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STATE TREASURER'S OFFICE

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					      STATE TREASURER’S OFFICE

CHAIRMAN, STATE TREASURER KAY IVEY



            THE PACT PROGRAM
  THE PREPAID COLLEGE TUITION TRUST FUND


      REQUEST FOR PROPOSAL
       LOCKBOX OPERATION
  (PAYMENT PROCESSING SERVICES)




                 January 2010


             State Treasurer Kay Ivey
             State Treasurer’s Office
              Alabama State Capitol
                600 Dexter Avenue
                 P.O. Box 302510
           Montgomery, Alabama 36104
            www.treasury.alabama.gov


           REQUEST FOR PROPOSALS
                    FOR
        PAYMENT PROCESSING SERVICES
                  FOR THE
          ALABAMA PACT TRUST FUND
                                      Section I
                                GENERAL INFORMATION

1. Purpose and Program Information
       This Request for Proposal (RFP) has been issued by State Treasurer Kay Ivey
(Treasurer), on behalf of the Prepaid Affordable College Tuition (PACT) Trust Fund Board of
Directors (Board). The Board solicits proposals from qualified firms to serve as the lockbox
provider (payment processor) for payments for PACT. This notice of need for professional
services shall be widely disseminated to the professional community in a full and open manner.

        This Request for Proposals (hereinafter “RFP”) is issued in accordance with the
requirements of Section 41-16-72(4), Code of Alabama (1975). This RFP is not an offer to
contract but seeks the submission of proposals from qualified, professional firms that may form
the basis for negotiation of a Contract with one of the qualified firms.

       The Treasurer shall post the RFP on the treasury website www.treasury.alabama.gov.

        PACT is a qualified 529 prepaid college savings program. Contracts were purchased to
prepay undergraduate tuition and qualified fees. Three payment plans were offered: a one time
lump sum, monthly payments for five years, and monthly payments extending from the year
purchased to June of the year the beneficiary graduates from high school. Payments are mailed
to a post office box in Birmingham and correspondence is also mailed to a separate post office
box. The lockbox operator picks these up daily and processes the payments for deposit into the
PACT account and forwards the correspondence to the PACT Records Administrator in Auburn,
Alabama. Information about the PACT program is available at the Treasurer’s website which is
www.treasury.alabama.gov.

        Payment activity for the fiscal year 2008/2009 is provided below. PACT enrollment has
been closed indefinitely and therefore, the volume of payments is expected to decrease over time.
All information furnished by the Treasurer shall be used only for the intended purpose and shall
not be disclosed to any other party.




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                           VOLUME OF LOCKBOX ACTIVITY
                            FOR PERIOD OCTOBER 1, 2008
                            THROUGH SEPTEMBER 30, 2009

   DATE     PAYMENTS                 RETURNED          CORRESPONDENCE               ACH
            PROCESSED                  CHECKS
10/08      2,899                    8                 136                        1,500
11/08      2,703                    12                208                        1,440
12/08      3,346                    22                161                        1,441
1/09       3,288                    16                233                        1,640
2/09       2,940                    35                1,288                      1,648
3/09       2,736                    20                798                        1,537
4/09       2,367                    24                284                        1,505
5/09       2,359                    12                416                        1,464
6/09       2,396                    14                739                        1,389
7/09       2,148                    11                406                        1,365
8/09       2,089                    18                245                        1,345
9/09       2,042                    13                124                        1,321
10/09      2,035                    11                720                        1,299
11/09      2,031                    17                187                        1,246
DAILY TRANSMISSION
DEADLINE:                            5:00 PM CST (FRIDAY & SATURDAY PAYMENTS
                                     COMBINED)
PAYROLL DEDUCTION:                   ELECTRONIC TRANSMISSION OR ONE CHECK
                                     WITH DETAIL TO LOCK BOX
CURRENT CONTRACT:                    EXPIRES APRIL 1, 2010

2. Issuing Office
    All proposals should be submitted in the format provided in Section II to:

                  Kay Ivey, State Treasurer
                  State Treasurer’s Office
                  Alabama State Capitol
                  600 Dexter Avenue
                   P.O. Box 302510
                  Montgomery, Alabama 36104

All questions concerning this RFP should be directed to brenda.emfinger@treasury.alabama.gov.

3. Minimum Qualifications
     Respondent must be able to pick up payments from the post office in Birmingham
        daily.


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          The Respondent must be a respondent or savings association organized and existing
           under the laws of Alabama, any other state of the United States, or the United States,
           and is authorized pursuant to the laws of Alabama or the United States to conduct and
           is conducting the business of making loans and taking deposits in Alabama.
          Respondent must have at least 5 years experience in retail lockbox operations.
          Respondent will qualify with the Secretary of State to conduct business in the State of
           Alabama. (To download the form for a “Certificate of Existence”, access
           www.sos.state.al.us, corporations division, or call 334-242-5324 to request the form.)
          Respondent will carry a fidelity bond, errors and omissions insurance or comparable
           instruments to cover negligent acts or omissions.
          Respondent maintains sufficient procedures and capabilities to ensure the timely and
           accurate backup and full recovery for all computers and other data storage systems
           related to the PACT account.
          Respondent has a company policy and practice of equal employment opportunity and
           non-discrimination based on race, creed or gender.
          Respondent attests that all workers providing the services described in this RFP are
           either citizens of the United States or are in proper and legal immigration status that
          authorizes them to be employed for pay within the United States.

If the respondent fails to meet any of the required criteria, the respondent should not proceed
further in the RFP process. The Respondent has a continuing obligation to disclose information
throughout the RFP process should any qualifications or situations change that might render the
Proposer an unqualified candidate.

4. Submission of Proposals
Proposals must be received at the following address no later than the close of business on
February 18, 2010. Provide the original plus four (4) copies. You must also email the electronic
copy of the response to alatreas@treasury.alabama.gov for retention purposes.

         Attention: Kay Ivey, State Treasurer
                    State Treasurer’s Office
                    Alabama State Capitol
                    600 Dexter Avenue
                    Montgomery, Alabama 36104

It is the responsibility of the Respondent to ensure that its proposal is timely delivered and
received in the proper office on or before the deadline for responding to this RFP. The Treasurer
will not consider proposals received after the date specified herein.

All questions concerning this RFP should be directed to the College Savings Programs Director,
Brenda Emfinger at brenda.emfinger@treasury.alabama.gov.

5. Evaluation and Selection




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After the review and evaluation of the proposals, the Board may conduct interviews. Finalists
chosen for interviews, if necessary, will be notified. The Board reserves the right to request a
best and final offer for fees from finalists.

The Board will select the Respondent the Board determines, in their sole discretion, to be fully
qualified and best suited among those submitting proposals that best meet the needs of the PACT
Program. All proposals received in response to this RFP may be rejected and the Board may
solicit additional proposals.

Upon selection, the Board may initiate negotiations for contract terms and conditions, including
fees.

6. Proposal Required Information
Proposals should be as thorough and detailed as possible so that capabilities to provide the
required services can be properly evaluated.

To be considered, responses to this RFP must include:
       1. Transmittal Letter providing contact information (This letter must be signed by an
          official in the responding organization who has the authority to bind the
          organization.).
       2. Exhibit A - The Proposal
       3. Exhibit B – Statement of Fees
       4. Exhibit C Minimum Qualifications
       5. Exhibit D, Disclosure Statement. All proposals submitted in response to this RFP
          must include one original and completed Disclosure Statement as required by Section
          41-16-80, et seq., Code of Alabama (1975). Copies of the Disclosure Statement, and
          information, may be downloaded from the Alabama Attorney General’s web site at
          www.ago.state.al.us/ag_items.cfm.

7. Contract

All duties shall be set forth in a Contract between the Respondent and the Board. The Contract
will incorporate reference to the requirements of the RFP, the response to the RFP, and any
subsequent revisions to, or modifications of, the proposal as negotiated by the Board or its
designee.

The expected term of the Contract will be for a five year period . State law prohibits the Board
from agreeing to (1) indemnify the Manager; (2) waive the right for jury trial; (3) grant a security
interest; or (4) binding arbitration. Additionally, it is mandatory that Alabama laws apply to the
performance of the Contract and that jurisdiction and venue be in Montgomery, Alabama for
state and federal courts.

