REQUEST FOR QUOTES ACTUARIAL CONSULTING SERVICES - GASB 43 & 45 To Valuate the Town of Reading Retiree Medical & Life Insurance Obligation

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1 REQUEST FOR QUOTES ACTUARIAL CONSULTING SERVICES - GASB 43 & 45 To Valuate the Town of Reading Retiree Medical & Life Insurance Obligation You are cordially invited to submit an RFQ for Actuarial Consulting Services in compliance with GASB 43 & 45 to actuarially value the Town of Reading s Retiree Medical and Life Insurance Obligation in accordance with the attached scope of service, terms and conditions. Contact: All quotes must be submitted in a sealed envelope, plainly marked: OPEB Actuarial Consulting Services Town of Reading Attn: Sharon Angstrom, CPA, Town Accountant 16 Lowell Street Reading, MA All quotes must be received no later than June 18, 2013 at 5:30 p.m. Sharon Angstrom Town Accountant Telephone: (781) Fax: (781) sangstrom@ci.reading.ma.us 1

2 1. INTRODUCTION REQUEST FOR QUOTES ACTUARIAL CONSULTING SERVICES (GASB 43 & 45) The Town of Reading is seeking an actuarial review of the Town s postemployment benefits obligation for retired employees. The Town needs an estimate of the outstanding and future liabilities associated with providing its post-employment benefits. 2. ATTACHMENTS The attachments below are included with this Request for Quotes (RFQ) for your review: Attachment 1 Scope of Services Attachment 2 Certificate of Foreign Corporation Attachment 3 Certificate of Tax Compliance Attachment 4 Certificate of Non-Collusion Attachment 5 Timeline Attachment 6 Price Proposal Form 3. INSTRUCTIONS TO BIDDERS 3.1 Examination of Quote Documents The submission of a Quote shall be deemed a representation and certification by the Bidder that they: Have carefully read and fully understand the information that was provided by the Town to serve as the basis for submission of this proposal Have the capability to successfully undertake and complete the responsibilities and obligations of the proposal being submitted Represent that all information contained in the proposal are true and correct Did not, in any way, collude; conspire to agree, directly or indirectly, with any person, firm, corporation or other Bidder in regard to the amount, terms or conditions of this proposal Acknowledge that the Town has the right to make any inquiry it deems appropriate to substantiate or supplement information supplied by the Bidder, and Bidder hereby grants the Town permission to make these inquiries, and to provide any and all related documentation in a timely manner. No request for 2

3 modification of the proposal shall be considered after its submission on grounds that Bidder was not fully informed to any fact or condition. The Town shall not be responsible for nor be bound by any oral instructions, interpretations or explanations issued by the Town or its representatives. 3.2 Submission of Quotes All non-price Quotes must be submitted in a sealed envelope, plainly marked: OPEB Actuarial Consulting Services non-price quote Town of Reading Attn: Sharon Angstrom, Town Accountant 16 Lowell Street Reading, MA All Price Quotes should be in a clearly marked as such in a separate envelope inside the non-price quote material. Quotes must be delivered no later than 5:30 p.m. on Tuesday, June 18, All Quotes received after that time will be returned to the Bidder unopened. Note that the deadline for Questions is June 11 th, as described further herein. 3.3 Withdrawal of Quotes All bidders may withdraw its quote at any time before the expiration of the time submission of quotes by delivering a written request for withdrawal signed by, or on behalf of, the Bidder. 3.4 Rights of the Town of Reading This RFQ does not commit the Town to enter into a contract, nor does it obligate the Town to pay for any costs incurred in preparation and submission of proposals or in anticipation of a contract. The Town reserves the right to: Make the selection based on its sole discretion; Reject any and all quotes; Issue subsequent Request for Quotes; Postpone opening for its own convenience; Remedy technical errors in the Request for Quotes process; Accept other than the lowest quote if it is determined to be in the best interest of the Town; 3

4 Waive informalities and irregularities in the Quotes and/or Enter into an agreement with other Bidders in the event the originally selected Bidder defaults or fails to execute an agreement with the Town. An agreement shall not be binding or valid with the Town unless and until it is executed by authorized representatives of the Town and of the Bidder. 4. INFORMATION TO BE SUBMITTED These instructions outline the guidelines governing the format and content of the proposal and approach to be used in its development and presentation. The intent of the RFQ is to encourage responses that clearly communicate the Bidder s understanding of the Town s requirements and its approach to successfully provide the products and/or services on time and within budget. Only that information which is essential to an understanding and evaluation of the proposal should be submitted. Items not specifically and explicitly related to the RFQ, e. g. brochures, marketing material, etc. will not be considered in the evaluation. All proposals shall address the following items in order listed below and shall be numbered 1 through 5 in the proposal document. 4.1 Summary This section shall discuss the highlights, key features and distinguishing points of the proposal and a list of individuals and contacts and how to communicate with them. 4.2 Profile on the Firm(s) This section shall include a brief description of the Prime Bidder s firm. Include a discussion of the Prime Bidder firm s financial stability, capacity and resources. Include all other firms participating in the project, including similar information about the firms. Additionally, this section shall include a listing of any lawsuits or litigation and the result of that action resulting from (a) any public project undertaken by the Bidder or by its subcontractors where litigation is still pending or has occurred within the last five years or (b) any type of project where claims or settlements were paid by the consultant or its insurers within the last five years. 4

