REGISTRATION, LICENSING, AND INSURANCE DIVISION - “FINANCIAL ANALYSIS SUPPORT”
Requisition Number: MC-RS-22-33-00003 Notice Type: Sources Sought Notice Agency Department of Transportation, (DOT); Federal Motor Carrier Safety Administration (FMCSA) Title: REGISTRATION, LICENSING,... Requisition Number: MC-RS-22-33-00003 Notice Type: Sources Sought Notice Agency Department of Transportation, (DOT); Federal Motor Carrier Safety Administration (FMCSA) Title: REGISTRATION, LICENSING, AND INSURANCE DIVISION - “FINANCIAL ANALYSIS SUPPORT” NAICS Code: 541611 Set Aside: Woman Owned Small Business Synopsis: Background The Office of Registration (MC-RS), Division of Registration, Licensing and Insurance was established to meet rapidly increasing challenges and demands for processing licensing and insurance applications, ensuring that carrier’s financial status meets statutory requirements; being responsive to stakeholders; and assisting the agency in raising the bar for entry into the carrier industry by reinforcing high safety standards and removing high-risk carriers, drivers, and service providers. The Division’s primary responsibility is to develop, manage, and administer programs to promote compliance by motor carriers, freight forwarders, and property brokers with registration requirements including regulatory safety, financial, and other requirements. The Insurance requirements are covered in 49 CFR 387, Minimum Financial Responsibility for Motor Carriers and require minimum levels of financial responsibility to be maintained by motor carriers, freight forwarders, and property brokers. The Division of Registration, Licensing, and Insurance is required to ensure minimum levels of financial responsibility are maintained. This requires a complete financial analysis of the following: (1) Self-Insurance Program for Motor Carriers, (2) Motor Carriers under the Oversight of a State/City/Town/Municipalities Insurance Risk Pool, (3) Trust Funds Used by Freight Forwarders and Property Brokers, and (4) Commercial Claims of Motor Carriers. The ICC Termination Act of 1995 transferred the responsibility for granting self-insurance authority sought by for-hire carriers to the U.S. Department of Transportation and by delegation to the Federal Motor Carrier Safety Administration (FMCSA). All for-hire carriers conducting operations in interstate or foreign commerce must maintain on file with the FMCSA evidence of insurance in the required amounts. In addition, the carriers' insurance companies must execute endorsements, which effectively waive policy defenses in court actions brought by injured persons or entities. Carriers that have been awarded self-insurance authorizations are freed from these requirements to the extent and amount of the authorizations and accordingly enjoy substantial cost saving benefits. The application process for self-insurance authority involves a detailed examination of the applicant's financial condition and claims experience. For each grant, a detailed order is issued which includes a series of conditions designed to protect the public. The carrier must satisfy the conditions of the self-decision on a continuing basis. Show cause orders are issued with a view toward terminating the self-insurance decision if the carriers fail to comply with the conditions. In addition, each carrier is subjected to a rigorous review of its financial condition, claims exposure, and claims handling practices at the application stage and continuously thereafter if the authorization is approved. At a minimum, each order requires the quarterly and annual submission of financial and claims data by motor carriers in the self-insurance program which must be analyzed in detail to ensure compliance. If necessary, additional reporting requirements are imposed. In addition, each carrier is required to establish back-up collateral to support the authorization. The amount and type of security must be tailored to each situation based on a thorough analysis of the carrier's financial condition and claims exposure. A compliance monitoring program is designed to identify carriers that may not be able to satisfy their claims obligations from operating funds so that additional security can be required of action taken to revoke the authorization. Despite detailed compliance monitoring, some self-insurance carriers file for bankruptcy or simply liquidate to consolidate their operations with other carriers. In these situations, a background in the banking industry and bankruptcy court proceedings prove critical to evaluate the degree of protection afforded to self-insured claimants by the reorganization or restructuring plans. The FMCSA is responsible for ensuring that the public is not exposed to any undue risk as a result of this program; accordingly, stringent, and often complex conditions are imposed on these authorizations. Finally, FMCSA requires financial consultation and administrative services, to include but not limited to, commercial insurance claims, and special financial projects designated by the Office of Registration. Scope The contractor shall provide consulting services to support the FMCSA in analyzing financial positions and monitoring compliance with the Motor Carrier Self-Insurance Program. Also, the contractor shall provide financial consultation and administrative services, to include but not limited