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September 21, 2018

RE: General Investment Consultant Request for Proposal (RFP)

The Board of Trustees of the Educational Employees’ Supplementary Retirement System of Fairfax

County ERFC (ERFC) is requesting proposals from qualified full service investment consulting firms.

ERFC is a public sector defined benefit plan, which operates under terms incorporated in a Fairfax County

Ordinance and the ERFC Plan Document. ERFC is governed by a seven member Board of Trustees that

has fiduciary responsibility for the retirement plan, as well as the exclusive authority to contract for

investment, actuarial and legal services. The Board of Trustees has exclusive responsibility for

investments of the assets of the Fund. The asset allocation for ERFC’s $2.4 billion Fund is as follows:

U.S. Large Cap Stocks 13%

U.S. Small Cap Stocks 5%

International Stocks 12%

Emerging Markets Stocks 5%

Equity Real Estate 9%

Private Equity 7%

Total Equities 51%

Broad Fixed Income 29%

Global Asset Allocation 10%

Better Beta 5%

Absolute Return 5%

The pension fund’s assets are managed externally by approximately 27 investment management firms

and advisors under contract to the Board, and monitored by the general investment consultant. The

Board is now seeking proposals for a general investment consultant. The general investment consultant

assists the Board by providing advice and expertise with respect to the overall management of the assets

of the Fund. Detailed information about ERFC is contained in its Comprehensive Annual Financial

Report, a copy of which is available on ERFC’s website, www.fcps.edu/ERFC. The objectives,

guidelines and performance standards for the assets of the Fund are detailed in ERFC’s Statement of

Investment Policy which is also available on the website. The intended schedule for this RFP process

appears below.

RFP Schedule

Issue RFP Fri 9/28/18

Bidder Questions Due Fri 10/5/18

Responses to Questions Due Fri 10/12/18

All Responses Received Wed 10/31/18

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Committee Selects Finalists Wed 11/15/18

Site Visits November/December 2018

Board Presentations (consultant

selection)

Thu 1/17/19

Please note these dates are subject to change based on the availability of the Board and ERFC staff.

Qualified responses six hard copies of the proposal be received by 5 p.m. EST on October 31, 2018, at the

following office:

The Educational Employees’ Supplementary Retirement System of Fairfax County (ERFC)

8001 Forbes Place, Suite 300

Springfield, Virginia 22151-2205

In addition, an electronic copy must be sent to emartinez@fcps.edu by 5 p.m. EST on October 31, 2018.

Proposals received past the deadline and/or proposals that are incomplete or do not meet the

minimum standards will be automatically disqualified. Additional information may be requested at

any time from bidding organizations, and addenda to the RFP may be issued at any time during the bid

process. ERFC’s standard Agreement for Professional Investment Consultant Services is attached to the

RFP; respondents will be expected to be comfortable providing services under the general terms laid out

in the Agreement. All information received is subject to the Public Records Act, Virginia Freedom of

Information Act, and will be presented in an open Board meeting.

Questions concerning this RFP should be sent by e-mail to Eli Martinez, emartinez@fcps.edu.

Sincerely,

Eli Martinez

Executive Director and Chief Investment Officer

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Table of Contents Statement of Work .............................................................................................................................................................. 4

Intent ................................................................................................................................................................................... 4

Scope ................................................................................................................................................................................... 4

Background ....................................................................................................................................................................... 4

Selection Considerations ............................................................................................................................................. 5

Bidder Qualifications .................................................................................................................................................... 5

Scope of Services ............................................................................................................................................................ 5

Questionnaire ....................................................................................................................................................................... 7

Organization ..................................................................................................................................................................... 7

Personnel and Experience .......................................................................................................................................... 8

Investment Philosophy and Process .................................................................................................................... 14

Standards of Conduct ................................................................................................................................................. 20

Fees ................................................................................................................................................................................... 22

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Statement of Work

Intent It is the intent of these specifications, terms and conditions to describe investment consulting services

being requested by ERFC.

ERFC intends to award a five-year contract (with option to renew) to the bidder selected as the most

responsible bidder whose response conforms to the RFP and meets ERFC’s requirements.

Scope ERFC is committed to providing comprehensive, high quality, and cost effective benefit plans and

programs that provide optimum value to ERFC, its employees and its retirees. ERFC is seeking to

establish a contractual relationship with an investment consulting firm to assist in achieving these goals

including the mutual development of and asset allocation that support ERFC’s mission and key

objectives.

Background ERFC is a legally separate single-employer retirement system and fund established under Virginia Code

Section 51.1-801 to provide pension benefits to all full-time educational and administrative support

employees who are employed by the Fairfax County Public Schools (FCPS) and who are not covered by

another Fairfax County plan. As such, and as a fund under the financial control of the School Board, the

System’s financial statements are included in the Schools’ basic financial statements as a pension trust

fund.

The System contains two primary benefit structures, ERFC and ERFC 2001. Both are defined benefit

structures. The original structure, ERFC, became effective July 1, 1973, and is coordinated with the

benefits members expect to receive from the Virginia Retirement System (VRS) and Social Security. It

remains in effect; however, it was closed to new members employed after June 30, 2001. Effective July

1, 2001, all newly hired full-time educational and administrative support employees were enrolled in

ERFC 2001, hereinafter referred to as ERFC 2001 Tier 1. Tier 1 was closed to new members employed

after June 30, 2017 but remains in effect as well. For ERFC members hired on or after July 1, 2017,

ERFC 2001 Tier 2 was established.

The Board of Trustees is the governing body of ERFC. The ERFC Board comprises seven members—

three appointed by the School Board, three elected by the System’s active membership, and one trustee

who is neither affiliated with, nor employed by FCPS, its School Board, nor by any union or similar

organization representing FCPS employees. The initial six trustees annually select and recommend the

seventh ERFC Board member, or “individual Trustee,” for approval by the FCPS School Board. The

ERFC executive committee comprises the chairperson and treasurer.

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Selection Considerations The criteria identified below are considered by ERFC to be of greatest importance in selecting the new

consulting actuary. Specific response, comment or clarification may be offered to the extent that any of

these issues are not fully addressed in the written response. The ordering of these criteria does not

signify the priority in importance.

Organization 15%

Personnel and Experience 30%

Investment Philosophy and Process 30%

Fees 25%

The successful bidder will provide comprehensive evaluation of the investment results achieved by the

designated investment managers. The investment consultant will also make recommendations to the

Trustees of appropriate actions to be consider which will enhance the probability of achieving the

Fund’s overall objectives. A detailed list of contract services and deliverables is shown below.

Bidder Qualifications 1. Bidder Minimum Qualifications

a. Bidder shall be a SEC-registered investment advisor or exempt from such registration

(Form ADV or disclosure of the nature of the exemption must be submitted).

b. Bidder must have provided investment consulting services comparable to those detailed

in the Scope of Services Section of this RFP to at least two (2) public pension plans, one

or more of which must have had at least $5 billion in assets, for a minimum of five years

as of June 30, 2018.

c. Bidder will agree to act as a fiduciary with respect to the Fund.

2. The bidder must designate an approved lead account consultant who has been regularly engaged

in the business of providing investment consulting services to public employee retirement

systems and has at least 15 years of experience with major public employee retirement systems.

The investment consultant must be an employee of the firm. ERFC reserves the right to reject

the firm’s choice of an investment consultant and may terminate the contract if investment

consultant, acceptable to the ERFC Board of Trustees, cannot be made available by the firm.

Scope of Services ERFC is searching for a qualified investment consulting firm to assist the Board by providing advice and

expertise with respect to the investment and management of the assets of the Fund. Responding firms

must demonstrate extensive experience and superior capability for providing those investment

consulting services that are critical to the success of a public pension plan investment program. The

selected consultant will report to the Board of Trustees of the The Educational Employees’

Supplementary Retirement System of Fairfax County (ERFC) and will be expected to attend Board

meetings when requested, as well as any special Board or Committee meetings as necessary. Regular

Board meetings are normally held once a month in Springfield, Virginia. At the discretion of the Board,

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and dependent upon the qualifications of the firm selected, the Consultant may provide some or all of

the following services:

1. Advise on the development, implementation and/or revision of investment policies and

guidelines.

2. Analyze and advise on the capabilities of investment managers, including the analysis of a firm’s

personnel, investment philosophies and processes, internal and risk controls, risk-adjusted

performance and performance relative to benchmarks and peers.

3. In conjunction with ERFC Trustees and Staff, periodically review the performance of investment

managers through various methods, including interviews and on-site visits.

4. Provide annual asset allocation reviews and recommendations, including annual reports of

general economic conditions and forecasts of capital markets, interest rates, inflation, and risk

and returns for all asset classes.

5. Advise on portfolio structure (e.g. active vs. passive, investment style mix).

6. Provide research and reports on various investment topics, and provide educational presentations

to the Board or Staff as requested.

7. Conduct, assist and advice in manager searches, selections, watch list placements and

terminations.

8. Perform quarterly performance analysis by manager, asset class, and total fund, including peer

universe comparisons at the asset class and total fund levels, and provide quarterly reports on

same.

9. Advice on prospective alternative investment assets, such as hedge funds, overlay strategies, etc.

10. Shepherd, monitor and grow existing private markets portfolio.

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Questionnaire

Respond fully to each of the following questions.

Organization

1. Please provide firm and primary contact information.

Name of the firm: _____________

Primary Contact Title Address Phone and E-mail

2. Indicate your office location(s). Provide the number of employees located in each office

location and describe the general function(s) of each office.

Office Location Number of Employees Office Function

3. Please describe your firm’s history and current ownership structure. Include the year your firm

was established and the year you began to provide investment consulting services to tax-

exempt pension clients. List the owners of the firm from largest to smallest percentage

ownership. If any changes to the firm’s organizational structure are known or anticipated,

please describe. Make sure to include the information in the table provided below (as of June

30, 2018).

Year founded

# of firm employees (in total)

# of investment professionals (in total)

# of investment professionals (projected to be

assigned to ERFC)

% of firm owned by employees

Location (city and state)

Parent Company (or equivalent)

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4. Provide information on organizational control/decision-making interests by your parent

organization and other affiliated parties (i.e., board seats, compensation structure, equity

participation, and other ongoing concerns, etc.).

5. Provide an organization chart of your firm and describe the relationship between the

investment consulting group and any other components of the firm.

6. For the year ended June 30, 2018, please list all services provided by the firm and the

percentage of total income that such services represent. If the firm has an ultimate parent

company, please list the percentage of total income that the firm’s services represent to the

ultimate parent company.

Type of Service % of Total Firm Revenue % of Total Parent Revenue

7. Please provide a copy of the firm’s most recent Form ADV Parts I and II.

8. Please identify all affiliated institutes, conferences, symposia, foundations, or other institutions

and for each, identify related sponsors, members or other participants, and remuneration paid

by them during the preceding three years.

Affiliation Participant Name Paid in

2017

Paid in

2016

Paid in

2015

Personnel and Experience

9. Who should ERFC contact regarding any questions about the information contained in your

response to this RFP? Who will be the lead consultant? Provide the following contact

information for each: title, phone, email, and address.

Name/Title Phone Email Address

RFP Contact

Lead Consultant

Client Service

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10. Provide biographies of personnel to be assigned to the ERFC relationship, including educational qualifications,

years of institutional investment experience, years of institutional investment consulting experience, and total years

with the firm. Also provide the total number of accounts assigned to each individual and include the name, plan

type, length of relationship, and size of each assigned client account.

Education Consultant #1 Consultant #2 Consultant #3 Client Service

Institutional investment

experience

Institutional investment

consulting experience

Years with firm

Number of accounts

assigned

Name account #1

Plan type

Relationship length

Account size

Name account #2

Plan type

Relationship length

Account size

Name account #3

Plan type

Relationship length

Account size

Name account #4

Plan type

Relationship length

Account size

Name account #5

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Plan type

Relationship length

Account size

Name account #6

Plan type

Relationship length

Account size

Name account #X

Plan type

Relationship length

Account size

11. Describe the firm’s compensation and incentive arrangements for consultants and other professional staff.

Staff type Compensation/incentive structure

Consultant

Performance analyst

Client service

Other

Other 2

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12. Calculate the turnover rate in senior level staff in each of the last five years. Indicate the

number of people lost in the following areas.

Consultants

Year Annual Turnover

Rate

Number of

Consultants Lost

Total Number

of Consultants

1

2

3

4

5

Technical Personnel

Year Annual Turnover

Rate

Number of

Technical Staff Lost

Total Number

of Staff

1

2

3

4

5

13. Please provide the number of institutional clients and assets under advisement the firm has

serviced in an all-inclusive, or full-retainer, fee capacity at the end of each of the last five

calendar years.

Year Number of full retainer clients Assets under advisement

1

2

3

4

5

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14. Please provide length of relationship of educational employee clients in the table below.

Client Name Current Client

(Yes/No)

Past Client

(Yes/No)

Length of

Relationship

15. For each of the last five calendar years, please provide the name and dollar amount of assets

advised for every all-inclusive retainer fee investment consulting client that terminated their

relationship with the firm. Provide the reason for each termination.

Year Client name(s) Amount of assets advised

1

2

3

4

5

16. Please list the number of institutional clients and assets under advisement the firm has serviced

on a project basis over the last five years. Please describe the types of projects for which you

were retained.

Year Number of

project clients

Assets under

advisement

Type of Project

1

2

3

4

5

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17. List six references for public pension funds with assets each in excess of $1 billion for the Lead

Consultant and Co-lead Consultant to be assigned to the ERFC account: three clients that are

currently receiving investment consulting services and three terminated clients for whom

investment consulting services had been provided. For each reference include client name,

contact person, address, telephone number, email address and services provided in the table

below:

Active Clients Terminated Clients

1 2 3 1 2 3

Client

Name:

Contact

Person:

Address:

Telephone

Number:

Email

Address:

Services

Provided:

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Investment Philosophy and Process

18. Describe the firm’s philosophy with respect to investment consulting. What key strengths and

competitive advantages does the firm possess that generate superior performance and service to

pension plan clients?

Philosophy:

Strengths and advantages:

19. In your view, how should a client measure its investment consulting firm’s performance?

Please explain. How does the firm measure its own performance?

Client measurement of consultant’s performance:

Consultant’s own measure of performance:

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20. Discuss the theory and methodology of the asset allocation models the firm utilizes. Describe

your process for establishing asset class risk and return assumptions, particularly for asset

classes such as real estate and private equity. What asset classes are included in the model?

How frequently does the firm review its capital markets expectations?

Theory and methodology of asset allocation models:

Process for asset class risk and return assumptions:

Process for real estate and private equity risk and return assumptions:

Asset classes included in model:

Frequency of capital markets expectations review:

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21. Describe the firm’s process for assisting clients with investment policy guideline development

and review. What specifically would the firm do to develop or review the policies of the

Fund? How would the Fund be involved in the process?

Process for investment policy guideline development and review:

Specific actions for development or review of current Fund policies:

Fund involvement:

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22. Please describe the firm’s manager research database. Is the database proprietary or purchased

from an outside vendor? Are managers charged for inclusion? How many managers are

tracked? What is the method for gathering information on the investment managers? How

often is the data updated?

Manager research database description:

Proprietary or purchased

Managers charged for inclusion

Number of managers tracked

Method for information gathering

Frequency of data update

23. Please describe the firm’s manager search process. How does the firm initially screen

managers? What criteria are emphasized in the latter stages of a search? How many manager

searches did the firm perform in 2017?

Initial screening process

Criteria emphasized in latter

search stages

Searches performed in 2017

Searches performed in 2016

24. Does the firm use some form of pre-approved manager list? Why is this practice superior or

inferior? Please attach a complete list of your firms pre-approved money managers—including

private markets managers if applicable.

Use pre-approved manager list (yes/no)?

Defense or argument against pre-approved manager lists:

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25. Please describe the firm’s experience and capability for analyzing manager structure. What

influence does a client’s current manager roster have on the selection of a new manager?

Experience and capability for analyzing manager structure:

Influence of client’s current manager roster on new manager selection:

26. Please describe how the firm monitors investment managers. Please include the firm’s

experience and capability for assessing an investment manager’s total performance. Besides

investment returns, what key criteria does the firm consider in the review of an investment

manager? At what point would the firm recommend terminating an investment manager?

Method of monitoring of investment managers:

Experience and capability for assessing performance:

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Criteria in review of investment manager (besides returns):

Termination point:

27. What is the percentage of investment manager turnover across all client portfolios over the last

five years?

Year Investment manager turnover rate

1

2

3

4

5

28. Does the firm keep a record of all manager recommendations made to public pension plan

clients?

29. Ideally, what is the best-practice clients can implement to monitor consultant performance?

30. How are consultants’ recommendations to clients reviewed and monitored by your

organization?

Recommendation type Method for monitoring

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31. Does the firm adhere to a level of consistency in consultant recommendations?

32. What systems are in place or do you recommend to assess your performance as an investment

consultant?

Standards of Conduct

33. Please list the revenue derived from investment consulting services as a percentage of total

firm revenue over the last five years (all clients and public pension fund clients).

Year

% of Revenue from

Investment Consulting

% Revenue from Investment

Consulting Public Pension Funds

1

2

3

4

5

34. Has the firm, its principals or any affiliate ever: (a) been the focus of a non-routine Securities

and Exchange Commission (SEC) inquiry or investigation or a similar inquiry or investigation

from any similar federal, state or self-regulatory body or organization; (b) been a party to any

litigation concerning fiduciary responsibility or other investment related matters; or (c)

submitted a claim to your errors & omission, fiduciary liability and/or fidelity bond insurance

carrier(s)? If yes to any, please provide details.

Details

SEC/Federal/State Inquiry

Fiduciary responsibility

litigation

Errors & omissions claim

35. What percentage of clients pay some or all of their consulting fees through soft dollar

arrangements?

36. Does the firm have a written code of conduct or set of standards for professional behavior? If

so, attach a copy and state how are they monitored and enforced.

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37. Has the firm adopted the CFA Code of Ethics and Standards of Professional Conduct? If so,

how is employee compliance monitored?

CFA Code adopted Compliance monitoring method

38. How does the firm identify and manage conflicts of interest?

39. Has your organization or any officer or principal of your organization been involved in

litigation related to consulting activities? If so, provide a brief explanation and indicate the

current status of the proceedings in the table below:

Practice Country Briefly Describe

Allegation

Outcome

Investment

Other

40. Does the firm retain any clients for whom it provides both general investment consulting

services and specialized private market consulting services? If so, please explain how your

firm avoids conflicts of interest, i.e. long-term marketing advantages, competitive advantages,

asset allocation bias, etc.

41. Within the last five years, has the firm or an officer or principal derived any remuneration

from any third party investment manager; and if so, please identify with particularity the

manager, the amount of remuneration and the consideration you provided in exchange for the

remuneration.

Manager Remuneration amount Consideration provided

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Fees

42. Please provide the flat annual fee your firm would charge for providing all of the requested

services.

43. Indicate any additional categories of consulting work not listed in the Scope of Services that

would be considered to be “special projects” that would not be included in the flat annual fee

quoted in response to Question 37 (services not listed are assumed to be part of the flat annual

fee engagement). Define specifically how “special projects” would be billed.

Project category Billing method

Exhibits

44. Please include as exhibits sample copies of the following:

a. Manager search book

b. Manager due diligence report

c. Research report

d. Quarterly performance review

e. Capital markets projections

f. List/sample of client resource tools

g. Alphabetical client list segregated by

i. Type of client, i.e. endowment, public fund, etc.

1. Educational, government, corporate, etc.

h. Private market resources, segregated by type, i.e. RE, PE, NR, Inf.

i. Team/expertise

ii. Firms last 5 years of deal flow volume

US_ACTIVE-142562868

AGREEMENT FOR

PROFESSIONAL INVESTMENT CONSULTANT SERVICES

This Agreement (“Agreement”) is made and entered into as of the Effective Date as

defined herein, by and between The Educational Employees’ Supplementary Retirement System

of Fairfax County (“ERFC”) and [______________________________] (“Consultant”).

WITNESSETH

WHEREAS, ERFC requires expert consulting services to assist the Board of Trustees of

ERFC (“Board”) in prudently investing the assets of the retirement system; and

WHEREAS, Consultant proposes to provide investment consulting services to ERFC and

Consultant represents that it has the experience, licenses, qualifications, staff and expertise to

perform said services in a professional and competent manner; and

WHEREAS, ERFC wishes to engage the services of Consultant as more particularly

described in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of

which is hereby acknowledged, it is mutually agreed by and between ERFC and Consultant that

Consultant shall provide the services to ERFC on the terms and conditions as set forth herein.

ARTICLE 1 – SCOPE OF WORK AND PERFORMANCE OF SERVICES

1.1 Consultant agrees to furnish the services set forth in Exhibit A, Scope of Services,

attached hereto and incorporated herein by this reference and any other services to which

the parties agree (collectively, the “Services”). Services shall include all documents,

materials, reports, manuals, plans, and specifications related to the Services.

1.2 Consultant’s Services shall be completed and submitted in accordance with ERFC’s

standards specified, and according to the schedule listed, in Exhibit A. The completion

dates specified herein may be modified by mutual agreement of ERFC and Consultant.

Consultant agrees to diligently perform the services to be provided under this Agreement.

In the performance of this Agreement, time is of the essence.

1.3 Consultant represents, warrants and agrees as follows:

(a) It is duly organized and in good standing in all jurisdictions in which it conducts

its business.

(b) It has the professional skills and expertise necessary to perform the services to be

performed under this Agreement and will provide ERFC with expert advice and

recommendations concerning the prudent investment of the assets of the

retirement system.

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(c) It has all the appropriate licenses and professional certifications necessary to

perform the services and shall maintain them in good standing during the term of

this Agreement.

(d) It will perform the Services in accordance with the highest standard of skill and

expertise prevailing among those consulting firms providing investment

consulting services to public employee defined benefit pension funds in the

United States.

(e) It acknowledges that ERFC is relying upon the professional skill and expertise of

Consultant to perform the Services.

(f) Acceptance by ERFC of the Services shall not operate as a release of Consultant

from its professional responsibility for the Services.

1.4 Consultant is an independent contractor and not an employee of ERFC. Consultant

expressly warrants that it will not represent to any third party for any reason that it is an

employee of ERFC.

1.5 Consultant agrees to maintain in confidence and not disclose to any person or entity,

without ERFC’s prior written consent, any confidential information, knowledge or data

relating to the services, processes, or operations of ERFC, including without limitation

investment, financial, accounting, member and statistical information pertaining to

ERFC. Notwithstanding anything to the contrary, the obligations of the Consultant set

forth in this Section 1.5 shall not apply to any information of the disclosing party which:

(i) is or becomes a part of the public domain through no wrongful act of Consultant; (ii)

was in the Consultant’s possession free of any obligation of confidentiality at the time of

ERFC’s communication thereof to Consultant; (iii) is developed by Consultant

completely independent from the confidential information of ERFC; or (iv) is required by

law or regulation to be disclosed, but only to the extent and for the purpose of such

required disclosure after providing ERFC with advance written notice if reasonably

possible such that ERFC is afforded an opportunity to contest the disclosure or seek an

appropriate protective order. Subject to the limitations and restrictions contained in this

Agreement, Consultant further agrees to maintain in confidence and not to disclose to any

person or entity, any data, information, technology, or material developed or obtained by

Consultant on behalf of ERFC during the term of this Agreement.

1.6 Subject to the limitations and restrictions contained in this Agreement, the studies,

reports, and other documents prepared or caused to be prepared by Consultant or others

acting on its behalf in connection with performing the Services (collectively,

“Documents”) shall be delivered to and shall become the exclusive property of ERFC.

Consultant may retain and use copies of such Documents, with written approval of

ERFC.

1.7 Consultant shall retain all rights, title and interest (including, without limitation, all

copyrights, patents, service marks, trademarks, trade secret and other intellectual property

rights) in and to all technical or internal designs, methods, ideas, concepts, know-how,

- 3 - US_ACTIVE-142562868

techniques, generic documents and templates (“Tools”) that have been previously

developed by Consultant or such Tools developed during the course of the provision of

the Services provided such Tools do not contain and/or are not based upon or derived

from any ERFC confidential information or proprietary data. Rights and ownership by

Consultant of its Tools shall not extend to or include all or any part of ERFC’s

proprietary data or ERFC confidential information. To the extent that Consultant may

include in the materials any pre-existing Consultant proprietary information or other

protected Consultant materials, Consultant agrees that ERFC shall be deemed to have a

fully paid up perpetual license to make copies of the Consultant owned materials as part

of this engagement for its business purposes and provided that such materials cannot be

modified without the written permission of Consultant.

1.8 At all times during the Term of this Agreement, as herein defined, the Services shall be

performed under the direct supervision of [________________________] (the “Lead

Account Consultant”). It is understood that no substitution for the Lead Account

Consultant will be permitted without the express prior written consent of ERFC, upon

action of its Board. In the event the Lead Account Consultant is absented from ERFC’s

account for any reason during the Term, and the Board has not approved a qualified

substitute for in writing, the Board may terminate this Agreement upon thirty (30) days’

written notice to Consultant.

1.9 Consultant shall meet with the ERFC’s Board at 8-12 investment-oriented Board

meetings per year at the times and places designated by the Board. Consultant agrees that

the Services include the Consultant’s attendance at Board meetings as needed in

Springfield, Virginia, as requested by the Board.

ARTICLE 2 – COMPENSATION

2.1 For the performance of all Services described in the Scope of Services contained in

Exhibit A, ERFC agrees to pay Consultant actual costs incurred, subject to compensation

for services in accordance with the method and amounts described in Exhibit B, attached

hereto and incorporated herein by this reference. Consultant certifies that the proposed

cost and pricing data used herein are complete, current, and accurate.

2.2 In the event of any changes affecting the Scope of Services resulting from new findings,

unanticipated conditions, or other conflicts or discrepancies, Consultant shall promptly

notify ERFC of the identified changes and advise ERFC of the recommended solution.

Work shall not be performed on such changes without ERFC’s prior written

authorization.

ARTICLE 3 – TERM AND EFFECTIVE DATE; NOTICE TO PROCEED

3.1 Unless sooner terminated in accordance with this Agreement, the term of this Agreement

shall commence on the Effective Date, as defined herein, and continue for five years and

may be renewed thereafter on a year-to-year basis (collectively the “Term”). The Term

may be extended by the parties by mutual agreement.

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3.2 This Agreement shall become effective on the date on which both parties’ authorized

signatories shall have executed the Agreement as indicated below (“Effective Date”).

Consultant shall commence work under the terms of this Agreement on the Effective

Date.

ARTICLE 4 – TERMINATION

4.1 This Agreement may be terminated by ERFC for cause upon one-day’s written notice to

Consultant. “Cause” shall include, but not be limited to, Consultant’s breach of this

Agreement or tortious conduct in connection with the performance of this Agreement or

any Services; the material unavailability of the Lead Account Consultant; and any

adverse action taken against Consultant by any state or federal regulatory agency or by

any other person or entity in connection with Consultant’s professional activities. This

Agreement may be terminated by ERFC without cause for any reason upon thirty (30)

days’ written notice to Consultant.

4.2 If this Agreement is terminated by ERFC, Consultant shall be entitled to compensation

for Services satisfactorily performed to the effective date of termination; provided

however, that ERFC may condition payment of such compensation upon Consultant’s

delivery to ERFC of any and all completed Documents provided to Consultant or

prepared by or on behalf of Consultant for ERFC in connection with this Agreement.

Payment by ERFC for the Services satisfactorily performed to the effective date of

termination shall be the sole and exclusive remedy to which Consultant is entitled in the

event of termination of the Agreement, and Consultant shall be entitled to no other

compensation or damages and expressly waives same. If ERFC has prepaid for any

Services, Consultant will forthwith remit a pro rata amount of the prepayment

representing the unearned portion of the prepayment.

4.3 This Agreement may be terminated by Consultant upon sixty (60) days written notice to

ERFC only in the event of substantial failure by ERFC to fulfill its obligations under this

Agreement through no fault of the Consultant. Prior to terminating the Agreement,

Consultant shall endeavor informally to resolve any issue or dispute with ERFC.

Following termination and upon request, Consultant agrees to cooperate with ERFC in

arranging a satisfactory transition of investment consulting services to another consultant.

4.4 This Agreement may be terminated immediately by written mutual agreement.

4.5 If this Agreement is terminated, payment to Consultant for Services rendered shall be in

proportion to the percentage of work that ERFC judges was satisfactorily performed up to

the effective date of termination.

