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AUTHORIZE THE CITY MANAGER TO APPROVE A CONTRACT WITH SEDGWICK ADMINISTRATORS (SEDGWICK) TO PROVIDE SERVICES AS THE THIRD-PARTY ADMINISTRATOR (TPA) FOR THE CITY’S SELF-INSURED GENERAL LIABILITY PROGRAM
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Approve entering into an agreement with Sedgwick Administrators (Sedgwick) to provide services as the Third-Party Administrator (TPA) for the City’s Self-Insured General Liability and Subrogation program;
2. Authorize the City Manager to execute a three (3) year agreement not to exceed $1,421,220, with an option to extend for two (2) additional one (1)-year terms;
3. Approve findings for an exception to the competitive bidding process; and
4. Authorize the City Manager to take necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
The City currently contracts with Sedgwick Administrators to provide TPA services for the City’s self-insured General Liability Program. These services include administering general liability claims against the City in accordance with State law, regulations, City policies and procedures.
The agreement with Sedgwick Administrators expires on May 13, 2024. The City Manager approved the use of a Request for Proposal (RFP) process to solicit proposals for services as the TPA for the City’s General Liability and Subrogation Program. On January 23, 2023, the RFP Evaluation Committee interviewed the top three ranking proponents and selected Sedgwick. If approved, the agreement with Sedgwick will commence on May 14, 2024, and continue for three (3) years with an option to extend for two (2) additional one (1)-year terms (Attachment A).
DISCUSSION
Background
Sedgwick has managed the City’s General Liability Program since October 7, 2019. Due to the level of training, expertise, amount of activity and technological infrastructure required for effective claims management, it is in the City’s best interest to contract with a Third-Party Claims Administrator that has the certification, expertise, and resources to handle the daily requirements of claims administration and subrogation.
Present Situation
The City issued a Request for Proposals (RFP) for a General Liability TPA (PUR 24-011) on October 2, 2023. The RFP outlined the scope of work and requested proposals addressing vendor’s experience, organizational structure, commitment to quality-of-service delivery, and pricing. The RFP also required that claims be administered in accordance with State law and regulations, City policies and procedures; maintain open and closed claim files; stop loss reporting; subrogation recovery and utilization review.
A committee was established to evaluate the proposals submitted and to select the best qualified TPA. The Committee was comprised of staff from Human Resources/Risk Services, the City Attorney’s Office, and the Information Technology Department. Based upon the Committee’s evaluation, Sedgwick was selected.
Findings
Pursuant to Stockton Municipal Code (SMC) section 3.68.070, Council may approve findings that support an exception to the competitive bidding process. These findings include:
1. Use of the RFP process is appropriate for this agreement because, in addition to cost, it relies on the evaluation of professional qualifications, performance, and demonstrated experience for the selection of a General Liability TPA.
2. Selection based on cost alone does not consider public sector experience or the ability to provide consistent quality claims administration.
3. Services such as general liability claims administration and subrogation recovery require experienced professionals who have handled such services for other public entities and can work closely with City staff, which is in the public interest.
4. The RFP process allows the vendors to specify what services they can provide to the City rather than the City bidding specific services.
5. The City negotiated a contract following the solicitation of competitive proposals in accordance with SMC section 3.68.070.A.3.
FINANCIAL SUMMARY
The following costs are based on the specific needs of the City for TPA services and the response received from Sedgwick. The expected cost over the next three years equates to $1,421,220, consisting of annual flat fees totaling from $453,326 to $494.356. The agreement includes an option to extend the contract for two (2) additional years, on a year-to-year basis as outlined below:
|
Renewal Pricing |
Flat Annual Fee |
|
Program Year 1 5/14/2024 - 5/13/2025 |
$453,326 |
|
Program Year 2 5/14/2025 - 5/13/2026 |
$473,538 |
|
Program Year 3 5/14/2026 - 5/13/2027 |
$494,356 |
|
|
|
|
Optional Year 1 5/14/2027 - 5/13/2028 |
$509,187 |
|
Optional Year 2 5/14/2028 - 5/13/2029 |
$524,463 |
Funding for the general liability and subrogation third party administration service agreement will be budgeted annually in fund 2510-000-630006-530-000-00-25-000-000-.
Attachment A - Sedgwick Contract 2024