Explanation
Background: In April, 2009 the Department of Finance and Management, Real Estate Management Office (REMO) solicited Request for Proposals (RFP) No. SA003242 for Insurance Brokerage and Risk Engineering Services for Property Casualty, Boiler & Machinery, and Aviation Insurance. The City sought to identify qualified insurance brokers, insurance agencies, or insurance agents to provide insurance brokerage services for the City's property (casualty), boiler and machinery, and aviation insurance programs. The selected Broker(s) responsibilities are to develop, recommend, and implement risk engineering and management programs for each area of insurance coverage and be responsible for marketing the City's insurance programs to solicit a minimum of three quotes for underwriting these programs to contain cost and improve insurance coverage in each area. The Real Estate Management Office (REMO) conducted research to identify potential brokers of adequate size and experience for inclusion in the solicitation as well as including the vendors currently registered with the City under commodity codes associated with insurance and brokerage services. As a result of this research, an additional six national brokers were solicited to respond to the RFP.
Earlier this year REMO was asked to assist the Division of Police (CPD) by reviewing the City's aviation insurance coverage for CPD's six helicopters to determine if consolidation of the administration of aviation coverage under REMO would benefit the Division and the City. After review, CPD and REMO concluded that the administration of the City's aviation coverage should be transferred to the Department of Finance and Management, Real Estate Management Office. REMO worked with CPD to extend their current aviation coverage to July 31st so that the City's three types (property, boiler & machinery, aviation) of insurance coverage would have the same policy commencement and termination dates to allow the insurance to be bid together in a single package for brokerage and risk engineering services to potentially obtain cost savings and improve coverage.
This project was advertised April 3, 2009 with responses due on April 30, 2009. The City received five responses to provide all three lines of insurance and one (1) response for aviation insurance only. Proposals were received from Aon Risk Services Northeast, Inc.; Arthur J Gallagher Risk Management Services, Inc.; Huntington Insurance; Marsh USA, Inc.; NationAir; and Wells Fargo Insurance Services of Ohio, LLC. The responses were reviewed by the City's Proposal Evaluation Committee, comprised of three members. Each proposal was evaluated, scored, and rated on the following criteria: competency to perform the required services based on qualifications and experience of employees; quality and feasibility of the Responder's proposal; ability to perform the required services competently; past performance with projects of similar size and scope; and proposal cost structure. After discussion, the Proposal Evaluation Committee recommended to the Director of Finance and Management that it was in the City's best interest, both in efficiency and cost, to award brokerage for all three insurance programs to a single broker.
The Proposal Evaluation Committee determined that Arthur J. Gallagher Risk Management Services, Inc. submitted both the best and lowest bid of the five full service insurance brokerage companies evaluated. Arthur J. Gallagher Risk Management Services, Inc. response scored the highest in the Quality and Feasibility, Ability to Perform, Past Performance, and Cost evaluation criteria. The City desires to establish a five (5) year contractual relationship with the Broker.
The insurance brokerage and risk engineering service fee for the initial one-year term and the first renewal term of the Contract shall be $30,000.00. The service fee for the subsequent three renewal terms shall be $30,000.00, plus an adjustment for inflation based on the percentage change from the preceding year to the then current year and as agreed upon by both parties.
Arthur J. Gallagher Risk Management Services, Inc. as required, solicited the market to obtain underwriting quotes for each of the City's three insurance programs for the 2009-2010 annual term. A minimum of three quotations for each area of insurance coverage were provided to the City for evaluation. After review of the quotations, the City selected insurance carriers that provide the broadest and best coverage, meet the City's requirements, and allow the City to realize an annual savings while providing improved coverage. The selected insurance carriers are: Affiliated FM Insurance Company for property (casualty) insurance; Zurich American Insurance Company for boiler and machinery insurance; and Phoenix Aviation (Old Republic Insurance Company) for aviation insurance. The policies include the following deductibles: $250,000 for property (casualty) insurance; a $25,000 deductible for boiler & machinery insurance; and a $100,000 deductible for aviation insurance. The combined cost of the selected insurance coverage is $332,505. The insurance policies are effective from August 1, 2009 through July 31, 2010.
The cost of the insurance brokerage and risk engineering services contract is the total of the brokerage and risk engineering service fee ($30,000) and the actual cost of all insurance coverage ($332,505), or $362,505.
This ordinance authorizes the Director of Finance and Management to execute those documents necessary to enter into a one year contract with four renewal options with Arthur J. Gallagher Risk Management Services, Inc. for insurance brokerage and risk engineering services for property casualty, boiler and machinery, and aviation insurance commencing on August 1, 2009 and terminating on July 31, 2010 and to authorize Arthur J. Gallagher to bind the underwriting of the City's selected insurance for each area of insurance coverage for policies commencing on August 1, 2009 and terminating on July 31, 2010. The contract contains a renewal provision for four (4) consecutive terms of one (1) year each subject to agreement by both parties and appropriation of necessary funds by the Columbus City Council and certification of availability of funds by the City Auditor. Additionally, this ordinance authorizes the expenditure of $235,425 to be paid out of the Department of Finance and Management Employee Benefit Fund Budget 2009 and $127,080 to be paid out of the Law Enforcement Seizure Fund.
The Contract Compliance Number for Arthur J. Gallagher Risk Management Services, Inc. is 36-2102482 and the expiration date is 02/04/2010.