ARTICLE 5 – INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE

5.1 Indemnification

Consultant expressly agrees to indemnify, defend and hold harmless ERFC and its Board

members, officers, directors, agents and employees (for purposes of this Article,

collectively, “ERFC”), from and against any and all loss, liability, expense, demands,

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and/or damages, including attorneys’ fees and costs, for any third party claims or suits

brought against ERFC arising out of or resulting from the wrongful acts or omissions,

and/or violations of applicable law, by Consultant and/or anyone acting on its behalf,

which result in injury to a person or damage to property.

5.2 No Limitation of First-Party Liability to ERFC

Nothing in this Agreement is intended to nor shall limit Consultant’s liability to ERFC

for any and all loss, liability, claims, expense, demands, and/or damages, including

attorneys’ fees and costs, arising out of or relating to the wrongful acts or omissions of

Consultant and/or anyone acting on its behalf.

5.3 Insurance Requirements

Prior to the Effective Date, Consultant shall have obtained, and thereafter shall maintain

during the Term of this Agreement, and for so long thereafter as claims may be brought

for acts or omissions occurring during the Term of this Agreement, all the insurance

required in this Section 5.3, and shall submit certificates for review and approval by

ERFC not less than annually. Each certificate of insurance except for professional

liability shall confirm that ERFC is an additional insured under the policy. Consultant’s

insurers shall be subject to ERFC’s reasonable acceptance. Consultant shall make its

insurance policies and all endorsements available to ERFC for inspection and copying

upon reasonable request.

Acceptance of any such certificate shall not relieve Consultant of any of the insurance

requirements, nor limit the liability of Consultant. Consultant’s insurance coverage shall

be primary; any other coverage available to ERFC shall be excess to Consultant’s and not

contribute to it.

(a) Workers’ Compensation Insurance

Consultant shall obtain and maintain during the Term of this Agreement and as

extended, Workers’ Compensation Insurance, providing coverage for all of its

employees and others acting on its behalf working in connection with performing

the Services. In lieu of evidence of Workers’ Compensation Insurance, ERFC

will accept a Certificate of Self Insurance from the Virginia Workers’

Compensation Commission.

(b) Commercial General Liability Insurance

Consultant shall obtain and maintain during the Term of this Agreement and as

extended, Automobile and General Liability Insurance providing coverage for all

of its employees and others acting on its behalf working in connection with

performing the Services. The amounts of such insurance coverage shall not be

less than $1,000,000/Occurrence, Bodily Injury, Property Damage —

Automobile, $1,000,000/Occurrence, Bodily Injury, Property Damage - General

Liability.

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(c) Professional Liability Insurance

Consultant shall obtain and maintain during the Term of this Agreement and as

extended, professional liability insurance (Errors and Omissions) with a minimum

of $10,000,000 of liability coverage per claim. Any deductible is the sole

responsibility of Consultant. Consultant shall provide 30 days advance written

notice to ERFC of any cancellation of or changes in coverage or deductible.

Consultant represents and warrants that coverage under the policy is applicable to

claims brought by ERFC.

(d) Upon request, Consultant will allow for inspection of its most recent audited

financial statements to ERFC, together with a certified statement disclosing any

material subsequent events occurring after the date of the statements.

ARTICLE 6 – NOTICES

6.1 Any notice which ERFC may desire or is required at any time to give or serve Consultant

may be delivered personally, or be sent by express delivery or United States mail, postage

prepaid, addressed to:

[__________________]

or at such other address as shall have been last furnished in writing by Consultant to

ERFC.

Any notice which Consultant may desire or is required at any time to give or serve upon

ERFC may be delivered personally, or be sent by express delivery or United States mail,

postage prepaid, addressed to:

The Educational Employees’ Supplementary Retirement System of

Fairfax County

Attention: Eli Martinez

8001 Forbes Place, Suite 300

Springfield, VA 22151-2205

or at such other address as shall have been last furnished in writing by ERFC to

Consultant.

Such personal delivery, express delivery or mailing in such manner shall constitute a

good, sufficient and lawful notice and service thereof in all such cases. Notice and

service shall be deemed effective upon actual receipt.

ARTICLE 7 – LEGAL COMPLIANCE

7.1 Consultant agrees that it is a fiduciary to ERFC and will perform all of its duties under

this Agreement in accordance with the same fiduciary standards as are applied to

members of ERFC’s Board.

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7.2 Consultant agrees that it will perform Services subject to and in furtherance of ERFC’s

operative investment policies and procedures, as amended from time to time, including

but not limited to ERFC’s Statement of Investment Policy.

7.3 Consultant agrees to observe and comply with all applicable Fairfax County,

Commonwealth of Virginia and federal laws, ordinances, rules, regulations and policies

now in effect or hereinafter enacted or issued, each of which are hereby made a part

hereof and incorporated herein by reference.

7.4 Consultant agrees that it is unaware of any financial or economic interest of any public

officer or employee of ERFC relating to this Agreement. It is further understood and

agreed that if such a financial interest does exist at the inception of this Agreement, it

shall constitute “cause” for termination of this Agreement.

7.5 Consultant agrees that all of its directors, officers, employees and agents who provide

services with respect to ERFC shall comply with applicable federal, state and ERFC

conflict of interest requirements. Consultant shall immediately notify ERFC in writing of

any violation thereof.

7.6 Consultant shall not directly or indirectly receive any benefit from recommendations or

advice made to ERFC and shall immediately disclose in writing to ERFC any investment

or economic interest of Consultant, or any of its officers, directors, agents or employees

or affiliates, that may be enhanced by the recommendations Consultant makes to ERFC.

7.7 Consultant agrees to disclose to ERFC any relationship it or any of its officers, directors,

agents or employees have with, or any financial interest they have in, any third party

manager, placement agent, contractor or vendor to ERFC.

7.8 Consultant agrees to disclose to ERFC as soon as possible after the happening of such

event, (a) the existence of any action, including investigations, initiated by any state or

regulatory agency in connection with the conduct of Consultant’s business, (b) the

existence of any material claims by any party arising out of the conduct of Consultant’s

business and (c) any material change of circumstances affecting the conduct of

Consultant’s business.

