HomeMy WebLinkAboutStaff Report 3023
City of Palo Alto (ID # 3023)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 9/4/2012
September 04, 2012 Page 1 of 3
(ID # 3023)
Summary Title: Workers Comp third-party administration services contract
Title: Approval of a Contract for Up to Five Years with York Risk Services Group,
Inc. In a Total Amount Not to Exceed $1,175,000 for Workers’ Compensation
Claims Administration Services.
From: City Manager
Lead Department: Human Resources
Recommendation
Staff recommends that Council:
1. Approve and authorize the City Manager or his designee to execute the attached
contract with York Risk Services Group Inc. effective July 1, 2012 to provide workers’
compensation claims administration services. The total amount for the three year
contract will not exceed $696,150.
2. Authorize the City Manager or his designee to exercise the option to renew the contract
for two additional one-year periods in the amount not to exceed $239,012 per year;
provided York Risk Services Group Inc. continues to meet the City’s needs and the
quality of its work is acceptable during the term of the contract.
Background
The work to be performed under the contract is for third-party claims administration services
for the City’s workers’ compensation program. These services are currently provided by York
Risk Services Group Inc. These services include: the processing of all workers’ compensation
claims in accordance with applicable Labor Code regulations; engaging services related to the
investigation and defense of claims; engaging the services of appropriate medical providers;
determining what benefits, if any, should be paid; handling all the necessary forms in each
reported claim; and performing all tasks in a timely manner as required under California
workers’ compensation laws. The term of the proposed contract with York Risk Services Group
Inc. ends on June 30, 2017.
September 04, 2012 Page 2 of 3
(ID # 3023)
As it is the City’s obligation to ensure that administration of the workers’ compensation
program is managed in the most effective manner, the City requested proposals from other
claims administrators to see what alternatives other firms had to offer.
Discussion
Selection Process
Staff sent a request for proposals to eight firms on April 20, 2012. The proposal period was
twenty-one days. A total of seven firms submitted proposals ranging between $205,500 to
$250,000 per year. Human Resources staff carefully reviewed the proposals in response to the
Request for Proposal relative to the following criteria:
Public agency experience, specifically with medium size cities including public safety
officers benefits (California Labor Code 4850 provides injured public safety employees
with salary continuation up to one year in lieu of temporary disability and requires
additional handling and knowledge);
Stability of ownership and management experience;
Ability to provide innovative programs and services;
Established, reliable, reporting technology and online capabilities; and
Customer service capability.
Two finalists were selected to be interviewed. York was selected to continue serving as the
City’s third party administrator. York has an exhaustive list of California cities clients and thus
are able to offer knowledge and resources to meet the needs of the City’s workers’
compensation program. They have a proactive claims management philosophy focused on
communication, quality control and partnership. Claim frequency and cost have decreased in
the most recent six-year period and this is attributed to the diligence of the York claim handling
team, their familiarity with the unique needs of Palo Alto’s program and the collaboration
established with the City’s risk management staff. In the previous three year totals of new
claim frequency have decreased from 133 in 2008-2009 to 93 in 2011-2012. The total claim
cost decreased by approximately $400,000. In addition, York has an established, reliable
document management system with superior features and reporting capabilities that has
created efficiencies and provides customer reports. York has successfully demonstrated its
ability to provide a high level of quality, innovative services and results in its claims
administration services and it was not evident that other vendors would provide any higher
level of service or quality.
Resource Impact
York will charge a flat fee, not to exceed $232,050 annually for the first three years of the
contract. Funding for this agreement is currently provided in the Fiscal Year 2013 budget in the
amount of $300,300 for this year. Based on the not to exceed actual amount of the new
contract, the City will experience a $68,250 savings in the FY 13 Workers’ Compensation Fund.
September 04, 2012 Page 3 of 3
(ID # 3023)
Policy Implications
This recommendation is consistent with current City policies.
Environmental Review
This is not a project requiring review under the California Environmental Quality Act (CEQA).
Attachments:
Contract For Workers Comp Admin (PDF)
Prepared By: Sandra Blanch, Assistant Director, Human Resources
Department
Department Head: Kathryn Shen, Director, Human Resources
City Manager Approval: ____________________________________
James Keene, City Manager
CITY OF PALO ALTO CONTRACT NO. C12145543
AGREEMENT BETWEEN THE CITY OF PALO ALTO AND
YORK INSURANCE SERVICES GROUP, INC. FOR PROFESSIONAL SERVICES
This Agreement is entered into on this day of August, 2012, ("Agreement")
by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"),
and YORK RISK SERVICES GROUP, INC., a New York Corporation and authorized to do
business in State of California, located at 750 The City Drive, Suite 350, Orange, California 92868
("CONSULTANT").
RECITALS
The following recitals are a substantive portion ofthis Agreement.
A. CITY intends to outsource the administration of its Self-Insured Worker Compensation
Program ("Project") and desires to engage a consultant to provide Third Party Administration
Services for its Self-Insured Worker Compensation Program ("Services").
B. CONSULTANT has represented that it has the necessary professional expertise,
qualitications, and capability, and all required licenses and/or certifications to provide the Services.
C. CITY in reliance on these representations desires to engage CONSULT ANT to provide the
Services as more fully described in Exhibit "A", attached to and made a part ofthis Agreement.
NOW, THEREFORE, in consideration ofthe recitals, covenants, terms, and conditions, this
Agreement, the parties agree:
AGREEMENT
SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in
Exhibit "A" in accordance with the terms and conditions contained in this Agreement. The
performance of all Services shall be to the reasonable satisfaction of CITY.
SECTION 2. TERM.
The term of this Agreement shall be from the date of its full execution through June 30, 2015 unless
terminated earlier pursuant to Section 19 ofthis Agreement. .CITY retains option to renew for up to
two additional one (I) year periods based upon CONSULTANT's performance of the Services
described in Exhibit A, Scope of Services, attached to and made a part of this Agreement.
SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of
Services under this Agreement. CONSULT ANT shall complete the Services within the term ofthis
Agreement and in accordance with the schedule set forth in Exhibit "B", attached to and made a part
of this Agreement. Any Services for which times for performance are not specified in this Agreement
shall be commenced and completed by CONSULT ANT in a reasonably prompt and timely manner
based upon the circumstances and direction communicated to the CONSULTANT. CITY's
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agreement to extend the term or the schedule for performance shall not preclude recovery of damages
for delay if the extension is required due to the fault of CONSULTANT.
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, during the initial term shall not exceed Two
Hundred Thirty Two Thousand Fifty Dollars per year ($232,050.00), except for Years 4 and 5, if
exercised. In the event Additional Services are authorized, the total compensation for services and
reimbursable expenses shall not exceed Two Hundred Thirty Two Thousand Fifty Dollars
($232,050.00) per year. In the event the City chooses to exercise its option to renew for up to two
additional one year periods, the compensation to be paid to CONSULTANT for performance of the
services described in Exhibit "A" shall not exceed the amounts specified in Exhibit C.
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 in Exhibit "A".
SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly
invoices to the CITY describing the services performed and the applicable charges (including an
identification of personnel who performed the services, hours worked, hourly rates, and reimbursable
expenses), based upon the CONSULTANT's billing rate. If applicable, the invoice shall also
describe the percentage of completion of each task. The information in CONSULTANT's payment
requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the
City's project manager at the address specified in Section 13 below. The City will generally process
and pay invoices within thirty (30) days of receipt.
SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be
performed by CONSULTANT or under CONSULTANT's supervision. CONSULTANT represents
that it possesses the professional and technical personnel necessary to perform the Services required
by this Agreement and that the personnel have sufficient skill and experience to perform the Services
assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted,
have and shall maintain during the term of this Agreement all licenses, permits, qualifications,
insurance and approvals of whatever nature that are legally required to perform the Services.
All of the services to be furnished by CONSULTANT under this agreement shall meet the
professional standard and quality that prevail among professionals in the same discipline and of
similar knowledge and skill engaged in related work throughout California under the same or similar
circumstances.
SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itselfinformed of and
in compliance with all federal, state and local laws, ordinances, regulations, and orders that may
affect in any manner the Project or the performance of the Services or those engaged to perform
Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all
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charges and fees, and give all notices required by law in the perfonnance of the Services.
SECTION 8. ERRORS/OMISSIONS. CONSULTANT shall correct, at no cost to CITY, any and
all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY gives
notice to CONSULTANT. If CONSULTANT has prepared plans and specifications or other design
documents to construct the Project, CONSULTANT shall be obligated to correct any and all errors,
omissions or ambiguities discovered prior to and during the course of construction of the Project.
This obligation shall survive termination of the Agreement.
SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works
project, CONSULTANT shall submit estimates of probable construction costs at each phase of
design submittal. Ifthe total estimated construction cost at any submittal exceeds ten percent (1 0%)
of the CITY's stated construction budget, CONSULTANT shall make recommendations to the CITY
for aligning the PROJECT design with the budget, incorporate CITY approved recommendations,
and revise the design to meet the Project budget, at no additional cost to CITY.
SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing
the Services under this Agreement CONSULTANT, and any person employed by or contracted with
CONSULTANT to furnish labor and/or materials under this Agreement,. shall act as and be an
independent contractor and not an agent or employee of the CITY. Notwithstanding the foregoing,
CONSULTANT shall be deemed the agent of the City for the limited purpose of discharging its
duties, as specifically set forth in this Agreement.
SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of
CONSUL TANT are material considerations for this Agreement. CONSULTANT shall not assign or
transfer any interest in this Agreement nor the performance of any of CONSULTANT's obligations
hereunder without the prior v,lfitten consent of the city manager. Consent to one assignment will not
be deemed to be consent to any subsequent assignment. Any assignment made without the approval
of the city manager will be void.
SECTION 12. SUBCONTRACTING.
CONSULTANT shall not subcontract any portion ofthe work to be performed under this Agreement
without the prior written authorization of the city manager or designee.
CONSULTANT shall be responsible for directing the work of any subconsultants and for any
compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning
compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a
subconsuitant. CONSULTANT shall change or add subconsultants only with the prior approval of
the city manager or his designee.
SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Marcus Beverly as
the Project Director to have supervisory responsibility for the performance, progress, and execution
of the Services and Debra Yokota as the project Manager to represent CONSULTANT during the
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day-to-day work on the Project. If circumstances cause the substitution of the project director, project
coordinator, or any other key personnel for any reason, the appointment of a substitute project
director and the assignrhent of any key new or replacement personnel will be subject to the prior
written approval of the CITY's project manager. CONSULTANT, at CITY's request, shaH promptly
remove personnel who CITY finds do not perform the Services in all acceptable manner, are
uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to
the safety of persons or property.
The City's project manager is Sandra Blanch, Email: Sandra.B1anch@CityotPaloAlto.org ,
Telephone: (650) 329-2294 Human Resources Department, 250 Hamilton Avenue Palo Alto, CA
94303. The project manager will be CONSULTANT's point of contact with respectto performance,
progress and execution of the Services. The CITY may designate an alternate project manager from
time to time.
SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including
without limitation, aH writings, drawings, plans, reports, specifications, calculations, documents,
other materials and copyright interests developed under this Agreement shaH be and remain the
exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees
that all copyrights which arise from creation of the work pursuant to this Agreement shaH be vested
in CITY, and CONSUL TANTwaives and relinquishes aH claims to copyright or other inteHectual
property rights in favor of the CITY. Neither CONSULTANT nor its contractors, ifany, shaH make
any of such materials available to any individual or organization without the prior written approval of
the City Manager or designee. CONSULTANT makes no representation of the suitability of the
work product for use in or application to circumstances not contemplated by the scope of work.
SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during
the term of this Agreement and for three (3) years thereafter, CONSULTANT's records pertaining to
matters covered by this Agreement. CONSUL T A~T further agrees to maintain and retain such
records for at least three (3) years after the expiration or earlier termination of this Agreement.
SECTION 16. INDEMNITY.
16.1. To the fuHest extent permitted by law, CONSULTANT shall protect, indemnifY, defend and
hold harmless CITY, its Council members, officers, employees and agents (each an "Indemnified
Party") from and against any and all demands, claims, or liability of any nature, including death or
injury to any person, property damage or ally other loss, including all costs and expenses of whatever
nature including attorneys fees, experts fees, court costs and disbursements ("Claims") resulting
from, arising out of or in any manner related to performance or nonperformance by CONSULTANT,
its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is
caused in part by an Indemnified Party.
16.2. Notwithstanding the above, nothing in this Section 16 shaH be construed to
require CONSULTANT to indemnifY an Indemnified Party from Claims arising from the active
negligence, sole negligence or willful misconduct of an Indemnified Party.
16.3. The acceptance of CONSULTANT's services and duties by CITY shall not
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operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive
the expiration or early termination of this Agreement.
SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant,
term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not
be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of
any subsequent breach or violation of the same or of any other term, covenant, condition, provision,
ordinance or law.
SECTION 18. INSURANCE.
18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full
force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D".
CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an
additional insured under any general liability or automobile policy or policies.
18.2. All insurance coverage required hereunder shall be provided through carriers
with AM Best's Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to
transact insurance business in the State of California. Any and all contractors of CONSULTANT
retained to perform Services under this Agreement will obtain and maintain, in full force and effect
during the term of this Agreement, identical insurance coverage, naming CITY as an additional
insured under such policies as required above.
18.3. Certificates evidencing such insurance shall be filed with CITY concurrently
with the execution of this Agreement. The certificates will be subject to the approval of CITY's Risk
Manager and will contain an endorsement stating that the insurance is primary coverage and will not
be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the
Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification,
CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance
are provided to CITY's Purchasing Manager during the entire tenn of this Agreement.
18.4. The procuring of such required policy or policies of insurance will not be
construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions
of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be
obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as
a result of the Services performed under this Agreement, including such damage, injury, or loss
arising after the Agreement is terminated or the term has expired.
SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES.
19.1. The City Manager may suspend the performance of the Services, in whole or
in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written
notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately
discontinue its performance of the Services.
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19.2. CONSULTANT may terminate this Agreement or suspend its performance of
the Services by giving thirty (30) days prior written notice thereofto CITY, but only in the event ofa
substantial failure of performance by CITY.
19.3. Upon such suspension or termination, CONSULTANT shall deliver to the
City Manager immediately any and all copies of studies, sketches, drawings, computations, and other
data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to
CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will
become the property of CITY.
19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid
for the Services rendered or materials delivered to CITY in accordance with the scope of services on
or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided,
however, if this Agreement is suspended or terminated on account of a default by CONSULTANT,
CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT's
services which are of direct and immediate benefit to CITY as such determination may be made by
the City Manager acting in the reasonable exercise ofhislher discretion. The following Sections will
survive any expiration or termination of this Agreement: 14, 15, 16,19.4,20, and 25.
19.5. No payment, partial payment, acceptance, or partial acceptance by CITY will
operate as a waiver on the part of CITY of any of its rights under this Agreement.
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SECTION 20. NOTICES.
All notices hereunder will be given in writing and mailed, postage prepaid, by
certified mail, addressed as follows:
To CITY: Office of the City Clerk
City of Palo Alto
Post Office Box 10250
Palo Alto, CA 94303
With a copy to the Purchasing Manager
To CONSULTANT:
With a copy to:
Jody A. Gray
Senior Vice President
York Risk Services Group, Inc.
750 The City Drive, Suite 350
Orange, CA 92868
Peter E. Lind, Senior Vice President and General Counsel
York Risk Services Group, Inc.
99 Cherry Hill Road, Suite 102
Parsippany, New Jersey 07054
SECTION 21. CONFLICT OF INTEREST.
21.1. In accepting this Agreement, CONSULTANT covenants that it presently has
no interest, and will not acquire any interest, direct or indirect, tinancial or otherwise, which would
conflict in any manner or degree with the performance of the Services.
21.2. CONSULTANT further covenants that, in the performance of this Agreement,
it will not employ subconsultants, contractors or persons having such an interest. CONSULTANT
certifies that no person who has or will have any tinancial interest under this Agreement is an officer
or employee of CITY; this provision will be interpreted in accordance with the applicable provisions
of the Palo Alto Municipal Code and the Government Code of the State of California.
21.3. If the Project Manager determines that CONSULTANT is a "Consultant" as
that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT
shall be required and agrees to file the appropriate fmandal disclosure documents required by the
Palo Alto Municipal Code and the Political Reform Act.
SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section
2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not
discriminate in the employment of any person because of the race, skin color, gender, age, religion,
disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status,
weight or height of such person. CONSULTANT acknowledges that it has read and understands the
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provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination
Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section
2.30.510 pertaining to nondiscrimination in employment.
SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE
REOUIREMENTS. CONSULTANT shall comply with the City's Environmentally Preferred
Purchasing policies which are available at the City's Purchasing Department, incorporated by
reference and may be amended from time to time. CONSULTANT shall comply with waste
reduction, reuse, recycling and disposal requirements of the City's Zero Waste Program. Zero Waste
best practices include first minimizing and reducing waste; second, reusing waste and third, recycling
or composting waste. In particular, Consultant shall comply with the following zero waste
requirements:
• All printed materials provided by Consultant to City generated from a personal
computer and printer including but not limited to, proposals, quotes, invoices,
reports, and public education materials, shall be double-sided and printed on a
minimum of30% or greater post-consumer content paper, unless otherwise approved
by the City's Project Manager. Any submitted materials printed by a professional
printing company shall be a minimum of 30% or greater post-consumer material and
printed with vegetable based inks.
• Goods purchased by Consultant on behalf of the City shall be purchased in
accordance with the City's Environmental Purchasing Policy including but not
limited to Extended Producer Responsibility requirements for products and
packaging. A copy of this policy is on file at the Purchasing Office.
• Reusable/returnable pallets shall be taken back by the Consultant, at no additional
cost to the City, for reuse or recycling. Consultant shall provide documentation from
the facility accepting the pallets to verifY that pallets are not being disposed.
SECTION 24. NON-APPROPRIATION
24.1. This Agreement is subject to the fiscal provisions of the Charterofthe City of
Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a)
at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year,
or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion ofthe
fiscal year and funds for this Agreement are no longer available. This section shall take precedence
in the event of a conflict with any other covenant, term, condition, or provision of this Agreement.
SECTION 25. MISCELLANEOUS PROVISIONS.
25.1. This Agreement will be governed by the laws of the State of California.
25.2. In the event that an action is brought, the parties agree that trial of such action
will be vested exclusively in the state courts of California in the County of Santa Clara, State of
California.
25.3. The prevailing party in any action brought to enforce the provisions of this
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Agreement may recover its reasonable costs and attorneys' fees expended in connection with that
action. The prevailing party shall be entitled to recover an amount equal to the fair market value of
legal services provided by attorneys employed by it as well as any attorneys' fees paid to third
parties.
25.4. This document represents the entire and integrated agreement between the
parties and supersedes all prior negotiations, representations, and contracts, either written or oral.
This document may be amended only by a written instrument, which is signed by the parties.
25.5. The covenants, terms, conditions and provisions of this Agreement will apply
to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the
parties.
25.6. If a court of competent jurisdiction finds or rules that any provision of this
Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this
Agreement and any amendments thereto will remain in full force and effect.
25.7. All exhibits referred to in this Agreement and any addenda, appendices,
attachments, and schedules to this Agreement which, from time to time, may be referred to in any
duly executed amendment hereto are by such reference incorporated in this Agreement and will be
deemed to be a part of this Agreement.
25.8 If, pursuant to this contract with CONSULTANT, City shares with
CONSULTANT personal information as defined in California Civil Code section l798.81.5(d) about
a California resident ("Personal Information"), CONSULTANT shall maintain reasonable and
appropriate security procedures to protect that Personal Information, and shall inform City
immediately upon learning that there has been a breach in the security of the system or in the security
of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing
purposes without City's express written consent.
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25.9 All unchecked boxes do not apply to this agreement.
25.10 The individuals executing this Agreement represent and warrant that they have
the legal capacity and authority to do so on behalf of their respective legal entities.
IN WITNESS WHEREOF, the parties hereto have by their duly authorized
representatives executed this Agreement on the date first above written.
CITY OF PALO ALTO YORK RISK SERVICES GROUP, INC
City Manager
APPROVED AS TO FORM:
Senior Asst. City Attorney
Date:
Attachments:
EXHIBIT "A":
EXHIBIT "B":
EXHIBIT "C":
EXHIBIT "D":
SCOPE OF WORK.
SCHEDULE OF PERFORMANCE
COMPENSATION
INSURANCE REQUIREMENTS
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EXHIBIT "A"
SCOPE OF SERVICES
WORKERS' COMPENSATION PROGRAM ADMINISTRATION
The intent of this Scope of Services is to insure that the CITY and York agree on the service levels
outlined herein this agreement in an effort to maintain the highest customer service standards to the
benefit of the CITY.
I. INTRODUCTION
The CITY of Palo Alto (CITY) is self-insured for workers' compensation in the State of Cali fomi a
through a combination of self-insurance (Certificate #7102) and excess coverage. Under this Scope
of Services, York Risk Services Group, Inc. (York) shall administer the Workers' Compensation
Program of the CITY of Palo Alto, in accordance with the terms of this agreement and as set forth in
this scope of services.
II. CLAIMS MANAGEMENT REOUIREMENTS AND SCOPE OF SERVICES
York Agrees:
A. To examine, on behalf of the CITY, all reports of industrial injury or illness relating to CITY
employees and reported to York;
B. To engage the services ofperson(s) or firm(s) other than York, upon written approval from
the CITY, for services relating to the investigation and defense of claims, and to coordinate services
ancillary to claims.
C. To determine in a timely and accurate mmmer, on behalf ofthe CITY, what benefits, if any,
should be paid or rendered under the applicable workers' compensation laws in each reported claim;
D. To pay compensation, medical expenses, Allocated Loss Expenses, and other benefits as
prescribed by law out of funds provided by the CITY;
E. To maintain a claim file on each reported claim which shall be available to the CITY at all
times for inspection and to conduct, at a time and frequency to be determined by the CITY, claim file
reviews with the CITY at a location to be determined by the CITY;
F. To aggressively handle subrogation claims against responsible parties in order to preserve the
CITY's right to recovery;
G. To consult with and advise the CITY on any matter arising in conjunction with the business
of the CITY which involves the subject matter of this Agreement;
H. To provide all necessary forms and supplies for the efficient operation of the Workers'
Compensation Program, including customized checks bearing the CITY name and seal, and to
prepare and file all legally required forms and documents;
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1. The examiner assigned to the CITY of Palo Alto shall handle the CITY's program
exclusively and will not be assigned to any other accounts. The examiner shall have a minimum of
five years' experience and a minimum of two years 4850 experience, unless other than these
minimums are authorized by the CITY.
J. Supervisor(s) and manager(s) must have a minimum of ten (10) years of experience
handling/supervising workers' compensation and be SIP certified at the time of contract start time.
K. The CITY retains the right to control the selection of all legal, nurse case management and
investigative services. The responsibility for assigning such services shall be with the Assistant
Director ofHR and/or the CITY Safety Officer. The contractor's claims examiner shall coordinate
the daily vendor services.
L. CITY retains the right to control the selection of subrogation counsel. Aggressive
subrogation services are desired as part of the agreement.
M. To engage Qualified Vocational Rehabilitation Representative services if required and shall be
the responsibility of York with the approval of the Assistant Director of HR and/or the CITY Safety
Officer.
N The CITY shall be notified prior to any staffing changes with any claims person assigned to
the account. In the event that York, at any time during this agreement, intends to reassign any claims
person assigned to the account, York shall notifY the CITY prior to reassignment of any staff
member and allow the CITY to be involved in the decision-making process. In addition, the CITY of
Palo Alto shall retain the right to participate in the selection of the senior and assistant examiners
assigned to the account;
O. In the event that the CITY, at any time during the term ofthis agreement, is dissatisfied with
any claims person assigned to the account, the CITY will notifY York of their dissatisfaction. If after
60 days from notification, the CITY is still dissatisfied, York shaH remove said person assigned
immediately upon recei ving written notification from the CITY of the desire for the removal of such
person;
P. To provide the CITY with computer-generated loss runs, case logs, check registers, risk
management reports and any other claim related reports requested by the CITY, at a frequency to be
determined by the CITY;
Q. To biannually provide a loss report for claims with no activity for the previous six months;
R To provide monthly, a comprehensive claims report as described by the CITY two weeks or
less after the end of the reporting period including but not limited to: workers' compensation claims
summary report; workers' compensation fiscal year claim summary report; litigation summary
report; modified duty, status report; and detail claim summary report.
S. To utilize a third party vendor, upon the approval of the CITY, to review and cost control, all
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medical, hospital and drug bills and to assist the CITY with designating industrial medical clinics
and hospitals which will provide the CITY with a preferred provider (PPO) discount at fees less than
the Industrial Fees Schedule (IFS), and to provide an itemized list of all medical savings resulting
from this program, at a frequency to be determined by the CITY;
T. To utilize a third party vendor, upon the approval of the CITY, to provide Utilization Review
services consistent with ACOEM guidelines and the California Labor Code to monitor frequency,
duration and appropriateness of all services during the claim life, and to provide an itemized list of
all medical savings resulting from this program, at a frequency to be determined by the CITY;
u. To subscribe to and pay on behalf of the CITY, enrollment in the Index Bureau System on
behalf of the CITY, for workers' compensation claims in Califomiaand to report to the Index Bureau
each and every Indemnity claim filed;
v. To provide toll-free "800" telephone numbers for employees ofthe CITY to contact York
regarding questions or concerns regarding claims information; and
w. To provide a complete and detailed electronic conversiun of all claims data.
