FROM: Robert Thompson, General Manager
Originator: Lorenzo Tyner, Assistant General Manager
SUBJECT:
title
PROFESSIONAL CONSULTANT SERVICES AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES
end
GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION: Recommend to the Board of Directors to:
Approve a Professional Consultant Services Agreement contract to Insight North America LLC to provide Investment Management Services, Specification No. CS-2023-1418BD, for five years, with two (2) optional two-year renewals.
body
BACKGROUND
The Orange County Sanitation District (OC San) has utilized Chandler Asset Management, Inc. to manage OC San’s portfolio since November 2014. Services include making investment decisions, completing investment transactions, and reporting investment results in accordance with the California Government Code and OC San’s Investment Policy.
RELEVANT STANDARDS
• Ensure the public’s money is wisely spent
PROBLEM
As OC San has used the same investment manager for several years and the Administration Committee deemed it prudent to re-evaluate the availability of these services in today’s open market, from both a cost and performance basis, and to conduct a competitive proposal process for these services.
PROPOSED SOLUTION
Approve a Professional Consultant Services Agreement with Insight North America LLC.
TIMING CONCERNS
Proposals are valid for 180 calendar days from the proposal due date of August 30, 2023.
RAMIFICATIONS OF NOT TAKING ACTION
OC San will continue with the current Investment Manager.
PRIOR COMMITTEE/BOARD ACTIONS
October 2014 - The Board of Directors selected Chandler Asset Management as OC San’s Investment Portfolio Manager and authorized staff to negotiate a professional services agreement.
September 2014 - The Administration Committee continued the selection of OC San’s Investment Manager.
February 2014 - The Administration Committee approved a Request for Proposal for Investment Management.
June 1995 - The Board of Directors selected PIMCO as OC San’s external investment portfolio manager.
ADDITIONAL INFORMATION
A Request for Proposal was issued on July 27, 2023, via PlanetBids. Proposals were due on August 30, 2023. OC San received 17 proposals that are valid for 180 calendar days from the proposal due date.
Prior to receipt of proposals, an Evaluation Team was formed consisting of the Assistant General Manager, Director of Finance, and a Senior Accountant. The Team was chaired by a Purchasing representative as a non-voting member. On September 5, 2023, the Evaluation Team met to discuss the policies and procedures for the evaluation process.
Individual scoring was the chosen method of evaluation for this procurement. Members of the Team performed an independent review of the proposals and later met as a group with the Buyer to discuss their preliminary scores and discuss any questions/concerns they had. Proposals were evaluated based on the following criteria:
|
CRITERION |
WEIGHT |
|
ADV Part II Submittal |
Pass/Fail |
|
1. Qualifications of the Firm |
30% |
|
a. Qualitative (20%) |
|
|
b. Quantitative (10%) |
|
|
2. Staffing & Project Organization |
20% |
|
3. Work Plan |
30% |
|
4. Cost |
20% |
The quantitative review of each proposal was an evaluation of past investment portfolio performance, analyzed by a third-party consultant.
The Evaluation Team first reviewed and scored the proposals based upon the criteria listed above, other than cost and quantitative performance analysis.
|
Rank |
Proposer |
ADV Part II |
Criterion 1 (Max 20%) |
Criterion 2 (Max 20%) |
Criterion 3 (Max 30%) |
Subtotal (Max 70%) |
|
1 |
Chandler Asset Management, Inc. |
Pass |
16.0% |
16.0% |
25.0% |
57.0% |
|
2 |
PFM Asset Management LLC |
Pass |
15.7% |
15.3% |
24.0% |
55.0% |
|
3 |
Pacific Investment Management Company LLC |
Pass |
15.7% |
15.7% |
23.5% |
54.9% |
|
4 |
Insight North America LLC |
Pass |
15.0% |
15.3% |
24.0% |
54.3% |
|
5 |
Meeder Public Funds |
Pass |
14.0% |
14.7% |
23.5% |
52.2% |
|
6 |
Public Trust Advisors, LLC |
Pass |
14.3% |
14.3% |
23.5% |
52.1% |
|
7 |
JPMorgan Asset Management |
Pass |
14.7% |
14.3% |
22.0% |
51.0% |
|
8 |
Allspring Global Investments LLC |
Pass |
13.3% |
14.0% |
23.0% |
50.3% |
|
9 |
RBC GAM-US |
Pass |
14.0% |
13.3% |
20.5% |
47.8% |
|
10 |
Lord, Abbett & Co. LLC |
Pass |
11.7% |
13.0% |
19.5% |
44.2% |
|
11 |
Franklin Templeton Investments |
Pass |
12.7% |
12.0% |
19.0% |
43.7% |
|
12 |
Garcia Hamilton & Associates, L.P. |
Pass |
12.3% |
12.3% |
18.5% |
43.1% |
|
13 |
Amundi Asset Management, US Inc. |
Pass |
12.0% |
12.0% |
19.0% |
43.0% |
|
14 |
PNC Capital Advisors, LLC |
Pass |
12.3% |
12.0% |
18.5% |
42.8% |
|
15 |
Segall Bryant & Hamill |
Pass |
11.3% |
12.0% |
19.5% |
42.8% |
|
16 |
Federated Investment Counseling |
Pass |
12.0% |
12.0% |
18.5% |
42.5% |
|
17 |
New Century Advisors |
Pass |
11.0% |
12.0% |
17.5% |
40.5% |
The firms scoring over 50% were advanced to a third-party consultant for a quantitative analysis of past performance. The quantitative analysis compared the overall rate of return on investments for each firm since 2018.
