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REQUEST FOR PROPOSAL

ACTUARIAL AUDIT SERVICES

RFP #O-2020-1

Issued September 17, 2019

Iowa Public Employees’ Retirement System7401 Register Drive

Des Moines, IA 50321Phone: 515-281-0070

Fax: 515-281-0045Website: www.ipers.org

http://www.ipers.org/

Iowa Public Employees’ Retirement SystemActuarial Audit Services RFP

Table of Contents

1. Purpose, Minimum Qualifications and Scope of Services..............................3

2. Proposal Submission Information.................................................................6

3. Questionnaire.............................................................................................13

4. Required Appendices.................................................................................20

5. Proposed Contract......................................................................................21


PART 1

PURPOSE, MINIMUM QUALIFICATIONS AND SCOPE OF SERVICES

A. PURPOSE

This Request for Proposal (“RFP”) is issued by the Iowa Public Employees’ Retirement System (“IPERS” or “System”) for the purpose of hiring an actuarial firm (“Auditor”) to perform an independent actuarial audit and evaluation of actuarial services provided to IPERS by its current actuarial consultant, Cavanaugh Macdonald Consulting. The purpose is to provide an evaluation sufficient to allow the Auditor to express an actuarial opinion regarding the reasonableness and/or accuracy of valuation results, actuarial assumptions and actuarial methods in accordance with generally recognized and accepted actuarial principles and practices.

B. SYSTEM OVERVIEW

IPERS is a cost-sharing, multiple-employer, contributory defined benefit public employee pension plan created and governed pursuant to Iowa Code Chapter 97B. The System covers approximately 360,000 active, inactive and annuitant members. The System consists of three membership groups: Regular membership, and two Special service groups (sheriffs & deputies and protection occupation). Complete background information, including the System’s fiscal year (FY) 2018 Actuarial Valuation Report, 2018 Demographic Assumptions Study, 2017 Economic Assumptions Study and the FY2018 Comprehensive Annual Financial Report, may be obtained from the System’s website www.ipers.org.

C. MINIMUM QUALIFICATIONS

To be considered as the Auditor for the purpose stated above, the respondent must meet all of the following Minimum Qualifications. Failure to do so shall result in rejection of the proposal. As used in this RFP, the term “Primary Auditor” shall refer to the lead and most senior actuary to be assigned to and provide direct services to IPERS. The term “Supporting Auditors” shall refer to less senior actuaries that will support the Primary Auditor in providing direct services to IPERS. As used in this RFP, the term “Auditing Actuaries” shall mean the Primary Auditor and all Supporting Auditors to be assigned to and provide direct services to IPERS.

1. The firm must be a professional actuarial services firm that provides actuarial valuation, experience studies, actuarial audits and pension consulting services.

2. The firm must have been in existence as a business entity performing such services for a minimum of five years.


https://www.ipers.org/sites/default/files/CAFR_2018.pdf

https://www.ipers.org/sites/default/files/CAFR_2018.pdf

https://www.ipers.org/sites/default/files/Economic%20Assumptions%20Study%202017.pdf

https://www.ipers.org/sites/default/files/Economic%20Assumptions%20Study%202017.pdf

https://www.ipers.org/sites/default/files/Demographic_Assumptions_Study.pdf

https://www.ipers.org/sites/default/files/2018%20Actuarial%20Valuation.pdf

https://www.ipers.org/sites/default/files/2018%20Actuarial%20Valuation.pdf


3. Within the past three years, the firm must have been engaged for such services as valuation assignments, experience analysis and/or actuarial audit assignments by a minimum of three public pension clients, each client with at least 100,000 members and at least one client whose membership includes multiple groups with different benefit structures.

4. The Primary Auditor performing the work must be a Fellow of the Society of Actuaries and an enrolled actuary. The Primary Auditor performing the services under the Contract must have a minimum of five years of experience as an actuary providing pension consulting services, experience analysis, valuation assignments and actuarial audit assignments for public retirement systems with memberships of at least 100,000 members and at least one client whose membership includes multiple groups with different benefit structures.

D. SCOPE OF SERVICES

All services described in this section shall apply to IPERS’ Regular membership and the two Special service groups. The audit will review the 2019 annual valuation to assure that the results presented therein are actuarially sound, reasonable and consistent with industry standards.

1. The audit should cover the following:a. Analyze the appropriateness of the actuarial assumptions.b. Review the actuarial assumptions and methodology for compliance

with generally recognized and accepted actuarial principles and practices which are consistent with Actuarial Standards of Practice, the Code of Professional Conduct, Qualifications Standards for Public Statements of Actuarial Opinion of the American Academy of Actuaries and GASB Statement No. 67.

c. Evaluate the data used for performance of the valuations including IPERS’ production of data used in the actuarial calculations, the degree to which data is sufficient to support the conclusions of the valuation and the use and appropriateness of any assumptions made regarding the data.

d. Conduct a replication of the 2019 valuation results using the same data, methods and assumptions used by Cavanaugh Macdonald.

e. Evaluate the test results and reconcile any significant discrepancies between the findings, assumptions, methodology, rates and adjustments of the auditing firm and Cavanaugh Macdonald.

f. Assess whether the valuation appropriately reflects information pursuant to actuarial professional standards.

g. Assess the information provided by the actuarial consulting firm to the System for the System’s required reporting standards under


GASB.

h. Review optional form factors used by the System for reasonableness and accuracy.

i. Assess the reasonableness of the 30-year projections made in the valuation simulation model provided to IPERS by its actuary. The model projects contribution rates (actuarial rates and funding policy rates), funded ratios and liabilities under alternative scenarios of future investment returns, four discount rates and two inflation assumptions.

2. The audit should culminate in a report that:a. Provides an evaluation and expresses an opinion regarding the

reasonableness and accuracy of the valuation results (including a determination of actuarial accrued liability, normal cost and actuarially determined contributions), actuarial assumptions and appropriateness and application of the actuarial cost method.

b. Includes any recommendations regarding reasonable alternatives to the actuarial assumptions used in the 2019 valuation.

c. Is provided first in draft form so that this information may be reviewed and commented upon, by IPERS and Cavanaugh Macdonald, prior to the issuance of the final report.

d. Is provided in final form to the IPERS Investment Board at its March 2020 meeting. The Auditor will provide 50 paper copies and one electronic copy of the final report.

e. Is summarized in a letter or comment format to be included in IPERS’ FY2019 Comprehensive Annual Financial Report.


PART 2

PROPOSAL SUBMISSION INFORMATION

A. INSTRUCTIONS FOR SUBMITTING PROPOSALS

1. Firms responding to this RFP must provide answers to the questions posed in Part 3 of this RFP. All proposals must be complete in every respect and must answer concisely and clearly all questions proposed by the RFP. Late proposals will not be accepted.

2. Proposals shall be submitted with a cover letter stating in the affirmative that the firm meets each and all of the Minimum Qualifications listed in Part 1.C of this RFP, that the firm is able and willing to provide the type and level of services required to fulfill the mandate proposed in this RFP and that the firm’s proposal is binding for 180 days from the date of the proposal. The cover letter should also include either an affirmative compliance statement or a disclosure statement relative to IPERS’ Ethics Policy (see Part 2.F below). Attach said cover letter as Appendix A to the proposal.

3. The cover letter and the offer made by the proposal, and any clarifications to that proposal shall be signed by an officer of the offering firm or a designated agent empowered to bind the firm in a Contract. The cover letter must also identify any sections of the proposal that the firm is identifying as confidential. (See Disclosure of Proposal Content below)

4. Proposals should follow the order of questions as they are asked in Part 3 of this RFP. In response to each question asked in Part 3, restate the main question (denoted by a number or a letter) in bold font followed by your answers stated in regular font. Responses should be thorough and answer the specific question asked, including the issues addressed in any bullet points following a question.

5. In preparation of the proposal, please use Word format for text and Excel format for spreadsheets.

6. Supporting material must be clearly referenced to the appropriate question. Information and materials which are strictly promotional in nature should not be used.

7. Verbal communication with IPERS’ Investment Board, Benefits Advisory Committee members and IPERS staff during the selection process is greatly discouraged. Firms will be given the opportunity to submit written requests for clarification of questions or terms contained in the RFP. In all cases, written communications will override verbal communications.


8. Proposals must be received no later than 4 p.m. Central time, October 25, 2019.

9. A firm must submit one original proposal and six complete copies to IPERS at the following address:

Iowa Public Employees’ Retirement SystemAttn: Donna M. Mueller, RFP Coordinator7401 Register DriveDes Moines, IA 50321-2953

In addition, the firm must e-mail a complete electronic version of its proposal and all appendices to IPERS at [email protected]. The e-mail subject line should clearly indicate that it contains a proposal submitted in response to RFP #O-2020-1. The proposal must be attached as a PDF with the firm’s name included in the file name. If the proposal contains more than one PDF file, you may compress the files and submit in a ZIP file that clearly identifies the firm in the file name.

B. DISCLOSURE OF PROPOSAL CONTENT

The laws of Iowa require that the content of bidders’ proposals be maintained in confidence prior to the issuance of a notice of intent to award a contract. If IPERS issues a notice of intent to award a contract at the conclusion of the selection process, the contents of all proposals, excluding confidential information, will be placed in the public domain and be open to inspection by interested parties. Trade secrets or proprietary information that are recognized as such and protected by law may be withheld, but only if designation of such sections is stated in proposing firms’ cover letters and confidential information is clearly identified as such on each of the applicable pages within the body of the proposal.

Any proposal submitted which contains confidential information must be conspicuously marked on the outside as containing confidential information, and each page which confidential information appears must be conspicuously marked as containing confidential information. Identification of the entire proposal as confidential shall be deemed non-responsive and disqualify the firm.

If the firm designates any portion of the RFP as confidential, the firm must submit a separate electronic “excised copy” of the original proposal from which the confidential information has been excised at the same time that they submit the original (unexcised) proposal. This excised copy is in addition to the number of copies requested in Part 2.9 of this RFP. The confidential information must be excised in such a way as to allow the public to determine the general nature of the material removed and to retain as much of the proposal as possible.

mailto:[email protected]


The firm’s failure to request confidential treatment of material shall be deemed by IPERS as a waiver of any right to confidentiality which the firm may have had.

C. REJECTION OF PROPOSALS

1. IPERS reserves the right to reject without penalty any or all proposals in whole or in part received by this request, due to noncompliance with the requirements of this RFP or for any other reason. Issuance of this RFP in no way constitutes a commitment by IPERS to award a contract or to enter into a contract with a successful bidder. IPERS further reserved the right to cancel this RFP, to issue a new RFP or to award a contract in whole or in part if deemed in the best interest of IPERS. The RFP and the RFP process are for the sole benefit of IPERS and its members. IPERS will not pay for any information herein requested, nor is it liable for any costs incurred by the submitting firms.

2. Firms whose proposals do not meet the minimum qualifications will be so notified. After evaluation of the proposals and approval by the IPERS Investment Board of the firm recommended, all firms having submitted proposals will be notified of the successful firm.

3. IPERS reserves the right to not hire or to defer the hiring of a firm for these services.

D. PROPOSAL OBLIGATIONS

The contents of the proposal and any clarifications thereto submitted by the successful firm shall become part of the contractual obligation and will be incorporated by reference into the ensuing Contract.

E. DISPOSITION OF PROPOSALS

All proposals become the property of IPERS and will not be returned to the firm.

F. COMPLIANCE WITH IPERS’ ETHICS POLICY

Bidders must agree to comply with IPERS’ Ethics Policy. Pursuant to that policy, the successful bidder must not be involved in any relationships with IPERS’ Key Employees or with any other party providing services to IPERS that would constitute a conflict of interest, as defined in the policy, with respect to the products and/or services to be provided under this RFP. Each Bidder must provide a positive statement in its proposal’s Appendix A affirming either that it has no such conflicts of interest, or an IPERS disclosure statement disclosing potential conflicts and requesting approval

https://www.ipers.org/sites/default/files/media/September%202017%20Ethics%20Policy%20Final.pdf


in advance. The policy may be obtained from the System’s website www.ipers.org.

G. IOWA STATUTES AND RULES

The terms and conditions of this RFP and the resulting Contract shall be construed in accordance with the laws of Iowa. Whenever differences exist between federal and state statutes or regulations affecting this procurement, interpretation shall be in the direction of that which is most beneficial to the interests of the State of Iowa.

H. SIGNATURE OF AUDITOR’S AGENT

The offer made by the proposal, and any clarifications to that proposal, shall be signed by an officer of the offering firm or a designated agent empowered to bind the firm in a Contract.

I. IPERS CONTRACT SIGNATORY

Donna M. Mueller, IPERS Chief Executive Officer.

J. CONTRACT AWARD

IPERS reserves the right to award this Contract not necessarily to the firm with the lowest fee and cost proposal, but to the firm which will provide the best match to the requirements of the RFP. The successful firm will be determined in accordance with the evaluation criteria defined by IPERS.

K. APPEALS

Filing an appeal. Any firm that filed a timely bid or proposal and that is aggrieved by an award made by IPERS may appeal the decision by filing a written notice of appeal with Chief Executive Officer Donna M. Mueller, 7401 Register Drive, Des Moines, Iowa 50321, within five calendar days of the date of award, exclusive of Saturdays, Sundays and legal state holidays. IPERS must actually receive the notice of appeal within the specified time frame for it to be considered timely. The notice of appeal shall state the grounds upon which the firm challenges IPERS award.

Procedures for vendor appeal. The appeal will be treated as “other agency action” in accordance with Iowa Code chapter 17A and cases interpreting this Code chapter. The procedure for an appeal of “other agency action” is to allow the firm an opportunity to be heard. To fulfill this obligation, the firm has five calendar days from the date the notice of appeal was filed with IPERS to submit any written arguments and documents it wants



considered related to the merits of the appeal. The aggrieved firm may, or may not, be afforded an opportunity to discuss the merits of the appeal with CEO Mueller, over the telephone or in person. CEO Mueller will issue a final agency decision related to the appeal. The exclusive means for a firm to seek further review of the final agency decision shall be covered by Iowa Code §17A.19.

L. EVALUATION OF PROPOSALS

An Evaluation Committee (“Committee”) has been established to evaluate and score proposals received, select finalist firms, conduct finalist interviews and recommend one specific finalist firm to the IPERS Investment Board. The Committee is composed of representative members of IPERS’ Investment Board, Benefits Advisory Committee, Chief Executive Officer, Chief Benefits Officer, and Chief Financial Officer. Finalist firms will be interviewed at IPERS’ office, and on-site due diligence visits to finalists’ offices may be conducted. Determination of which firms to interview and whether on-site diligence visits are necessary is at the sole discretion of the Committee. IPERS’ Investment Board will make the final Auditor selection.

M. EVALUATION CRITERIA

Proposals will be evaluated using the following criteria:

1. The Firm’s Organization, Experience and Resources 25%2. The Project Team’s Relevant Experience 30%3. The Firm’s Methodology 25%4. The Firm’s Fee Proposal 20%


N. TIMETABLE

1. September 17, 2019—RFP ISSUED2. September 27, 2019—INQUIRES—Inquires and requests for

interpretation or clarification of the RFP from potential bidders will be accepted only in writing, as mailed, e-mailed or faxed, and only if received no later than 4 p.m. Central time, September 27, 2019. Mail, e-mail or fax requests to:

Iowa Public Employees’ Retirement SystemAttn: Donna M. Mueller7401 Register DriveDes Moines, IA 50321-2953E-mail: [email protected]: 515-281-0045

3. October 4, 2019—RESPONSES TO INQUIRIES—Responses to and addenda resulting from requests for interpretation shall be posted on the IPERS website by 4 p.m. Central time, October 4, 2019.

4. October 25, 2019—PROPOSALS DUE—Proposals must be received by 4 p.m. Central time, October 25, 2019.

5. November 12–22, 2019—FINALIST INTERVIEWS—Members of the Evaluation Committee will interview finalist firms at IPERS’ office during the period of November 12–22, 2019. IPERS may choose to hold additional interviews at the firms’ offices.

6. December 6, 2019 (Tentative)—ANNOUNCEMENT OF SELECTION—The System will notify all firms that submitted a proposal of its Auditor selection, which shall be subject to successful Contract negotiation with the selected firm.

7. March 13, 2020—Final audit report due to IPERS.8. March 27, 2020 (Tentative)—PRESENTATION of final audit report to

the IPERS Investment Board.

O. THE RESULTING CONTRACT

The Contract shall be a combination of the specifications, terms and conditions of the RFP, any written clarifications or changes made to this RFP, the offer contained in the successful proposal and any additional contractual terms and conditions agreed to mutually and in writing by the parties. IPERS’ proposed Contract is included as Part 5 of this RFP.

mailto:[email protected]


P. TERM OF CONTRACT

The resulting Contract shall be for a one-time actuarial audit as described in Part 1.D and elsewhere in this RFP. The firm selected from the current search will not be eligible to bid on any IPERS full-service actuarial retainer that may be issued within the twelve-month period following publication of the actuarial audit report or issued as a result of the actuarial audit.

Q. PERFORMANCE-BASED FEES

Iowa Code §8.47 places a requirement on state agencies that service Contracts must contain a performance-based payment clause. The administrative rule, 11 Iowa Administrative Code 107.4, describes the acceptable types of performance-based payment clauses.

An acceptable performance-based payment clause that all bidders must include in their responses to the RFP can place the entire payment for all deliverables in the Contract at risk, or selected deliverables at risk. For the purpose of illustration only, an example might be:

Contractor will provide the deliverable(s) specified in Part X, paragraph XX, by July 1, 201X. In the event that the deliverable(s) in Part X, paragraph XX, are not delivered by July 1, 201X, Contractor will forfeit [certain percentage of the invoice] [$X amount] [will subtract $XXXX/day until delivery is made to IPERS].

Each bidder must propose performance-based fees in its response to the RFP. IPERS encourages bidders to be creative. The Evaluation Committee will evaluate the performance-based fee proposals for each bidder. The performance-based fee proposals will be subject to final negotiations with the bidder selected pursuant to this RFP.


PART 3

QUESTIONNAIRE

The proposal must answer the following questions:

A. ORGANIZATION AND OWNERSHIP

1. Provide the following information:Date of Response:Name of Firm:Primary Contact Person:Title:Address:

Telephone Number:Facsimile Number:E-mail Address:

2. Describe the background and ownership of the firm. Describe any material changes in organization structure or ownership that have occurred in the past five years.

Year firm was formed and began providing actuarial consulting services to institutional clients.

The ownership structure. Indicate all entities that have an ownership stake in the firm (name and percentage).

Affiliated companies or joint ventures. Recent or planned changes to the ownership or organization

structure. Transition plans for retirement of key executives. Importance of actuarial consulting services to your parent

company’s (if applicable) or your firm’s overall business strategy.

Percentage of parent company’s (if applicable) or your firm’s revenues from actuarial consulting services.

3. Provide as Appendix B one organization chart that diagrams the ownership of your firm and any interrelationships between the parent-subsidiary, affiliate and joint venture entities.

4. Provide as Appendix C another organization chart that depicts the structure of the actuarial consulting group and that identifies this group’s key executives and principals and the people that will be involved in providing direct services to IPERS.


5. List the location of the firm’s offices which would be primarily responsible for providing actuarial audit services for IPERS.

6. If the actuarial firm is publicly held, provide a copy of the firm’s most recent audited annual financial report as Appendix D.

7. Discuss in general the firm’s competitive advantage over other firms in the actuarial consulting industry and in the actuarial audit service area. Why should IPERS hire your firm?

8. Over the past five years, has your organization or any key executive or principal been involved in any business litigation or other legal proceedings related to any actuarial consulting activities or actuarial auditing services? If so, provide a brief explanation and indicate the current status.

9. Has your firm, within the last ten years, been censured or fined by any regulatory body? If so, please indicate the dates and describe the situation.

10. Is the firm affiliated with any other firm(s) offering nonactuarial services that could represent conflicts of interest? If yes, briefly describe your firm’s policies and procedures for doing business with these affiliates while safeguarding against conflicts of interest.

11. Do you, your parent company, or any affiliated company have any business relationships with Cavanaugh Macdonald Consulting (IPERS’ actuary), Wilshire Associates (IPERS’ investment consultant), or Ice Miller (IPERS’ external plan counsel)? If so, describe that relationship.

12. List and describe any professional relationship your firm or any of your actuarial consulting group staff have with any member of the IPERS Investment Board, IPERS Benefits Advisory Committee or IPERS staff.

13. Has anyone in your firm provided any gifts, travel expenses, entertainment, or meals to any member of the IPERS Investment Board, IPERS Benefits Advisory Committee or IPERS staff in the last twelve months? If yes, describe the expense and the purpose.

B. ACTUARIAL SERVICES STAFFING

1. How many actuaries does your firm employ?

2. Describe in general the background of the professionals in the firm’s actuarial consulting services group:


Are they brought in from outside of the firm or promoted to their positions from within the organization?

For those recruited from the outside, what prior experience and educational credentials are generally sought?

What percentage are currently Fellows of the Society of Actuaries? Enrolled actuaries?

What ongoing educational programs are economically supported and/or required? If economic support is offered, state the extent of this.

3. For the key executives or principals in the actuarial consulting group, including the Primary Auditor and all Supporting Auditors that would be assigned to IPERS, provide a table that identifies the following information:

Name and title Responsibilities within the firm. If a person has multiple

responsibilities, indicate the percentage of time spent on each function in a footnote to the table

Years of relevant experience Years with the firm Degrees and professional designations Institution awarding each degree and designation Publications authored

4. How long has the current group of key executives or principals in your actuarial consulting group been together?

5. For the Primary Auditor and all Supporting Auditors that will directly provide services to IPERS, provide biographies and label these as Appendix E.

6. For the Primary Auditor and all Supporting Auditors, state the length of time these individuals have all worked together as a team.

7. For the Primary Auditor and all Supporting Auditors, list their actuarial audit assignments for the past three years. Include for each assignment the date of the final audit report, whether the auditor served as the primary or Supporting auditor, and the client’s name and size (number of pension plan members and annuitants).

8. For the Primary Auditor and all Supporting Auditors that will directly provide services to IPERS, state the role each would play in providing the required IPERS services.


9. State for the Primary Auditor and each Supporting Auditor the total number of clients currently assigned to these individuals; describe whether the assignment is for general actuarial services or actuarial audit services.

10. For the Primary Auditor and all Supporting Auditors, state whether any of these individuals are affiliated with any other business entity or activity that could pose a potential conflict of interest with their IPERS assignments. If so, provide details on the entity or activity.

11. State the Primary Auditor’s experience making presentations to/testifying before state legislatures or committees thereof on behalf of clients. Provide a list of such presentations in the past two years.

12. Describe your compensation and incentive program for actuaries in your firm. How are actuaries evaluated and rewarded? What incentives are provided to attract and retain superior individuals? Identify the percentage of compensation which is:

Base salary Performance bonus Equity incentives Other Do you offer direct ownership, phantom stock, profit sharing,

and/or performance bonus? Who is eligible to participate? On what basis are these incentives determined—is

compensation tied to success factors such as client base growth, performance, or other factors? Please list and indicate the weight of each in determining total compensation.

How does your compensation structure/levels compare with other firms in the industry?

13. Discuss the causes and impact of professional staff turnover (departures or hiring/promotions) in the actuarial consulting group that has occurred in the last three years. Provide a table listing the number of professionals that have departed from that group over the past three years. For each individual, provide the following information:

Title Responsibilities Years with the firm Reason for leaving the firm Was the position filled


14. Does the firm have a transition plan to deal with the possible sudden departure of key professionals within the group? Describe the plan.

C. METHODOLOGY

1. Describe the specific methodology to be used for the required scope of work identified in Part 1.D of this RFP.

2. Provide a timeline for completion of the work identified in Part 1.D of this RFP. Include proposed dates for each key stage or event of the project, indicate dates by which your firm must have specific input data from IPERS or its retained actuary, and indicate points in the project when your firm would plan to meet with IPERS staff at our office.

3. Describe your firm’s theory and methodology used in recommending an appropriate actuarial cost method for a public pension fund.

4. Describe your firm’s theory and methodology for development of actuarial assumptions (except for the interest rate assumption, which is addressed separately).

5. Describe the methodology you use to formulate a pension fund’s actuarial interest rate assumption. How may this methodology differ from client to client? Under what circumstances would you recommend IPERS change its interest rate assumption?

6. Describe your firm’s approach to recommendations regarding the amortization of unfunded liabilities.

7. Describe your approach to measuring funded status and funding progress in order to facilitate the assessment of trends over several valuations of a client.

8. Describe the capabilities of your valuation system(s) and your computer system support.

9. Describe your quality control processes for actuarial audit reports and recommendations. How are these services monitored and reviewed?

10. Provide as Appendix F one recent actuarial audit report as provided to an existing client.


D. RELEVANT EXPERIENCE

1. Complete the following table, reporting only those client relationships where actuarial auditing services similar to this mandate have been or are being provided.

As of:7/31/19 12/31/1

812/31/17

Total number of actuarial audit clientsTotal number of public pension plan actuarial audit clients

2. For all current public pension plan clients, state the client’s name, the first year of your initial Contract with the plan, and their asset and membership size as of June 30, 2019.

3. Provide the name, title, address and telephone number for the following four client references for whom your firm has provided either full service actuarial consulting or actuarial audit services similar to this mandate, as specified in each question:

The client for whom your firm most recently completed an actuarial audit.

A public pension plan client for whom your firm has provided full-service actuarial consulting for at least three years.

A full-service actuarial consulting client that has been assigned for at least two years to the Primary Auditor proposed for the IPERS account.

The client for whom the Primary Auditor most recently completed an actuarial audit.

4. List all pension plan clients that have terminated their actuarial service contracts with your firm in the last three years. Include the client firm’s name, size of membership date of contract termination, and reason(s) for contract termination.

5. Provide the names of all public pension plan clients for whom you have performed actuarial audits within the last five years.

6. Have your firm’s actuarial consulting service products been audited by another actuarial firm within the last three years? If so, state the number of such audits and whether any resulted in revisions to your clients’ annual valuation results, actuarial assumptions or actuarial cost methods.


E. RESOURCES

1. Would your firm propose to use any subcontracts in the provision of the required IPERS services? If so, describe the specific services that would be subcontracted, the name of the subcontractor, the cost to your firm of these services and how you would control the quality of services provided.

2. Does your firm use internal or external legal expertise, or both? If external is used, state its source and nature.

3. What investments has the firm made in information technology?

4. Do you have plans/arrangements in place for alternative work sites should either your headquarters facility or the facility that will primarily provide services to IPERS become inoperative because of fire, earthquake, etc.? Briefly describe your emergency and disaster recovery plans. Include in your description your disaster recovery plans related to client data files.

5. Please describe the levels of coverage for errors and omissions insurance and any fiduciary or professional liability insurance your firm carries. Is the coverage on a per-client basis, or is the dollar figure applied to the firm as a whole? List the insurance carriers.

6. How does the firm monitor and measure actuarial client satisfaction and actuarial audit satisfaction?

7. Describe the resources your firm has that specifically address the needs of public fund clients.

F. FEES

1. Describe how fees are determined for your firm’s actuarial auditing services.

2. The proposed fee should include administrative, third-party, travel and all other costs.

3. State the performance-based fee structure you propose for provision of the services described in Part 1.D. State the fee tiers in dollars and include the specific performance benchmarks proposed for each fee tier.


PART 4

REQUIRED APPENDICES

Appendix A—Letter evidencing firm’s satisfaction of minimum qualifications, ability and willingness to provide required services, and validating proposal for 180 days from date that the proposal is due.

Appendix B—Organization chart reflecting firm’s ownership and relationship to parent and affiliates (if any).

Appendix C—Organization chart of firm’s actuarial consulting group.

Appendix D—Firm’s latest audited financial statement.

Appendix E—Biographies of Primary Auditor and all Supporting Auditors to be assigned to the IPERS account.

Appendix F—Sample actuarial audit report for existing client.


PART 5

PROPOSED CONTRACTACTUARIAL AUDIT SERVICES CONTRACT

WHEREAS, the parties hereto desire to enter into this Contract for the purpose of providing actuarial audit services to the Iowa Public Employees’ Retirement System (IPERS) whose business location is 7401 Register Drive, Des Moines, Iowa 50321.

NOW, THEREFORE, for the mutual covenants and agreements herein contained, the parties agree as follows:

1. DEFINITIONS.a. “Auditor” means the legal entity known as __________________, and its

employees and agents.b. “Contract” means the negotiated contract, the terms, and conditions of the

RFP, the Auditor’s proposal made in response to the RFP, and any written clarifications or changes made in accordance with the provisions herein.

c. “IPERS” means the Iowa Public Employees’ Retirement System as it is defined in Iowa Code chapter 97B, and other relevant sections of the Iowa Code.

d. “Primary Auditor” means the lead and most senior auditor to be assigned to and provide direct services to IPERS.

e. “Supporting Auditor” means the less senior auditor that will support the Primary Auditor in providing direct services to IPERS.

2. PARTIES TO THE CONTRACT. This Contract shall be between _________________, hereinafter referred to as Auditor, and the Iowa Public Employees’ Retirement System, hereinafter referred to as IPERS, for actuarial audit services as specified by this Contract.

3. TERM OF CONTRACT. This Contract shall begin on ____________, 2019. The duration of the Contract shall be through _______, 2019.

4. DELIVERABLES. [See PART 1.D of the RFP.]

5. RETAINER FEES. This is a firm fixed price Contract. In exchange for the deliverables in Part 1.D, Auditor will received $ _________________.

[Performance-based fees will be included in this paragraph.]

6. TERMINATION OF CONTRACT. 6.1 Termination for cause: IPERS may terminate the Contract at any time after

fifteen calendar days’ written notice if the Auditor fails to carry out its provisions. IPERS shall provide the Auditor with fifteen calendar days’ written notice of conditions endangering performance. If after such notice the Auditor fails to remedy the conditions contained in the notice, IPERS may do one or more of the following:

• Exercise any remedy provided by law.• Terminate the Auditor's services.


• Seek monetary damages from the Auditor.

6.2 The Auditor shall not be considered to be in default under this Contract, nor shall monetary damages be assessed, if performance is delayed or made impossible by an act of God, or such other event that is beyond the reasonable control of the Auditor. In each such case, the delay or impossibility must be beyond the reasonable control and without the fault or negligence of the Auditor.

6.3 Should IPERS obtain a money judgment against the Auditor as a result of a breach of this Contract, the Auditor consents to such judgment being offset against monies owed the Auditor by IPERS under this or any other agreement with IPERS or the State of Iowa.

6.4 Amounts due to IPERS as monetary damages may be deducted by IPERS from any money payable to the Auditor pursuant to this or any other agreement. IPERS shall notify the Auditor in writing of any claims for damages on or before the date IPERS deducts such sums from money payable to the Auditor.

6.5 Should either party be in default of its obligations, the party not in default shall issue a written notice of default providing for an agreed time frame in which defaulting party shall have an opportunity to cure, provided that the cure is possible and feasible. If after opportunity to cure, the default remains, the party not in default may exercise any remedy provided by Iowa law.

6.6 Notwithstanding any other provisions of Contract, if funds anticipated for continued fulfillment of said Contract are at any time not forthcoming or sufficient, either through the failure of IPERS to receive appropriated funds, discontinuance, or material alteration of the program for which funds were provided, then IPERS shall give written notice as soon as practical documenting the lack of funding, discontinuance, or program alteration. Unless otherwise agreed to by the parties, the Contract shall become null and void on the last day for which appropriations were available.

6.7 Remedies of the Auditor in event of termination by IPERS. In the event of termination of this Contract for any reason, IPERS shall pay only those amounts, if any, due and owing to the Auditor for services actually rendered up to and including the date of termination of the Contract and for which IPERS is obligated to pay pursuant to this Contract. Payment will be made only upon submission of invoices and proper proof of the Auditor’s claim. This provision in no way limits the remedies available to IPERS under this Contract in the event of termination. However, IPERS shall not be liable for any of the following costs:

6.7.1 The payment of unemployment compensation to the Contractor’s employees;

6.7.2 The payment of workers’ compensation claims which occur during the Contract or extend beyond the date on which the Contract


terminates;

6.7.3 Any costs incurred by the Auditor in its performance of the Contract, including, but not limited to, startup costs, overhead, or other costs associated with the performance of the Contract;

6.7.4 Any taxes that may be owed by the Contractor in connection with the performance of this Contract, including, but not limited to, sales taxes, excise taxes, use taxes, income taxes, or property taxes.

6.8 Termination at will. IPERS may terminate the Contract without penalty on any day by giving written notice to the Auditor at least 30 calendar days prior to the termination. The Auditor may terminate the Contract without penalty on any given day by giving written notice to IPERS at least 180 days prior to the termination.

7. EQUAL EMPLOYMENT OPPORTUNITIES. The Auditor is prohibited from engaging in discriminatory employment practices forbidden by federal and state law, or executive orders pertaining to Equal Employment Opportunity.

8. AUDIT AND EXAMINATION OF RECORDS. The Auditor agrees that the Auditor of the State of Iowa, or any authorized representative of IPERS, and where federal funds are involved, the Comptroller General of the United States or any other representative of the United States Government, shall have access to, and the right to examine, audit, excerpt, and transcribe any directly pertinent books, documents, papers, and records of the Auditor relative to services performed, orders, invoices, or payments of this Contract.

8.1 All records relating to this Contract shall be retained by the Auditor for five years following the date of final payment or completion of any required audit, whichever is earlier.

8.2 Compliance with this clause does not relieve the Auditor from retaining any records required by other laws or regulations of federal, state, or local governmental units. The Auditor will not be eligible for additional payments from IPERS, for expenses incurred, to comply with the foregoing audit requirements.

9. CONTRACT CHANGES. Changes in contractual provisions or services to be furnished under the Contract may be made only in writing and must be approved mutually by the Auditor and IPERS.

10. INDEMNIFICATION AND LIABILITY RESTRICTIONS.

10.1 The Auditor will indemnify IPERS against liability for any suits, actions, or claims arising from or relating to the performance of the Auditor under this Contract.

10.2 IPERS has no obligation to provide legal counsel or defense to the Auditor if a suit, claim, or action is brought against the Auditor or its subcontractors as a result of the Auditor's performance of its obligations


under the Contract. In addition, IPERS has no obligation for the payment of any judgments or the settlement of any claims against the Auditor as a result of the Auditor's performance of its obligations under the Contract. The Auditor shall immediately notify IPERS of any claim made or suit filed against the Auditor resulting from the Auditor's obligations under the Contract. The Auditor will cooperate, assist, and consult with IPERS in the defense or investigation of any claim made or suit filed against IPERS resulting from the Auditor's performance under the Contract.

10.3 The Auditor agrees to indemnify and hold IPERS, its Chief Executive Officer, Managers, Board, Benefits Advisory Committee, elected and appointed officials, and employees harmless from any and all liabilities, damages, settlements, judgments, costs, and expenses, including reasonable attorney fees of IPERS staff or of the Iowa Attorney General's Office, and the costs and expenses and attorney fees of other counsel IPERS may retain, related to or arising from:

10.3.1 Property damage, personal injury, death, loss costs, expense or other harm arising out of, resulting from, relating to or connected with any act or omission by the Auditor, its divisions, subsidiaries, partners, principals, employees, agents, elected or appointed officials, officers, and directors in fulfilling this Contract; or

10.3.2 Claims for infringement of patents, trademarks, trade dress, trade secrets, or copyrights arising from this Contract; or

10.3.3 Any breach or any claimed breach of this Contract by the Auditor or by any of its partners, principals, officers, directors, employees, and agents.

10.4 IPERS shall not be responsible for action taken by the Auditor, its partners, principals, shareholders, employees, officers, elected or appointed officials, or its agents in knowing violation of any federal, state, or local law, or that of a foreign country.

10.5 In the event that either party deems it necessary to take legal action to enforce any provisions of the Contract, and in the event that IPERS prevails, the Auditor agrees to pay costs and fees at all stages of litigation as set by the court or hearing officer. Legal action shall include administrative proceedings.

11. TAXES. IPERS is exempt from federal excise taxes, and no payment will be made for any taxes levied on the Auditor’s wage payments. IPERS is exempt from state and local sales and use taxes on the services supplied pursuant to this Contract. In the event that the Auditor is in arrears in payment of any State taxes that are due to the State of Iowa, the State may offset any taxes in arrears from payments to the Auditor under the Contract.

12. SECURITY, CONFIDENTIALITY, AND OWNERSHIP OF DATA.

12.1 Access to Confidential Data. The Auditor’s employees, agents, and


subcontractors may have access to confidential data maintained by IPERS to the extent necessary to carry out its responsibilities under the Contract. The Auditor shall presume that all information received pursuant to this Contract is confidential unless otherwise designated by IPERS. The Auditor shall provide to IPERS a written description of its policies and procedures to safeguard confidential information. Policies of confidentiality shall address, as appropriate, information conveyed in verbal, written, and electronic formats. The Consulting Auditor shall remain the responsible authority in charge of all data collected, used, or disseminated by the Auditor in connection with the performance of the Contract.

The Auditor shall provide adequate supervision and training to its agents, employees, and subcontractors to ensure compliance with the terms of this Contract. The private or confidential data shall remain the property of IPERS at all times.

12.2 No Dissemination of Confidential Data. No confidential data collected, maintained, or used in the course of performance of the Contract shall be disseminated except as authorized by law and with the written consent of IPERS, either during the period of the Contract or thereafter. Any data supplied to or created by the Auditor shall be considered the property of the Agency. The Auditor must return any and all data collected, maintained, created, or used in the course of the performance of the Contract in whatever form it is maintained promptly at the request of IPERS.

12.3 Subpoena. In the event that a subpoena or other legal process is served upon the Auditor for records containing confidential information, the Auditor shall promptly notify IPERS and cooperate with IPERS in any lawful effort to protect the confidential information.

12.4 Reporting of Unauthorized Disclosure. The Auditor shall immediately report to IPERS any unauthorized disclosure of confidential information.

12.5 Survives Termination. The Auditor’s obligation under this Contract shall survive termination of this Contract.

13. RIGHTS IN PRODUCTS. IPERS retains all rights to the services and deliverables, and other results of the Contract. These rights exclude any copyrighted materials by the Auditor that are utilized by IPERS. The Auditor may not reproduce or otherwise use the products of this Contract without the written consent of IPERS.

14. WARRANTY AGAINST CONTINGENT FEES. The Auditor warrants that no person or selling agency has been employed or retained to solicit and secure this Contract upon an agreement or understanding of commission, percentage, brokerage, or contingency fee except bona fide employees maintained by the Auditor for the purpose of securing business. For breach or violation of this warranty, IPERS shall have the right to immediately terminate this Contract without liability other than for services already performed, or in IPERS’ discretion, to deduct from the


Contract price or to otherwise recover the full amount of such commission, percentage, brokerage, or contingency.

15. CERTIFICATION OF INDEPENDENT PRICE DETERMINATION. By signing this Contract, the Auditor certifies that its prices in this Contract have been arrived at independently, without consultation, communication, or agreement, for the purpose of restricting competition, as to any matter relating to such prices with any competitor. No attempt was made by the Auditor to induce any other person or firm to submit or not submit a proposal for the purpose of restricting competition.


16. CONTRACT. This Contract between IPERS and the Auditor shall include the negotiated Contract, the terms and conditions of the RFP, the Auditor’s proposal made in response to the RFP, and any written clarifications or changes made in accordance with the provisions herein. In the event of conflict between the documents, the rights of IPERS and the Auditor shall be determined by first examining this agreement, then examining any written clarifications or changes that follow the effective date of this Contract, then the RFP, and finally the Auditor’s response to the RFP.

17. RELEASE OF INFORMATION ABOUT THIS CONTRACT. News releases or other material pertaining to this Contract shall not be made available to the public, the Auditor's clients, or potential clients without prior written approval of IPERS.

18. AUTHORITY OF IPERS. IPERS shall determine the quantity, quality, and acceptability of work under this Contract. IPERS shall decide all questions regarding performance and fulfillment of the Contract, including the obligations of the Auditor.

19. ASSIGNMENT. The Auditor shall not assign the Contract in whole or in part or any payment arising from the Contract without prior written consent of IPERS and subject to such conditions and provisions as IPERS may deem necessary.

20. PROHIBITION AGAINST GRATUITIES. Iowa law provides that it is a felony to offer, promise, or give anything of value or benefit to an elected official, public official, public employee, candidate, or that person’s immediate family member, with the intent to influence that person's acts, opinion, judgment, or exercise of discretion with respect to that person's duties. In addition to any criminal and civil penalties, IPERS may, by written notice to the Auditor, terminate this Contract, if the Auditor violates this section.

21. USE OF THIRD PARTIES AND SUBCONTRACTORS. IPERS acknowledges that the Auditor may contract with third parties for the performance of any of the Auditor’s obligations under this Contract. All subcontracts shall be subject to prior approval by IPERS. The Auditor may enter into these contracts to complete the project provided that the Auditor remains responsible for all services performed under this Contract. All restrictions, obligations, and responsibilities of the Auditor under this Contract shall also apply to the subcontractors. IPERS shall have the right to request the removal of a subcontractor from the Contract for good cause.

22. WORKERS’ COMPENSATION AND UNEMPLOYMENT INSURANCE. During the term of the Contract, the Auditor shall provide and maintain for all employees of the Auditor engaged in work under this Contract, workers' compensation and unemployment insurance as required by applicable law.

23. LIABILITY, MALPRACTICE, AND/OR ERRORS AND OMISSIONS INSURANCE. The Auditor shall maintain malpractice and/or an Errors and Omissions Insurance Policy in the amount of at least $3,000,000. Additionally, the Auditor shall maintain adequate business insurance to include an umbrella liability policy of at least $1,000,000 per occurrence or $5,000,000 total. Coverage under these policies must include protection from the fraudulent conduct and breach of


fiduciary responsibility of the Auditor. Evidence of insurance shall be furnished at Contract signing and upon request.


24. JURISDICTION OF DISPUTES. This Contract shall be governed under Iowa law. Jurisdiction over disputes involving this Contract, not settled by mutual consent of the parties, shall be solely in the courts of the State of Iowa and shall be tried in Polk County, Iowa District Court, or the United States District Court for the Southern District of Iowa, if jurisdiction is appropriate in federal court.

25. AUDITOR PERSONNEL. IPERS may request replacement of any of the Auditor’s personnel believed unable to carry out the responsibilities of this Contract. IPERS shall approve replacement personnel. Such approval shall not be unreasonably withheld. Such approval shall in no way lessen the Auditor’s responsibility for the proper selection, assignment, management, and discipline of the Auditor’s employees.

26. AUDITOR’S TERMINATION AND TRANSITION DUTIES. If this Contract is terminated with or without cause, not renewed, or if the Auditor is not the successful bidder at the next RFP process, the Auditor, upon the receipt of notice from IPERS, shall:

26.1 Cease work under this Contract and take all necessary or appropriate steps to limit disbursements and minimize costs, and furnish a report within thirty (30) days of the date of notice of termination, describing the status of all work under the Contract, including, without limitation, results accomplished, conclusions resulting therefrom, or any other matters IPERS may require.

26.2 Immediately cease using and return to IPERS any personal property, records, data, or materials, whether tangible or intangible, provided by the provided by IPERS to the Auditor, unless otherwise directed by IPERS.

26.3 Comply with IPERS’ instructions for the timely transfer of any active files and work product(s) produced by the Auditor under this Contract.

26.4 Cooperate in good faith with IPERS, its employees, agents, and contractors during the transition period between the notification and the substitution of any replacement contractor.

26.5 Immediately return to IPERS any payments made by IPERS for services that were not rendered by the Auditor.

27. INDEPENDENT CONTRACTOR STATUS. It is expressly understood and agreed that the Auditor will act an as independent contractor in performance of this Contract. No provision hereunder shall be intended to create an employer/employee relationship with respect to the Auditor’s employees and IPERS nor shall this Contract be construed to create a partnership or joint venture with respect to the services and deliverables, or otherwise.

28. INTEGRATION. This Contract represents the entire agreement between the parties and neither party is relying on any representation that may have been made which is not included in this Contract.

29. HEADINGS OR CAPTIONS. The paragraph headings or captions are for


identification purposes only and do not limit or construe the contents of the paragraphs.


30. SUPERSEDES FORMER AGREEMENTS. This Agreement supersedes all prior Agreements between the Auditor and IPERS for the services provided in connection with this Agreement.

31. AUDITOR CHANGES. The Auditor shall provide notification to IPERS concerning changes in the Auditor’s organizational relationships, ownership, professional staff, or services, which may have an impact on the Auditor’s performance under this Contract.

32. NOTICE: Any notice, advice, or report to be given pursuant to this Contract shall be delivered or mailed to:

FOR IPERS:

Donna M. Mueller, Chief Executive OfficerIowa Public Employees’ Retirement System7401 Register Drive, P.O. Box 9117Des Moines, Iowa 50306-9117E-mail: [email protected]: 515-281-0070Fax: 515-281-0045

FOR AUDITOR:

33. SEVERABILITY. If any provision of this Agreement is deemed invalid or unenforceable, the remainder shall be valid and enforceable.

34. WAIVER OF INFORMALITIES. Failure of IPERS at any time to require strict performance of any provision of this Contract shall not constitute a waiver of that provision nor in any way limit the enforcement of the provision.

35. COUNTERPARTS. This Contract may be executed in any number of counterpart copies, each of which when fully executed shall be considered as an original.

36. INVOICES. The Auditor shall submit an invoice pursuant to the performance-based payment schedule as agreed to by the Auditor and IPERS. IPERS shall be permitted a reasonable period to verify that the invoiced services were rendered and pay the invoice. The Auditor shall not be entitled to any interest unless provided for under Iowa law.

37. ADHERENCE TO ETHICS POLICY. The Auditor acknowledges that it has been provided with a copy of the IPERS Ethics Policy, and agrees to comply with that policy as a material requirement under this Contract. The Auditor agrees that, except as otherwise disclosed and preapproved by IPERS, it shall not be involved in relationships with IPERS’ Key Employees or with any other party providing products and/or services to IPERS where the relationships would constitute a conflict of interest under the IPERS Ethics Policy. In addition, the Auditor agrees to certify upon IPERS’ reasonable request that the provisions of this paragraph continue to be true, and also to promptly notify IPERS and request a ruling using


the IPERS disclosure statement at any time when the provisions of the paragraph may no longer be true because of a potential or actual conflict of interest.


IN WITNESS, WHEREOF the parties have agreed to all provisions contained herein and has executed this Agreement on the date indicated.

IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

By ___________________________________________ Donna M. Mueller, Chief Executive Officer

Date: _______________________

[AUDITOR]

By ___________________________________________ [Name of person that can bind Auditor] [Title]

Date: ________________________

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