2015-29245 Reso RESOLUTION NO. 2015-29245
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
CITY MANAGER PERTAINING TO THE RANKING OF FIRMS, PURSUANT TO
REQUEST FOR PROPOSALS (RFP) NO. 2015-195-LR FOR HEALTH CARE
BENEFITS CONSULTING SERVICES; AUTHORIZING THE ADMINISTRATION
TO ENTER INTO NEGOTIATIONS WITH THE TOP-RANKED PROPOSER,
GALLAGHER BENEFIT SERVICES, INC.; AND IF UNSUCESSFUL IN
NEGOTIATING AN AGREEMENT WITH GALLAGHER BENEFIT SERVICES,
INC., AUTHORIZING THE ADMINISTRATION TO ENTER INTO
NEGOTIATIONS WITH AON CONSULTING INC.; AND IF UNSUCESSFUL IN
NEGOTIATIONS WITH AON CONSULTING INC., AUTHORIZING THE
ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH WELLS FARGO
INSURANCE SERVICES USA, INC.; AND FURTHER AUTHORIZING THE
MAYOR AND CITY CLERK TO EXECUTE AN AGREEMENT UPON
CONCLUSION OF SUCCESSFUL NEGOTIATIONS BY THE
ADMINISTRATION.
WHEREAS, Request for Proposals (RFP) No. 2015-195-LR was released on July 9,
2015; and
WHEREAS, a pre-proposal conference was held on July 23, 2015; and
WHEREAS, the City received proposals from Aon Consulting Inc., Gallagher Benefit
Services, Inc., and Wells Fargo Insurance Services USA, Inc.; and
WHEREAS, on October 20, 2015, the City Manager, via Letter to Commission,
appointed an Evaluation Committee (the "Committee") consisting of the following individuals:
• Sonia Bridges, Risk Manager, Human Resources Department, City of Miami Beach
• Kathie Brooks, Assistant City Manager, City of Miami Beach
• Tameka Otto-Stewart, Budget Officer, Budget Department, City of Miami Beach
• Anne-Marie Sharpe, Risk Manager, City of Miami
• Allison Williams, Interim Acting Assistant Director, Finance Department, City of Miami
Beach; and
The following Alternates were also appointed:
• Jim Buschman, Risk Manager, City of Hallandale Beach
• Ramon Suarez, Finance Manager, Finance Department, City of Miami Beach; and
WHEREAS, the Committee convened on November 5, 2015 to consider all proposals;
and
WHEREAS, the Committee was provided an overview of the project, information relative
to the City's Cone of Silence Ordinance and the Government Sunshine Law, general information
on the scope of services, references, and a copy of the proposal; and
WHEREAS, the Committee was instructed to score and rank the proposals pursuant to
the evaluation criteria established in the RFP; and
WHEREAS, the Evaluation Committee's ranking was as follows: Gallagher Benefit
Services, Inc. as the top ranked proposer; Aon Consulting, Inc., second highest ranked
proposer; and Wells Fargo Insurance Services USA, Inc., third highest ranked proposer; and
WHEREAS, at the December 9, 2015 City Commission meeting, in accordance with the
Evaluation Committee's ranking, the City Manager recommended that the Mayor and the City
Commission authorize the Administration to enter into negotiations with Gallagher Benefit
Services, Inc., as the top ranked proposer; and if the Administration was unsuccessful in its
negotiations with Gallagher Benefit Services, Inc., authorize the Administration to negotiate with
the second highest ranked proposer, Aon Consulting, Inc.; and if unsuccessful in its negotiations
with Aon Consulting, Inc., then the Administration would negotiate with the third highest ranked
proposer, Wells Fargo Insurance Services USA, Inc.; and
WHEREAS, at the December 9, 2015 City Commission meeting, Aon Consulting, Inc.