7.9 The services to be performed by Consultant will be performed in conformance with the

policies, interpretations, rules, practices and procedures made or established by ERFC

and as provided by ERFC to Consultant. Consultant will not have discretionary authority

with respect to the management of the assets. Consultant cannot be relied upon to

discover errors irregularities or illegal acts, including fraud or falsifications that may exist

in the internal administration of ERFC. Therefore, Consultant will not be liable for any

actions taken, or not taken, as directed by or caused by actions of the ERFC, ERFC’s

agents, administrators, or any other person(s) or third parties authorized to provide

directions to Consultant.

Consultant will serve as an Investment Consultant to ERFC, and as such will provide

investment advice with respect to the selection, monitoring, and performance evaluation

of ERFC’s portfolio managers. Consultant hereby certifies that it is registered as an

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Investment Advisor under the Investment Advisor Act of 1940 or is lawfully exempt

from such registration. If so registered, its investment advisory services will be in

compliance with such Act and the regulations enacted thereunder. Nothing herein will in

any way constitute a waiver or limitation of any rights which the ERFC may have under

federal securities laws.

7.10 During the term of this Agreement, Consultant shall disclose to ERFC annually, or

sooner as ERFC requests, a report of its internal risk management policies and

procedures, their success or failure, and allow for inspection of the results of any audit of

such policies and procedures conducted by any person or entity.

ARTICLE 8 - MISCELLANEOUS

8.1 This Agreement represents the entire understanding of ERFC and Consultant as to those

matters contained herein. No prior oral or written understanding shall be of any force or

effect with respect to those matters covered hereunder. This Agreement may only be

modified by amendment in writing signed by each party.

8.2 This Agreement is binding on the successors and assigns of the parties hereto. This

Agreement is personal to the parties hereto and the Services to be provided are unique.

Neither party may assign, transfer or otherwise substitute its interest in this Agreement or

any of its obligations hereunder except with the parties’ mutual written consent, which

consent may be withheld for any reason whatsoever.

8.3 If any part of this Agreement is declared by a final decision of a court or tribunal of

competent jurisdiction to be unlawful, invalid or beyond the authority of either party to

enter into or carry out, such decision shall not affect the validity of the remainder of this

Agreement, which shall continue in full force and effect, provided that the remainder of

this Agreement can be interpreted to give effect to the intentions of the parties.

8.4 Multiple counterparts of this Agreement may be executed by the parties but together they

shall constitute one agreement. The parties agree that the executed Agreement in the

possession of ERFC shall be the version of the Agreement that shall take precedence

should any differences exist among counterparts of the Agreement.

8.5 Governing Law; Jurisdiction and Venue.

(a) This Agreement shall be deemed to have been entered into and performed in

Fairfax County, Virginia. All matters relating to this Agreement shall be

governed by the laws of the Commonwealth of Virginia, without regard to its

conflict of interest provisions.

(b) In the event of any dispute between the parties arising out of or relating to this

Agreement, the breach, termination, enforcement, interpretation or validity

thereof, the Parties agree that they shall first attempt to resolve their dispute

through non¬binding mediation, to be conducted in a manner satisfactory to the

parties but to be concluded within 90 days following either party’s delivery of

written notice to the other party of the dispute and a request for mediation. If the

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dispute has not been resolved within 90 days following delivery of such notice, or

as mutually extended in writing by the parties, either party shall be free to initiate

legal action as provided for below.

(c) In the event the dispute has not been resolved timely through non-binding

mediation or otherwise, the parties will each have the right to initiate legal action

in a court of competent jurisdiction venued in the Circuit Court for Fairfax

County, Virginia, or in the U.S. Federal District Court for the Eastern District of

Virginia. The law of the Commonwealth of Virginia shall govern all substantive

matters.

8.6 A party’s waiver of the performance of any covenant, condition, obligation,

representation, warranty or promise in this agreement shall not invalidate this Agreement

or be deemed a waiver of any other covenant, condition, obligation, representation,

warranty or promise. A party’s waiver of the time for performing any act or condition

hereunder does not constitute a waiver of the act or condition itself.

8.7 There shall be no discrimination against any person or group of persons, on account of

race, color, religion, creed, national origin, ancestry, gender, age, marital status,

disability, or sexual orientation in the performance of this Agreement. Consultant shall

not establish or permit any such practice(s) of discrimination with reference to the

Agreement or the performance of any Services. Consultant’s violation of this section

shall be deemed to be a material breach of this Agreement

8.8 Consultant affirms that it does not have any financial interest or conflict of interest that

would prevent Consultant from providing unbiased, impartial service to ERFC under this

Agreement.

8.9 This Agreement may be modified or amended only in a writing signed by both parties,

specifically referring to this Agreement.

8.10 The provisions of Sections 1.5, 1.6, 4.2, 4.3, 4.5, 5.1, 5.2, 5.3, 6.1, 7.9, 8.2, 8.5, 8.6 and

8.11 shall survive termination of this Agreement for whatever reason.

8.11 Consultant’s work is prepared solely for the use and benefit of the ERFC in accordance

with its statutory and regulatory requirements. Consultant recognizes that materials it

delivers to the ERFC may be public records subject to disclosure to third parties,

however, Consultant does not intend to benefit and assumes no duty or liability to any

third parties who receive Consultant’s work in this fashion and may include disclaimer

language on its work product so stating. To the extent that Consultant’s work is not

subject to disclosure under applicable public records laws, and Consultant has

specifically designated the work as “Proprietary,” ERFC agrees that it shall not disclose

Consultant’s Proprietary work product to third parties without Consultant’s prior written

consent; provided, however, that the ERFC may distribute Consultant’s Proprietary work

in its entirety to; (i) its professional service providers who are subject to a duty of

confidentiality and who agree to not use Consultant’s work product for any purpose other

than to provide services to the ERFC, or (ii) any applicable regulatory or governmental

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agency, as required. Consultant acknowledges that this Agreement and all of its exhibits

are public records subject to disclosure under applicable law.

