Pension Benefit Guaranty Corporation awards $18.9M contract for portfolio management services to Duff & Phelps

Contract Overview

Contract Amount: $18,944,083 ($18.9M)

Contractor: Duff & Phelps Investment Management CO

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2016-07-27

End Date: 2026-07-26

Contract Duration: 3,651 days

Daily Burn Rate: $5.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF ASSET MANAGEMENT

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60606

State: Illinois Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $18.9 million to DUFF & PHELPS INVESTMENT MANAGEMENT CO for work described as: IGF::OT::IGF ASSET MANAGEMENT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of approximately 10 years (3651 days) indicates a long-term need for these services. 3. Firm Fixed Price contract type helps to control costs and provides predictability. 4. The North American Industry Classification System (NAICS) code 523920 points to specialized financial services. 5. The awardee, Duff & Phelps, is a known entity in investment management, suggesting relevant expertise. 6. The contract is for portfolio management, a critical function for managing financial assets.

Value Assessment

Rating: good

The contract value of $18.9 million over nearly 10 years suggests an average annual cost of approximately $1.9 million. Benchmarking this against similar portfolio management contracts for federal agencies of comparable size and scope would be necessary for a definitive value assessment. However, the firm fixed-price nature of the contract provides cost certainty. Without specific performance metrics or comparison data, it's difficult to definitively assess value-for-money, but the competitive award process is a positive indicator.

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 11 bidders (no) suggests a healthy level of competition for this requirement. A competitive process like this generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: The robust competition for this portfolio management contract is beneficial for taxpayers as it likely drove down costs and ensured the selection of a qualified provider at a reasonable price.

Public Impact

The Pension Benefit Guaranty Corporation (PBGC) is the primary beneficiary, receiving essential portfolio management services. The services delivered will ensure the effective management and oversight of the PBGC's investment assets. The contract's geographic impact is national, as the PBGC operates nationwide. There are no direct workforce implications mentioned, as the service is provided by a contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced incentive for innovation if not actively managed.
Reliance on a single contractor for a critical function like portfolio management poses a risk if the contractor underperforms or faces financial instability.

Positive Signals

Awarded through full and open competition, indicating a competitive market for these services.
Firm Fixed Price contract type provides cost certainty and budget predictability.
The contractor, Duff & Phelps, is a reputable firm with expertise in investment management.
The contract duration aligns with the long-term nature of managing pension assets.

Sector Analysis

The financial services sector, specifically investment management and portfolio administration, is characterized by specialized expertise and regulatory oversight. Contracts in this area often involve managing significant assets for public and private entities. The market size for such services is substantial, with numerous firms competing for government contracts. This contract fits within the broader category of financial advisory and asset management services procured by federal agencies to support their fiduciary responsibilities.

Small Business Impact

There is no indication that this contract included a small business set-aside. The presence of 11 bidders suggests that larger, established firms likely participated. Subcontracting opportunities for small businesses are not explicitly detailed but could arise if the prime contractor engages them for specialized support services.

Oversight & Accountability

Oversight of this contract would typically fall under the Pension Benefit Guaranty Corporation's contracting officer and program managers. Accountability measures would be defined in the contract's statement of work and performance standards. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of Labor (which oversees PBGC) would likely have jurisdiction for audits and investigations.

Related Government Programs

PBGC Pension Plan Administration
Federal Investment Management Services
Financial Advisory Services for Government Agencies

Risk Flags

Long contract duration
Potential for contractor underperformance
Reliance on a single provider

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $18.9 million to DUFF & PHELPS INVESTMENT MANAGEMENT CO. IGF::OT::IGF ASSET MANAGEMENT

Who is the contractor on this award?

The obligated recipient is DUFF & PHELPS INVESTMENT MANAGEMENT CO.

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 $18.9 million.

What is the period of performance?

Start: 2016-07-27. End: 2026-07-26.

What is the track record of Duff & Phelps Investment Management Co. with federal contracts?

Duff & Phelps Investment Management Co. has a history of performing services for federal agencies. While specific details on all past federal contracts require deeper database searches, their presence as an awardee in this instance suggests they have met the qualifications and requirements for government work. Their expertise in investment management is well-established in the private sector, and their ability to secure this contract indicates a successful track record in navigating federal procurement processes. Further analysis would involve examining past performance reviews and any reported issues on previous government engagements to fully assess their reliability and effectiveness as a federal contractor.

How does the annual cost of this contract compare to similar portfolio management services for federal agencies?

The annual cost for this contract averages approximately $1.9 million ($18.9M / ~10 years). To benchmark this effectively, we would need to compare it against contracts for portfolio management services awarded to agencies of similar size and with comparable asset management responsibilities. Factors such as the complexity of the portfolio, the specific services required (e.g., risk management, performance reporting, asset allocation), and the market conditions at the time of award all influence pricing. Without access to a detailed database of comparable federal contracts, a precise benchmark is difficult. However, the competitive nature of this award suggests the pricing is likely within a reasonable market range for the services provided.

What are the primary risks associated with this portfolio management contract?

Key risks include potential underperformance of the managed assets, which could impact the PBGC's financial stability. There's also a risk of contractor personnel turnover, leading to a loss of institutional knowledge. Operational risks, such as data breaches or system failures, are present given the sensitive financial data involved. Furthermore, a long-term reliance on a single provider could reduce the agency's leverage for negotiating future terms or seeking alternative solutions. Ensuring robust oversight and clear performance metrics are crucial to mitigating these risks.

How effective is the firm fixed-price contract type in managing costs for portfolio management services?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs in service-based contracts like portfolio management, especially when the scope of work is well-defined. It shifts the risk of cost overruns to the contractor, providing budget certainty for the government. For the PBGC, this means they know the exact cost of the service over the contract period, simplifying financial planning. The effectiveness hinges on the initial pricing accuracy and the contractor's ability to deliver the services within that price. If the scope is stable and well-understood, FFP is a strong choice for cost control.

What is the historical spending pattern for portfolio management services by the Pension Benefit Guaranty Corporation?

Analyzing historical spending patterns for portfolio management by the PBGC would require access to their detailed procurement data over multiple fiscal years. This specific contract, awarded in 2016 with an end date in 2026, represents a significant, long-term investment. Without prior data, it's difficult to establish a trend. However, the PBGC's mission involves managing substantial assets to ensure pension plan benefits are paid, suggesting a consistent and ongoing need for sophisticated portfolio management. Future analysis should compare this contract's value and duration against previous or subsequent procurements to identify any shifts in spending or strategy.

What are the implications of the 10-year duration for the PBGC's long-term financial strategy?

A 10-year contract for portfolio management provides significant stability and continuity for the PBGC's investment strategy. It allows for long-term planning and execution of investment objectives without the disruption of frequent re-competition. This extended period can foster a deeper working relationship between the PBGC and the contractor, potentially leading to more tailored and effective investment advice. However, it also means the PBGC is locked into a specific service provider and pricing structure for an extended duration, which could be a disadvantage if market conditions change significantly or if better alternatives emerge. Regular performance reviews and contract management are essential to ensure the PBGC continues to receive value throughout the contract's life.

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

Solicitation ID: PBGC01RP160028

Offers Received: 11

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 200 S WACKER DR FL 5, CHICAGO, IL, 60606

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

Financial Breakdown

Contract Ceiling: $18,944,083

Exercised Options: $18,944,083

Current Obligation: $18,944,083

Actual Outlays: $7,284,706

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline