Procurement of Financial Services

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Best Practice

Governments rely on a variety of vendors to provide essential financial services, including:

  • Banking services
  • Trustee/custodial
  • Securities broker/dealer
  • Underwriting and other debt related services
  • Financial advisory
  • Merchant services
  • Investment advisory services

These industries are subject to constantly changing regulations, technologies, and market conditions. As a result, governments must provide regular due diligence of all financial service providers. Part of ongoing due diligence includes regular competition for the procurement of services.


GFOA recommends that governments review their financial services contracts every five years and use a competitive process for the procurement of financial services. A competitive procurement process provides an opportunity for the government to obtain market competitive rates and negotiate preferable terms and conditions and/or service enhancements in financial service contracts. It also gives the government an opportunity to take advantage of technology enhancements, service changes, or evolution in the market. Identifying a regular schedule for soliciting competitive bids for financial service providers also helps reduce the risk of a government becoming too reliant on one vendor.

With every competitive procurement process, governments should define the scope of the procurement opportunity, identify specific evaluation criteria, and prepare a strategy to evaluate responses. Evaluation criteria should specifically address the following:

  • Product and service breadth, depth and quality – the service provider’s ability to provide solutions that meet the government’s specific needs.
  • Quality of servicing staff – the individual experience, skills, and qualifications of the staff members who will provide services on the account, if selected, and their ability to meet the government’s needs.
  • Financial strength – the service provider’s profitability, operating history, and net capital (which should be of sufficient size to satisfy service requirements).
  • Service capacity – the provider’s ability to process sufficient transaction volumes and dollars of throughput.
  • Regulatory standing – the provider’s status with the applicable regulatory agency.
  • Reputation and social responsibility – the experience peer governments have had with the provider and the provider’s demonstration of being a good citizen that is fair and honest in its dealings.
  • Cost – the overall cost or rate included in the proposal, which can include consideration of potential future price escalations.
Treasury and Investment Management
  • Sample RFPs (coming soon)
  • Sample evaluation criteria/checklist (coming soon)
Approved by GFOA's Executive Board: 
January 2017