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SR-12-11-2012-3FCity Council Meeting: December 11, 2012 Agenda Item: 2--�—Tz To: Mayor and City Council From: Gigi Decavalles- Hughes, Director of Finance Subject: First Modification to Professional Services Agreement for Workers' Compensation Data Analysis Services Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to a professional services agreement in the amount of $107,400 with TCS Risk Management Services, LLC, a California -based company, for workers' compensation data analysis services. This will result in a new five -year agreement in the amount of $166,150, with future funding contingent on Council budget approval. Executive Summary The City has used the services of TCS Risk Management Services for the past two years to prepare quarterly reports detailing the financial and operational position of the Workers' Compensation Program. This data is critical to Risk Management; it allows staff to closely monitor program performance and focus cost containment efforts on areas that yield the greatest cost savings or efficiencies. TCS Risk Management Services was selected to provide this service through a competitive bidding process in the summer of 2010. Finance staff reviewed the nine proposals received on the basis of experience, qualifications, references and cost, and concluded that TCS Risk Management Services was the best bidder. The initial two - year agreement with TCS Risk Management Services did not meet the purchasing threshold for requiring City Council authorization. Staff now recommends the City pursue a first modification to this agreement that extends the term by three years and increases the total contract cost from $58,750 to $166,150. This action requires City Council approval. Discussion The Risk Management Division of the Finance Department is responsible for managing the City's Workers' Compensation Program, and in this capacity, is charged with ensuring the program operates cost - effectively and in accordance with the law. Tracking the financial and operational performance of the program is critical to this 1 effort. Therefore, for the past two years, staff has used the services of TCS Risk Management Services to prepare quarterly program performance reports. The value of this service is many -fold; the reports help staff: 1) objectively and succinctly communicate citywide and department specific program performance to Department Heads and the City Manager; 2) track the progress of program cost containment efforts to determine effectiveness and make adjustments as necessary; 3) identify troubling trends early and take appropriate action; and 4) focus on program cost containment areas that yield the greatest costs savings or efficiencies. In short, these reports are a critical tool for effectively managing workers' compensation costs. The initial two -year agreement with TCS Risk Management Services did not meet the purchasing threshold for requiring City Council authorization. Staff now recommends the City pursue a first modification to this agreement that extends the term by three years and increases the total contract cost from $58,750 to $166,150. This action requires City Council approval. Consultant Selection A Request for Proposal (RFP) for workers' compensation data analysis services was posted on the City's online bidding website in April of 2010. Nine firms submitted responses to the RFP. A panel composed of City Finance staff evaluated the proposals on the basis of experience, qualifications, references and cost, and determined that TCS Risk Management Services was the best bidder. The firm demonstrated a superior understanding of the project scope, possessed the most experience with preparing workers' compensation data analysis, and submitted a competitively priced proposal. The City subsequently entered into a two -year agreement with TCS Risk Management Services for $58,750. The initial agreement, set to expire in December 2012, did not meet the purchasing threshold for requiring City Council authorization. Staff now recommends, however, the City pursue a first modification to this agreement that 2 extends the term by three years and increases the total contract cost from $58,750 to $166,150. This action requires City Council approval. Financial Impacts & Budget Actions The agreement modification to be awarded to TCS Risk Management Services is $107,400, and when added to the initial agreement of $58,750 brings the total agreement cost to $166,150. Funds in the amount of $17,900 are included in the FY2012 -13 budget in account 59235.555060. Budget authority for subsequent years will be requested in each budget cycle for Council approval ($35,800 per year for FY2013 -14; $35,800 in FY2014 -15, and $17,900 in FY2015 -16). Future funding is contingent on Council approval. Prepared by: Deb Hossli, Risk Manager Director of Finance 3 Forwarded to Council: Rod Gould City Manager Reference Contract No. 9675 (CCS).