Western Asset Management Co. awarded $18M contract for fixed income management services by Pension Benefit Guaranty Corporation

Contract Overview

Contract Amount: $18,015,005 ($18.0M)

Contractor: Western Asset Management CO, LLC

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2004-11-22

End Date: 2005-09-30

Contract Duration: 312 days

Daily Burn Rate: $57.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FIXED INCOME MANAGER

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 $18.0 million to WESTERN ASSET MANAGEMENT CO, LLC for work described as: FIXED INCOME MANAGER Key points: 1. Contract value of $18M for portfolio management services. 2. Services provided by Western Asset Management Co., LLC. 3. Contract awarded by the Pension Benefit Guaranty Corporation. 4. Duration of the contract is 312 days. 5. Firm Fixed Price contract type indicates a set cost for services. 6. The contract was awarded under Full and Open Competition.

Value Assessment

Rating: fair

The contract value of $18,015,005.25 for a 312-day period for fixed income management is substantial. Benchmarking this against similar contracts for portfolio management services would be necessary to determine true value for money. Without specific performance metrics or comparison data, it's difficult to definitively assess if the pricing is competitive or if the value delivered is excellent. The fixed price nature suggests cost certainty for the agency, but potential for contractor profit maximization.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. The presence of two bids suggests a moderate level of competition. While full and open competition is generally preferred for ensuring fair pricing and access to the best solutions, the specific number of bidders (2) might warrant further investigation to ensure robust price discovery.

Taxpayer Impact: A competitive bidding process like this generally benefits taxpayers by encouraging lower prices and better service quality from vendors vying for the contract.

Public Impact

The Pension Benefit Guaranty Corporation benefits from professional management of its fixed income portfolio. This contract ensures the effective management of financial assets, potentially safeguarding retirement benefits. Services are delivered within the District of Columbia, where the agency is headquartered. The contract supports financial services sector jobs, particularly in portfolio management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may not have driven the absolute lowest price.
The fixed price contract could lead to contractor windfalls if costs are lower than anticipated.
Performance metrics and quality of service are not detailed in the provided data, making value assessment difficult.

Positive Signals

Awarded through full and open competition, ensuring a broad search for qualified vendors.
Firm Fixed Price contract provides cost certainty for the agency.
Contractor, Western Asset Management Co., LLC, is a known entity in asset management.

Sector Analysis

The financial services sector, particularly asset and portfolio management, is a critical component of the broader economy. Federal agencies like the Pension Benefit Guaranty Corporation rely on specialized firms to manage significant investment portfolios. Spending in this area is driven by the need for expert financial stewardship to meet agency mandates. Comparable spending benchmarks would involve analyzing other federal contracts for similar investment management services across different agencies.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As a large financial services contract, it is unlikely to have been specifically targeted towards small businesses. Subcontracting opportunities for small businesses are not detailed but would depend on the prime contractor's policies and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically fall under the Pension Benefit Guaranty Corporation's internal procurement and financial management divisions. Accountability measures would be defined in the contract's terms and conditions, including performance standards and payment schedules. Transparency is generally facilitated through contract award databases, though detailed performance reporting may be internal.

Related Government Programs

Investment Management Services
Financial Advisory Services
Asset Management Contracts
Fixed Income Securities Management

Risk Flags

Limited Competition
Potential for Contractor Windfall (FFP)
Lack of Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $18.0 million to WESTERN ASSET MANAGEMENT CO, LLC. FIXED INCOME MANAGER

Who is the contractor on this award?

The obligated recipient is WESTERN ASSET MANAGEMENT CO, 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 $18.0 million.

What is the period of performance?

Start: 2004-11-22. End: 2005-09-30.

What is the track record of Western Asset Management Co., LLC in managing federal contracts?

Western Asset Management Co., LLC is a well-established global asset manager. While specific details on their federal contract history are not provided in this data snippet, their presence as a bidder and awardee suggests they possess the qualifications and experience necessary to compete for and perform government contracts. A deeper dive into federal procurement databases would reveal the extent and nature of their past federal engagements, including performance ratings, contract values, and any issues encountered. Their ability to secure this contract indicates a level of trust and capability recognized by the Pension Benefit Guaranty Corporation.

How does the $18M contract value compare to similar fixed income management contracts?

Without access to a comprehensive database of comparable federal contracts for fixed income management, a precise benchmark is difficult. However, $18 million for approximately 10 months of service (312 days) represents a significant investment. The Pension Benefit Guaranty Corporation manages substantial assets, so a contract of this magnitude is plausible. To assess value, one would compare the fee structure (likely a percentage of assets under management or a fixed fee) against industry standards and the scope of services. Factors like the complexity of the portfolio, market conditions, and the specific expertise required would influence the appropriate cost.

What are the primary risks associated with this fixed income management contract?

Key risks include market risk (adverse movements in fixed income markets impacting portfolio value), interest rate risk (changes in interest rates affecting bond prices and yields), credit risk (default by bond issuers), and operational risk (failures in systems or processes). For the agency, there's also the risk of underperformance relative to benchmarks or objectives, and the risk that the contractor may not fully meet contractual obligations. The fixed price nature could also pose a risk if unforeseen market volatility significantly increases the contractor's costs, potentially impacting their focus on optimal performance.

How effective is the Pension Benefit Guaranty Corporation in managing its financial assets?

The effectiveness of the Pension Benefit Guaranty Corporation's asset management, including the performance under this specific contract, is not detailed in the provided data. PBGC's overall mission is to protect retirement benefits for private-sector defined benefit pension plans. Their investment strategy aims to ensure sufficient assets to meet obligations. Information on their investment performance, risk management practices, and the success of individual contracts like this would typically be found in their annual reports, audited financial statements, and potentially Inspector General reports.

What are the historical spending patterns for fixed income management at PBGC?

The provided data only shows a single contract award from 2004-2005. To understand historical spending patterns, one would need to analyze PBGC's procurement history over multiple years. This would involve looking at the total amount spent on investment management services, the number and value of contracts awarded, the types of services procured (e.g., fixed income, equities, alternatives), and the primary contractors utilized. Analyzing trends in spending, contract durations, and competition levels over time would provide a clearer picture of PBGC's financial management strategies.

What is the significance of the 'Firm Fixed Price' contract type in this context?

A 'Firm Fixed Price' (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience in performing the work. For the Pension Benefit Guaranty Corporation, this offers budget certainty and predictability, as the total cost is known upfront. For Western Asset Management Co., LLC, it shifts the risk of cost overruns to them. This contract type is often used when the scope of work is well-defined and the risks are manageable. It incentivizes the contractor to control costs efficiently to maximize profit, but it also means the government does not benefit from any cost savings the contractor might achieve.

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Legg Mason Sbic Mezzanine Fund (UEI: 101458883)

Address: 385 E COLORADO BLVD, PASADENA, CA, 28

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

Financial Breakdown

Contract Ceiling: $30,805,963

Exercised Options: $30,805,963

Current Obligation: $18,015,005

Timeline