Review of the Distributorship Agreement for the Commonwealth Secretariat Debt Management Software Suite

Reference: X/CWG/090
Closing Date: 2 Apr 2012

Background

The Debt Management Section (DMS) (http://www.csdrms.org/) which implements the Commonwealth Secretariat’s capacity building programme in debt management in its member countries since 1985 is an arm of the Special Advisory Services Division (SASD) of the Secretariat. As part of the programme, DMS has developed and continuously maintains a suite of debt management software comprising the Commonwealth Secretariat Debt Recording and Management System (CS-DRMS) and the Commonwealth Secretariat Securities Auction System (CS-SAS). The debt management software is available free to all Commonwealth Member countries, while non-members pay a price and are serviced by the Crown Agents (UK) through a non-exclusive Distributorship agreement between the Secretariat and Crown Agents. As of now, the software has been made available to 60 countries around the world, including 15 non-member countries out of which 8 are supported through Crown Agents.

The Commonwealth Secretariat initially signed the distributorship agreement with Crown Agents in 1993 for the software distribution to non-member countries. The distributorship agreement was subsequently reviewed in 2005 to incorporate a new pricing structure along with new collaborative arrangements. A further revised pricing policy was applied in 2010 as a temporary measure to make the software products financially more competitive. Under the agreement, Crown Agents markets and sells the software to non-Commonwealth clients (mostly Ministries of Finance and Central Banks) at a price pre-agreed with the Secretariat with revenue sharing arrangements between the two organizations. Based on this arrangement, an end user licensing agreement is signed between the clients and Crown Agents whereby the latter provides direct support to these client sites under a separate software support and maintenance agreement entered with the respective clients. For provision of additional services related to training and capacity building activities, the pricing of such intervention is determined exclusively by Crown Agents and remains outside the scope of the distributorship agreement.

Since the release of the current generation of the software in 2001, the application suite has undergone a range of enhancements both on the functional and technological fronts as a direct response to the significant changes in the global debt management landscape, user requirements as well as Information Technology arena. In response to these changes, DMS will be releasing in 2012 a new software product, the Commonwealth Secretariat Public Debt Analytical Tool (CS-PDAT) as part of the suite of the debt management software to assist debt managers plan debt operations within a strategic framework.

DMS will also soon be embarking on a project to re-engineer the CS-DRMS and CS-SAS based on state-of-the-art technologies. This would also be coupled with architectural and functional enhancements to render the software more business friendly and transform it into a tool to better assist debt managers in decision making.

Software Suite

The Commonwealth Secretariat debt management software, launched in 1985, as a debt recording and management software popularly known as (CS-DRMS) has been expanded with other systems related to auctioning of government securities and for planning debt operations within a strategic framework. The various software forms a suite of applications which conform to international best practices of compilation, accounting, reporting of debt data and management of debt liabilities. The systems are used by government agencies, namely the Ministries of Finance, Debt Management Offices (DMO), Treasuries, and Central Banks, for monitoring and managing the sovereign debt portfolio. The system is also used for sub-national debt management and private sector debt management in some countries.

The software suite, which is available in English and French, comprises the following applications:

• Commonwealth Secretariat Debt Recording and Management System (CS-DRMS)
• The software adopts a comprehensive perspective to debt management by providing a central repository for several categories of public and privately secured external and domestic debt, including short-term debt, virtually covering all types of debt instruments. The two main modules of the system are as follows:

a. Loans Management Module allows recording and monitoring of loan data, terms and conditions from multilateral, bilateral and commercial creditors. It also comes with an Analytical Module designed to assist debt managers to conduct sensitivity analysis and portfolio reviews.

b. Securities Management Module provides for capturing details and monitoring of a wide range of debt securities issued by the Government and Central Banks, covering treasury bills, bonds, promissory notes and commercial papers.