X. To coordinate and attend file review meetings with CITY staff and claims staff on a quarterly
basis and may attend additional meetings with other CITY staff as required.
III. SPECIAL CLAIMS HANDLING SERVICES
1. York agrees to provide the following Special Claims Handling Service:
A. To establish Indemnity of Lost Time Claims within five (5) days upon receipt of the
Employers First Report oflnjury (Form 5020) from the CITY.
The definition of an Indemnity Claim shall be an industrial injury or illness claim for which any of
the following benefits are claimed:
1. Temporary Disability
2. Permanent Disability
3. Life Pension
4. Death;
B. To confer wi th the Assistant HR Director or Safety Officer regarding questions, reports, or
issues concerning claims and to assist CITY department managers and supervisors regarding
questions, concerns, or issues involving employee claims
C. To immediately notify the Assistant HR Director, by providing a copy of a Reserve
Computation Sheet, of any reserve changes over twenty-thousand dollars ($20,000.00);
D. To review and obtain advance notice and approval by Assistant Director of HR or CITY
Safety Officer of any Claim Denials;
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E. To close Medical Only Claims within twelve (12) months from the date of injury or within
twelve (12) months from last day of treatment. The CITY will be updated on closures every thirty
(30) days. Exceptions to this requirement shall be reported in writing to the CITY;
F. To confer with the Assistant Director ofHR or Safety Officer as the following conditions
arise:
To approve a Vocational Rehabilitation Plan for injuries prior to (Year to be determined)
To refer a claim to a law firm or attorney
To approve surveillances, sub rosa, or other investigations
To obtain settlement authority over fifteen-thousand dollars ($15,000.00);
G. To promptly acknowledge receipt of voice mail and email messages within 24 hours;
H. To consistently maintain a high level of customer service with CITY staff and injured
employees;
1. To promptly furnish the Assistant Director ofHR or Safety Officer with all required material
papers, which consist of but shall not be limited to:
Applications and Other Legal Documents
Work Restrictions
Letters from Defense Counsel
Vocational Rehabilitation Reports
Private Investigation Reports and Summaries
Benefit Notices
Delay and/or Denial of Claim Notices
Medical Reports, as needed, in cases involving an Industrial Disability Retirement;
J. To submit to the CITY for approval and closure within five (5) days of receipt of written
notice, all undisputed Advisory Ratings.
K. To provide the CITY with a check register and a claims and expense report that balances with
the monthly loss experience report. These reports will be sent no later than ten (10) days following
the end of each month to the Assistant Director of HR.
1. To establish controls and procedures to manage and control the cost of defense.
IV. SPECIAL CLAIMS HANDLING SERVICES OF THE CITY
The CITY agrees to provide the following special claims handling services:
A. To promptly report to York all incidents of employee industrial injuries or illnesses;
B. To promptly forward to York all applications, reports, notices, or any legal correspondence
pertaining to claims administration;
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C. When applicable, to make all attempts possible to assign employees to modified duty
pursuant to the CITY of Palo Alto Workers' Compensation Modified Duty Policy;
D. To make available to York funds for the payment of benefits or services for industrial injuries
or illnesses;
E. To pay, with funds provided by CITY, all Allocated Loss Expenses defined as: all expenses
incurred on behalf of CITY and reasonably necessary for the adj ustment, handling, settlement, or
resistance of claims, including litigation expenses; and
F. To pay York all service fees as prescribed and included in Exhibit B -Fee Schedule.
V. PROGRAM MANAGEMENT
A. The Claims Supervisor shall be responsible for the following:
I. Review and assign all new claims;
2. Review to determine if referral to outside investigation firm is appropriate. Supervisor will
document each review whether investigation is conducted or not;
3. Review to determine if referral to defense counsel is appropriate when any of the following
occur:
a. Notification of applicant attorney representation
b. Suspected fraud
c. Subrogation
d. Filing of 132A or Serious and Willful Misconduct
e. Need for legal discovery or depositions, etc.
f. Issues that may need to be resolved by the WCAB
g. Claims involving presumptions
h. Claims with incurred value over $25,000
The supervisor will document every claim file in which one or more of the above criteria exists
indicating whether or not the claim should be referred to defense counsel and the reasoning for the
referral;
4. Oversee the development of the claims examiner's action plan in those cases in which
various alternatives may be appropriate. Supervisor will contactthe CITY of Palo Alto by telephone
or email to communicate the need to consider alternative action plan options and solicit their input
and/or concurrence;
5. Coordinate and attend file review meetings with CITY staff and claims staff on a quarterly
basis and attend additional meetings with other CITY staff, as necessary; and
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6. Establish a personal relationship with the primary medical vendors used by the CITY of Palo
Alto and maintain a professional rapport and ongoing communication to discuss issues as necessary.
