PBGC awards $83.9M to NISA Investment Advisors for fixed income management, with 7 bidders

Contract Overview

Contract Amount: $83,868,385 ($83.9M)

Contractor: Nisa Investment Advisors LLC

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2017-12-19

End Date: 2026-12-18

Contract Duration: 3,286 days

Daily Burn Rate: $25.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LDI FIXED INCOME INVESTMENT MANAGEMENT SERVICES

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63105

State: Missouri Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $83.9 million to NISA INVESTMENT ADVISORS LLC for work described as: LDI FIXED INCOME INVESTMENT MANAGEMENT SERVICES Key points: 1. Value for money appears reasonable given the scope of investment management services. 2. Strong competition with 7 bidders suggests a competitive market for these services. 3. Risk indicators are moderate, with a long contract duration requiring ongoing oversight. 4. Performance context is tied to the PBGC's fiduciary responsibility for pension assets. 5. Sector positioning is within financial services, specifically investment management for public entities.

Value Assessment

Rating: good

The contract value of $83.9 million over approximately 9 years represents a significant investment in managing the PBGC's fixed income portfolio. Benchmarking against similar large-scale investment management contracts is challenging without specific performance metrics and asset under management details. However, the firm fixed-price structure suggests that the pricing was determined upfront, which can offer cost certainty. The number of bidders indicates a healthy level of interest and potential for competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with seven distinct bidders vying for the opportunity. The presence of multiple bidders suggests that the market for fixed income investment management services is robust and that the PBGC was able to solicit a range of proposals. This level of competition is generally favorable for achieving competitive pricing and ensuring that the selected contractor offers a strong value proposition.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down costs and ensured the PBGC selected a highly qualified provider, maximizing the return on investment for pension assets.

Public Impact

The primary beneficiary is the Pension Benefit Guaranty Corporation (PBGC), which relies on these services to manage its investment portfolio. The services delivered include fixed income investment management, aiming to preserve and grow assets to meet pension obligations. The geographic impact is national, as the PBGC operates nationwide to protect private-sector pension plans. Workforce implications are minimal, primarily affecting the financial services sector through the contractor's employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (approx. 9 years) necessitates sustained oversight to ensure continued performance and value.
Reliance on a single firm for significant asset management requires robust performance monitoring.
Potential for market shifts in fixed income could impact strategy effectiveness over the contract term.

Positive Signals

Awarded under full and open competition, indicating a competitive selection process.
Firm fixed-price contract provides cost certainty for the PBGC.
Contractor has a significant role in managing critical pension assets, suggesting a level of trust and capability.

Sector Analysis

This contract falls within the financial services sector, specifically focusing on investment management. The market for investment management services is vast and highly competitive, with numerous firms offering specialized expertise. The PBGC's need for fixed income management is a common requirement for large institutional investors aiming to balance risk and return. Comparable spending benchmarks would typically be assessed based on assets under management (AUM) and the complexity of the investment strategy.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature and scale of investment management services for an entity like the PBGC, it is likely that larger, established firms with extensive track records and resources would be the primary participants. Subcontracting implications are not detailed but would depend on NISA's internal policies and the specific needs of the investment strategy.

Oversight & Accountability

Oversight of this contract would primarily fall under the Pension Benefit Guaranty Corporation's internal procurement and financial management divisions. Accountability measures are embedded in the firm fixed-price contract terms and performance expectations. Transparency is generally maintained through regular reporting by the contractor and oversight by the PBGC's Inspector General, if applicable, to ensure fiduciary duties are met.

Related Government Programs

PBGC Investment Management
Federal Retirement Benefits Management
Fixed Income Securities Management
Institutional Investment Services

Risk Flags

Long-term contract duration requires ongoing monitoring.
Performance metrics and benchmarks are not explicitly detailed.
Potential for market volatility impacting fixed income investments.

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $83.9 million to NISA INVESTMENT ADVISORS LLC. LDI FIXED INCOME INVESTMENT MANAGEMENT SERVICES

Who is the contractor on this award?

