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HomeMy WebLinkAboutContract 47896 RILE v�� Jk CITY sEcRETAW/ I , I A. wC CONTRACT NO. `i- Mr.Mark Barta Assistant HR Director,Risk Management City of Ft.Worth i000 Throckmorton Street Fort Worth,Texas 76102 June i3,2o16 Dear Mr.Barta, This letter confirms that City of Fort Worth("the City", "you"or"Client")has engaged PricewaterhouseCoopers LLP("we"or"us"or"PwC")to perform the services described below.Client may procure services under this engagement letter for itself and for those of its consolidated subsidiaries or affiliates that Client binds to this engagement letter by its signature or which separately agree to the provisions of this engagement letter(collectively,the"Subsidiaries"). Scope of Our Services We will perform a review of the City's recently completed actuarial analyses of the self-insurance programs(workers'compensation,automobile liability,general liability,employment practices liability and law enforcement liability).In this actuarial review PwC will specifically provide the following services(the"Services"). Our review will consist of a second opinion of the recently completed actuarial analyses.Three different approaches are commonly used when these types of opinions are issued. 1. Independent Testing. This approach involves an independent, detailed calculation of the actuarial estimates by PwC actuaries using a combination of alternative methods,assumptions, and groupings of data. This approach is generally used for the larger business segments and can provide an alternative viewpoint of an actuarial projection with specific reasons for the differences detailed. 2. Methods and Assumptions Review. A methods and assumptions review (sometimes referred to as a"peer review")consists of a direct examination of the current actuarial analysis. This approach includes a detailed review of the reasonableness of selected methods and key underlying assumptions. It may include the selection of alternative assumptions when we determine that such an alternate is more appropriate than the assumption selected by the current actuary or as a test of the sensitivity of the current results. In other instances,where we have reviewed the current approach and agree with that the selected methods,assumptions,and results are reasonable,we may accept the current estimates without adjustment. 3. Diagnostic Review. Based upon the size,historical volatility,and nature of the actuarial data grouping,there may be a portion of the analysis where we believe there is a lower risk of material misstatement and therefore a less detailed examination of current estimates is sufficient.Before adopting this approach,some management inquiry and/or risk assessment analytics would need to be performed. Based on a limited review of the two underlying actuarial analyses the City has provided,the initial expectation of the scope of review is as follows: _..... _.... ...................................I....................... OFFICIAL RECORD PricewaterhouseCoopers LLP,301 Commerce Street,Suite 2350,Ft.Worth,,rx 76102 CITY SECRETARY Telephone:(817)870 0825,Mobile:(817)412 9274,www.pwc.com/us FT. WORTH, TX JLI PWC r Coverage Independent, Assumptions Testing Review Review ompensation- Automijbile Liability General Liability i s Workers'Compensation is clearly a significant component of the City's underlying risk exposure and with the recent increases in self-insured retention levels,this coverage warrants independent testing. It appears the projected future loss levels are substantially higher than the historical levels and this area calls for further exploration. The Automobile Liability,General Liability,and Employment Practices Liability segments are categorized as Methods and Assumptions reviews primarily due to their size. If second opinions were regularly performed,one or more of these segments possibly could shift to a diagnostic review. It is possible that during our review one or more of these coverages may be moved to independent testing if alternative testing is deemed necessary. Law Enforcement Liability is categorized as independent testing both due to its longer tailed nature as well as recent national trends in this area. Timing The project duration is 6 weeks and assuming we receive data by June 27,2oi6 the project will be completed by the week of August 1,2016.The proposed project timeline is as follows: Weeks Key Tasks/Deliverables 1-2 Initial Data Setup, Review and Preliminary Analysis 3 Onsite Meeting-Discussion of Preliminary Analysis 4-5 Finalize Analysis 6 Onsite Meeting- Presentation of Results Completion of our work is subject to,among other things,i)appropriate co-operation from the City personnel including timely preparation of necessary schedules,2)timely responses to our inquiries, and 3)timely communication of all significant accounting and financial reporting matters. When and if for any reason the City is unable to provide such schedules,information and assistance,PwC and the City will mutually revise the fee and/or timing to reflect additional services,if any,required of us to complete the report. Deliverables We expect to provide you with tangible written material specifically prepared for and delivered to you under this engagement letter("Deliverables"). Key deliverables will include at least 2 onsite meetings. The results meeting will be accompanied by a presentation with a level of detail that is deemed appropriate for the audience. In addition,a report which fully describes and documents the analysis will be provided. The report will include: i. An independent assessment of the reasonableness of the current actuarial analyses Page 2 of 7 Jk PWC 2. Alternative estimates and considerations as appropriate 3. A detailed description of the current actuarial approach 4. Documentation of the PwC review process 5. Details regarding the specific data relied upon in the review 6. Qualifications of the actuaries performing the review 7. Recommended other areas of focus. "Deliverables"also includes any oral advice we may provide. We may prepare some Deliverables in conjunction with you that will be intended to be treated solely as your own,and will not be represented as having been prepared by PwC. You will review such Deliverables,revise them as you deem appropriate,approve them prior to your use and take full responsibility for their content. Each party shall continue to own its own working papers and all intellectual property rights in its pre- existing materials. Upon full payment,you will own all tangible,written Deliverables,excluding any PwC Materials embedded therein which shall continue to be owned by PwC,and to which you will have a license as set out below. PwC Materials shall include PwC's pre-existing materials and any improvements and derivatives thereto(including a new or improved process,methodology,technique, analytical process etc.)and any general skills,know-how,process or other general intellectual property which may have been discovered or created as a result of the Services. Upon full payment,you will have a nonexclusive,non-transferable license to use such PwC Materials embedded in the Deliverables for your own internal use as part of such Deliverables. In addition to Deliverables,we may develop software or electronic materials(including spreadsheets, documents,databases and other tools)to assist us with an engagement. If we make these available to you,they are provided"as is"and your use of these materials is at your own risk. Use of Deliverables PwC is providing the Services and Deliverables solely for Client's internal use and benefit pursuant to a client relationship exclusively with Client,and not for a third party's use,benefit or reliance,and PwC disclaims any contractual or other responsibility or duty of care to others. Client may disclose Deliverables or discuss information relating to Services with third party professional advisors including subcontractors with a need to know such information to provide advice or services to Client and which are subject to obligations of confidentiality although PwC disclaims any duties or liabilities to such advisors. However,Client agrees it will not disclose or make reference to PwC,the Deliverables or Services to other third parties without the prior written consent of PwC. Third party professional advisors do not include any parties that are providing or may provide insurance,financing,capital in any form,a fairness opinion,or selling or underwriting securities in connection with any transaction that is the subject of the Services or any parties which have or may obtain a financial interest in Client or an anticipated transaction. PwC recognizes that Client is a public entity and may be subject to requests under a public record disclosure statute. In the event such a request is made under a public record statute,Client will promptly notify PwC of such request so that PwC can take any action permitted by law to withhold disclosure of the information,if it so desires. Page 3 of 7 Jk PWe Confidentiality "Confidential Information"means non-public information marked"confidential"or"proprietary"or that otherwise should be understood by a reasonable person to be confidential in nature,provided by a party or on its behalf. All terms of this engagement letter,including but not limited to fee and expense structure,are considered Confidential Information. Confidential Information does not include any information which(i)is rightfully known to the recipient prior to its disclosure; (ii)is released to any other person or entity(including governmental agencies)without restriction; (iii)is independently developed by the recipient without use of or reliance on Confidential Information;or(iv)is or later becomes publicly available without violation of this engagement letter or may be lawfully obtained by a party from a non-party. Each party will protect Confidential Information using reasonable measures commensurate with those that the party uses to protect its own confidential information.Each party may use Confidential Information to perform,or as permitted in,this engagement letter or as requested or directed by the other,or as required by applicable law,statute,rule,regulation or professional standard,and neither party will disclose Confidential Information to third parties without the other's prior written consent.Notwithstanding the foregoing,without the other party's prior written consent,a party may disclose Confidential Information to its professional advisors,subcontractors, PwC Subcontractors or employees on a need-to-know basis,provided that such entities and individuals are required to comply with confidentiality obligations. If disclosure is required by law,statute,rule or regulation(including any subpoena or other similar form of process),or by professional standards,the party to which the request for disclosure is made shall(other than in connection with government audits,investigations or supervisory examinations by regulatory authorities with jurisdiction and without breaching any legal or regulatory requirement)provide the other party with prior prompt written notice(to the extent permissible by law)thereof and,if practicable under the circumstances, allow the other party to seek a restraining order or other appropriate relief. Neither party shall use the other party's name or refer to the other party directly or indirectly in any media release,public announcement,or public disclosure relating to this engagement letter or its subject matter,including any promotional or marketing materials,lists,referral lists,or business presentations,without written consent from the other party for each such use or release. Notwithstanding the foregoing,PwC may use your name in experience citations and recruiting materials. PwC recognizes that Client is a public entity and may be subject to requests under a public record disclosure statute. In the event such a request is made under a public record statute,Client will promptly notify PwC of such request so that PwC can take any action permitted by law to withhold disclosure of the information,if it so desires. Our Responsibilities We will perform the Services in accordance with the American Academy of Actuaries'Code of Professional Conduct and relevant Actuarial Standards of Practice. Accordingly,we will not provide an audit,accounting or attest opinion and we will not verify or audit any of the information provided to us. Your Responsibilities To facilitate our work,you agree to provide the following assistance: You are responsible for all management functions and decisions,including establishing and maintaining your internal controls,evaluating and accepting the adequacy of the scope of the Services in addressing your needs and making decisions regarding whether to proceed with recommendations. You will designate a competent member of your management to oversee the Services. We expect that you will provide timely,accurate and complete information and reasonable assistance,and we will perform the engagement on that basis. Page 4 of 7 JIL PWC Fees and Expenses We commit to a not to exceed fee for this engagement of$26,000. Fees of all PwC Subcontractors(as defined in"Other PricewaterhouseCoopers Firms and Subcontractors"below),if any,are included in the agreed fee as well as our reasonable out-of-pocket expenses,any applicable sales,use or value added tax,and our internal per ticket charges for booking travel. The amount of our fee is based on the assumption that we will receive the information and assistance as detailed throughout this engagement letter. In the event we believe an additional fee is required as the result of your failure to meet any of these requests or for any other reason,we will inform you promptly. Invoices will be issued semi-monthly based on an equal proration of the fixed fee over the expected duration of the engagement. Invoices are due upon presentation and payable within 15 days of the invoice date. Termination and Dispute Resolution Either party may terminate the Services by giving notice to that effect. Any disputes that arise between the parties that are not resolved by mutual agreement shall be resolved by arbitration. The arbitration will be conducted in accordance with the Rules for Non-Administered Arbitration of the International Institute for Conflict Prevention and Resolution("Rules")then in effect. The arbitration will be conducted before a panel of three arbitrators selected using the screened process provided in the Rules. The arbitration panel,and not any federal,state or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation,applicability, enforceability or formation of this engagement letter. The arbitration panel shall have no power to award non-monetary or equitable relief of any sort. It shall also have no power to award damages inconsistent with the Limitations on Liability provisions below or any other terms in this engagement letter. Judgment on any arbitration award may be entered in any court having jurisdiction. All aspects of the arbitration shall be treated as confidential. You accept and acknowledge that any demand for arbitration arising from or in connection with the Services must be issued within one year from the date you became aware or should reasonably have become aware of the facts that give rise to our alleged liability and in any event no later than two years after the cause of action accrued. This engagement letter and any dispute between the parties whether in contract,tort or otherwise will be governed by and construed,interpreted and enforced in accordance with the laws of the State of Texas,without giving effect to any choice of law principles or provisions relating to conflict of laws that require the laws of another jurisdiction to apply. Limitations on Liability Except to the extent finally determined to have resulted from our gross negligence or intentional misconduct,our aggregate liability to pay damages for all claims,losses,liabilities or damages in connection with this engagement letter or the Services,whether as a result of breach of contract,tort (including negligence)or otherwise,regardless of the theory of liability asserted,is limited to no more than the total amount of fees paid to us for the particular Service giving rise to the liability under this engagement letter. In addition,we will not be liable in any event for lost profits,consequential, indirect,punitive,exemplary or special damages. Also,we shall have no liability arising from or relating to third-party hardware,software,information or materials selected or supplied by you. Page 5 of 7 JIL pwc Other PricewaterhouseCoopers Firms and Subcontractors PwC is part of a global network of separate and independent PricewaterhouseCoopers firms(exclusive of PwC,the"Other PwC Firms"). PwC may,in its discretion,draw on the resources of and/or subcontract to its subsidiaries,affiliates,the Other PwC Firms and/or third party contractors and subcontractors in each case within or outside of the United States(each a"PwC Subcontractor"),in connection with the provision of Services and/or for internal,administrative and/or regulatory compliance purposes. Client agrees that PwC may provide information PwC receives in connection with this engagement letter to the PwC Subcontractors for such purposes. Except as the parties may agree otherwise,PwC will be solely responsible for the provision of the Services(including those performed by the PwC Subcontractors)and for the protection of the information provided to the PwC Subcontractors. The PwC Subcontractors,and theirs and PwC's respective partners,principals or employees(collectively the"Beneficiaries")shall have no liability or obligations arising out of this engagement letter. Client agrees to: (a)bring any claim or other legal proceeding of any nature arising from the Services against PwC and not against the Beneficiaries; and(b)ensure or procure that those of Client's Subsidiaries do not assert any such claim or other legal proceeding against PwC or the Beneficiaries. If any of Client's Subsidiaries receive Services under this engagement letter,Client agrees to provide a copy of this engagement letter to such Subsidiaries,and Client will notify them that although PwC Subcontractors may interact with them,the delivery of the Services is governed by the terms of this engagement letter(including the liability limitations herein)and Client's Subsidiaries should notify Client of any disputes or potential claims arising from the Services. We disclaim any contractual or other responsibility or duty of care to any other subsidiaries or affiliates. While PwC is entering into this engagement letter on its own behalf,this section also is intended for the benefit of the Beneficiaries. Other Matters Neither party to this engagement letter may assign or transfer this engagement letter or any rights, obligations,claims or proceeds from claims arising out of or in any way relating to this engagement letter,any services provided hereunder,or any fees for this engagement or such services,to anyone without the prior written consent of the other party,and any assignment without such consent shall be void and invalid. If any provision of this engagement letter is found to be unenforceable,the remainder of this engagement letter shall be enforced to the extent permitted by law. If we perform the Services prior to both parties executing this engagement letter,this engagement letter shall be effective as of the date we began the Services. Neither party shall be liable to the other for any delay or failure to perform any of the Services or obligations in this engagement letter due to causes beyond its reasonable control. If PwC is requested or authorized by Client or required by government regulation,regulatory agency, subpoena,or other legal process to produce PwC's Deliverables,working papers or personnel for testimony or interview with respect to services PwC performed for Client,Client will,to the extent permissible by law,reimburse PwC for PwC's and its counsel's expenses and professional time incurred in responding to such a request. PwC is owned by professionals who hold CPA licenses as well as by professionals who are not licensed CPAs. Depending on the nature of the Services,non-CPA owners may be involved in providing Services under this engagement letter. This engagement letter represents the entire agreement between the parties with regard to the subject matter thereof and supersedes any prior understandings,proposals or agreements with respect to the Services.Any changes must be agreed to in writing. Page 6 of 7 jk PWC We are pleased to have the opportunity to provide Services to City of Fort Worth. If you have any questions about this engagement letter,please discuss them with Mark Jones at(817)412-9274. If the Services and terms outlined in this engagement letter are acceptable,please sign one copy of this engagement letter in the space provided and return it to Mark Jones. You may return the signed copy to Mark by mail or air courier to 301 Commerce Street,Suite 2350,Ft.Worth TX 76102,or attached as a pdf,jpeg or similar file type to an e-mail to Mark at mark.jeapwc.com. Very truly yours, Pri cewaterhouseClIoo''persLLP Mark Littmann,FCAS,MAAA Principal Date: June 13,2016 ACKNOWLEDGED AND AGREED: City of Fort Worth -� Signature of client official: Please print name: Title: Date: o -4 o � A. "DARM A LEGALITY. Mary J. r, i1u<<(� O M&C REQUIRED Page 7 of 7 OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX