What Makes a Retirement Plan RFP Defensible?

What Makes a Retirement Plan RFP Defensible?

An RFP is supposed to help a committee make a good decision. But when that decision is questioned later — by participants, auditors, regulators, or in litigation — the RFP also becomes evidence of how the decision was made.

A defensible RFP is one that holds up under that kind of review. It doesn't guarantee a particular outcome. It shows that the committee followed a careful, fair, and documented process.

Process Is What Gets Reviewed

Fiduciary decisions are judged mainly on how they were made, not only on how they turned out. A committee can choose a provider that later underperforms and still have acted prudently. And a committee can get lucky with a provider and still have a weak process.

That's why the structure of the RFP matters as much as the result.

1. Independence

The first question about any RFP is who ran it.

If the party running the process is also a candidate, or is paid by the providers being compared, the committee may later have to explain why the process should be trusted. An independent evaluator — one with no financial relationships with the firms being evaluated — removes that question.

Independence doesn't mean excluding your current advisor or consultant from the conversation. It means the evaluation itself is run by someone without a stake in the result.

2. Written Criteria, Set in Advance

Before any provider is contacted, the committee should agree on what it's evaluating and how much each factor matters. Common criteria include service model, fees, investment capabilities, participant experience, technology, and cybersecurity.

Setting criteria first matters. Criteria written after the responses arrive can look like they were built to support a decision already made.

3. A Fair, Comparable Market Review

A defensible RFP gives qualified providers the same information, the same questions, and the same deadlines. Responses should be gathered in a format that allows a true side-by-side comparison.

Pricing deserves special care. If each bidder prices a different scope of service, the numbers can't be compared. Blind, anonymous pricing — where bids are compared without the committee knowing which provider submitted which price — can help keep the focus on the terms themselves.

4. Real Alternatives

An RFP with one serious candidate isn't much of a comparison. The committee should be able to show it considered a reasonable range of qualified providers, including firms outside the current relationship.

This doesn't mean the incumbent is at a disadvantage. Many RFPs confirm that the current provider is the right choice. That outcome is far stronger when it comes from real competition.

5. Documented Reasoning

The decision itself is only part of the record. A defensible RFP documents:

• The criteria and how they were weighted

• The providers considered and how each was scored

• Fee comparisons and how they relate to the services offered

• Concerns raised during discussion and how they were resolved

• The final decision and the reasons behind it

Committee minutes should reflect this reasoning in plain language. Someone reading them years later should be able to follow the committee's thinking.

6. Conflicts Disclosed and Managed

Every party involved in the process — advisors, consultants, committee members — should disclose any relationships with the providers being evaluated. Disclosed conflicts can be managed. Undisclosed ones can undermine an otherwise careful process.

7. Monitoring After Selection

Choosing a provider isn't the end of the committee's responsibility. The Supreme Court confirmed in Tibble v. Edison International (2015) that fiduciaries have a continuing duty to monitor plan investments. The same approach — ongoing oversight rather than a one-time decision — applies across the plan's provider relationships.

A defensible RFP sets up that monitoring: clear service expectations, fee terms that can be tracked, and a timeline for the next review.

Where RFPs Most Often Fall Short

Most weak RFPs aren't the result of bad intentions. They're the result of shortcuts, usually taken under time pressure. The most common:

• Starting too late. A compressed timeline forces the committee to skip steps — especially setting criteria and negotiating.

• Scoring without criteria. Responses are read and discussed, but never measured against anything agreed in advance.

• Comparing unlike offers. Bids cover different services or assumptions, so the fee comparison doesn't mean much.

• Thin minutes. The committee had a thoughtful discussion, but the record just says "the committee selected Provider A."

• No follow-through. The contract is signed, and the next review is never scheduled.

Each of these is easy to prevent at the start of the process and very hard to fix after the fact.

The Same Lessons Now Apply to Health Benefits

Retirement plans learned these lessons over the last fifteen years, through disclosure rules, litigation, and closer scrutiny of committee decisions. Health benefits are now on a parallel path, with growing attention to broker compensation, PBM pricing, and how health plan vendors are chosen.

The good news is that the process doesn't need to be reinvented. Independence, written criteria, fair comparison, and clear documentation work just as well for a PBM or broker evaluation as they do for a recordkeeper search.

A Practical Checklist

Before your next RFP, ask whether you can answer yes to each of these:

• Is the process being run by someone without a stake in the outcome?

• Are the evaluation criteria written down before providers are contacted?

• Will every provider respond to the same questions on the same terms?

• Will the committee see a real range of qualified alternatives?

• Will the reasoning behind the decision be clearly documented?

• Is there a plan for monitoring the provider after selection?

If any answer is no, that's the place to strengthen the process before it begins.

Culpepper RFP conducts independent retirement plan and health benefit evaluations with no financial ties to the providers being evaluated. If your committee is planning its next review, we're glad to talk through what a defensible process looks like.