/ DRAFT
Market/Division/Tier 3 (Optional) | Practice Group/Tier 4 (Optional)
Proprietary & Confidential (Optional) / 1

Table of Contents

Instructions to Tenderers

Background, Specification and Award Criteria

Tender Questions

Form of Tender

1

Instructions to Tenderers

  1. Invitation to Tender

1.1.The London Borough of Southwark (the “Council”) invites tenders for the provision of passive investment management services in accordance with the Conditions of Contract (which are to be based on the Investment Management Association's Model Terms of Business together with a number of Council specific conditions (these Conditions of Contract are to be sent out to Tenderers as soon as reasonably practicable following the despatch of this ITT)), the Specification and other documents included or referred to in this Invitation to Tender. The contract that is to be awarded shall be for a period of ten (10) years, subject to earlier termination in accordance with the Conditions of Contract.

  1. Basis of Tenders

2.1.A contract or contracts will be awarded to the most economically advantageous tender or tenders, applying the evaluation criteria set out in this Invitation to Tender.

  1. TUPE

3.1.The Council considers that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) do not apply to this contract and will evaluate tenders accordingly. Tenders will be assumed not to provide for TUPE costs unless stated to the contrary. The Council makes no assurances about the effects of TUPE and tenderers are recommended to take their own legal advice.

  1. Information, Costs and Expenses

4.1.The Tenderer is responsible for obtaining all information necessary for preparing its Tender and shall bear all costs, expenses and liabilities incurred in connection with its preparation and delivery.

  1. Research and Investigation

5.1.The Tenderer is deemed for all purposes relating to its Tender, the Conditions of Contract and Specification to have read and understood them, to have carried out all necessary researches, investigations and enquiries at its own expense and to have satisfied itself as to the nature, extent and character of the Services and the extent of the premises, employees, materials, equipment and machinery which may be required, and any other matter which may affect its Tender.

5.2.The Tenderer shall have no claim against the Council in respect of the matters mentioned in condition 5.1 above. In particular (but without limitation) the Council shall make no payments to the Tenderer except as expressly provided for in the Contract, and no compensation or remuneration shall be payable by the Council because the nature, extent or character of the Services is different from that envisaged by the Tenderer.

  1. Further Information and Queries

6.1.The Tenderer may write to Caroline Watson, Pension Fund Investment Manager, London Borough of Southwark, Finance & Resources, 160 Tooley Street, London SE1 2TZ (Tel: 0207 525 4379) (E-mail: ) to request any reasonable information or raise any query relating to the Form of Tender, the Conditions of Contract or the Specification. Any such request or query must be received in sufficient time to allow the Council to respond no later than 6 days before the date specified in condition 9 as the date for the return of tenders. The Council shall endeavour to provide such information or clarify such query and shall advise all Tenderers of any information provided to a Tenderer as a result of any such request.

6.2.If a Tenderer has difficulty in complying with any specific provision of the Conditions of Contract or the Specification or wishes to propose any amendment to them, it should provide all information and evidence concerning the same as the Council may require. The Council may, at its discretion, consider the matter and may waive or amend the relevant provision without prejudice to all or any other provisions of the Conditions of Contract or Specification or any rights or powers of the Council. No such waiver or amendment shall bind the Council unless it is in writing and signed by Caroline Watson, Pension Fund Investment Manager.

  1. Tenders

7.1.A tender for performing the Services must be made on the Tender accompanied by:

(a)completed responses to the Tender Questions that are set out in this Invitation to Tender; and

(b)such further details or information reasonably requested by the Council.

  1. Signature of Tender

8.1.The Tender must be signed:

(a)where the Tenderer is an individual, by that individual;

(b)where the Tenderer is a partnership, by 2 authorised partners; or

(c)where the Tenderer is a company, by 2 directors, or by a director and the secretary of the company, such persons being authorised for that purpose.

8.2.and the Tenderer shall produce forthwith on the request of the Council documentary evidence of any authorisation referred to above.

  1. Delivery of Form of Tender

9.1.The Tender must be duly completed and delivered to Deborah Collins, Strategic Director of Communities, Law and Governance, London Borough of Southwark, 160 Tooley Street, London SE1 2TZ by no later than noon on 22 December 2011. Any Tender submitted after that date may not be considered. Where Tenders are delivered by courier or any method other than by external mail, they must be delivered to the reception desk at the offices of the London Borough of Southwark, 160 Tooley Street, London SE1 2TZduring normal working hours and a receipt obtained. Tenders should not be handed to any other Council Officer or Member.

9.2.The Tender and associated documents must be sealed in an envelope bearing the return label provided by the Council which shall not bear any name or mark by which the Tenderer could be identified. If more than one envelope/package is used this should be marked ‘Number [ ] of [ ] envelopes/packages’.

9.3.Tenders and supporting documents shall be in English and be submitted in the format and quantity set out in conditions 9.4 and 9.5.

9.4.Tenderers are required to submit 2bound hard copies, 1unbound hard copy and 1 copy on CD-Rom or memory stick (compatible with Microsoft Word 2000 and Excel). In the event of any discrepancy between the hard copy and CD-Rom or memory stick copy, the hard copy shall prevail. The name of the Tenderer should be included on each page of the hard copy.

9.5.If Tenders are to be submitted in separate volumes, each page should be numbered consecutively with the volume using the following format – Volume [ ] page [ ] of [total page number] Each volume shall contain a contents list for that volume bound immediately inside the cover. Any drawings or diagrams included within the Tender shall be numbered.

9.6.The Tenderer must keep its tender valid for acceptance for 90 days from the date set out in condition 9.1 above. If the Council has not accepted a tender within this period it shall remain in force without variation. The Tenderer may at any time after this 90 day period however give notice in writing to the Council to accept its Tender. Such notice must be delivered by hand to Caroline Watson, Pension Fund Investment Manager, London Borough of Southwark, Finance & Resources, 160 Tooley Street, London SE1 2TZ or sent there by recorded delivery post. Following the service of such a notice the Council will have 14 days, not including the day of service, within which it may accept a Tender. If it does not do so within that time then the tender will be deemed to be withdrawn. The Tenderer shall not withdraw its Tender except in the manner provided in this condition.

9.7.Tenderers may decline to tender, but should they choose not to tender, they should alert the Council promptly, giving reasons, and return to the Council all copies of the Invitation to Tender.

9.8.If at any time during the Tender period there are any material changes to the information provided by Tenderers in their response to the Pre Qualification Questionnaire (PQQ) the Tenderer must advise the Council promptly in writing.

  1. Non-consideration of Form of Tender

10.1.In its absolute discretion, the Council may refrain from considering a Tender if:

(a)the whole of the Services are not tendered for or there are omissions in the Tender;

(b)it is not in accordance with these Conditions of Tendering;

(c)the Tenderer makes or attempts to make any variation or alteration to the contract except in accordance with condition 6 of these Conditions of Tendering.

  1. Rejection of Tender

11.1.The Council shall reject a Tender, without prejudice to any other civil remedies available to the Council or any criminal liability the Tenderer may attract, if the Tenderer:

(a)fixes or adjusts the prices shown in its Tender by or in accordance with any agreement or arrangement with any other person or by reference to any other Tender; or

(b)communicates to any person other than the Council the amount or approximate amount of the prices shown in its Tender, except where such communication is made in confidence in order to obtain quotations necessary for the preparation of the Tender or for the purposes of obtaining the necessary insurance, Bond Undertaking or Guarantee Undertaking; or

(c)agrees with any other person than such other person shall refrain from submitting a Tender or shall limit, restrict or reduce the prices to be shown by any other Tenderer in its Tender; or

(d)offers or agrees to pay or give, or does pay or give any sum of money, inducement or valuable consideration directly or indirectly to any person for doing or having done, or for causing or having caused to be done any act of omission in relation to any other tenderer or any other person's proposed Tender; or

(e)in connection with the award of the Contract, commits an offence under the Prevention of Corruption Acts 1889 to 1916 or gives any fee or reward the receipt of which is an offence under section 117(2) Local Government Act 1972; or

(f)has directly or indirectly canvassed any member or officer of the Council concerning the acceptance of any Tender or has directly or indirectly obtained or attempted to obtain Confidential Information or any information from any such member or officer or any contractor engaged in providing services to the Council concerning any other tenderer or Tender submitted by any other tenderer.

  1. Acceptance of Form of Tender

12.1.The Council is not bound to accept the lowest or any Tender and reserves to itself the right at its absolute discretion to accept or not accept any Tender. Nothing contained in this Invitation to Tender or in any other communication between the Council and any other party shall be taken as constituting a contract, agreement or representation between the Council and any other party (excluding a formal award of contract under condition 12.2)

12.2.An acceptance of a Tender by the Council shall be in writing and posted to the successful Tenderer and the Contract shall then be made and become binding. In addition the Contractor shall at the request of the Council execute and deliver to the Council a formal contract under seal.

  1. Confidentiality

13.1.The Tender, Conditions of Contract and Specification and all other documentation issued by the Council relating to the Services shall be treated by the Tenderer as private and confidential for use only in connection with the tender and any resulting contract and shall not be disclosed in whole or in part to any third party without the prior written consent of the Council.

13.2.The Contract and all copies are and shall remain the property of the Council and must not be copied or reproduced in whole or in part, save for the Contractor's own purposes in performing the Services, and must be returned to the Council on demand.

13.3.Tenderers may not make any public statements or promotional activity relating to the tender process without prior agreement with the Council.

  1. Warranties

14.1.In delivering a Tender, the Tenderer warrants and represents to the Council (and the Council relies on such warranties and representations) that:

(a)it has not done any of the acts or matters referred to in condition 11 of, and has complied in all respects with, these Conditions of Tendering;

(b)all information, representations and other matters of fact communicated (whether in writing or otherwise) to the Council by the Tenderer or its employees or officers in connection with or arising out of the Tender are true, complete and accurate in all respects;

(c)it has made its own investigations, research and due diligence and has satisfied itself in respect of all matters relating to the Tender, Conditions of Contract and Specification and has not delivered the Form of Tender and will not have entered into the contract in reliance on any information, representations or assumptions (whether made orally, in writing or otherwise) which may have been made by the Council;

(d)it has full power and authority to enter into the contract and perform the Services and will if requested produce evidence of that to the Council;

(e)it is of sound financial standing and its officers and employees are not aware of any circumstances (other than as may be disclosed in the audited accounts or other financial statements submitted under condition 10 above) which may adversely affect its financial standing in the future;

(f)it has and will have sufficient working capital, skilled employees, equipment, machinery and other resources available to it to perform the Services; and

(g)it has obtained all necessary consents, licences and permissions to enable it to perform the Services and will throughout the term of the Contract obtain and maintain all further and other necessary consents, licences and permissions to enable it to perform the Services.

Tender Timetable / Please note the following provisional dates for this tendering process. The Council reserves the right to amend any of the dates set out below.
Stage / Dates
Invitations to Tender sent out / 11 November 2011
ITT return date / By 12 noon on 22 December 2011
Evaluation of tenders / 23December 2011– 9 January 2012
Interviews (if applicable) / w/c 16January 2012
Contract Award date / Likely to be end March 2012
Contract Start date / April 2012

Background, Specification and Award Criteria

Background / The Council is seeking to appoint up to three (3) passive investment managers, in its capacity as the administering authority for the London Borough of Southwark Pension Fund (the “Fund”). As of 30 September 2011, the value of the Fund was approximately £783m and is invested as follows:
Asset Class / Proportion / Manager
Global Equities / 60% / Newton Blackrock
Bonds / 20% / Blackrock
Property / 20% / Henderson
At the current time BlackRock manage 74.2% of the Fund on a passive basis.
The intention is to have up to 70% of the Fund managed on a passive basis. At the outset the following assets will be managed on a passive basis:
  • Global Equities
–UK
–US
–Europe
–Japan
–Pacific Basin
–Emerging Markets
  • UK Gilts
  • UK Index Linked Gilts
  • Corporate Bonds

As part of this mandate, the Fund requires the flexibility to vary the proportion of each asset class and invest in a wider range of asset classes at any point in the contract. This may include (but is not limited to):
  • Global Bonds
  • Regional Equities
  • Alternative Assets

Cost control is a key component of this mandate.
Tenderers will be required to facilitate and manage the transition of assets either at take on or throughout the life of the contract.
The Council will decide whether to appoint one, two or three managers and how to split the asset as part of the tender process. Proposals should clear (in particular the pricing and structure) and in line with the Local Government Pension Scheme (“LGPS”) regulations and restrictions.
Specification / When considering the responses submitted to this Invitation to Tender, the Council will be evaluatingthe information provided in the following areas:
Specification 1: COMMERCIAL
  • Stability of the business and any changes since 30 June 2011.
  • Clear proposalof investment structure under the LGPS regulations.
  • Transfer or potential transfer of risk to the Council.

Specification 2: APPROACH & PERFORMANCE
  • A proven track record of returns within acceptable tracking errors across all asset classes. In particular, Tenderers should follow a methodology of tracking each index which is repeatable and which can be explained.
  • A track record of providing positive performance (up to 0.3% above benchmark), for example, through securities lending.
  • Robust and efficient process for investment/disinvestment between asset classes.

Specification 3: ADDITIONAL SERVICES
  • Transition management capabilities – specifically to include the ability to provide transition services at take on and throughout the term of the contract and interacting with the relevant stakeholders e.g. custodian, administrator, other investment managers and investment consultants.
  • A clear policy being in place relating to responsible investment management, including voting,and the ability to report on engagement activity on a quarterly basis. The Fund is seeking awareness and compliance from Tenderers with relation to the U.N. Principles for Responsible Investment and the UK Stewardship Code.
  • Liaison with the client's custodian and performance measurer on performance measurement and reporting matters in a manner and time consistent with the custodian's service level agreement.
  • Access to a full range of investment opportunities.

Specification 4: CLIENT SERVICE
Good Client Servicing. In particular:
  • Tenderers should provide a client relationship manager to act as a point of contact for the Fund and be available for meetings with officers as required.
  • Tenderers will need to attend at least one Pensions Advisory Panel meeting per year.
  • Tenderers will need to provide:
  • statementsat least monthly and a quarterly performance report within 10 and 25 business days of the month and quarter end respectively.
  • invoices within a month of the end of the relevant billing period.
  • copies of all presentations and meeting papers at least one week before the agreed meeting date.
  • Tenderers should have an established complaints procedure for resolving disputes and complaints.
  • Tenderers should actively ensure the quality and timely provision of all the above stated information.

Specification 5: RISK CONTROL
  • Scale and ongoing viability of the organisation to take on the Fund's mandate. In particular:
–Tenderers should have sufficient assets under management in each of the proposed funds such that any investment that the Fund makes is not likely to represent a stakeholding which exceeds 25%.