Retirement boards may request authority to commit funds to new partnerships offered
by alternative investments project managers with whom they have already invested. An
example would be a board that has invested in a hypothetical Venture Capital V and has
voted to invest in Venture Capital VI. When a board elects such a course as a prudent
exercise of its fiduciary responsibility, it may conclude that no purpose is served by
drafting an RFP and undertaking a competitive process. Such a process may be deemed
impractical not only because of the short time frame often involved in terms of
committing to new partnerships but also because the board’s existing relationship with
the current project manager could well preclude a thorough and true competitive process.
In these cases, the board should submit an updated exemption application for the
manager along with a request for a supplementary regulation relative to the normal
procurement process for an investment-related service (840 CMR 16.08). This request
should include documentation of the board’s current financial relationship with the
manager, including assets invested, length of contract, and investment performance
results from existing projects, as well as an explanation of why a commitment to the
manager’s new project is consistent with the board’s investment objectives and strategies.
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