|
Agenda Item
ASR
Control 19-001046 |
||
|
MEETING DATE: |
10/08/19 |
|
|
legal entity taking action: |
Board of Supervisors |
|
|
board of supervisors
district(s): |
All Districts |
|
|
SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
|
|
Department contact
person(s): |
Renee Catanzariti (714)834-2564 |
|
|
|
Duane Bankey (714)834-2081 |
|
Subject: Approve Contract for
Investment Consulting Services
|
ceo CONCUR |
|
Clerk of the Board |
||||||||
|
Concur |
Approved Agreement to Form |
Discussion |
||||||||
|
|
|
3 Votes Board Majority |
||||||||
|
|
|
|
||||||||
|
Budgeted: Yes |
Current Year Cost:
$147,000 |
Annual Cost:
FY 2020-21 $228,000 |
||||||||
|
|
|
|
||||||||
|
Staffing Impact: |
No |
# of Positions:
|
Sole Source:
N/A |
|||||||
|
Current Fiscal Year Revenue: N/A
|
||||||||||
|
Prior Board Action: 10/16/2018
#32, 10/20/2015 #22 |
||||||||||
RECOMMENDED ACTION(S):
Authorize the Chief Human Resource Officer or designee, to execute a contract with Mercer Investments LLC, dba as Mercer Investment Advisers LLC, for Investment Consulting Services effective November 19, 2019, through November 18, 2022, with a cost not to exceed $684,000 with the option to renew for two additional one-year periods at a total two-year cost not to exceed $544,500.
SUMMARY:
Approve the contract with Mercer Investments LLC, dba Mercer Investment Advisers LLC, to provide Investment Consulting Services for the County’s Defined Contribution Plans, the Health Reimbursement Arrangement Plan, Extra-Help Defined Benefit plan and the Defined Contribution and Health Reimbursement Arrangement Advisory Committees.
BACKGROUND INFORMATION:
The County has offered its employees defined contribution plans since 1979. The Plans include the 457(b), 401(a), 3121 Extra-Help plan Defined Contribution Plans, the County’s “1.62 Defined Contribution Plans” consisting of a 457(b) Defined Contribution plan and a 401(a) match plan and the Health Reimbursement Arrangement (HRA) Program, which currently have over 17,000 employees and retirees participating in the programs with assets now over $1.4 billion.
In 1999, the County Executive Office (CEO) established the joint Labor/Management Defined Contribution Advisory Committee (DCAC) to assist in the oversight and direction for the County’s defined contribution programs. The DCAC is comprised of the CEO, Treasurer-Tax Collector, Human Resource Services (HRS) and representatives from various labor organizations. The committee relies on the services of an investment consultant to provide assistance and expertise in managing the programs. In addition to the defined contribution programs, HRS also uses the investment consultant in the oversight of the Extra-Help Defined Benefit Plan and the HRA Program. The HRA was established in 2007 and is a defined contribution health benefit for the Association of Orange County Deputy Sheriffs, Association of County Law Enforcement Managers and Orange County Attorneys Association, as required under current Memorandum of Understanding (MOUs). The investment consultant assists the County with investment fund performance, compliance with laws and regulations, Request for Proposal (RFP) (e.g., record-keeping, HRA, actuary, etc.) and plan design changes.
On October 1, 2013, Mercer Investment Consulting Inc. was selected, based on the results of an RFP, to provide investment consulting services for three years, renewable for an addtional two years, per Board of Supervisors' (Board) policy. On October 20, 2015, the contract with Mercer Investment Consulting Inc. was renewed for an additional two-year period from November 19, 2016, through Jovember 18, 2018. Currently, the County’s investment consultant is Mercer Investment Consulting LLC. The Contract expires on November 18, 2019, and in anticipation of the Contract expiration, the County issued RFP number 017-201907-MC on June 14, 2019. The RFP closed on July 18, 2019, and the County received two responsive proposals from the following vendors:
· Meketa Investment Group
· Mercer Investments LLC, doing business as Mercer Investment Advisers LLC (Mercer)
RFP EVALUATION PROCESS:
An RFP evaluation committee was established and consisted of a Retiree Employees Association of Orange County member and HRS/Employee Benefits representative who participate on the County’s Defined Contribution Advisory Committee, a Health Care Agency staff member, a staff member of Orange County Information Technology and a member of HRS/Employee Benefits. A County Deputy Purchasing Agent (DPA) presided over and attended all committee meetings to monitor the selection process.
