HomeMy WebLinkAboutContract 29292-A1 CITY SECRETARY
CONTRACT NO, ffacj -
STATE OF TEXAS § FIRST AMENDMENT TO
§ CITY SECRETARY CONTRACT
COUNTY OF TARRANT § NO. 29292
This FIRST AMENDMENT TO CITY SECRETARY CONTRACT NO. 29292 is made and
entered into by and between THE CITY OF FORT WORTH ("City"), a home-rule municipal
corporation of the State of Texas, acting by and through its duly authorized Assistant City
Manager.. and AON CONSULTING. INC. ("Consultant), a New Jersey corporation authorized
to do business in the State of Texas, acting by and through its Assistant Vice President.
WHEREAS, on November 18, 2003, the City and Consultant entered into an agreement
for advisory services related to the City's health benefit plan, the same being City Secretary
Contract No. 29292 ("Contract"), and
WHEREAS, the original agreement provided for the possibility of renewals through
December 31, 2007; and
WHEREAS, on December 18, 2007, the Fort Worth City Council approved M&C C-
22583, authorizing an amendment to Contract 29292 to provide for two additional, one-year
extensions, the second of which expires December 31, 2009; and
WHEREAS, the parties have exercised and operated under those renewal options; and
WHEREAS, on December 8, 2009, the Fort Worth City Council approved M&C G-
16780. authorizing an amendment to Contract 29292 to provide for an additional two-year
extension through December 31, 2011 and to address provision of additional benefits advisory
services: and
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First Amendment to Contract No.394't9 Page I of 7
06-04- 1 0 p '4 :;;�3 I N
WHEREAS, City and Consultant wish to amend Contract 29292 to extend the parties"
relationship in accordance with the authority granted by the Fort Worth City Council.
NOW, THEREFORE, City and Consultant, agree as follows:
1.
Section 1, "Term of Agreement," of the CONTRACT is deleted in its entirety and
replaced with the following:
Section 1: TERM OF AGREEMENT
This Agreement shall encompass all services included in the Scope of Work and rendered
by Consultant to or on behalf of the City for a period beginning on November 1$, 2003
and ending on December 31, 2011, unless terminated sooner in accordance with Section
17. To the extent City wishes to engage Consultant to perform benefits-related services
that fall outside the Scope of Work (including but not limited to, pharmacy benefits
review, dependent eligibility verification audits, and design of high deductible health
plans and health savings accounts), City and Consultant shall execute separate contracts
setting forth the terms pursuant to which such additional services are to be provided.
2.
The "Payments" Subsection of Section 3, "Scope of Work," of the CONTRACT is
amended to add the following:
On and after October 1, 2007, Consultant will charge the City an annual amount of
Seventy-Two 'Thousand, Five Hundred Dollars ($72,500.00) for providing Core Basic
Services, billed as a monthly retainer. Consultant will generate an invoice by the first
working date of each month. The invoice will be payable upon receipt and considered
delinquent if'not paid 30 days from the date of receipt. Consultant will not receive any
First Amcndin nt to Contract No 29292 page 2 of',
brokerage fees or any form of commission from any vendors for any City business related
to the City's benefit program.
In addition to the monthly retainer, Consultant will charge City for Special Services
requested by the City and perfonmed by the Consultant in accordance with the pricing
indicated in the "Special Services" Subsection of this Agreement. Charges for any
Special Service will be billed in arrears via invoice in the month following completion of
the service. The invoice will be payable upon receipt and considered delinquent if not
paid 30 days from the date of receipt. During the period January 1, 2010 through
December 31. 2010, City anticipates engaging Consultant to perform additional benefits-
related services ("Additional Services") that fall outside of both the Core Basic Services
and Special Services. The amount and structure of payment for Additional Services shall
be governed by separate contracts between the parties.
Under no circumstances shall the total cost for Core Basic Services, Special Services,
and Additional Services during the period January 1, 2010 through December 31,
2010 exceed a combined total of Two Hundred and Sixty-Two Thousand, Five
Hundred Dollars ($262,500.00). Under no circumstances shall the total cost for
Core Basic Services, Special Services, and Additional Services during the period
January 1, 2011 through December 31, 2011 exceed a combined total of One
Hundred and Twenty-Five Thousand Dollars ($125,000.00).
The "Special Services" Subsection of Section 3, "Scope of Work," of the CONTRACT is
deleted in its entirety and replaced with the following:
Special Services:
Special services, which are not covered above, will be agreed upon between the parties in
writing in advance of the work being performed and will be incorporated with this
I irst AmcndmCnt M('OrUract No 29''1)2 Pare? oI 7
contract as individual work orders. Examples of special services not included in the
retainer fee above include but are not limited to:
1. Aon technical and communication experts will provide a review of the Summary
Plan Description's organization and readability and will develop a new Summary
Plan Description when applicable for a fee of Five Thousand Two Hundred
Dollars ($5,200.00).
2. *AonMed - model plan changes and the potential impact on claims of increases or
decreases to cost-sharing features such as deductibles, out-of-pocket limits, co-
payments, and changes in provider discounts for in-network utilization.