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto each herewith subscribe the same in duplicate.

THE EDUCATIONAL EMPLOYEES’

SUPPLEMENTARY RETIREMENT

SYSTEM OF FAIRFAX COUNTY

Dated: ______________________________

By: _________________________________

Authorized Signatory

Its: __________________________________

[CONSULTANT]

Dated: ______________________________

By: _________________________________

Authorized Signatory

Its: __________________________________

US_ACTIVE-142562868

EXHIBIT A

SCOPE OF SERVICES

1. Purpose and Scope of Service

Consultant shall provide comprehensive general investment consulting advice and services.

Consultant will report to the Board. Consultant will functionally work closely with the Board

and ERFC’S Executive Director and CIO.

In general, the consultant will assist the Board in the ongoing process of investment policy

development and implementation. Consultant will serve in a fiduciary capacity and will

acknowledge in writing its fiduciary status, without qualification. In all cases, Consultant and its

representatives will offer advice to the board that is solely in the interest of the plan participants

and beneficiaries of ERFC. The services required include, but are not limited to the following:

2. Investments, Investment Policy and Asset Allocation

a) Provide annual asset allocation reviews and recommendations, including annual reports

of general economic conditions and forecasts of capital markets, interest rates, inflation,

and risk and returns for all asset classes.

b) Develop an appropriate investment management structure for ERFC and each asset class

that considers the role of active versus passive strategies and investment management

styles under different market conditions.

c) Analyze the investment characteristics of available asset classes and the risk/ return

potential of alternative asset mix policies, and recommend changes where appropriate.

d) Advise on effective risk-based approaches to effective asset allocation (e.g. risk

budgeting or value at risk) and further advise on how best to transition to a risk-based

asset allocation approach for the Fund over time.

e) Provide advice and recommendations on various other investment policy issues

including, but not limited to: cash flow, currency management, derivatives, rebalancing,

use of soft dollars, securities lending, proxy voting, etc.

f) Shepherd, monitor and grow existing private markets portfolio (i.e., investing in private

equity and private real estate, as a fiduciary).

3. Investing Manager Search, Selection and Review

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a) Analyze and advise on the capabilities of investment managers, including the analysis of

a firm’s personnel, investment philosophies and processes, internal and risk controls,

risk-adjusted performance and performance relative to benchmarks and peers

b) Conduct, assist and advice in manager searches, selections, watch list placements and

terminations.

c) Assist ERFC staff with negotiating appropriate investment management fees including

monitoring and evaluating manager trading and transaction costs.

d) Assist ERFC in developing a formal manager review process. In conjunction with

ERFC’s Board and staff, periodically review the performance of investment managers

through various methods, including interviews and on-site visits. Have periodic

discussions with managers on investment performance and organizational issues (such as

changes in ownership, staff, new products, etc.).

e) Provide ongoing monitoring and oversight of investment managers and their

organizational risk to ensure compliance with laws and regulations, investment policies

and manager mandates

f) Provide recommendations for retention or replacement of investing managers and

facilitate transition management services as necessary.

4. Performance Monitoring and Reporting

a) Compare the investment performance of the total fund, asset classes and investment

managers to relevant benchmarks and “peer group” samples.

b) Recommend appropriate performance benchmarks for the total fund, each asset class,

portfolio composite and investment manager.

c) Provide regular risk-based reporting with respect to the fund.

d) Provide periodic and ongoing asset and fund performance calculations at the discretion of

the Board and ERFC staff.

5. Client Service and Education

a) Provide research and reports on various investment topics, and provide educational

presentations to the Board or Staff as requested

b) Prepare and present quarterly reports on investment performance, including quarterly

performance analysis by manager, asset class, and total fund, including peer universe

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comparisons at the asset class and total fund levels, and provide quarterly reports on

same.

c) Advice on prospective alternative investment assets, such as hedge funds, overlay

strategies, etc.

d) Coordinate effectively with staff, the actuary and the custodian bank.

e) Respond to inquiries between meetings in an appropriate and prompt manner (i.e., be

available to respond in a timely manner to calls, emails or other communication from

staff and board members).

f) Report any significant changes in the firm’s ownership, organizational structure and

personnel in a timely manner.

g) Assist on special projects as needed, the scope of which shall be approved by both parties

in advance.

h) Provide all other investment advisory- related services as requested.

6. Review, Search and Selection of Other Investment- Related Vendors

a) Provide advice and recommendations on custodial arrangements, (including custodian

review and search services).

b) Assist with evaluation, search and selection involving other investments- related

consultants and vendors as required.

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EXHIBIT B

COMPENSATION

Compensation for services provided in Exhibit A, SCOPE OF SERVICES, shall be in

accordance with the methods and specific amounts described in this Exhibit.

1. Effective [___], 2018, as approved by the Board, ERFC shall pay Consultant for

performance of the Services set forth in Exhibit A an annual basic retainer fee. The

annual basic retainer fee is as follows:

Year 1 $

Year 2 $

Year 3 $

Year 4 $

Year 5 $

2. Following Year 5, if the Agreement is renewed, the annual basic retainer fee will increase

annually, either adjusted for inflation by the percentage increase, if any, of the annual

Consumer Price Index for all Urban Consumers, U.S. City Average, published by the

U.S. Bureau of Labor Statistics (“CPI”), or as otherwise negotiated. Inflationary

adjustments will be made based on the publication of the annualized CPI for the quarter

ending March 31.

3. For other services or projects not included in Exhibit A, ERFC and Consultant will

negotiate the fee.

4. Billing and Payment

Consultant shall invoice ERFC on a quarterly basis, in advance, for 1/4th of the above

annual basic retainer fee.