5 4.3 Qualifications of the Firm This section shall include a brief description of the Bidder s and lead actuary s qualifications and previous experience on similar or related projects. Provide descriptions of the pertinent project experiences with other public municipalities that includes a summary of the work performed, the total project cost, the percentage of work the firm was responsible for, the period over which the work was completed, and the name, title, and phone number of clients to be contacted for references. Give a brief statement of the firm s adherence to the schedule and budget for the project. 4.4 Work Plan This section shall present a well-conceived work plan for the project. Include a full description of major tasks and subtasks. This section of the proposal shall establish that the Bidder understands the Town s objectives and work requirements and Bidder s ability to satisfy those objectives and requirements. Succinctly describe the approach for addressing the required services and the firm s reliance on Town resources, outlining the approach that would be undertaken in providing the requested services. Approach State the overall approach of the valuation, including objectives, scope of work to be performed and methodologies to be used. Describe how the firm will determine the proper actuarial cost method, actuarial asset valuation method, amortization method and key assumptions to the valuation based on relevant accounting and actuarial standards. Some key assumptions to consider as part of this discussion are: o Turnover o Retirement Age o Disability retirement age o Mortality o Projected salary increases o Inflation rate o Healthcare cost trend data for appropriate region o Amortization timeframe o Investment return o Post retirement benefit changes o Actuarial assumptions associated with the method (projected unit credit, entry age normal, etc.) Provide an analysis of allowed actuarial methods and amortization methods with the pros and cons of each method and recommend the most appropriate or commonly used one or two methods for this type of study. 5

6 Describe how the firm would assist in the interpretation of the plan and value the associated costs in situations where there is ambiguity related to the substantive plan. Timeline The firm will identify the major tasks in the valuation engagement and suggested timeline for completion. Data Requirements The actuarial firm should list all data requirements, that they require to complete the valuation and in what type of format that the data must be provided. Support Provide a description and estimate of hours of any support that may be required of the Town s staff. Sample Report Include in an Appendix of the firm s response a copy of a sample report. 4.5 Project Costs (Provide in a Separate Envelope Clearly Marked as Price Quotes ) The fee information is relevant to a determination of whether the fee is fair and reasonable in light of the services to be provided. Provision of this information assists the Town in determining the firm s understanding of the project. This section shall include the cost quotes to provide the services desired. PLEASE NOTE: The Town of Reading does not pay for services before it receives them. Therefore, do not propose contract terms that call for upfront payments or deposits. 5. REVIEW AND SELECTION PROCESS Town staff will evaluate the proposals provided in response to this RFQ based on the following criteria: Quality and completeness of proposal; Bidder s experience, including the experience of staff to be assigned to the project, the engagements of similar scope and complexity; Cost to the Town; Bidder s proposed timeline and need for/use of Town resources; Bidder s prior record of performance with other municipalities or governmental agencies. 6. ORAL INTERVIEWS Bidders may be required to participate in an oral interview as part of the review process. 6

7 7. NON-CONFORMING PROPOSALS A proposal shall be prepared and submitted in accordance with the provisions of these RFQ instructions and specifications. Any alterations, omissions, addition, variance, or limitation of, from or to a proposal may be sufficient grounds for non-acceptance of the proposal, at the sole discretion of the Town. 8. QUESTIONS Please direct any questions regarding this RFQ to Sharon Angstrom, Town Accountant, Town of Reading, 16 Lowell Street, Reading, MA 01867, sangstrom@ci.reading.ma.us, (781) (Deadline June 11, 2013) 7

8 ATTACHMENT 1 TOWN OF READING REQUEST FOR QUOTATIONS SCOPE OF SERVICES A. Project Purpose The Town of Reading is seeking an actuarial review of the Town s postemployment benefits obligation for retired employees. The Town needs an estimate of the outstanding and future liabilities associated with providing its post-employment benefits by Town Department, which includes Reading Municipal Light Department, Town, Water, Sewer, Storm Water and Retirement Admin. B. Background The Town provides post-retirement medical benefits to employees that retire from the Town under Massachusetts General Laws Chapter 32. There are currently 778 active employees who are, or could become, eligible for this benefit. There are currently 572 retirees or surviving spouses who are receiving this benefit. Active Employees in Retirement System # Employees: 778 Currently Enrolled in Life Insurance: 231 Eligible for Health Insurance: 767 Currently Enrolled in Health Insurance: 487 Family Enrollments HMO Blue: 194 PPO Blue Options: 96 Individual Enrollments HMO Blue: 136 PPO Blue Options: 61 Retirees # Retirees: 572 Currently Enrolled in Life Insurance: 329 Eligible for Health Insurance: 491 8