Upon expiration or termination of the Contract, all files, tapes, manuals, documents and
information held by the Respondent in connection with the performance of the services described


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in this RFP shall be turned over to the Board or its designee in a commercially usable format
prescribed by the Board.

The current contract expires April 1, 2010.


8. Efforts to Influence Selection Process Prohibited
The integrity of the Request for Proposals process is of primary importance and will not be
compromised. Any written or oral communications beyond the RFP Response made by
Respondents, or others on their behalf, whether paid or unpaid, to influence the selection process,
from the time the RFP is issued through its conclusion, made directly or indirectly to the
Treasurer, Board members, Treasury staff or independent advisors to the Board will be grounds
for immediate elimination from the selection process. The sole point of contact is Brenda
Emfinger.


9. Public Information
All responses received will be subject to the Alabama Open Records Act, §36-12-40, Code of
Alabama and may be subject to public disclosure upon request. The Open Records Act is
remedial and should therefore be liberally construed in favor of the public. The Alabama Trade
Secrets Act is §8-27-1 through §8-27-6, Code of Alabama. Proposers are cautioned to be
familiar with these statutes. The burden is on the one asserting the trade secret to show that the
information sought to be protected meets the definition of a Trade Secret as defined in the Act.

Any RFP response submitted that contains confidential, trade secrets or proprietary commercial
information must be conspicuously marked on the outside as containing confidential information,
and each page upon which confidential information appears must be conspicuously marked as
such. Identification of the entire Proposal as confidential is not acceptable unless the Proposer
enumerates the specific grounds or applicable laws which support treatment of the entire material
as protected from disclosure according to the foregoing statutes or other applicable Alabama law.

The owner of the confidential information shall indemnify and hold the State of Alabama, the
State Treasurer, and Treasury staff harmless from all costs or expenses, including but not limited
to attorney fees and expenses related to litigation concerning disclosure of said information and
documents.

10. Board Liability
The Board shall have no liability whatsoever to any Proposer or subcontractor of a Proposer for
any expenses or losses incurred by such entity or entities in responding to this RFP or, if such
proposal is accepted, in the negotiation and preparation of the subsequent Contract, whether or



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not such Contract is executed. The Proposer shall indemnify and hold the Board harmless from
any claim, suit, damage, or other liability, including costs and attorney’s fees, occasioned by the
Proposer’s failure to perform an obligation under the terms of this RFP, the Proposer’s proposal
and any subsequent Contract.

                                           Section II
                                           PROPOSAL
Proposals received will be evaluated based on the contents of the Proposal, including the firm’s
ability to perform the requested services, expertise, fees, and completeness of Proposal. Act
2001-956 provides direction to the State in securing professional services. The professional
service provider shall best meet the needs as expressed in the RFP. Price shall be taken into
consideration.

The Proposal should include the following:

                                           Exhibit A
Qualifications

1. Provide an overview of your firm, including corporate profile, ownership structure, financial
   condition, overall business objectives, services/products offered, and strategic plans for
   growth.

2. Provide details of any past or pending litigation relating to your firm, individual personnel, or
   to the management of client assets.

3. Provide details of any claims, disputes, litigation or other legal proceedings where your firm
   is involved with the State of Alabama or any of its agencies, or has been involved, in the
   three preceding years.

4. Describe any activities in which the Firm is engaged which may constitute a conflict of
   interest.

5. Provide an organizational chart and biographies of the person/persons/or team members who
   will be assigned to this account, including experience relevant to this type account.

6. Describe factors or reasons we should consider your firm more favorably than your
   competitors.

7. Detailed information on any vendors or subcontractors your firm will partner with to provide
   services to PACT.

8. Provide the following information on at least 2 clients for whom similar services as described
   in this RFP are provided:
   a. Company



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   b.   Address
   c.   Contact Person
   d.   Telephone Number
   e.   Length of Relationship in Years
   f.   Services Provided


                                          Exhibit B
Services
A. Description of Services
      The     program      assigns     a   10    digit    numeric   number   for    each
   prepaid tuition contract sold. Therefore, transactions are processed on a per account
   basis. A purchaser may submit one check with either multiple coupons or multiple
   account references for more than one account, a check with no documentation,
   multiple checks with one coupon, or make payments by payroll deduction or
   automated payments from a checking/savings account. PACT contracts with Health Data,
   Inc.(HDI)for records administration, including payment posting. Respondent must work
   closely with HDI for accurate and timely payment processing.

1. Lockbox The Respondent will be required to perform an automated retail lockbox operation
    which utilizes coupons bearing an OCR scan line.
Please describe your operation and error rate. (If another method is utilized, please
    describe.)

    (a.) PACT mail must be picked up daily from the post office in Birmingham.
    (b.) Mail must be opened and sorted as follows:
    general correspondence from post office to be forwarded to HDI
    coupons without check
    coupon with check equal to payment amount
    coupon with check not equal to payment amount
    multiple coupons/multiple check transactions
    check without coupon

All payment must be transmitted to HDI for posting to PACT accounts.
Please describe your method of transmitting the information as described above. PACT
account numbers must be attached to all payments and if processor is unable to do that, the
information must be transmitted in a manner agreeable to PACT for assistance in posting as
suggested below:

     Information on checks not accompanied by coupons will be key entered into a
      lockbox program for later transmission to HDI.            Information to be captured
      includes prepaid account number (if available) and check amount.
   Please describe the format for overnight transmission to HDI.




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       Information from payments accompanied by coupons will be captured on
        equipment capable of reading the OCR scan line on the PACT coupon. The
        captured data will be transmitted to HDI via FTP in a format as required by
        HDI.
     Please describe the format and method of timely delivery to HDI.

        Encoding errors require correction and proper documentation for HDI to
         make posting corrections.
     Explain your method of handling encoding errors and your proposed documentation to
     be submitted to HDI.

      Each day all correspondence received must be submitted to HDI.
     Describe your method for this delivery.

       A copy of the deposit ticket will be forwarded daily (via facsimile) or through
        electronic balance reporting to the PACT office in Montgomery.
     Describe your proposed method for reporting deposits.

2. ACH - The respondent will be required to process ACH debits and when necessary ACH
    credit transactions to those PACT customers which have elected the automatic payment
    option.

        HDI will create these transactions in NACHA format and will forward them to
         the originating financial institution via FTP.
     If you propose another method of delivery please specify.

      HDI and PACT should be advised of returned ACH items.
     Describe your method for this notification and the level of detail provided.

          The Respondent      will   be   required   to   process   prenote   transactions   at   no
           charge to PACT.

3.       Deposit of Lockbox Payments - A demand deposit account will be
         maintained for the receipt of lockbox deposits and ACH transactions. All receipts
         will be deposited daily. The Treasurer reserves the right to negotiate the method
         used in determining the amount of interest earned on this account. The average balance in
         this account is $4,856.000. This fluctuates as payments are deposited and cash is
         transferred to make tuition payments. PACT makes withdrawals from this account to
         transfer to Treasury for tuition payments.

           Describe your method for depositing into the account, the proposed instrument for
           daily interest earnings, and the rate of return.
           Describe your proposed method (preferably the most cost efficient) for transfers.




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B. Compensation – The successful respondent will be required to invoice monthly, in
   arrears, based on the negotiated pricing schedule. Payment will not be made for
   services not included in the schedule.

C. Miscellaneous

1. Describe the methodology and timeliness of transferring the service from present
   provider, if necessary.

2. Please describe your systems capability that allows “state of the art” payment processing and
   your commitment to technological advances in the industry.

3. Explain briefly any area of expertise that sets you apart from other payment processing
   service providers.

4. What other services or alternative methods of delivery would you propose to accommodate
   this process?




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                                    EXHIBIT C
                              STATEMENT OF CHARGES
                                   Price Proposal
The Treasurer reserves the right to negotiate final compensation structure. Fees will not increase
during the term of the contract.

Please include a statement that the prices submitted have been arrived at independently
and without consultation, communication or agreement with any other Respondent and no
attempt has been made by Respondent to induce any other firm to submit, or not to
submit, a Proposal for the purpose of restricting competition.

