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Agenda Item
ASR
Control 18-001035 |
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MEETING DATE: |
10/16/18 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
All Districts |
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SUBMITTING
Agency/Department: |
Human Resource Services (Approved) |
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Department contact
person(s): |
Renee Catanzariti (714) 834-2564 |
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Duane Bankey (714) 834-2081 |
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Subject: Approve Contract Amendment
Number Two with Mercer Investment Consulting LLC
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Agreement to Form |
Discussion |
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3 Votes Board Majority |
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Budgeted: Yes |
Current Year Cost:
$126,000 |
Annual Cost:
FY 2019-20 $84,000 |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 10/25/2015
#22, 10/1/2013 #32 |
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RECOMMENDED ACTION(S):
Authorize the Chief Human Resources Officer or designee to execute Contract Amendment Two with Mercer Investment Consulting LLC, formerly Mercer Investment Consulting, Inc., to extend the current contract for a sixth year for the period November 19, 2018, through November 18, 2019, for a contract amount not to exceed $210,000, under the same terms and conditions and scope of work for a cumulative contract total amount of $1,550,000.
SUMMARY:
Approval of Amendment Number Two to the Contract for Investment Consulting Services with Mercer Investment Services LLC will provide for Mercer Investment Services LLC to continue assisting the County with development of two Request for Proposals that are currently in progress and to provide Human Resource Services additional time to develop and release a Request for Proposal for Investment Consulting Services.
BACKGROUND INFORMATION:
The County has offered employees defined contribution programs since 1979. Currently, over 16,000 employees and retirees participate in the various Defined Contribution Plans with assets in excess of one billion dollars. In 1999, the County Executive Office established the joint Labor/Management Defined Contribution Advisory Committee to assist in the oversight and direction for the County’s Plans. The Committee is comprised of representatives from the County Executive Office, Treasurer-Tax Collector, Human Resource Services, and representatives from the various labor organizations. The committee relies on the services of the investment consultant to provide assistance and expertise to the committee in managing the Plans.
The County currently has a contract with Mercer Investment Consulting LLC (Mercer), formerly Mercer Investment Consulting, Inc., to provide investment consulting services for the County’s Defined Contribution Programs, the Health Reimbursement Arrangement Program and the 1992 Defined Benefit Plan. The original three-year contract and the two one-year renewals have been exercised and the contract renewal expires on November 18, 2018. Prior to the contract expiration, the department plans to issue a solicitation to continue services. Under the Scope of Services of this agreement, Mercer identifies and analyzes changes in firm organization, fund management style and personnel, changes in fund investment guidelines and recommends de-selection or selection of products for all of the County’s Plans. They consult with County staff, the Defined Contribution Advisory Committee and the Health Reimbursement Arrangement Advisory Committee on compliance issues with current and proposed changes in laws, regulations, ordinances, etc. and the impact of those changes to the Plans. They review and make recommendations to the written investment policy guidelines for the Plans and assist County staff and the Committees in analyzing and identifying the need for new or enhanced services. They assist County staff in developing contract language for Request for Proposals (RFP) (e.g., recordkeeping, Health Reimbursement Arrangement, actuary, Retirement Plan Administrative and Investment Services, etc.) and define the rating factors used therein. They provide interest return rates on investments, and provide advice on plan design and the refinement of investment options for the Plans, as well as all related matters regarding the structure and delivery of services/products under the Plans and assist in contract negotiations, including advising the County on appropriate fees for service. Mercer conducts fund searches, screen funds and prepare comprehensive reports providing comparative data to the committee for each fund manager candidate; and advise on the selection of finalist candidates and assist with the implementation of the new fund.
