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PB’s Self-funded Health Insurance Consultant Bid

Oct 27, 2014

POPLAR BLUFF – When Kaplan came on board on August 18, he was faced with the city’s self-funded health insurance nearing a $3,000,000 deficit. His first step in getting out of such a huge hole was to find a health insurance consultant. A request for bids was sent out.

The city received two qualified bids for insurance consultants.

The low bid of $68,000 was submitted by First Community Insurance of Poplar Bluff.

A bid of $85,000 was submitted by AON, an international company.

To evaluate the two bids, a committee comprised of seven employees from different departments within the city was formed. Committee members included Deputy Chief Jeff Rolland as chairman along with Steven Burkhead, Gail Barriner, Chris DeGaris, Jason Ruesler, Sandy Walker and Robert Monroe.

The employee committee met for several days, evaluating each of the bids on eight criteria. The committee also interviewed the representatives from both companies. The city clerk, financial manager and city manager were not allowed to be a part of the selection process.

The employee committee selected the higher bid from AON as the health insurance consultant. The council accepted and endorsed their recommendation with a 5-2 vote.

After the committee recommendation had been made, and before the council vote, agents from First Community Insurance came to the podium and stated, “We can provide the same service for $17,000 less.”

Chairman Rolland was asked by Mayor Pearson to respond as to why the committee chose AON over First Community Insurance.

Rolland pointed out that GBL had “grouped with First Community Insurance” for a local presence.

The City has a “Local Purchasing Preference Policy” which prefers local when it is within 3 percent of the lowest bid. In this case, the local bid was the lowest. There are other requirements as well in City Code Section 140.080 which state “at least 51percent of the value of the total work” and “60 percent of the work” must be performed locally.

SEMO TIMES contacted Eric Wilcoxon of First Community Insurance. Wilcoxon said “$12 of the $20 per employee monthly fee would have stayed within this agency” which equates to 60 percent. Wilcoxon also wanted to correct the record that First Community sought out GBL after evaluating all of the service providers they had available to them.

He also said that First Community does not currently have any self-funded customers in their agency at this time but that GBL has many.

The city codes state that the bids from a local vendor must be “substantially equal to or better than other bids received” to give preference. That is where it appears the GBL/First Community bid fell short to AON.

Rolland expressed that during the interview process, AON appeared more readily available to come and work with the city employees than GBL. AON has an office in St Louis, about 150 miles closer than GBL’s Iowa-based offices.

Rolland said the committee felt that AON had a better reach into the insurance markets and that AON’s proposal would give the employees more options and, “hopefully, [give] the city bigger discounts to help work out of the situation we currently find ourselves in.”

The employee committee rated both bids on the following criteria: Understanding of Work, Compliance with Specifications, Staff Expertise / Qualifications, Similar Experience, Company History / Background, Past Performance, References and Cost.

The overall score for the two bids was:
GBL – 47.95; AON – 53.95.

Of course, GBL/First Community scored highest in the cost category and both companies scored the same in Specification Compliance and Company History.

But in each of the other five categories, AON’s marks were overwhelmingly superior.

In Staff Expertise, all seven employees rated AON better than GBL. In Similar Experience, six of the seven rated AON better with one employee rating them the same.

Kaplan stated, during the council meeting discussion, that the rating worksheets from each committee member were available to the public by making a sunshine request.

SEMO TIMES asked this week if any other news agencies, citizen group or the chamber requested to see the employee worksheets. City Clerk Kearbey answered, “There have been no other requests.”