requested that the contract be awarded to them, based upon the fact that Aon Consulting, Inc.'s
proposal had a cost value of $30,000 less than the cost proposed by Gallagher Benefit
Services, Inc.; and
WHEREAS, the City Commission deferred the item to the December 16, 2016
Presentation and Awards meeting, asking the City Manager to conduct further due diligence;
and
WHEREAS, since the December 9, 2015 City Commission meeting, the City Manager
reviewed, once again, the results of the Evaluation Committee and conducted additional due
diligence, and recommends that the Mayor and City Commission accept the ranking provided by
the Evaluation Committee, which unanimously ranked Gallagher Benefit Services, Inc. as the
top ranked proposer, based upon a combination of qualifications, scope and cost.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby accept the recommendation of the City Manager pertaining to the ranking
of firms, pursuant to Request for Proposals (RFP) No. 2015-195-LR for Health Care Benefits
Consulting Services; authorize the Administration to enter into negotiations with Gallagher
Benefit Services, Inc.; and if unsuccessful in negotiating an agreement with Gallagher Benefit
Services, Inc., authorize the Administration to enter into negotiations with Aon Consulting, Inc.;
and if unsuccessful in negotiating an agreement with Aon Consulting, Inc., authorize the
Administration to enter into negotiations with Wells Fargo Insurance Services USA, Inc.; and
further authorize the Mayor and City Clerk to execute an agreement upon conclusion of
successful negotiations by the Administration.
PASSED AND ADOPTED this 16th da of December 2015. ///
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UUMMISSION I I LW! SUMMARY
Condensed Title:
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH,FLORIDA,
ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER PERTAINING TO THE RANKING OF
FIRMS, PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 2015-195-LR FOR HEALTH CARE
BENEFITS CONSULTING SERVICES.
Key Intended Outcome Supported:
Ensure expenditure trends are sustainable over the long term.
Supporting Data (Surveys, Environmental Scan, etc: N/A .
Item Summary/Recommendation:
The Administration issued RFP 2015-195-LR to seek proposals from qualified firms to provide health care
benefits consulting services. The RFP was approved for issuance July 8, 2015. The RFP was released on
July 9,2015.A pre-proposal conference to provide information to the proposers submitting a response was
held on July 23, 2015. On September 11, 2015, the City received proposals from,the following firms: Aon
Risk Solutions, Gallagher Benefit Services, Inc., and Wells Fargo Insurance. .
On November 5,2015,the Evaluation Committee appointed by the City Manager convened to consider the
responsive proposals received. The Committee was instructed to score and rank the proposals received
pursuant to the evaluation criteria established in the RFP.The results of the evaluation committee process
were presented to the City Manager for his recommendation to the City Commission.
After reviewing the submissions and the Evaluation Committee's ranking of the proposals received,the City
Manager exercised his due diligence and is recommending that the Mayor and the City Commission,
pursuant to Request for Proposal (RFP) No. 2015-195-LR, for Health Care Benefits Consulting Services,
authorize the Administration to enter into negotiations with the highest ranked proposer, Gallagher Benefit
Services, Inc.The City Manager further recommends that the Mayor and City Clerk be authorized to execute
an Agreement upon completion of successful negotiations by the Administration.
UPDATE FROM THE DECEMBER 9TH CITY COMMISSION MEETING.
On December 9, 2015, the City Commission, pursuant to item C7I, considered the City Manager's
recommendation to negotiate with Gallagher Benefit Services.At the meeting,the second-ranked proposer,
Aon Risk Solutions, despite acknowledging that every member of the Evaluation Committee ranked
Gallagher as the top proposer based on qualifications,scope offered and methodology, presented to the City
Commission that it should be awarded the contract solely because its cost is apparently$30,000 less than
the cost proposed by Gallagher Benefit Services.The City Commission deferred the item to December 16th,
asking the City Manager to conduct further due diligence.
The City Manager conducted additional due diligence (as noted on the attached memorandum) and
reconsidered the results of the Evaluation Committee process, which, again, resulted in Gallagher Benefit
Services being unanimously ranked as the top proposer based on a combination of qualifications,scope and
cost, and reaffirms his recommendation to award the contract to Gallagher Benefit Services.
RECOMMENDATION
ADOPT THE RESOLUTION.
Advisory Board Recommendation:
Financial Information: The annual cost associated with the health care benefits consulting services is
subject to the funds availability approved through the City's budgeting process.
Source of Amount Account
Funds: 1
2
Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Alex Denis, Extension 6641
Sign-Offs:
Departmen A.I irector "r- tant City Manager City =`na•er
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AGENDA ITEM KIN
DATE 124 b-I
C-P- MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139,
www.miamibeachfl.gov
COMMISSION EMORANDUM
n of ii e City Co sion
TO: Mayor Philip Levine and Members y
FROM: Jimmy L. Morales, City Manager
DATE: December 16, 2015
SUBJECT: A RESOLUTION OF THE MAYO-t AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEP 'ING THE RECOMMENDATION OF THE CITY
MANAGER PERTAINING TO THE RANKING OF FIRMS, PURSUANT TO
REQUEST FOR PROPOSAL (RFP) NO. 2015-195-LR HEALTH CARE BENEFITS
CONSULTING SERVICES.
ADMINISTRATION RECOMMENDATION
Adopt the resolution.
FUNDING
The annual cost associated with the health care benefits consulting services is subject to the funds
availability approved through the City's budgeting process.
BACKGROUND
On July 8, 2015, the City Commission approved the issuance of Request for Proposals (RFP) No.
2015-195-LR for Health Care Benefits Consulting Services. The Administration issued RFP 2015-195-
LR to seek proposals from qualified firms to provide health care benefits consulting services for the City
of Miami Beach.
RFP PROCESS
The RFP was released on July 9, 2015. A pre-proposal conference to provide information to potential
proposers was held on July 23, 2015. On September 11, 2015, the City received proposals from Aon
Risk Solutions, Gallagher Benefit Services, Inc., and Wells Fargo Insurance.
On October 20, 2015, the City Manager appointed, via letter to Commission (LTC) No. 447-2015, an
Evaluation Committee(the Committee), consisting of the following individuals:
• Sonia Bridges, Risk Manager, Human Resources Department, City of Miami Beach
• Kathie J. Brooks, Assistant City Manager, City of Miami Beach
• Tameka Otto-Stewart, Budget Officer, Budget Department, City of Miami Beach
• Anne-Marie Sharpe, Risk Manager, City of Miami
• Allison Williams, Interim Acting Assistant Director, Finance Department, City of Miami Beach
The following Alternates were also appointed:
• Jim Buschman, Risk Manager, City of Hallandale Beach
• Ramon Suarez, Finance Manager, Finance Department, City of Miami Beach
Ms. Brooks and Ms. Sharpe were unable to participate, and were replaced by the listed alternates. The
Committee convened on November 5, 2015, to consider the proposals received. The Committee was
provided an overview of the project, information relative to the City's Cone of Silence Ordinance and the
Government in the Sunshine Law. The Committee was also provided general information on the scope
of services, references, and a copy of each proposal. The Committee was instructed to score and rank
the proposals pursuant to the evaluation criteria established in the RFP.
Commission Memorandum—RFP 2015-195-LR Health Care Benefits Consulting Services
December 9,2015
Page 2
Evaluation Criteria` = Total Points
Proposer Experience and Qualifications, including Financial Capability 45
Scope of Services Proposed 15
Approach and Methodology 20
Cost Proposal 20
The RFP also stipulated that additional points would be applied, if applicable, pursuant to the City's
Veteran's Preference Ordinance. However, none of the proposers were eligible for the veteran's
preference.
After proposer's presentations and interviews, the Committee discussed the proposers' qualifications,
experience, and competence, and further scored the proposers in accordance with the qualitative
criteria established in the RFP (experience & qualifications, scope of services, and
approach/methodology). As stipulated in the RFP, cost proposal scores (indicated below) were added
to the qualitative scores established by the committee members. The final rankings are as follows:
t
a+ C N
RFP#2015-195-LR Health m o
Care Benefits Consulting r —
Services
!C o d m 0
E
con Ranking c Ranking 1— Ranking - Ranking a -
Aon Risk Solutions 76 2 81 2 91 2 95 2 80 2 10 2
Gallagher Benefit Services,Inc. 95 1 91 1 96 1 97 1 87 1 5 1
Wells Fargo Insurance 68 3 80 3 88 3 87 3 68 3 15 3
Cost Points
Maximum
Allowable Total Points
Proposer Annual Cost Points Awarded*
Aon Risk Solutions $150,000.00 20 20
Gallagher Benefit Services,Inc. $180,000.00 20 17
Wells Fargo Insurance $200,000.00 20 15
In determining responsiveness and responsibility of the firm, the Procurement Department verified
compliance with the minimum requirements established in the RFP, financial capacity as contained in
the Dun & Bradstreet Supplier Qualifier Report, and past performance through client references
submitted by each proposer.
MANAGER'S DUE DILIGENCE
After reviewing the submissions and the Evaluation Committee's ranking of the proposals received, the
City Manager exercised his due diligence and is recommending that the Mayor and the City
Commission, pursuant to Request for Proposal (RFP) No. 2015-195-LR, for Health Care Benefits
Consulting Services, authorize the Administration to enter into negotiations with the highest ranked
proposer, Gallagher Benefit Services, Inc. The City Manager further recommends that the Mayor and
City Clerk be authorized to execute an Agreement upon completion of successful negotiations by the
Administration.
The City Manager notes that Gallagher Benefit Services, Inc. is the City's current contractor for benefits
consulting services. According to staff, Gallagher Benefit Services, Inc. has performed well over the 5
year term of the current agreement. Their services have also been attained by other local municipal
agencies such as Palm Beach County Board of County Commissioners, the City of Boca Raton and the
School Board of Broward County.
Commission Memorandum—RFP 2015-195-LR Health Care Benefits Consulting Services
December 9,2015
Page 3
UPDATE FROM DECEMBER 9, 2015 CITY COMMISSION MEETING
On December 9, 2015, the City Commission, pursuant to item C7I, considered the City Manager's
recommendation to negotiate with Gallagher Benefit Services. At the meeting, the second-ranked
proposer, Aon Risk Solutions, despite acknowledging that every member of the Evaluation Committee
ranked Gallagher as the top proposer based on qualifications, scope offered and methodology,
presented to the City Commission that it should be awarded the contract solely because its cost is
apparently $30,000 less than the cost proposed by Gallagher Benefit Services. The City Commission
deferred the item to December 16th, asking the City Manager to conduct further due diligence.
Accordingly, the City Manager conducted additional due diligence and reconsidered the RFP (which
awarded 80 points to non-cost factors and 20 points to cost factors), and the results of the Evaluation
Committee process, which, again, resulted in Gallagher Benefit Services being unanimously ranked as
the top proposer based on a combination of qualifications, scope and cost. Based on the following, the
City Manager reaffirms his recommendation to award the contract to Gallagher Benefit Services.
Cost.
Aon's primary argument is that the City would save money by awarding it the contract. First, given the
nature of the services envisioned and services provided in the past, the $30,000 difference between the
two proposals is negligible. Second, when Aon's responses to certain portions of the RFP are
considered, the apparent cost savings may quickly disappear. This is because in its proposal, Aon failed
to agree to unlimited actuarial services as requested in the RFP and as agreed to by Gallagher. As an
example of how Aon's material alteration of the requirements of the RFP may affect pricing, some
actuarial reports previously acquired by the City in other areas (e.g., pension related) have ranged in
cost between $400 and $27,000. In fact, with Aon's failure to agree to unlimited actuarial services
makes it impossible for the City to determine the full cost of its proposal. In contrast, under the current
contract Gallagher has provided actuarial reports and assistance to the Budget Advisory Committee and
staff at no additional cost. For these reasons, the apparent cost savings claimed by Aon may not
actually exist and Aon's proposal may result in higher costs than the City is currently paying for the
required services.
Exceptions to RFP Requirements.
In addition to its failure to agree to unlimited actuarial services, Aon took other exceptions to the
Requirements of the RFP that cause concern. Aon's proposal attempts to limit its liability pursuant to the
required services or for errors in its work. Its proposal included a limitation of liability stating that,
"Should any errors in our work occur, we will correct our work product without any additional charge. In
addition, to the extent we failed[sic]to satisfy our obligations under this letter, our liability to you will not
exceed a mutually agreed amount. As our sole responsibility under this letter is to the City, the City will
be responsible for any third party claims against you or us arising out of or in connection with the
service. Third parties include your affiliates, the plans, any trustees and any employees, participants or
their representatives. If it is determined that any damages to such third parties resulted from our error,
we will reimburse the City up to the amount agreed upon in the contract."This attempt to limit liability by
Aon pursuant to the services it would provide is concerning to the City.
Finally, the RFP required that the proposer provide guidance on the transitional fee reinsurance
program and calculate the transitional reinsurance fee. While Aon agreed to provide the City guidance,
it made no mention of calculating of the transitional reinsurance fee, a critical component for the City.
