Procurement of Investment Manager Services by the Pension Benefit Guaranty Corporation

The Chairman of the House Select Committee on Aging has asked whether the Pension Benefit Guaranty Corporation (PBGC) is subject to compliance with Federal procurement regulations in procuring investment manager services for (1) excess capital in PBGC's revolving funds and (2) assets of terminated plans for which it serves as trustee.

We conclude that the revolving funds of PBGC are appropriated funds so that procurements using such funds could not be exempted from the application of Federal property and Administrative Services Act of 1949 or the regulations implementing the Act. As for the procurement of investment manager services for assets of terminated plans when PBGC serves as trustee for such plans, PBGC primarily serves the interest of the participants and beneficiaries of the plans in the same manner and to the same degree as would a nongovernmental party when it acts in that capacity. It therefore possesses all of the powers and duties a private party would possess when serving as a trustee. Because the trusts PBGC administers are privately established and privately funded it is unlikely that they would be considered public funds even when they come into PBGC's possession. Thus, PBGC is not required to follow the 1949 Act or its implementing regulations when contracting for investment managers in its capacity as trustee for terminated plans.