EASTERN CARIBBEAN CURRENCY UNION AUTOMATED CLEARING HOUSE (ACH) OPERATOR REQUEST FOR PROPOSAL (RFP)

EASTERN CARIBBEAN CURRENCY UNION AUTOMATED CLEARING HOUSE (ACH) OPERATOR REQUEST FOR PROPOSAL (RFP) Prepared by Banking and Monetary Operations Department EASTERN CARIBBEAN CENTRAL BANK ST KITTS

TABLE OF CONTENTS 1.0 PRE-AMBLE... 1 2.0 BACKGROUND... 2 3.0 CURRENT CHEQUE CLEARING PROCESS... 2 4.0 ISSUES WITH THE CURRENT SYSTEM... 4 5.0 TECHNOLOGY ENVIRONMENT... 5 6.0 STANDARDS ADOPTED BY THE ECCU... 5 7.0 ACH IMPLEMENTATION OBJECTIVES... 7 8.0 PURPOSE OF REQUEST FOR PROPOSAL (RFP)... 7 9.0 FUNCTIONAL REQUIREMENTS... 9 10.0 OPERATOR SPECIFICATION... 15 11.0 IMPLEMENTATION/PROJECT PLANNING... 18 12.0 COSTS... 18 13.0 REFERENCES AND OTHER RELEVANT INFORMATION... 19 14.0 CONTACT AT ECCB... 20 15.0 PROPOSAL CONTENT AND FORMAT... 20 16.0 INSTRUCTIONS FOR SUBMISSION OF PROPOSAL... 24 17.0 EVALUATION AND SELECTION... 25 18.0 CONTRACTUAL TERMS AND CONDITIONS... i

1.0 PRE-AMBLE The objective of this Request for Proposal (RFP) is to enable the ECCB to select an Operator for operational outsourcing of the planned ECCU Automatic Clearing House (ACH). In addition to outsourcing of the operation of the ACH the ECCB is also expecting the selected Operator of the ACH (ACH Operator) to coordinate and execute the ACH implementation in collaboration with the ECCB and the chosen vendor of the ACH application software (ACH Vendor). Is should be noted that this acquisition process and the associated RFP is being conducted in parallel with the ACH Application Software acquisition and that the potential ACH Application Software providers already have submitted their response to the ACH Application Software RFP. The ECCB expects the selected ACH Operator to cooperate with the selected ACH Vendor on the development of the production and disaster recovery configurations of the ACH to enable the ECCB to enter into an outsourcing contract with the ACH Operator. The outsourcing contract must ensure that the operational ACH complies with the security and resilience requirements inherent in the standards set out in the BIS Core Principles for Systemically Important Payment Systems. In this context the ACH Operator and the ACH Vendor must put in place a fully fault tolerant system configuration which guarantees system availability of not less than 99.95%. Both the ACH Operator and the ACH Vendor will be required to include in their respective contractual obligation a Service Level Agreement underpinning the operational availability and resilience specified above. 1

2.0 BACKGROUND The Eastern Caribbean Currency Union (ECCU) refers to the jurisdiction of the Eastern Caribbean Central Bank (ECCB) that shares the Eastern Caribbean Dollar. The ECCU comprises of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia and St. Vincent and the Grenadines. The countries are island states, physically and politically separated. Currently, there are 40 individually licensed commercial banks operating within the ECCU. In accordance with Part VIII Section 36, the ECCB owns and operates a cheque clearing house segmented into nine clearing facilities across ECCU, including a separate clearing facility in Nevis. Considering, clearing activity by territory, the following table illustrates the current number of participants including the ECCB. Table 1: Clearing House Participation in the ECCU Country Banks/Branches ECCB Anguilla 4 1 Antigua and Barbuda 8 1 Dominica 4 1 Grenada 5 1 Montserrat 2 1 Saint Kitts and Nevis (Basseterre) 5 1 Saint Kitts and Nevis (Charlestown) 5 1 Saint Lucia 6 1 St. Vincent and the Grenadines 4 1 43 9 3.0 CURRENT CHEQUE CLEARING PROCESS The ECCB operates a net settlement system for the clearing of cheques drawn on licensed commercial banks operating within the ECCU. In each business day, a clearing settlement is conducted in each jurisdiction. The process involves banks physically transporting cheques drawn on each other to the ECCB s 1 offices where they are exchanged. Detailed obligations and receipts are tallied and a net position derived. 1 In Nevis the location for the exchange of cheques is rotated weekly among the commercial banks. 2

This net position is then processed manually by the Central Bank, through its Real Time Gross Transfer System (RTGS) to settle obligations and receipts between all parties. Approximately 25,000 cheques are exchanged between participants daily. Given the system s infrastructure, two different clearing mechanisms are utilised in the ECCU. These are the clearing of cheques within the same territory and the clearing of cheques across territories. The majority of cheque clearance (99%) currently occurs within the same territory and takes T+2 days for main branches (illustrated in Figure 1) and T+3 days for out of town branches. Figure 1 Current Paper-based Cheque Clearance System Payee Cheque Writer 1. Cheque 5. Debits Customer a/c 6. Returns - Insufficient Funds) Day 3 (T+2) 10. Return to Customer - Day 3 (T+2) 2. Deposit on Day 1 (T) 7. Return Items 8. Return Items Clearing House 4. Day 2 (T+1) 3. Day 2 (T+1) Bank-A 5. Central Bank (Settlement) Day 2 (T+1) 9. Central Bank (Settlement) Day 3 (T+2) Bank-B 3

