SR-11-12-2013-3ICity Council Meeting: November 12, 2013
Agenda Item: -3-1
To: Mayor and City Council
From: Donna C. Peter, Director of Human Resources
Subject: Professional Services Agreement with Gallagher Benefits Services, Inc.
for Employee Benefits Consulting Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a professional service agreement with Gallagher Benefits Services, Inc.
(Gallagher), an Illinois -based company, in an amount not to exceed $234,000 (includes
10% contingency) for employee benefits consulting service for three years, with two
additional one -year renewal options in the amount of $82,700 and $85,300,
respectively, for a total amount not to exceed $402,000 over a five -year period, with
future year funding contingent on Council budget approval.
Executive Summary
Gallagher provides benefits consulting services including negotiating health and welfare
insurance benefit plan 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 $234,000 (including 10% contingency), with two additional one -
year renewal options in an amount not to exceed $82,700 (including 10% contingency)
for the first one -year renewal option and $85,300 (including 10% contingency) for the
second one -year renewal option.
Discussion
Gallagher would provide the City of Santa Monica 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
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planning; financial analysis; claims experience analysis and reporting; plan marketing
and general consulting services related to City employee benefit plans
Contractor /Consultant Selection
The Human Resources Department issued a Request for Proposal (RFP) for employee
benefits consulting services in July 2013. The RFP was posted on the City's online
bidding site and sent to five firms that provide benefits consulting services. Six written
proposals were received, reviewed and scored by a review team comprised of Human
Resources staff. The selection criteria included the responsiveness of the firms proposal
to the RFP, including clarity, organization, and approach to providing the scope of
services, demonstration of technical expertise, the qualifications and experience of
individual team members, references and marketplace position, rates and fees, and the
consultant's awareness and ability to provide communication of emerging trends and
regulatory updates with regard to employee benefits and health care reform. Based
upon this review, Gallagher was rated the highest and is recommended as the best firm
to provide benefits consulting services.
SEBINS Healthcare Consultants proposed the lowest fees, but their overall proposal
scored lower in other areas of the selection criteria, specifically in the approach to
providing the scope of services, references, and marketplace position. Gallagher's
proposed pricing fees were the second lowest and are based on fee - for - service as
opposed to commission -based fees. With exception to SEBINS's lowest bid, Gallagher's
proposed fees are from 9% to 145% less than the proposed fees of the other firms.
Gallagher was founded in 1927 and is the fourth largest insurance brokerage firm 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
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The professional service agreement to be awarded to Gallagher is for an amount not to
exceed $402,000 (includes 10% contingency). Funds are available in the FY 2013 -14
budget in division 252; the contract will be charged to account 01252.555060. Budget
authority for subsequent budget years will be requested in each budget for Council
approval. Future funding is contingent upon Council approval and budget adoption.
Prepared by: Grace Quitzon, Senior Human Resources Analyst
Approved:
(fDonna C. Peter
Director, Human Resources
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Forwarded to Council:
Rod Gould
City Manager
'a
Reference:
Contract No. 9830
(CCS)