DATE: April 14, 2015
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russell Truell, Assistant City Administrator / CFO
Shirley Harmon-Gower, Director of Human Resources
Sara Sylvis, Risk Manager
Brian Wilcox, Purchasing Manager
SUBJECT:
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Consideration Of Bid Award To Sun Life Assurance Company Of Canada, Located In Wellesley Hills, Massachusetts, In The Total Estimated Annual Amount Of $313,159.20, For Stop-Loss Insurance For Employee And Retiree Health And Pharmacy Programs Of The City For Fiscal Year 2016 With Options To Extend (Purchasing Office Procurement Solicitation No. 2015-026; City Contract No. 2015-0106)(WS 4/28/15)
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Purpose
The purpose of this procurement is to purchase stop-loss insurance for employee and retiree health and pharmacy programs of the City for fiscal year 2016, with four (4) options to extend, each time for up to one (1) additional year, for a maximum possible term of award of five (5) years total. Stop-loss insurance is reinsurance purchased to protect the City from paying the total cost of either a single large claim over a specific amount for a member or an aggregate (group) claim over a specified amount during a set time period for all members.
Background
The City published on March 19, 2015 a Notice to Bidders in the Williamson Herald for stop loss insurance for employee and retiree health and pharmacy programs. In addition, bid documents were sent on or about the same date directly to thirteen (13) potential bidders known or thought to be interested in this solicitation. Bids from four (4) vendors were publicly opened at the bid opening held on April 2, 2015. A tabulation of the bids received for this solicitation is attached.
The City's employee benefits consultant, Cowan Benefit Services, Inc., has analyzed the bids received. Please see the Cowan memorandum of recommendation, as well as a summary of the Cowan analysis, both attached. Please note that the recommendation includes increasing the City's specific deductible from $225,000 to $250,000.
Financial Impact
When considering "total premium at risk" (which includes any aggregating specific deductible plus any "laser" - higher individual specific deductible - in addition to annual premium), the apparent lowest, most responsive and responsible bid, from Sun Life Assurance Company of Canada, located in Wellesley Hills, Massachusetts, is in the total estimated annual amount (premium) of $313,159.20 for the indicated coverage for fiscal year 2016, with four (4) options to extend, each time for up to one (1) additional year, for a maximum possible term of award of five (5) years total, with pricing to be negotiated in advance of any optional term of extension commencement. The estimated annual premium is based on the quoted rates applied to the specified estimated July 1, 2015 projected enrollment of employees receiving benefits under the City's health plan. This bid was identified because it is the lowest bid that most closely meets or exceeds the City's intention as expressed and implied by the City's specifications as well as the instructions, terms and conditions pertaining to this procurement solicitation. The City's recommended fiscal year 2016 budget will allocate this proposed expenditure to the various funds, departments and divisions from which employees are paid.
Options
In accordance with the bid documents, the City reserves the right to reject any and all bids.
Recommendation
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Staff concurs with the consultant's recommendation referenced above, including increasing the City's specific deductible from $225,000 to $250,000, and recommends that the City accept, contingent upon Law Department and City Administrator approval of City Contract No. 2015-0106, the apparent lowest best bid, from Sun Life Assurance Company of Canada, located in Wellesley Hills, Massachusetts, in the total estimated annual amount (premium) of $313,159.20 for the indicated coverage for fiscal year 2016, with four (4) options to extend, each time for up to one (1) additional year, for a maximum possible term of award of five (5) years total, with pricing to be negotiated in advance of any optional term of extension commencement. Purchasing Manager Brian Wilcox is of the opinion that the prepared specifications as distributed allowed for competition among multiple vendors, and that the staff recommendation appears to be made in a fair and impartial manner based upon the bids received.