Department of the Treasury, Bureau of the Public Debt, Division of Procurement, 200 Third Street, Room 207, Parkersburg WV 26101-5312

R -- TECHNICAL RESEARCH FOR BOOK ENTRY SYSTEMS POC Point of Contact, Tammie S. Johnson, 304/480-6461, Contracting Officer, Orlando R. Yaconis, 304/480-6992 WEB: Department of the Treasury, Bureau of the Public Debt,, http://www.publicdebt.treas.gov/oa/oaprocr.htm. E-MAIL: Department of the Treasury, Bureau of the Public Debt,, procurement@bpd.treas.gov. The Bureau of the Public Debt intends to negotiate a sole source procurement with Angelo Scalzo, 64 Shadow Lane, Stanton Island, New York 10306, to obtain the following services: To deliver position papers, analyses, and briefings, represent Public Debt in meetings with government securities market participants, and train existing book-entry staff on operational aspects of the secondary market trading, and back-office clearing and settlement environments related to fixed-income products such as Treasury securities. The Contractor shall provide briefings and written reports on the following topics: 1. Assess the Feasibility of Implementing Repo Tracking Functionality in the National Book-Entry System (NBES) a. Describe the repo tracking functionality that might be provided by NBES. b. Identify modifications necessary to NBES and other secondary market systems to provide Repo tracking functionality in NBES. c. Identify pros and cons to Treasury, the Federal Reserve, and secondary market participantsof providing this Repo tracking functionality to NBES participants and other secondary market customers. d. Identify potential users of the Repo tracking functionality. e. Analyze cost effectiveness of this functionality -- for Treasury/Federal Reserve and for potential users. f. Analyze and describe impact on payment systems risk. g. Identify cost of providing repo tracking functionality in NBES and the process that should be used to determine the changes to the fee structure necessary to recover the cost of providing this service. 2. Assess the Feasibility of Providing Securities Transfer Netting in the NBES System a. Describe the securities transfer netting functionality that might be provided in NBES. b. Identify modifications necessary to NBES and other secondary market systems to provide Securities Transfer Netting and Settlement in NBES. c. Analyze pros and cons to Treasury, the Federal Reserve System and the secondary market of providing this functionality to NBES participants and other secondary market customers. d. Identify potential users of this securities transfer and netting functionality. e. Analyze cost effectiveness of this functionality -- for Treasury/Federal Reserve and for potential users. f. Analyze impact on payment system risk. g. Identify cost of providing securities transfer netting in NBES and the process that should be used to determine the changes to the fee structure necessary to recover the cost of providing this service. 3. Assess Feasibility of Modifying $50 Million "Cap" on Security Transfer Wires a. Document original purposes of "cap" and an analysis of whether purpose was achieved. b. Analyze pros and cons to Treasury, the Federal Reserve System and the secondary market of: 1) Eliminating the transfer "cap". 2) Increasing the "cap" to various levels. c. Identify potential benefactors for each type of change to this feature. d. Analyze cost effectiveness of this feature -- for Treasury/Federal Reserve and for users. e. Analyze the impact on payment system risk. f. Estimate costs to implement for Treasury/Federal Reserve and users. g. Estimate how the volume of transfers may be affected with a change to the "cap." 4. Identify What Treasury/FRBs Could do to Facilitate the Concept of Straight-Through Processing for Securities Transactions a. Identify policy, operational and systemic changes that the FRB/Treasury could implement that would facilitate the move toward straight-through processing of securities transactions for securities held on NBES. b. Analyze the pros and cons to Treasury and the Federal Reserve of promoting straight-through processing. c. Estimate and analyze implementation costs, if any, for Treasury/Federal Reserve and NBES participants. d. Propose an implementation strategy. e. Analyze impact on payment system risk. 5. Identify other Initiatives or Modifications the Treasury/FRB could take or make that would Improve or Facilitate both Primary and Secondary Market Activity in Treasury Securities. a. Identify other initiatives or modifications the Treasury/FRB could take or make that would improve or facilitate both Primary and Secondary Market Activity in Treasury Securities. b. Analyze the pros and cons for these initiatives or modifications c. Estimate and analyze implementation costs, if any, for these initiatives or modifications. d. Propose an implementation strategy. e. Analyze impact of these initiatives or modifications. All work shall be performed within a twelve-month period. The Contractor shall have at least 20 or more years of experience in brokerage operations and be an expert in the design, development, and operation of broker/dealer back-office operations, and have a highly successful record of achievements in both project and line management functions. The Contractor shall have experience of managing a staff of at least 70-100 operations personnel with an annual budget of at least $4-10 million with a daily settlement activity value of at least $25-30 billion. The Contractor shall have experience in developing brokerage back office systems that comply with the Government Securities Act of 1986. Also, the Contractor shall have experience in designing and developing back office clearance and settlement systems for major U.S. dealer or secondary market firms. The Contractor shall have experience as an operations consultant to one or more large primary dealer operations. The Contractor shall have experience in managing daily settlements and implementing remote (self) clearance with agent banks on all book-entry securities. The contractor shall have performed the full range of activities in book-entry back-office operations. The Contractor shall be intimately familiar with all Treasury securities products. The Contractor must have a conceptual understanding of the National Book-Entry System (NBES). Also, the Contractor must have an expert knowledge of: (1) clearing bank operations; (2) private netting and clearing corporations (e.g., the Government Securities Clearing Corporation); and (3) broker/dealer back-office operations. Finally, the Contractor must understand and be able to offer expert advice to Treasury so that it may properly conduct its responsibilities under the CBE Program. All affirmative responses must be in writing, must be accompanied by clear and convincing evidence to show that the respondee has the experience described above and the ability to provide the services required. No solicitation document is available. A request for documentation will not be considered an affirmative response. If no affirmation written response is received, within 15 days after publication of this notice, to the effect that comparable services are available, and that it is more advantageous to the Government than obtaining these services through a sole-source contract with Angelo Scalzo, a sole-source acquisition award will be negotiated. Telephonic inquiries will not be accepted. Posted 03/25/99 (W-SN312700). (0084)

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