HomeMy WebLinkAboutStaff Report 8129
City of Palo Alto (ID # 8129)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 9/11/2017
City of Palo Alto Page 1
Summary Title: Employee Benefit Broker Services Contract Amendment
Title: Approval of Amendment Number 4 to Contract Number S12145610 to
add $75,000 for a Total Not-to Exceed Amount of $379,000 for Continuation
of Employee Benefit Broker Services Pending WFIS Sale to USI Insurance
Services
From: City Manager
Lead Department: Human Resources
Recommended Motion
Staff recommends that the City Council approve and authorize the City Manager to execute
Amendment No. 4 to Contract S12145610 with Wells Fargo Insurance Services to increase
contract authority by $75,000 for a total not to exceed $379,000 through June 30, 2018.
Background
The City of Palo Alto partners with Wells Fargo Insurance Services for their expertise and as a
broker and advisor for employee benefits services. Human Resources was recently notified that
USI Insurance is acquiring Wells Fargo Insurance Services. Wells Fargo Bank has entered into an
agreement with USI Insurance Services (USI) to sell Wells Fargo Insurance Services USA (WFIS)
and expect to close the transaction by November 2017 after securing all necessary regulatory
approvals. USI is currently the leading national insurance brokerage and consulting firm,
delivering employee benefits, property and casualty, personal risk and retirement solutions
throughout the United States. USI is one of the largest privately held insurance brokerage firms
in the country. WFIS provides the City with annual strategy setting, compliance review, renewal
and negotiation services, vendor analysis and market review, enrollment and communication
assistance and year-end analysis. WFIS also serves as a valuable resource by keeping Human
Resources informed of significant changes regarding employee benefits and/or trends in the
marketplace.
The City’s relationship with WFIS began in 2005 when the City conducted a competitive
solicitation for employee benefits brokerage and consultation services. In 2009 and 2012 the
City also conducted competitive solicitation processes. In each case, WFIS was selected as the
firm which best matched the City’s requirements. Contract S1214561, established in 2012, was
originally established for $68,500 per year for the duration of three years with a total not to
City of Palo Alto Page 2
exceed of $205,500. In year two of the contract a $15,000 annual amendment was added for
the remaining two years.
Discussion
By approving this staff report, Council will increase the contract authority by $75,000 for a total
not to exceed of $379,000 through June 30, 2018. This action is being requested as the current
contract ended on June 30, 2017. While WFIS is meeting current service needs, staff intends to
conduct a competitive solicitation process within FY 2018 to ensure due diligence.
Furthermore, the City is working with WFIS on critical assignments to secure a new vendor for
Retiree Health Reimbursement Accounts (HRA). WFIS began a solicitation on behalf of the City
in February 2017. Vendor selection was completed in June 2017 and HR department initiated
the process to transition our 950+ retiree HRA accounts to a new service provider. In addition,
WFIS is coordinating the RFP process for the following benefit contracts due to expire 1/1/2018:
Life and Long-Term Disability Insurance, Dental, and Vision Insurance and the Employee
Assistance Program. Any disruptions to the services with WFIS would impact the City’s ability to
complete these critical RFP cycles. WFIS has expertise and knowledge to assist Palo Alto in
securing competitive quotes from reputable vendors in the employee benefits marketplace.
Additionally, WFIS has maintained a successful partnership with Palo Alto by effectively
providing their expertise and quality support to address insurance contract issues, complex
benefits questions and cost analysis as needed. The City’s account is serviced by Account
Executives with over 25 years of experience in employee benefit plan management and
compliance knowledge.
Resource Impact
Sufficient funding for these services are available within the FY 2018 General Benefits Fund and
no impact to the General Benefits Fund is anticipated. As staff conducts the competitive
solicitation process within FY 2018 to ensure due diligence, anticipated costs for future years of
employee benefits brokerage and consulting will be factored into the development of the
annual operating budget.
Attachments:
Attachment A
1 Revision April 28, 2014
AMENDMENT NO. 4 TO CONTRACT NO. S12145610
BETWEEN THE CITY OF PALO ALTO AND
WELLS FARGO INSURANCE SERVICES USA, INC.
This Amendment No. 4 to Contract No. S12145610 (“Contract”) is entered into the 1st
day of July, 2017 by and between the CITY OF PALO ALTO, a California chartered municipal
corporation (“CITY”), and WELLS FARGO INSURANCE SERVICES USA, INC., a North
Carolina corporation authorized to do business in the state of California, located at 959 skyway
Road, 2nd Floor, San Carlos, California, 94070, (“CONSULTANT”).
R E C I T A L S
A. The Contract was entered into between the parties for the provision of
Employee Benefit Broker Service for CITY benefit program; and
B. WHEREAS, CITY intends to extend the contract term to June 30, 2016 and
increase the compensation by $68,500.00 from $235,500.00 to $304,000.00 for continuation of
services as per EXHIBIT “A” Scope of Services; and
C. WHERAS, CITY intends to create an option to extend the contract term to
June 30, 2017 and increase the compensation by an additional $75,000 from $304,000.00 to
$379,000.00 for continuation of services as per EXHIBT “A” Scope of Services; and
D. WHERAS, CITY intends to create an option to extend the contract term to
June 30, 2018 and increase the compensation by an additional $75,000 from $379,000.00 to
$454,000.00 for continuation of services as per EXHIBT “A” Scope of Services; and
NOW, THEREFORE, in consideration of the covenants, terms, conditions, and
provisions of this Amendment, the parties agree:
SECTION 1. Section 2 TERM is hereby amended to read as follows:
“SECTION 2. TERM. The term of this Agreement shall be from July 1, 2012 through June 30,
2018, unless terminated earlier pursuant to Section 19 of this Agreement.”
SECTION 2. Section 4 COMPENSATION is hereby amended to read as follows:
“SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to
CONSULTANT for performance of the Services described in Exhibit “A”, including both payment
for professional services and reimbursable expenses, shall not exceed Three Hundred Seventy Nine
Thousand Dollars ($379,000.00).
1st Year (07/01/2012 through 06/29/2013) $68,500.00
2nd Year (07/01/2013 through 06/29/2014) $83,500.00
DocuSign Envelope ID: 3383A089-04EE-4FD2-B2CE-C0914CE108EB
2 Revision April 28, 2014
3rd Year (07/01/2014 through 06/29/2015) $83,500.00
4th Year (07/01/2015 through 06/29/2016) $68,500.00
5th Year (07/01/2016 through 06/29/2017) $75,000.00
6th Year (07/01/2017 through 06/29/2018) $75,000.00
The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “HOURLY
RATE SCHEDULE,” which is attached to and made a part of this Agreement.
Additional Services, if any, shall be authorized in accordance with and subject to the provisions of
Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed
without the prior written authorization of CITY. Additional Services shall mean any work that is
determined by CITY to be necessary for the proper completion of the Project, but which is not
included within the Scope of Services described at Exhibit “A”.
”
SECTION 3. The following exhibit(s) to the Contract is/are hereby amended to read
as set forth in the attachment(s) to this Amendment, which are incorporated in full by this reference:
a. Exhibit “A” entitled “SCOPE OF SERVICES”.
b. Exhibit “B” entitled “COMPENSATION”.
SECTION 4. Except as herein modified, all other provisions of the Contract,
including any exhibits and subsequent amendments thereto, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have by their duly authorized representatives
executed this Amendment on the date first above written.
CITY OF PALO ALTO
APPROVED AS TO FORM:
WELLS FARGO INSURANCE
SERVICES USA, INC.
Attachments:
EXHIBIT "A": SCOPE OF SERVICES
EXHIBIT "C": COMPENSATION
DocuSign Envelope ID: 3383A089-04EE-4FD2-B2CE-C0914CE108EB
Senior Vice President
Gary L. Delaney
3 Revision April 28, 2014
EXHIBIT “A”
SCOPE OF SERVICES
CONSULTANT shall provide Employee Benefit Broker Services for CITY benefit program
per the following:
A. Representation in all negotiations with benefit providers on issues related to premiums,
service, benefit levels, plan design, special terms and conditions, etc.
B. Annual review and reports of employee benefits programs for quality and adequacy of
benefits provided, strengths, shortcomings, cost-effectiveness, competitiveness, plan
administration, and recommendations concerning any changes in terms, conditions and
limits, and future cost reduction strategies and goals.
C. When coordinating or assisting with request for proposal (RFP) process, CONSULTANT
shall work directly with City's Human Resource and Purchasing Divisions to ensure that
RFP's meet all City requirements and shall issue RFP's only upon receipt of written
direction from City.
D. Prepare action plan on calendar year basis to manage City’s account including renewal, plan
implementation, new program/services identification, assessment of needs and problems,
long-mid- short range planning of tasks and activities.
E. Annual evaluation of self-funded dental and vision plan costs and revenues with
recommendation for future premium based on current plan design, and estimated premium
based on changes to plan design (i.e. higher annual maximum benefit).
F. Website technologies (“Website”) that may be edited and updated by City to support an
employee educational module to assist employees in self-management of benefits, that are
accessible via the internet as well as the City’s intranet.
G. Review and resolution of issues concerning insurance policies, certificates of insurance and
other documents related to employee benefits programs.