3. AonRx - model changes in plan design to help mitigate the rising increases in
prescription drug costs for a fee of Eight Thousand Dollars ($8,000.00).
4. *AonCDH - provide a three-year projection for consumer driven as an option
within a menu of medical plan choices or as a full replacement plan for an
existing medical program
5. *Actuarial Projects as requested by the City, including, but not limited to studies
of proposed contribution-rate or plan-design changes, special GASB updates,
HBAC-initiated studies, and other requested scenarios.
*The estimated fees to make plan design changes for medical plans depend on the
complexity of benefits, the number of current plans, and the number of options required.
Typical fees for up to 5 plan design changes would be in the range of Three to Six
Thousand Dollars ($3,000.00 - $6,000.00). The estimated fees for AonCDH options can
start as low as Five to Ten Thousand Dollars ($5,000.00 - $10,000.00) depending on the
scope of the project. The parties would need to discuss the scope in more detail before
establishing a firm fee for the consumer driven pricing. The estimated fees for actuarial
projects can range from Two to Five Thousand Dollars ($2,000.00 - $5,000.00)
depending on the complexity of the project and the requested report structure. These fees
are based on 2010 project date. Delaying project date may require reconfirmation of fees
from Consultant.
I first Amendment to Contract No 29292 Pagel 47
5. "Government Accounting Standard (GASB) Analysis
*The estimated project fees for completing the analysis are Thirty Seven
Thousand Five Hundred Dollars ($37,500.00) annually. This fee amount assumes
that participant data will he provided electronically in a predetermined format and
that claims and enrollment data will be provided electronically in a timely and
accurate manner. These fees are based on 2010 project date. Delaying project
date may require reconsideration of fees from Consultant.
• Participant Data Collection
Consultant will prepare a data request to gather post-retirement benefit plan data.
This will include data for retired participants receiving benefits and active
employees who may eventually be eligible to retire and receive benefits from the
plan. In addition, we will also request plan-design information such as
deductibles, copayments, out-of-pocket limits, etc. Data can be transmitted using
almost any medium: FTP, CD, tape, diskette, or even paper if necessary.
• Claims Data Collection and Analysis
Once the data is received from either the City or carrier, Consultant will analyze
the data to develop estimated incurred claims cost tables for use in preparing the
actuarial valuations. Consultant will assist in setting retiree contribution rates for
the upcoming plan year.
• Actuarial Valuation and Reporting
Consultant will present the results of the actuarial valuation and year-end
disclosure in a format that best meets City's needs. The valuation report will
rinst Amendment to Contract No 29292 Pagc 5 k)1'7
typically include the current and prior valuation results, but can be customized to
meet the City's needs.
Consultant will respond to auditors' requests on behalf of the City.
First ,Amendment to Contract No 21)292 Page 6 of 7
4.
All other provisions of the CON'T'RACT that are not expressly amended herein shall
remain in full force and effect throughout the initial term and any renewals.
Executed on this the 1 41-- day of , 2010.
AON CONSULTING, INC: CITY OF FORT WORTH
By / By
Andrea Silva - ""I Karen L. Montgomery
Senior Vice President a'O' 'III' 4� Assistant City Manager 13 0
ATTEST:
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*10%00000000 0 City Secretary
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APPR AS O FORM:
As ant Ci ttorney
M&Cs G-16780
C 225r� 3
First amendment to Contract No. 29292 Pa—e 7 of 7
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CITY COUNCIL AGENDA FORTY ORT1I�
COUNCIL ACTION: Approved on 12/8/2009
DATE: 12/8/2009 REFERENCE NO.: G-16780 LOG NAME: 14AONAMEND
CODE: G TYPE: NON-CONSENT PUBLIC NO
NO
SUBJECT: Authorize Execution of Amendment and Extension of Existing Contract with Aon
Consulting,
an Inc.,
Review an for Group Health Benefits Consulting Services and Assistance with
ation of Cost-Saving Measures, for an Anticipated il�N
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to amend and extend the current
contract with Aon Consulting, Inc., to provide group health benefits consulting services and to assist
with the development and implementation of cost-saving measures, for an anticipated first year cost
of approximately $262,500.00.
DISCUSSION:
On October 21, 2003, the City Council adopted (M&C C-19816) authorizing the City Manager to enter
into a contract with Aon Consulting, Inc., (Aon) to be the City's Health Benefits Plan consultant. The
last extension under the original contract expired on December 31, 2007. On December 18, 2007,
the City Council approved (M&C C-22583) which authorized an amendment to the original contract to
provide for two additional, one-year extensions. The City has exercised both additional renewal
options, the second of which will expire on December 31, 2009.
Staff recommends that the contract with Aon be amended and extended for an additional two-year
period, which would expire on December 31, 2011.