Cheques presented in one ECCU territory but drawn on a bank in another ECCU territory are not presented through the clearing house of the territory where the cheque was received. In those instances, the cheques would be sent on collections to a correspondent bank in the territory of the issuing bank. The correspondent bank would then present the cheque through the local clearing house arrangement. The funds received would then be credited to the depositor s bank s account with the appropriate notification. This arrangement takes T+10 to 27 days to settle the transaction. Currently, all cheques must be physically presented to the issuing branch. Therefore, inter-territory cheques take a longer time than locally drawn cheques as the physical cheque must be delivered via the post or courier to the issuing bank. 4.0 ISSUES WITH THE CURRENT SYSTEM Inter-island payments have been mostly stymied as there is no infrastructure to support the efficient means of payments between the countries. In addition, the infrastructure supports a heavy reliance on cash and cheques and does not encourage alternate means of making retail payments. Alternate payment products mainly consist of cards modelled after a consumer to business model. Generally, there are no efficient alternatives to cash, cheques and costly wire transfers for making consumer to consumer, business to business and business to consumer payments, resulting in less than optimal business activity. The ECCB s primary concern is the effective and efficient settlement of retail payments within the ECCU which includes all payment models. The ECCB is of the view that without an efficient infrastructure to facilitate payments and settlements of transactions, economic growth within the ECCU will be negatively impacted. The Bank has already seen indications that multiple pools of liquidity are being maintained to facilitate settlement of various payment instruments. A separate pool of liquidity is being maintained for settlement of card transactions, compared to liquidity being maintained 4

for settlement of cheque related transactions. In addition, inter-island economic activity remains depressed due in part to a lack of efficient infrastructures. 5.0 TECHNOLOGY ENVIRONMENT There are a number of technology platforms in place at each of the banks. These include but are not limited to AS/400, UNIX and Windows Servers. There is a mix of proprietary and commercial software products in use for the core banking systems. Some of the banks have their core technology run remotely on island or off island in Barbados, Trinidad, the US or Canada. The ability to interface with both a domestic domiciled and international banking system is critical. A Vendor Request for Proposal (Vendor RFP) to provide an application solution for the ECCU was disseminated on 13 August 2010. Nine proposals to Vendor RFP were received from Aperta, Montran, Profit Stars, SWIFT, Caribbean Credit Card Corporation Ltd, Bevertec, Aptys Solutions, 3i Infotech and PaySett. The hardware and infrastructural requirements vary from vendor to vendor. 6.0 STANDARDS ADOPTED BY THE ECCU The ECCB recognises the role that Magnetic Ink Character Recognition (MICR) and image exchange and processing plays in improving the automated processing of cheques. The ECCB further recognises the role that such functionalities could play for the ECCU in facilitating cheque truncation and improving the conduct of retail transactions across the ECCU. Therefore, in consultation with the commercial banks, the ECCB has adopted the following standards to support the automated processing of cheques and retail electronic funds transfers through the ECCU: 6.1 MAGNETIC INK CHARACTER RECOGNITION (MICR) The ECCB has adopted the Canadian Payment Association (CPA) Code 006 Standards for MICR and cheque standardisation. These standards can be accessed via the http link: www.cdnpay.ca/rules/pdfs_rules/standard_006.pdf 5

6.2 STANDARDS FOR CHEQUE IMAGING AND DATA EXCHANGE The X9.100-180 standard supports multiple currencies, the widest range of image formats in image exchange, and is the foundation for other image exchange standards. It offers currency and image flexibility beyond those supported by the other two standards and therefore will offer the ECCU ACH all of the following benefits: 1. An internationally accepted standard. 2. Multiple currency support to facilitate, if necessary, the clearing of multiple currencies locally through the ACH and would bode well for any future integration with other ACHs. The ECCU has adopted the American National Standards Institute s (ANSI) X9.100-180 standard for cheque image exchange. To support X9.100-180, the ECCU is considering the adoption of ANSI X9.100-181. 6.3 ACH STANDARDS FOR ELECTRONIC FUNDS TRANSFERS The National Automated Clearing House Association s (NACHA) standard for electronic payments was adopted by the ECCU. The Standard was recognised for its international appeal and wide use in North America as the default standard for electronic funds transfers through an ACH environment. The ACH Operator is expected to participate in the review, finalisation and adoption of the rules to support the NACHA Standards. 6

7.0 ACH IMPLEMENTATION OBJECTIVES The ACH s objective is to: 1. Develop/implement a cost efficient clearance and settlement mechanism between ECCU member banks for retail payments which meets international standards. 2. Facilitate the functional realization of the ECCU Single Financial Space initiative. 3. Reduce credit and other risks in the retail payment system of the ECCU. The critical success factors regarding the implementation of the ACH will therefore be reflected in: 1. The automated receipt/upload of payment instructions in multiple file formats from any end-user through a system participant to a final beneficiary. 2. Seamless interface with a variety of internal and external applications, including the RTGS at the ECCB for efficient settlement of multilateral netted positions. 3. The performance of multiple intra-day clearance for cheque and electronic transactions. 4. The performance of regional (inter-territory) transaction clearance and settlement as seamless as intra-territory clearance and settlement. 5. The accommodation of expedited cheque clearance and settlement for items designated as large value. 8.0 PURPOSE OF REQUEST FOR PROPOSAL (RFP) This RFP seeks a qualified outsourcing service provider capable of operating the proposed central ACH on behalf of the ECCU. The proposed ACH will provide payment message processing, clearing and settlement functions supported by the ability to link with a wide variety of participants of the ACH including the Central Bank in a cost effective manner. A separate Request for Proposal has been issued and the 7

submitted proposals for supply of the ACH Application Software are currently being evaluated. This RFP solicits Operators to propose the provision of outsourcing services aimed at delivering a cost effective and complete end-to-end operational environment to support a modern cheque clearing operation combined with an electronic funds transfer system preferably on a fixed price basis in compliance with international standards including the Bank for International Settlements (BIS) Core Principles for Systemically Important Payment Systems. It is expected that the selected Operator must collaborate with the ECCB and the selected ACH Vendor to be able to deliver a service in support of the following: 1. Facilitate operations, processes and procedures to maximize efficiency and minimize cost. 2. Efficiently process minimum volumes of at least 25,000 transactions per day. 3. Within five years efficiently process projected volumes of up to 25,000 transactions per hour. 4. Provide adequate staffing to support operations, technical support, client support/customer services and administration. 5. Back-up data storage and perform data warehousing. 6. Conduct training for participants, the Central Bank and the ECCU on implementation and as required in relation to the preparation, processing and submission of data to the ECCU ACH. 7. In collaboration with the Central Bank provide project management support and administration of the Project activities during the selected ACH vendor s implementation of the ACH, including but not limited coordination of hardware and network acquisition and installation, ensuring timely participant readiness and facilitate implementation connectivity between the Participant Banks and the ACH. 8. In collaboration with the chosen ACH Vendor provide detailed Installation and Implementation Plans. 8

9. Provide Service Level Agreement in support of a fully fault tolerant operation of the ACH guaranteeing security, resilience and an availability of not less than 99.95%. 10. Provide secure network facilities to allow the participant banks and Central Bank to communicate and allow the transfer of payment data and any associated images between the participants. 9.0 FUNCTIONAL REQUIREMENTS At minimum the Operator will be required to deliver under a Services Agreement: 9.1 IMPLEMENTATION MANAGEMENT The Operator will be required to negotiate detailed hardware, system software and network requirements with the successful ACH Vendor. In addition, the Operator will discuss and negotiate with Vendors on behalf of the ECCU ACH as necessary, on the respective contract renewal dates and shall be responsible for the retention of all contract agreements negotiated by them. 9.2 PROCUREMENT OF NEW OR REPLACEMENT SYSTEMS Once the ACH is in fully operational and in production the Operator shall evaluate, together with duly appointed representatives of the ECCU ACH, any new software or hardware that is being considered for implementation and use by the ECCU ACH to ensure that it is in keeping with the Operator s and ECCU ACH s strategic business objectives. The Operator may own all or some aspects of the hardware required to support the ECCU ACH and may offer the use of the hardware to the ECCU ACH on a contractual basis as will be detailed in the Services Agreement. The acquisition and implementation of all such new systems shall be handled in accordance with an agreed Operator s Project Management Framework. 9

9.3 SYSTEMS MANAGEMENT The Operator shall manage, maintain, house and operate the hardware and software necessary to provide the automated clearing house services required to support the ECCU ACH. 9.4 SOFTWARE LICENSING AND MAINTENANCE The Operator will be required to make arrangements for the necessary ongoing support licensing and maintenance of the software that is specific to the applications provided to support the ECCU ACH solution and covered by agreement, including the selected Vendor s software and utility system management tools. 9.5 CONNECTIVITY AND NETWORK TOPOLOGY This project aims to create a single financial space for the ECCU. The Operator is required to provide the required network to support this arrangement including but not limited to nodes of access, points of presence, servers, dial-up, and physical arrangements. It is imperative that the infrastructure not only be efficient but readily accessible. Therefore, access may be provided by a point of presence (POP) in each territory or alternatively an economical and efficient means of facilitating same day settlement service for less time sensitive retail payments. This may involve either dialup at local costs or continuous link via a VPN or similar facility. ECCB anticipates that the preferred and primary form of communication between the participants and the ECCU ACH will be TCP/IP; however, there may be instances where other exchange processes such as SWIFT to facilitate settlement may be required. 9.6 PROBLEM MANAGEMENT 9.6.1 Support and Help Desk Services The Operator will be required to provide adequate systems to manage and interface with the participants of the ECCU ACH to ensure the management and resolution of any issues arising. This will include Help desk facilities, maintenance and support services where applicable. 10

