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HomeMy WebLinkAboutPR 15495: GALLAGHER BENEFIT SERVICES CONTRACTCity of Port Arthur Memorandum To: Steve Fitzgibbons, City Manager From: Rebecca Underhill, Assistant City Date: September 15, 2009 Re: PR 15495 I recommend that the City Council adopt Proposed Resolution 15495 which authorizes a consulting services contract with Gallagher Benefit Services, Inc. related to the City's Other Post Employment Benefit (OPEB), Retiree Health Insurance Plan. The City is in the process of evaluating the Retiree Health Insurance Plan. In reviewing alternatives, it is necessary for an actuary to evaluate the cost, or cost savings of the changes. Gallagher Benefits Services (GBS) has been working with us in this project, as a sub contractor, through our recently completed consulting agreement with First Southwest. As GSB is familiar with our plan and our ongoing evaluation, it is in our best interest to engage the firm to complete the work, as well as perform our 2009 updated actuarial study. M er The estimated cost of this contract is $15,000. P.R. 15495 jja: 9/9/09 RESOLUTION NO. A RESOLUTION AUTHORIZING A CONSULTING CONTRACT FOR THE SERVICES OF GALLAGHER BENEFIT SERVICES, INC. RELATED TO THE CITY'S OTHER POST EMPLOYMENT BENEFIT (OPEB), RETIREE HEALTH INSURANCE PLAN BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: THAT the City Manager of the City of Port Arthur is hereby authorized and directed to execute on behalf of the City of Port Arthur a consulting contract between the City and Gallagher Benefit Services, Inc. to assist in City's Other Post Employment Benefit (OPEB); and THAT a copy of said scope of services is attached hereto and made a part hereof as Exhibit "A"; and, THAT a copy of the caption of this resolution be spread upon the Minutes of the City Council. READ, ADOPTED, AND APPROVED, this day of September, 2009 A.D., at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: Council members: NOES: ATTEST: Mayor Terri Hanks, City Secretary APPROVED AS TO FORM: V , Mark Sokolow ity Attorney (on7 bQh~ APPROVED FOR ADMINISTRATION: :~~/ Stephen Fitzgibbons, City Manager Rebecca Underhill, Assistant City Manager APPROVED AS TO AVAILABILITY OF FUNDS: Deborah Echols, Finance Director EXHIBIT "A" STATE OF TEXAS COUNTY OF JEFFERSON PROFESSIONAL SERVICES CONTRACT This instrument is a contract between Gallaher Benefit Services, Inc., 3600 American Blvd. W. Suite 500, Bloomington, MN 55431 telephone number 952-356-0706, whose primary business is to perform actuarial services and provide employee benefits analysis. hereinafter denoted as "Professional", and the City of Port Arthur, hereinafter denoted as "City". SCOPE OF SERVICES/PRICE: This contract authorizes Professional to perform professional services as described in Exhibit "A- 1 ". The compensation for the Professional shall not exceed the estimated costs $15,000 TERM: The maximum term of this agreement shall be the lesser of (a) three months, (b) when the project described in Exhibit "A-1" is completed or (c) when the professional is terminated under the "Termination of Professional" clause. PROGRESS REPORTS: The professional shall provide progress reports as reasonably requested by the City's Representative. PERSONNEL OF PROFESSIONAL: DESIGNATION OF OWNER (CITY'S) REPRESENTATIVE AND DUTIES THEREOF: a. The City Manager or his designee shall act as City's Representative. b. The City's Representative shall use his best efforts to provide City records for Professional's usage on this project. STANDARDS OF PERFORMANCE: a. The Professional shall perform all services under this Agreement in accordance with the standards of the profession specializing in the scope of services as described in Exhibit "A-1 ". b. Codes and Standards (1) Professional agrees the services it provides as an experienced and qualified provider will reflect the professional standards, procedures, and performances common in the industry. (2) Professional agrees to and shall indemnify and hold harmless City, its agents and employees, from and against any and all claims, losses, damages causes of action, suits and liability of every kind, including all expenses of litigation, court costs, and attorney's fees, for injury to or death of any person, or for damage to any property, arising out of or in connection with the work done by Professional under this contract, such indemnity shall only apply where the claims, losses, damages, causes of action, suits or liability arise from the negligence of Professional. SC'HF.niJi.F,: The Professional shall not proceed with the project or any stage thereof until written notice to proceed is provided by the City's representative. The project schedule will commence as detailed in Exhibit "A-1 ". INSURANCE: A. The Professional shall procure and maintain insurance in the amounts listed below for protection from claims under Worker's Compensation, claims for damages because of bodily injury, including personal injury, and from claims or damages because of injury to or destruction of property including loss of use resulting therefrom. The Professional shall provide a copy of the insurance certificate to the City. Coverage Worker's Compensation Limit of Liability Statutory for Worker's Compensation Employer's Liability Bodily Injury by Accident $1,000,000 (Each Accident) Bodily Injury by Disease $1,000,000 (Policy Limit) Bodily Injury by Disease $1,000,000 (Each Employee) Commercial General: Including Broad Form Coverage, Contractual Liability, Bodily and Personal Injury, and Completed Operations Bodily Injury and Property Damage, Combined Limits of $500,000 each Occurrence and $1,000,000 aggregate (defense costs excluded from face amount of policy) b. The Professional shall maintain professional liability (errors and omissions/malpractice) insurance in the amount of $1,000,000. The Professional shall provide a copy of his insurance policy to the City within 10 days of contract execution or this contract shall be null and void. A deductible is acceptable for professional liability insurance and the deductible limits shall not exceed $250,000. c. The Professional shall give the City thirty (30) days notice prior to any change or cancellation of these insurance policies. LIABILITY: The Professional shall be liable only for the services performed by the Professional and shall be responsible for only the negligent acts or omissions that the Professional has direct control over. SUB-CONSULTANTS AND SUB-CONTRACTORS: The Professional shall receive written approval of the City's Representative prior to the use of sub-consultants and/or sub-contractors. TERMINATION OF PROFESSIONAL: The City retains the right to terminate the contract "at will" and to pay only for the professional services and sub-consultant's and subcontractor's costs that were provided for and/or that were committed to and that were City approved prior to the termination. RECORDS: At the City's request, the City will be entitled to review and receive a copy of all documents that indicate work on the project. BILLINGS: The City will process interim progress billings and shall have up to thirty (30) days to pay bills. All bills must demonstrate in detail the services completed. REPUTATION IN THE COMMUNITY: The Professional shall retain a high reputation in the Community for providing professional services. The Professional shall forward a copy of any current petition or complaint which (a) asserts more than $50,000 for errors or omissions in providing professional services and/or (b) seeks to deny the Professional from practicing in Texas. PAYROLLS AND BASIC RECORDS: a. The Professional shall maintain payrolls and basic payroll records during the course of the contract work and shall preserve them for a period of three years from the completion of the contract for all personnel working on the contract. Such records shall contain the name and address of each such employee, social security number, correct classification, hourly rates of wages paid, daily and weekly number of hours worked, deductions made, and actual wages paid. b. The records to be maintained under paragraph (a) of this clause shall be made available by the Professional for inspection, copying, or transcription by the City or their authorized representatives. The Professional shall permit such representatives to interview employees during working hours on the job. DEFAULT OF PROFESSIONAL: a. If the Professional refuses or fails to prosecute the work or any separable part, with the diligence that will insure its completion within the time specified in this contract, or fails to complete the work within this time, the City may, by written notice to the Professional, terminate the right to proceed with the work (or the separable part of the work) that has been delayed. In this event, the City may take over the work and complete it by contract or otherwise, and may take possession of and use any records necessary for completing the work. The Professional shall be liable for any damage to the City resulting from the Professional's refusal or failure to complete the work within the specified time, whether or not the Professional's right to proceed with the work is terminated. This liability includes any increased costs incurred by the City in completing the Professional's work. b. The Professional shall not be charged with damages under this clause if, (1) The delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Professional. Examples of such causes include (i) acts of God or of the public enemy, (ii) acts of the Government in either its sovereign or contractual capacity, (iii) acts of another contractor or Professional in the performance of a contract with the Government, and/or extended review or approvals by government agencies out of the control of the Professional, (iv) acts of fire, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of the Professional; and (2) The Professional, within 10 days from the beginning of any delay (unless extended by the City's Representative), notifies the City's Representative in writing of the causes of delay. The City's Representative shall ascertain the facts and the extent of delay. If, in the judgment of the City's Representative, the findings of fact warrant such action, the time for completing the work shall be extended. The findings of the City's Representative shall be final and conclusive on the parties, but subject to appeal to City Council. c. The rights and remedies of the City in this clause are in addition to any other rights and remedies provided by law or under this contract. APPLICABLE LAW: This contract has been made under and shall be governed by the laws of the State of Texas. The parties agree that performance and all matters related thereto shall be in Jefferson County, Texas. NOTICES: Notices shall be mailed to the addresses designated herein or as maybe designated in writing by the parties from time to time and shall be deemed received when sent postage prepaid U.S. Mail to the following addresses: CITY: City of Port Arthur Attention: Rebecca Underhill