The CalPERS Risk and Audit Committee assigned the highest interview score to BDO USA and voted to recommend that the full board award a contract to BDO, subject to final negotiations and satisfaction of all requirements.

The committee’s recommendation follows a meeting of finalist interviews and a committee scoring process in which members discussed candidates’ technical skills, project management approaches and attention to cybersecurity and artificial intelligence risks. Committee members then used a single motion to assign interview points and later directed staff to begin contract negotiations with BDO as the top-ranked finalist.

Vice Chair David Miller said the finalists were “all very strong” but that differences in how teams addressed emerging technology and information systems affected his scoring. “There was a couple questions where I thought [Plante Moran] just didn't answer the question or didn't address really critical stuff like the emerging AI technologies, what they really would bring to the table,” Miller said.

Member Kevin Pelkey said cybersecurity and the handling of member data weighed heavily in his ranking. “The topic on AI and cybersecurity … protecting that information of our members … is a high concern of mine,” Pelkey said, and added that BDO’s discussion of cybersecurity influenced his top ranking for that firm.

Member Ramon Rubakava and Member Jose Luis Pacheco also described differences they observed among firms. Rubakava said he had been impressed by BDO’s detailed project-management approach and daily-status updates, and Pacheco said Plante Moran’s public-sector experience stood out to him while also noting BDO’s competence.

Committee advisor Mr. Carlin advised members on process before the committee moved to a formal motion. “I think the next step at that point would be for someone to make a motion. And then for the committee to further discuss the motion to try to arrive to a resolution,” he said.

Member Kevin Pelkey moved that the committee award interview points as follows: BDO USA — 700 points, Plante Moran — 690 points, KPMG — 680 points, and Crowe LLP — 670 points. Vice Chair David Miller seconded the motion. The roll call recorded Miller, Jose Luis Pacheco and Pelkey voting yes, Rubakava voting no, and Melissa Willette voting yes; the motion passed.

Staff then completed score tabulation and announced combined totals (preliminary technical scores plus interview scores and incentive points): BDO USA — 1,050 points; Plante Moran — 1,034.59 points; KPMG — 1,018.68 points; Crowe LLP — 1,010.96 points. Justin Heeb, CalPERS contracts and procurement manager, read those totals aloud.

Following the totals, the chair moved that the committee recommend the board award a contract to BDO as the highest-ranking finalist, “subject to final negotiations and satisfaction of all requirements,” and directed staff to begin contract negotiations with BDO and, if negotiations are unsuccessful in staff’s discretion, to begin negotiations with Plante Moran, the next-highest scoring finalist. Jose Luis Pacheco seconded that motion; the committee vote recorded all members voting in the affirmative and the motion passed.

The committee’s discussion noted that BDO had served as the auditor for the referenced period and that KPMG had served for one interim year before BDO took the role, and members referenced aspects of past contracting and the RFP timeline while explaining their votes.

Madam Chair closed the item by reminding members and finalists of the committee’s restricted contact policy and the cited government code provision. “I want to remind all members of the committee and the finalists of the restricted contact policy under government code section 20,153,” she said.

Next steps: staff will begin contract negotiations with BDO and report back to the committee and board as required by CalPERS procurement rules; if staff determines negotiations with BDO are unsuccessful, staff will begin negotiations with Plante Moran, the next-highest scoring firm.