While this contract has been in effect, Aon has provided satisfactory service to the City which has
been a factor in keeping annual increases in the cost of the Health Benefits Plan significantly below
national and local averages. Aon is among the world's top global human capital and management
consulting firms, providing a complete array of consulting, outsourcing and insurance brokerage
services. Aon Consulting professionals possess extensive knowledge of and experience in group
health benefit plans consulting. The company is capable of providing high quality consulting services
to the City of Fort Worth.
The City's contract with Aetna for administration of the health benefits will expire on December 31,
2009. Beginning in January 2010, Aon would assist the City in developing a Request for Proposal
(RFP) seeking a health benefits plan administrator. Aon would also aid the City in evaluating
proposals received from the RFP solicitation. Aon would also advise and assist the City during the
implementation phase of the new benefits plan administrator contract in calendar year 2011.
Therefore, staff recommends that Aon be retained as the health benefits consultant to provide
continuity in consulting services to the City as it works through the process of making these other
changes.
In addition, the City is in the process of developing and implementing Health Benefits Plan design
changes that should result in cost savings that were identified during the budget process. These
design changes are: (1) eliminating the Select Plan from the health benefits plan design and (2)
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adding a Medicare Advantage Plan to the retiree health benefits plan program. These design
changes will occur during 2010 and require the services of the Health Benefits Plan consultant to
design and implement. In addition, the current health benefits consultant is also working with the City
on other cost-saving projects that were identified during the budget process. These cost-saving
projects are: (1) Pharmacy Benefits Review, (2) Dependent Eligibility Verification Audit and (3) Health
Savings Account. Staff recommends continuing to employ Aon because its existing familiarity with the
City's circumstances will make the process of studying, developing and implementing these cost-
savings projects more efficient.
The cost of the contract for 2010 will include Aon's standard fees for consulting services and actuarial
updates and scenarios, which total approximately $125,000.00 annually. The 2010 contract costs will
also include additional fees for assisting the City in developing and implementing the Health Benefits
Plan design changes and cost-saving projects, which will total an additional $137,500.00. These
additional fees will be one-time expenses in 2010 only. The anticipated total cost of the contract in
calendar ear 2010 will total a roxi 62,500.00.
ere is no guaranteed amount for this contract since
services are billed on the basis of what is actually required.
M/WBE —Aon Consulting, Inc., is in compliance with the City's MNVBE ordinance by committing to
fan additional 15 percent M/WBE participation on this Amendment No. 1. The City's goal on this
Amendment is 15 percent.
FISCAL INFORMATION/CERTIFICATION:
The Financial Management Services Director certifies that funds are available in the current operating
budget, as appropriated, of the Group Health Insurance Fund.
TO Fund/Account/Centers FROM Fund/Account]Centers
FE85 531200 0148510 $262,500.0
Submitted for City Manager's Office W. Karen Montgomery (6222)
Originating Department Head: Karen Marshall (7783)
Additional Information Contact: Ron Josselet (8058)
ATTACHMENTS
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CITY COUNCIL AGENDA FORT��
COUNCIL ACTION: Approved on 12/18/2007
DATE: 12/18/2007 REFERENCE NO.: **C-22583 LOG NAME: 14AMEND
CODE: C TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT: Authorize Execution of an Amendment and the Extension of the Existing Contract with
AON Consulting, Inc., for Group Health Plan Consulting Services
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to amend the current contract
with AON Consulting, Inc., for group health plan consulting services.
DISCUSSION:
On October 21, 2003, (M&C C-19816) the City Council approved AON Consulting, Inc. (AON), to be
the City's health plan consultant. The City has exercised all of its renewal options under City
Secretary Contract No. 29292. The contract will expire December 31, 2007.
Staff recommends that the contract be amended to provide the City with the option of extending the
contractual relationship for two additional one-year periods. While this contract has been in effect,
AON has provided satisfactory service to the City which has been a factor in keeping the annual
increases in the cost of the health plan significantly below the national and local averages. In
addition, AON has performed actuarial studies to determine the City's liabilities under the
Government Accounting Standards Board (GASB) Statement No. 45. Changing the health plan
consultant at this time would result in additional cost due to a new actuary having to develop the
information needed to determine the City's liability. A change in the actuary could also result in
additional complexity to an already complex issue.
The cost of the contract will include fees for AON's regular consulting services and special projects
for a cost not to exceed $125,000 annually.
RENEWAL OPTIONS - The amended agreement will allow renewal for two additional one-year terms
at the City's option beginning January 2008. Future renewals would not require specific City Council
approval provided that the City Council has appropriated sufficient funds to satisfy the City's
obligations during the renewal term.
M/WBE - AON is in compliance with the City's M/WBE ordinance by committing to 15 percent M/WBE
participation.
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FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that funds are available in the current operating budget, as
appropriated, of the Group Health and Life Insurance Fund.
TO Fund/Account/Centers FROM Fund/Account/Centers
FE85 531200 0148510 $125,000.00
Submitted for Cif Manager's Office by: Karen Montgomery (6222)
Originating Department Head: Karen Marshall (7783)
Additional Information Contact: Bob Molloy (7787)
ATTACHMENTS
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