A New York state judge dismissed a lawsuit by a unit of Empower Retirement challenging the New York City Deferred Compensation Plan's hiring of Voya Financial as the record keeper for its 457, 401(a) and 401(k) plans.
Following an RFP issued in June 2018, the plan's governing board announced in December that it had chosen Voya, replacing the Empower unit, then known as FASCore LLC, for a five-year contract that began in mid-2019. FASCore had been the record keeper since 1996. It is now called Empower Institutional.
The governing board received bids from five candidates, including FASCore, noting that Voya received the highest score among the finalists.
However, FASCore challenged the procurement process, first in a pair of protest letters and later in court as an Article 78 proceeding, named for the section of state law that allows appeals of decisions by state or local agencies. FASCore said the governing board failed to follow state procurement practices.
"Here, FASCore has to contend with the results of the process which placed it in third place due to its high cost and low technical rating," wrote Verna L. Saunders, a New York State Supreme Court judge, in her Sept. 27 opinion rejecting FASCore's claims.
The selection of Voya "was rational and reasonable and not arbitrary and/or capricious," Ms. Saunders wrote in the case of FASCore LLC vs. Robert Linn et al.
In November 2018, FASCore filed a protest letter with the New York City's Office of Labor Relations, whose former commissioner, Robert Linn, also was chairman of the deferred compensation board. FASCore alleged that the RFP process was tainted, adding another protest letter in December.
The office denied the claims, saying the RFP process complied with state law and that Voya was "properly selected" by the plan's governing board.
The New York City Deferred Compensation Plan had aggregate assets of $16.4 billion as of Dec. 31, according to its annual report.