to, Financial condition, approval, and claims exposure of Risk Pools, Financial Security of Brokers and Freight Forwarders registered with FMCSA, specific financial analysis and oversight of Trust Funds filed with FMCSA, claims payment analysis of motor carriers, brokers, and freight forwarders. In this effort the contractor shall conduct annual and quarterly financial and claims reviews of participating motor carriers and new applicants. The contractor shall develop asset resolution programs. The contractor shall be able to analyze the financial health of self-insured motor carriers involved in interstate commerce. The contractor shall develop financial analytical reports and review of insurance claims information of all carriers in the program to help determine which carriers are at risk of not meeting financial claims and/or are unable to maintain financial reserves required as a condition of the program’s initial decision. The contractor shall calculate the cash flow on a monthly, quarterly, and annual basis using a desired algorithm that indicates the carrier’s net worth and its ability to pay out claims with enough reserves to sustain its financial health. The contractor shall be responsible for the following: (l) Review new motor carrier self-insurance applications and modifications; (2) Draft decisions and recommendations granting or denying self-insurance authorizations or modifications to existing self-insured carriers; (3) Review the participating motor carriers' compliance with the conditions of their self- insurance authorizations; (4) Analyze the financial health of these motor carriers; (5) Review the claims reserves associated with the self-insurance program (6) Draft letters of recommendation regarding deteriorating financial status to troubled carriers whenever necessary; (7) Make recommendations on how to improve FMCSA's financial oversight; (8) Create and maintain a status report of all self-insured carriers for each quarter and annual reporting period that includes the following information: a. Self-Insured Carrier Ranking (Standard or Troubled) b. Quarterly or Annual Report Received from FMCSA c. Quarterly or Annual Report Sent to FMCSA d. Cash Flow Available to Insurance Claims Expense (CFAICE) e. Net Worth f. Security Required g. Pending Claim Amount (9) Review new Risk Pool Applications and Modifications (10) Draft decisions and recommendations granting or denying Risk Pools or Modifications to existing Risk Pools (11) Review the Participating Risk Pools compliance (12) Analyze the Financial Health of Risk Pools (13) Review the Claims associated with Risk Pools (14) Draft letters of recommendations regarding deteriorating financial status of Risk Pools (15) Recommend improvement to Financial Oversight of Risk Pools (16) Create and maintain a status report of all Risk Pools based on reporting period(s). (17) Review Trust Funds Filed with FMCSA to ensure it satisfies Financial Security and determine whether Claims Reserves are readily available (18) Review Commercial Insurance claims of motor carriers, brokers and freight forwarders registered with FMCSA Specific Duties Task 1: The FMCSA receives applications from motor carriers for the self-insurance program and petitions for modifications to existing self-insurance authorizations. These applications and modifications, along with historical information, if applicable (i.e., self-insurance decisions, historical financial statements. and claims reports), and current financial statements and claims reports will be provided to the contractor as received. The contractor shall provide support in the following areas: Self-Insurance Application Review and Modification of Self-Insurance Application Review: Within 30 days after receipt of the necessary carrier information from the FMCSA, the contractor shall include an examination of: a. Earnings performance b. Cash position, as it is used as a measurement of the motor carrier’s financial performance c. Ability to service short- and long-term obligation d. The collateral securing the applicant's self-insured commitments e. A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. f. lf an applicant conducts operations within a parent-subsidiary framework, then analysis of intercompany transactions must be undertaken for both applicants and carriers with authorizations. This Review must consider: (i) The use of stand-alone versus consolidated data in establishing conditions of applicants (ii) Offers of parent guarantees to support authorizations must be evaluated in light of the amount of liquid assets available to the parent as well as the existence of loan covenants which may impose restrictions on the use of certain assets. (iii) Bodily Injury & Property Damage (BIPD) and cargo claims analysis for each applicant (iv) The analysis shall evaluate the carrier's claims reserve with a comparison to historical figures. The completed Self-Insurance Application Review packages and modifications must be submitted to the FMCSA within the period listed above after receipt from the FMCSA. The contractor must provide the FMCSA with the following: 1) Historical Financial Statement Spreadsheet 2) Historical Claims Spreadsheet 3) Draft written decision of conclusions and recommendations addressing background, compliance issues, financial review, and claims. This decision should contain recommendations