Assistant City Manager P. O. Box 1089 Port Arthur, Texas 77641 PROFESSIONAL: Gallagher Benefit Services, Inc. 3600 American Blvd. W, Suite 500 Bloomington, MN 55431 WAIVER: No waiver by either party hereto of any term or condition of this agreement shall be deemed or construed to be a waiver of any other term or condition or subsequent waiver of the same term or condition. This Agreement represents the entire and integrated agreement between City and Professional and supersedes all prior negotiations, representations or agreements, either written or oral. This agreement may only be amended by written instrument approved and executed by the parties. The City of Port Arthur and Professional, accept and agree to these terms. SIGNED ON THE day of , 2009. BY: Attest: SIGNED ON THE day of Attest: 2009. CITY OF PORT ARTHUR, TEXAS BY: Steve Fitzgibbons, City Manager Terri Hanks City Secretary EXHIBIT "A-1" SCOPE OF SERVICES Subject to any changes and additions as may be mutually agreed by the parties in writing, Gallagher Benefit Services, Inc. (GBS) will provide the following approach and services for the City of Port Arthur, Texas related to the October 1, 2009 GASB No 45 actuarial valuation of Other Postemployment Benefits (OPEB) for retired employees: I) OCTOBER 1, 2009 GASB NO.45 OPEB ACTUARIAL VALUATION a. DETERMINE THE LIABILITY AND ANNUAL COST UNIIER THE OCTOBER 1, 2009 OPEB PLAN GBS will perform the following steps to determine the City's OPEB liability and annual cost based on the City's current October 1, 2009 plan provisions: ^ Request Information -GBS will request information regarding the City's postemployment healthcare plans including active and retiree census data, historical active and retiree medical and prescription drug claims experience, summaries of the healthcare plan provisions (e.g., deductibles, copays, coinsurances; benefit coverage for retiree, spouses, and beneficiaries; retirement eligibility requirements and retiree contributions), and any other applicable documents that assist in understanding the provisions of the postemployment benefits (union contracts, participant letters, etc.). ^ Research Plan Provisions -GBS will review plan provisions, recent amendments, union or other agreements, and any other documents to understand the substantive plan and determine expected future retiree contributions, healthcare plans and coverage elections. ^ Review Assumptions -GBS will review economic assumptions (e.g., discount rate, healthcare trend rates) and demographic assumptions (e.g., turnover rates, mortality rates, disability rates, retirement rates) used in calculating the OPEB liability for postemployment benefits. ^ Develop Per Capita Claims Costs -GBS will analyze the historical active and retiree medical and prescription drug claims experience and develop the expected fiscal year October 1, 2009 to September 30, 2010 per capita healthcare costs for retirees used in calculating the postretirement healthcare coverage OPEB liability. ^ Determine OPEB Liability and Annual Cost -Using the above information, GBS will program the benefits and calculate the OPEB liability and annual cost for the October 1, 2009 to September 30, 2010 fiscal year based on current plan provisions in effect as of October 1, 2009. SCOPE OF SERVICES (Continued) b. PROVIDE THE OCTOBER 1, 2009 GASB N0.45 OPEB VALUATION REPORT The results of the October 1, 2009 valuation will be provided in a formal October 1, 2009 GASB No. 45 and 43 Actuarial Valuation report that will include the following: ^ Actuarial Present Value of Benefits as of October 1, 2009 ^ Actuarial Accrued Liability as of October 1, 2009; October 1, 2010; and October 1, 2011 ^ Unfunded Actuarial Accrued Liability as of October 1, 2009; October 1, 2010; and October 1, 2011 ^ Annual Required Contribution and Annual OPEB Cost for fiscal years ending September 30, 2010 and September 30, 2011 ^ Financial Statement Note Disclosures and Required Supplementary Information for the fiscal years ending September 30, 2010 and September 30, 2011 ^ Pay-as-you-go cost projections (35-Year) ^ Summary of plan participants as of October 1, 2009 ^ Summary of plan provisions as of October 1, 2009 ^ Summary of actuarial assumptions as of October 1, 2009 In GASB 45 OPEB PLAN DESIGN CONSULTING To reduce or control the ongoing OPEB liability and annual costs changes in the plan's benefits, cost sharing, eligibility requirements and/or funding may be required. Gallagher Benefit Services will provide the following related consulting services to assist in reducing the OPEB liability/cost: a. Analyze current OPEB commitments and plan designs and identify optional plan designs/provisions to further explore the impact on the GASB 45 liability and annual costs. b. Calculate the impact that the optional plan designs/provisions have on GASB 45 liabilities and annual costs. FEES OCTOBER 1, 2009 GASB N0.45 OPEB ACTUARIAL VALUATION The fee to complete the October 1, 2009 GASB 45 OPEB actuarial valuation described in item n above is $10,000. This fee includes a conference call meeting to present the valuation report. GASB 45 OPEB PLAN DESIGN CONSULTING The fee to complete the plan design consulting described in item II) above will be based on an hourly billing rate of $185/hour. We anticipate approximately 3 to 6 hours for each optional plan design. EXPENSES GBS does not anticipate any expenses will be required in providing these services, but should the City desire a personal consultation, travel expenses would be in addition to the fees above.