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HomeMy WebLinkAbout25D - RFQ - AGMT - DEFERRED COMPREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: 19, 2017 TITLE: AUTHORIZATION TO ISSUE REQUEST FOR PROPOSAL FOR RECORDKEEPING & INVESTMENT ADVISORY SERVICES FOR THE 457 DEFERRED COMPENSATION PLAN AND ADOPT THE AMENDMENTS TO THE CURRENT AGREEMENTS (STRATEGIC PLAN NO. 7,4) MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 16'Reading ❑ Ordinance on 2ndReading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Authorize staff to issue two Requests for Proposals: 1) for Recordkeeping and Communication Services and 2) for Investment Advisory Services pertaining to the 457 Deferred Compensation Plan. 2. Authorize the City Manager and Clerk of the Council to execute an extension with Great -West Financial to maintain services during the Requests for Proposals for recordkeeping and communication services pertaining to the 457 deferred compensation plan for a nine-month period beginning January 1, 2018 through September 30, 2018, subject to non -substantive changes approved by the City Manager and City Attorney. 3. Authorize the City Manager and Clerk of the Council to execute an amendment with Benefit Financial Services Group (BFSG), for plan and investment advisory services pertaining to the 457 deferred compensation plan for a one-year period beginning January 1, 2018 through December 31, 2018 for an amount not to exceed $20,000, subject to non -substantive changes approved by the City Manager and City Attorney. DISCUSSION Currently, the 457 Deferred Compensation Plan is administered through the Finance & Management Services Agency and as of November 30, 2017, maintains plan assets approximating $111.8 million with 1,169 participants. Great West Financial ("Great -West'), the Plan Sponsor, operating under its subsidiary Empower, has been engaged to provide administrative, recordkeeping and communication services for the plan with Benefit Financial Services Group ("BFSG") providing the investment advisory services. 25D-1 Agreement with Great -West Financial & BFSG December 19, 2017 Page 2 In 2014, the City retained the services of BFSG in order to enhance employee's investment experience. City finance staff in conjunction with BFSG, negotiated with Great -West to change the plan structure, which provided participants with greater fund transparency, better access, and varied investment options. The negotiated agreement allowed for greater expansion of fund selection and flexibility than provided under the former annuity -based contract. As a result of these efforts, employees participating in the plan experienced significantly reduced management, fund and participant fees. The terms, conditions and services that were negotiated by the City in 2014 will remain in full effect. The current plan and fee structure will remain unchanged. During the month of August 2017, staff was given administrative direction to evaluate the plan, its related services, and the 457 market to ensure that the investment and plan options currently provided to participants is the most cost-effective plan and highest quality of customer service. On September 19, 2017, the City Council adopted a third amendment for a three-month period with Great -West as well as a three-month agreement with BFSG. The three-month period was needed to allow staff to analyze the 457 market and determine the necessary next steps. As such, and in compliance with a core fiduciary best practice, staff is recommending the development and issuance of two Requests for Proposal ("RFP") (1. for Recordkeeping and Communication Services and 2. for Investment Advisory Services) in order to gauge what the 457 plan provider market can offer employees in additional plan benefits and quality of services. The 457 plan provider is a dynamic marketplace and is constantly changing as new plan providers enter the market on a periodic basis. Approval of these amendments will allow staff to develop and issue the RFP and related selection process. It is anticipated that staff will release an RFP no later than February 2018 and take approximately nine months to determine whether to stay with the current provider or select a new provider. The following is a preliminary timeline for each RFP: Recordkeeping : Communication Services Issuance of RFP February 2018 Responses Evaluated April 2018 Vendor Interviews/Selection May 2018 City Council Approval June 2018 Conversion Period August -September 2018 New Agreement October 1, 2018 25D-2 Agreement with Great -West Financial & BFSG December 19, 2017 Page 3 e 1 is Issuance of RFP August 2018 Responses Evaluated September 2018 Vendor Interviews/Selection October 2018 City Council Approval November 2018 New Agreement January 1, 2019 STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #7 Team Santa Ana, Objective #4 (Establish employee compensation that attracts and retains a highly qualified workforce). FISCAL IMPACT There is no fiscal impact associated with this action. All administrative fees pertaining to the services will be borne by the plan participants. Internal Revenue Code permits administrative reimbursement from plan assets, which will be utilized to offset fiduciary advisory, participant education and staffing costs related to the management of the 457 Plan. Francisco Gutierrez Executive Director Finance and Management Services Agency W Exhibits: 1. Agreement with Great -West Financial 2. Agreement with Benefit Financial Services Group 25D-3 25D-4 Exhibit 1 Amendment No. 4 Attached to and Forming part of AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES §457 Deferred Compensation Plan GROUP #98280-01 THIS AMENDMENT NO. 4 is entered into by and between Great -West Life & Annuity Insurance Company ("Great -West'), and/or any successor, assign or affiliate, and the City of Santa Ana ("the Plan Sponsor") With respect to the services to be provided by Great -West to the City of Santa Ana 457 Deferred Compensation Plan (hereinafter referred to as the "Plan"). Effective September 22, 2014, Great -West and the Plan Sponsor entered into the Agreement for Recordkeeping and Communication Services ("Agreement'), under which Great -West provides certain recordkeeping and communication services for the Plan'Sponsor with respect to the Plan; and Effective December 10, 2015, Great -West and the Plan Sponsor entered into Amendment No.1 ("Amendment No.1") to the Agreement, to renew the Agreement; and Effective October 10, 2016, Great -West and the Plan Sponsor entered into Amendment No.2 ("Amendment No.2") to the Agreement, to renew the Agreement; and Effective August 1, 2017, Great -West and the Plan Sponsor entered into an extension to the term; and Effective October 1, 2017, Great -West and the Plan Sponsor entered into Amendment No. 3 ("Amendment No. 3") to the Agreement, to renew the Agreement through December 31, 2017. NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other good and valuable consideration as herein provided, the parties agree to amend the Agreement as follows: 1. Pursuant to Section IX Agreement Term and Termination is amended to extend the term of the Agreement up to and including September 30, 2018. 2. Except as modified by this Amendment No. 4, and all prior amendments, all terms and conditions of the Agreement shall remain in full force and effect. 3. This Amendment No. 4 will take effect upon the date executed by both the Plan Sponsor and Great -West. City of Santa Ana Service Agreement Amend No 4 25D-5 IN WITNESS WHEREOF, the parties have caused this Amendment No. 4 to the Agreement to be executed, in duplicate, by their respective officers and agents thereunto duly authorized. For The City of Santa Ana Signature: Name: Title: For Great -West Life & Annuity Insurance Company Signature: Title: City of Santa Ana Service Agreement Amend No 4 25D-6 Date Date ATTEST: MARIA HUIZAR Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney Laura A. Rossini Senior Assistant City Attorney RECOMMENDED FOR APPROVAL: CITY OF SANTA ANA RAUL GODINEZ, II City Manager FRANCISCO GUTIERREZ Executive Director of Finance, and Management Agency [Signature Page for Amendment No. 4 to Agreement for Recordkeeping and Communication ServicesSection 457 Deferred Compensation Plan between Great -West and Cityof Santa Ana] 25D-7 25D-8 Exhibit 2 AGREEMENT TO PROVIDE FIDUCIARY AND INVESTMENT ADVISORY SERVICES PERTAINING TO THE 457 DEFERRED COMPENSATION PLAN THIS AGREEMENT is made and entered into this 19th day of December, 2017 by and between Benefit Financial Services Group, LLC, a California Limited Liability Corporation and SEC registered investment advisor and wholly=owned, indirect subsidiary of Focus Financial Partners (` kS(T" or "Consultant"), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS A. The City desires to retain a consultant having special skill and knowledge in in providing fiduciary advice in Plan and Investment Advisory services with the expertise to provide quarterly investment analysis, recommendations, and reports pertaining to the City's 457 Deferred Compensation Plan including the design, solicitation and implementation of customized solutions for deferred contribution plan and defined benefit plans. BFSG will assist the City in the transition, monitoring of plan asset fund transfers and deposits from the current structure with the City's 457 Plan Provider and Record -keeper to new.modern fund portfolio structure and subsequent Plan Provider Request for Proposal. B. Consultant represents that, it is able and willing to provide such services to the City. C. In undertaking the performance of this Agreement; Consultant represents that it is knowledgeable in its field and that any services performed by Consultant under this Agreement will be performed in compliance with such standards as may reasonably be expected from a professional consulting firm in the field. NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows: SCOPE OF SERVICES Consultant shall perform Fiduciary and Investment Advisory Services as set forth in the Scope of Services, attached hereto as Exhibit A, and incorporated by reference. 2. COMPENSATION a. City agrees to pay, and Consultant agrees to accept as total payment for its services, a fee of $5,000 per quarter. The total sum to be expended under this Agreement shall not exceed $20,000 during the tern of this Agreement. b. Payment by City shall be made within 45 days (forty-five) days following receipt of proper invoice evidencing work performed, subject to City accounting procedures. Payment need not be made for work which fails to meet the standards of performance set forth in the Recitals which may reasonably be expected by City. Page 1 of 9 25D-9 3. TERM . This Agreement shall commence on the date first written above for a one (I) year term from January 1, 2018, to December 31, 2018 unless terminated earlier in accordance with Section I5, below. ' 5. INDEPENDENT CONTRACTOR Consultant ,shall, during the entire term of this Agreement, be construed to be an independent contractor and not an employee of the City. This Agreement is not intended nor shall it be construed to create an employer-employee relationship, a joint venture "relationship, or to, allow the City to exercise discretion or control over the professional manner in. which Consultant performs the services which.are the subject matter of this Agreement; however, the services to be provided by Consultant shall be provided in a manner consistent with all applicable standards and regulations governing such services. Consultant shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes. 6. OWNERSHIP OF MATERIALS This Agreement creates a non-exclusive and perpetual license for Cityto copy, use, modify, reuse, or sublicense any and All copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of Authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require all subcontractors to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subcontractor prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were provided to Consultant by the City. City shall not be limited in any way in its use of the Documents and Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk. INSURANCE Prior to undertaking performance of work under this Agreement, Consultant shall maintain and shall require its subcontractors, if any, to obtain and maintain insurance as described below: a. Commercial General Liability Insurance. Consultant shall maintain commercial general liability insurance naming the City, its officers, employees, agents, volunteers and representatives as additional insured(s) and shall include, but not be limited to protection against claims arising from bodily and personal injury, including death resulting therefrom and damage to property, resulting from any act or occurrence arising out of Consultant's operations in the performance of this Agreement, including, without limitation, acts involving vehicles. The amounts of insurance shall be not less than the following: single limit coverage applying to Page 2 of 9 25D-10 bodily and personal injury, including death resulting therefrom, and property damage, in the total amount of $1,000,000 per occurrence, with $2,000,000 in the aggregate. Such insurance shall (a) name the City, its officers, employees, agents, and representatives as additional insured(s); (b) be primary and not contributory with respect to insurance or self-insurance programs maintained by the City; and (c) contain standard separation of insureds provisions. b. Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000 per occurrence. Such insurance shall include coverage for owned, hired and non -owned automobiles. C. Worker's Compensation Insurance. In accordance with'the provisions of Section 3700 of the Labor Code, Consultant, if Consultant has any employees, is required to be insured against liability for worker's compensation or to undertake self- insurance.. Prior to commencing the performance of the work under this Agreement, Consultant agrees to obtain and .maintain any employer's liability insurance with limits not less than $1,000,000 per accident, d. Professional liability (errors and omissions) insurance, with a combined single limit of not less than $1,000,000 per claim with $2,000,000 in the aggregate.. e. The following requirements apply to the insurance to be provided by Consultant pursuant to .this section: i. Consultant shall maintain all insurance required above in full force and effect for the entire period covered by this Agreement: ii. Certificates of insurance shall be furnished to the City upon execution of this Agreement and shall be approved by the City. iii. Certificates and policies shall state that the policies shall not be canceled or reduced in coverage or changed in any other material aspect without thirty (30) days prior written -notice to the City. iv. Consultant shall supply City with a fully executed additional insured endorsement. If Consultant fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the City with required proof that insurance has been procured and is in force and paid for, the, City shall have -the right, at the City's election, to forthwith terminate this Agreement. Such termination shall not affect Consultant's right to be paid for its time and materials expended prior to notification of termination. Consultant waives the right to receive compensation and agrees to indemnify the City for any work performed prior to approval of insurance by the City. 8. INDEMNIFICATION Consultant agrees to defend, and shall indemnify and hold.harmless the City, its officers, agents, employees, contractors, special counsel, and representatives from liability: (1) for personal injury, damages, just compensation, restitution, judicial or equitable relief arising out of claims for personal injury, including death, and_ claims for property damage, which may arise from the negligent operations of the Consultant, its subcontractors, agents, employees, or other persons Page 3 of 9 25D-11 acting on its behalf which relates to the services described in section I of this Agreement;- and (2) from any claim that personal injury, damages, just compensation, restitution, judicial or equitable relief is due by reason of the terms of or effects arising from this Agreement. This indemnity and hold harmless agreement applies to all claims for damages, just compensation, restitution, judicial or equitable relief suffered, or alleged to have been suffered, by reason of the events referred to in this, Section or by reason of the terms of, or effects, arising from this Agreement. The Consultant further agrees to indemnify, hold harmless, and pay all costs for the defense of the City, including fees and costs for special counsel to be selected by the City, regarding any action by third party challenging the validity of this Agreement, or asserting that personal injury, damages, just compensation, restitution, judicial or equitable relief due to personal or property rights arises by reason of the terms of, or effects arising from this Agreement. City may make all reasonable decisions with respect to its representation in any legal proceeding. Notwithstanding the foregoing, to the extent Consultant's services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent required by Civil Code Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant. 9. RECORDS Consultant shall keep records and invoices in connection with the work to be performed under this Agreement.. Consultant shall, maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures, and disbursements charged to the City for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearlyidentifiable. Consultant shall allow a representative of the City to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement during regular business hours. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 10. CONFIDENTIALITY If Consultant receives from the City information which due to the nature of such information is reasonably understood to be confidential and/or proprietary, Consultant agrees that it shall not use or disclose such information except in the performance of this Agreement, and further agrees to exercise the same degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information" shall include all nonpublic information. Confidential information includes not only written information, but also information transferred orally, visually, electronically, or by other means. Confidential information disclosed to either party by any subsidiary and/or agent of the other party is covered by this Agreement. The foregoing obligations of non-use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sources; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful possession of the Consultant without an obligation of confidentiality; (d) is required to be disclosed by operation of law; or (e) is independently developed by the Consultant without reference to information disclosed by the City. Page 4 of 9 25D-12 11. CONFLICT OF INTEREST CLAUSE Consultant covenants that it presently has no interests and 'shall not have interests, direct or indirect, which would conflict in any manner with performance of services specified under this Agreement. 12. DISCRIMINATION Consultant shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined, and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. Consultant affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 13. EXCLUSIVITY AND AMENDMENT This Agreement represents the complete and exclusive statement between the City and Consultant, and supersedes any and all other agreements, oral or written, between the parties. In the event of a -conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Consultant. The parties agree that any terms or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, the terms and "conditions hereof, shall not bind or obligate Consultant or the City. Each party to. this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which is not embodied herein. 14. ASSIGNMENT Inasmuch as this Agreement is intended to secure the specialized services of Consultant, Consultant may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null and void. Nothing in this Agreement shall be; construed to limit the City's ability to have any of the services which are the subject to this Agreement performed by City personnel or by other consultants retained by City. 15. TERMINATION This.Agreement maybe terminated by the City upon thirty (30) days written notice of termination. In such event, Consultant shall be entitled to receive and the City shall pay Consultant compensation for all services performed by Consultant prior to receipt of such notice of termination, subject to the following conditions: a. As a condition of such payment, the Executive Director may require Consultant to deliver to the City all work product(s) completed as of such date, and in such case such work product shall be the property of the City unless prohibited by law, and Page 5 of 9 25D-13 Consultant consents to the City's use thereof for such purposes as the City deems appropriate. b. Payment need not be made for work which fails to meet the standard of performance specified in the Recitals of this Agreement. 16. WAIVER No waiver of breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right or remedy. No waiver of any breach, failure or right, or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies. 17. JURISDICTION - VENUE This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action of proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 18. PROFESSIONAL LICENSES Consultant shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Consultant shall notify the City immediately and .in writing of its inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability "shall be cause for termination of this Agreement. 19. MISCELLANEOUS PROVISIONS a. Each undersigned represents and warrants that its signature herein below has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. b. All Exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. 20. NOTICE Any notice, tender, demand, delivery, or other communication pursuant to this Agreement shall be in writing and shall be deemed to be properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by fax or other telegraphic communication in the manner provided in this Section, to the following persons: Page 6 of 9 25D-14 To City: Clerk of the City Council City of Santa Ana 20 Civic Center Plaza (M=30) P.O. Box 1988 Santa Ana, CA 92702-1988 Fax: 714- 647-6956 With courtesy copies to: Executive Director of Finance and Management Services City of Santa Ana 20 Civic Center Plaza (M-17) P.O. Box 1988 Santa Ana, CA 92702 Fax: 714-647-5414 Sonia R. Carvalho City Attorney City of Santa Ana 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, Califomia'92702 Fax: 714- 647-6515 To Consultant: Darren Stewart, J.D. Vice President and Secretary 2040 Main Street Suite 150. Irvine, CA 92614 A party may change its address by giving notice in writing to the other party. Thereafter, any communication shall be addressed and transmitted to the new address. If sent by mail, communication shall .be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by fax, communication shall be effective or deemed to have been given twenty-four (24) hours after the time set forth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. For purposes of calculating these time frames,. weekends, federal, state, County or City holidays shall be excluded. Page 7 of 9 25D-15 IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written. ATTEST: Maria D. Huizar Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: R ., Laura A. Rossini Senior Assistant City Attorney RECOMMENDED FOR APPROVAL: FRANCIS ICO GUTIERREZ Executive Director Finance and Management Services Agency CITY OF SANTA ANA Raul Godinez, It City Manager BENEFIT FINANCIAL SERVICES GROUP Darren Stewart Vice President and Secretary Page 8 of 9 25D-16 EXHIBIT A SCOPE OF SERVICES 25D-17 BENEFIT FINANCIAL. SERVICES GROUP EXHIBIT A FIDUCIARY ADVISORY SERVICES: Prepare up to four Quarterly Investment Analysis Reviews for 457 Deferred Compensation Plan and meet with Plan Administrator Committee and Plan Investment Committee up to four times providing comprehensive Plan investment advisory and investment services. l) Said Quarterly Review shall include, but not limited to: • Market overview addressing the major markets, indices, sectors and the economic statistics affecting them; • In-depth portfolio summary, including fund and benchmark returns, style analysis and overall "portfolio return; • Analyze the Plan asset allocation by fund and underlying sector. The fund line-up will also be analyzed to determine the amount of overlap that may be occurring; • Detailed quantitative and qualitative examination of each mutual fund investment option within the Plan, including performance. numbers versus the category and index, manager style drift, risk/retuni, standard deviation, Sharpe Ratio, expense ratio, upside and downside capture and fund allocation; • Review City's Investment Policy to ensure it meets the needs of the City and that the investments and processes outlined within are being adhered; • Recommend possible fund alternatives when in conjunction with the Investment Committee, it is determined a change in fund line-up is necessary; 2) Perform fund searches as needed and make "watch list" recommendations 3) Assist in fund change implementations and update transitions 4) Prepare annual cost analysis and negotiate with vendor to potentially lower overall costs and recapture any excess revenues on behalfof Plan if applicable 5) Maintain and revise the Investment Policy Statement and Committee Charter as needed 6) Attend on-site meetings, and provide recorded minutes for each meeting or conference call .7) Assist in development of Request for Proposal for Plan Provider 25D-18