B. The Senior Claims Examiner shall be responsible for the following:
1. To make initial contact with all injured workers by telephone within twenty-four (24) hours
following the date York receives an indemnity claim from the CITY to explain benefits and obtain
medical history, prior workers' compensation claim information and any other pertinent information.
Follow-up phone contact shall be made with the injured worker at least every two (2) weeks
thereafter provided the injured worker remains off work and unrepresented by council. Dates, times,
and details of all telephone contacts must be documented in the claim file;
2. To contact injured workers by telephone when any ofthefollowing occurs, unless the injured
worker is represented:
a. Explain the delay process when claims are placed on delay;
b. Explain the reason for denial when a claim is denied;
c. Explain permanent and stationary findings, permanent disability and ratings;
3. To contact the CITY on delay claims to determine action plan;
4. The claims examiner shall adhere to the following three-tier system:
a. Schedule the most appropriate medical treatment utilizing the designated medical
scheduling service or authorized physicians:
I. Physical therapy treatment shall only be authorized at facilities located in
Palo Alto unless otherwise approved by the Assistant Director of HR or
Safety Officer;
2. In order to expedite proper diagnosis of an injury, the claims examiner will have
the discretion to authorize initial diagnostic tests such as MRI's, CT Scans,
and nerve conduction studies without referral to Utilization Review;
b. Employees on lost time status shall be returned to modified work status within thirty
(30) days if available. Claims examiners shall aggressi vely pursue a release to modified duty for all
CITY employees through written and verbal communication with the medical provider and;
c. Employees on modified work status shall be returned to their usual and customary
duty status as soon as possible;
5. In all cases, the claims examiner must attempt to gain and maintain medical control of cases
per labor code 4600 unless a physician's statement is on file or a written change in treating physician
is provided by the applicant.
VI. COST REDUCTION GUARANTEE
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York agrees:
A. To guarantee the CITY of Palo Alto at least a 1: 1 indemnity closure ratio in each calendar
year of service under this contract. If this goal is not attained, York will credit the CITY of Palo Alto
$5,000.00 ofthe annual service fee.
B. To guarantee the CITY of Palo Alto that at least 32% of the indemnity claims reported during
service year will be closed by the end of the service year. If this goal is not attained, York will credit
the CITY of Palo Alto $5,000.00 ofthe annual service fee.
VII. PENALTIES
Penalties imposed by the Workers' Compensation Appeals Board (WCAB), the Department of
Industrial Relations, the Division Of Workers' Compensation, the Federal Government, or any
judicial forum or quasi-judicial forum in the State of California, arising out of the denial of claims
shall be the responsibility of the CITY if imposed as a result of actions taken by York at the express
written direction of the CITY.
Penalties imposed as a result of improper denial of claims shall be the responsibility of York if no
formal request for denial was obtained by or from the Assistant Director of HR.
Penalties imposed as a result of either party's failure to comply with the administrative rules,
regulations and the Labor Code of the State of California shall be the responsibility of the culpable
party.
York shall provide the CITY with a quarterly accounting of all penalties paid by Yark on behalf of
the CITY, including a listing of each penalty payment and the specific claim file to which the penalty
payment was charged. Penalties shall be paid out of the CITY's benefit account and York shall then
reimburse the CITY within thirty days (30) of the issuance of the penalty and fines report, for those
penalties and fines which are the responsibility of York under the terms and conditions of this
agreement.
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EXHmIT "B"
SCHEDULE OF PERFORMANCE
CONSULTANT shall perform the Services so as to complete the necessary Tasks in a timely
manner and to the reasonable satisfaction of the CITY.
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EXHIBIT "C"
COMPENSATION
The CITY agrees to compensate the CONSULTANT for professional services performed in
accordance with the terms and conditions of this Agreement, and as set forth in the budget
schedule below.
The compensation to be paid to CONSULTANT under this Agreement for all services
described in Exhibit "A" ("Basic Services") and reimbursable expenses shall not exceed
$232,050.00 per year, and the amounts specified below for Years 4 & 5, if the city chooses to
exercise its option to renew the contract in those years~ CONSULTANT agrees to complete
all Basic Services, including reimbursable expenses, within this amount. In the event CITY
authorizes any Additional Services, the maximum compensation shall not exceed
$232,050.00. Any work performed or expenses incurred for which payment would result in a
total exceeding the maximum amount of compensation set forth herein shall be at no cost to
the CITY.
CONSULTANT shall perform the tasks and categories of work as described in Exhibit A -
Scope of Services and budgeted below. The CITY's Project Manager may approve in writing
the transfer of budget amounts between any of the tasks or categories listed below provided
the total compensation for Basic Services, including reimbursable expenses, does not exceed
$232,050.00 and the total compensation for Additional Services does not exceed $232,050.00,
and the amounts specified below for Years 4 & 5, if the city chooses to exercise its option to
renew the contract in those years.
BUDGET SCHEDULE
Year 1
(2012-13)
Year 2
(2013-14)
Year 3
(2014-15)
Year 4
Year 5
NOT TO EXCEED AMOUNT
$232,050
$232,050
$232,050
The contract price for the period of July 1, 2015,
through June 30, 2016, shall be based on the change
in the annual average increase from April 2014 to
April 2015 in the San Francisco-Oakland-San Jose
Urban Wage Earners and Clerical Workers
Consumers Price Index provided, however, that the
increase shall not be more than three percent (3 %).
The contract price for the period of July 1, 2016,
through June 30, 2017, shall be based on the change
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in the annual average increase from April 2015 to
April 2016 in the San Francisco-Oakland-San Jose
Urban Wage Earners and Clerical Workers
Consumers Price Index provided, however, that the
increase shall not be more than three percent (3%).
Sub-total Basic Services per year $232,050.00
Reimbursable Expenses $0.00
Total Basic Services and Reimbursable expenses $232,050.00
Additional Services (Not to Exceed) $0
Maximum Total Compensation per year $232,050.00
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
A. Travel outside the San Francisco Bay area, including transportation and meals, will be
reimbursed at actual cost subject to the City of Palo Alto's policy for reimbursement of travel
and meal expenses for City of Palo Alto employees.
B. Long distance telephone service charges, cellular phone service charges, facsimile
transmission and postage charges are reimbursable at actual cost.
All requests for payment of expenses shall be accompanied by appropriate backup information.
Any expense anticipated to be more than $0.00 shall be approved in advance by the CITY's
project manager.
ADDITIONAL SERVICES
The CONSULT ANT 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
expense, for such services based on the rates set forth in Exhib it C-l. 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.
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Payment for additional serVIces is subject to all requirements and restrictions m this
Agreement
Work required because the following conditions are not satisfied or are exceeded shall be
considered as additional services:
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EXHIBIT "D"
INSURANCE REQUIREMENTS
CONTRACTORS TO THE CITY OF PAW ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THETERMOF THE CONTRACT OBTAIN
AND MAINTAIN INSURANCE IN THE AMOUNTS FOR TIlE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM
BEST'S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE
STATE OF CALIFORNIA.
AWARD IS CONTINGENT ON COMPLIANCE WITH CITY'S INSURANCE REQUIREMENTS. AS SPECIFIED, BEWW:
MINIMUM LIMITS
REQUIRED TYPE OF COVERAGE REQUIREMENT EACH
YES
YES
YES
YES
YES
YES
OCCURRENCE AGGREGATE
WORKER'S COMPENSATION STATUTORY
EMPWYER'S LIABILITY STATUTORY
BODILY INJURY $1,000,000 $1,000,000
GENERAL LIABILITY, INCLUDING
PERSONAL INJUR Y, BROAD FORM PROPERTY DAMAGE $1,000,000 $1,000,000
PROPERTY DAMAGE BLANKET
CONTRACTUAL, AND FIRE LEGAL BODILY INJURY & PROPERTY DAMAGE $1,000,000 $1,000,000
LIABILITY COMBINED.
BODILY INJURY $1,000,000 $1,000.000 -EACH PERSON $1,000,000 $1,000,000 -EACH OCCURRENCE $1,000,000 $1,000,000
AUTOMOBILE LIABILITY, INCLUDING
ALL OWNED, HIRED, NON-OWNED PROPE1UY DAMAGE $ 1,000,000 $1,000,000
BODILY INJURY AND PROPERTY $1,000,000 $1,000,000
DAMAGE, COMBINED
PROFESSIONAL LIABILITY, INCLUDING,
ERRORS AND OMISSIONS,
MALPRACTICE (WHEN APPLICABLE),
AND NEGLIGENT PERFORMANCE ALL DAMAGES I $1,000,000 I
THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSLlRED: CONTRACfOR, AT 1TS SOLE COST AND EXPENSE,
SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT TIlROUGHOUTTHEENTIRE TERM OF ANY RESULTANT AGREEMENT,
TIlE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT
AS ADDITIONA L INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES,
ALSO, WITH THE EXCEPTION OF WORKERS' COMPENSATION, EMPWYER'S LIABILITY AND PROFESSIONAL INSURANCE, NAMING I
L INSURANCE COVERAGE MUST INCLUDE:
A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN
COVERAGE OR OF COVERAGE CANCELLATION; AND
B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR
CONTRACTOR'S AGREEMENT TO INDEMNIFY CITY.
C. DEDUCTIBLE A.MOUNTS IN EXCESS OF $5,000 REQUIRE CITY'S PRIOR APPROV AL.
II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE.
IlL ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO "ADDITIONAL
INSUREDS"
A. PRIMARY COVERAGE
WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NA.MED INSURED, INSURANCE AS
AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER
INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS.
B. CROSS LIABILITY
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THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL
NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURF.n AGAINST ANOTHER, RUT THIS
ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF
THE COMPANY UNDER THIS POLICY.
C. NOTICE OF CANCELLATION
I. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER
THAN THE NON·PA YMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY
AT LEAST A THIRTY (3D) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF
CANCELLATION.
2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON·PA YMENT
OFPREMJUM, THE ISSUING COMPANY SHALL PROVIDE CITY ATLFASTA TEN (10) DAY
WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION.
NOTICES SHALL BE MAILED TO:
PURCHASING AND CONTRACT ADMINISTRA nON
CITY OF PALO ALTO
P.O. BOX 10250
PALO ALTO, CA 94303
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