The Respondent’s function in remittance processing is to act as agent for the PACT Program by
collecting and processing remittance payments, and collecting correspondence. PACT payments
are mailed to P.O. Box 217 in Birmingham, AL and PACT correspondence is mailed to P.O. Box
12865 in Birmingham, AL. The Respondent, as acting depository agent of the Program, will
collect from the post office in Birmingham, all mail which contains remittance payments and
correspondence. The Respondent will process payments and handle returned items; the
respondent will also open all correspondence to look for payments and then forward the
correspondence to the Records Administrator in Auburn, Alabama on a daily basis.

The Respondent’s pricing should take into account the full scope of the service as described in
this RFP. The pricing schedule below is consistent with the monthly billing detail provided by
invoice from the current provider.
Please provide your proposed fee schedule which may or may not be as described below.

                                          Fee Proposal

           SERVICE                      ACTIVITY            UNIT FEE            TOTAL FEE
         DDA Services
Account Maintenance
FDIC Insurance
Deposits and Other Credits
Checks Deposited
Returned Deposit Items
Outgoing Wire Transfers
Other:
Other:
         ACH Services
ACH Files Processed
ACH Items (On Us)
ACH Items (Out of District)
Other:
Other:
    Remittance Processing



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Retail Lockbox Maintenance
Non Process Items
Payments Processed (On Us)
Payments Processed (Out of
District)
Photocopies
Records Transmitted
Transmission Fee
Postage/Shipping
Remittance Report Pages Faxed
Other
Other
     DDA Balance Reporting
Software/maintenance Charge
Detail Transactions
Base Monthly/facsimile
Other
Other
 Miscellaneous Fees Not Listed
       In Above Categories
Other
Other
         GRAND TOTAL
* If your payment processing fee is priced incrementally, please provide the detail by
attachment, and use this pricing as a basis for calculating the total fee.




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                                         EXHIBIT C
MINIMUM QUALIFICATIONS AND MISCELLANEOUS INFORMATION

1. Respondent must be able to pick up payments from the post office in Birmingham daily.
      Yes_____      No_____

2. The Respondent must be a respondent or savings association organized and existing under the
laws of Alabama, any other state of the United States, or the United States, and is authorized
pursuant to the laws of Alabama or the United States to conduct and is conducting the business
of making loans and taking deposits in Alabama.
       Yes_____ No_____

3. The Respondent may not be in conservatorship, receivership, or possession of a regulatory
agency.
       Yes_____    No_____

4. The Respondent must have deposit insurance under the provisions of the Federal Deposit
Insurance Act, 12 U.S.C. § 1811 et seq.
       Yes_____       No_____

5. The Respondent must be a member of the Federal Reserve System.
       Yes_____    No_____

6. The Respondent must be a member of the National Automated Clearing House Association
(NACHA).
       Yes_____    No_____

7. The Respondent must be designated as a Qualified Public Depository under the SAFE
Program.
       Yes_____    No_____

8. The financial statements of the Respondent must be audited annually by an independent
certified public accounting firm and an unqualified opinion must be issued by the auditor in
connection with the audit.
        Yes_____       No_____

9. Respondent must have at least five years experience in processing retail payments.
      Yes_____      No_____

10. Respondent is, or will become, qualified with the Secretary of State to conduct business in
the State of Alabama.(To download the form for a “Certificate of Existence”, access
www.sos.state.al.us, corporations division, or call 334-242-5324 to request the form.)
       Yes_____       No_____




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11. Respondent, once selected, will carry a fidelity bond, errors and omissions insurance or
comparable instruments to cover negligent acts or omissions.


12. Respondent maintains sufficient procedures and capabilities to ensure the timely and
accurate backup and full recovery for all computers and other data storage systems related to the
PACT account.
       Yes____        No____

13. The Proposer has a company policy and practice of equal employment opportunity and non-
discrimination based on race, creed or gender.
       Yes____        No_____

14. The Proposer attests that all workers providing the services described in this RFP are either
citizens of the United States or are in proper and legal immigration status that authorizes them to
be employed for pay within the United States.
        Yes____        No____




                                         EXHIBIT D
                             Please attach Disclosure Statement




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