Emergency
Loan Guarantee Board
(“Board”)
Emergency
Steel Loan Guarantee Program
(“Steel
Program”)
Emergency
Oil & Gas Guaranteed Loan Program
(“O&G
Program”)
Statement
of Work
For Credit
and Financial Consulting Services
And
Annual
Credit Subsidy Cost Re-estimates
1.0
Background: Chapter 1 of Public Law 106-51 (the
“Act”) established the Steel Program and the O &G Program (collectively, the
“Programs”) to be administered by the Board. The Act provides that the Programs may
guarantee loans provided to qualified steel companies and qualified small
independent oil & gas companies, respectively, by private banking and
investment institutions in accordance with the criteria provided in the Act and
with procedures, rules, and regulations established by the Board. The Board has adopted rules and
regulations, which are codified at 13 CFR Chapters 400 and 500. The
Programs are also subject to various Federal policies, laws and regulations
regarding the extension of, budgeting for, and reporting concerning Federal
credit instruments, including compliance with the Federal Credit Reform Act of
1990. The Board’s authority to issue new
loan guarantees under the Steel Program expires December 31, 2007 unless
extended by Congress. The Board’s
authority to issue new loan guarantees under the O&G Program has
expired. Currently there is one
performing loan and one defaulted loan undergoing liquidation in the Steel
Program, and one performing loan in the O&G Program.
The Board has established
processes and financial models for calculation of estimated credit subsidy costs
of loans guaranteed under the Programs that comply with the Federal Credit
Reform Act of 1990 and related OMB Circulars and that have been approved by OMB
and the Board.
The Board requires
specialized assistance in the evaluation of any future applications submitted
for loan guarantees under the Steel Program, and in complying under the Programs
with certain policies, laws and regulations governing Federal credit
programs. The Board also requires
specialized assistance in providing the annual credit subsidy cost re-estimates
for each outstanding guaranteed loan under the Steel Program and the O&G
Program and in determining appropriate entries for quarterly and yearly
financial statements for the Programs and in providing information for the
independent audit thereof.
A Contractor is needed to
assist the Board and to provide the services and deliverables described in this
Statement of Work and authorized by issuance of a delivery order by the
Contracting Officer. The Contractor
shall provide the necessary personnel and independent consultants to provide the
services described below.
2.0 Scope
Provide specialized
assistance to Emergency Loan Guarantee Board in the issuance and administration
of loan guarantees under the Steel Program and in the administration of loan
guarantees under the O&G Program.
3.0 Statement of
Work
3.1 Task I: Evaluation of Steel Program Loan
Guarantee Applications
3.1.1 The contractor shall as requested by the Board COTR ,
provide a credit analysis of any
new application for a loan guarantee under The Steel Program.
3.1.1.1 The written credit
analysis shall conform to the Board COTR’s direction and shall be both
descriptive and analytical.
3.1.1.2 Each analysis shall
include:
3.1.1.2.1 a review and
description of the credit evaluation submitted by the applicant
lender.
3.1.1.2.2 a summary and
evaluation of industry factors that influence the credit worthiness of the
borrower.
3.1.1.2.3 a description of
the borrower’s financial status.
3.1.1.2.4 a description of
the proposed borrower’s business plan and loan structure.
3.1.1.2.5
an evaluation of other factors comprising the criteria set forth in the
authorizing statute and the Board’s regulations.
3.1.1.2.6 An analysis of current and future prospects of the domestic
steel industry as they relate to proposed borrower.
3.1.1.2.7 An analysis of
operational, environmental and other relevant factors affecting the proposed
borrower.
3.1.1.2.8 Valuations of the
collateral proposed as security for the loan to be
guaranteed.
3.1.1.2.9 Evaluation of
financial projections submitted by the proposed borrower and/or
lender.
3.1.1.2.10 A credit rating
of the proposed borrower prepared by an independent rating agency designated by
the Board.
3.1.1.3 Each analysis will be
modified to reflect comments, questions or requests following review by Board
Staff and/or the Board.
3.1.2
Deliverable Task I: A final written credit analysis of the
application together with all relevant exhibits and other
documents.
3.2 Task
II: Provide an Initial Credit
Subsidy Cost Estimate for each Steel Program Loan Guarantee
application.
3.2.1 The
contractor shall:
3.2.1.1 Provide an initial estimated
credit subsidy cost spreadsheet as
approved by OMB and using the OMB Credit Subsidy Calculator for each loan
guarantee application, as requested by the Board COTR.
3.2.1.1.1
The spreadsheet shall be accompanied by such descriptive materials as the Board
COTR and OMB shall require.
3.2.1.2 The contractor shall assist the Board as
requested by the COTR in responding to OMB questions and
concerns.
3.2.1.2.1 The contractor shall assist in obtaining OMB approval of an
estimated initial credit subsidy cost for each loan guarantee application under
the Steel Program.
3.2.1.3 The contractor shall provide an Initial
Estimated Credit Subsidy Cost for each Steel Program
application
3.2.2 Deliverable Task II: An initial estimated credit subsidy cost
spreadsheet and related documents, approved by the OMB and the
Board.
3.3 Task
III: As Requested by the Board COTR
, assist in providing information concerning guaranteed loan balances and loan
activity, and recommended account entries in connection with the quarterly and
annual financial statements for the Steel Program and the O&G Program. Note: The
Programs’ financial statements are consolidated with those of the Department of
Commerce.
3.3.1
The contractor
shall:
3.3.1.1
assist as requested in providing
information for the annual independent audit of the Steel Program and O&G
Program’s financial statements.
3.3.1.2
be responsible for providing information to support initial and re-estimated
credit subsidy cost spreadsheet numbers.
3.3.2 Deliverables for Task
III: Recommended account entries for
the Program’s quarterly and annual financial statements; documentation required
to respond to questions and requests for documentation from the independent
auditors of the Commerce Department financial statements.
3.4 Task IV: The contractor shall prepare annual
credit subsidy cost re-estimates for each Steel Program and O&G Program
guaranteed loan outstanding during the fiscal year as of the end of each fiscal
year.
3.4.1 Framework Task IV
3.4.1.2 For each annual credit subsidy cost
re-estimate, the general framework will remain the same but the level of
analysis performed will vary depending on the status of the particular
guaranteed loan. The contractor
shall:
3.4.1.2.1 Ramp up. Perform an overall initial review of
each Program.
3.4.1.2.2 Perform Review. Files for each guaranteed loan
outstanding during the fiscal year will be reviewed and updated information will
be collected for input into the credit subsidy model. For Level 1, this would entail updating
information on unpaid principal balances and loan term. For more extensive review (Levels 2 or
3), key elements of the loan would be reviewed in order to determine impact on
default probability, and the estimated amount and timing of associated
recoveries.
3.4.1.2.3
Calculate Credit Subsidy Cost Re-estimate. The updated information is used to calculate the
credit subsidy re-estimate, using the Board- and OMB- approved spreadsheets.
3.4.1.2.4
Meetings. As
requested by the COTR, discussion and presentation of the findings to relevant
parties, including Board staff, Commerce Department personnel, and OMB
personnel.
3.4.1.2.5
Documentation.
Prepare the credit subsidy
cost re-estimate spreadsheets and documentation to support the credit subsidy
cost re-estimates for audit purposes.
3.4.2 Projected Level
of Effort, By Level
3.4.2.1Level One
– Update. The credit subsidy cost estimate for a
guaranteed loan would be revised to include updated information on unpaid
principal balance and loan term.
Other qualitative or quantitative assessments of the borrower would most
likely not be required. This is the
least time intensive of the three levels of effort. This level is appropriate if no material
changes were identified at either the individual borrower level or at the level
of the general industry or general economy.
3.4.2.2
Level Two – Limited Scope
Re-evaluation. Selective re-evaluation of credit risk
upon occurrence of identified material change to a borrower’s risk profile. Examples of this type of change would be
a payment default, a downgrade by the lender in the borrower’s risk rating or
any other factor that would indicate a significant change in the risk of default
or to the estimated recovery value.
3.4.2.3Level
Three – Comprehensive Re-evaluation of Portfolio. Re-evaluation of the credit risk for each loan in the
portfolio. This may be appropriate
should there be a large-scale change to the specific industry or the general
economy that would warrant a re-examination of the entire loan portfolio for a
Program.
3.4.3 Deliverables: The Contractor shall create a credit subsidy cost
re-estimate, in form and substance acceptable to the Board and to the OMB, for
each guaranteed loan outstanding during the particular fiscal year.
3.5 Task V: If Requested by the Board COTR, establish
O&G Program and/or Steel Program Portfolio Monitoring Methodologies that
comply with Federal credit policies and rules and are acceptable to the
Board.
Deliverables:
3.5.1 Servicing and reporting requirements and
templates for participating lenders.
3.5.2 Loan accounting requirements and develop an
appropriate on-going system for tracking credit exposure.
3.5.3 Oversight procedures for risk mitigation and
problem loan management.
3.5.4 Schedule for Credit Reform Act modeling of
portfolio
3.5.5 Schedule for Portfolio Risk Analysis modeling
of portfolio.
3.6 Task
VI: If Requested by the Board COTR,
develop and execute a training program acceptable to the Board for NIST
employees with respect to Credit Reform accounting.
3.6.1
The contractor shall,
after preliminary discussions with the COTR, develop a training program outline
for approval by the COTR.
3.6.2
The contractor shall
draft a curriculum pursuant to the approved outline, primarily in PowerPoint
with supporting documents as needed.
The curriculum would envision a 90 minute high-level presentation and a
two-hour follow on presentation for staff with more detail. The curriculum would be reviewed by the
COTR, revised as needed by the contractor, and approved by the
COTR.
3.6.3
The contractor shall
deliver the training as requested.
3.7 All
work assignments under this Statement of Work shall be made by the Board COTR,
who shall approve all deliverables.
4.0
Government Furnished Resources:
As needed, documentation in the files of the Board relating to
Steel Program applications and documentation relating to outstanding Steel
Program and O&G Program loan guarantees..
5.0
Travel Requirements: None
6.0
Security
Requirements:
See References: (CAM 1352-239-73, 1352-239-74, and
1352.209-72)
7.0 Place
of Performance: Washington
D.C. Area
8.0
Period of
Performance: Time of award thru
December 31, 2007 including 4 options:
Option I – January 1, 2008 thru December 31,
2008
Option II – January 1, 2009 thru December 31,
2009
Option III – January 1, 2010 thru December 31,
2010
Option IV – January 1, 2011 thru December 31,
2011