9.6.2 Problem Definition, Escalation and Resolution Consistent with minimum agreed service levels, the Operator will be responsible for remedying any deficiencies in services identified by the participants and shall notify promptly and in writing, of any changes or revisions to operations. Any changes or revisions to operations or processing for problem resolution must be fully tested, verified, and accepted in a test environment prior to their planned and controlled introduction to the live processing environment. 9.7 SECURITY AND BUSINESS CONTINUITY 9.7.1 System Security Requirements The Operator is required to demonstrate capacity to adopt, comply with and execute best security practices for access to and management of the provision of sensitive payment system processing, consistent with international best practices. The Operator will be required to manage information and data security in such a way as to restrict unauthorized access and shall protect and maintain the integrity of all of the Client s customer data. Security and encryption standards must conform to industry best practice and should cover: 1. Security of data whilst in transit over the network. Network security must include appropriate encryption. 2. Security of data whilst stored in the central repository. This must cover transient and permanently stored data. 3. Physical and virtual Access security. 4. Archival methodology. 5. Access by individual users must be monitored and logged including logon attempts and data modification audit trails. Audit information should include all relevant details for indentifying the source of any significant actions; this shall include the location of the action. 6. Security features included in the respective designs. 11

9.7.2 Business Continuity/Contingency The Operator must have a robust business continuity and business contingency functionality in place that allows for the Operator to enter into a contract with the ECCU in support of the following requirements: 1. Adequate backup of data on a real time basis, suitable for system restore and operational continuity, when required. 2. Primary and secondary server configurations with suitable failover functionality, such as mirroring or clustering. 3. End-of-day/next settlement cycle period guaranteed for ECCU wide payments. The system must be recoverable within a clearing cycle. Where there is more than one cycle intra day, an end of day failure must provide settlement by the first cycle for the next business day. 4. System must be available 24 hours daily, seven days weekly with a availability of not less than 99.95%. 5. Must be expandable over time to provide individual territory settlement in the event of a problem with the Central Server(s) / Payment Processing System(s). Therefore, in the event of inaccessibility to central processing local servers would fail over to facilitate at minimum local clearing and settlement on a territory basis. 6. Documentation and communication of all contingency arrangements to all system participants as required and at least when any procedures or arrangements are modified. 9.8 PERFORMANCE TRACKING AND REPORTING The Operator shall conduct ongoing monitoring of production environment to ensure availability and to assess the level of service being provided to all participants. 12

9.8.1 Service Review and Reporting The Operator will be required to provide written reports to the ECCU ACH on a scheduled basis on service levels. In addition, the Operator would be required to participate in and report at scheduled meetings to cover (as applicable): 1. Service performance levels 2. Support performance levels 3. Installation performance 4. Equipment issues 5. System issues 6. Compensation issues 7. Administrative Issues 8. Security Issues 9. Other 9.9 STATISTICAL REPORTING AND BILLING The Operator would be required to collate and provide defined and ad-hoc statistics to the ECCU ACH, the Central Bank and the participants of the system. Reports may cover activity of the ECCU ACH, Billing and Financial Reports, and others identified during the system implementation. The Operator would be required to: 1. Manage the billing of ACH participants including detailed level charging determined by, but not limited to: a. Source of input. b. File, batch and transaction levels. c. Number of transmissions received. d. Number of returns. e. Number of other media reports, by page. f. Number of adjustments. g. Number of reversals. h. Number of adds/changes/deletes. 13

2. Support delivery of reports as actual data from database as well as formatted and printed. The Operator shall provide the above on behalf of the ECCU ACH and shall work with the ECCU ACH to ensure an appropriate billing mechanism is provided. 9.10 STAFF TRAINING AND COMPETENCE 9.10.1 Technical Training - Operator The Operator will be required to engage duly qualified personnel to provide the services required by the ECCU ACH and shall ensure that all staff involved in the provision of these services to the ECCU ACH are properly trained and fully capable of performing their duties in a competent and efficient manner. 9.10.2 User Documentation The Operator in conjunction with the ACH Solution Vendor will be required to provide all participants with the necessary User Documentation for all applications and system components covered in providing the complete ECCU ACH Solution. 9.10.3 User Training The Operator in conjunction with the ACH Solution Vendor shall ensure that all relevant staff of participants in the ECCU ACH are able to operate and use the software and system components in accordance with the procedures outlined in the User Documentation, provided by the Operator and Vendor, for the Applications and components provided under Agreement. 14

9.10.4 Training on New/Upgraded Software/products The Operator will be responsible for notifying the Client in advance of any planned changes to these systems and/or equipment so that adequate arrangements can be made for the necessary training of staff if and where applicable. 10.0 OPERATOR SPECIFICATION The Operator is required to demonstrate the competence and capacity to undertake the functionalities outlined in the Functional Requirements. To assist in illustrating such capabilities, the Operator is asked to provide the following: 10.1 HARDWARE Please indicate the type of hardware your system or services can run on and/or you are able to support: 1. Mainframe: Type(s), including brands, model numbers, configuration(s). 2. Mid-range: Type (s), including brands, model numbers, configuration(s). 3. PC/Server: Type (s), including brands, model numbers, configuration(s). 10.2 SYSTEM SOFTWARE Please detail: 1. Operating Systems (O/S) that you support. 2. The databases supported (include brand, version numbers, and platforms). 3. The version of the software currently in use. 4. The number of back versions that you currently support. 10.3 BENCHMARKS Provide assumptions, performance and background data on your most recent and all relevant software performance benchmarks by platform (if multiple platforms). 10.4 CONNECTIVITY/NETWORK TOPOLOGY Please advise if you support: 15

1. TCP/IP (via Secure VPN methodology). 2. FTP Put or Get. 3. Other forms of Asynchronous transmission. 4. Other communications methods, such as bisynchronous/mainframe-based transmissions. 5. Encrypted file delivery and the ability to de-encrypt the file by the participants. Please describe: a. Encryption options. b. Methodology used for data authentication. 6. Any other formats and protocols. 10.5 SYSTEM SECURITY Kindly outline: 1. How segregation of duties is managed. 2. How the software or service is secured from unauthorised access, tampering or other potential fraudulent activities by employees. 3. How the installation site(s) is protected from unauthorised individuals or external fraud. 10.6 GENERAL BUSINESS CONTINUITY/CONTINGENCY Kindly outline: 1. The contingency plans in the event of a production outage. 2. The contingency plans required by participants, the ECCU ACH and/or the ECCB in the event of a production outage. 3. Your off-site backup facilities/plans currently in operation. 4. The available times for using the facilities to process the work of the ECCU ACH, should it become necessary. 5. What facilities you operate in case of power outage. 16

10.7 DATA CENTRE/NETWORK If you operate a data centre, kindly: 1. State the location of your data centre. 2. Indicate the number of persons employed at your data centre. 3. Outline the security arrangements for your data centre. 4. Describe the construction of your computer room. Please indicate if it is commercial grade e.g. raised floors, secure, backup power, etc. 5. Describe the network topology to be used between your firm and the ECCU Participants. 6. Outline your proposal to provide the network/telecom configuration for the ECCU ACH. 7. Indicate if your facilities can accommodate the testing, customisation and certification of ECCU ACH Application solution in addition to the live processing environment. 8. Indicate the number of employees who are or will be dedicated to ACH Customer Service. 9. Indicate the number of employees who are available for Technical Support. 10. Indicate the hours of support available. 11. Outline how your support or proposed support for ACH Customer Service or Technical Support after hours. 12. Indicate if you have a dedicated phone number(s) to call for Customer Service and/or Technical Support. Please list the numbers. 13. Indicate the minimum ACH experience level of the assigned contact. 14. Indicate your target response and resolution time to inquiries. Kindly indicate your average response and resolution times. 15. Indicate whether or not, your organisation has standard Service Level Agreements (SLA s) for inquiries. Can these be customized to meet the requirements of the ECCU ACH standards for responsiveness? 16. Indicate if penalty clauses are incorporated within your SLAs for non compliance. 17

17. Outline your procedures for tracking inquiries. Please indicate if they are monitored by Senior Management. 18. Indicate if a history of inquiries is maintained and for what duration. 19. Outline your company s approach for ensuring prompt follow-up and resolution of inquiries. 20. Indicate if the ECCU ACH has a dedicated Customer Service Representative and/or Technical Contact. 21. Outline your escalation process for unresolved inquiries or critical problems that require immediate resolution. 11.0 IMPLEMENTATION/PROJECT PLANNING 1. Kindly describe your recommended approached and timeline for the implementation of the ECCU ACH including the selection of and negotiations with the selected ACH Vendor during the ACH Vendors Initial Study Phase (negotiations aimed at agreeing on the Hardware, System Software and Network configuration). 2. Please provide a project plan outline for your recommended approach. 3. Kindly outline the level of support that your firm proposes to make available to the implementation of the ECCU ACH including staff, technical assistance, education, and marketing. Kindly outline all associated costs if they are to be billed differently. 12.0 COSTS Please detail the following costs stating any assumptions made: 1. The cost for providing the services as outlined in the Functional Requirements (Section 9). 2. The cost of your anticipated annual maintenance contract with ECCU ACH. If your company tiers the price of your maintenance contracts by level of service, please detail those that are available and their associated costs. 18

