REQUEST FOR PROPOSAL FOR EXTERNAL MANAGERS OF FIDEICOMISO FONDO DE AHORRO Y ESTABILIZACIÓN

ACTIVE FIXED-INCOME MANDATES

2017

Fideicomiso Fondo de Ahorro y Estabilización (“Fideicomiso FAE”, “FAE” or the “Fund”) is a savings and stabilization sovereign fund of the Republic of Colombia. In December 2016, the Investment Committee of the Fund approved a comprehensive plan for the investment of the Fund’s assets pursuant to which external managers would be hired on behalf of the Fund to implement a defined target asset allocation for the Fund (as described more fully below, a 20% Short-Term Fixed Income / 70% U.S. Core Fixed Income / 10% Global Equities target allocation).

Banco de la República, the Central Bank of Colombia, serves as the administrator of Fideicomiso FAE (in its capacity as administrator of Fideicomiso FAE, the “Administrator”; acting in its own capacity, “BdlR”). Acting in solely its capacity as the administrator of Fideicomiso FAE, the Administrator is issuing this Request for Proposal (“RFP”) for the purpose of soliciting proposals from qualified portfolio manager firms to actively manage a portion of the U.S. Core Fixed Income portfolio1 of the Fund, in a separately managed account style structure.

The Fund’s investment strategy seeks to maximize the portfolio’s return while minimizing benchmark risk. Candidates2 should be specialized in U.S. Core Fixed Income portfolios to manage a portfolio that targets a net-of-fee risk-adjusted return of 0.3, as measured by information ratio, while maintaining a maximum tracking error of 100 basis points per annum3

versus the Barclays U.S. Government/Credit Index. Manager(s) will only be permitted to carry out investment strategies approved by the Investment Committee of Fideicomiso FAE (the “Investment Committee”), which are mainly interest rates, currencies, sector and security selection, agency MBS, securitized ABS and eligible ETFs. Eligible assets must be denominated in the following currencies: US dollars, Euros, Japanese yen, Canadian dollars, Australian dollars, British pounds, New Zealand dollars, Swedish kronor, Swiss francs and Norwegian kronor. For currency and interest rate risk management, currency forwards and future contracts on interest rates and government bonds are allowed. The investment guidelines for the U.S. Core Fixed Income Portfolio are included in Annex 1.

The appointment process for the investment manager(s) will be based on a conservative, institutional and rigorous review of Candidates’ criteria, focused mainly on assessing each Candidate’s (i) organization, (ii) investment approach, (iii) track record from a risk and return perspective and (iv) fees.

1 The Administrator intends to award three Active Fixed-Income Mandates, each of approximately US$700 million. This information is provided only for reference purposes. The Administrator may in its discretion modify the number of managers, the amount under management and the investment guidelines at any time.

2 The term “Candidate” means the legal entity constituting the asset management firm presenting a Proposal (as defined below) pursuant to this RFP, on a stand-alone basis and not including any Affiliate of the Candidate. “Affiliate” means any person or entity controlled by, controlling or under common control with, the Candidate.

3 Measured as the ex-ante volatility of the excess returns versus a given benchmark.

Candidates should be aware that, under Colombian law, the Fund’s assets are and will remain separate and distinct from assets of BdlR, assets of the Government of the Republic of Colombia and any other assets managed by BdlR. Accordingly, while trading and other counterparties of the Fund may, subject to sovereign immunity considerations, have recourse to the Fund and its assets for losses or liabilities arising out of investments or trades entered by or on behalf of the Fund, none of BdlR, any other assets managed by BdlR or the Government of Colombia is or will be liable for any investment or other liabilities or losses of the Fund and no recourse will be available to the Foreign Reserves of the Republic of Colombia, assets of BdlR, assets of the Government of the Republic of Colombia or any other assets managed by BdlR. Contracts pursuant to which external managers are appointed will include the foregoing restrictions and limitations on liability. Managers in their contracting activities (including futures and other contractual-based investments) on behalf of the Fund will be expected to include (1) the foregoing restrictions and limitations on liability and (2) acknowledgments of the Fund’s sovereign immunity, to the maximum extent available under applicable law.

PART 1: ORGANIZATIONAL DESCRIPTION

The Fund was created in 2011 as part of the new legislation related to the General Royalty System (“GRS”) (Legislative Act Number 05 of July 2011). The purpose of the GRS is to distribute revenues produced by the exploitation of Colombia´s nonrenewable natural resources, including oil and coal, for various purposes such as financing projects aimed at the social, economic, and environmental development; accruing savings for retirement liabilities; making physical investments in education, science, technology, and innovation; creating public savings for intergenerational equity; and increasing the general competitiveness of the economy in an effort to improve the social conditions of Colombian people. All the funds of the General Royalty System belong to certain Colombian departments, municipalities and districts in accordance with applicable Colombian law (the “Beneficiaries”).

According to the Legislative Act Number 05 of July 2011, the distribution of royalties for the above purposes is specified by a defined percentage, set by the Law 1530 of 2012, and expressed in the biannual budget approved by the Congress of Colombia. The biannual budget may allocate up to 30% of expected royalties to Fideicomiso FAE.

The Fund may be required to disburse funds to the Beneficiaries in fiscal years in which the royalty revenues are significantly lower than budgeted royalty revenues, with the maximum annual disbursement capped at 10% of the balance of the Fund as of the last day of the prior year.4

As of December 31, 2016, Fideicomiso FAE had total assets of US$3.47 billion

THE FUND’S GOVERNANCE

Fideicomiso FAE has an Investment Committee which is responsible, among other things, for determining and supervising the investment policy of the Fund and setting forth the general criteria for the selection, approval, and assessment of counterparties, external administrators, custodians, agents, attorneys, and investment advisors.

4 Please refer to Article 48 of Law 1530 of 2012 which is now compiled in Title 4 Chapter 10 of Decree 1082 of 2015. Annex 2 to this RFP includes Decree 1082 of 2015 and its amendments (Article 3 of Decree 1297 of 2016) specifying the regulation of the administration of the Fund.

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The Investment Committee also (a) specifies policies and general criteria for (i) the selection of investments; (ii) operations with derivatives, repos, simultaneous and temporary transference of securities; (iii) limits on investments, earnest money deposits and/or guarantees for these operations; (iv) strategy for the investment of the Fund’s assets as a function of both profitability and risk; and (v) procedures to be followed in the event of surpluses or deficits in investment limits; and (b) performs assessment procedures and risk management and administrative policy.

The Investment Committee consists of the Minister of Finance and Public Credit or his/her delegate, who presides over the Investment Committee, the Minister of Mining and Energy or his/her delegate, and the Director of the National Department of Planning or his/her delegate. The Governor of BdlR or his/her delegate and the Auditor of the Fund (the “Auditor”), who is also the Auditor of BdlR, attend sessions of the Investment Committee in a non-voting capacity. BdlR serves as the Secretary of the Investment Committee. In addition, four representatives of the Beneficiaries are permanently invited to attend Investment Committee sessions in a non-voting capacity.

ROLE OF BDLR AS ADMINISTRATOR OF FIDEICOMISO FAE

The Administrator is responsible for providing administrative services to the Fund. The Administrator’s responsibility includes “administer[ing] and invest[ing] the resources of the Fund either directly or through intermediaries, as per the instructions of the Investment Committee”. The Fund’s assets are separate and distinct from those of BdlR. None of BdlR, any other assets managed by BdlR or the Government of Colombia is or will be liable for any investment or other liabilities or losses of the Fund, and no recourse therefrom is available to the Foreign Reserves of the Republic of Colombia, any assets of BdlR, any other assets managed by BdlR or the Government of Colombia.

As part of the administrative services provided by the Administrator, the Administrator is issuing this RFP and will ultimately enter into agreements for and on behalf of the Fund for the investment management services set forth in this RFP.

THE FUND’S INVESTMENTS AND INVESTMENT POLICY

According to the Law 1530 of 2012, the Fund’s investment policy should be “aimed at maximizing the profitability of the entrusted resources, incorporating risk and return goals, and, for a period consistent with the nature of the resources, seeking the diversification of the portfolio…”

Law 1530 of 2012 provides that the Fund’s investments and its administration must be made solely from the perspective of the Fund’s interests and its investment policy. The standard for the administration and management of the Fund is that of a prudent investor, considering the purposes of the Fund’s investments, diversification of the portfolio, and investment policy, as determined in accordance with the Law 1530 of 2012.

Decree 1082 of 2015 provides that investments of the Fund should only be made in foreign-currency denominated financial instruments issued outside of Colombia (including, for the sake of clarity, Colombian external debt acquired outside of Colombia in the secondary market). Currently, the portfolio consists of fixed income products denominated in US dollars, mainly government bonds and other high-quality issuers, such as quasi-governments and banks.

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As noted above, the Fund’s assets are and will remain separate and distinct from those of BdlR, any other assets managed by BdlR and the Government of the Republic of Colombia. Trading and other counterparties of the Fund may, subject to sovereign immunity considerations, have recourse to the Fund and its assets for losses or liabilities arising out of investments or trades entered by or on behalf of the Fund. However, no recourse will be available to the Foreign Reserves of the Republic of Colombia, assets of BdlR, assets of the Government of the Republic of Colombia or any other assets managed by BdlR for any losses or liabilities of the Fund.

FUND OWNERSHIP AND SUPERVISION

As previously mentioned, all the funds of the GRS belong to the Beneficiaries who access those resources through the different funds created by the GRS.

The National Government has delegated the responsibility for auditing the Fund to the Auditor of BdlR. The Auditor is in charge of, among other duties, (i) examining the balance sheet of the Fund; (ii) verifying that the operations of the Fund conform to the legal and contractual requirements for the Fund and to the corresponding decisions of the Investment Committee; and (iii) reviewing the measures implemented for the preservation and safekeeping of the assets of the Fund.

Additionally, the Fund’s assets are under the fiscal control of the Office of the Comptroller General of Colombia in accordance with the provisions of Law 1530 of 2012. Also, the System of Monitoring, Control and Evaluation of the General System of Royalties exercises control over the FAE´s assets.

PART 2: SCHEDULE FOR THE SELECTION PROCESS

The schedule for the manager selection process is as follows:

Questions about this RFP or the selection process should be sent to InvestmentmanagerFAE2017@banrep.gov.co before April 20, 2017. The Administrator expects to publish the answers on its website approximately two weeks later.

Candidates responding to this RFP must provide a Proposal consisting of (i) Certification as to Satisfaction of the Minimum Selection Criteria for Consideration (Part 4), (ii) Additional Documentation (Part 5), (iii), and the Questionnaire (Part 6).. Responses must be received by the Administrator by May 31, 2017. Please refer to Annex 3 for specific instructions which must be strictly adhered to.

The Administrator expects to evaluate Candidates in two stages.

o In the first stage, based on Candidate´s responses to this RFP, the Administrator will define a group of finalist and inform all Candidates whether they have been chosen as finalists for the second stage (“Finalists”) by August 31, 2017.

o In the second stage, officers from the Administrator will, at their discretion at an agreed time, visit Finalists in their offices in order to get more information about their responses. Additional information as well as answers to questions the Finalists may have regarding this stage will be provided by the Administrator. These questions should be sent to InvestmentmanagerFAE2017@banrep.gov.co

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and the answers will be provided to all Finalists. This stage is expected to be completed by September 30, 2017.

After the second stage evaluation, each of the finalists will be required to submit a fee proposal that will be considered for the final decision. Additional information regarding the fee proposal will be provided by the Administrator at this point.

Afterwards, the Administrator will notify in writing the Finalists regarding their designation, or non-designation, as a selected provider of investment management services.

Hiring of managers will be subject to completion of satisfactory legal due diligence by the Administrator, the negotiation and entry into the Fund’s standard Discretionary Management Agreement, as described in more detail below in Part 4, among other considerations.

PART 3: TERMS AND CONDITIONS OF THE RFP

During this process, the Administrator requests that Candidates refrain from contacting directly any officer of the Administrator or member of the Investment Committee regarding this RFP or the selection process. We also ask that no Candidate include any generic marketing or sales information or rely on cross-references to other documentation (including any responses to the Passive Global Equities Mandate, in the case of a Candidate participating in that RFP response), in its response.

This RFP does not commit the Administrator to award, or the Fund to enter into, a contract for the management of any of the Fund’s assets. The Administrator reserves the right, in its sole discretion, in its capacity as administrator of the Fund, to accept or reject any or all responsive Proposals, to negotiate with any or all firms considered, or to cancel or postpone this RFP in whole or in part. Neither the Administrator nor the Fund assume, and neither shall have, any responsibility, liability or obligation of any kind or nature in connection with this RFP or the Administrator’s analysis or assessment of any or all responses to the RFP. The Administrator reserves the right, in its sole discretion, to choose one or more new external asset manager(s) for the management of the Fund’s assets based on whatever criteria it deems necessary and appropriate. Neither the Administrator nor the Fund will have any obligation to specify to any person the reasons, either in general or specific terms, at any stage in the process, for not accepting a particular Candidate’s response or for terminating the selection process altogether.

Neither the Administrator nor the Fund will reimburse Candidates for any expenses incurred in preparing or submitting Proposals or providing information to the Administrator or the Fund in connection with Proposals. The Administrator and the Fund reserve the right to retain all Proposals submitted and to use any ideas in a Proposal regardless of whether that Proposal is selected.

To the extent permitted by applicable law, the Administrator and the Fund will treat as confidential information that a Candidate provides in response to this RFP, unless such information is otherwise made public by a person other than the Administrator or the Fund. The Administrator may provide Candidates with confidential information in connection with this RFP and reserves the right to require Candidates to enter into a customary non-disclosure agreement with the Administrator prior to receiving such information.

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Candidates may be requested to clarify the contents of their Proposals. Other than to provide such information as may be required by the Administrator, no Candidate will be allowed to alter its Proposal or to add new information after the RFP due date. If a Candidate discovers any ambiguity, conflict, discrepancy, omission or other error in this RFP, please immediately notify the Administrator of such error before April 20, 2017 and request clarification or modification of the document. If it becomes necessary to revise any part of this RFP or if a more exact interpretation of provisions of this RFP is required prior to the due date for Proposals, a supplement will be posted by the Administrator on its web site. If such supplement is necessary, the Administrator reserves the right to extend the due date of Proposals to accommodate such interpretations or additional data requirements.

Fee Proposals provided by Candidates will remain firm for a period of 180 days following the designation as a selected provider of investment management services by the Administrator and may not be changed following submission. If a Candidate fails to notify the Administrator of a known error or an error that reasonably should have been known prior to the final filing date for submission, the Candidate shall assume the risk. If awarded a contract, the manager shall not be entitled to compensation or additional time by reason of the error or its late correction.

A Candidate’s willingness to accept the Fund’s standard Discretionary Management Agreement (a copy of which shall be provided to Finalists) will be among the factors used in evaluating its Proposal. As described above, the Fund’s standard Discretionary Management Agreement specifies that (i) the Fund’s assets are and will remain separate and distinct from those of BdlR, any other sovereign fund managed by BdlR and the Government of the Republic of Colombia; (ii) trading and other counterparties of the Fund may, subject to sovereign immunity considerations, have recourse to the Fund and its assets for losses or liabilities arising out of investments or trades entered by or on behalf of the Fund, but none of BdlR, any other sovereign fund managed by BdlR or the Government of Colombia is or will be liable for any investment or other liabilities or losses of the Fund and no recourse will be available to the Foreign Reserves of the Republic of Colombia or any assets of BdlR, any other sovereign fund managed by BdlR or the Government of the Republic of Colombia; and (iii) managers in their contracting activities (including futures and other contractual-based investments) on behalf of the Fund will be expected to include (A) similar restrictions and limitations on liability to the foregoing and (B) acknowledgments of the Fund’s sovereign immunity, to the maximum extent available under applicable law.

The Candidate that is the respondent to the RFP must be the legal entity that enters into the Discretionary Management Agreement with the Administrator, on behalf of the Fund.

Notwithstanding any other provision of this RFP, the Administrator reserves the right, in its capacity as administrator of the Fund, to reject any or all Proposals or to waive any informality in a Proposal. Please note that Proposals accepted will not necessarily be the lowest Fee Proposal. The Administrator will consider each Candidate’s experience in the investment advisory field, each Candidate’s detailed responses to each section of the RFP, its work with similar clients on related projects, interviews and presentations. Conditions described in this RFP should be closely adhered to and any deviations must be carefully explained.

Non-responsive Proposals include, but are not limited to, those that:

Are irregular or not in conformance with RFP requirements and instructions. Are incomplete, indefinite or ambiguous. Are not submitted on time.

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If more than one entity of the same group participates in this RFP process as Candidate, only one of them will be eligible to be selected by the Administrator as an investment manager.

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PART 4: CERTIFICATION AS TO SATISFACTION OF THE MINIMUM SELECTION CRITERIA FOR CONSIDERATION

Each Candidate must meet all the criteria as listed in the “REQUIRED MINIMUM SELECTION CRITERIA” section for its Proposal to be considered.

For each criterion, the Candidate must provide a detailed response (one sentence or more) stating how the Candidate complies with the criteria and the authorized signatory (according to the Certificate of Incumbency) must initial alongside each criterion, indicating that the Candidate has met the conditions as of December 31, 2016. A response that is limited to a mere reference to other sections of the RFP will be insufficient. Any known deviations from the criteria below must be disclosed in detail.

Except where expressly noted below, the information provided must refer solely to the specific legal entity that is proposed to be the Candidate (on a standalone basis, and not together with its Affiliates (as defined above)). For the sake of clarity, the Candidate must be the party that will, if its Proposal is selected, enter into the Discretionary Management Agreement with the Administrator. References to “strategy” should be understood as a portfolio that has similar characteristics to the Bloomberg Barclays U.S. Aggregate index.

REQUIRED MINIMUM SELECTION CRITERIA:

Ineligible entities

Neither the Candidate nor any Affiliate thereof currently provides custodial services or portfolio investment consultant services for Fideicomiso FAE. _____(Initial)

Size

The amount of fixed income assets under management by the Candidate is equal to or greater than $30 billion (in USD terms) as of December 31, 2016. _____(Initial)

The amount of US Core Fixed Income assets under management by the Candidate is equal to or greater than $7 billion (in USD terms) as of December 31, 2016. _____(Initial)

The amount of assets under management by the Candidate on behalf of Official Institutions5 is equal to or greater than $20 billion (in USD terms) as of December 31, 2016. _____(Initial)

Experience

Candidate’s lead portfolio manager in charge of the account has at least 10 years of experience managing assets in proposed strategy. If the Candidate will propose a team approach to portfolio management, each of the senior portfolio managers in charge of the account included in the Candidate’s Proposal shall have at least 10 years of experience managing US Core Fixed Income assets. Time period for experience requirements is as of December 31, 2016. _____(Initial)

5 For purposes of this RFP, “Official Institutions” is defined as central banks, sovereign wealth funds and supranational entities.

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The Candidate has at least 10 years of experience managing fixed income portfolios for Official Institutions. Time period for experience requirements is as of December 31, 2016. _____(Initial)

Performance

The Candidate’s proposed investment strategy has at least a 5-year, GIPS-compliant track record. _____(Initial)

The risk-adjusted returns, net of fees, for the Candidate’s proposed strategy, as measured by information ratios, are greater than or equal to 0.2 for at least half available rolling 3-year periods (most recent 3 years ended December 31, 2016 and rolling 3-year periods ended 12/31/15, rolling back in 4 quarter increments to 12/31/2007).6_____(Initial)

Fees

The Candidate must be amenable to a variable, performance-based fee structure. _____(Initial)

Operations

The Candidate must be able provide position level holdings and transparency on a daily basis to Administrator staff for daily reconciliation and risk management. _____(Initial)

PREFERRED CRITERIA BUT NOT REQUIRED:

Candidate is willing to offer knowledge transfer and training to staff of the Administrator and/or the Ministry of Finance and Public Credit. _____(Initial)

Certification

By signing below, the Candidate represents and warrants that the Candidate (i) meets all of the REQUIRED MINIMUM SELECTION CRITERIA as detailed above; (ii) understands the PREFERRED CRITERIA stated above; (iii) is capable of performing the services as asset manager as contemplated by this RFP; (iv) has carefully reviewed this RFP; (v) acknowledges and agrees that none of BdlR, any other assets managed by BdlR or the Government of the Republic of Colombia are or will be liable or responsible for the actions or omissions or losses of the Fund; (vi) if selected as a manager pursuant to this RFP, will have no recourse against any of BdlR, any other assets managed by BdlR or the Government of the Republic of Colombia; (vii) acknowledges that the Fund’s assets constitute assets of the Beneficiaries protected by sovereign immunity to the maximum extent provided by applicable law; and (viii) acknowledges and agrees that, if selected as an investment manager of the Fund in accordance with this RFP, the Candidate will have a fiduciary duty to perform its services as asset manager and act in the best interests of Fideicomiso FAE.

____________________________Authorized Signature (Please provide Certificate of Incumbency)(Print Name)

6 Please follow the example provided in the tab named “Performance Calculation Example” inside the Excel file “RFP Fixed Income.xlsx.”

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PART 5: ADDITIONAL DOCUMENTATION

Each Candidate must also provide the following current documents or their equivalents for the Candidate:

Most recent audited consolidated financial statements Certificate of good standing Certificate of Incumbency for authorized signatures Registration as investment advisor7

Statement on Standards for Attestation Engagements No. 16 – SSAE 16 Enterprise risk management policies and procedures, including the role of internal audit

Applicants are only expected to send the most recent documentation. Please provide an explanation if any of these documents cannot be provided.

PART 6: QUESTIONNAIRE

Include in your response to the questionnaire the name and contact information of the persons who will be involved in this RFP process.

Please answer the following questions completely and avoid inaccurate, vague or partial answers. Be aware that any unanswered question or table will receive the minimum score applicable.

References to “Strategy” should be understood as a portfolio that has similar characteristics to the Bloomberg Barclays U.S. Aggregate index.

Answers to the tables should be provided in the attached excel spreadsheet named “RFP Fixed Income.xlsx”. The Administrator expects to receive it as a separate file in the email (excel spreadsheet).

SECTION 1 - FIRM/ORGANIZATION (All information provided must refer to the legal entity that will enter into the Discretionary Management Agreement with the Administrator (in its capacity as administrator of the Fund) unless otherwise stated below.)

A. SIZE AND EXPERIENCE

1. Please provide a brief description of your firm, including the following information:

a. Legal name

b. Ownership and capital structure

c. Affiliated companies (including relevant relationship information, such as level of ownership and common management)

d. Specify the legal entity that would be responsible for managing the account (including the office location of such entity).

e. Name of regulatory body overseeing the firm, this product, and the dates of registration, as appropriate.

2. Please provide the organizational structure of your firm and main functions of each area (portfolio management, risk management, compliance, internal audit, IT, administrative, operations, research, etc.).

7 If your firm is registered with the U.S. SEC, complete copies of both Part 1 and Part 2 of Form ADV should be provided.

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3. Please fill out the following table, listing the number of individuals in each job function. If individuals hold multiple job functions or responsibilities, only count them once under their primary responsibility.

Table A1JOB FUNCTION NUMBER OF

EMPLOYEESAVERAGE YEARS OF

EXPERIENCEPortfolio ManagersRisk ManagersOperations personnelCompliance and internal control personnelIT and other infrastructure personnelEconomists/Research AnalystsTradersClient service/MarketingOther staffTotal firm employees

4. Please answer the following questions succinctly:

a. What other financial services does the firm provide?

b. In which jurisdiction is the firm incorporated?

c. If the firm outsources asset management to one or more Affiliates, please provide the name and jurisdiction of incorporation of each such Affiliate.

d. Would your firm utilize or partner with any subadvisors, Affiliates or other agents in the provision of services to the Administrator? If so, please describe what entity(ies), your relationship with them and the kind of services that such entity is going to provide.

e. List all awards or other recognition that your firm or its employees have received during the last five years.

5. Please provide contact information for three to five current client references with mandates similar to the one proposed by the Administrator. All information will be kept confidential.

6. Please provide any additional information not included above about your firm that supports its qualification to manage an active fixed-income portfolio for an Official Institution.

7. Please provide the following information as of December 31, 2016 (in USD million):

Table A2

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CATEGORY TOTAL ASSETS UNDER MANAGEMENT

YEARS OF FIRM´S EXPERIENCE MANAGING PORTFOLIOS BY

CATEGORYNUMBER

OF CLIENTSTOTALSTRATEGYOFFICIAL INSTITUTIONS (CENTRAL BANKS, SOVEREIGN WEALTH FUNDS AND SUPRANATIONAL ENTITIES)

* Each of the categories is independent from each other, meaning they are not necessarily subgroups of the other categories.

8. Please provide the following information regarding assets under management as of December 31, for each year (in USD million):

Table A3

2012 2013 2014 2015 2016TOTALSTRATEGYOFFICIAL INSTITUTIONS (CENTRAL BANKS, SOVEREIGN WEALTH FUNDS AND SUPRANATIONAL ENTITIES)

CATEGORY ASSETS UNDER MANAGEMENT

* Each of the categories is independent from each other, meaning they are not necessarily subgroups of the other categories. ** For the information provided in the table, if AUM in any category varied by more than 10% in any given year with respect to the previous year, please explain the main reasons behind that variation.

B. CLIENT SERVICE

The Administrator expects the selected firm to have a dedicated and efficient customer service team that understands the Administrator’s and the Fund’s specific needs. Additionally, such firm must be willing to prepare monthly performance and risk presentations, to regularly participate in conference calls with the Administrator and/or Ministry of Finance’s staff, to prepare an annual review of the portfolio to be presented in meetings to be held at the Administrator, and to provide information to the Investment Committee upon request.

9. Please confirm that your firm would be able and willing to provide the services described.

10. Please provide a description of your customer service program.

11. Please complete the following table with information regarding your customer service employees who would be directly involved with the Fund’s account, including the most important point of contact and his/her location.

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Table B1

Person Name TitleNumber of years

working in investment management

Education (bachelor, masters, Ph.D., CFA)*

123……N

* In case they have more than one of these degrees please provide all of them.

12. Please explain your standard procedure to answer client requests/inquiries, including a description of how client servicing/communication responsibilities are divided between portfolio managers and client service/marketing personnel.

13. Please provide a sample of an annual and monthly portfolio review reports.

14. Please elaborate on the training/knowledge transfer that your firm provides to clients. Please detail (i) seminars or other events organized, (ii) the target audience and the type of clients that attend, and (iii) the staff and resources that your firm makes available. Include additional information if considered pertinent.

15. Do you have a dedicated team that provides support to client projects/initiatives? If so, please detail the pool of available resources/services that would be made available to the Administrator.

16. Please describe any other value-added specific products or services made available to clients by your firm, for example, access to research papers, internal research or conference calls on special topics.

C. OPERATIONS AND COMPLIANCE

I. OPERATIONS

Professional backgrounds and years of experience

17. Describe briefly your back-office operations including trade confirmations, settlements, reconciliation, exceptions identification, monitoring and escalation, report production, collateral management, etc. How does your firm notify clients of changes in your firm’s back-office operations, and do clients get prior notice of any such change?

18. Please describe the organizational structure of your back-office and client service teams.

19. Please complete the following table with the information regarding the back-office and client service teams who would be directly involved with the Fund’s account.

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Table C1

Person Name Title

Number of years working in Back

Office/Client Service functions

Education (bachelor, masters,

CFA)

1        2        3        

…        …        N        

20. Do you perform back office activities by yourself or are such activities outsourced to an Affiliate or a third party? If such activities are outsourced/subcontracted (either to an Affiliate or third party), please (i) provide the name of the entity to which such activities are outsourced/subcontracted and (ii) describe your monitoring and tracking procedures to assure that the entity to which such activities are outsourced/subcontracted complies with all applicable requirements? Are you considering outsourcing/subcontracting any applicable back office activities (either to an Affiliate or third party) in the next two years?

Infrastructure and technology

21. Describe your technological infrastructure and connections among the different systems involved on the back-office activities.

22. Taking into account that JP Morgan Chase (the “Custodian”) is the custodian bank for the Fund, please describe your level of automation and connections with the Custodian.

23. For previous links with the Custodian (if developed), have you implemented an STP flow?

24. Indicate the means you would use to communicate trades to the Custodian and the time at which instructions will be sent. If all trades will be instructed to the Custodian via SWIFT, please specify the message types used. Which means do you use alternatively in case of a SWIFT (or other communications provider) contingency?

25. Do you have the capability to send forex instructions to the Custodian to settle via CLS?

26. Describe your record-keeping policies as they relate to the Fund account transactions and the availability for inspection and audit purposes by the Administrator or by persons designated by the Administrator.

Ability to provide information and support to the Administrator regarding operational procedures

27. Describe communication procedures with clients. Include degree of automation, timing of communications, and controls in place and back-up structure for the client service group.

28. Describe if you have internal timing standards to answer queries sent by your clients.

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Include your escalation procedures.

29. Taking into account that the Administrator is located in Eastern Standard Time (NY), indicate how and when clients can contact you.

30. The Administrator can provide periodically (for example once a year) a list of markets and locations for which the Fund has up to date tax exemption documentation (if applicable), and the tax rates for each market. Can your firm adopt a procedure to request that the Administrator and the Custodian complete tax exemption documentation (if applicable) and any additional requirements imposed by the tax authorities of any market in which the selected investment manager is interested in investing if it is not listed in the list of markets provided by the Administrator?

31. Based on the nature of the investment activity that you anticipate for FAE’s portfolio, (i) how do you believe that the Fund will be treated for U.S. and European regulatory purposes? (ii) What are the implications that follow from such treatment, and (iii) is such treatment and compliance with such regulations likely to change or affect in any way the manner in which you perform the investment management and other services required by this RFP?

32. For informational purposes provide a total estimated volume (or range) of transactions (daily, monthly or annually) and if possible a distribution by instrument type: Fixed Income, Forex, Futures, Deposits, Mortgages (including TBAs), etc.

REPORTING

33. Does your firm have the capability to develop, configure and generate reports resulting from specific requirements from clients? When answering, please also describe your ability to modify your reports to satisfy a specific requirement or request from the Administrator.

34. Please confirm that you can comply (Yes/No) with providing the below listed reports on the required format and indicate whether reports will be delivered via email, web platform, swift, fax, other.

Table C2

Daily reporting requirements Preferred Format Yes / No

Delivery method(s) (email, web platform, swift, fax, other)

End of day trading report by 6 pm EST of trade date. Excel    

Cash activity report by 12 pm EST on value date plus one. This will be a detailed cash flow file including opening and closing balances by currency.

Excel

   

Cash reconciliation report with the Custodian by 12 pm EST on value date plus one.

Excel-Pdf   

15

Futures cash report by 12 pm EST on value date plus one. This file will show for each currency the activity in the margin accounts at the Futures Clearing Intermediary.

Excel

   

Futures cash reconciliation report with the broker by 12 pm EST on value date plus one.

Excel-Pdf   

Account holdings report by 12 pm EST on trade date plus one. A report with all relevant information for each investment type in the account.

Excel-Pdf

   

Open TBA Report by 12 pm EST on value date plus one. Excel-Pdf    

Open FX Report by 12 pm EST on value date plus one. Excel-Pdf    

Collateral report by 12 pm EST on value date plus one. Excel-Pdf  

Monthly reporting requirements Preferred Format Yes / No

Delivery method(s) (email, web platform, swift, fax, other)

Investment Management Report (risk, performance) within ten (10) business days after month end.

Excel   

Preliminary monthly position file by 12 pm EST of one (1) business day after month end.

Excel   

Audited End of the Month Holdings report within ten (10) business days after month end.

Excel   

Detailed Excel spreadsheet containing a list of assets, including cost, unit valuation, position valuation, accrued income, position duration and position contribution to duration within (ten)10 days after month end.

Excel

   Detailed activity summary for the previous month, including trades, dividends and interest within ten (10) days after month end.

Excel

    Reconciliation report of the Custodian’s records with respect to the Investment Manager’s records of cash accounts, holdings, pricing discrepancies and off-balance sheet items, within ten (10) days after month end.

Excel-Pdf

   

16

MANAGEMENT OF SETTLEMENT FAILURES

35. How are overdraft charges handled?

36. Describe the practices that you follow to manage settlement failures. How, if at all, do these differ from normal industry practices for settlement failures?

37. Specify if you keep a record of failures due to operational risk. How do you monitor operational risk events that had an effect on the settlement of transactions?

II. COMPLIANCE

38. How is the compliance function applicable to your firm’s services contemplated by this RFP managed to coordinate across all relevant areas of compliance and geographic locations, and to whom does your primary supervisor report?

39. Please complete the following table with the information regarding the compliance team who would be directly involved with the Fund’s account.

Table C3

Person Name TitleNumber of years

working in investment management

Education (bachelor, masters, Ph.D., CFA)*

123……N

* In case they have more than one of these degrees please provide all of them.

40. What infrastructure, procedures and technology do you have in order to monitor and ensure compliance with portfolio guidelines and internal policies and procedures at all times? Please specify if you have both pre-trade and post-trade compliance systems.

41. Please describe the role of compliance officers, specifying their independence from the investment team and their responsibilities towards clients.

42. Please briefly explain your standard procedures to resolve breaches of investment guidelines.

SECTION 2 - INVESTMENT PROCESS

A. INVESTMENT APPROACH

43. Please briefly describe the theory and beliefs underlying the firm’s investment philosophy in fixed income (quantitative or fundamental, top-down or bottom up). If possible describe how this is evidenced in the firm’s investment process.

44. Please detail how investment decisions are made (people/areas involved, processes, frequency). Are there any committees where investment ideas are discussed? Who is accountable for the investment decisions?

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45. Please explain the specific investment processes that apply to the following strategies:

a. Interest Ratesb. Currenciesc. Agency MBSd. Corporate Debt e. Asset Backed Securities (ABS)

46. Please describe your approach to risk budgeting and portfolio construction. Do you use any quantitative tools in this process? How are sector and individual security weightings determined? Please explain.

47. Please explain the role of the portfolio manager in charge of the account. Does he/she participate in the decision making process? Is he/she allowed to deviate from the overall investment strategy of the firm?

48. Do you have separate research teams in economics and quantitative analysis that provide support to the portfolio management function? If so, please provide the number of dedicated members.

49. Please provide an overview of your research, including the use of fundamental, technical, and qualitative analyses. Please provide any additional comments that are unique to your firm.

50. Has your investment process experienced significant changes during the last 5 years? Do you envision significant changes to that process in the near future? Please briefly elaborate if needed.

B. BACKGROUND OF INVESTMENT TEAM

51. Please complete the following tables with information regarding the portfolio management team that would be directly involved with the Fund’s account. Provide a brief biography of each member as an annex. Both tables should include the same professionals.

Table B2

Person Name TitleNumber of years

working in investment management

Number of years working in the Strategy

Number of years at the firm

Education (bachelor, masters, Ph.D., CFA)*

123……N

* In case they have more than one of these degrees please provide all of them.

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Table B3

Interest rates Currencies Agency MBS Corporate Debt Asset Backed Securities (ABS)

123

……N

Person Name TitleYears of experience investing in the following sectors:

52. For the lead portfolio manager, please include the size and quantity of portfolios he or she currently manages within the strategy and any other strategy he or she works on.

53. What is the compensation structure of portfolio managers? Does the compensation depend on the performance of the account?

54. Do you have specialized teams responsible for making investment recommendations in the following sectors: interest rates, currencies, agency MBS, corporate debt, and asset backed Securities (ABS)? If so, please provide the following information for those teams:

Table B4

SectorsNumber of members Name of member Years of experience Years with firm

Years of experience with sector

Education (bachelor, masters, Ph.D., CFA)*

Corporate debt

Interest rates

Currencies

Asset backed securities (ABS)

Agency MBS

* In case they have more than one of these degrees please provide all of them.

55. Please describe minimum qualifications for your staff and briefly comment about internal training programs for portfolio managers, risk managers, traders, research analysts, operational analysts, etc.

C. RISK MANAGEMENT CAPABILITIES

56. How is risk management integrated in your investment process? Is the risk management function independent from portfolio management? Can risk managers recommend changes to the portfolio?

57. To whom does the Chief Risk Officer report?

58. Describe your firm’s approach to risk management regarding both financial and non-financial risks.

59. Please explain what measures are used to assess market risk and credit risk.

60. How do you evaluate and monitor liquidity risk; specifically, describe how you would handle an “illiquidity event”?

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61. Please state if your firm has performance and risk attribution systems and, if so, briefly describe them, including whether such systems are proprietary or externally provided. Please also provide a sample of a performance/risk report and indicate the frequency with which such reports would be made available to the Administrator.

62. Do you have specialized teams involved in the market and credit risk management of the portfolios? If so, please provide the following information:

Table C4

Areas Number of members Name of member

Years of experience

Education (bachelor, masters, Ph.D., CFA)*

* In case they have more than one of these degrees please provide all of them.** Other risks: if relevant please specify the type of risk and complete the table accordingly

Market risk

Credit risk

Other risks**

63. Please explain in detail your process to assess credit risk of individual issuers and asset backed securities.

64. Has your risk management process experienced significant changes during the last 5 years? Do you envision significant changes to such process in the near future? Please briefly elaborate if needed.

65. In addition to the portfolio-related risk management policies and procedures discussed above, please describe your firm’s enterprise-wide risk management, addressing, among other things, operation, legal, compliance and counterparty risk.

66. Please describe your firm’s Business Continuity and Operations Plan.

67. Please describe your firm’s policy relating to due diligence and controls over vendors and Affiliates that may be involved in the performance of services under the asset manager relationship or that may have access to confidential information of the Administrator and/or the Fund.

68. Does your firm maintain errors and omissions insurance, cybersecurity insurance or other potentially relevant insurance policies? If so, with which insurers and what are the policy limits?

D. STRENGTH OF THE FIRM IN STRATEGY

69. Indicate the number of personnel as designated below as of December 31, 2016. Count individuals only once (do not duplicate).

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Table D1JOB FUNCTION NUMBER OF

EMPLOYEESNUMBER OF EMPLOYEES

DEDICATED TO STRATEGY*Portfolio ManagersRisk ManagersOperations personnel

Compliance and internal control personnelIT and other infrastructure personnelEconomists/Research AnalystsTradersClient service/MarketingOther staff**Total firm employees* Not involved in other firm products. Strategy as defined at the beginning of the questionnaire** Other staff: if relevant please specify the role of the mentioned individuals

70. Provide the following information regarding assets under management as of December 31, 2016 (in USD millions):

Table D2CATEGORY

ASSETS UNDER MANAGEMENT % OF TOTAL ASSETS

PORTFOLIOS THAT FOLLOW THE STRATEGY* & MANAGED FOR OFFICIAL INSTITUTIONS*** Strategy as defined at the beginning of the questionnaire** Central Banks, Sovereign Wealth Funds and Supranational Entities

SECTION 3 – PERFORMANCE / TRACK RECORD

71. Provide in the tab named “Historical Performance” of the Excel file provided (“RFP Fixed Income.xlsx”), audited figures of portfolio and benchmark monthly returns from January 2005 through December 31, 2016 of composite(s) similar to the Fund’s proposed strategy in terms of the type of clients and permitted asset classes. For portfolio monthly returns, provide gross and net of fees figures. Information must be provided for the stated time period. Please consider that as described before strategy should be understood as a portfolio that has similar characteristics to the Bloomberg Barclays U.S. Aggregate Index.

72. Please provide a detailed description of the composite(s) and the benchmark(s), including credit rating breakdown, duration and the average size of the assets under management.

73. Please specify if the returns provided in question 71 are GIPS compliant for at least the last 5 years. If your firm does not comply with GIPS, please provide a description of the standards that it employs in calculating its returns.

SECTION 4 – LEGAL, COMPLIANCE AND OTHER MATTERS

74. Do your Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT). Program and AML policies and procedures comply with current AML legislation, regulations and guidelines issued by the regulatory bodies in all jurisdictions in which you operate?

75. Describe your firm’s code of ethics and how compliance with the code is monitored.

76. Describe your firm’s conflict of interest policy and how compliance with the policy is monitored.

21

77. Describe your firm’s confidentiality policies that would protect against both non-use and non-disclosure of confidential information of the Administrator and the Fund.

78. Please describe your policies and procedures concerning trading and execution, including those relating to:

a. How your firm seeks to achieve best execution with brokers, dealers and other counterparties.

b. How you supervise and monitor your firm’s compliance with best execution.

c. How you execute trades, in particular, (1) does your firm execute trades on a global basis or by region? (2) If by region, how does your firm monitor compliance across the different regions?

d. The process your firm uses for determining which brokers/dealers will execute client transactions.

e. How your firm ensures equitable trading for all clients (i.e., the account of one client is not favored above the account of another) and exceptions to this policy, if any.

f. Your policy for allocation of trades (e.g., by portfolio manager or automated).

79. The Fund has a standard Discretionary Management Agreement that it signs with each of its managers within the External Manager Program.

a. Under the Fund’s Discretionary Management Agreement, asset managers have discretion as to which assets and securities to trade (within the Fund’s investment guidelines). However, if an asset/security is established under an agreement (e.g., transactions under an ISDA Master Agreement or an MSFTA) that is in the name of or binding on the Fund, the asset manager must first provide a copy of the proposed agreement to the Administrator and obtain the Administrator’s prior consent to such agreement.

b. The Fund’s Discretionary Management Agreement specifies that (i) the Fund’s assets are and will remain separate and distinct from those of BdlR, from such managed by BdlR, and from such of the Government of the Republic of Colombia; (ii) none of BdlR, any other assets managed by BdlR or the Government of Colombia is or will be liable for any investment or other liabilities or losses of the Fund and no recourse will be available to the Foreign Reserves of the Republic of Colombia, any assets of BdlR, any other assets managed by BdlR or the Government of the Republic of Colombia; and (iii) managers in their contracting activities (including futures and other contractual-based investments) on behalf of the Fund will be expected to include (A) the restrictions and limitations on liability similar to the foregoing and (B) acknowledgments of the Fund’s sovereign immunity, to the maximum extent available under applicable law.

Please confirm that your firm would comply with these provisions.

22

80. What challenges have you observed, from a legal and compliance perspective, in implementing investment management programs for other sovereign wealth funds of a similar type to that contemplated by this RFP?

81. How have you addressed challenges, if any, you described in Question 80.

82. How would you expect that the Fund would be treated for U.S. and European regulatory purposes, and what operational, investment or other implications would you anticipate in that regard? Because the Fund’s Investment Guidelines allow currency and interest rate risk management, currency forwards and future contracts on interest rates and government bonds, please be sure to address such products in your response.

83. How do you anticipate that such regulations and compliance therewith would impact your investment of the Fund’s assets in accordance with this RFP?

84. Please confirm that your firm would agree to notify of (and update us on) litigation or any actions or investigations by governmental or regulatory agencies that could adversely affect your ability to fulfill your functions as asset manager.

85. Does your firm or its Affiliates have any real or potential conflicts of interest (personal or organizational) with the Administrator? If so, how does your firm propose to avoid, mitigate or neutralize such conflicts of interest?

86. Describe how (if at all) your proprietary interests or interests of your other clients might affect or conflict with your duties to the Fund and/or the Administrator.

87. Describe the standards used by you to implement your cybersecurity system. Also, describe your due diligence related to cybersecurity programs of third and fourth party vendors you would utilize on behalf of the Fund.

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ANNEX 1 INVESTMENT GUIDELINES U.S. CORE FIXED INCOME PORTFOLIO

The objective of the U.S. Core Fixed Income portfolio is to outperform the Barclays U.S. Government/Credit Index on a net of fee basis by investing in a broad range of U.S. dollar denominated fixed income instruments. Over longer periods of time (3 plus years), the portfolio has a targeted risk-adjusted return of 0.3 as measured by a net of fee information ratio. Risk, as measured by tracking error, should not exceed 1% on an ex ante basis.

1. Eligible Assets: Instruments must be denominated in approved currencies, must be of investment grade quality, and can have any maturity. Eligible instruments are the following:

A. Securities that are represented in the Barclays U.S. Government/Credit Index,

B. Cash, Approved U.S. government and government-related money market funds, and other investments representing high quality liquid debt and monetary instruments, including commercial paper, negotiable certificates of deposit, and U.S. government securities and funds,

C. Government debt securities,

D. Agency and Government-related debt securities,

E. Corporate debt securities of U.S. and non-U.S. issuers,

F. Emerging markets debt securities rated at least A-,

G. Mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, including TBAs,

H. Securitized asset-based securities (AAA only),

I. SEC Rule 144a securities, and

J. Interest rate futures, currency forwards, and interest rate and currency swaps.

2. Eligible Sectors (see Note 1): The eligible sectors are presented in Table 1:

Table 1. ELIGIBLE SECTORSSector General Characteristics

U.S. Government U.S. Treasury and U.S. Agency

U.S. CreditCorporates within Industrials, Utilities and Financial Institutions. USD denominated Non-Corporates represented by Sovereigns, Supra-nationals, Foreign Agency and Foreign Local Government.

Other Other sectors outside of benchmark permissible only as outlined in 1. Eligible Assets

24

3. Currency risk: Eligible assets must be denominated in the following currencies: USD, EUR, JPY, NOK, SEK, AUD, NZD, CHF, GBP, CAD. Currency hedging on an unleveraged basis is permitted to both enhance returns and reduce risk. Currency exposure can be managed actively and separately from the underlying assets in the portfolio. Unhedged currency exposure in approved currencies is allowed up to +/- 10% of the portfolio (see Note 2).

4. Duration risk: Portfolio duration must remain within +/- two (2) years of that of the Barclays U.S. Government/Credit Index.

5. Credit and Liquidity Risk:

A. Eligible debt must be classified as guaranteed, senior preferential, or senior.

B. Long-term credit rating (see Note 3): The issuer of an eligible asset or the eligible asset must be rated by at least two agencies, and each agency must provide a minimum investment grade credit rating.

C. Short term credit rating: For short-term issues of less than one year, one or more of the credit rating agencies (S&P, Moody´s, Fitch) must rate the issue with a short term credit rating of A1/P1/F1 or higher.

D. Average credit quality: Portfolio must maintain a minimum weighted average credit quality of at least single A. This applies to corporate exposure as well as the portfolio’s overall credit quality, including mortgages. Average credit quality is an average of each bond’s credit rating, adjusted for its relative weighting in the portfolio.

E. Limits per Sector: The maximum level of exposure by sector as a percentage of the total value of the U.S. Core Fixed Income portfolio is presented in Table 2:

Table 2. LIMITS PER SECTORS

Sector

% benchmark

weight (9/30/16)

Guideline limit %

minimum

Guideline limit %

maximum

U.S. Treasury and Government-related* 61% 35% 100%

Corporate - Financial 11% 0% 30%

Corporate - Industrial 22% 0% 30%

Corporate - Utility 3% 0% 10%

Emerging Debt** 3% 0% 5%

Exposure to sectors outside benchmark

Securitized 0% 0% 10%

144As 0% 0% 5%

Active Currency0% 0%

10% (see Note 2)

*Government-related includes: Agency, Local Authority, Sovereign and Supranational.**Emerging Market Debt includes: EMD sovereigns and corporates within the benchmark (e.g.,

Mexico, PEMEX).

25

Limits by Issuer: The maximum exposure by issuer as a percentage of the total value of the U.S. Core Fixed Income portfolio is presented in Table 3:

Table 3. LIMITS BY ISSUER (see Notes 4, 5)Sector Max % of the portfolio (Mkt. Value)

U.S. Government and Government-related (Agencies explicitly guaranteed) No Limit

Corporate and other Government-related (Supranational, Agencies without explicit guarantees, Local Authorities )

5%

Mortgages* 5%

Short Term Investment Fund (STIF) and Money Market Fund designated by the client. STIF provided by custodian.

No Limit

* Specific mortgage pools and trusts are considered separate issuers.

F. Maximum investment per issue: The portfolio must not hold more than 10% of the outstanding amount of any investment (see Note 6).

G. Credit quality limits: Guidelines delineated by credit quality are presented in Table 4:

Table 4. LIMITS BY CREDIT QUALITY

Rating (see Note 3)

% benchmark

weight (9/30/16)

Guideline limit %

minimum

Guideline limit %

maximum

AAA 58%AA 7%A 15% 0% 50%BBB 20% 0% 30%AAA to A 80% 60% 100%

6. Derivatives guidelines:

A. Interest rate futures and swaps: The external manager(s) may use interest rate futures or swaps to alter the duration of the portfolio within guideline constraints but only with counterparties having long-term risk ratings equal to or greater than A+ as rated by at least two of the following rating agencies: Fitch, Moody’s and Standard & Poor’s. (see Note 3)

26

1. List of eligible future contracts and exchangesEligible exchanges Eligible contracts

CME GroupUS Treasury Futures (Bond and

Notes), FED Funds Futures, Eurodollar Futures

Eurex European Sovereign and Agency Bond Futures

ICE Futures Europe

Euribor, Euroswiss, Short Sterling, Gilt, Swiss Confederation Bond,

Japanese Government Bond

Osaka Exchange Japanese Government Bond Futures

Bourse de Montréal/TMX Canadian Government Bond Futures

Sydney Futures Exchange Australian and New Zealand Government Bond Futures

2. List of eligible swapsEligible exchanges Eligible contracts

LCH Interest rate swaps

Markit CDX (swaps) 5 year CDS

B. Currency forwards and swaps: The external manager may contract forwards or swaps with counterparties having long-term risk ratings equal to or greater than A+ as rated by at least two of the following rating agencies: Fitch, Moody’s and Standard & Poor’s. (see Note 3)

The nominal value of the forwards or swaps contracted by the external manager with an eligible counterparty shall not exceed 2% of the market value of the portfolio. The aggregate nominal value of forwards and swaps shall not exceed 10% of the Core fixed income portfolio.

The following rules shall be applicable when using currency forwards or swaps:

1. Forwards or swap transactions shall only be made among eligible currencies.

2. Currency spot, forward, or swap contracts shall only be made with eligible counterparties having a risk rating of at least A+ in at least two of the following rating agencies: S&P, Moody´s, Fitch (See Note 3).

27

3. Currency forward or swap contracts may be cash delivery or use offsetting contracts.

4. The counterparty risk relative to each cash delivery contract shall be 100% of the notional value of the forward or swap, as denominated in USD. The counterparty risk shall vary based on changes in the exchange rate parity between the USD and the currency of the forward or swap throughout the effective term of the contract. The terms of these contracts shall not exceed 90 days.

The Portfolio may enter into forward purchase and sale of TBA mortgage securities with eligible counterparties having a risk rating of at least A+ in at least two of the following rating agencies: S&P, Moody´s, Fitch (See Note 3). Because of uncertainty in the deliverable pool at time of settlement and counterparty risk, maturities are limited to two months. TBA mortgages must meet eligible criteria as outlined in the guidelines.

7. Other risks: no investments shall be made in any securities or other financial instruments issued or guaranteed directly by (i) any entity located in or (ii) any entity whose parent or guarantor is located in, any of the “Ineligible Domiciles” listed in Table 5.

Table 5. INELIGIBLE DOMICILES

Afghanistan Dominica Monaco SeychellesAndorra Ethiopia Montserrat St. Kitts and NevisAnguilla Grenada Nauru St. LuciaAntigua and Barbuda Iran Niue St. Vincent and the GrenadinesAruba Iraq Palau SyriaBelize Korea (North) Panama The BahamasBonaire Laos Saba Turks and Caicos Islands Bosnia and Herzegovina Macao SAR Saint Eustatius UgandaCook Islands Malaysia (Labuan) Saint Maarten VanuatuCuração Marshall Islands Samoa Yemen

8. Additional considerations: External managers cannot invest in securities issued by themselves, their parent company or any of their Affiliates, or any special purpose subsidiary for which it serves as incorporator, manager, trustee or in which it is an investor.

9. Investment Guideline Breaches:

A. All Investment Guidelines apply at the time of purchase of an investment. In the case an investment becomes noncompliant after this (passive breach), the portfolio must be compliant with the Investment Guidelines no later than 25 business days after the event.

1. In the case where a security is downgraded to non-investment grade, it must be sold as soon as possible in a prudent fashion and no later than 25 business days after the event. If it is not possible to sell the downgraded security in a prudent manner within 25 business days, the external manager can formulate a proposed plan for presentation to the Administrator for disposing of the security as soon

28

as is prudently possible. The maximum term to formulate a proposal to the Administrator is 20 business days after the downgrade.

2. In the case where a security defaults, it must be sold as soon as possible in a prudent fashion and no later than 25 business days after the event. If it is not possible to sell the defaulted security in a prudent manner within 25 business days, the external manager can formulate a proposed plan for presentation to the Administrator for disposing of the security as soon as is prudently possible. The maximum term to formulate a proposal to the Administrator is 20 business days after the default.

B. In the case that an investment is made that violates investment guidelines (active breach), the portfolio must be made compliant with the Investment Guidelines as soon as possible in a prudent fashion and no later than 25 business days after the event.

10. Notes8

Note 1. Sectors are defined in line with the Barclays U.S. Government/Credit Index. In particular, to determine to which subsector an issuer/issue corresponds , these index criteria should be used.

Note 2. The Unhedged currency exposure shall be calculated as the sum of all currencies that have a net long position against the Benchmark.

Note 3. The minimum credit rating corresponds to the lowest long term credit rating issued by S&P, Moody’s and Fitch Ratings, taking into account that the issuer /issue or the counterparty must be rated by at least two of these agencies. In the case of investments, to determine which rating is used as reference for each agency a) the rating of the issue should prevail and, only if the issue has no ratings, the ratings of the issuer can be used, and b) if the issue is guaranteed, the credit rating of the guarantor can be used. Lastly, if the issuer or counterparty is an Affiliate or a subsidiary that is not rated but its parent is, the credit rating of the parent may be used as a rating for the issuer as long as there is a guarantee over the operations of the Affiliate, or for the counterparty only if there exists evidence of the parent’s support.

Note 4. a) The issuer exposure is calculated by adding the positions of related issuers (see Table 6). b) In the event that the related issuers have a different credit rating, aggregate exposure may not exceed the limit set for the highest rated issuer and the exposure of each issuer may not exceed the limit set for its rating.

Table 6. RELATED ISSUERS

Sector Related IssuersCorporate Parent Company and Subsidiaries or BranchesLocal Authorities Local or Regional Government and entities that are

guaranteed by the Local or Regional GovernmentGovernment-related Government-related and Subsidiaries

Note 5. In case an issuer has debt programs/issues with different ratings (by having debt programs with and without a guarantee provided by a third party), the aggregate exposure to the issuer may

8 These notes are an integral part of the Investment Guidelines

29

not exceed the limit set for the highest rated issue and the exposure of each issue may not exceed the limit set for its credit rating.

Note 6. For MBS the outstanding amount corresponds to the generic aggregate size at issuance. This limit does not apply to money market investments.

30

ANNEX 2

Decree 1082 of 2015CHAPTER 10

Unofficial translation

SAVINGS AND STABILIZATION FUND (FAE) MANAGEMENT

Article 2.2.4.10.1. Savings and Stabilization Fund. Any income from the General System of Royalties distributed to the Savings and Stabilization Fund will constitute a “patrimonio autónomo” named “Fideicomiso FAE”, and will be administered by Banco de la República. For these purposes, the funds assigned to the Savings and Stabilization Fund referred by the Law 1530 of 2012, may be transferred directly in foreign currency through the Single National Account System to the name of General System of Royalties as determined by the General Directorate of Public Credit and National Treasury.

In no case it should be understood that the participants in the Savings and Stabilization Fund will receive the funds in a different currency from Colombian Pesos.

Banco de la República will manage any funds transferred thereto by the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit, as well as any revenue or proceeds generated during this administration.

For each down payment made to “Fideicomiso FAE”, the Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit must submit a formal communication to Banco de la República indicating the amount in US Dollar distributed by participant in the Savings and Stabilization Fund, the wire transfer date and the source of the payment. This communication must be sent no later than one (1) day before the wire transfer.

Paragraph. While the National Department of Planning assigns the funds across the participants in the Savings and Stabilization Fund, and the wire transfer to Banco de la República is being prepared, the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit may keep these funds temporarily in bank accounts or term deposits outside of Colombia. Any net financial returns generated will be transferred to Banco de la República, together with the initial down payment itemized by participant. The administrative function referred to in this Article, will be performed taking into account that the responsibility of the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit are of means and not of results. For this reason, this agency will not assume currency risk.(Decree 1076 of 2012, article 1)

Article 2.2.4.10.2. Definition of participant. For purposes of this Chapter, the participants are those Departments, Municipalities and Districts defined and reported by the National Planning Department to the General Directorate of Public Credit and National Treasury, as provided under Articles 360 and 361 of the Political Constitution. Similarly, the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit will inform to Banco de la República about the respective participants.(Decree 1076 of 2012, article 2)

Article 2.2.4.10.3.  Fund Management. All investments in “Fideicomiso FAE” will be made only in financial instruments denominated in foreign currency and issued outside of Colombia. The investments may include securities representing the Colombian public debt acquired in the secondary market. The currency risk will be assumed by the participants in the Savings and Stabilization Fund and in no case by the Nation.

Banco de la República must send to the members of the Investment Committee reports on the “Fideicomiso FAE” under the terms and frequency indicated by the Investment Committee. The Ministry of Finance and

31

Public Credit will issue a quarterly report on the “Fideicomiso FAE” addressed to the public.(Decree 1076 of 2012, article 3)

Article 2.2.4.10.4. Dissaving. Upon the occurrence of a cause for dissaving under the applicable regulations, the General Directorate of Public Credit and National Treasury and the Ministry of Finance and Public Credit will request such dissaving in a formal communication addressed to Banco de la República. The communication will indicate the amount of the dissaving in US Dollar itemized by participant in the Savings and Stabilization Fund. Banco de la República will have ten (10) days from the time of reception of the above communication to transfer the funds.

Once Banco de la República has made the wire transfer of the dissaving funds, the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit will have thirty (30) days to transfer them to the corresponding participants. These funds will be assigned through the Regional Compensation Fund, the Regional Development Fund and direct allocations, according to their participation in the corresponding year income of the General System of Royalties.

Paragraph. The General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit will transfer the funds in foreign currency through the exchange market and under market conditions. Any cost emerging from these operations will be assumed proportionally by the beneficiaries of the dissaving.

While the National Department of Planning determines the distribution of the funds among the participants in the Savings and Stabilization Fund, the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit may keep these resources in bank accounts or term deposits outside of Colombia. Any return accrued will be distributed among the participants in the Fund proportionally to the funds received.(Decree 1076 of 2012, article 4).

Article 2.2.4.10.5. Investment Committee. The “Fideicomiso FAE” will have an Investment Committee consisting as follows: The Minister of Finance and Public Credit or his/her delegate, who will preside over the Committee; the Minister of Mining and Energy or his/her delegate and the General Director of the National Department of Planning or his/her delegate. The Governor of Banco de la República or his/her delegate and the auditor of the “Fideicomiso FAE” will attend the meetings of the Investment Committee with voice, but without voting rights.

Paragraph 1. The members of the Investment Committee may only delegate their attendance to officials in the directive level of the ministries and the National Department of Planning.

Paragraph 2. As stated in article 52 of Law 1530 of 2012, the Investment Committee will have as permanent guests, with voice but without voting rights, two (2) department governors, one of whom will be the governor of one of the producing departments, both elected for one (1) one-year period, and two (2) mayors, one of whom will be the mayor of one of the producing municipalities, both elected for a one (1) one-year period.(Decree 1541 of 2012, article 7 and Decree 1076 of 2012, article 5).

Article 2.2.4.10.6. Functions and Operation of the Investment Committee. The Investment Committee will perform the following functions:1. Determine the investment policy of the “Fideicomiso FAE”. 2. Define the admissible assets.3. Define the asset allocation, that is, the assets, their weights and the currency composition.4. Define the general criteria for the selection of the investments, operations with derivatives, repos,

simultaneous and temporary transfer of securities.5. Establish the maximum individual limits per financial instrument and counterparty.6. Establish general conditions for the margin or collateral deposits applicable to derivatives, repos,

simultaneous and temporary transfer of securities operations.

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7. Establish the general criteria for the selection, approval and assessment of counterparties, correspondent banks, external managers, mandataries, custodians, agents, attorneys and investment advisors, and establish the scope of the delegation, consistent with the purposes of the “Fideicomiso FAE” and the investment policies.

8. Establish the procedures to be followed in the event of surpluses or deficits in investment limits.9. Monitor the performance of the “Fideicomiso FAE” and established policies.10. Determine the frequency and subject matter of the periodical reports to be submitted by Banco de la

República regarding the “Fideicomiso FAE”.11. Approve during the first quarter of each year the annual financial statements of the “Fideicomiso

FAE”.12. Approve any amendments to the administration fee stated in the administration agreement.13. Study and decide on any proposal presented by Banco de la República regarding deviations from the

investment policy, as established under the administration agreement.14. Determine any other necessary duties for the management of the “Fideicomiso FAE” and its

investments.15. Establish self-regulation.

Paragraph 1. The Investment Committee will convene for ordinary meetings at least once per quarter and for extraordinary meetings upon request of the president of the Investment Committee. The Investment Committee will convene with the attendance of all of its members and any decisions will be made by simple majority. Individuals invited to the Committee will participate in the meetings with voice but without voting rights.

The decisions of the Investment Committee will take into consideration the operational capabilities of Banco de la República for their implementation, without this resulting in a failure to comply with the provisions of Section 10 of Article 361 of the Political Constitution.

The Investment Committee, according to a self-determined frequency, may consult with suitable international experts proficient in the management of sovereign wealth fund portfolios, whose fees shall come from the operating resources of the General System of Royalties allocated to the Ministry of Finance and Public Credit. The Ministry of Finance and Public Credit will enter into these agreements either directly or through third parties.

Paragraph 2. Banco de la República will act as secretary to the Investment Committee with the following functions:

1. Call the ordinary meetings of the Investment Committee and any extraordinary meetings upon request of the president of the Committee.

2. Prepare and keep the minutes of the meetings of the Investment Committee.3. Submit to the members of the Committee reports and financial statements required for the discussions

and implementation of the decisions.

Paragraph 3. The Investment Committee will have a Financial Advisory Group consisting of the Technical Vice-Minister and the General Director of Public Credit and of the National Treasury, and the Deputy Head of the Risk Division of the Ministry of Finance and Public Credit. Two (2) external members may be invited to form part of the group, who will have no conflicts of interest in relation to the matters under discussion. The Director of International Investments Department of Banco de la República may attend as a permanent guest to the group meetings.

Paragraph 4. The Ministry of Finance and Public Credit will create a Technical Support Group for the Investment Committee and the Financial Advisory Group, whose remuneration will come from the resources of the General System of Royalties allocated annually for its operation. In addition to the functions allocated thereto in the act of its creation, this group will be responsible for preparing and

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keeping the minutes of the Financial Advisory Group and such reports and other documents as may be required for the operation of the Investment Committee and the Groups.

Paragraph 5. The Investment Committee will not be responsible for the appreciation or depreciation of the portfolio or of any of the assets or derivatives that constitute it, nor for the profitability effectively achieved, nor for any realized losses.(Decree 1076 of 2012, article 6, Decree 1293 of 2013 article 1).

Article 2.2.4.10.7. Valuation and Accounting Management of the “Fideicomiso FAE”. The “Fideicomiso FAE” will be valued in accordance with the method that reflects the objectives and characteristics of the financial instruments that constitute the fund.

The value of the Savings and Stabilization Fund must be determined on a daily basis, and expressed in both US Dollar and units. The units measure the value of the contributions of the participants, and represent shares of the equity value of the Savings and Stabilization Fund. Changes in the value of the unit represent any profits or losses incurred.

Any funds received and any funds withdrawn from the Savings and Stabilization Fund will be denominated according to the value of the unit at the end of the business day immediately preceding.

The current value of the unit will be the one computed at the end of the business day immediately preceding the date of the saving or dissaving operation. This will consider all incomes and expenses arising from the management of the “Fideicomiso FAE”. The initial value of the investment unit for the day when the operation of the “Fideicomiso FAE” is initiated will be of US$ 1000, corresponding to the date on which Banco de la República receives and records the first down payment of the funds assigned to the “Fideicomiso FAE”.

The accounting of the “Fideicomiso FAE” will be kept in US Dollar and differentiated by participant in the Savings and Stabilization Fund in the accounting books of Banco de la República through fiduciary accounts. The preparation and issue of the financial statements and the general accounting management will be governed by the accounting standards applicable to Banco de la República.

Banco de la República, in its capacity as administrator of the “Fideicomiso FAE”, should make any necessary adjustments in accordance with the current accounting rules, and,  in general, when differences results in alterations to the equity value of the participants in the “Fideicomiso FAE” or the analysis of the results.

Paragraph.  Banco de la República will submit on a monthly basis to the General Directorate of Public Credit and National Treasury of the Ministry of Finance and Public Credit information on the value of the Savings and Stabilization Fund in US Dollar, as well as the balance in units and its equivalent in US Dollar for each participant.

Transitory Paragraph. While Banco de la República prepares and adjusts the IT systems for the management of the contributions, withdrawals and capitalization per participant in the Savings and Stabilization Fund, the accounting will be recorded in aggregate provisionally.(Decree 1076 of 2012, article 7).

Article 2.2.4.10.8. Audit of the “Fideicomiso FAE”. The National Government delegates the audit function of the “Fideicomiso FAE” to the Auditor of Banco de la República, who will have the following functions:

1. Examine the financial statements of the “Fideicomiso FAE”in order to establish its reasonableness and to render a professional opinion whether these are prepared, in all relevant aspects, in keeping with generally accepted accounting standards;

2. Ensure that the operations of the “Fideicomiso FAE” comply with all legal and contractual provisions, and the corresponding decisions of the Investments Committee;

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3. Ensure that the accounting of the “Fideicomiso FAE” and the minutes of the Investment Committee are kept regularly and in compliance with the law, and that the correspondence and supports of the movements of the “Fideicomiso FAE”Fund accounts are duly kept;

4. Ensure that any actions aimed at preserving and securing the assets of the “Fideicomiso FAE” are taken in a timely manner.

5. Evaluate the internal control system of the processes of Banco de la República related to the administration of the “Fideicomiso FAE”, and submit to Banco de la República the results of all evaluations and its recommendations;

6. Apply, in its control and verification interventions, the generally accepted auditing standards and ensure compliance with the accounting rules and principles;

7. Comply with such other requirements as may be indicated by the law.(Decree 1076 of 2012, article 8)

Article 2.2.4.10.9. Contract for the Administration of the “Fideicomiso FAE”. The contract for the administration of the “Fideicomiso FAE” will be entered into by the Legal Representative of Banco de la República and by the Minister of Finance and Public Credit on behalf of the Nation.

The initial fee for the administration of the “Fideicomiso FAE”, which will be earned by Banco de la República, should be agreed upon in the contract to be entered into by and between the Ministry of Finance and Public Credit and Banco de la República. This fee will be paid from the returns of the funds entrusted, and absent these, from the funds themselves.

Paragraph. Costs and expenses arising from the administration fee and the service fee related to the management of the funds in the “Fideicomiso FAE” will have no budgetary effects for the General System of Royalties. Therefore, they will not be imputable to the budget for administrative expenses thereof.(Decree 1076 of 2012, article 9).

Article 2.2.4.10.10. Communications. The communications related to the General System of Royalties will be resolved by the entity of the system in charge of the nature of the request, and according to the competencies allocated to each one of them by the applicable regulations.(Decree 1076 of 2012, article 10).

Decree 1297 of 2016(August 10, 2016)

Unofficial translation

Whereby Decree 1082 of 2015 is amended to regulate the transference and reimbursement of the resources in the General System of Royalties

Article 3.  Article 2.2.4.10.4 of Decree 1082 of 2015 is amended hereby as follows: 

Article 2.2.4.10.4. Dissaving. Upon the emergence of any cause for dissaving provided under the applicable regulations, the General Directorate of Public Credit and National Treasury (DGCPTN) of the Ministry of Finance and Public Credit will request the resources through a formal communication to Banco de la República stating the amount of the dissaving itemized by participant in the Savings and Stabilization Fund in US Dollar, and the legal basis to authorize it. 

Banco de la República shall transfer the resources to the DGCPTN of the Ministry of Finance and Public Credit within ten (10) days after the reception of the above communication. 

Within 30 days after the above transference, the DGCPTN of the Ministry of Finance and Public Credit will channel the resources in foreign currency through the foreign exchange market under market

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conditions. 

If the amount resulting from this operation is lower than required for complying with the dissaving regulation that orders it, the DGCPTN will request as many times as necessary and on the same terms of the first subparagraph, the amount in US Dollars required to complete the dissaving. 

Upon completion of the above procedure, and following the instruction to deposit into account sent by the National Department of Planning, the DGCPTN will assign the cash to each fund and beneficiary of the respective dissaving. The transference of the resources will proceed in accordance with the provisions in force on this matter for each type of assignment and fund. 

If the amount resulting from the operation provided for in the third subparagraph above is higher than required for complying with the dissaving regulation that orders it, any such amount in excess by exchange differential shall be provided to the participant that originated it in the budget of the Savings and Stabilization Fund, during the next budget period.

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ANNEX 3INSTRUCTIONS FOR THE PROPOSAL

Please keep in mind that the Administrator will only consider Proposals that are delivered in time, and sent to the electronic and physical addresses according to the procedure stated below.

The term “Proposal(s)” should be understood as the group of documents consisting of:

1. Responses to the Questionnaire (Part 6) 2. Certification as to Satisfaction of the Minimum Selection Criteria for

Consideration Certification (Part 4)3. Additional Documentation (Part 5): Most recent audited consolidated financial

statements, Certificate of good standing, Certificate of incumbency for authorized signatures, Registration as investment advisor, Statement on Standards for Attestation Engagements No. 16 – SSAE 16, and Enterprise risk management policies and procedures, including the role of internal audit.

Proposals should be submitted in written form in English. The instructions for sending the documents are as follows:

1. Responses to the Questionnaire (Part 6): They must be submitted via e-mail only to the address DAOfertasdelExterior@banrep.gov.co with the following subject matter: “RFP 2017 Investment Management FAE Fixed Income. Final Response”. The body of the e-mail shall visibly state the complete name and contact data of the Candidate, including its physical and electronic address. The Responses to the Questionnaire must be received at the e-mail address indicated above no later than by 23:59 (Bogota time), May 31, 2017. The Administrator will not consider e-mails received after the date and time indicated above. The documents must be sent as an attachment(s) to an e-mail in .PDF format with the exception of the tables that can be found in the excel file included in this RFP, which should also be sent in .XLSX format. The size of each email must be equal or less than 10 MB because the e-mail server of the Administrator does not accept files of larger sizes. If you need to send separate e-mails, please take into account that they should be numbered (for example, e-mail 1 of 5) and come from the same e-mail address.

2. Certification as to Satisfaction of the Minimum Selection Criteria for Consideration Certification (Part 4) and Additional Documentation (Part 5): The documents must be sent by courier to the attention of:

Banco de la RepúblicaDepartamento de Inversiones Internacionales DirecciónCarrera 7 No. 14-78 Piso 1Bogotá, Colombia

These documents should be delivered not later than May 31, 2017. The documents will be received at the address stated above, Monday to Friday (Local business day), from 09:00 to 12:00 (noon), and from 14:00 to 17:00 (Bogota time). For purposes of the timely delivery of the documents, please be aware that due to security procedures of

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BdlR, visitors of BdlR are required to record his/her personal data with BdlR, and this could take time.

The submission of the Proposal by the Candidate will be evidence of its understanding and acceptance of the conditions set forth in this RFP.

Any conditional Proposal from the Candidate will be evaluated by the Administrator, who may or may not accept the same.

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