For Immediate Release - July 17, 2012


Switch to Federated Investors, Inc. Will Save Commonwealth More Than $8 Million

          Treasurer Steven Grossman today announced that his office’s efforts to competitively bid the contract to provide investor management services for the Massachusetts Municipal Depository Trust (MMDT) will result in $8.17 million in anticipated savings to the Commonwealth over three years, a 34 percent reduction in the present cost of conducting the business.  The MMDT, created by the Legislature in 1977, provides cash portfolio and bond fund management services for the state, several independent authorities, and approximately 290 municipalities.

          “One of my principal commitments when I took office was to competitively bid all of our contracts, both to save taxpayers money and bring best business practices to all of our operations,” said Grossman.  “This new contract clearly represents the best deal for the Commonwealth and its taxpayers.”

          Predicated on a successful contract negotiation, the new firm for the business will be Federated Investors, Inc., one of the nation’s largest investment managers with over $369 billion under management and an investor of public funds in all 50 states.  The firm competed against three other finalists for the business in a highly competitive procurement process that weighed factors such as best value, stability and general expertise of the firm, personnel qualifications, and supplier diversity.  The firm, which is based in Pittsburgh, has committed to expanding their offices in Boston.

          “This was a professional, objective, and competitive process from the start, one that involved collaboration between Treasury staff, municipal officials, and representatives from several independent government authorities,” said Anthony Logalbo, the Treasurer and Finance Director for the Town of Concord and a member of the 16-member Procurement Management Team comprised of local, state, and independent authority officials.  “Federated Investors will generate continued confidence in the state Treasury’s management of our cash and bond portfolios, and I was pleased to play a part in this thorough and carefully considered recommendation.” 

          Officials also noted that the anticipated $8 million-plus in savings over the three-year term of the contract come in the form of lower investment fees for the state, municipalities, and independent authorities that invest in the MMDT, directly benefiting taxpayers by freeing up more money for services that these entities provide.  

          The contract has been held by Pyramis Global Advisors, a subsidiary of Fidelity Investments, for the 35 years that the MMDT has been in existence.  Upon transition, Federated Investors, Inc. will operate under a three-year contract with the option for two one-year extensions.

          “We’re deeply grateful for the professional partnership we have enjoyed with Fidelity over the years, and we look forward to continuing our relationship with them in a wide variety of financial services,” said Grossman.  “We thank them for their outstanding service to the Commonwealth and the MMDT.”

          In addition to the MMDT contract, Grossman said that his office identified dozens of significant contracts that could be put out for competitive bid when he first came into office.  Last summer, Grossman’s office successfully negotiated a new contract for the Treasury’s core banking services that is saving $2.7 million over three years.