The evaluation committee was charged with selecting a proposal that best meets the needs of the County based on the following criteria:
· Background, General Description and Organizational Structure
· Qualifications and Experience in Providing Investment Consulting Services
· Fees
· Delivery of Client Services
· Overall Responsiveness to the Request for Proposal
The evaluation process consisted of two phases:
PHASE I:
Each committee member individually evaluated the proposals in accordance with pre-determined criteria outlined above and independently scored each proposal. The members of the evaluation committee met to discuss their individual observations, comments and scores for each criteria in the proposals. The DPA documented the committee members’ scores and established a rank order for the proposals.
PHASE II:
All vendors were requested to make an oral presentation to the evaluation committee. Following the oral presentations, the members of the evaluation committee completed the scoring process. See Attachment A for the final scores of each proposal.
RFP SCORING:
The table below represents the collaborative scoring effort made by the committee and is the basis for the HRS recommendation included in this ASR. Based on the evaluation results, Mercer received the highest overall evaluation score as shown below.
|
Proposer |
Final Score |
|
Mercer |
77.8 |
|
Meketa Investment Group |
63.1 |
Under the Scope of Services for this agreement, the selected investment consultant will assist the County in the management and oversight of the plans. They will conduct ongoing performance monitoring of the investment funds, including individual fund performance. The consultant will identify under-performing investments and develop and review potential alternatives with the DCAC. Mercer will consult with County staff and the DCAC on compliance issues with current and proposed changes in laws, regulations, ordinances, etc. and the impact of those changes to the plans and programs. The consultant will attend advisory committee meetings, present required reports and provide investment advice as requested.
Upon request by the County, the consultant will provide advice on plan design and refinement of the investment options, as well as all related matters regarding the structure and delivery of the products and services. The consultant will assist in contract negotiations for the Defined Contribution and HRA programs, including advising the County on appropriate fees for service. They will conduct investment fund searches, screen funds and prepare a comprehensive report providing comparative data to assist the County in the evaluation of each fund manager candidate. They will advise and provide guidance to the County during the selection of investment fund finalists for both new and replacement funds and assist with the implementation of new funds. They will review participant education, training material, account statements, communications and the plan website for accuracy and completeness. They will also assist in ensuring the plans administered by the County fully comply with applicable laws and regulations.
Mercer proposed contract revisions that are consistent with revisions previously approved by the Board regarding indemnification, insurance provisions, the addition of a third party beneficiary and arbitration language.
Due to changes in federal regulations, Mercer is requesting the addition of a section titled “Commodity Trading Advice.” Mercer is deemed to be providing commodity-trading advice whenever it recommends a fund or strategy to a client if that fund or strategy uses commodity interests as a significant part of its investment strategy. To comply with this regulation, Mercer has requested the Commodity Trading Advice language be included in the new contract.
FINANCIAL IMPACT:
Appropriations for this Contract are included in the FY 2019-20 Budget for Budget Control 056 and will be included in the budgeting process for future years.
The total costs for the first three years of the Contract is not to exceed $684,000, with an option to extend the Contract for two additional one-year periods at an aggregate total cost for the two years of $544,500. The majority of Mercer’s investment consulting fees are offset by reimbursement to the County from the Administrative Funding Accounts under the Great-West and the International City Management Association contracts and results in minimal cost to the County.
The Contract is contingent upon funding by the County during the term of the Contract. If such funding is not approved, the Contract will be immediately terminated without penalty to the County.
A copy of the contract is on file in the office of the Clerk of the Board.
STAFFING IMPACT:
N/A
ATTACHMENT(S):
Attachment A - Final Scoring Sheet
Attachment B - Contract with Mercer Investments LLC
Attachment C - Risk Assessment Form
Attachment D - Contract Summary Form