The obligated recipient is NISA INVESTMENT ADVISORS 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 $83.9 million.

What is the period of performance?

Start: 2017-12-19. End: 2026-12-18.

What is NISA Investment Advisors LLC's track record with federal contracts, particularly with the PBGC or similar agencies?

Information on NISA Investment Advisors LLC's specific track record with federal contracts, especially with the PBGC or similar government agencies, is not detailed in the provided data. However, the award of a significant contract like this suggests they possess the necessary qualifications and experience to manage substantial investment portfolios. Further investigation into their past performance, client references, and any history of contract disputes or awards with federal entities would provide a more comprehensive understanding of their reliability and expertise in the public sector.

How does the $83.9 million contract value compare to the PBGC's overall investment management spending or similar agencies' spending?

The $83.9 million contract value represents the total estimated value over its duration, not an annual spend. To compare this effectively, one would need to know the PBGC's total assets under management (AUM) and its annual investment management budget. Without this context, it's difficult to ascertain if this figure is high or low relative to the PBGC's needs or the spending of comparable agencies like the Federal Retirement Thrift Investment Board (FRTIB) or other large pension funds. The number of bidders (7) suggests it's a competitive and potentially standard-sized contract for such services.

What are the key performance indicators (KPIs) used to measure the success of NISA Investment Advisors LLC under this contract?

The provided data does not specify the key performance indicators (KPIs) for this contract. Typically, for investment management services, KPIs would include metrics such as investment returns relative to a benchmark index (e.g., a specific bond index), risk-adjusted returns (e.g., Sharpe ratio), tracking error, and adherence to investment guidelines and policies. The firm fixed-price nature of the contract implies that the contractor is responsible for achieving certain outcomes within the agreed-upon price, but the specific metrics for success would be detailed in the contract's statement of work and performance standards.

What is the risk assessment associated with NISA Investment Advisors LLC managing the PBGC's fixed income portfolio?

The primary risks associated with NISA managing the PBGC's fixed income portfolio include market risk (fluctuations in interest rates and bond prices affecting portfolio value), credit risk (potential default of bond issuers), liquidity risk (difficulty selling assets quickly without significant loss), and operational risk (failures in systems or processes). The long contract duration (nearly 9 years) also introduces risk related to potential changes in market conditions or the contractor's strategic approach over time. The PBGC's oversight and the firm fixed-price structure aim to mitigate some of these risks by ensuring clear expectations and accountability.

How has the PBGC's spending on investment management services evolved over the past 5-10 years?

Historical spending data for the PBGC on investment management services is not provided in this dataset. To analyze this trend, one would need access to historical contract awards and budget allocations for the PBGC's investment division. Factors influencing spending evolution could include changes in the PBGC's asset base, shifts in investment strategy (e.g., asset allocation changes), market performance, and the competitive landscape for investment management services. Understanding this evolution would provide context for the current $83.9 million award.

What is the potential impact of this contract on the broader fixed income investment market?

This contract, representing a significant allocation of assets for fixed income management, can have a modest impact on the broader market. The scale of NISA's management activities, driven by this contract, could influence trading volumes in certain fixed income instruments. Furthermore, the PBGC's investment strategy, executed by NISA, may signal preferences or trends in the market, potentially influencing other institutional investors. However, the overall impact is likely contained within the institutional investment sphere rather than broadly affecting retail markets, given the specialized nature of fixed income management.

Industry Classification

NAICS: Finance and Insurance › Securities and Commodity Contracts Intermediation and Brokerage › Investment Banking and Securities Dealing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: PBGC01-RP-17-0014

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nisa Investment Advisors, LLC

Address: 101 SOUTH HANLEY ROAD, SUITE 1700, SAINT LOUIS, MO, 63105

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

Financial Breakdown

Contract Ceiling: $83,868,385

Exercised Options: $83,868,385

Current Obligation: $83,868,385

Actual Outlays: $45,911,188

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline