CITY AND COUNTY OF SAN FRANCISCO DEFERRED COMPENSATION PLAN REQUEST FOR PROPOSALS FOR INVESTMENT CONSULTING SERVICES FOR THE CITY AND COUNTY OF SAN FRANCISCO 457(b) DEFERRED COMPENSATION PLAN DATE: FRIDAY, JANUARY 22, 2016 DEADLINE FOR SUBMISSION: TUESDAY, MARCH 29, 2016, 5:00 P.M. (PACIFIC TIME)
Request for Proposals for Investment Consulting Services For the City and County of San Francisco 457(b) Deferred Compensation Plan Table of Contents I. Introduction 1 II. Scope of Services. 1 III. Submission Requirements 2 IV. Evaluation and Selection Criteria. 4 V. Schedule... 5 VI. Terms and Conditions for Receipt of Proposals. 7 VII. Contract Requirements 11 Appendices: A. RFP Questions B. Investment Policy Statement C. Core Investment Funds D. Required Vendor Forms: Listing and Internet addresses of Forms related to Chapters 12B, 12C, and 14B of the S.F. Administrative Code, to Business Tax, and to Employer Identification Number. E. General Investment Consulting Agreement
Request for Proposals for Investment Consulting Services For the City and County of San Francisco 457(b) Deferred Compensation Plan I. Introduction The City and County of San Francisco Employees Retirement System ( SFERS ) is soliciting proposals from qualified consulting firms to provide investment consulting services to the Retirement Board and Staff for the San Francisco Deferred Compensation Plan ( SFDCP ) for five (5) years. The SFDCP is an Internal Revenue Code 457(b) plan. As of November 30, 2015, the SFDCP had approximately $2.8 billion in assets. II. Scope of Services The Retirement Board wishes to retain the services of an independent investment consultant to perform the following tasks: A. Investment Fund Selection Process 1. Assist the Retirement Board, Deferred Compensation Committee and SFDCP staff with the process of selecting new or replacement funds, terminating existing funds and retaining funds as the result of fund evaluations 2. Conduct semi-annual evaluation of investment products and make recommendations to the Retirement Board, Deferred Compensation Committee and SFDCP staff. 3. Assist the Retirement Board, Deferred Compensation Committee and SFDCP staff with the process of evaluating, selecting and oversight of its custom structure for Target Date Funds. 4. Assist the Retirement Board, Deferred Compensation Committee and SFDCP staff with the process of evaluating the existing Stable Value Fund and make recommendations to the Retirement Board and SFDCP staff. B. Ongoing Performance Monitoring 1. Provide a semi-annual performance measurement report including reference to each fund s objectives, selected comparison indices and peer group universes. Measurement periods must be at least 1, 3, 5, and 10 years. 2. Provide a semi-annual in-depth investment performance analysis and identify changes in firm organization, key personnel, fund management process/style, changes in investment guidelines as well as detailed attribution for fund performance results. Identify any funds that warrant placement on the watch list/probation report and make recommendations for fund termination and/or fund selection. 3. Present semi-annual investment performance analysis and reports to the Retirement Board, Deferred Compensation Committee and SFDCP staff for review and discussion. 4. Meet with the Deferred Compensation Committee to discuss investment options and performance within the Plan. Make recommendations for investment selection to the pg. 1
Committee when new investment funds have been identified as a replacement or addition to the plan. 5. Provide the Retirement Board and SFDCP staff with information and educational sessions on topical investment issues affecting deferred compensation plans annually. C. Investment Policy Statement 1. Review the written investment policy statement for the SFDCP and make recommendations in relation thereto. Recommendations shall include, but not be limited to, ongoing fund performance standards applicable to each investment style/asset class and criteria for selection, retention and termination of funds. A copy of the Investment Policy Statement is included in Appendix B. 2. Present a preliminary report of findings and recommendations to the SFDCP staff for review. 3. Present findings and recommendations in a written report to the Retirement Board, Deferred Compensation Committee and SFDCP staff when necessary. D. Ancillary Services 1. Assist SFDCP staff in the preparation and evaluation of a Request for Proposal to conduct a vendor search for plan administration in the calendar year 2018. Present findings and make recommendations to the Retirement Board, Deferred Compensation Committee and SFDCP staff. 2. Assist SFDCP Staff in the execution of any and all other normal related duties as mutually agreed upon between SFDCP Staff and the contractor. III. Submission Requirements For the duration of the RFP process, the SFERS and the Retirement Board will enter into a blackout period during which communications and meetings between interested parties and SFDCP staff and Retirement Board members will be prohibited. This blackout will continue until the review and selection of an Investment Consultant is completed. This blackout is effective immediately upon release of this Request for Proposal. This blackout will enable the SFDCP to treat all respondents fairly during the RFP process and permit the Retirement System review of the responses without bias. Blackout conditions are outlined below: Interested parties are to refrain from meeting or communications with the SFDCP staff, Retirement Board members and Deferred Compensation Committee. The only exceptions are communications with Jay Huish, Executive Director, Caryn Bortnick, Deputy Executive Director, and Diane Chui Justen, Deferred Compensation Manager, presentations for finalists scheduled by the System, and publicly noticed meetings of the Retirement Board and Deferred Compensation Committee. pg. 2
This blackout remains in effect until the successful bidder(s) enters into a contractual agreement with the City and County of San Francisco SFDCP. Communications include telephone conversations, letters, and email. Interested parties may meet with the SFDCP staff at the SFERS board offices or a Board member only if the meeting consists of an exchange of information that is not relevant to the RFP. The Executive Director of the Retirement System will be notified of these meetings in advance and any meeting will be documented. If you have any questions regarding the blackout, please contact Diane Chui Justen, Deferred Compensation Manager at (415) 487-7530. A. Time and Place for Submission of Proposals Proposals must be submitted and received by 5:00 p.m. (Pacific Time), Tuesday, March 29, 2016. Proposals may be submitted in person and left with Diane Chui Justen, Deferred Compensation Manager, City and County of San Francisco Employees Retirement System, Attn: Deferred Compensation - Investment Consultant RFP, 1145 Market Street, 5th Floor, San Francisco, California, 94103 or mailed to: City and County of San Francisco Employees Retirement System Attn: Deferred Compensation Diane Chui Justen Investment Consultant RFP 1145 Market Street, 5th Floor, San Francisco, CA 94103 Proposers shall submit eight (8) copies in a sealed envelope or box and two (2) electronic copies in Microsoft Word format, clearly marked: Deferred Compensation - Investment Consultant RFP. Proposals should be submitted electronically to Diane Chui Justen (diane.chuijusten@sfgov.org). Proposals, which are submitted by fax, will not be accepted. B. Format and Content of Proposals Firms interested in responding to this RFP must submit the following information, in the order specified below: COMPLETENESS, CLARITY, AND BREVITY ARE IMPORTANT. CANDIDATES SHOULD SUBMIT ALL INFORMATION REQUESTED IN THIS RFP IN THE SPECIFIED FORMAT. RESPONSES NOT MEETING FORMAT REQUIREMENTS OR THAT ARE INCOMPLETE IN ANY WAY MAY BE REJECTED. CANDIDATES ARE URGED TO READ THIS RFP CAREFULLY, TO TAKE CARE IN THE PREPARATION OF RESPONSES, AND TO CAREFULLY PROOFREAD THE FINAL VERSIONS FOR ACCURACY AND COMPLETENESS. The Candidate s response to this request for proposal must be organized in the format listed below. 1. Introduction and Executive Summary; 2. Statement of Qualifications including statement of respondent firm and team members specific background and experience in providing investment consulting services to government organizations and/or other relevant industry clients; pg. 3
3. Previous Project Description and Sample Reports including a concise description from inception to completion of one project completed within two (2) years from the date of this RPF with services similar to the services proposed in response to this RFP; 4. Consulting Price Proposal in your response to this RFP; and 5. References of three (3) local government agencies and/or relevant industry clients that the respondent has provided services substantially similar to the services requested in this RFP within five (5) years from the date of this RFP at least two (2) of the references must be from entities other than the City and County of San Francisco IV. Evaluation and Selection Criteria A. Minimum Qualifications - Unless otherwise indicated, all qualifications must be met as of submission of the bid response due date. All proposals will be initially reviewed to determine if they are responsive to all of the City and County of San Francisco requirements. Compliance with these requirements and submission of necessary forms is mandatory at the time of submission of a proposal, prior to award of contract, or both. 1. The proposal must provide an Investment Consultant/Firm who meets or exceeds the following standards: a. The assigned lead consultant must have ten (10) years experience in Deferred Compensation or Defined Contribution investment consulting for government organizations and/or other relevant industry clients; b. The lead investment consultant must have five (5) years experience providing services substantially similar to the services requested in this RFP for public sector or governmental entities or past experience with the City of County of San Francisco. c. The investment consultant must have three (3) years experience in advising and/or managing custom target date funds for defined contribution plans or other relevant industry clients; d. At least $1B in assets under advisement. 2. The Proposer must be an SEC-registered investment advisor or exempt from registration. 3. The Proposer must have submitted a response to SFDCP s Request for Proposal (RFP) by March 29, 2016. 4. The Proposer must be directly responsible for the management of the Investment Consulting Services, and all personnel responsible for the consulting services must be employees of the firm. 5. The Proposer must carry Errors and Omissions Insurance coverage or must have applied for it by the submission date of the RFP. E&O insurance will be required throughout the duration of the assignment. pg. 4
B. Selection Criteria Each written proposal will be evaluated by SFDCP staff. SFDCP intends to evaluate the proposals relative to each other generally in accordance with the criteria and maximum points for each sub-category itemized below. 1. Respondent Qualifications (50 points) a. Does the response, including any statements of service and staff qualifications and previous project description clearly and specifically demonstrate expertise and experience substantially similar to what is requested for the services described in this RFP? b. Are the proposed team members qualified? 2. Consulting Price Proposal (30 points) 3. Respondent References (20 points) a. How applicable is the experience on the references projects to SFDCP needs? b. How did the references rate the respondent s expertise in product types? c. How did the references rate the respondent s quality of services, staffing, adherence to schedules, budgets and deadlines, and problem-solving ability for previously completed projects similar to proposed by SFDCP. A. Schedule of Events V. Schedule Action Responsibility Date RFP is advertised and issued SFDCP Staff Friday, January 22, 2016 Deadline to submit written questions and requests for interpretation Proposers Monday, February 15, 2016 Response to written questions to be provided to all proposers SFDCP Staff Friday, March 11, 2016 Submission of proposal Proposers Tuesday, March 29, 2016 Review of proposals, selection of finalists SFDCP Staff April, 2016 Finalist presentations at SFERS offices in San Francisco SFDCP Staff /Deferred Compensation Committee May, 2016 Recommend finalist to SFERS Board SFDCP Staff May, 2016 Contract, Fee and Guideline SFDCP Staff May, 2016 negotiations commence New contract takes effect July, 2016 pg. 5
B. Explanation of Events 1. Release of RFP the RFP will be advertised and posted on the SFERS website and on the National Association of Government Defined Contribution Administrators, Inc., website. All firms meeting minimum qualifications, as stated in Section IV, will be welcome to participate. 2. SFDCP will keep a record of all parties who request and receive copies of the RFP. Any requests for information concerning the RFP must be in writing, and any substantive replies will be issued as written addenda to all parties who have requested and received a copy of the RFP from SFDCP. No questions or requests for interpretation or additional information will be accepted after February 15, 2016. 3. In preparing their responses, candidates should rely only on written material concerning this RFP issued by SFDCP. 4. SFDCP will respond to all candidates written questions by March 11, 2016. Deadline for submission of the RFP response is 5:00 PM, Pacific Time, Tuesday, March 29, 2016. No exceptions to this deadline will be granted. 5. Submissions will be considered public documents. Any material that the candidate considers Business- Confidential should be so marked. C. Contract Award To be considered, all proposals must comply with the requirements and specifications outlined in this RFP. During contract negotiations, if the SFDCP or its agent is unable to agree to contract terms with the Proposer receiving the highest evaluation in this RFP process, the Retirement Board reserves the right to terminate contract negotiations with that Proposer without undertaking another RFP process, and to negotiate with another qualified Proposer. 1. Termination This RFP in no manner obligates the Retirement Board or any of its agencies to the eventual procurement of services described, implied or which may be proposed, until confirmed by a written contract. Progress toward this end is solely at the discretion of the Retirement Board and may terminate at any time prior to the signing of a contract. The Retirement Board reserves the right to cancel this RFP at any time and to reject any and all proposals submitted in response to this RFP, if the Retirement Board determines such action or actions are in its best interest. 2. Proposal Applicability To allow sufficient time for contract negotiation, all fees and conditions stated in the proposal must be firm for a period of 120 days from the deadline for submission of proposals. 3. Legal Review The Retirement Board expects that all candidates will agree to be bound by the terms and conditions articulated in this RFP. For this reason, it is strongly recommended that Proposers have the terms and conditions contained herein reviewed with corporate counsel and that concerns be brought to the attention of SFDCP Staff in a timely manner. 4. Governing Law This procurement and any agreement with Proposers that may result shall be governed by the laws of the State of California and the City and County of San Francisco. Submission of a proposal constitutes acceptance of this condition. pg. 6
5. Basis for Proposal Only information supplied by the SFDCP staff in writing or in this RFP should be used in the preparation of proposals. 6. Proposal Preparation Cost Any cost incurred by the Proposer in the preparation, transmittal or presentation of any proposal or material submitted in response to this RFP will be borne solely by the Proposer. 7. Proposer Qualification The Retirement Board may take such investigations as necessary to determine the ability of the Proposer to adhere to the items as identified within the questionnaire portion of this RFP. The Retirement Board reserves the right to reject the proposal of any Proposer who, in the Retirement Board s opinion, is not a responsible candidate as defined below: Responsible candidate means a candidate who submits a complete proposal and who has furnished, when required, information and data to prove that its financial resources, production and service facilities, personnel, service reputation and experience are adequate to make satisfactory delivery of the services described in the proposal. 8. Non-Discrimination in Contracts - All contracts are subject to the non-discrimination ordinance of the City and County of San Francisco. Contractors should note the provision prohibiting discrimination by contractors in the provision of benefits between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees. A. Errors and Omissions in RFP VI. Terms and Conditions for Receipt of Proposals Proposers are responsible for reviewing all portions of this RFP. Proposers are to promptly notify the SFDCP, in writing, if the Proposer discovers any ambiguity, discrepancy, omission, or other error in the RFP. Any such notification should be directed to SFDCP promptly after discovery, but in no event later than five working days prior to the date for receipt of proposals. Modifications and clarifications will be made by addenda as provided below. B. Inquiries Regarding RFP Inquiries regarding the RFP (i.e., clarification questions) must be directed by email, by February 15, 2016 to: 1. Diane Chui Justen, Manager City and County of E-mail: diane.chuijusten@sfgov.org SFDCP will post answers to all questions received by the deadline at http://mysfers.org/about-sfers/request-forproposal/ no later than March 11, 2016. C. Addenda to RFP SFDCP may modify the RFP, prior to the proposal due date, by issuing written addenda. Addenda will be sent via e- mail or regular, first class U.S. mail to the last known business address of each firm listed with SFDCP as having received a copy of the RFP for proposal purposes. SFDCP will make reasonable efforts to notify Proposers in a timely manner of modifications to the RFP. Notwithstanding this provision, the Proposer shall be responsible for ensuring that its proposal reflects any and all addenda issued by SFDCP prior to the proposal due date regardless of when the proposal is submitted. pg. 7
D. Term of Proposal Submission of a proposal signifies that the proposed services and prices are valid for 180 calendar days from the proposal due date and that the quoted prices are genuine and not the result of collusion or any other anti-competitive activity. E. Revision of Proposal A Proposer may revise a proposal on the Proposer s own initiative at any time before the deadline for submission of proposals. The Proposer must submit the revised proposal in the same manner as the original. A revised proposal must be received on or before the proposal due date. In no case will a statement of intent to submit a revised proposal, or commencement of a revision process, extend the proposal due date for any Proposer. At any time during the proposal evaluation process, SFDCP may require a Proposer to provide oral or written clarification of its proposal. SFDCP reserves the right to make an award without further clarifications of proposals received. F. Errors and Omissions in Proposal Failure by SFDCP to object to an error, omission, or deviation in the proposal will in no way modify the RFP or excuse the vendor from full compliance with the specifications of the RFP or any contract awarded pursuant to the RFP. G. Financial Responsibility SFDCP accepts no financial responsibility for any costs incurred by a firm in responding to this RFP. Submissions of the RFP and associated materials will become the property of SFDCP and may be used by SFDCP in any way deemed appropriate. H. Proposer s Obligations under the Campaign Reform Ordinance Proposers must comply with Section 1.126 of the S.F. Campaign and Government Conduct Code, which states: No person who contracts with the City and County of San Francisco, for the rendition of personal services, for the furnishing of any material, supplies or equipment to the City, or for selling any land or building to the City, whenever such transaction would require approval by a City elective officer, or the board on which that City elective officer serves, shall make any contribution to such an officer, or candidates for such an office, or committee controlled by such officer or candidate at any time between commencement of negotiations and the later of either (1) the termination of negotiations for such contract, or (2) three months have elapsed from the date the contract is approved by the Retirement System or the board on which a City elective officer serves. If a Proposer is negotiating for a contract that must be approved by an elected local officer or the board on which that officer serves, during the negotiation period the Proposer is prohibited from making contributions to: the officer s re-election campaign a candidate for that officer s office a committee controlled by the officer or candidate The negotiation period begins with the first point of contact, either by telephone, in person, or in writing, when a contractor approaches any city officer or employee about a particular contract, or a city officer or employee initiates pg. 8
communication with a potential contractor about a contract. The negotiation period ends when a contract is awarded or not awarded to the contractor. Examples of initial contacts include: (i) a vendor contacts a city officer or employee to promote himself or herself as a candidate for a contract; and (ii) a city officer or employee contacts a contractor to propose that the contractor apply for a contract. Inquiries for information about a particular contract, requests for documents relating to a Request for Proposal, and requests to be placed on a mailing list do not constitute negotiations. Violation of Section1.126 may result in the following criminal, civil or administrative penalties: (a) Criminal. Any person who knowingly or willfully violates section 1.126 is subject to a fine of up to $5,000 and a jail term of not more than six months, or both. (b) Civil. Any person who intentionally or negligently violates section 1.126 may be held liable in a civil action brought by the civil prosecutor for an amount up to $5,000. (c) Administrative. Any person who intentionally or negligently violates section 1.126 may be held liable in an administrative proceeding before the Ethics Commission held pursuant to the Charter for an amount up to $5,000 for each violation. For further information, Proposers should contact the San Francisco Ethics Commission at (415) 252-3100. I. Sunshine Ordinance In accordance with S.F. Administrative Code Section 67.24(e), contractors bids, responses to RFPs and all other records of communications between the City and persons or firms seeking contracts shall be open to inspection immediately after a contract has been awarded. Nothing in this provision requires the disclosure of a private person s or organization s net worth or other proprietary financial data submitted for qualification for a contract or other benefits until and unless that person or organization is awarded the contract or benefit. Information provided which is covered by this paragraph will be made available to the public upon request. J. Public Access to Meetings and Records If a Proposer is a non-profit entity that receives a cumulative total per year of at least $250,000 in City funds or Cityadministered funds and is a non-profit organization as defined in Chapter 12L of the S.F. Administrative Code, the Proposer must comply with the reporting requirements of that Chapter. The Proposer must include in its proposal (1) a statement describing its efforts to comply with the Chapter 12L provisions regarding public access to Proposer s meetings and records, and (2) a summary of all complaints concerning the Proposer s compliance with Chapter 12L that were filed with the City in the last two years and deemed by the City to be substantiated. The summary shall also describe the disposition of each complaint. If no such complaints were filed, the Proposer shall include a statement to that effect. Failure to comply with the reporting requirements of Chapter 12L or material misrepresentation in Proposer s Chapter 12L submissions shall be grounds for rejection of the proposal and/or termination of any subsequent Agreement reached on the basis of the proposal. K. Reservations of Rights by SFDCP The issuance of this RFP does not constitute an agreement by SFDCP that any contract will actually be entered into by SFDCP. SFDCP expressly reserves the right at any time to: 1) Waive or correct any defect or informality in any response, proposal, or proposal procedure; 2) Reject any or all proposals; 3) Reissue a Request for Proposal; pg. 9
4) Prior to submission deadline for proposals, modify all or any portion of the election procedures, including deadlines for accepting responses, the specifications or requirements for any materials, equipment or services to be provided under this RFP, or the requirements for contents or format of the proposals; 5) Procure any materials, equipment or services specified in this RFP by another means; or 6) Determine that no project will be pursued. L. No Waiver No waiver by SFDCP of any provision of this RFP shall be implied from any failure by SFDCP to recognize or take action on account of any failure by a Proposer to observe any provision of this RFP. M. Chapter 12B and 12C: Nondiscrimination in Employment and Benefits Chapter 12B and 12C of the San Francisco Administrative Code are incorporated by reference as though fully set forth herein. Chapters 12B and 12C prohibit discrimination by City contractors in employment, the use of property, the provision of public accommodations and in the provision of benefits to employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees. Please refer to Appendix C regarding the requirements of San Francisco Administrative Code Chapters 12B and 12C. N. Local Business Enterprise Participation SFERS strongly encourages proposals from qualified Local Business Enterprises ( LBEs ) as defined in Chapter 14B of the San Francisco Administrative Code. If a Proposer desires to participate in the City s Local Business Enterprise Program, which helps certain financially disadvantaged businesses increase their ability to compete effectively for City contracts, go to the How to Qualify to Do Business with the City tab on the Office of Contract Administration website at www.sfgsa.org for details and required forms. O. Conflicts of Interest The successful proposer will be required to agree to comply fully with and be bound by the applicable provisions of state and local laws related to conflicts of interest, including Section 15.103 of the City's Charter, Article III, Chapter 2 of City s Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et seq. of the Government Code of the State of California. The successful proposer will be required to acknowledge that it is familiar with these laws; certify that it does not know of any facts that constitute a violation of said provisions; and agree to immediately notify the City if it becomes aware of any such fact during the term of the Agreement. Individuals who will perform work for the City on behalf of the successful proposer might be deemed consultants under state and local conflict of interest laws. If so, such individuals will be required to submit a Statement of Economic Interests, California Fair Political Practices Commission Form 700, to the City within ten calendar days of the City notifying the successful proposer that the City has selected the proposer. pg. 10
VII. Contract Requirements A. Standard Contract Provisions The successful Proposer will be required to enter into a contract substantially in the form of the Agreement for Professional Services, attached hereto as Appendix E. Failure to timely execute the contract, or to furnish any and all certificates, bonds or other materials required in the contract, shall be deemed an abandonment of a contract offer. The City, in its sole discretion, may select another firm and may proceed against the original selectee for damages. Full text of all referenced San Francisco municipal codes can be viewed on-line at www.sfgov.org at the Municipal Codes link under the Government tab on the San Francisco homepage (tab is located at the top of the page). B. Required Standard City Forms Before the City can award any contract to a Proposer, the Proposer must file three standard City forms with the Retirement System. The required forms are: 1. Vendor Profile Application (includes New Vendor Number Request Form and IRS Form W-9) 2. P-25 - Business Tax Declaration 3. CMD 12B-101 Declaration of Nondiscrimination in Contracts and Benefits A complete description of these three (3) required forms and where to find them on the Internet is provided in Appendix D of this RFP. If these forms are not filed at the time you submit your proposal, the proposal may be determined to be non-responsive and rejected. Please submit one (1) copy of the above three (3) required forms at the time you submit your proposal. The forms should be submitted under separate cover in a separate, sealed envelope addressed to: Jim Burruel, Finance Manager San Francisco Employees Retirement System Attention: Deferred Compensation Investment Consultant RFP 1145 Market Street, 5th Floor San Francisco, CA 94103 If a Proposer has previously completed and submitted the required forms to the Retirement System, the Proposer should not do so again unless the Proposer s answers have changed. pg. 11
Appendix A RFP Questions Your company s submitted proposal, including this questionnaire, must be submitted both in printed form and electronic copy. The questionnaire must be provided in a current Microsoft Word file. All copies must be provided with each clearly labeled with your company s name and contact information. Firm Qualifications - Organizational Structure 1. Provide your company s name, address and type of legal entity (corporation, limited liability company, joint venture, partnership, etc.). 2. Provide the name, title, address, telephone and email address of the contact person or persons from your company whom we may contact with questions regarding your response. These individuals must be authorized to negotiate contracts regarding the scope, terms and pricing outlined in the proposal. 3. Provide a short description of your organization, the businesses in which it engages, and the services it provides. 4. Supply an audited financial statement for the most recently closed fiscal year. 5. Is your company a subsidiary or affiliate of another company? Provide full disclosure of all direct or indirect ownership. 6. Describe any pending agreements to merge or sell your company or any portion thereof. If you can provide this information and it is confidential, please clearly so indicate. 7. Indicate your firm s fiduciary classification (Registered Investment Advisor, Affiliate or Fiduciary, etc.) 8. Describe any potential conflicts of interest your firm may have in the handling of this account. Describe any and all services provided to investment management organizations. If your company or its parent is an affiliate of an investment manager, does your firm include this manager in searches it conducts for its clients? 9. What policies are in effect to control workload? Is there a limit on the number of accounts a consultant may handle? 10. Describe your errors and omissions coverage. Describe the various types of insurance coverage and indemnification provided to protect clients, including for each insurance type risks covered, carriers, levels, limits, and deductibles. Risk Covered Carriers Levels Limits Deductibles Appendix A - 1
Experience 11. List the number of years your company has offered investment consulting for defined contribution or deferred compensation plans. 12. Describe your firm s experience managing defined contribution and deferred compensation plans with assets over $2 billion. 13. Describe your firm s experience in developing investment policies and portfolio management guidelines for defined contribution and deferred compensation plans. 14. How many years have your company offered investment consulting for governmental defined contribution or deferred compensation plans? 15. Please provide a representative list of at least five (5) public sector deferred compensation and defined compensation clients (not references) for whom you provide investment consulting services. Include asset size and length of relationship. Name Assets Length of Relationship 16. Provide three recent verifiable client references. Preferably, references should be in California, particularly customers who have been provided services similar to those being proposed for this plan. For each reference contractor should provide the following: a. Client name; b. Contact name and title; c. Telephone number; and d. Length and dates of relationship. 17. How many deferred compensation and defined contribution plans to whom you provide investmentconsulting services offer a self-directed brokerage option? How many offer full brokerage? How many are public plans? 18. Provide samples of client reports and indicate their frequency. 19. How soon after the end of the evaluation period does your company provide performance reports for the plan funds? 20. What other communication is provided to clients (including description of services and/or samples of newsletters, seminars, research, etc.)? 21. Describe the last two fund evaluations and investment policy projects that you have conducted for public retirement plan clients and any actions taken by the clients in response to the evaluation. 22. The current core investment funds and Investment Policy Statement is listed in the Appendix B & C. What changes would your firm suggest we consider in the next year and longer term? Appendix A - 2
23. Does your organization assist plan sponsors in the preparation and evaluation of RFPs for third party administration? If so, please list three recent RFP projects your company completed. Firm Information 24. Provide the name, title, email address and phone number of the person responsible for submitting the RFP. If there is a different person that SFDCP should contact with questions regarding this RFP submission, please also provide the name, title, email address and phone number of that person. 25. Briefly describe the ownership of the firm, including the individuals or entities that are the largest owners of the firm. Provide a list of the individuals or entities (and their percentage ownership) that have more than a 10% ownership, and indicate whether any of them are involved in the subject product. 26. Have there been any material developments (changes in ownership, personnel, business, etc.) since January 1, 2012? Briefly describe such developments, with particular emphasis on the effect of such changes on investment consulting services. Indicate whether any such developments should be expected in the future and describe in as much detail as possible. 27. Please provide a chart describing the firm s organizational structure overall and specifically relating to investing consulting services for defined contribution or deferred compensation plans. 28. Has your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) ever been involved in litigation where an allegation of a breach of fiduciary responsibility was made. If yes, for each litigation matter, please provide the following information: a) Full name of the case; b) Court where the case was filed; c) Case number; d) Date the case was filed; e) Summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and f) Procedural posture (if the case is pending) or outcome of the case (if the case is resolved). 29. Has your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) ever been involved in an administrative proceeding including but not limited to arbitration where an allegation of a breach of fiduciary responsibility was made. If yes, for each administrative proceeding, please provide the following information: a) Full name of person initiating the proceeding; b) Administrative body hearing the matter; c) Proceeding number; d) Date the proceeding was filed; e) Summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and f) Procedural posture (if the proceeding is pending) or outcome of the proceeding (if the proceeding is resolved). 30. Identify any demands or claims asserted against your firm or any officer or employee at your firm (or exofficer or employee while employed at your firm) alleging a breach of fiduciary duty that did not proceed to litigation or an administrative proceeding. For each such demand or claim, please provide the following information: a) The name of the person asserting the demand or claim; b) The date the person asserted the demand or claim; Appendix A - 3
c) The person s relationship to the firm, officer or employee; d) A summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and e) How the demand or claim was resolved. 31. Identify all lawsuits filed against your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) in the past five (5) years, and please provide the following information for each lawsuit: a) Full name of the case; b) Court where the case was filed; c) Case number; d) Date the case was filed; e) Summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and f) Procedural posture (if the case is pending) or outcome of the case (if the case is resolved). 32. Identify all administrative proceedings initiated against your firm or any officer or employee at your firm (or ex-officer or employee while employed at your firm) in the past five (5) years, and please provide the following information for each proceeding: a) Full name of person initiating the proceeding; b) Administrative body hearing the matter; c) Proceeding number; d) Date the proceeding was filed; e) Summary of the allegations, including the names of all officers or employees referenced in the allegations or involved in the alleged conduct; and f) Procedural posture (if the proceeding is pending) or outcome of the proceeding (if the proceeding is resolved). 33. Has your firm been involved in an investigation or enforcement action by a regulatory agency? If yes, please explain and provide the following information: a) The regulatory agency or agencies involved; b) The dates of the investigation or enforcement action; c) The nature of the investigation or enforcement; and d) Procedural posture (if the investigation or enforcement is pending) or outcome of the proceeding (if the investigation or enforcement is resolved). 34. Have any officers or employees of your firm, or ex-officers or employees while employed at your firm, been involved in litigation, investigation, or enforcement action by a regulatory agency or other legal proceedings related to investment activities. If yes, please explain. 35. Does your firm provide health and other employment benefits to domestic partners of employees? If yes, describe. If no, indicate whether your firm would adopt such benefits if it were selected for this assignment. 36. Discuss the overall business objectives of your firm with respect to future growth. Comment on any present or planned areas of emphasis expected in the near future (3 years or less). 37. Describe your firm s history, research resources and processes for asset allocation advice. 38. Is your firm, its parent or affiliate a broker/dealer? If Yes, briefly describe the affiliation. 39. Has your company ever filed a petition or has your company ever been petitioned into bankruptcy or insolvency or has your company ever made any assignment for the benefit of your creditors? If so, provide complete details. Appendix A - 4
40. Has your company ever had a contract terminated by a client for cause within the last five (5) years? If so, by whom and under what circumstances? Provide the name and telephone number of each client that has terminated your company s services. 41. Has your company ever had a contract non-renewed or terminated without cause by a client? If so, by whom? Provide the name and telephone number of each client that has non-renewed or terminated your company's services. 42. Provide samples of your deferred compensation plan investment consulting contracts. 43. In the last five (5) years, has your company failed or refused to complete a contract? If so, provide an explanation. Personnel 44. Provide the name, title, contact information and biography of the team members you propose for this assignment, as well as their direct experience in carrying out the services required. Please also identify whether these team members will be assigned to other clients and if so, the approximate percentage of time devoted to those clients. 45. Identify which individuals on the team proposed in this response, if any, are under employment contracts and when those contracts expire. 46. Other than the team managers above, how many people are specifically dedicated to this service? 47. What is their tenure with the service as well as their investment experience and credentials? Investment Philosophy 48. Describe your investment consulting philosophy as it applies to participant-directed deferred compensation and defined contribution plans, particularly plans of public sector sponsors. Include the approach to the development of a plan-appropriate investment offering and ongoing performance measurement and monitoring. 49. How does your firm implement this philosophy? 50. Summarize your company s philosophy relating to the investment consultant relationship with governing boards, staff, and investment providers. Describe any services your company performs that might not be offered by other investment advisory firms. 51. Describe your performance measurement and analytic process. 52. What publicly available databases do you use? What type of custom capabilities can your company provide? 53. Does your company provide universe comparison services based on an internally developed database or do you use an outside database? 54. What is the source of performance data for your universe comparison? 55. Describe your information management systems, including research databases, tracking systems and client reporting systems. 56. Describe your experience in conducting searches for a stable value fund and mutual funds. 57. How many fund managers do you track? 58. What criteria do you use when evaluating funds and managers? How do you verify information? Appendix A - 5
59. What fees or other considerations do you receive from managers who wish to be maintained in your database? 60. Please describe your firm s philosophy regarding diversification among alternative investment options, including but not limited to: US Government Agency securities, Private Equity, and Real Estate. 61. What is the methodology for determining the asset mixes including key inputs such as asset returns, risk, and correlations? Attach a copy of your firm s most recent capital market and other inputs and assumptions as an exhibit. 62. How often do you recommend that plan sponsors formally review and update their investment lineup? 63. Describe your philosophy on stable value funds vs. alternatives to stable value. 64. Describe your methodology for analyzing and monitoring funds that are composed of the core investments in the plan and custom target date funds. Target Date Funds 65. Please fill in the following table to provide your firm s suggested asset allocation for the specified target date years. Retirement 2020 2025 2030 2035 2040 2045 2050 2055 US Equity Non-US Eq. Fixed Inc. Cash and Stable Value Other (Please List) 66. Describe your firm s experience with target date fund glide path design and how they differ from the TDFs of other major providers. 67. How often do you reassess your asset allocation process and target date glide path strategy, and the rationale? 68. What factors would likely trigger a change in your glide path philosophy or practice in the future? 69. Does your firm recommend the inclusion of tactical allocation authority in custom TDF investment management and why or why not? 70. What changes do you foresee see in the industry (including any regulatory developments) regarding target date funds over a 5-10 year horizon? 71. Describe how your firm benchmarks the performance of the TDFs it designs, including the use of simple (e.g., equity/bond) or composite (weighted index) benchmarks. What do you think is the best way to evaluate different target date funds (performance relative to benchmark, glide path, asset allocation, fees, other TDFs)? Appendix A - 6
Portfolio Construction 72. Which asset classes does your firm recommend for inclusion in the target date fund and how are asset classes chosen? How does the design segment asset classes; by capitalization, style, geography, or other measures? If your firm would include private equity or other non-daily valued asset classes, how would you deal with the illiquidity? 73. What asset classes are you considering incorporating in the future? How often will this decision be reviewed and by whom? 74. What level of passive management do you recommend for custom TDFs? Which asset classes or categories does your firm believe are effective for passive management in a TDF? 75. Would an asset class ever be removed from the glide path? If so, how would that be determined? 76. Do you incorporate alternative asset classes into your strategy? If so, please specify which asset classes and your firm s rationale for their inclusion as well as how liquidity is managed. If not, describe why your firm has opted not to incorporate alternative asset classes into your strategy. 77. The asset classes currently included in SFDCP s custom TDFs are specified above in this RFP and in the SFDCP Investment Policy Statement. Specify any asset classes that are currently used that you would recommend eliminating or any you would add, and provide your rationale. 78. Do you recommend the use of liquid alternatives in custom target date funds (defined as strategies that are daily valued strategies that incorporate elements of investments often found in absolute return or hedge funds)? Provide your rationale. Retirement Assumptions 79. How does the target date fund glide path construction and investment process take into account participants level of defined benefit plan income or Social Security benefits? 80. How does the investment process and target date fund glide path construction account for participant behavior (not saving enough, not diversifying appropriately, taking loans/early withdrawals, etc.)? 81. How do you factor in the amount a participant will contribute before retirement? 82. How do you factor in the amount a participant will withdraw annually in retirement? 83. Are these assumptions based on mathematical models or actual participant data? 84. How do you evaluate life expectancy and how does it impact your strategy? Participant Communication 85. How does your firm assist plan sponsors in communicating and marketing core investments and target date funds to plan participants? 86. What level of ongoing customer service support does your firm provide? 87. Does your organization provide written updates to clients on legislative changes? If yes, how frequently? Provide recent samples. Appendix A - 7
Fees 88. Describe any revenue sharing agreements between your firm, any mutual fund companies, third party administrators, or target date fund providers. Investment Policy 89. Describe your experience and approach in developing an Investment Policy Statement. 90. Describe your process for analyzing the plan s investment structure and for recommended modifications. 91. What does your firm consider to be the most crucial issues regarding an Investment Policy Statement? 92. Does your organization assist in written updates and revisions to the Investment Policy Statement? If so, how often do you review the policy statement for updates? Cybersecurity Policy 93. Has your firm experienced any security breaches? If yes, briefly explain. 94. Does your firm carry cybersecurity insurance? If yes, provide an overview of the coverage. 95. Does your firm conduct periodic risk assessment reviews to identify potential cybersecurity threats, vulnerabilities, and potential business consequences? If so, what are the frequencies of these reviews? 96. What are your firm s processes and systems for dealing with cybersecurity threats and protections of personal identifiable information? 97. Does your firm have an annual independent assessment made of its cybersecurity processes? If so, who provides that independent review? 98. Does your firm have a privacy and security policy, and does the policy apply to personal identifiable information of retirement plan clients? Does the policy reference storing of personal identifiable information on laptops and portable storage devices, and if so, what is that policy? 99. What is the frequency of updates to your firm s technology systems and who ensures the updates occur on a regular basis? 100. Does your firm have policies on storing personal identifiable information including where it is stored, how long it is stored, and how it is eliminated? 101. Is advanced authentication used by the company? Can you describe the process? 102. What are the training procedures to ensure that all employees who come in contact with personal identifiable information are aware of and follow the procedures to ensure adequate protection of the information? 103. Does your firm have a chief information security officer or similar position? Please provide that person s biography. Appendix A - 8
Warranties 104. Does your firm warrant that it maintains, or has applied for by the due date for RFP responses, an Errors and Omissions Insurance policy providing prudent coverage for negligent acts or omissions and that such coverage will remain in place for the duration of your firm s services under the anticipated contract? Please specify the types and amounts of insurance coverage your firm maintains. 105. Does your firm warrant that all information and statements in this RFP are complete and true? Any statement or claim found to be incomplete, misleading or false will be grounds for immediate disqualification or dismissal and may be subject to legal action. 106. Does your firm warrant that it is an SEC-registered investment advisor or exempt from registration? If so, please provide a copy of the firm s current Form ADV. If exempt, explain the nature of exemption. 107. Does your firm warrant that it has ten (10) years experience in Deferred Compensation or Defined Contribution investment consulting for government organizations and/or other relevant industry clients? 108. Does your firm warrant that it has five (5) years experience providing services substantially similar to the services requested in this RFP for public sector or governmental entities or past experience with the City of County of San Francisco? 109. Does your firm warrant that it has at least three (3) years experience in advising and/or managing custom target date funds for defined contribution plans or other relevant industry clients? 110. Does your firm warrant that it has a minimum of $1 billion in total assets under advisement? 111. Does your firm warrant that it is compliant with the CFA Institute s Global Investment Performance Standards? If not, why not? 112. Does your firm warrant that it has reviewed the form of Investment Consulting Agreement, attached as Appendix E to this RFP, and that the firm s counsel has reviewed that agreement? Please identify any changes you would request to that Investment Consulting Agreement, either by providing a marked revised copy of the agreement with your requested changes or by identifying each section of the agreement where you would request changes and specifying the changes requested. Please warrant that the marked-up copy of the Investment Consulting Agreement or list with agreement sections and the specific changes requested to those sections represents your full list of requested changes. 113. Have you or anyone in your firm provided any gifts, travel and room expenses, entertainment or meals to any Board member or SFDCP staff during the past 12 months? If yes, please describe the amount of the expense and what it was for, as well as the date. Other 114. Provide references for three public pension plans and/or relevant industry clients that the respondent has provided services substantially similar to the services requested in this RFP within five (5) years from the date of this RFP. Include the name, address and phone number of the person whom we may contact. References must represent large deferred compensation or defined contribution plans. We prefer references with a minimum of $2 billion in assets. 115. Does your firm have an outreach program for disadvantaged communities? If so, please describe the program and include the policies and procedures for outreach and recruitment. Appendix A - 9
Appendix B Investment Policy Statement City and County of San Francisco 457 Deferred Compensation Plan Investment Policy Statement Appendix B-1
City and County of San Francisco 457(b) Deferred Compensation Plan Investment Policy Statement Effective December 10, 2014 Appendix B-2
1 PURPOSE OF THE INVESTMENT POLICY STATEMENT AND OBLIGATIONS OF PLAN FIDUCIARIES The City and County of San Francisco ( City ) authorized the San Francisco Retirement Board ( Board ) to establish and administer a Deferred Compensation Plan ( Plan ) for the benefit of employees of the City and the Superior Court of California, County of San Francisco, excluding judges (collectively, Employees ). The Board established the Plan in accordance with Section 457 of the Internal Revenue Code of 1986, as amended (the Code ). The Board adopts this Investment Policy Statement ( Policy ) under the authority granted by the City. This Policy defines the investment objectives of the Plan and establishes policies and procedures for meeting those objectives. The Policy is intended to provide guidelines for investing the Plan in a prudent manner that is consistent with the requirements of the Code and other applicable laws, rules and regulations. This Policy is designed to incorporate sufficient flexibility, including to accommodate current and future economic and market conditions and changes in applicable accounting, statutory and regulatory requirements. The Board may deviate from this Policy as it deems appropriate and in the best interests of the Plan and its participants and their beneficiaries (collectively Participants and individually a Participant ). Any such deviation may be adopted by revising this Policy or in other written documentation. Plan fiduciaries including the Board, Plan staff, investment management providers, the Plan s general investment consultant ( Investment Consultant ) and any specialty consultants or managers, and the Plan s third party administrator (the Third Party Administrator ) must perform their fiduciary duties in the exclusive interest of the Plan and Participants. These fiduciaries must comply with applicable local, state and federal laws, rules and regulations regarding the administration and investment of the Plan s assets. Fiduciaries must discharge their fiduciary duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims, and comply with the provisions of this Policy. While the Employee Retirement Income Security Act of 1974, as amended ( ERISA ) does not apply to the Plan, it is the Board s expressed goal that the Plan be administered and invested as if ERISA applies, when it is practicable to do so and in the interests of the Plan and Participants. The Board will review this Policy on a periodic basis and, if appropriate, revise it. The Board may revise this Policy without the consent of any other party. Investment Policy Statement December 10, 2014 Appendix B-3
2 PLAN INVESTMENT OBJECTIVES The Plan s objective is to provide Participants with a source of retirement income from their accumulated contributions and investment returns. The Board s investment objective for the Plan, as detailed in this Policy, is to provide Participants with an array of appropriate investment options in the Plan. The Board intends that the Plan will provide sufficient investment choices to reflect a broad range of risk tolerances, and that these choices will allow Participants to achieve a portfolio with aggregate risk and return characteristics within the range normally appropriate for Participants. Investments are expected to be valued on a daily basis and Participants are given the flexibility to alter the composition of the investments in their accounts and, as applicable, to change their investment allocations for future contributions. The Board intends that the Plan provide Participants with reasonable access to current investment and fee information, along with educational materials, programs and tools designed to compare investment options by risk and return characteristics to help Participants make informed investment decisions. 3 RESPONSIBILITIES OF PLAN PARTICIPANTS Among other responsibilities, Participants are responsible for the following: Determining their retirement income needs. Determining how much to contribute as a deferral of their pay, up to the limits established under federal law each year. Determining whether to contribute on a pre- or post-tax basis. Allocating contributions and accumulated assets in their accounts among the investment options offered by the Plan and/or through a Self-Directed Brokerage Option. Participants should allocate funds based on their own judgment and assessment of their risk tolerance and retirement income objectives, including, to the extent applicable, through their evaluation of information and guidance provided by an outside investment advisor retained by the Participant, if any. Investment Policy Statement December 10, 2014 Appendix B-4
Determining when to make withdrawals and at what level, as required, permitted or limited by applicable law, rule or regulation. 4 RESPONSIBILITIES FOR ADMINISTRATION AND MANAGEMENT OF THE PLAN S INVESTMENTS Retirement Board The Board shall have the power to perform all the duties necessary to select and oversee the investment options in the Plan. Taking into consideration recommendations made by the Investment Consultant, Plan staff, and the Deferred Compensation Plan Committee ( Committee ), the Board's responsibilities include, but are not limited to, the following: Establishing and maintaining this Policy, reviewing it periodically and revising it as necessary. Reviewing and approving investment options to be added or removed from the Plan. Reviewing and approving the managers and allocations to managers that comprise the investment options of the Plan. Monitoring and evaluating investment performance of the Plan s investment options periodically. Monitoring investment fees and expenses for the Plan s investment options, excluding the Self Directed Brokerage Option. Approving the selection and retention, and monitoring the performance, of the Investment Consultant, as well as any specialty investment managers to the Plan, e.g., the Target Date Fund manager and the Stable Value Fund manager. Approving the selection and retention, and monitoring the performance, of the Third Party Administrator, and other service providers as needed to provide effective and efficient investment, educational and other services to Participants. To assist in carrying out these duties, the Board may delegate certain decisions and actions to the Committee, Plan staff, or an alternate designee. Investment Policy Statement December 10, 2014 Appendix B-5
Deferred Compensation Plan Committee The Committee is a committee of the Board. Taking into consideration recommendations made by Plan staff, the Investment Consultant and any specialty investment managers or service providers, the Committee shall: Make recommendations to the Board regarding this Policy. Make recommendations to the Board regarding the structure of the investment options line-up, including the investment options to be added or removed from Plan and the investment managers that comprise each option. Monitor investment performance and investment fees and expenses for the Plan s investment options, excluding the Self Directed Brokerage Option, and make recommendations to the Board regarding performance, fees and expenses. Make recommendations to the Board regarding the selection and retention of the Plan s Third Party Administrator, taking into consideration the recommendation of Plan staff and the Investment Consultant. Make recommendations to the Board regarding the selection and retention of the Investment Consultant, taking into consideration Plan staff s recommendation. Make recommendations to the Board regarding the selection and retention of any specialty investment managers or other service providers, e.g., the Target Date Fund manager and the Stable Value Fund manager, taking into consideration the recommendation of Plan staff and where applicable the Investment Consultant. Monitor and make recommendations to the Board regarding the performance of the Third Party Administrator, Investment Consultant, and any specialty investment managers or service providers. Investment Consultant The Investment Consultant is responsible for: Conducting a regular review of this Policy and, in consultation with Plan staff, recommending revisions to the Board through the Committee. Evaluating and making recommendations, in consultation with Plan staff, to the Board through the Committee on the investment options line-up, including any new or replacement investment options and the composition Investment Policy Statement December 10, 2014 Appendix B-6
of the investment options. The Investment Consultant is responsible for ensuring appropriate due diligence, including evaluation using the selection criteria in this Policy, and that the recommendations and the evaluation and selection processes are thoroughly documented. Monitoring the ongoing performance of the investment options and investment managers and providing a semi-annual performance measurement report to the Committee and Board that evaluates investment results and organizational characteristics of the investment managers, identifying any funds or managers that warrant placement on the Watch List, and making recommendations for fund selection, replacement and termination. Making recommendations to the Committee and the Board, in consultation with Plan staff, for changes in investment guidelines applicable to specific investment managers. Reviewing and advising on the appropriateness of Plan, fund, manager and Participant fees and expenses. Providing assistance to Plan staff, the Committee, and the Board on other Plan investment issues. Assisting with periodic selection, analysis and recommendations regarding the Plan s Third Party Administrator, Target Date Fund manager and Stable Value Fund manager. Plan Staff Plan staff, including the Deferred Compensation Manager, is responsible for: Assisting the Board and Committee with carrying out their responsibilities, including by communicating on a timely basis to the Board and Committee about information relevant to Plan oversight and administration. Ensuring timely and effective implementation of Board and Committee decisions. Monitoring and overseeing the work or performance of the Investment Consultant, the Target Date Fund manager, the Stable Value Fund manager, the Third Party Administrator, and any other consultants, managers or other service providers retained by or providing services to the Plan. Investment Policy Statement December 10, 2014 Appendix B-7
Third Party Administrator The Third Party Administrator is responsible for working with Plan staff under the terms of the Plan document and a contract delineating its responsibilities and fee arrangements. Generally the Third Party Administrator will: Provide individual record-keeping and accounting, enrollment, beneficiary designation and changes, disbursement of assets and other administrator functions, as specified in its agreement with the Plan. Provide services to Participants to ensure full access to the features of the Plan. This may include asset allocation tools for Participants that construct professionally managed, diversified portfolios. Provide education and outreach to Participants on investments, Plan benefits and features, preparing for retirement, and other matters identified by Plan staff, the Committee, and the Board. 5 A. PLAN INVESTMENT OPTIONS The Plan offers a range of investment options, including: a) Plan Designated Fund Options; b) Custom Target Date funds; and c) Stable Value Fund. In addition, Participants may enroll in a Self Directed Brokerage Option. Plan Designated Fund Options Plan Designated Fund Options are the core investment options available to Participants. These options are titled as SFDCP funds and will be comprised of one or more investment managers. Target Date Funds The Plan offers custom Target Date Funds ( TDFs ) whose asset allocation is designed with the financial characteristics of Participants in mind. The target date is based on the approximate date when a Participant may expect to retire. Each TDF seeks to provide Investment Policy Statement December 10, 2014 Appendix B-8
strategy diversification by investment in multiple underlying investment managers, which will include funds in Plan Designated Fund Options as well as other manager funds offering asset class exposure to provide additional diversification. The Plan s Target Date Funds serve as the Plan s Qualified Default Investment Alternative ( QDIA ). Participants who do not select investment options in which to invest their contributions and assets will have their contributions and assets invested in (i.e., defaulted into) a Target Date Fund as the QDIA. A Participant will be defaulted into a Target Date Fund based on the Participant s age. Additional information about the TDFs is found in Exhibit B. Stable Value Fund The Stable Value Fund ( SVF ) is one of the Plan Designated Fund Options. The SVF is an investment alternative that is intended to preserve principal and provide an increment of returns over cash returns. The SVF is managed by a Stable Value Fund manager approved by the Board with a principal preservation objective. The SVF is invested, among other investments, in benefit responsive wrap agreements designed to provide for a credited interest rate based on the performance of the underlying fixed income securities and income on any other financial instruments. Credited interest income is announced regularly and under normal conditions should not be less than 0.0%. The Board recognizes that several factors could adversely impact the principal preservation objective of the SVF, for example, impairments of the underlying wrapped securities or default by a benefit responsive wrap contract issuer. The SVF manager has full discretion as a fiduciary over the SVF, provides full transparency to the Plan on all elements and components of the SVF investments, wrap coverage, and associated fees for management and wrap coverage, and assists the Plan with communicating and providing appropriate information to Participants regarding the SVF. The SVF is intended to permit Participants to withdraw their contributions plus earnings from the declared crediting rate without losses. The SVF is managed according to guidelines negotiated with the Stable Value Fund manager, recommended by the Committee, and approved by the Board. Self Directed Brokerage Option The Plan s Self Directed Brokerage Option ( SDBO ) offers Participants access to thousands of open end mutual funds. Generally, the SDBO is intended to provide additional investment options for Participants who wish to select their own investment funds. Investment Policy Statement December 10, 2014 Appendix B-9
Holdings in the SDBO are solely and fully the responsibility of the Participant, or, if applicable, the Participant s authorized agent, including an outside investment advisor retained by the Participant. The Board, Committee, Plan staff, Third Party Administrator, and any consultants or managers retained by the Plan are not responsible for reviewing, selecting or monitoring any investments, fees, expenses, revenue sharing or any other aspect of a Participant s account under the SDBO. Participants may maintain no more than 50% of their Plan assets in the Self-Directed Brokerage Account; a Participant cannot transfer additional assets to the Self -Directed Brokerage Account if the Self-Directed Brokerage Account balance is 50% or greater of the total balance, or if the proposed transaction will result in a balance of 50% or greater in the Self-Directed Brokerage Account. The Third Party Administrator monitors these limits. The investment selection process in Section 5B of this Policy does not apply to the SDBO. Performance Benchmarks of Investment Options The performance benchmarks and other characteristics of the investment options available to Participants (other than the SDBO) are outlined in Exhibit A of this Policy. B. SELECTION OF PLAN INVESTMENT OPTIONS AND MANAGERS General Principles for Investment Options Taking into consideration recommendations of the Investment Consultant, Plan staff, and the Committee, based on the general principles below, the Board will seek to establish and construct the Plan s investment options such that: Each is diversified within itself and may be comprised of one or more investment managers. Each has materially different risk, return and/or style characteristics. When considered together, the investment options permit a Participant to manage risk through diversification. When considered together, the investment options enable the Participant, by choosing among the investment options, to achieve a Plan account portfolio with aggregate risk and return characteristics within the range normally appropriate for the Participant. The line-up of investment options may include the use of professionallymanaged portfolios such as custom Target Date Funds. Asset allocation tools Investment Policy Statement December 10, 2014 Appendix B-10
or other professionally managed investment programs may also be available through the Third Party Administrator or otherwise. Criteria for Selection of Investment Managers The criteria for selecting investment managers for the Plan s investment options or as components of the Target Date Funds may include but are not limited to: 1. Whether the manager is experienced in managing money in the asset class/product category specified by the Plan, open to new investment, and willing to accept defined contribution plan assets from the Plan. 2. Whether the Plan s investment in the fund would exceed 20% of the fund s total assets, including all share classes of the fund. 3. Whether the fund has been in operation for a period of five years prior to selection. 4. Whether the manager has displayed a record of stability in retaining and attracting qualified investment professionals, as well as a record of managing asset growth effectively, both in gaining and retaining clients. 5. Whether the manager has demonstrate adherence to the investment style sought by the Plan and adherence to the fund s stated investment discipline, recognizing that the effectiveness of investment styles can be cyclical. 6. Whether the manager has a historical track record that is competitive relative to appropriate market indices and peers. A manager s performance may be evaluated in the context of its investment style and peers, its role in the Plan s roster of investment options, and the capital markets. 7. Whether the manager s fees are competitive with industry standards for the product category, taking into account a manager s track record and skill. The Plan acknowledges that low expenses and management costs can provide additional investment return to Participants. Higher fee managers may be suitable, however, based on a manager s skill or track record. Funds with sales loads and other commissions will generally not be selected. The manager must fully disclose to Plan staff and the Investment Consultant all fees, commissions and charges for a fund before the manager s fund will be recommended as an investment option. 8. Whether the manager s fund is available on the Third Party Administrator s platform. 9. Whether the manager has provided to Plan staff and the Investment Consultant detailed information on the history of the fund, its investment philosophy and approach, its investment team, fee information, and other relevant information. Investment Policy Statement December 10, 2014 Appendix B-11
While these manager selection criteria establishes guidelines for the manager selection process, each manager is unique and should be analyzed on an individual basis, taking into account any unique circumstances affecting the selection process 6 MONITORING INVESTMENT OPTION AND MANAGER PERFORMANCE The Investment Consultant shall monitor the performance of the Plan s investment options and the investment managers that comprise the options. If an investment option or manager fails to perform at the expected investment return levels or has exhibited significant qualitative factor changes, the Investment Consultant shall report such shortfalls to the Board, Committee and Plan staff, and make recommendations for next steps. Except as otherwise provided in this Policy, if the Investment Consultant or Plan staff recommend that the investment option and/or manager should be replaced or eliminated, and the Board concurs, the Investment Consultant and Plan staff will begin the process of terminating the investment option or manager, and the process of recommending and reviewing the replacement investment option and/or manager (if any). 7 INVESTMENT OPTION MONITORING The Board, with the assistance of the Investment Consultant, Committee and Plan staff intend to monitor the Plan s investment options and investment managers with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in such monitoring. Watch List An investment option or manager may be subject to Watch List status if it meets one or more of the Watch List status criteria. The Plan s Watch List policy includes both qualitative (e.g., personnel/organization changes, style drift concerns, etc.) and quantitative criteria (e.g., performance Investment Policy Statement December 10, 2014 Appendix B-12
relative to benchmark and relevant peer category). A fund s or investment manager's failure to remedy the concerns leading to Watch List status within a reasonable time may be grounds for termination. The Watch List policy is provided as Exhibit C to this Policy. Replacement or Elimination of an Investment Option and/or Manager The Board may terminate an investment option or investment manager at any time for any reason, but does not generally expect to be reactive to short-term investment developments. The Board recognizes that the accumulation of wealth for eventual retirement benefit payout is long-term in nature and that manager investment competence, particularly as measured by performance, should be measured over a complete market cycle (generally a three to five year period). Nevertheless, the Board may act on interim qualitative judgments. The Board may replace or eliminate an investment option or manager following the process and criteria outlined in Section 5 under Selection of Investment Options. The Board may remove or replace an investment option or manager using one of the following approaches: Remove and transfer (map) assets to a different, existing investment option, including the QDIA; Remove and transfer (map) assets to a new replacement investment option or manager; Freeze the investment option to any new contributions and direct new contributions (if not subsequently changed by a Participant) to either a new replacement investment option or a different, existing investment option, including the QDIA; or Phase out the investment option over a specified time period. When an investment option is eliminated, Participants invested in that option will have an opportunity to transfer their assets in that investment option to another available investment option. The Plan will seek to provide advance written notice to affected Participants, when reasonably feasible, of the planned replacement or elimination and mapping action (if any) and the opportunity for transfer to an existing investment option. If a Participant does not select the option to transfer to an existing investment option when the investment option is removed, all assets in that investment option will be mapped and transferred to a new replacement investment option, if applicable, or to the QDIA or another existing investment option until the Participant elects to redirect the assets. If Plan staff, in consultation with the Investment Consultant, determine that immediate action to remove or replace an investment option or manager is necessary to protect the best interests of Participants, Plan staff is authorized to take such action, but shall promptly arrange a meeting of the Committee to explain the circumstances and actions, and seek a recommendation that the Board ratify Plan staff s actions or take other action. Investment Policy Statement December 10, 2014 Appendix B-13
8 EXCESSIVE TRADING POLICY The Board recognizes that excessive trading imposes costs on all Participants that are not in the interests of the Plan. The Plan s Third Party Administrator will enforce trading restrictions on Participants under the Third Party Administrator s excessive trading policy and, where applicable, the excessive trading policies of an investment manager. The Third Party Administrator will report to the Plan on its Excessive Trading Policies and procedures and the Plan will take reasonable steps to make those policies available to Participants, for example, by posting them on the Plan s website. Investment Policy Statement December 10, 2014 Appendix B-14
EXHIBIT A PERFORMANCE EXPECTATIONS AND BENCHMARKS INVESTMENT OPTION SFDCP Stable Value Fund Underlying separate account comprised of investment contracts issued by financial institutions and other eligible stable value investments SFDCP Core Bond Fund Investments will consist primarily of fixed income securities, including corporate bonds and U.S. government debt and mortgagebacked. SFDCP Target Date Funds (including SFDCP Retirement Fund) These 10 funds are based on a custom glide path (comprising a range of asset allocation mixes) that is developed based on factors specific to the Plan, including Participants ages, normal retirement ages, other pension income, and other factors. See Exhibit B for further detail on the structure of the Target Date Funds. PERFORMANCE EXPECTATION VERSUS MARKET INDICES Return exceeds the 3-Year Constant Maturity Treasury Index. Total annualized return exceeds the Barclays Aggregate Bond Index. Volatility similar to Barclays Aggregate Bond Index. Each Target Date Fund will be measured against a primary benchmark that reflects the Growth/Capital Preservation allocation of the fund and is expected to exceed the return on an annualized basis. A secondary benchmark that reflects the specific allocations of the funds as weights for indices for those funds may also be used. PERFORMANCE EXPECTATION VERSUS UNIVERSE OF PEERS N/A Total return which ranks above the 50th percentile in a universe of other bond funds over multiple time periods. The Target Date Funds will also be measured against: A suitable universe of peer Target Date Funds; Other measures as necessary. Total return is expected to rank above the 50 th percentile over multiple time periods. Investment Policy Statement December 10, 2014 Appendix B-15
EXHIBIT A (CONT D) PERFORMANCE EXPECTATIONS AND BENCHMARKS INVESTMENT OPTION SFDCP Large Cap Core Equity S&P 500 Index Investments will consist primarily of the 500 stocks that comprise the S&P 500 Index. SFDCP Large Cap Core Equity Active Portfolio Investments will be primarily in stocks of large cap companies (large cap companies are generally defined as companies with a market capitalization of greater than $10 billion). SFDCP Large Cap Social Equity Portfolio Investments will be primarily in a portfolio of large cap company stocks screened for certain social and environmental criteria. PERFORMANCE EXPECTATION VERSUS MARKET INDICES Total annualized return equals the S&P 500 Index (gross of fees). Volatility should match the S&P 500 Index. Total annualized return exceeds the S&P 500 index. Volatility should be similar to the S&P 500 Index. Total annualized return equals the FTSE 4Good US Select Index (gross of fees). Volatility should match the FTSE 4Good US Select Index. N/A PERFORMANCE EXPECTATION VERSUS UNIVERSE OF PEERS Total return which ranks above the 50 th percentile in a universe of other large cap core funds over multiple time periods. N/A Investment Policy Statement December 10, 2014 Appendix B-16
EXHIBIT A (CONT D) PERFORMANCE EXPECTATIONS AND BENCHMARKS INVESTMENT OPTION SFDCP Large Cap Value Equity Portfolio Investments will be in undervalued stocks of primarily large cap companies, characterized by aboveaverage income yields and belowaverage price/earnings ratios relative to the large cap stock market, with some exposure to mid cap companies. SFDCP Large Cap Growth Equity Portfolio Investments will be primarily in stocks of large cap companies, which have experienced aboveaverage and consistent long-term earnings growth and exhibit favorable prospects for future growth, with some exposure to mid cap companies. This option is composed of a 50/50 blend of two different large cap growth funds. The Third Party Administrator is responsible for maintaining the equal weighting of the two underlying funds. PERFORMANCE EXPECTATION VERSUS MARKET INDICES Total annualized return exceeds the Russell 1000 Value Index. Volatility should be similar to the Russell 1000 Value Index. Total annualized return exceeds the Russell 1000 Growth Index. Volatility should be similar to the Russell 1000 Growth Index. PERFORMANCE EXPECTATION VERSUS UNIVERSE OF PEERS Total return which ranks above the 50 th percentile in a universe of other large-cap value funds over multiple time periods. Total return which ranks above the 50 th percentile in a universe of other large cap growth funds over multiple time periods. Investment Policy Statement December 10, 2014 Appendix B-17
INVESTMENT OPTION SFDCP International Equity Portfolio Invests primarily in equities of non- U.S. companies and cash equivalents determined by the manager. SFDCP Mid-Cap Core Fund Investments will be primarily in stocks of mid cap companies (generally defined as companies with market capitalizations in the range of $1.5 billion to $10 billion). SFDCP Small Cap Core Fund Invests primarily in securities of small -sized companies (generally those with a market capitalization of $2 billion and below). This option is composed of a 50/50 blend of the underlying funds used for the SFDCP Small Cap Value and SFDCP Small Cap Growth Fund options. The Third Party Administrator is responsible for maintaining the equal weighting of the two underlying funds. EXHIBIT A (CONT D) PERFORMANCE EXPECTATION VERSUS MARKET INDICES Total annualized return exceeds the MSCI All Country World Ex. US Index. Volatility should be similar to the MSCI All Country World Ex. US Index. Total annualized return exceeds the Russell Mid-Cap Index. Volatility should be similar to the Russell Mid-Cap Index. Total annualized return exceeds the Russell 2000 Index. Volatility should be similar to the Russell 2000 Index. PERFORMANCE EXPECTATION VERSUS UNIVERSE OF PEERS Total return which ranks above the 50 th percentile in a universe of other international funds over multiple time periods. Total return which ranks above the 50 th percentile in a universe of other mid cap core funds over multiple time periods. Total return which ranks above the 50 th percentile in a universe of other funds with similar funds of size and style over multiple time periods. Investment Policy Statement December 10, 2014 Appendix B-18
INVESTMENT OPTION SFDCP Small Cap Value Fund Invests primarily in securities of small-sized companies characterized by above average income yields and below average price/earnings ratios relative to the small cap stock market SFDCP Small Cap Growth Fund Invests primarily in securities of small-sized companies, which have experienced above-average and consistent long-term earnings growth and exhibit favorable prospects for future growth. SFDCP Real Estate Portfolio Invests primarily in real estate investment trusts ( REITs ) and other real estate oriented stocks in order to provide exposure to the real estate asset class. EXHIBIT A (CONT D) PERFORMANCE EXPECTATION VERSUS MARKET INDICES Total annualized return exceeds the Russell 2000 Value Index. Volatility should be similar to the Russell 2000 Value Index. Total annualized return exceeds the Russell 2000 Growth Index or the CRSP US Small Cap Growth Index. Volatility should be similar to the Russell 2000 Growth Index. Total annualized return exceeds the MSCI US REIT Index. Volatility should be similar to the MSCI US REIT Index. PERFORMANCE EXPECTATION VERSUS UNIVERSE OF PEERS Total return which ranks above the 50 th percentile in a universe of other funds with similar funds of size and style over multiple time periods. Total return which ranks above the 50 th percentile in a universe of other funds with similar funds of size and style over multiple time periods. Total return which ranks above the 50 th percentile in a universe of other funds with similar funds of size and style over multiple time periods. Investment Policy Statement December 10, 2014 Appendix B-19
EXHIBIT B SFDCP CUSTOM TARGET DATE FUND PORTFOLIOS Participants may elect to invest contributions or account assets in the SFDCP Target Date Funds ( TDFs ). In addition, the Plan may map Participant contribution or assets to the TDFs as the Plan s Qualified Default Investment Alternative. Asset Allocation: The TDF portfolios will be based on custom glide paths (comprising a range of asset allocation mixes for each of the ten target date funds offered to Participants, including one for those Participants in retirement and nine based on age) that is developed based on factors specific to the Plan, including Participants ages and expected retirement dates, other pension income, and other factors. The asset allocation of the TDFs (other than the SFDCP Retirement Fund) is expected to change over time, with an increasing allocation to capital preservation assets and following the custom glide path. Fund Selection within Target Date Funds: The asset allocation of the TDFs will be implemented through the use of investment options offered in the Plan and may use other investment portfolios (typically mutual funds or other commingled vehicles) that provide exposures in the TDFs approved by the Board for that purpose but that are not included in the investment options available in the Plan. Selection of funds that are only used in the TDFs will follow the same policies and procedures outlined in Section 5 of this Policy for manager selection and are subject to the Watch List policy outlined in Exhibit C. The Board will review the performance of the TDFs on a periodic basis and consider changes in asset class exposures in the custom glide paths, as recommended by the glide path manager, periodically or as deemed necessary. Investment Policy Statement December 10, 2014 Appendix B-20
EXHIBIT C WATCH LIST POLICY The purpose of this Watch List Policy is to establish general guidelines for monitoring the Plan s investment options and/or managers and identifying issues of concern, and to provide a systematic and consistent process for the Investment Consultant and Plan Staff to use when making recommendations to the Committee and Board concerning evaluation and retention of investment options and their underlying managers that are utilized in the Plan. Watch List Status Criteria An investment option or manager may be subject to Watch List status if it is determined by Plan staff and Investment Consultant to have met any one or more of the following criteria: Quantitative Factors: Recent Performance: a) Under-performs the style specific index and is below the 75 th percentile in peer group ranking for the trailing 12 months for the last two reporting periods. Market Cycle Performance: b) The three-year annualized return under-performs the style specific index over that time period. c) The three-year annualized return ranks below the 50th percentile of the peer group average over that time period. Qualitative Factors d) There is a disruption or a change in the ownership of an investment option s manager. e) There is a change in key personnel for an investment option s manager. f) There is a change in investment philosophy, process, or style. g) There is a violation of Securities and Exchange Commission rules or regulations or other legal or regulatory issues. h) There are changes, especially relative to its peers, in a manager's fee structure. i) Other qualitative issues are believed may have a material impact on the future performance of an investment option or investment manager, e.g., a significant change in the level of assets, systems or operational changes, or other factors. Investment Policy Statement December 10, 2014 Appendix B-21
Watch List Procedures and Fund Termination An investment option may be removed from Watch List status when the investment option no longer falls within any of the criteria listed above for Watch List status. An investment option manager's failure to remedy the investment option s unsatisfactory performance within a reasonable time may be grounds for termination. While this Watch List policy establishes guidelines for investment option monitoring, experience has shown that each investment option s situation is unique, and should be analyzed on an individual basis, taking into account any unique circumstances affecting the investment option. Investment Policy Statement December 10, 2014 Appendix B-22
Appendix C Core Investment Funds FUND NAME INTERNATIONAL EQUITY SFDCP International Equity Portfolio DOMESTIC EQUITY SFDCP Large Cap Growth Equity Portfolio SFDCP Large Cap Value Equity Portfolio SFDCP Large Cap Core S&P 500 Index SFDCP Large Cap Core Equity Portfolio SFDCP Mid Cap Core Equity Portfolio SFDCP Small Cap Core Equity Portfolio SFDCP Small Cap Growth Equity Portfolio SFDCP Small Cap Value Equity Portfolio SOCIALLY CONSCIOUS SFDCP Large Cap Social Equity Portfolio FIXED INCOME SFDCP Core Bond Portfolio STABILITY OF PRINCIPAL SFDCP Stable Value Fund UNDERLYING FUND American Funds EuroPacific Growth, R6 (RERFX) T. Rowe Price Growth Stock (PRUFX) and Vanguard Growth Index I (VIGIX) (Blended 50/50) LSV Conservative Value Equity Fund (LSVVX) Vanguard Institutional Index Instl PI (VIIIX) Fidelity Contrafund (FCNTX) Fidelity Low Price Stock Fund (FLPKX) (has redemption fee) Vanguard SC Index Fund I (VSIIX) & Vanguard SC Growth Fund I (VSGIX) (Blended 50/50) Vanguard SC Growth Fund I Vanguard SC Index Fund I Vanguard FTSE Social Index, Investor Shares (VFTNX) Baird Core Plus Bond Inst. Fund (BCOIX) Managed by: Galliard Capital Mgmt. SELF-DIRECTED BROKERAGE ACCOUNT SFDCP Self-Directed Brokerage Account Prudential Investment Mgmt. Svcs, LLC Appendix C-1
Appendix D Required Vendor Forms Vendor Eligibility Forms: Office of Contract Administration Form Purpose/Info Routing Business Tax Declaration Form (Form P-25) Declaration of Nondiscrimination in Contracts and Benefits with supporting documentation(form CMD-12B-101) Vendor Profile Application This declaration is required for city vendors to determine if you are required to obtain a Business Registration Certificate. This Declaration is used by the City s Contract Monitoring Division to determine if a vendor offers benefits to employees. When a vendor offers benefits, it must be verified that all benefits, including insurance plans and leaves, are offered equally to employees with spouses and employees with domestic partners. For more information and assistance, please visit the City Administrator s Contract Equal Benefits web page. Includes New Vendor Number Request Form and IRS Form W-9. Email:ttx.VendorAccounts@sfgov.org Fax: (415) 554-6207 Mail: Treasurer & Tax Collector City Hall, Room 140 1 Dr. Carlton B. Goodlett Pl. San Francisco, CA 94102 Website: www.sfgov.org/cmd Email:cmd.equalbenefits@sfgov.org Mail: CMD, 30 Van Ness Ave., Suite 200 San Francisco, CA 94102-6033 Email:Vendor.File.Support@sfgov.org Fax: (415) 554-6261 Mail: City and County of San Francisco Vendor Profile Application Vendor File Support City Hall, Room 488 1 Dr. Carlton B. Goodlett Place San Francisco, CA 94102-4685 Appendix D-1
Supplemental Forms: Form: Minimum Compensation Ordinance (MCO) Declaration (pdf) Health Care Accountability Ordinance (HCAO) Declaration (pdf) Insurance Requirements (pdf) Payment (Labor and Material) Bond (pdf) Performance Bond (pdf) Local Business Enterprise Program Application(Contract Monitoring Division) Required If: You have at least $25,000 ($50,000 for non-profit organizations) in cumulative annual business with a City department or departments and have more than 5 employees, including employees of any parent, subsidiaries and subcontractors. You have at least $25,000 ($50,000 for non-profit organizations) in cumulative annual business with a City department or departments and have more than 20 employees (more than 50 employees for nonprofit organizations), including employees of any parent, subsidiaries or subcontractors. The solicitation requires the successful bidder to demonstrate proof of insurance. The solicitation requires the awarded vendor to post a Payment (Labor and Material) bond. The solicitation requires the awarded vendor to post a Performance bond. You desire to participate in the City s Local Business Enterprise Program, which helps certain financially disadvantaged businesses increase their ability to compete effectively for City contracts. Appendix D-2
Appendix E General Investment Consulting Agreement GENERAL INVESTMENT CONSULTING AGREEMENT BETWEEN SAN FRANCISCO DEFERRED COMPENSATION PLAN AND [ ] THIS General Investment Consulting Agreement (this Agreement ) is made this day of, 2016 in the City and County of San Francisco (the City ), State of California, by and between: [ ] ( Consultant ) and the San Francisco Deferred Compensation Plan (the Plan ). RECITALS WHEREAS, the San Francisco Retirement Board ( Retirement Board ) established the Plan for eligible employees of the Plan s participating employers, and the Plan is intended to comply with Section 457 of the Internal Revenue Code of 1986, as amended (the Code ) and all applicable federal, state and local regulations, statutes and laws for purposes of providing retirement plan benefits to employees; WHEREAS, the Retirement Board acts as a fiduciary for the Plan and has the authority to appoint and delegate fiduciary authority and responsibility to service providers for the Plan;; WHEREAS, the Retirement Board, through the Plan, seeks to retain non-discretionary general investment consulting and advisory services (the Proposed Services ) for the Plan; WHEREAS, the Plan issued a request for proposal with respect to the Proposed Services ( RFP ), and as a result of the competitive selection process in connection with that RFP (the RFP Process ), the Plan recommended, and the Retirement Board approved, selection of Consultant to provide the Proposed Services based on Consultant s representations during the RFP Process; and WHEREAS, Consultant represents and warrants that it is qualified to perform the services required by the Plan under this Agreement; Now, THEREFORE, in consideration of the promises and mutual covenants herein contained, Consultant and the Plan do hereby agree as follows: 1. Term of the Agreement. Subject to Section 8 of this Agreement, the term of this Agreement shall be from [_July 1, 2016 to June 30, 2021_]; provided, however, Appendix E-1-1
that the Plan shall have two (2) options to extend the term of the Agreement for a period of one (1) year each option, which the Plan may exercise in its sole, absolute discretion. 2. Engagement. The Plan hereby engages Consultant, and Consultant hereby accepts such engagement, to provide non-discretionary investment consulting and advisory services to the Plan in accordance with the terms and conditions of this Agreement, applicable federal, state and local laws, the Plan document and Board policies and procedures for the Plan. 3. Services. Consultant agrees to perform the non-discretionary investment consulting services for the Plan described in the Schedule of Services attached hereto as Exhibit A and incorporated by reference as though fully set forth herein (the Described Services ). Additional services will be provided only upon and in accordance with a written request by the Executive Director of the Plan (the Executive Director ) or designee acting on behalf of the Plan (the Additional Services, together with the Described Services, the Services ). 4. Compensation. (a) (b) (c) Fees. For the full performance and the completion of the Services, Consultant shall be compensated as set forth in the Fee Schedule attached hereto as Exhibit D and incorporated by reference as though fully set forth herein (the Fees ). The Fees include the compensation for professional services as well as travel and other out-of-pocket expenses, printing, delivery, secretarial and clerical support services and any other costs incurred as may be necessary to perform the Services in a professional manner. No charges shall be incurred under this Agreement nor shall any payments become due to Consultant until reports, services, or both, required under this Agreement are received from Consultant and approved by the Plan as being in accordance with this Agreement. The Plan may withhold payment to Consultant in any instance in which Consultant has failed or refused to satisfy any material obligation provided for under this Agreement. In no event shall the Plan be liable for interest or late charges for any late payments. Fee Ceiling. In no event shall the annual compensation amount under this Agreement exceed Dollars [$ ]. Payment Does Not Imply Acceptance of Services. The granting of any payment by the Plan, or the receipt thereof by Consultant, shall in no way lessen the liability of Consultant to replace unsatisfactory Services, although the unsatisfactory character of such Services may not have been apparent or detected at the time such payment was made. Services that do not conform to the requirements of this Agreement may be rejected by the Plan and in such case must be replaced by Consultant without delay. Appendix E-2-2
5. Fiduciary Responsibility. Consultant represents and warrants that it is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act ), and will be registered as an investment adviser under the Advisers Act at all times while the Plan receives the Services. Consultant represents and warrants that it has delivered to the Plan, at least five (5) business days prior to the date of this Agreement, Parts 1A and 2 of Consultant s Form ADV (the Disclosure Statement ). Consultant further represents and warrants that it will deliver to the Plan: (a) a copy of the Disclosure Statement it files with the Securities and Exchange Commission annually, within thirty (30) days of filing and (b) copies of any amendments to the Disclosure Statement it files with the Securities and Exchange Commission, within thirty (30) days of filing. Consultant acknowledges that this Agreement places it in a fiduciary relationship with the Plan. As a fiduciary, Contractor shall discharge each of its duties and exercise each of its powers (as those duties and powers are defined herein) with the competence, care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the course of any enterprise of like character and with like aims, in conformance with the California Constitution, Article XVI, Section 17, California Government Code Sections 31594 and 31595, San Francisco Charter Section 12.100 and with the customary standard of care of a professional investment consultant providing services to a United States employee pension trust (the Standard of Care ). Consultant shall cause any and all of its employees, agents and representatives providing services in connection with this Agreement to exercise the same Standard of Care. Consultant acknowledges that, to comply with the above-described fiduciary duties, it must maintain independence from all interests other than the interests of the Plan members and beneficiaries, as those interests are expressed by the Retirement Board. Consultant further acknowledges that the Plan staff acts as the agent for the Retirement Board in its relationship with Consultant, but is subordinate to the Retirement Board and cannot direct Consultant to consider interests contrary to those expressed by the Retirement Board. Consultant warrants that it will not delegate its fiduciary responsibilities under this Agreement. Within the context of providing the Services, Consultant s analysis may address tax, legal or other considerations related to various investment strategies or investments. However, Consultant shall not provide or otherwise be responsible for the provision of tax advice or legal counsel. Consultant shall act in an investment advisor capacity only. 6. Disclosures. (a) (b) RFP. Consultant represents and warrants that its statements, dated [ ], in its response to the RFP, are true and correct. Disclosure of Interest. Consultant shall fully and promptly disclose to the Plan: (i) its direct or indirect financial interests in any investment opportunity that it may recommend to the Plan in providing the Services; (ii) with respect to any Appendix E-3-3
potentially oversubscribed investment opportunity that Consultant recommends to the Plan, whether Consultant is also recommending such investment opportunity to other clients of Consultant (and the amounts thereof) or otherwise assisting other clients of Consultant in such investment opportunity, regardless of whether such other clients proceed with the investment opportunity; and (iii) any other fact or relationship which would compromise or materially affect its ability to faithfully perform its duties under this Agreement. (c) Intellectual Property. The Services and deliverables that Consultant provides under this Agreement shall not infringe upon any patent rights, copyright, trade secret or any other proprietary right or trademark, or any other intellectual property rights of any other third party. 7. Personnel. (a) (b) Qualified Personnel. Work under this Agreement shall be performed only by competent personnel under the supervision of and in the employment of Consultant. Consultant will comply with the Plan s reasonable requests regarding assignment of personnel, but all personnel, including those assigned at the Plan s request, must be supervised by Consultant. Consultant shall commit adequate resources to complete the services within the schedule specified in this Agreement. Key Personnel. The Plan may designate in writing, from time to time, that certain personnel of Consultant are key personnel. Consultant shall immediately notify the Plan in writing of any changes in key personnel within its organization. 8. Budget Authorization. This Agreement is subject to the budget and fiscal provisions of the City s Charter. Charges will accrue only after prior written authorization certified by the City Controller, and any amount of the Plan s obligation hereunder shall not at any time exceed the amount certified for the purpose and period stated in such advance authorization. This Agreement will terminate without penalty, liability or expense of any kind to the Plan at the end of any fiscal year if funds are not appropriated for the next succeeding fiscal year. If funds are appropriated for a portion of the fiscal year, this Agreement will terminate, without penalty, liability or expense of any kind at the end of the term for which funds are appropriated. The Plan has no obligation to make appropriations for this Agreement in lieu of appropriations for new or other agreements. City budget decisions are subject to the discretion of the City Mayor and the City Board of Supervisors. Consultant s assumption of risk of possible non-appropriation is part of the consideration for this Agreement. This Section 8 controls against any and all other provisions of this Agreement. Appendix E-4-4
9. Invoices. Consultant shall submit invoices for the Services in a form acceptable to the Plan, along with an itemized statement of Services, at the end of each quarter. Consultant shall send invoices to: Diane Chui Justen, Manager 1145 Market Street, 5 th Floor San Francisco, CA 94103 Consultant shall also send electronic copies of such invoices to: diane.chuijusten@sfgov.org; and team.sfdcp@sfgov.org. The Plan from time to time may specify another recipient or address for invoices by written notice to Consultant in accordance with Section 21 of this Agreement 10. False Claims. Consultant acknowledges that Consultant is subject to Section 21.35 of the San Francisco Administrative Code ( Section 21.35 ), which provides that any contractor, subcontractor or consultant who submits a false claim shall be liable to the City for the statutory penalties set forth in Section 21.35. Under Section 21.35, a contractor, subcontractor or consultant will be deemed to have submitted a false claim to the City if the contractor, subcontractor or consultant: (a) knowingly presents or causes to be presented to an officer or employee of the Plan a false claim or request for payment or approval; (b) knowingly makes or uses or causes to be made or used a false record or statement to get a false claim paid or approved by the Plan; (c) conspires to defraud the Plan by getting a false claim allowed or paid by the Plan; (d) knowingly makes, uses or causes to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the Plan; or (e) is a beneficiary of an inadvertent submission of a false claim to the Plan, subsequently discovers the falsity of the claim and fails to disclose the false claim to the Plan within a reasonable time after discovery of the false claim. 11. Taxes. Consultant shall have the sole obligation to pay any taxes, including without limitation payroll taxes and California sales and use taxes, levied upon or as a result of this Agreement, or the services delivered pursuant under this Agreement. 12. Independent Contractor. (a) Independent Contractor Status. In performing the Services, Consultant or any agent or employee of Consultant shall be deemed at all times to be an independent contractor and is wholly responsible for the manner in which it performs the services and work under this Agreement. Consultant or any agent or employee of Consultant shall not have employee status with the Plan, nor be entitled to participate in any plans, arrangements, or distributions by the Plan pertaining to or in connection with any retirement, health or other benefits that the Plan may offer its employees. Consultant or any agent or employee of Consultant is liable for the Appendix E-5-5
acts and omissions of itself, its employees and its agents. Consultant shall be responsible for all obligations and payments, whether imposed by federal, state or local law, including, but not limited to, FICA, income tax withholdings, unemployment compensation, insurance, and other similar responsibilities related to Consultant s performing services and work, or any agent or employee of Consultant providing same. Nothing in this Agreement shall be construed as creating an employment or agency relationship between the Plan and Consultant or any agent or employee of Consultant. (b) Payment of Taxes. If any governmental authority should, nevertheless, determine that Consultant is an employee for purposes of collection of any employment taxes, then the Plan s payment obligations hereunder shall be reduced so that the aggregate amount of payments directly to the Consultant and to the applicable governmental authority does not exceed the maximum amount specified in Section 4 of this Agreement. Consultant shall refund any amounts necessary to effect that reduction. 13. Insurance. Without in any way limiting Consultant s liability pursuant to Section 14 of this Agreement, Consultant must maintain in force, during the full term of the Agreement, insurance in the following amounts and coverages: (a) (b) (c) worker s compensation, in statutory amounts, with employers liability limits not less than $1,000,000 each accident; commercial general liability insurance with limits not less than $1,000,000 each occurrence, including without limitation combined single limit for bodily injury and property damage, including contractual liability, personal injury, products, completed operations and hired and non-owned automobiles; and professional or fiduciary indemnity (errors and omissions) insurance in the aggregate minimum of $10,000,000. Regarding workers compensation, Consultant hereby agrees to waive subrogation which any insurer of Consultant may acquire from Consultant by virtue of the payment of any loss. Consultant agrees to obtain any endorsement that may be necessary to effect this waiver of subrogation. The workers compensation policy shall be endorsed with a waiver of subrogation in favor of the Plan for all work performed by the Consultant, its employees, agents and subcontractors. All evidence of insurance shall specify this Agreement and shall be accompanied by a written statement from the insurer that the Plan shall be given at least thirty (30) days advance written notice of any material modification or termination of any policy of insurance. Should any of the required insurance be provided under a claims-made form, Consultant shall maintain such coverage continuously throughout the term of this Agreement and, without lapse, for a period of three (3) years beyond the termination of this Agreement, to the effect that, should Appendix E-6-6
occurrences during the contract term give rise to claims made after termination of this Agreement, those claims shall be covered by the claims-made policies. Should any of the required insurance be provided under a form of coverage that includes a general annual aggregate limit or provides that claims investigation or legal defense costs be included in a general annual aggregate limit, the general annual aggregate limit shall be double the occurrence or claims limits specified above in this Section 13. Should any required insurance lapse during the term of this Agreement, the Plan will not process requests for payment originating after the lapse until the Plan receives satisfactory evidence of reinstated coverage as required by this Agreement, effective as of the lapse date. If insurance is not reinstated, the Plan may, at its sole option, terminate this Agreement effective on the date of such lapse of insurance. Before commencing any operations under this Agreement, Consultant shall furnish to the Plan certificates of insurance, in form and with insurers satisfactory to the Plan, evidencing all coverages set forth above, and shall furnish complete copies of policies promptly upon the Plan s request. Failure by Consultant to procure or maintain the insurance described in this Section 13 shall constitute a material breach of this Agreement upon which the Plan may immediately terminate this Agreement for default effective on the date of such breach. Approval of the insurance by the Plan shall not relieve or decrease the liability of Consultant under this Agreement. 14. Indemnification. Consultant shall indemnify and save harmless the Plan and the Retirement Board, and their officers, agents and employees from, and, if requested, shall defend them against any and all loss, cost, damage, injury, liability, and claims thereof for injury to or death of a person, including employees of Consultant or loss of or damage to property, arising directly or indirectly from Consultant s (a) breach of any representation or warranty made by Consultant in this Agreement, (b) breach of any covenant, agreement or obligation of the Consultant contained in this Agreement, including without limitation breach of fiduciary duty, breach of the Standard of Care, breach of trust or breach of confidentiality or (c) performance of this Agreement, including, but not limited to, Consultant s use of facilities or equipment provided by the Plan or others, regardless of the negligence of, and regardless of whether liability without fault is imposed or sought to be imposed on the Plan, except to the extent that such indemnity is void or otherwise unenforceable under applicable law in effect on or validly retroactive to the date of this Agreement, and except where such loss, damage, injury, liability or claim is the result of the active negligence or willful misconduct of the Plan and is not contributed to by any act of, or by any omission to perform some duty imposed by law or agreement on Consultant, its subcontractors or either s agent or employee. The foregoing indemnity shall include, without limitation, reasonable fees of attorneys, consultants and experts and related costs and the Plan s costs of investigating any claims against the Plan. In addition to Consultant s obligation to indemnify the Plan, Consultant specifically acknowledges and agrees that it has an immediate and independent obligation to defend the Plan from any claim which actually or potentially falls within this indemnification provision, even if the allegations are or may be groundless, false or Appendix E-7-7
fraudulent, which obligation arises at the time such claim is tendered to Consultant by the Plan and continues at all times thereafter. Consultant shall indemnify and hold the Plan harmless from all loss and liability, including attorneys fees, court costs and all other litigation expenses for any infringement of the patent rights, copyright, trade secret or any other proprietary right or trademark, and all other intellectual property claims of any person or persons in consequence of the use by the Plan, or any of its officers or agents, of articles or services to be supplied in the performance of this Agreement. 15. Limitation on Liability of the Plan. The Plan s payment obligations under this Agreement shall be limited to the payment of the compensation provided for in Section 4 of this Agreement. Notwithstanding any other provision of this Agreement, in no event shall the Plan be liable, regardless of whether any claim is based on contract or tort, for any special, consequential, indirect or incidental damages, including but not limited to, lost profits, arising out of or in connection with this Agreement or the services performed in connection with this Agreement. 16. Default; Remedies. (a) Each of the following shall constitute an event of default ( Event of Default ) under this Agreement: (1) Consultant fails or refuses to perform or observe any term, covenant or condition contained in any of the following sections of this Agreement: (A) (B) (C) (D) (E) (F) (G) (H) (I) Section 10 (False Claims); Section 11 (Taxes); Section 13 (Insurance); Section 20 (Proprietary or Confidential Information); Section 25 (No Assignment or Subcontracting); Section 31 (Drug-Free Workplace); Section 44 (Compliance with Laws); Section 47 (Protection of Private Information); and Section 48 (Graffiti Removal); (2) Consultant fails or refuses to perform or observe any other term, covenant or condition contained in this Agreement, and such default continues for a period of ten (10) days after written notice thereof from the Plan to the Consultant; (3) Consultant (A) is generally not paying its debts as they become due, (B) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy, insolvency or other debtors relief law of any jurisdiction, (C) makes an assignment for the benefit of its creditors, (D) consents to the appointment Appendix E-8-8
of a custodian, receiver, trustee or other officer with similar powers of Consultant or of any substantial part of Consultant s property or (E) takes action for the purpose of any of the foregoing; or (4) a court or government authority enters an order (A) appointing a custodian, receiver, trustee or other officer with similar powers with respect to Consultant or with respect to any substantial part of Consultant s property, (B) constituting an order for relief or approving a petition for relief or reorganization or arrangement or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy, insolvency or other debtors relief law of any jurisdiction or (C) ordering the dissolution, winding-up or liquidation of Consultant. (b) (c) On and after any Event of Default, the Plan shall have the right to exercise its legal and equitable remedies, including, without limitation, the right to terminate this Agreement or to seek specific performance of all or any part of this Agreement. In addition, the Plan shall have the right (but no obligation) to cure (or cause to be cured) on behalf of Consultant any Event of Default; Consultant shall pay to the Plan on demand all costs and expenses incurred by the Plan in effecting such cure, with interest thereon from the date of incurrence at the maximum rate then permitted by law. The Plan shall have the right to offset from any amounts due to Consultant under this Agreement or any other agreement between the Plan and Consultant all damages, losses, costs or expenses incurred by the Plan as a result of such Event of Default and any liquidated damages due from Consultant pursuant to the terms of this Agreement or any other agreement. All remedies provided for in this Agreement may be exercised individually or in combination with any other remedy available hereunder or under applicable laws, rules and regulations. The exercise of any remedy shall not preclude or in any way be deemed to waive any other remedy. 17. Termination for Convenience. The Plan shall have the option, in its sole discretion, to terminate this Agreement, at any time during the term hereof, for convenience and without cause. The Plan shall exercise this option by giving Consultant written notice of termination (the Termination Notice ). The Termination Notice shall specify the date on which termination shall become effective. Upon receipt of the Termination Notice, Consultant shall commence and perform, with diligence, all actions necessary on the part of Consultant to effect the termination of this Agreement on the date specified by the Plan and to minimize the liability of Consultant and the Plan to third parties as a result of termination. All such actions shall be subject to the prior approval of the Plan. Such actions shall include, without limitation, the cessation of performance of all services under this Agreement on the date(s) and in the manner specified by the Plan, the completion of performance of any service that the Plan designates to be completed prior to the date of termination specified by the Plan or such other actions as directed by the Plan. Consultant agrees to cooperate with the Plan to ensure an orderly termination process. Appendix E-9-9
Within thirty (30) days following the termination date specified by the Plan, Consultant shall submit to the Plan an invoice, which shall provide details of all activities and services rendered through the date of termination. 18. Rights and Duties upon Termination. This Section 18 and the following sections of this Agreement shall survive termination of this Agreement: (a) Section 4(c) (Payment Does Not Imply Acceptance of Services); (b) Section 10 (False Claims); (c) Section 11 (Taxes); (d) Section 12 (Independent Contractor); (e) Section 13 (Insurance); (f) Section 14 (Indemnification); (g) Section 15 (Limitation on Liability of the Plan); (h) Section 20 (Proprietary or Confidential Information); (i) Section 22 (Ownership of Results); (j) Section 23 (Works for Hire); (k) Section 24 (Audit and Inspection of Records); (l) Section 39 (Modifications); (m) Section 40 (Administrative Remedy); (n) Section 41 (California Law; Venue); (o) Section 42 (Construction); (p) Section 43 (Entire Agreement); (q) Section 46 (Severability); and (r) Section 47 (Protection of Private Information). Subject to the immediately preceding sentence, upon termination of this Agreement, this Agreement shall terminate and be of no further force or effect. Consultant shall transfer title to the Plan, and deliver in the manner, at the times, and to the extent, if any, directed by the Plan, any work in progress, completed work and other materials produced as a part of, or acquired in connection with the performance of this Agreement, and any completed or partially completed work which, if this Agreement had been completed, would have been required to be furnished to the Plan. 19. Conflict of Interest. Through its execution of this Agreement, Consultant acknowledges that it is familiar with the provisions of Section 15.103 of the San Francisco Charter, Article III, Chapter 2 of the San Francisco Campaign and Governmental Conduct Code, and Section 87100 et seq. and Section 1090 et. seq. of the Government Code of the State of California, and certifies that it does not know of any facts that constitute a violation of those provisions and agrees that it will immediately notify the Plan if it becomes aware of any such fact during the term of this Agreement. Consultant further acknowledges that it is familiar with Section 3.216 of the San Francisco Campaign and Governmental Conduct Code ( Section 3.216 ) which prohibits an officer or employee of the Plan from soliciting or accepting any gift from a person Appendix E-10-10
who the officer or employee knows or has reason to know is a restricted source. Section 3.216 defines restricted source to mean: (a) a person doing business with or seeking to do business with the department of the officer or employee; or (b) any person who during the prior twelve (12) months knowingly attempted to influence the officer or employee in any legislative or administrative action. 20. Proprietary or Confidential Information. Consultant understands and agrees that, in the performance of the work or services under this Agreement or in contemplation thereof, Consultant may have access to private or confidential information which may be owned or controlled by the Plan and that such information may contain proprietary or confidential details, the disclosure of which to third parties may be damaging to the Plan. Consultant agrees that all information disclosed by the Plan to Consultant shall be held in confidence and used only in performance of the Agreement. Consultant shall exercise the same standard of care to protect such information as a reasonably prudent consultant would use to protect its own proprietary data. 21. Notices. Unless otherwise indicated elsewhere in this Agreement, all written communications sent by the parties may be by U.S. mail, e-mail (with confirmation of receipt) or by fax (with confirmation of receipt), and shall be addressed as follows (or to such other recipient or address as either party from time to time may specify in writing to the other party in accordance with this notice provision): To the Retirement System: Jay Huish, Executive Director San Francisco City and County Employees Retirement System 1145 Market Street San Francisco, CA 94103 Fax: (415) 487-7023 E-mail: jay.huish@sfgov.org To Consultant: [ ] 22. Ownership of Results. Any interest of Consultant or its subcontractors, in drawings, plans, specifications, blueprints, studies, reports, memoranda, computation sheets, computer files and media or other documents prepared by Consultant or its subcontractors in connection with services to be performed under this Agreement, shall become the property of and will be transmitted to the Plan in a useable format (including electronic format) upon demand by the Plan; provided, however, Consultant may retain and use copies for reference and as documentation of its experience and capabilities. The Plan shall have the unrestricted authority to publish, disclose, distribute or otherwise use in whole or in part any reports, data or other materials prepared under this Agreement, crediting Consultant as the source. 23. Works for Hire. If, in connection with services performed under this Agreement, Consultant or its subcontractors create artwork, copy, posters, billboards, photographs, videotapes, audiotapes, systems designs, software, reports, diagrams, surveys, blueprints, Appendix E-11-11
source codes or any other original works of authorship, such works of authorship shall be works for hire as defined under Title 17 of the United States Code, and all copyrights in such works are the property of the Plan. If it is ever determined that any works created by Consultant or its subcontractors under this Agreement are not works for hire under U.S. law, Consultant hereby assigns all copyrights to such works to the Plan, and agrees to provide any material and execute any documents necessary to effectuate such assignment. With the prior written approval of the Plan, Consultant may retain and use copies of such works for reference and as documentation of its experience and capabilities. 24. Audit and Inspection of Records. Consultant agrees to maintain and make available to the Plan, during regular business hours, accurate books and accounting records relating to its work under this Agreement, including copies of all invoices. Consultant will permit the Plan to audit, examine and make excerpts and transcripts from such books and records, and to make audits of all invoices, materials, payrolls, records or personnel and other data related to all other matters covered by this Agreement, whether funded in whole or in part under this Agreement. Consultant shall maintain such data and records in an accessible location and condition for a period of not less than five (5) years after final payment under this Agreement or until after final audit has been resolved, whichever is later. The State of California or any federal agency having an interest in the subject matter of this Agreement shall have the same rights conferred upon the Plan by this Section 22. 25. No Assignment or Subcontracting. The services to be performed by Consultant under this Agreement are personal in character and Consultant shall perform the work contemplated with resources available within its own organization. Neither this Agreement nor any duties or obligations hereunder may be assigned, subcontracted or delegated by Consultant without prior written consent of the Plan. 26. Non-Waiver of Rights. The omission by either party at any time to enforce any default or right reserved to it, or to require performance of any of the terms, covenants, or provisions hereof by the other party at the time designated, shall not be a waiver of any such default or right to which the party is entitled, nor shall it in any way affect the right of the party to enforce such provisions thereafter. 27. Local Business Enterprise Utilization. Consultant shall comply with all the requirements of the Local Business Enterprise and Non-Discrimination in Contracting Ordinance set forth in Chapter 14B of the San Francisco Administrative Code as it now exists or as it may be amended in the future (collectively the LBE Ordinance ), provided such amendments do not materially increase Consultant s obligations or liabilities, or materially diminish Consultant s rights, under this Agreement. Such provisions of the LBE Ordinance are incorporated by reference and made part of this Agreement as though fully set forth in this Section 27. Consultant's willful failure to comply with any applicable provision of the LBE Ordinance is a material breach of Consultant s obligations under this Agreement and shall entitle the Plan, subject to any applicable Appendix E-12-12
notice and cure provisions set forth in this Agreement, to exercise any of the remedies provided for under this Agreement, under the LBE Ordinance or otherwise available at law or in equity, which remedies shall be cumulative unless this Agreement expressly provides that any remedy is exclusive. In addition, Consultant shall comply fully with all other applicable local, state and federal laws prohibiting discrimination and requiring equal opportunity in contracting, including subcontracting. Consultant agrees to maintain records necessary for monitoring its compliance with the LBE Ordinance for a period of three (3) years following termination of this Agreement. 28. Nondiscrimination; Penalties. (a) (b) (c) (d) Consultant Shall Not Discriminate. In the performance of this Agreement, Consultant agrees not to discriminate against any employee, City employee working with such contractor or subcontractor, applicant for employment with such consultant or subcontractor, or against any person seeking accommodations, advantages, facilities, privileges, services, or membership in all business, social, or other establishments or organizations, on the basis of the fact or perception of a person s race, color, creed, religion, national origin, ancestry, age, height, weight, sex, sexual orientation, gender identity, domestic partner status, marital status, disability or Acquired Immune Deficiency Syndrome or HIV status (AIDS/HIV status), or association with members of such protected classes, or in retaliation for opposition to discrimination against such classes. Subcontracts. Consultant shall incorporate by reference in all subcontracts the provisions of Sections 12B.2(a), 12B.2(c)-(k), and 12C.3 of the San Francisco Administrative Code and shall require all subcontractors to comply with such provisions. Consultant s failure to comply with the obligations in this subsection shall constitute a material breach of this Agreement. Nondiscrimination in Benefits. Consultant does not as of the date of this Agreement and will not during the term of this Agreement, in any of its operations in San Francisco, on real property owned by San Francisco, or where work is being performed for the Plan elsewhere in the United States, discriminate in the provision of bereavement leave, family medical leave, health benefits, membership or membership discounts, moving expenses, pension and retirement benefits or travel benefits, as well as any benefits other than the benefits specified above, between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of such employees, where the domestic partnership has been registered with a governmental entity pursuant to state or local law authorizing such registration, subject to the conditions set forth in Section 12B.2(b) of the San Francisco Administrative Code. Condition to Contract. As a condition to this Agreement, Consultant shall execute the Chapter 12B Declaration: Nondiscrimination in Contracts and Appendix E-13-13
Benefits form (form HRC-12B-101) with supporting documentation and secure the approval of the form by the San Francisco Human Rights Commission. (e) Incorporation of Administrative Code Provisions by Reference. The provisions of Chapters 12B and 12C of the San Francisco Administrative Code are incorporated in this Section 25 by reference and made a part of this Agreement as though fully set forth herein. Consultant shall comply fully with and be bound by all of the provisions that apply to this Agreement under such chapters, including but not limited to the remedies provided in such chapters. Without limiting the foregoing, Consultant understands that pursuant to Section 12B.2(h) of the San Francisco Administrative Code, a penalty of $50 for each person for each calendar day during which such person was discriminated against in violation of the provisions of this Agreement may be assessed against Consultant and/or deducted from any payments due Consultant. 29. MacBride Principles Northern Ireland. Pursuant to San Francisco Administrative Code Section 12F.5, the City urges companies doing business in Northern Ireland to move towards resolving employment inequities, and encourages such companies to abide by the MacBride Principles. The City urges San Francisco companies to do business with corporations that abide by the MacBride Principles. By signing below, the person executing this Agreement on behalf of Consultant acknowledges and agrees that he or she has read and understood this Section 26. 30. Tropical Hardwood and Virgin Redwood Ban. Pursuant to Section 804(b) of the San Francisco Environment Code, the City urges companies not to import, purchase, obtain, or use for any purpose, any tropical hardwood, tropical hardwood product, virgin redwood or virgin redwood wood product. 31. Drug-Free Workplace. Consultant acknowledges that pursuant to the federal Drug- Free Workplace Act of 1988 (the Drug-Free Workplace Act ), the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited on Plan premises. Consultant agrees to comply with the Drug-Free Workplace Act. Any violation of this Section 28 shall be deemed a material breach of this Agreement. 32. Resource Conservation. Consultant shall comply in good faith, wherever applicable, with Chapter 5 of the San Francisco Environment Code, which is hereby made a part of this Agreement as though fully set forth herein. 33. Compliance with Americans with Disabilities Act. Consultant acknowledges that, pursuant to the Americans with Disabilities Act of 1990, as amended (the ADA ), programs, services and other activities provided by a public entity to the public, whether directly or through a contractor, must be accessible to the disabled public. Consultant shall provide the services specified in this Agreement in a manner that complies with the ADA and any and all other applicable federal, state and local disability rights legislation. Appendix E-14-14
Consultant agrees not to discriminate against persons with disabilities in the provision of services, benefits or activities provided under this Agreement and further agrees that any violation of this prohibition on the part of Consultant, its employees, agents or assigns will constitute a material breach of this Agreement. 34. Sunshine Ordinance. Consultant acknowledges that under Section 67.24(e) of San Francisco Administrative Code, contracts, contractors bids, responses to requests for proposals and all other records of communications between the Plan and persons or firms seeking contracts, shall be open to public inspection immediately after a contract has been awarded. All information provided by Consultant that is covered by that ordinance (as it may be amended) will be made available to the public upon request. 35. Limitations on Contributions. Through execution of this Agreement, Contractor acknowledges that it is familiar with Section 1.126 of the San Francisco Campaign and Governmental Conduct Code ( Section 1.126 ), which prohibits any person who contracts with the City for the rendition of personal services, for the furnishing of any material, supplies or equipment, for the sale or lease of any land or building, or for a grant, loan or loan guarantee, from making any campaign contribution to (a) an individual holding a City elective office if the contract must be approved by the individual, a board on which that individual serves, or the board of a state agency on which an appointee of that individual serves, (b) a candidate for the office held by such individual, or (c) a committee controlled by such individual, at any time from the commencement of negotiations for the contract until the later of either the termination of negotiations for such contract or six (6) months after the date the contract is approved. Consultant acknowledges that the foregoing restriction applies only if the contract or a combination or series of contracts approved by the same individual or board in a fiscal year have a total anticipated or actual value of $50,000 or more. Consultant further acknowledges that the prohibition on contributions applies to each prospective party to the contract; each member of Consultant s board of directors; Consultant s chairperson, chief executive officer, chief financial officer and chief operating officer; any person with an ownership interest of more than 20 percent in Consultant; any subcontractor listed in the bid or contract; and any committee that is sponsored or controlled by Consultant. Additionally, Consultant acknowledges that Consultant must inform each of the persons described in the preceding sentence of the prohibitions contained in Section 1.126. Consultant further agrees to provide to the Plan the names of each person, entity or committee described above. 36. Requiring Minimum Compensation for Covered Employees. Consultant agrees to comply fully with and be bound by all of the provisions of the Minimum Compensation Ordinance (the MCO ), as set forth in San Francisco Administrative Code Chapter 12P ( Chapter 12P ), including the remedies provided, and implementing guidelines and rules. The provisions of Chapter 12P are incorporated herein by reference and made a part of this Agreement as though fully set forth. Appendix E-15-15
37. Requiring Health Benefits for Covered Employees. Unless exempt, Consultant agrees to comply fully with and be bound by all of the provisions of the Health Care Accountability Ordinance (the HCAO ), as set forth in San Francisco Administrative Code Chapter 12Q, including the remedies provided, and implementing regulations, as the same may be amended from time to time. The provisions of the HCAO are incorporated by reference and made a part of this Agreement as though fully set forth herein. 38. Prohibition on Political Activity with Plan Funds. In accordance with San Francisco Administrative Code Chapter 12G ( Chapter 12G ), Consultant may not participate in, support, or attempt to influence any political campaign for a candidate or for a ballot measure (collectively, Political Activity ) in the performance of the services provided under this Agreement. Consultant agrees to comply with Chapter 12G and any implementing rules and regulations promulgated by the City s Controller. The terms and provisions of Chapter 12G are incorporated herein by this reference. In the event Consultant violates the provisions of this Section 38, the Plan may, in addition to any other rights or remedies available hereunder, (a) terminate this Agreement, and (b) prohibit Consultant from bidding on or receiving any new Plan contract for a period of two (2) years. The City s Controller will not consider Consultant s use of profit as a violation of this Section 38. 39. Modifications. This Agreement may not be modified, nor may compliance with any of its terms be waived, except by written instrument executed and approved in the same manner as this Agreement. 40. Administrative Remedy. All disputes, controversies or claims arising under or relating to this Agreement shall be settled by the Executive Director. The Executive Director s decision shall be deemed an exhaustion of all administrative remedies. However, the Executive Director s decision shall not preclude resorting to judicial remedy. 41. California Law; Venue. The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue for all litigation relative to the formation, interpretation and performance of this Agreement shall be in San Francisco. 42. Construction. All section headings in this Agreement are for reference only and shall not be considered in construing this Agreement. Terms such as hereunder or herein refer to this Agreement as a whole. Terms such as include or including shall be deemed followed by the words without limitation. References to consents, approvals, determinations or other decisions of the Plan shall refer to the sole judgment of the Plan. 43. Entire Agreement. This Agreement contains the entire agreement between the parties, and supersedes all other oral or written provisions. The attached Exhibits A, B and C are a part of this Agreement. Appendix E-16-16
44. Compliance with Laws. Contractor shall keep itself fully informed of the City s Charter, codes, ordinances and regulations of the City and of all state, and federal laws in any manner affecting the performance of this Agreement, and must at all times comply with such local codes, ordinances, and regulations and all applicable laws as they may be amended from time to time. 45. Services Provided by Attorneys. Any services to be provided by a law firm or attorney must be reviewed and approved in writing in advance by the Office of the City Attorney of the City (the City Attorney ). No invoices for services provided by law firms or attorneys, including without limitation, as subcontractors of Consultant, will be paid unless the provider received advance written approval from the City Attorney. 46. Severability. Should the application of any provision of this Agreement to any particular facts or circumstances be found by a court of competent jurisdiction to be invalid or unenforceable, then (a) the validity of other provisions of this Agreement shall not be affected or impaired thereby, and (b) such provision shall be enforced to the maximum extent possible so as to effect the intent of the parties and shall be reformed without further action by the parties to the extent necessary to make such provision valid and enforceable. 47. Protection of Private Information. Consultant has read and agrees to the terms set forth in San Francisco Administrative Code Sections 12M.2, Nondisclosure of Private Information, and 12M.3, Enforcement of San Francisco Administrative Code Chapter 12M, Protection of Private Information, which are incorporated herein as if fully set forth herein. Consultant agrees that any failure of Consultant to comply with the requirements of Section 12M.2 of this chapter shall be a material breach of the Agreement. In such an event, in addition to any other remedies available to it under equity or law, the Plan may terminate the Agreement, bring a false claim action against Consultant pursuant to Chapter 6 or Chapter 21 of the San Francisco Administrative Code, or debar Consultant. 48. Graffiti Removal. Graffiti is detrimental to the health, safety and welfare of the community in that it promotes a perception in the community that the laws protecting public and private property can be disregarded with impunity. This perception fosters a sense of disrespect of the law that results in an increase in crime; degrades the community and leads to urban blight; is detrimental to property values, business opportunities and the enjoyment of life; is inconsistent with the City s property maintenance goals and aesthetic standards; and results in additional graffiti and in other properties becoming the target of graffiti unless it is quickly removed from public and private property. Graffiti results in visual pollution and is a public nuisance. Graffiti must be abated as quickly as possible to avoid detrimental impacts on the City and its residents, and to prevent the further spread of graffiti. Consultant shall remove all graffiti from any real property owned or leased by Consultant in the City within forty eight (48) hours of the earlier of Consultant s (a) discovery or notification of the graffiti or (b) receipt of notification of the graffiti from the Department of Public Works. This Section 48 is not intended to require a Consultant to breach any lease or other agreement that it Appendix E-17-17
may have concerning its use of the real property. The term graffiti means any inscription, word, figure, marking or design that is affixed, marked, etched, scratched, drawn or painted on any building, structure, fixture or other improvement, whether permanent or temporary, including by way of example only and without limitation, signs, banners, billboards and fencing surrounding construction sites, whether public or private, without the consent of the owner of the property or the owner s authorized agent, and which is visible from the public right-of-way. Graffiti shall not include: (1) any sign or banner that is authorized by, and in compliance with, the applicable requirements of the San Francisco Public Works Code, the San Francisco Planning Code or the San Francisco Building Code; or (2) any mural or other painting or marking on the property that is protected as a work of fine art under the California Art Preservation Act (California Civil Code Sections 987 et seq.) or as a work of visual art under the federal Visual Artists Rights Act of 1990 (17 U.S.C. 101 et seq.). Any failure of Consultant to comply with this Section 48 of this Agreement shall constitute an Event of Default. 49. Cooperative Drafting. This Agreement has been drafted through a cooperative effort of both parties, and both parties have had an opportunity to have the Agreement reviewed and revised by legal counsel. No party shall be considered the drafter of this Agreement, and no presumption or rule that an ambiguity shall be construed against the party drafting the clause shall apply to the interpretation or enforcement of this Agreement. 50. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which counterparts shall together constitute one and the same instrument. [Signature Page Follows] Appendix E-18-18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first referenced above. SAN FRANCISCO DEFERRED COMPENSATION PLAN [ ] By: JAY HUISH Executive Director By: Name: Title: Appendix E-19-1
EXHIBIT A SCHEDULE OF SERVICES TO TRACK RFP REQUIREMENTS Appendix E-20
EXHIBIT B FEE SCHEDULE TO TRACK PROPOSER S FEE PROPOSAL, AS NEGOTIATED WITH THE DEFERRED COMPENSATION PLAN Appendix E-21-1