9 Currently Enrolled in Health Insurance: 426 Family Enrollments HMO Blue: 29 PPO Blue Options: 23 Individual Enrollments HMO Blue: 41 PPO Blue Options: 57 Medex Enrollments: 467 (includes 27 surviving spouses of retirees who do not receive a retirement allowance) Town of Reading Data Population: 24,000 FY13 General Fund Budget: $78 million C. Scope of Services The objective of this project is to be able to recognize OPEB costs systematically over employee s years of service and to provide relevant information about the actuarial accrued liabilities for these benefits. Specifically, the selected firm will provide: 1. A determination of the Town s retiree medical benefits actuarial liability as of July 1, A breakdown of this liability by department. 3. An analysis and explanation of the various funding strategies that might be considered for funding and the cost of the benefits associated with past service and strategies for reducing the cost of the benefit going forward. 4. The required annual total contribution amounts by department under the various funding strategies utilizing 30 year amortization period. 5. A summary of the actuarial basis and assumptions used in the valuations. 6. An executive summary of the results of this analysis. 9

10 7. The contracted firm shall perform the following activities to complete the actuarial funding study for the Town s OPEB programs: Prepare a written report summarizing conclusions and recommendations and documenting the analysis. Attend one or more meetings with Town officials and possibly with the external auditor to discuss the report. Make a presentation of the final report to the Board of Selectmen and the Finance Committee. D. Terms of Agreement The term of the agreement is one year. Please note that this agreement will be contingent upon funding. 10

11 ATTACHMENT 2 CERTIFICATE OF FOREIGN CORPORATION The undersigned hereby certifies that it has been duly established, organized, or chartered as a corporation under the laws of: (Jurisdiction) The undersigned further certifies that it has complied with the requirements of Massachusetts General Law Chapter 30, Section 39L and with the requirements of Massachusetts General Law Chapter 181 relative to registration and operation of foreign corporations within the Commonwealth of Massachusetts. Signature of individual submitting bid or proposal Name (please print or type) Title (please print or type) Name of Corporation (please print or type) AFFIX CORPORATE SEAL HERE Name and Legal Address of Registered Agent in Massachusetts Agent s Name and Title (please type or print) Business Name, if applicable Agent s Mailing Address (cannot be a post office box) 11

12 ATTACHMENT 3 CERTIFICATE OF COMPLIANCE WITH MASSACHUSETTS TAX LAWS Pursuant to Massachusetts General Law Chapter 62C, Section 49A, the undersigned acting on behalf of the Contractor*, certify under penalties of perjury that to the best knowledge and belief, the Contractor* is in compliance with all laws of the Commonwealth relating to taxes, reporting of employee and contractors, and withholding and remitting child support. Individual Signature Date Name (please print or type) Social Security Number Corporate Corporate Name (please print or type) Signature of Corporate Officer Date Name of Corporate Officer (please print or type) Title Taxpayer Identification Number As used in this certification, the word Contractor shall mean any natural person, business, partnership, corporation, union, committee, club, or other organization, entity, or group of individuals. 12

13 ATTACHMENT 4 CERTIFICATE OF NON-COLLUSION Town of Reading, Massachusetts Request for Quotes Actuarial Consulting Services GASB 43 & 45 Due Date: Tuesday, June 18, :30 pm CERTIFICATE OF NON-COLLUSION The undersigned certifies under penalties of perjury that this bid or proposal has been made and submitted in good faith and without collusion or fraud with any other person. As used in this certification, the word person shall mean any natural person, business, partnership, corporation, union, committee, club, or other organization, entity, or group of individuals. Signature of individual submitting bid or proposal Name of Business (please type or print) 13

14 ATTACHMENT 5 Timeline: June 11, 2013 June 18, 2013 June 20, 2013 August 29, 2013 Last day to submit questions to Town Accountant Deadline to submit quote to Town (5:30 pm) Winning bidder selected by Town Final actuarial valuation report due to Town 14

15 ATTACHMENT 6 PROJECT COSTS OPEB Actuarial Valuation We propose the following fee to complete all services associated with this Request for Quotes. Total $ Written: The Consultant will execute the Town's Standard Contractor Consultant Contract (sample attached). Town will not pay for any additional work on this project without the prior written approval. Conditional contracts or proposals are not acceptable. Your signature below acknowledges your understanding of these parameters and your willingness to live within the stated financial constraint of the project. Company: Authorized Signature: Print Name: Title: Date: 15