|
Rank |
Proposer |
Subtotal (Max 70%) |
Quantitative Analysis (Max 10%) |
Subtotal (Max 80%) |
|
1 |
Chandler Asset Management, Inc. |
57.0% |
6.5% |
63.5% |
|
2 |
PFM Asset Management LLC |
55.0% |
6.6% |
61.6% |
|
3 |
Insight North America LLC |
54.3% |
7.1% |
61.4% |
|
4 |
Pacific Investment Management Company LLC |
54.9% |
6.4% |
61.3% |
|
5 |
JPMorgan Asset Management |
51.0% |
10.0% |
61.0% |
|
6 |
Allspring Global Investments LLC |
50.3% |
9.6% |
59.9% |
|
7 |
Meeder Public Funds |
52.2% |
Non-responsive |
N/A |
|
8 |
Public Trust Advisors, LLC |
52.1% |
Withdrew |
N/A |
One firm could not provide the information needed to conduct the quantitative analysis and another firm requested to withdraw their proposal.
The five highest ranking firms were selected for interviews, which were conducted on November 1, 2023. Following the interviews, the Evaluation Team adjusted their scores based on the clarifications provided during the interview process.
|
Rank |
Proposer |
Criterion 1 (Max 30%) |
Criterion 2 (Max 20%) |
Criterion 3 (Max 30%) |
Total Score without cost (Max 80%) |
|
1 |
Chandler Asset Management, Inc. |
22.8% |
16.3% |
25.0% |
64.1% |
|
2 |
Pacific Investment Management Company LLC |
22.7% |
15.3% |
23.5% |
61.5% |
|
3 |
Insight North America LLC |
22.1% |
15.3% |
23.5% |
60.9% |
|
4 |
PFM Asset Management LLC |
22.3% |
15.0% |
23.0% |
60.3% |
|
5 |
JPMorgan Asset Management |
24.0% |
14.0% |
22.0% |
60.0% |
All proposals were accompanied by a sealed cost proposal. Cost proposals for all five remaining firms were opened.
|
Rank |
Proposer |
Subtotal Score without cost (Max 80%) |
Cost (Max 20%) |
Total Score (Max 100%) |
|
1 |
Chandler Asset Management, Inc. |
64.1% |
17.5% |
81.6% |
|
2 |
Insight North America LLC |
60.9% |
20.0% |
80.9% |
|
3 |
PFM Asset Management LLC |
60.3% |
15.9% |
76.2% |
|
4 |
Pacific Investment Management Company LLC |
61.5% |
0.0% |
61.5% |
|
5 |
JPMorgan Asset Management |
60.0% |
0.0% |
60.0% |
The top three firms were invited to submit their Best and Final Offer (BAFO) for pricing, resulting in an adjustment to the cost scoring.
|
Rank |
Proposer |
Subtotal Score without cost (Max 80%) |
BAFO Cost (Max 20%) |
Total Score (Max 100%) |
|
1 |
Insight North America LLC |
60.9% |
20.0% |
80.9% |
|
2 |
Chandler Asset Management, Inc. |
64.1% |
16.6% |
80.7% |
|
3 |
PFM Asset Management LLC |
60.3% |
16.1% |
76.4% |
Based on these results, staff recommends awarding a Professional Consultant Services Agreement to Insight North America LLC for Investment Management Services. The initial term of this Agreement will be five years, with two (2) optional two-year renewals.
CEQA
N/A
FINANCIAL CONSIDERATIONS
This request complies with authority levels of OC San’s Purchasing Ordinance. This item has been budgeted in the FY 2023-24 budget.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OC San website (www.ocsan.gov) with the complete agenda package:
• Professional Consultant Services Agreement