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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 1 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 2 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 9 Forwarded to Council: Rod Gould City Manager 'a Reference: Contract No. 9830 (CCS)