Emergency action is requested to allow the immediate execution of the contract to allow the City's insurance coverage for property, boiler & machinery, and aviation to be effective August 1, 2009 and to continue without interruption.
Fiscal Impact: The funding for this one (1) year contract was budgeted and funds are available within the Department of Finance and Management Employee Benefit Fund Budget 2009 and the Law Enforcement Seizure Fund. The total financial obligation for this one year contract for the City's insurance programs is $362,505. This amount represents an annual reduction in the City's cost for its insurance programs and a savings of $51,788.00.
Title
To authorize the Director of Finance and Management to execute those documents necessary to enter into an insurance brokerage and risk engineering services contract with Arthur J. Gallagher Risk Management Services, Inc. for a one year term with four annual renewal options that includes authorization to bind the 2009-2010 property, boiler & machinery, and aviation insurance coverage selected by the City; to authorize the transfer of funds within the Law Enforcement Seizure Fund; to authorize the expenditure of $362,505 for the City's 2009-2010 insurance programs; and to declare an emergency.
Body
WHEREAS, it is in the best interest of the City of Columbus to enter into a contract for insurance brokerage and risk engineering services including authorization to bind the property, boiler & machinery, and aviation insurance coverage selected by the City for the term August 1, 2009 to July 31, 2010; and
WHEREAS, the parties have agreed that the contract shall include an initial one-year term and four (4) one-year renewals and that the annual cost of the contract for each term shall be determined by the insurance broker's service fee plus and the actual underwriting cost to bind the property, boiler & machinery, and aviation insurance coverage selected by the City; and
WHEREAS, it is necessary to authorize the execution of the insurance brokerage and risk engineering services contract with Arthur J. Gallagher Risk Management Services, Inc. including authorization to bind the property, boiler & machinery, and aviation insurance coverage selected by the City; and
WHEREAS, it is necessary to transfer funds within the Law Enforcement Seizure Fund; and
WHEREAS, it is necessary to authorize the expenditure of $362,505 to pay contract costs for insurance brokerage and risk engineering services and the actual cost of binding the City's property, boiler & machinery, and aviation insurance policies; and
WHEREAS, an emergency exists in the usual daily operations of the Department of Finance and Management in that it is immediately necessary to enter into the contract for insurance brokerage and risk engineering services for the City's property, boiler & machinery, and aircraft insurance programs including the underwriting cost of the City's selected insurance policies for property, boiler & machinery, and aircraft coverage thereby preserving the public health, peace, property, safety and welfare; now, therefore:
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of Finance and Management be and is hereby authorized and directed to enter into contract with Arthur J. Gallagher Risk Management Services, Inc. to provide insurance brokerage and risk engineering services, including authorization to bind the property, boiler & machinery, and aviation insurance coverage selected by the City.
SECTION 2. That the term and conditions of the contract shall be in a form approved by the City Attorney's Office and shall include the following:
a) The insurance brokerage and risk engineering service fee for the initial one (1) year term and the first automatic one (1) year renewal term of this contract shall be $30,000.00. The service fee for the subsequent three (3) automatic one (1) year renewal terms shall be $30,000.00 plus and adjustment as agreed upon by both parties.
b) The term shall be for a one (1) year period commencing on August 1, 2009 and terminating on July 31, 2009, and contain an option for four (4) additional one (1) year renewal terms, each subject to agreement by both parties and the appropriation of necessary funds by the Columbus City Council and certification of availability of funds by the City Auditor.
c) The Broker will market and bind the City's insurance program on an annual basis. The total insurance cost for each one year term of the contract will be determined by the actual cost of the property, boiler & machinery, and aviation insurance coverage selected by the City and the insurance brokerage and risk engineering service fee subject to changes in the scope or extent of insurance coverage, as as authorized by the City during the term.
d) Arthur J. Gallagher Risk Management Services, Inc. shall provide fully bound insurance policies to the Real Estate Management Office, Department of Finance and Management, 90 W. Broad Street, Room 425, Columbus, Ohio, 43215 no later than July 31, 2009.
e) Such other terms and conditions as agreed to and approved by the City Attorney.
SECTION 3. The City Auditor is hereby directed to tranfer funds within Law Enforcement Seizure Fund as follows:
FROM:
Department/Division: 30-03|Fund: 219| Subfund: 016| OCA Code: 300988| Object Level 1: 06| Object Level 3:6697| Amount: $48,063
TO:
Department/Division: 30-03| Fund: 219| Subfund: 016| OCA Code: 300988| Object Level 1: 03| Object Level 3:3392 | Amount: $48,063
SECTION 4. That the expenditure of $362,505.00, or so much thereof that may be necessary in regard to the action authorized in Section 1, be and is hereby authorized and approved as follows:
Department/Division: 45-54
Fund: 502
OCA Code: 450052
Object Level 1: 03
Object Level 3: 3392
Amount: $235,425.00
Department/Division: 30-03
Fund: 219
Subfund: 016
OCA Code: 300988
Object Level 1: 03
Object Level 3:3392
Amount: $127,080.00
SECTION 5. That the City Auditor is authorized to make any accounting changes necessary to ensure that this contract is properly accounted for and recorded accurately on the City's financial record. That the City Auditor is authorized to make any changes to revise the funding source for any contract or contract modification associated with this ordinance.
SECTION 6. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.