granting or denying the self-insurance authorization or modifications to an existing authorization. Task 2: Motor carriers already in the self-insurance program must provide annual and quarterly reports to the FMCSA. As of November 22, 2021, there are 46 motor carriers in the self-insurance program (see Attachment A). There are two categories of self-insured carriers: "Standard" and "Troubled." Standard carriers have a cash flow ratio of at least two times available over their insurance claims expense. Troubled carriers have a ratio or cash flow available to insurance expense of less than two times. CFAICE is defined as operating cash flow less required annual debt serviced divided by annual claims expense. Annual and quarterly reviews for Troubled carriers shall be submitted to FMCSA within thirty days of receipt from FMCSA providing annual and quarterly reports (i.e., financial and claims information). Standard carrier annual and quarterly reviews shall be submitted to FMCSA within sixty days of receipt of annual and quarterly reports (i.e., financial and claims information) provided by FMCSA. The designation of Standard or Troubled for this requirement will be based on the most recently completed quarterly or annual report. The contractor shall provide support in the following areas: (A) Annual Review (Standard) Within 60 days after receipt of the necessary motor carrier information from the FMCSA, the contractor shall conduct an annual review of each self-insured carrier's annual financial and claims information. The review shall include: (i) Earnings performance (ii) Cash position, as it is used as a measurement of the motor carrier’s financial performance (iii) Ability to service short-term and long-term obligations (iv) The collateral securing the self-insured commitments (v) A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. (vi) Review bodily injury and property damage (Bl&PD) and cargo claims analyses for each participating carrier. (vii) Evaluate the carrier's claim reserve with a comparison to historical figures and related pending court cases. (B) Annual Review (Troubled) Within 30 days after receipt of the necessary motor carrier information from the FMCSA, the contractor shall conduct an annual review of each self-insured carrier's annual financial and claims information. The review shall include: (i) Earnings performance (ii) Cash position, as it is used as a measurement of the motor carrier’s financial performance (iii) Ability to service short-term and long-term obligations (iv) The collateral securing the self-insured commitments (v) A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. (vi) Review bodily injury and property damage (Bl&PD) and cargo claims analyses for each participating carrier. (vii) Evaluate the carrier's claim reserve with a comparison to historical figures and related pending court cases. (C) Quarterly Review (Standard) Within 60 days after receipt of the necessary motor carrier information from the FMCSA, the contractor shall conduct a quarterly review of each self-insured carrier's annual financial and claims information. The review shall include: (i) Earnings performance (ii) Cash position, as it is used as a measurement of the motor carrier’s financial performance (iii) Ability to service short-term and long-term obligations (iv) The collateral securing the self-insured commitments (v) A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. (vi) Review bodily injury and property damage (Bl&PD) and cargo claims analyses for each participating carrier. (vii) Evaluate the carrier's claim reserve with a comparison to historical figures and related pending court cases. (D) Quarterly Review (Troubled) Within 30 days after receipt of the necessary motor carrier information from the FMCSA, the contractor shall conduct a quarterly review of each self-insured carrier's annual financial and claims information. The review shall include: (i) Earnings performance (ii) Cash position, as it is used as a measurement of the motor carrier’s financial performance (iii) Ability to service short-term and long-term obligations (iv) The collateral securing the self-insured commitments. (v) A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. (vi) Review bodily injury and property damage (Bl&PD) and cargo claims analyses for each participating carrier. (vii) Evaluate the carrier's claim reserve with a comparison to historical figures and related pending court cases. The completed Annual Review Report packages and Quarterly Review Report packages must be submitted to the FMCSA within the time frames listed above after receipt from the FMCSA. The contractor must provide the FMCSA with the following: (1) Historical Financial Statement Spreadsheet (2) Historical Claims Spreadsheet (3) Written Report addressing background, compliance issues, financial review, claims review, and conclusions and recommendations (4) Annual Status Report or Quarterly Status Report of All Self-Insured Carriers (5) If the review determines that the carrier's financial performance has materially deteriorated from the preceding period, then the contractor shall provide: (a) Draft letter of recommendations regarding deteriorating financial status to troubled carrier: or (b) Draft show cause decision to troubled carrier; or (c) Draft decision revoking carrier's authorization to self-insure Task 3: Risk