State of Connecticut

State of Connecticut Office of the State Comptroller
Deferred Compensation (Section 457) Program
Request for Proposals (RFP) - June 9, 1997


    On January 3, 1997, the State of Connecticut, acting through the Office of the State Comptroller, issued a Request for Proposals (RFP) seeking the services of a "full scope" Third Party Administrator (TPA) for its Section 457 Deferred Compensation Program (457 Program). In accordance with Section VIII of the January 3, 1997 RFP, OSC exercised its right to reject all proposals received, having determined that the state's interests would be best served by retaining a "limited scope", rather than a "full scope", TPA for the 457 Program; accordingly, this document is being issued in an effort to fulfill that determination. Along these lines, please note that while the services which will be required of the TPA are narrower than those described in the January 3, 1997 RFP, OSC's policy objectives for the 457 Program are essentially unchanged from their previous presentation.


    OSC, on behalf of the State of Connecticut, is soliciting proposals from firms qualified to serve as TPA for its 457 Program during the period from January 1, 1998 to December 31, 2001.

    OSC anticipates that during the course of the four year agreement it seeks to negotiate, the TPA selected will face two over-arching administrative tasks, as follows:

    Phase 1. Transitioning the Existing 457 Program. The TPA will be responsible for transitioning the four authorized institutions of the existing 457 Program into its new administrative environment and, working with OSC, refine their investment offerings so as to assure congruence with policy objectives.
    Phase 2. Implementation of Mutual Funds in the 457 Program. During the 1997 session of the Connecticut General Assembly, OSC successfully pursued legislation which will revise the 457 Program so as to allow for direct participant investment in mutual funds; as currently structured, the 457 Program limits investment alternatives to insurance-style "annuity wraps" and life insurance products. Assuming ratification of this legislative initiative by the Governor, the TPA will be responsible for implementing mutual funds options in the 457 Program under OSC's direction and guidance.

    In selecting a TPA and performing the two over-arching tasks discussed herein, it is OSC's firm objective for there to be no budgetary impact on the State of Connecticut.


    The 457 Program was established in 1974 in accordance with provisions of Public Act No. 73-578 (codified as Connecticut General Statutes, Section 5-264a). Section 5-264a has been revised several times since 1973, but the benefit offered to state employees has not changed substantially; a copy of Section 5-264a is attached hereto as Exhibit "A". Under Internal Revenue Code, Section 457, state employees can enter into agreements with their employer to defer payment of a defined portion of current compensation until retirement or separation from service. The advantages offered to state employees for participating in the 457 Program include the ability to defer paying income tax on the deferred amount until it is paid or made available to them and, at the same time, serve as a retirement income for their future. As provided by the Connecticut General Statutes, the administration of the 457 Program shall be under the direction of OSC, which is empowered to enter into contracts with state employees to defer earned income and with other entities to provide the necessary investment vehicles. In the past, OSC has only contracted with insurance companies to act as authorized institutions for the 457 Program; currently, there are four such authorized institutions:

    1. Aetna Investment Services, Inc.
    2. Hartford Life Insurance Companies
    3. Travelers Life Insurance Company
    4. Phoenix Home Life Mutual Insurance Company

    The authorized institutions are responsible for explaining the advantages, as well as any disadvantages, to state employees who may be considering participating in the 457 Program. The insurance companies maintain the records of all participants, provide quarterly reporting to each participant, and are the investors of the funds in the 457 Program. Each of the authorized institutions offers a selection of investment possibilities to the participants; however, these offerings are, by statute, limited to insurance-style "annuity wraps" and life insurance products. Although OSC is responsible for "due care" in selecting the providers approving the investment vehicles, the participants assume the risk of any loss from decreases in the values of the 457 Program's assets. The State is liable to the participants for only the pro rata shares of the market value of 457 Program assets.

    As allowed under the Connecticut General Statutes, OSC is under contract with a private corporation to assist with the administration and servicing of the 457 Program; this entity, known as the Plan Consultant, is: Financial & Investment Services, Inc. of Cromwell, Connecticut. The Plan Consultant is compensated under agreements it negotiates with the four authorized institutions of the 457 Program. OSC anticipates that the Plan Consultant's responsibilities will be assumed by the TPA and, for this reason, the Financial & Investment Services agreement will be terminated as a function of the RFP.

    Set forth in Exhibit "B" are the asset values and number of 457 Program participants for the past four fiscal years. Exhibit "C" allocates these asset values and participant members among the four authorized institutions for the past three fiscal years.

    As apparent from the growth in the number of participants reflected in Exhibits "B" and "C", the 457 Program has been popular with state employees. However, even with these increases in participation and asset value, the administration of the 457 Program has remained shared between OSC and the four authorized institutions and relatively uncomplicated. OSC maintains a full-time staff of two who process the necessary paperwork for contributions, distributions, and any changes ordered by participants; additionally, a portion of the activities of two OSC Managers is devoted to the 457 Program and typically involve such matters as: hardship withdrawals; review and approval of investment vehicles; compliance issues; and problem resolution of a general nature. In recent years, the Plan Consultant has performed specialized functions on an as needed basis.


    Set forth in Exhibit "D" to this RFP are the major responsibilities OSC intends to delegate to the TPA for the 457 Program; Exhibit "D" also lists responsibilities OSC intends to delegate to the 457 Program's authorized institutions along with those it plans to retain. The responsibilities contained in Exhibit "D" are not intended to be exhaustive, but rather an expression in summary fashion of the most significant administrative tasks associated with the 457 Program. To the extent that duties are not listed in Exhibit "D", OSC reserves the right to delegate them in a manner consistent with the "limited scope" approach adopted by this RFP.


    In order to be considered, each firm responding to this RFP must, at a minimum, possess the following qualifications:

    1. Organizational Experience

      The firm must have been in operation for at least five continuous years as of December 31, 1997.

    2. Professional Experience

      The key professionals must have at least a three year history while at the firm of providing administrative services for Section 457, Section 401(k), or Section 403(b) plans as of December 31, 1997.

    3. Plans Under Administration

      The firm must have a minimum of five (5) Section 457, Section 401(k), or Section 403(b) plans, each with at least 5,000 participants, to which it provides administrative services as of December 31, 1997. Preference may be given to firms with substantial experience in Section 457 plans.

    1. Each proposal must include the following:
      Title Page
      The title page should indicate the date, subject, name of the contractor, and the address, telephone number, name, and title of the contractor's contact person.
      A description of the office that would support the 457 Program, including its geographic location, staffing level, the background, experience, and qualifications of personnel, as well as other available resources.
      Minimum Qualifications
      Demonstrate that your firm possesses the minimum qualifications stipulated in Section IV of this RFP.
      Describe your experience specific to the services requested in this RFP, including the relevant experience of the principal(s) who would be assigned to this engagement. List all other comparable government agencies, corporations, and organizations that your firm has provided these services for in the past two (2) years, specifying those with a unionized work force.
      TPA Responsibilities
      For each of the responsibilities listed in Exhibit "D", contractors must supply a narrative which discusses: (1) the general approach that the contractor would take with respect to the task under consideration; (2) the contractor's experience performing the specific responsibility for a client similar to the State of Connecticut; and (3) issues pertaining to each which need to be identified and resolved prior to implementation. Contractors are also encouraged to discuss responsibilities which may not be included in Exhibit "D" but, in its judgment, belong to the core of duties required of a "limited scope" TPA.
      Transition Plan
      Discuss in a preliminary fashion your plan for transitioning the 457 Program from its current configuration to the administrative model contemplated by this RFP.
      Names, addresses, and phone numbers of individuals who can serve as references.
      Work Samples
      Work samples relevant to the scope of this RFP must be attached to the contractor's proposal; however, it is only necessary to submit one copy of each sample for consideration.
      Conflict of Interest
      Disclose any current or past (within the last two years) business relationships which may pose a conflict of interest, including all business relationships with the 457 Program's authorized institutions, their parent companies, subsidiaries, and subcontractors.
      Affirmative Action
      See Section XI, Paragraph 16 of this RFP.
      Describe fully a suggested mechanism for fee payment given OSC's commitment to retain a "limited scope" TPA for the 457 Program while avoiding direct budgetary impact.
      Executive Summary
      At your firm's option, an executive summary may be included with your proposal.
    2. Each firm must submit an original plus four (4) copies of its proposal in loose-leaf binders to:

      Retirement & Benefit Services Division
      Office of the State Comptroller
      55 Elm Street, Third Floor
      Hartford, Connecticut 06106
      Attention: Steven Weinberger, Director

    3. Firms furnished a copy of this RFP intending to make a proposal are requested to submit a letter of intent to Mr. Weinberger no later than 4:30 p.m. on Wednesday, June 25, 1997. Those not intending to make a proposal are asked to submit a negative reply.
    4. Firms that have questions regarding this RFP should submit them in writing to Mr. Weinberger at the address set forth above no later than 4:30 p.m. on Wednesday, June 25, 1997. Answers to such questions will be transmitted on or before Monday, June 30, 1997. No phone calls will be accepted relative to this RFP.
    5. Proposals must be received on or before 4:30 p.m. on Friday, July 11, 1997.


    Request for Proposals and Response Phase

    June 9, 1997 Release of RFP by OSC
    June 25, 1997 Letters of Intent due at OSC
    June 25, 1997 Questions due at OSC
    June 30, 1997 OSC answers questions received
    July 11, 1997 Proposals due at OSC

    Review and Selection Schedule

    July 14 - 25, 1997 Reading and Scoring of Proposals by Screening Committee
    July 28 - August 8, 1997 Semi-Finalist Interviews see note 1
    August 11 - 22, 1997 Finalist Interviews see note 2
    August 22, 1997 TPA Selection see note 3
    August 25 - September 30, 1997 Contract Negotiations
    January 1, 1998 TPA Conversion see note 4


    1. Semi-Finalist Interviews. Firms selected as semi-finalists will be expected to make a presentation to a Screening Committee at OSC offices in Hartford, Connecticut. Each presentation will be followed by a question and answer period. The number of firms to be selected for semi-final interviews has yet to be determined; however, the expectation is that the number will not exceed five.
    2. Finalist Interviews. Firms selected for a final interview will be expected to make a presentation, followed by a question and answer period, to the State Comptroller and certain members of her staff at OSC Offices in Hartford, Connecticut. The number of finalists to be selected for interviews has yet to be determined; however, the expectation is that this number will not exceed three.
    3. Selection of the TPA is expressly conditioned upon a site visit by up to three OSC representatives, to be conducted at a mutually agreeable date and time. All expenses incurred by OSC in making the site visit shall be borne exclusively by the TPA and treated as a cost of responding to this RFP.
    4. TPA Conversion. It is OSC's expectation that, following the successful conclusion of contract negotiations, the TPA will develop and thereafter follow a work plan which has as its objective the implementation of Phase 1 and Phase 2 of this RFP on or about January 1, 1998.


    Each proposal will be evaluated by a Screening Committee using the following criteria to determine which contractor is most capable of implementing OSC's requirements, as follows:

    1. Contractor's experience with and ability to do the specific work, including experience in the administration of Section 457 Programs.
    2. Contractor's understanding of the project's purpose and scope, as evidenced by the proposed approach and the level of effort.
    3. Competitiveness of proposed cost.
    4. Availability and competence of personnel.
    5. Conformity with specifications contained herein.
    6. Demonstration of commitment to affirmative action by full compliance with the regulations of the Commission on Human Rights and Opportunities.

      7) At the option of the Screening Committee, an oral presentation.


    OSC reserves the right to award in part, to reject any and all proposals in whole or in part, to waive technical defects, irregularities and omissions if, in its judgement, the best interest of the State will be served.


    Conformance - All responses to this RFP must conform to these instructions. Failure to conform may be considered appropriate cause for rejection of the response.

    Delivery of Responses - RFP responses must be in sealed envelopes upon which a clear indication has been made of the RFP reference title, as well as the date and time the proposal is due. The name and address of the vendor must appear on the envelope. FAX responses are not acceptable.

    Structure of Response - Contractors must structure the responses as outlined in this RFP.

    Exclusion of Taxes from Prices - The State of Connecticut is exempt from the payment of excise, transportation, and sales taxes imposed by the Federal Government and the State. Such taxes must be excluded from quoted prices.

    Signature and Responsible Persons - The proposal must be signed by an authorized official. The proposal must also provide name, title, address, and telephone number for individuals with authority to negotiate and contractually bind the contractor, and for those who may be contacted for the purpose of clarifying the information provided.

    "Not to Exceed" Quotations - All cost estimates will be considered as "not to exceed" quotations.


    Any contractor responding to this RFP must be willing to adhere to the following conditions and must so state in its submission:

    1. Acceptance or Rejection by the State - The state reserves the right to accept or reject any or all proposals submitted for consideration. All proposals will be kept sealed and safe until the deadline for submission has passed.
    2. Conformance with Statutes - Any contract awarded as a result of this RFP must be in full conformance with statutory requirements of the State of Connecticut.
    3. Ownership of Proposals - All proposals in response to this RFP are to be the sole property of the state, and subject to the provisions of Section 1-19 of the Connecticut General Statutes (Freedom of Information).
    4. Ownership of Subsequent Products -Any product, whether acceptable or unacceptable, developed under the contract awarded as a result of this RFP is to be the sole property of the state unless stated otherwise in the RFP or contract.
    5. Availability of Work Papers - All work papers and data used in the process of performing this project must be available for inspection by the State of Connecticut Auditors of Public Accounts for a period of three (3) years or until audited.
    6. Timing and Sequence - Timing and sequence of events resulting from this RFP will ultimately be determined by the state.
    7. Stability of Proposed Prices - Any price offerings from contractors must be valid for a period of one hundred eighty (180) days from the due date of contractor proposals.
    8. Oral Agreements - Any alleged oral agreement or arrangement made by a contractor with any agency or employee will be superseded by the written agreement.
    9. Amending or Canceling Requests - The state reserves the right to amend or cancel this RFP, prior to the due date and time, if it is in the best interests of the state.
    10. Rejection for Default or Misrepresentation - The state reserves the right to reject the proposal of any contractor which is in default of any prior contract or for misrepresentation.
    11. State's Clerical Errors in Awards - The state reserves the right to correct inaccurate awards resulting from its clerical errors.
    12. Rejection of Qualified Proposals - Proposals are subject to rejection in whole or in part if they limit or modify any of the terms and conditions and/or specifications of the RFP.
    13. Contractor Presentation of Supporting Evidence - A contractor, if requested, must be prepared to present evidence of experience, ability, service facilities, and financial standing necessary to satisfactorily meet the requirements set forth or implied in the proposal.
    14. Changes to Proposal - No additions or changes to the original proposal will be allowed after submittal. While changes are not permitted, clarification at the request of the agency may be required at the contractor's expense.
    15. Collusion - By responding, the contractor implicitly states that the proposal is not made in connection with any competing contractor submitting a separate response to the RFP, and is in all respects fair and without collusion or fraud. It is further implied that the contractor did not participate in the RFP development process, had no knowledge of the specific contents of the RFP prior to its issuance, and that no employee of the agency participated directly or indirectly in the contractor's proposal preparation.
    16. Include a summary of your firm's experience with affirmative action. This information is to include a summary of your affirmative action plan and your affirmative action policy statement.

      Section 4-114a-3(10) of the Regulations of Connecticut State Agencies requires agencies to consider the following factors when awarding a contract which is subject to contract compliance requirements:

      1. The contractor's success in implementing an affirmative action plan;
      2. the contractor's success in developing an apprenticeship program complying with Section 46a-68-1 to 46a-68-14 of the Connecticut General Statutes, inclusive;
      3. The contractor's promise to develop and implement a successful affirmative action plan;
      4. The contractor's submission of EEO-1 data indicating that the composition of its work force is at or near parity when compared to the racial and sexual composition of the fork force in the relevant labor market area; and
      5. The contractor's promise to set aside a portion of the contract for legitimate small contractors and minority business enterprises, where applicable. (See Section 32-9e of the General Statutes.)

      A "Notification to Contractors" form is attached, to be read, signed, and returned by the contractor (Attachment I).

      Also attached is a "Contract Compliance Requirements" reporting form, which the contractor must complete, sign, and return; such form will be sent by OSC to the Commission on Human Rights and Opportunities (Attachment II).

    17. Expenses - Contractors who respond to this RFP, including semi-finalists and finalists, will not be reimbursed by the State for any costs and expenses incurred in connection with this process, such as travel expenses relating to an oral presentation and costs incurred by OSC representatives on any site visits.

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