• Securities Auctioning System (CS-SAS) is a software product that allows clients (mostly central banks) to manage auctioning of debt securities from issuance through to acceptance and allotment of bids. A soon to be released supplementary product, the Securities Online Bidding System (CS-OSBS) will allow online submission of bids through the Internet and also offer dealers the facility to monitor status of their bids and browse through information on past auctions.
• The Public Debt Analytical Tool (CS-PDAT) which is a new product to be released in 2012 will support the formulation of the government debt management strategy over the medium term and its implementation through the preparation of an annual borrowing plan and application of liability management operations. The system is based on comprehensive cost and risk analysis model for planning future debt operations.

The Commonwealth Secretariat is currently planning to move CS-DRMS and CS-SAS to latest technologies. The objective is to re-engineer the CS-DRMS/CS-SAS which will cover revisiting the current architecture and functionalities as well as addition of new features and taking advantage of new technologies.

Scope of Work

Since the current distributorship agreement became effective with the Crown Agents in 1993, the debt management software (CS-DRMS) has been sold to 8 non-Commonwealth countries. For adoption of CS-DRMS by non-member countries, in some instances, Crown Agents submits its bid for tenders as part of procurement process adopted by respective departments / Ministries in the client countries. The bid includes the cost of the software as well as other associated services like installation and training. Support to the Crown Agents client countries using CS-DRMS are mainly provided based on the activities underlined in the time bound project. Further follow up activities aimed at capacity building are also provided by Crown Agents based on the needs of their clients. The main principles for providing support to the client countries are meeting client software requirements for effective utilisation of the system for supporting public debt management operations more efficiently, ensuring sustainable capacity in the use of the system, strengthening debt management and adhering to international best practices.

Following the new enhancements in the debt management systems including development of new systems like PDAT, preliminary market information shows the potentiality of a sizable demand for the new CS-PDAT from non-member countries. However, for the new CS-PDAT and the proposed re-engineered CS-DRMS to achieve deep penetration in the non-Commonwealth market, there will be a need for a skills enhancement at the distributor’s end with respect to marketing, sale, support and training of the software suite. Even more importantly, for any firm expected to distribute the Secretariat debt management software suite, the new PDAT system will necessitate possession of specific expertise in debt and risk analysis, policy formulation and implementation, fixed income markets in contrast to traditional expertise required on debt recording, compilation and accounting principles and information technology.

In view of the above, the Secretariat is envisaging to enlist consultancy services to review the current distributorship agreement and recommend appropriate arrangements and processes within a new partnership agreement that would better support non-member client countries and improve and maximize sale potential of the Secretariat’s debt management software suite beyond the Commonwealth boundaries thereby enhancing the visibility of the Secretariat. Specifically, the consultancy services will include the following:

• Undertake a quantitative and qualitative assessment of the performance of the distributorship agreement between the Secretariat and the software distributor (Crown Agents presently) through key performance indicators to analyse achievements made so far and identify areas where improvements can be made;
• Identify any key weaknesses in the current distributorship arrangements including but not limited to for example access to information, reporting mechanism, review meetings, sharing of proceeds, obligation of parties, etc;
• Assess customer satisfaction of client countries under the current distributorship arrangement including assessment of the instruments of intervention deployed for supporting countries and based on value-for- money approach;
• Recommend measures and arrangements to ensure high quality delivery of the distributor’s intervention so as to achieve maximum impact in non-member Commonwealth countries;
• Assess the possibility, pros and cons of opening up the distributorship arrangement to more than one distributor;
• Advise on the recommended profile (expertise, size, etc.,) of potential distributors for the successful implementation of the distributorship agreement for serving the needs of non-member countries taking into account the planned enhancement of the software suite of the Secretariat;
• Assess the plausibility and effectiveness of any other model other than a distributor arrangement for supporting non-member countries;
• Recommend the pricing policy for software licenses and Annual Maintenance Fees (in GBP) that the distributor should charge for the sale of the different products (CS-DRMS, CS-SAS, CS-PDAT) to non-Commonwealth countries and advise on the revenue sharing arrangement between the Secretariat and the distributor;
• Advise on the kind and content of Service Level Agreements between the distributor and the user country for support;
• In the light of the above and taking into consideration the expanding portfolio of software offered by the Secretariat, review the Distributorship Agreement and make appropriate recommendations;
• Review the Software Licensing Agreement and the maintenance agreement entered between the software distributor and non-Commonwealth clients and make recommendations accordingly with regard to services covered, service level, obligations of parties, etc;
• Assess legal implications in respect of any underlying recommendations;
• Undertake any other appropriate tasks relevant for the successful completion of the assignment;
• Document the recommendations, supported by analysis and justifications, in a consultancy report to be submitted on conclusion of the assignment. The recommendations will be presented to a team of the Commonwealth Secretariat in London and the feedback received will be taken into account by the consultant for finalizing the report.

Draft and final deliverables produced during this assignment will be the property of the Commonwealth Secretariat which will hold the copyright to their use.

Required Technical Expertise

For undertaking the above mentioned work, consultancy firms are invited to submit their proposals to the Secretariat. The assignment should be undertaken by a minimum of two consultant(s) having the following mix of expertise:

• A good knowledge of public debt management process;
• Legal expertise and experience working with contractual documents; Relevant experience in financial or business software marketing, development, implementation and/or support;
• Demonstrable involvement in, and good understanding of issues and industry best practices relating to service level agreements;
• Consulting experience with regard to software contracts and pricing;
• Knowledge of project management
• Knowledge of technical assistance work and process will be an added advantage;

Location and Level of Effort

The consultants will be expected to work closely with DMS staff and regularly demonstrate progress to DMS.

The consultant(s) will need to travel to the Commonwealth Secretariat office in London, UK for initial discussions with the team and the present distributor and also for presentation of findings and recommendations. As part of this assignment, the consultants will also be expected to travel to four Non-Commonwealth member countries of which two are using CS-DRMS through the support of Crown Agents; one which did not adopt CS-DRMS following previous bidding process participated by Crown Agents; and one which represents a potential client country for CS-PDAT adoption. The specific countries to be visited will be communicated to the successful bidder by the Commonwealth secretariat. The Secretariat will also arrange for the visits and meetings with relevant parties in the respective countries. Other client sites may be surveyed through teleconferencing/video conferencing or email/questionnaire. Any other relevant work can be done at the consultant’s premises.

The level of effort anticipated for the assignment is up to around 50 person days. This would include consultations with DMS and other relevant parties, survey of clients, research, documentation and submission of draft report, presentation of recommendations to the Secretariat and finalisation of the report. Bidders will specify the number of person days they expect the assignment will take.

Remuneration

The Secretariat will offer the following:

• Consultancy fees (the daily rate would be up to £500 per day)
• Economy class return air fare to London and client sites, as applicable.
• Daily subsistence allowance for nights spent in London and at client sites at prevailing UN rates, as applicable

The following payment terms will apply:

(a) 20% of the consultancy fees after signature of contract.

(b) 30% on submission of the first draft of the report to a standard deemed satisfactory to the Secretariat.

(c) 50% of the fees after completion of work to the satisfaction of the Secretariat.

Assessment Criteria

Bids will be assessed based on the following criteria:

• Understanding of the terms of reference;
• Methodology and work plan for undertaking the assignment;
• Qualifications and Experience of bidder/consultant.
• Consultancy fees

Submission of Proposals

Proposals must include the following:

• The profile of the consultancy firm and details of similar projects undertaken;
• A write up explaining

(a) the bidder’s understanding of the assignment;

(b) the methodology for undertaking the assignment and achieving the objectives; and

(c) the adequacy of the consultant’s knowledge and experience with reference to the assignment and required expertise;

• Composition of consultancy team and roles and responsibilities of individual consultants;
• Detailed CV of consultant(s) showing:

(a) Skills related to assignment;

(b) Experience related to assignment;

• A detailed work plan with milestones showing involvement of proposed consultants for different activities; the work plan will also show which activities will be carried out in London for which there will be need for consultants to travel to the Secretariat;
• Total consultancy fees. The consultancy fees do not include cost of travel to and subsistence allowance in London and client sites (if applicable) as these will be arranged for separately by the Commonwealth Secretariat.

Proposals should be submitted electronically via e-mail to Human Resources to the attention of Mr James Lek at j.lek@commonwealth.int

The deadline for submission of proposals is 24:00 hours BST on 2nd April 2012.

Download the Terms of Reference