Pool Analysis The FMCSA receives applications from states, cities, towns, and other municipalities to self-insure motor carriers who want to operate under their Risk Pools. FMCSA regulation at 49 CFR 387.309(b) provides that “FMCSA also will consider applications for approval of other securities or agreements and will approve such application if satisfied that the security or agreement offered will afford the security for the protection of the public contemplated by 49 U.S.C. 13906.” FMCSA is accepting qualified risk pools as evidence of financial responsibility for interstate motor carrier operations. Each Risk Pool will be subjected to an application and reporting process to include, but not limited to, rigorous review of financial condition, claims exposure, and continuous claims handling practices. The contractor shall provide support in the following areas: (A) Written Report addressing background, compliance issues, financial review, claims review and conclusions/recommendations of Motor Carriers wanting to self-insure using Risk Pools 1. Annual review of reporting status of all Risk Pools to insure they meet 49 CFR 387 should include: (i) Earnings performance (ii) Cash position, as it is used as a measurement of the motor carrier’s financial performance (iii) Ability to service short-term and long-term obligations (iv) The collateral securing the self-insured commitments (v) A financial ratio analysis shall support each examination covering liquidity, profitability, and leverage. (vi) Review bodily injury and property damage (Bl&PD) and cargo claims analyses for each participating carrier. (vii) Evaluate the claim reserve with a comparison to historical figures and related pending court cases. (viii) Financial Review of all Audited Statements for Risk Pools 3. Create and maintain a Historical Claims Spreadsheet 4. Create and maintain Historical Financial Statement Spreadsheet 5. Contractor shall recommend financial or actuarial standards and conditions for approval of Risk Pools Task 4: Trust Fund Analysis Financial Analysis of Trust Funds used by Brokers and Freight Forwarders registered with FMCSA to satisfy Financial Security. FMCSA, under congressionally mandated Moving Ahead for Progress in the 21st Century (MAP-21) is responsible for review of Financial Security of Brokers and Freight Forwarders. For more information on Trust Funds, Brokers, and Freight Forwarders see the following link: https://www.regulations.gov/document?D=FMCSA-2016-0102-0030 Brokers and Freight Forwarders can satisfy financial security by trust funds which must have assets readily available to pay claims. FMCSA must improve regulatory oversight to ensure that companies providing the financial instruments (trust funds) ensure brokers and forwarders can pay claims from motor carriers, shippers, and customers, are properly licensed and capable of paying claims. Each trust fund filed with FMCSA will be subjected to rigorous financial and claims payment analysis. Claims will be tracked for payment and restoration of funds. (A) Written Report addressing the validity of Financial Security and Claims Reserves in accordance with (IAW) MAP-21 1. Create a Report providing Verification that Trust Funds contains and maintains the minimum Financial Security set for Brokers and Freight Forwarders registered with FMCSA IAW MAP-21 2. Create a tracking report to provide a review of Trust Fund Claims Payments IAW with MAP-21 Task 5: Commercial Claims Analysis Review of Commercial Insurance Claims for motor carriers registered with FMCSA when FMCSA is notified of unpaid claims. (A) Create a Written Report analyzing financial claims of motor carriers registered with FMCSA to ensure the public is properly protected on an Annual Basis and Claims are paid in a timely manner Task 6: Site Visits (A) Periodic visits to headquarters on an as-needed basis. Task 7: Contract Transition Ensure that processes and procedures are documented, and process and system training take place for a successful transition and new awardee performance. Instructions: Interested parties are invited to submit a technical capability statement which clearly demonstrates their ability to meet the government’s requirement as summarized above. Additionally, interested parties should discuss their experience in financially analyzing large and middle market companies that are experiencing financial problems and have relationship issues with their creditors; reviewing financial criteria; ratios and utilizing tools that govern motor carriers for setting performance standards and procedures for the new tasks relating to Risk Pools, Trust Fund Analysis, Freight Forwarders/Brokers, and Commercial Insurance claims. Contractors should include General Services Administration (GSA) Schedule, Special Identification Number (SIN), and Contract Number, if applicable. Also, please submit your firm’s business size, and socio-economic status, if applicable. In addition, please confirm your registration expiration date in www.SAM.gov. There is a 10-page limit. Responses must be submitted via email to Steve.Fuller@dot.gov . Reference in the subject line of the email: REGISTRATION, LICENSING, AND INSURANCE DIVISION - “FINANCIAL ANALYSIS SUPPORT” Responses must be received by 12:00 p.m. ET on February 11, 2022.
Data sourced from SAM.gov.
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