SR-072308-1KCity Council Meeting: July 23, 2008
Agenda Item: 0'-k.
To: Mayor and City Council
From: Karen Bancroft, Director of Human Resources
Subject: Professional Services Agreement with Gallagher Benefits Services Inc.
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a contract with Gallagher Benefits Services, Inc. (Gallagher) for employee
benefits consulting services for a period of three years with two one-year renewal
options.
Executive Summary
The City of Santa Monica will engage Gallagher to provide benefits consulting services
including negotiating health- insurance renewals with insurance carriers, issuing and
assisting with requests for proposals for health insurance coverage, handling
problematic insurance claim issues, and other employee health and welfare issues.
Gallagher was selected through a competitive process to provide these services for a
three-year term in an amount not to exceed $191,000 (including 10% contingency), with
two additional one-year renewal options in an amount not to exceed $70,000 (including
10% contingency) for the first one-year renewal option and $74,000 (including 10%
contingency) for the second one-year renewal option.
Discussion
The City of Santa Monica will engage Gallagher to provide a full range of employee
benefits consulting services and day-to-day benefit plan administration, which includes
the following services: renewal negotiations with carriers; contract review;
claims/service assistance with vendors; legislative updates and interpretation; client
meetings; vendor interface (correspondence and meetings); plan design; employee
benefits strategic planning; financial analysis; claims experience analysis and reporting;
plan marketing and general consulting services related to City employee benefit plans.
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Contractor/Consultant Selection
The Human Resources Department issued a Request for Proposal (RFP) for employee
benefits consulting services in April 2008. The RFP packet was requested and issued to
five firms; AON Employee Benefits Consulting (AON), Mercer, Buck Consultants,
Gallagher Benefits Services, and ABD/Wells Fargo Insurance Services. Five written
proposals were received, reviewed and scored by a review team comprised of Human
Resources staff. The selection criteria included the firm's qualifications, fees, minimum
amount of consulting required to contract with the City, references, and additional
services provided. Based upon this review, AON and Gallagher were invited for an
interview.
The review team unanimously recommends Gallagher based on price, experience, and
services provided. Gallagher's proposed pricing fees are either significantly less than
the other firms or are based on fee-for-service compared to commission-based fees.
Their fees-for-services at the minimum are 30% less than other firms with the same
pricing structure. Gallagher was founded in 1927 and is the third largest
consultant/broker in the country. They have extensive public sector experience, which
includes numerous municipality clients and schools. Their services include a Public
Entity Practice Group of consultants who focus on the benefit and human resource
issues specific to public entity businesses.
Financial Impacts & Budget Actions
The cost for benefits consulting. services will not exceed $191,000 for the three-year
term of the professional services agreement beginning with fiscal year 2008/09 through
2010/11. Funds for these services will be budgeted in the Human Resources
Department in account 01252.555060. The first one-year renewal option to the contract
will not exceed the amount of $70,000 and the second one-year renewal option. will not
exceed the amount of $74,000. Funds for the renewal options will be considered in
future years' budgets.
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Prepared by:
Karen Bancroft, Director of Human Resources
Approved:
Kahn Bancroft
Director of Human
Forwarded to Council:
'~amont Ewell
ity Manager
Reference Contract No.
8959 (CCS).