H. Claims experience reports and special studies as requested by City.
I. Assistance in the development of long-range goals and strategies for the City’s employee
benefits programs such as union partnerships and employee education programs.
J. Monitoring of ongoing contracts, including provider plan administration, tracking of
performance standards, provider compliance with contracts and incurred claims.
K. Estimates of renewal rates and cost trends and assistance to City staff in preparation of
budget figures.
DocuSign Envelope ID: 3383A089-04EE-4FD2-B2CE-C0914CE108EB
4 Revision April 28, 2014
L. Information, consultation, and recommendations on employee benefit issues, trends and
existing, proposed, or new legislation including but not limited to Healthcare Reform,
COBRA, HIPAA, Medicare, FMLA, CFRA, ADA, and IRS rules.
M. Identification and analysis of cost containment and efficiency measures such as employer
partnerships, electronic benefits administrations, etc.
N. Attendance, upon request, at meetings with City and bargaining units; develop models to
incentivize employees to seek lower cost plans.
O. Assistance with employee communications, including design and delivery of employee
health benefits brochures and information and web page.
P. Upon request of City, and potentially upon short notice, produce probable cost of actual or
hypothetical changes in the insurance programs.
Q. Provide bi-weekly calls with Human Resources to track ongoing employee benefit action
items.
R. Assist City in coordinating City required contract requirements; document with vendors.
S. Review of and assistance with resolving disputes regarding coverage, billing questions and
service delivery.
T. Provide educational support of Human Resource staff members to enhance knowledge of
benefit issues, legislation, and compliance requirements.
U. Assist Human Resources staff members with coordination of annual Benefits Fair and Open
Enrollment period.
V. Keep City informed of new and emerging trends in health care with regular (i.e. personal
site meetings by account management team to discuss City benefit program issues and
concerns).
W. Consultant shall provide prompt services and accurate information as required, and shall
designate a backup individual to the CONSULTANT’s Project Manager who will be
available at all times.
DocuSign Envelope ID: 3383A089-04EE-4FD2-B2CE-C0914CE108EB
5 Revision April 28, 2014
EXHIBIT “C”
COMPENSATION
The CITY agrees to compensate the CONSULTANT for professional services performed in
accordance with the terms and conditions of this Agreement based on the hourly rate schedule
attached as Exhibit C-1.
The compensation to be paid to CONSULTANT under this Agreement for all services,
additional services, and reimbursable expenses shall not exceed the amount(s) stated in
Section 4 of this Agreement. CONSULTANT agrees to complete all Services and Additional
Services, including reimbursable expenses, within this/these amount(s). Any work performed
or expenses incurred for which payment would result in a total exceeding the maximum
amount of compensation set forth in this Agreement shall be at no cost to the CITY.
REIMBURSABLE EXPENSES
The administrative, overhead, secretarial time or secretarial overtime, word processing,
photocopying, in-house printing, insurance and other ordinary business expenses are included
within the scope of payment for services and are not reimbursable expenses. CITY shall
reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for
which CONSULTANT shall be reimbursed are: None
All requests for payment of expenses shall be accompanied by appropriate backup information.
Any expense shall be approved in advance by the CITY’s project manager.
ADDITIONAL SERVICES
The CONSULTANT shall provide additional services only by advanced, written authorization
from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a
detailed written proposal including a description of the scope of services, schedule, level of
effort, and CONSULTANT’s proposed maximum compensation, including reimbursable
expenses, for such services based on the rates set forth in Exhibit C-1. The additional
services scope, schedule and maximum compensation shall be negotiated and agreed to in
writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the
services. Payment for additional services is subject to all requirements and restrictions in this
Agreement.
DocuSign Envelope ID: 3383A089-04EE-4FD2-B2CE-C0914CE108EB
Certificate Of Completion
Envelope Id: 3383A08904EE4FD2B2CEC0914CE108EB Status: Completed
Subject: Please DocuSign: S12145610 Amendment No 4. doc.doc
Source Envelope:
Document Pages: 5 Signatures: 1 Envelope Originator:
Supplemental Document Pages: 0 Initials: 0 Christopher Anastole
Certificate Pages: 2
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Payments: 0 250 Hamilton Ave
Palo Alto , CA 94301
chris.anastole@cityofpaloalto.org
IP Address: 12.220.157.20
Record Tracking
Status: Original
5/3/2017 1:35:23 PM
Holder: Christopher Anastole
chris.anastole@cityofpaloalto.org
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Gary L. Delaney
Gary.Delaney@wellsfargo.com
Senior Vice President
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Frank Lee
Frank.Lee@CityofPaloAlto.org
Senior Human Resources Administrator
City of Palo Alto
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