It is a prudent and recommended practice within the industry to engage an investment consultant to provide assessment and advice independent from the firms contracted to provide the investment options and record keeping services. Human Resource Services requests your honorable Board to authorize the Chief Human Resources Officer or designee to execute Amendment Two to increase the current contract maximum obligation to address the additional sixth year of services as described in this Agenda Staff Report, approve the extension of the current contract for an additional year in order to continue providing assessment and advice independent from the firms contracted to provide the investment options and record keeping services for the County Plans, to offset the renewal dates for the current Mercer Contract from the Retirement Plan Administrative and Investment Services and Administration of a Health Reimbursement Arrangement Program RFPs and the Department plans on releasing a solicitation for services in the fall of 2018. Mercer’s consulting services are invaluable to the County in developing the aforementioned RFPs, which are currently in progress. The increase to the maximum monetary limit of the current contract will be primarily funded by Administrative Funding Accounts contained in the County’s Defined Contribution Administrator contract (administered by Empower/Great West Retirement Services) and the County’s Health Reimbursement Arrangement Program contract (administered by International City Management Association – Retirement Corporation). In addition, Mercer is currently assisting Human Resource Services staff in developing contract language and defining rating factors for the Retirement Plan Administrative and Investment Services RFP and the Administration of a Health Reimbursement Arrangement Program RFP. Extending the contract for a sixth year will provide uninterrupted consulting services for the two RFPs.
Contract and Prior Board Actions
On October 1, 2013, the Board, approved the selection of Mercer Investment Consulting, Inc. as the consultant to provide employee benefit investment consultant services, for the County through a Request for Proposal process, for the County’s 457, 401(a), 1.62 and 3121 Defined Contribution, Health Reimbursement Arrangement Program and the Extra Help Defined Benefit Plan effective November 19, 2013, through November 18, 2016, renewable for two additional one-year periods per Board policy.
On October 20, 2015, the Board approved the execution of Amendment One to the Contract with Mercer Investment Consulting, Inc. that increased the then current contract funding amount and approved the renewal of the contract for an additional two-years effective November 19, 2016, through November 18, 2018, to continue providing assessment and advice independent from the firms contracted to provide the investment options and record keeping services for the County’s Defined Contribution Plans, Health Reimbursement Arrangement Program and the Extra Help Defined Benefit Plan.
This contract does not currently include subcontractors or pass through to other providers. See attachment E for Contract Summary Form.
Performance Guarantees:
Included with the contract are Performance Guarantees (PGs) which set minimum standards for services under the Contract while also assisting the County in measuring the effectiveness of Mercer’s performance. This Contract includes five PGs measured on a quarterly and an annual basis and includes:
· Timely responses to verbal inquiries from the County
· Timely responses to written inquiries from the County
· Projects completed by predetermined deadlines
· Account Management Satisfaction
· Consulting Team Continuity
The PG results are shown in Attachment D. The PGs for FY 2017-18 are not yet available; however, HRS is satisfied that Mercer has met the performance guarantees under the contract, and has received client satisfaction ratings of “satisfied” and “very satisfied” throughout the duration of this contract.
FINANCIAL IMPACT:
Contract Amendment Two will increase the current contract amount by $210,000 for a total contract amount of $1,550,000 through November 18, 2019. The FY 2018-19 Contract cost is projected to be $210,000 and is offset by reimbursement from the County’s Defined Contribution Administrator and Health Reimbursement Arrangement Administrator contracts. The two contracts for Administrative Services provide funding for administrative costs incurred by the County for overseeing and maintaining Plans such as the Investment Consulting contract and the Health Reimbursement Arrangement Plan. Appropriations for this Agreement are included in the FY 2018-19 Adopted Budget and will be included in the budgeting process for FY 2019-20.
STAFFING IMPACT:
N/A
ATTACHMENT(S):
Attachment A – Mercer Investment Consulting Services
Amendment Two
Attachment B – Mercer Investment Consulting Services Contract
Attachment C – Mercer Investment Consulting Services Amendment One
Attachment D – Mercer Financial Performance Guarantees for Fiscal Years
2014-2017
Attachment E – Contract Summary Form