3. Specific hardware that may be required to support the provision of your service at the expense of the ECCU ACH. Please detail the appropriate configurations that the ECCU ACH should consider, including any necessary additional hardware and software required for hot back-up. (We note that hardware requirements may vary for each ACH Application Provider and that final Hardware, System Software and Network configuration will be negotiated in collaboration with the ECCB and the selected ACH Vendor during the ACH Vendor s Initial Study. Cost for the Vendor solution should not be included, however assumptions made regarding any connectivity or operation of the solution should be clearly stated). 4. If currently operating as a service bureau or the intention is to operate in this manner for the ECCU ACH, please detail a complete fee schedule including: a) Base monthly fee. b) Per customer transmission fee. c) Per batch fee. d) Per transaction fees (include tiered pricing discounts, where appropriate). e) Return item fees. f) Notification of Change (NOC) fees. g) Adjustments fees. h) Per change/reversal fee. i) Any other fees not detailed above. j) Determination/assessment of development costs for product or system enhancements. k) ECCU ACH specific development requests. l) Requests that apply to several of your customers. m) Requests that apply to all or a large number of your customers. 13.0 REFERENCES AND OTHER RELEVANT INFORMATION 1. Please supply a list of your customers and a minimum of five reference accounts of financial institutions. 19

2. Please list any pending lawsuits either by or against your firm, as well as those within the last five years. 3. Please provide any other information in an addendum to this proposal response that you think would be important or relevant to the Operator selection process. 4. Explicit acceptance of the terms outlined in the Agreement of Non-Disclosure. 14.0 CONTACT AT ECCB For questions and/or clarifications, kindly contact: Mr Alex Straun Deputy Director Banking and Monetary Operations Department Eastern Caribbean Central Bank P O Box 89 Basseterre St Kitts Telephone: 869-465-2537 (ext. 607) Fax: 869-465-5614 Email: alex.straun@eccb-centralbank.org Copied to: bmod-sec@eccb-centralbank.org 15.0 PROPOSAL CONTENT AND FORMAT 15.1 CONTENT Proposals should demonstrate: 1. Your understanding of the ECCU s needs and the importance of this project. 2. The tangible results you expect to achieve. 3. Your firm s sincere commitment to perform the scope of work in an efficient and timely manner. 4. How you will effectively integrate this project into your firm s current obligations and existing workload. 5. Why your firm should be chosen to undertake this work at this time. 20

PROPOSALS NOT ADHERING TO THE PRESCRIBED FORMAT WILL NOT BE CONSIDERED. 15.2 DESIRED FORMAT 15.2.1 Title Page The Proposal must have a Title Page, signed by a person or persons authorised to submit the proposal. The Title Page must clearly identify the institution and indicate specific points of contact for discussions and clarifications of the proposal. Such points of contact will include names, titles, address (including email, if available), telephone, and facsimile numbers. The Title Page must explicitly indicate if the firm does or does not accept the ECCB s standard contractual terms and conditions as identified in Section 18 - Appendix I. In the event that the firm does not accept or wishes to discuss alternative terms and conditions, the firm must explicitly indicate which terms are not accepted and propose specific alternative language as appropriate. 15.2.2 Functional Requirements The Operator is required to articulate its ability to satisfy the requirements as outlined in Section 9 of the RFP. 15.2.3 Operator Background and Overview Please provide a Company background, description, and company mission. Also, indicate associations, affiliations, alliances and key personnel. Kindly indicate: 1. If your company is public or private. 2. The date of incorporation of the Company. 3. The current number of employees. 4. The number of employees last year (2009) and in the previous year (2008). 5. The current number of customers. 21

6. Your customer growth last year (2009) and in the previous year (2008). 7. Your current revenues on an annual basis. 8. Your revenue growth last year (2009) and in the previous year (2008). 9. The percentage of the current revenue that is derived from ACH products or services. 10. If your company is profitable and for what duration has profitability been maintained. 11. The year that your company began providing ACH services. 12. The number of employees that are dedicated to: a) ACH software b) ACH services c) Software or application development. 13. If your company has undergone any third party review, including SAS 70 and all other attested reports. Please provide a copy if any such review was conducted. 14. All strategic partnerships if any that you may have. 15. If your company sponsors user group meetings and if so, at what frequency. Kindly provide copies of the agendas for the last three meetings. 16. Provide your strategic plan and vision statement for the future of ACH processing in the financial services industry. 15.2.4 Operator Specifications Please outline any competences, capacity and peculiarities that are pertinent to your proposal but are not covered under your response to the functional requirements. 15.2.5 Project Approach and Management Operators should provide an outline of the approach which they will follow to achieve the project objectives. Each phase of the proposed approach should be described. It should detail the objectives, milestones and deliverables of each phase. Project management and staffing should be clearly described. The responsibilities of each 22

project participant should be defined. Key dependencies should be identified. The responsibilities of Central Bank and any other project participants, other than the Operator s staff, must be explained. 15.2.6 Project Costs Project costs need to be described. Costs should contain the following: Initial costs o Hardware costs o Software costs o Staffing costs On-going Running Costs o Hardware costs o Software costs o Staffing costs The above information must be provided for: Core Solution Options Operator must state all proposed pricing to complete the work and should respond to all questions raised in Section 12 of the RFP. Pricing information should not appear in any other section of the proposal. The pricing proposal must state the period of validity of the stated prices, which must be no less than a period of 120 days from the date of submission of the proposal. The ECCB will not be responsible for any costs incurred by the firm in the preparation of their submissions. Pricing of any professional fees as part of the solution are to be quoted on a specific basis (i.e., fixed or cost plus, based on hours worked etc). The composition of the proposed professional fees must set out a schedule listing, for each category of personnel included in the proposed project team, the total estimated hours, hourly rate, 23

and estimated total professional fees. The Operator should also provide in the relevant sections, estimates of project-related expenses (for example, travel, courier), including a not-to-exceed amount representing a percentage of total proposed professional fees, and should propose a formula for assessing the amount of progress payments on a phase completion basis. All pricing must be quoted in EC$ (US$1.00 = EC$2.70) and must represent the actual price to be paid (please show all Taxes/VAT separately). 15.2.7 Operator References and Previous Projects Please provide previous project details and reference information which Central Bank can use to confirm the veracity of information provided. (This applies to sub-contactors also). The Operator must provide at least three references for similar installations. Installations performed in multi region jurisdictions are of particular interest. 16.0 INSTRUCTIONS FOR SUBMISSION OF PROPOSAL The proposal must be placed in PRIVATE AND CONFIDENTIAL envelopes clearly marked TENDER FOR PAYMENT SYSTEM IMPROVEMENT PROJECT Automated Clearing House (ACH) Operator and must be addressed to: The Managing Director Eastern Caribbean Central Bank P O Box 89 Basseterre, St Kitts ATTENTION: Director, Banking and Monetary Operations Department The proposal must reach the Eastern Caribbean Central Bank by 21 December 2010. A Soft Copy must also be submitted to the ECCB at the email address bmod-sec@eccb-centralbank.org. 24

17.0 EVALUATION AND SELECTION The Evaluation and Selection process will take place in two successive stages as detailed below, during which your proposed solution will be evaluated in order to identify the Best Solution for the ECCU. 17.1 STAGE 1: PROPOSAL EVALUATION The proposal will be reviewed by an internal committee comprised of personnel from the Internal Audit, Legal Services, Accounting, Banking and Monetary Operations, and Management and Information Systems Departments. The criteria on which the proposals will be evaluated are listed below: 1. Feasibility of the proposed solution 2. Competitiveness of the Cost Proposal 3. Operator expertise and capacity 4. Quality of ongoing support 5. Delivery Schedule The ECCB reserves the right not to award, award part of, or award the entire contract for the required services for any reason that is, in its opinion, in the best interest of the ECCB. 17.2 STAGE 2: PRESENTATION, DEMONSTRATION AND SELECTION In addition to submission of the Proposal by the date stated in the Proposal Requirement, an Operator who is successful in Stage 1 may, at the option of the ECCB, be required during the evaluation process to make a formal presentation and/or attend a meeting to discuss the Proposal. The ECCB reserves the right to contact any references that may be listed in the Proposal to validate any claims made by the Operator. 25

APPENDIX 1 18.0 CONTRACTUAL TERMS AND CONDITIONS Terms of Engagement 1. The ECCB engages the Operator for [a term to be agreed] and the Operator shall in accordance with the terms and conditions outlined in the Agreement provide to the ECCB the services described in the Agreement. 2. The Operator shall perform the services as set out in the Agreement solely as an independent contactor of the ECCB and neither the Operator nor any of its agents, employees or servants shall be considered an agent or employee of the ECCB. Confidentiality 3. The Operator agrees that it shall require each person assigned to perform work hereunder to abide by the following non-disclosure conditions: a) not to disclose, deliver to, or use for the benefit of any person other than the ECCB or its authorised agents, any restricted or confidential information or material he or she receives from the ECCB, other than material or information previously in the records of the undersigned or obtainable prior to such disclosure, delivery, or use from third parties or from the public domain; b) to adhere to any policies or instructions provided by the ECCB as to the classification, use or disposition of any restricted or confidential information or materials; c) not to use any restricted or confidential information or material for personal gain; d) after the completion or termination of the Agreement, will continue to adhere to the first three clauses above and; e) (If applicable) to report the termination of the permitted period of access to ECCB s network to the ECCB. i

APPENDIX 1 Assignment 4. The Operator shall not assign or sub-contract the Agreement, in whole or in part, without first obtaining the ECCB s written consent and it shall be a condition of any consent to any sub-contract of the Agreement that the Operator shall: a) ensure and be responsible for the compliance by any sub-contractor with the terms of the Agreement; b) include in the sub-contract, provisions consistent with the terms and conditions of the Agreement for the benefit of and enforceable by the ECCB; and c) furnish the ECCB with copies of any sub-contract upon the ECCB s request at any time. Disputes 5. The Operator agrees that if any difference shall arise between the Operator and the ECCB as to any claim against the Operator or as to any matter touching the rights, duties and liabilities of the Operator or the ECCB or otherwise in any way relating to or arising out of the Agreement such difference shall be referred to arbitration in accordance with the provisions of the Arbitration Act, Chapter 6, Laws of St Christopher and Nevis or any statutory modification thereof. Insurance and Liability 6. The Operator agrees a) to indemnify the ECCB from and against any and all loss, damage, liability (whether criminal or civil) suffered including any legal fees and costs incurred, resulting from a breach of Agreement by the Operator and/or arising in connection with the performance of the Agreement by the Operator. b) to maintain at its own expense such insurance as will fully protect both the firm and the ECCB from any and all claims of whatever kind or nature for the damage to property including monetary loss or for personal injury, including ii

APPENDIX 1 death, made by anyone whomsoever, that may arise from operations carried on under the Agreement by the firm. c) that the maintenance of such insurance is the sole responsibility of the Operator, and the ECCB shall not be required to bear any of the cost thereof. d) to submit Certificates of Insurance evidencing the coverage required herein upon execution of this Agreement. Changes 7. The ECCB may, at any time, by written order, require changes in the services to be performed by the Operator. If such changes cause an increase or decrease in the Operator s cost of or time required for performance of any services under the Agreement, an equitable adjustment shall be agreed by the ECCB and the Operator and the Agreement shall be modified in writing accordingly. In addition, the ECCB must pre-approve all work which is beyond the scope of the Proposal. No services for which an additional cost or fee will be charged by the Operator shall be furnished without the prior written authorisation of the ECCB. Acceptance Testing 8. The ECCB reserves the right to undertake acceptance testing at each phase of the Project. This is crucial in determining whether the product satisfies the ECCB s requirements. Consideration 9. In full consideration for the services performed by the Operator under the Agreement, the ECCB shall pay to the Operator [the contract price] in installments as specified in the Agreement. 10. All payments will be made against original invoices delivered to the ECCB at its principal office by the Operator to the following: iii

APPENDIX 1 The Managing Director Eastern Caribbean Central Bank P O Box 89 Bird Rock Basseterre St. Kitts Electronic Communication 11. Notwithstanding any other provision in the Agreement, the parties agree and acknowledge that any emails or other electronic transmissions dispatched by one party to the other for the purposes of the Agreement, shall be subject to the following terms:- a) neither party makes any warranty to the other that any information or other notice, instruction or document sent by email or other electronic transmission shall be free from viruses or other harmful defects or components or that it will be secure or confidential and each party acknowledges that information sent by email or other electronic transmission may be intercepted, lost or destroyed, falsified, corrupted or delayed in transmission; b) each party undertakes to the other to take such steps as are reasonably within its power to ensure that its computer systems do not contain or include viruses and defects but do include firewalls, screening mechanisms and other software designed to identify and prevent contamination of its computer systems by viruses and other defects, and that it will not knowingly send an email or other electronic transmission to the other party containing any such virus or defect; c) neither party shall be liable to the other, whether in contract, tort or otherwise for any direct, indirect or consequential loss arising solely from its use of email or other electronic transmission to send information to the other or the inability of either party to use the information sent by email or other electronic transmission, or for damages or injuries caused by any computer virus, theft or iv

APPENDIX 1 unauthorized access or any power, equipment or software failure or malfunction; and d) each party shall be entitled to use email to provide to the other advice, instructions, valuations, reports, data, information and generally to communicate on any matter for the purposes of the Agreement save that in the event that any email is sent by one party to the other which contains information of an important nature, the party sending the email shall additionally and promptly communicate with the other by facsimile. Warranty 12. The Operator warrants that all services provided under the Agreement shall be furnished in a manner consistent with industry standards and the level of professional skill generally acceptable in the industry with regard to services of this kind. 13. The Operator warrants that any material [hardware or software] used shall be fit for the intended purpose and of good quality and workmanship and that all services, materials, and workmanship used shall be free from errors and defects and shall conform to all applicable specifications. Entire Understanding 14. The Agreement embodies the entire understanding of the parties in respect of the matters contained or referred to in it and there are no terms, conditions or obligations, oral or written, express or implied other than those contained in the Agreement. Notice 15. A notice under the Agreement shall be in writing and may be delivered personally or sent by airmail, email or by fax, as follows: v

APPENDIX 1 a. if to the ECCB, to: Eastern Caribbean Central Bank P O Box 89 Basseterre St Kitts Fax: (869) 465-5614 Email: (fill in) Marked for the attention of: Director, Banking and Monetary Operations Department b. if to the Operator, to: (fill in address) Marked for the attention of: (fill in name) or to another person, address or fax number specified by the relevant party by written notice to the other. 16. In the absence of evidence of earlier receipt, a notice shall be deemed given: c. if delivered personally, when left at the address referred to in sub-clause (1); d. if sent by mail, two (2) days after posting it; and e. if sent by fax or email, on the day of dispatch. vi

APPENDIX 1 Governing Law 17. The Agreement shall be governed by the laws of St Christopher and Nevis in every particular and shall be deemed to be made in St Christopher and Nevis. Termination 18. The Agreement may be terminated by either party upon ninety (90) days written notice to the other party. vii