Current Services Provided by Gallagher.
The contract requires that the consultant's work include, but not be limited to: unlimited actuarial support
and analysis of the self-funded medical and dental health care coverage plans, negotiations with
carriers to obtain the best prices and terms and conditions available, support and guidance in the
implementation and impact of the Patient Protection and Affordability Act and interpretation and
application of any other benefit related regulation, actuarial analyses and reporting as required for the
Government Accounting Standard Board (GASB) 45 filing, and review and approval of the carriers'
summary plan descriptions.
Through the current consultant agreement, the City has had unlimited access to the lead consultant, two
benefit consultants/account managers, an actuary and a benefits attorney, who are all local.
Commission Memorandum—RFP 2015-195-LR Health Care Benefits Consulting Services
December 9,2015
Page 4
Projects/assignments to Gallagher Benefits Consulting in the recent past include, but are not limited to,
reviewing a pharmacy cost containment program, assisting the City with defining the scope of work for
the wellness program RFP and preparing the City to comply with the new IRS reporting requirement as
of March 2016.
Perhaps the most complex and labor-intensive project, not specifically identified in the scope of work
was working with the Budget Advisory Committee in 2012 on an analysis of the City's health plan
services. On August 29, 2012, the premiums paid by the City and its enrolled active employees and
retirees for health care insurance coverage for general employees enrolled in the City's self-funded plan
was discussed by the Committee of the Whole as part of the Mayor's and Commissioner's proposed
budget for FY 2012/13.
With Humana's loss of the Baptist network, the consultant assisted with an expedited solution through
an informal process to continue providing the City's insured employees and retirees access to the
Baptist network providers. Consequently, the City Commission approved a two self-funded arrangement
to included AvMed as the carrier to provide access to the Baptist network. A mini-open enrollment
period was opened and the City's insured employees and retirees had the opportunity to make a
change. It was a seamless process and continuity of care was not disrupted.
When the City needed an experienced benefits manager as part of its staff, Gallagher actively, and for
no additional cost, assisted the City in finding the right person to come in and assume the role, at least
on a temporary basis, while firmer plans were developed.
In the recent past, Gallagher conducted all the actuarial work to assist the City in offering transgender
health insurance benefits. Their work demonstrated that offering this benefit would not have a
considerable effect on the City's health insurance cost, but could result in a significant recruitment tool
and goodwill among the community.
Past Performance.
Throughout the years Gallagher has worked closely with the Human Resources Department, Budget
Office and Assistant City Manager, Kathie Brooks. Staff has been responsive to our needs and desires
and has delivered as requested. Quarterly meetings are held to go over our experience and actuarial
projections for the rest of the benefit year. Their knowledge of the City's experience providing health
care benefits is exhaustive.
The staff attorney and current account manager have spent a significant amount of time familiarizing
City staff with the Patient Protection and Affordability Act, and assisted City staff to ensure fees were
correctly paid and on time.
Gallagher staff responds to calls and emails promptly, including weekends and evenings.
Aon and Broward County entered into a five-year, with two one-year options to renew, agreement for
Owner's Control Insurance Program (OCIP). Upon expiration of the five-year agreement, Broward
County did not exercise its options to renew; instead, hired their current broker of record, Arthur J.
Gallagher, to continue the administration of their program. In addition to the four cases in which Aon is
named as a defendant, that appears on Aon's Dunn and Bradstreet Report, the City has learned that
Aon has outstanding issues with Broward County and Miami-Dade County Aviation Department.
CONCLUSION
The Administration continues to recommend that the Mayor and City Commission of the City of Miami
Beach, Florida, approve the resolution accepting the recommendation of the City Manager, pursuant to
Request for Proposal (RFP) No. 2015-195-LR, for Health Care Benefits Consulting Services, authorizing
the Administration to enter into negotiations with Gallagher Benefit Services, Inc. and further authorizing
the Mayor and City Clerk to execute an agreement with Gallagher Benefit Services, Inc., upon
completion of successful negotiations by the Administration.
JLM/MT/SCT/AD
T:WGENDA\2015\October\PROCUREMENT\RFP 2015-195-LR Health Care Benefits Consulting Services-Memo(FINAL).doc