Western Asset Management Co. secured a $21.6M contract for investment banking services, awarded by PBGC

Contract Overview

Contract Amount: $21,664,777 ($21.7M)

Contractor: Western Asset Management CO, LLC

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2008-10-01

End Date: 2016-03-31

Contract Duration: 2,738 days

Daily Burn Rate: $7.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

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 $21.7 million to WESTERN ASSET MANAGEMENT CO, LLC for work described as: CFO/CID Key points: 1. The contract's duration of nearly 7.5 years suggests a long-term need for these specialized financial services. 2. A firm-fixed-price contract type indicates that the price was set at the time of award, providing cost certainty. 3. The award was made under full and open competition, implying a robust bidding process. 4. The contract was awarded to a single entity, Western Asset Management Co., LLC. 5. The services provided fall under the 'Investment Banking and Securities Dealing' NAICS code. 6. The contract was awarded by the Pension Benefit Guaranty Corporation (PBGC).

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service deliverables and market rates for investment banking services over such a long period. The firm-fixed-price structure provides some cost control, but the total value of $21.6 million over nearly 7.5 years averages to approximately $2.88 million annually. This figure needs to be compared against the scale and complexity of PBGC's investment portfolio and the specific services rendered to determine true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple bidders were likely considered. The presence of 5 bids suggests a competitive environment, which generally leads to better price discovery and potentially more favorable terms for the government. The specific details of the bidding process and the number of proposals received would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by ensuring that the government receives competitive pricing and a wider range of potential solutions, reducing the risk of overpayment.

Public Impact

The primary beneficiary of this contract is the Pension Benefit Guaranty Corporation (PBGC), which receives expert financial management services. The services delivered are crucial for managing the investment of PBGC's assets, ensuring the long-term solvency of pension plans it insures. The geographic impact is primarily national, as PBGC operates nationwide, though the direct service delivery may be concentrated. There are no direct workforce implications for the public sector, as the services are outsourced to a private firm.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 7.5 years) could lead to potential cost inefficiencies if market conditions or PBGC's needs change significantly.
Reliance on a single contractor for critical investment services may pose a risk if the contractor's performance declines or if they face financial instability.

Positive Signals

Awarded under full and open competition, suggesting a thorough vetting of potential providers.
Firm-fixed-price contract provides cost certainty for the duration of the award.
The contract was awarded to Western Asset Management Co., LLC, a known entity in the financial services sector.

Sector Analysis

This contract falls within the financial services sector, specifically investment banking and securities dealing. The market for these services is highly specialized and competitive, with numerous firms offering expertise in managing large investment portfolios. The size of this contract, $21.6 million over nearly 7.5 years, is moderate within the context of federal financial services procurement, which can range from millions to billions depending on the agency and scope.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from this particular award. The competition was open, suggesting larger, established firms were likely the primary bidders.

Oversight & Accountability

Oversight for this contract would typically be managed by the Pension Benefit Guaranty Corporation's contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract structure, requiring the contractor to deliver specified services within the agreed-upon budget. Transparency is generally maintained through federal procurement databases like FPDS, where contract awards are reported. Specific Inspector General jurisdiction would depend on PBGC's internal structure and any potential fraud, waste, or abuse investigations.

Related Government Programs

PBGC Investment Management
Federal Financial Services Contracts
Asset Management Contracts
Securities Dealing Services

Risk Flags

Long contract duration
Potential for market shifts impacting service needs
Reliance on a single contractor for critical financial functions

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $21.7 million to WESTERN ASSET MANAGEMENT CO, LLC. CFO/CID

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 $21.7 million.

What is the period of performance?

Start: 2008-10-01. End: 2016-03-31.

What specific investment banking and securities dealing services were provided under this contract?

The contract, awarded under NAICS code 523110 (Investment Banking and Securities Dealing), likely encompassed a range of services critical to managing the Pension Benefit Guaranty Corporation's (PBGC) investment portfolio. These services could include investment strategy development, portfolio analysis, risk management, execution of trades for various asset classes (such as fixed income, equities, and alternatives), and market research. The firm-fixed-price nature suggests a defined scope of work for which the contractor, Western Asset Management Co., LLC, was compensated a set amount. Without access to the contract's statement of work, the precise details remain proprietary, but the core function would be to optimize the performance and manage the risk of PBGC's assets to ensure its long-term financial stability.

How does the $21.6 million contract value compare to similar investment management contracts awarded by federal agencies?

Comparing the $21.6 million value of this contract requires context regarding the duration and scope of services. Awarded over approximately 7.5 years (2738 days), the average annual value is roughly $2.88 million. This figure is moderate for federal investment management contracts. Larger agencies with vast investment portfolios, such as the Department of the Treasury managing the Civil Service Retirement and Disability Fund or the Social Security Administration's Trust Funds, often award contracts in the tens or hundreds of millions of dollars annually for similar services. However, the PBGC's specific mandate and asset size dictate its procurement needs. This contract's value appears reasonable for specialized investment advisory and execution services for an entity like the PBGC, especially given the competitive bidding process.

What are the key risks associated with a long-term (nearly 7.5 years) contract for investment services?

A significant risk with a long-term contract for investment services is market volatility and the potential for changing economic conditions or investment strategies. Over nearly 7.5 years, the optimal investment approach could shift considerably, and a fixed contract might not allow for timely adjustments without costly modifications. Another risk is contractor performance degradation; a firm's expertise or responsiveness might wane over an extended period. Furthermore, if the contractor, Western Asset Management Co., LLC, experiences financial difficulties or undergoes significant organizational changes, it could disrupt the continuity and quality of services. Lastly, there's the risk of 'lock-in,' where the government may be less agile in adopting new technologies or service providers that emerge during the contract's term, potentially missing out on better value or innovation.

What is the historical spending pattern of the Pension Benefit Guaranty Corporation (PBGC) on investment banking and securities dealing services?

Analyzing the historical spending patterns of the PBGC on investment banking and securities dealing services requires access to historical procurement data beyond this single contract. This $21.6 million contract, spanning from October 1, 2008, to March 31, 2016, represents a significant but specific period. To understand historical trends, one would need to examine prior contracts awarded by the PBGC for similar services, noting their values, durations, and awarded contractors. It would also be beneficial to look at subsequent contracts to see if Western Asset Management Co., LLC continued to be a provider or if the PBGC shifted its strategy or providers. Such an analysis would reveal whether this contract represents a typical level of spending or an outlier, and whether the PBGC has consistently utilized full and open competition for these services.

How does the firm-fixed-price contract type impact the Pension Benefit Guaranty Corporation (PBGC) and Western Asset Management Co., LLC?

The firm-fixed-price (FFP) contract type places the primary risk of cost overrun on the contractor, Western Asset Management Co., LLC. This means the contractor is obligated to perform the specified services for the agreed-upon price, regardless of their actual costs. For the PBGC, this offers significant budget certainty, as the total cost is known upfront. This structure incentivizes the contractor to be efficient and manage costs effectively to maximize their profit margin. However, FFP contracts can sometimes lead to less flexibility if the scope of work needs to change, potentially requiring contract modifications. For the contractor, it offers the potential for higher profits if they can deliver services efficiently, but also the risk of losses if costs exceed the fixed price. Given the nature of investment services, where market fluctuations can impact execution costs, this risk is notable for the contractor.

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

Offers Received: 5

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, 91101

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,664,777

Exercised Options: $21,664,777

Current Obligation: $21,664,777

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Timeline