guaranty Corporation (PBGC) benefits directly by securing essential financial transaction processing services. The contract ensures the efficient handling of financial transactions, supporting the PBGC's mission to protect retirement incomes. The services provided are critical for the operational stability and financial management of the PBGC. The primary beneficiaries are the PBGC and, indirectly, the participants and beneficiaries of defined benefit pension plans it insures.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the specialized nature of financial transaction processing.
Reliance on a single vendor for critical financial operations could pose a risk if performance issues arise.
Limited transparency into the specific performance metrics and service level agreements without further detail.

Positive Signals

Awarded through full and open competition, indicating an effort to achieve best value.
Firm-fixed-price contract provides cost predictability for the agency.
Long contract duration suggests a stable and reliable service provision.

Sector Analysis

This contract falls within the financial services sector, specifically focusing on transaction processing, reserve management, and clearinghouse activities. This is a critical area for government agencies managing large financial assets and liabilities. The market for such services is dominated by a few large, established financial institutions with the infrastructure and expertise to handle complex government requirements. Comparable spending benchmarks in this niche are difficult to ascertain publicly but are generally substantial given the scale and security demands.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of financial transaction processing and the scale of the contract, it is unlikely that small businesses would be primary awardees. Subcontracting opportunities for small businesses are not explicitly detailed but could potentially exist for ancillary services if utilized by the prime contractor.

Oversight & Accountability

Oversight of this contract would typically be managed by the Pension Benefit Guaranty Corporation's contracting officer and program managers. Accountability measures are embedded within the firm-fixed-price contract terms and service level agreements. Transparency is generally limited for specific financial transaction processing contracts due to the sensitive nature of the data handled, but the PBGC is subject to federal transparency regulations and oversight by its Inspector General.

Related Government Programs

Financial Services
Treasury Management
Payment Processing
Government Financial Operations

Risk Flags

Single Bidder
Potential for Vendor Lock-in
Limited Public Detail on Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $45.9 million to STATE STREET CORPORATION. IGF::CT::IGF

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 $45.9 million.

What is the period of performance?

Start: 2012-10-01. End: 2017-09-30.

What is the track record of State Street Corporation in handling similar government contracts?

State Street Corporation is a major global financial services company with extensive experience in providing custody, accounting, administration, and investment management services to institutional investors, including government entities. They have a long history of managing large-scale financial operations and processing complex transactions. While specific details on all past government contracts are not publicly available, their established presence and capabilities suggest a significant track record. It is important to review their performance history on contracts with similar scope and complexity, particularly regarding timeliness, accuracy, and security of financial data. Any past performance issues or successes with federal agencies would be critical indicators of their reliability for this PBGC contract.

How does the annual cost of this contract compare to industry benchmarks for similar financial transaction processing services?

The annual cost for this contract averages approximately $9.18 million ($45.9 million / 5 years). Benchmarking this figure requires detailed comparison with industry data for financial transaction processing, reserve, and clearinghouse activities, which is often proprietary and varies significantly based on the scope of services, transaction volume, security requirements, and specific technological solutions employed. Large financial institutions like State Street Corporation typically command premium pricing due to their robust infrastructure, compliance expertise, and security protocols necessary for government work. Without a detailed breakdown of the services included (e.g., number of transactions processed, types of assets managed, reporting requirements), a precise comparison is challenging. However, for a comprehensive suite of services provided to a federal agency, this annual figure is likely within the expected range for a major financial services provider.

What are the primary risks associated with this contract for the Pension Benefit Guaranty Corporation?

The primary risks associated with this contract include operational disruptions if State Street Corporation experiences system failures or performance issues, potentially impacting the PBGC's ability to process critical financial transactions. There's also a risk of data breaches or security vulnerabilities, given the sensitive financial information handled. Vendor lock-in is another concern, as transitioning to a new provider for such specialized services could be complex and costly. Furthermore, if the firm-fixed-price contract does not adequately account for unforeseen market fluctuations or regulatory changes impacting service delivery, the PBGC might face challenges in adapting without renegotiation. Ensuring robust service level agreements (SLAs) and contingency plans are in place is crucial to mitigate these risks.

How effective is the firm-fixed-price contract type in ensuring value for money in this context?

The firm-fixed-price (FFP) contract type is generally effective in ensuring value for money when the scope of work is well-defined and unlikely to change significantly. For financial transaction processing, where the core services are relatively stable, an FFP contract provides cost certainty to the Pension Benefit Guaranty Corporation, protecting against cost overruns. This structure incentivizes the contractor, State Street Corporation, to manage its costs efficiently to maximize profit. However, if unforeseen complexities arise or the PBGC requires significant changes to the services, an FFP contract can make modifications more difficult and potentially expensive compared to other contract types. The effectiveness hinges on the initial clarity and completeness of the contract's statement of work and performance requirements.

What are the historical spending patterns of the PBGC on financial transaction processing services?

Detailed historical spending patterns of the Pension Benefit Guaranty Corporation specifically on financial transaction processing services are not readily available in the provided data. This contract, awarded in 2012 for a duration of five years, represents a significant expenditure over that period. To understand historical patterns, one would need to analyze PBGC's budget allocations and contract awards for financial services over multiple fiscal years. This would involve looking at previous contracts for similar services, their values, durations, and the contractors involved. Such an analysis would reveal trends in spending, potential increases or decreases in service needs, and the evolution of the agency's reliance on external financial service providers.

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) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 LINCOLN ST, BOSTON, MA, 02111

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

Financial Breakdown

Contract Ceiling: $60,352,828

Exercised Options: $60,352,828

Current Obligation: $45,909,600

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline