Treasury details procurement plan for new financial office
Agency will follow federal acquisition rules, but anticipates that a number of contracts will be awarded without full and open competition.
In implementing the recently signed economic bailout bill, the Treasury Department will use two primary methods of procuring private sector services -- contracting under the Federal Acquisition Regulation and financial agent authority.
A memorandum released on Monday stated that the department generally will follow federal contracting rules in obtaining supplies and services for its new Office of Financial Stability, despite a provision in the rescue package that allows the Treasury secretary to waive the FAR "upon a determination that urgent and compelling circumstances make compliance with such provisions contrary to the public interest."
But, the memo noted, competition for these contracts may be limited for a number of reasons, including for small business set-asides and urgent situations.
"Due to the paramount need for expeditious implementation of the secretary's authorities under the act, Treasury anticipates that a number of contracts will be awarded through other than full and open competition, using the previously established FAR provisions applicable under conditions of unusual and compelling urgency," the memo stated.
In addition, Treasury will use its authority to retain financial institutions to provide services on its behalf. While the department has long had that ability, the stabilization law expands it. Agency officials now can retain private firms for "all reasonable duties related to the act" and can select from a wider range of financial institutions.
The memo stated that Treasury primarily will use agent authority when it needs a firm to conduct asset management and other transactions.
The asset managers retained will be financial agents of the United States, not contractors, the memo stated. Eligible institutions include banks, savings associations, credit unions, security brokers or dealers, and insurance companies.
"As financial agents, asset managers will have a fiduciary agent-principal relationship with the Treasury with a responsibility for protecting the interests of the United States," the memo noted.
Along with procedures to get the stabilization plan up and running, Treasury posted three solicitations for financial agents on Monday. The department is seeking firms to perform: custodian, accounting, auction management and other infrastructure services; securities asset management services; and whole loan asset management services.
The department's procedural warning that "the selection process for asset managers may involve extremely short deadlines for submitting information and for traveling to Washington, D.C. for meetings or interviews," was no exaggeration. Proposals for the services sought are due by 5 p.m. on Wednesday. The agency said it expects to announce the results of the initial selection by next week.
A number of high-profile firms, such as T. Rowe Price, BlackRock and Legg Mason, are rumored to be bidding on the work but declined to comment. A spokesman for Prudential said the firm expects to submit proposals by the deadline for both the security asset management services and whole loan services.
The Treasury Department did not return calls for comment.