PBGC's $4.45M Investment Contract with Performance Equity Management Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $4,452,077 ($4.5M)

Contractor: Performance Equity Management, LLC

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2019-10-01

End Date: 2026-10-31

Contract Duration: 2,587 days

Daily Burn Rate: $1.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DELPHI PRIVATE MARKETS ASSETS

Place of Performance

Location: GREENWICH, FAIRFIELD County, CONNECTICUT, 06831

State: Connecticut Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $4.5 million to PERFORMANCE EQUITY MANAGEMENT, LLC for work described as: DELPHI PRIVATE MARKETS ASSETS Key points: 1. The Pension Benefit Guaranty Corporation (PBGC) awarded a $4.45 million contract for investment services. 2. The contract was not competed, raising questions about potential price discovery and value for taxpayer money. 3. The lack of competition presents a significant risk of overpayment and reduced overall investment performance. 4. This spending falls within the financial services sector, which often involves complex fee structures.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to assess if the pricing is reasonable compared to similar investment management contracts. The firm fixed-price structure provides some cost certainty, but the absence of competition limits the ability to benchmark against market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award. This method bypasses competitive price discovery, potentially leading to higher costs for the government and taxpayers as there is no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for this $4.45 million contract means taxpayers may not be receiving the best possible value for investment management services, potentially increasing the overall cost to the agency.

Public Impact

Taxpayers may be overpaying for investment management services due to the absence of a competitive bidding process. The PBGC's fiduciary duty to manage pension assets effectively could be compromised if the selected firm is not the most cost-efficient. Lack of transparency in sole-source contract awards can erode public trust in government procurement practices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Potential for Overpayment
Limited Benchmarking
Sole-Source Award

Positive Signals

Firm Fixed Price Contract
Defined Contract Duration

Sector Analysis

This contract falls under the financial services sector, specifically investment banking and securities dealing. Spending benchmarks in this area are highly variable, but competitive bidding is standard practice to ensure cost-effectiveness for large asset management contracts.

Small Business Impact

This contract does not appear to involve small businesses, as it is a sole-source award to a specific firm. There is no indication of subcontracting opportunities for small businesses within this agreement.

Oversight & Accountability

The lack of competition for this contract warrants closer oversight from the PBGC's Inspector General to ensure the agency is acting in the best interest of its beneficiaries and taxpayers. Accountability for the sole-source justification is crucial.

Related Government Programs

Investment Banking and Securities Dealing
Pension Benefit Guaranty Corporation Contracting
Pension Benefit Guaranty Corporation Programs

Risk Flags

Sole-source award lacks transparency.
Potential for inflated costs.
Reduced incentive for optimal performance.
Difficulty in benchmarking against market rates.
Questionable value for taxpayer funds.

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $4.5 million to PERFORMANCE EQUITY MANAGEMENT, LLC. DELPHI PRIVATE MARKETS ASSETS

Who is the contractor on this award?

The obligated recipient is PERFORMANCE EQUITY MANAGEMENT, 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 $4.5 million.

What is the period of performance?

Start: 2019-10-01. End: 2026-10-31.

What was the justification for awarding this contract on a sole-source basis, and how does it align with the PBGC's procurement regulations?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of available competition. Without specific details from the PBGC, it's impossible to confirm the exact reasoning. However, such justifications are subject to strict review to ensure they are valid and that the government is not foregoing potential cost savings or better performance through competition.

How does the PBGC ensure that the fees paid to Performance Equity Management are competitive and provide good value, given the absence of a competitive bidding process?

The PBGC likely relies on internal benchmarks, industry standards, and potentially independent cost analysis to assess the reasonableness of fees. However, without a competitive process, the assurance of 'good value' is inherently weaker. Regular performance reviews and fee re-negotiations, if permissible under the contract, would be critical to mitigate this risk.

What is the potential financial impact on the PBGC's assets and, by extension, on pension beneficiaries if this contract is not cost-effective?

If the contract is not cost-effective, the PBGC's investment returns could be lower than anticipated, impacting the overall health of the pension insurance program. This could indirectly affect beneficiaries through reduced future benefits or increased premiums. The $4.45 million represents the total contract value, and the actual financial impact depends on the duration and the degree of overpayment.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 16PBGC19R0017

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5 GREENWICH OFFICE PARK STE 3, GREENWICH, CT, 06831

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: $4,452,077

Exercised Options: $4,452,077

Current Obligation: $4,452,077

Actual Outlays: $1,950,551

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline