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HomeMy WebLinkAbout30- Human Resources ORIGiNIIAL CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION From: Linn Livingston, Director Subject: RESOLUTION OF THE CITY OF of Human Resources SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH Dept: Human Resources MERCER HEALTH AND BENEFITS LLC TO PROVIDE BROKER AND Date: May 25, 2010 ADMINISTRATION SERVICES FOR THE CITY'S EMPLOYEE HEALTH CARE PROGRAM. M/CC Meeting Date: June 7, 2010 Synopsis of Previous Council Action: On May 3, 2010, Mayor and Common Council authorized the Director of Human Resources to negotiate the terms of a contract with Mercer Health & Benefits for broker and administration services. Recommended Motion: 1. Adopt Resolution. Si Lure Contact person: Linn Livingston Phone: 384-5161 Supporting data attached: Ward: Funding Requirements: Amount $275,000 FY 2010/11 Source: (Acct. No.) 001-092-5502 (Acct. Description) Health & Life Insurance Finance: Council Notes: �7A 41!9D Agenda Item No. *36 .7- � - / 0 CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION Staff Report SUBJECT Resolution of the City of San Bernardino authorizing the execution of an agreement with Mercer Health and Benefits, LLC to provide broker and administration services for the City's employee healthcare program. BACKGROUND In July 2007, the Mayor and Common Council authorized an agreement with Mercer health benefits consulting/broker and administrative services for a period of three (3) years. Prior to the conclusion of this agreement, the Human Resources Department went out to bid in February 2010 for these services. In response to the Request for Proposal (RFP), seven(7) firms submitted proposals. In March 2010, proposals were reviewed by an evaluation committee that short-listed four(4) firms. Interviews with the four(4) firms were conducted by the evaluation committee on March 24, 2010: BB&T John Burnham Insurance Keenan &Associates Mercer Health&Benefits Wells Fargo Insurance Services Following the interviews, the committee discussed and came to a unanimous consensus to recommend Mercer as the City of San Bernardino's Administrator for Health Care & Benefits if financial terms could be negotiated successfully. On May 3, 2010, Mayor and Common Council authorized the Director of Human Resources to negotiate the terms of the contract with Mercer Health & Benefits for broker and administration services for the City's health care plans. Mercer is a wholly-owned subsidiary of Marsh&McLennan Companies,Inc., a Fortune 500 diversified financial services company. Mercer is the largest benefit consulting firm in the world, yet it delivers local services with experienced and expert staff and has extensive experience working with public sector employers and labor organizations. Mercer's health benefits consulting/broker and administration fees are very competitive. For the previous three(3)years, Mercer's broker fees were$327,000 annually. As a result of our negotiations,Mercer has agreed to reduce their cost by approximately 19% for the first year. As a result,the first year's broker fee will be$275,000; second year$282,500 and third year is $290,000. These fees are based on basic annual benefits which include consulting services, administrative on-line services,consolidated billing services, call center services,communication services, Section 125 FSA administration,retiree medical,open enrollment and COBRA. In addition,Mercer is placing a significant amount of their consulting/broker fees at risk(10%)to guarantee delivery of the most appropriate and valuable service to the City's satisfaction(as outlined in Performance Standard Guarantees, attached as Exhibit`B'). Effective July 1, 2010, we are recommending Mercer's services continue as the City's Broker of Record. Since 2008,Mercer has negotiated with vendors to hold gross cost increases at 2.9%, 5.1%, and 7.3%,which is significantly below the average trend of 12-13%annually. The Human Resources Department looks forward to continuing the consistency and continuity of Mercer's services and anticipates an increased stability to the benefits program. The Human Resources Department is requesting this agreement be approved to provide Broker and Administration services for City of San Bernardino beginning July 1, 2010 and continuing for a period of three(3) years with an option of two(2),one(1) year extension. FINANCIAL IMPACT The cost of these services is at $275,000 for FY 2010/11; $282,500 for FY 2011/12; and $290,000 for FY 2012/13. Pricing is a flat annual fee for services quoted. The City's FY 2010- 11 proposed budget includes funds to cover the anticipated broker fees. The Water Department participates in the City's Health Care plans and services. The cost share portion for FY 10/11 to the Water Department is $48,500. This will reduce the City contribution to $226,500 for FY 10/11. RECOMMENDATION 1. Adopt Resolution. Resolution No i 2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE 3 EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S 4 HEALTH CARE PROGRAM. 5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 6 SECTION 1: The Human Resources Director of the City of San Bernardino is hereby 7 8 authorized and directed to execute on behalf of said City an Agreement with Mercer Health and 9 Benefits LLC to provide health, broker, and administration services for a period of three (3) 10 years with an option of two (2), one (1) year extension, commencing on July 1, 2010; authorize I 1 the Purchasing Manager to issue an annual purchase order as outlined in Exhibit "A" and 12 incorporated herein by reference as fully as though set forth at length. 13 SECTION 2: The authorization to execute the above mentioned agreement is rescinded 14 if the parties to the agreement fail to sign it within sixty (60) days of the passage of this 15 resolution. 16 17 18 19 20 21 22 23 24 25 I RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC 2 TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S 3 HEALTH CARE PROGRAM. 4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 5 the Common Council of the City of San Bernardino at a meeting thereof, 6 held on day of 2010, by the following vote,to wit: 7 8 COUNCILMEMBERS`. AYES NAYES ABSTAIN ABSENT 9 MARQUEZ DESJARDINS 10 BRINKER 11 SHORETT 12 KELLEY 13 JOHNSON MCCAMMACK 14 1s 16 Rachel G. Clark, City Clerk 17 The foregoing resolution is hereby approved this day of 18 , 2010. 19 20 Patrick J. Morris, Mayor 21 City of San Bernardino 22 Approved as to form: 23 JAMES F. PENMAN, City Attorney 24 25 By: HR/Agenda Items:Reso.Mercer.2010 SERVICES AGREEMENT 1 2 THIS AGREEMENT is made and entered into this 1st day of July, 2010 ("Effective 3 Date"), by and between the CITY OF SAN BERNARDINO, a charter city ("City"), and 4 MERCER HEALTH & BENEFITS LLC, a Delaware limited liability company 5 ("CONSULTANT"). 6 WITNESSETH : 7 A. WHEREAS, CITY proposes to have CONSULTANT perform the services 8 described herein below; and 9 B. WHEREAS, CONSULTANT represents that it has that degree of specialized 10 expertise contemplated within California Government Code, Section 37103, and holds all 11 necessary licenses to practice and perform the services herein contemplated; and 12 C. WHEREAS, CITY and CONSULTANT desire to contract for professional 13 services as described in the Scope of Services, attached hereto as Exhibit "A"; and 14 D. WHEREAS, no official or employee of CITY has a financial interest, within the 15 provisions of California Government Code, Sections 1090-1092, in the subject matter of this 16 Agreement. 17 NOW, THEREFORE, for and in consideration of the mutual covenants and conditions 19 contained herein,the parties hereby agree as follows: 19 1.0. SERVICES PROVIDED BY CONSULTANT 20 1.1. Scone of Services. For the remuneration stipulated, CONSULTANT shall 21 provide the professional services described in the Scope of Services attached hereto as Exhibit 22 "A" and incorporated herein by this reference ("Services'). If a conflict arises between the 23 Scope of Services document and this Professional Services Agreement (hereinafter 24 "Agreement"), the terms of the Agreement shall govern. 25 1.2. Professional Practices. All Services to be provided by CONSULTANT pursuant to this Agreement shall be provided by skilled personnel and in a manner consistent with the standards of care, diligence and skill ordinarily exercised by professional consultants in similar i fields and circumstances in accordance with sound professional practices. CONSULTANT 2 also warrants that it is familiar with all laws that may affect its performance of this Agreement 3 and shall advise CITY of any changes in any laws that may affect CONSULTANT's 4 performance of this Agreement if the CONSULTANT has actual knowledge of such changes. 5 CONSULTANT and the CITY each represent that no CITY employee will provide any Services 6 under this Agreement. 7 1.3. Warranty. CONSULTANT warrants that it shall perform the Services required 8 by this Agreement in compliance with all applicable Federal and California employment laws 9 including, but not limited to, those laws related to minimum hours and wages; occupational 10 health and safety; fair employment and employment practices; workers' compensation insurance 11 and safety in employment; and all other Federal, State and local laws and ordinances applicable 12 to the services required under this Agreement. CONSULTANT shall indemnify and hold 13 harmless CITY from and against all claims, demands,payments, suits, actions,proceedings, and 14 judgments of every nature and description including reasonable attorneys' fees and costs, or 15 recovered against CITY to the extent arising from CONSULTANT's violation of any such 16 applicable law. 17 1.4. Non-discrimination. In performing this Agreement, CONSULTANT shall not 18 engage in, nor permit its officers, employees or agents to engage in, discrimination in 19 employment of persons because of their race, religion, color, national origin, ancestry, age, 20 mental or physical disability, medical condition, marital status, sexual gender or sexual 21 orientation, except as permitted pursuant to Section 12940 of the Government Code. Violation 22 of this provision may result in the imposition of penalties referred to in Labor Code, Section 23 1735. 24 1.5 Non-Exclusive Agreement. CONSULTANT acknowledges that CITY may enter 25 into agreements with other consultants for services similar to the Services that are subject to this Agreement or may have its own employees perform services similar to those services contemplated by this Agreement. 1 1.6. Delegation and Assignment. This is a personal service contract, and the duties 2 set forth herein shall not be delegated or assigned to any person or entity without the prior 3 written consent of CITY, which consent shall not be unreasonably withheld or delayed. 4 CONSULTANT may engage a subcontractor(s) as permitted by law and may employ other 5 personnel to perform services contemplated by this Agreement at CONSULTANT's sole cost 6 and expense. 7 1.7 Conflicts of Interest. During the term of this Agreement, CONSULTANT shall 8 at all times maintain a duty of loyalty as to the CITY and shall not accept payment from or 9 employment with any person or entity which will constitute a conflict of interest with the CITY. 10 1.8 CITY Business Certificate. CONSULTANT shall obtain and maintain during 11 the term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5 12 of the City of San Bernardino Municipal Code and any and all other licenses, permits, 13 qualifications, insurance and approvals of whatever nature that are legally required of 14 CONSULTANT to practice its profession, skill or business. 15 2.0. COMPENSATION AND BILLING 16 2.1. Compensation. Except as provided herein, CONSULTANT compensation shall 17 be as set forth in Exhibit"A". 18 2.2. Additional Services. CONSULTANT shall not receive compensation for any 19 services provided outside the scope of services specified in the Exhibit "A" unless the CITY, 20 prior to CONSULTANT performing the additional services,approves such additional services 21 in writing. It is specifically understood that oral requests and/or approvals of such additional 22 services or additional compensation shall be barred and are unenforceable. 23 2.3. Method of Billing. CONSULTANT may submit invoices to CITY for approval. 24 Said invoice shall be based on the total of all CONSULTANT's services which have been 25 performed in accordance with the terms of this Agreement during the period covered by such invoice. CITY shall pay CONSULTANT's invoice within thirty (30) days from the date CITY receives said invoice. The invoice shall describe in detail, the services performed and the 1 associated time for completion. Any additional services approved and performed pursuant to 2 this Agreement shall be designated as "Additional Services" and shall identify the number of the 3 authorized change order, where applicable, on all invoices. 4 2.4. Performance Standard Guarantees. The CONSULTANT shall reduce the total 5 cost of service related fees to the project, up to a maximum of 10%, if their services are not 6 satisfactory to the CITY as outlined in the chart(Exhibit`B"). 7 2.5. Records and Audits. Records of CONSULTANT's Services directly relating to 8 this Agreement shall be maintained in accordance with generally recognized accounting 9 principles and shall be made available to CITY for inspection and/or audit at mutually 10 convenient times for a period of three (3) years from the Effective Date. Any such inspection 11 shall be conducted at the CITY's expense, during normal business hours and upon reasonable 12 prior written notice to CONSULTANT. Such audit shall also be subject to the execution of a 13 confidentiality agreement regarding inadvertent access to confidential information not related to 14 the CITY. 15 3.0. TERM AND NOTIFICATION. 16 3.1. Term. This Agreement shall commence on the Effective Date and continue until 17 the third anniversary of the Effective Date unless the Agreement is previously terminated as 18 provided for herein. 19 3.2 Termination. CITY or CONSULTANT may terminate the Services provided 20 under Section 1.1 of this Agreement upon thirty(30)days written notice to the other party. In 21 the event of termination, CONSULTANT shall be paid the reasonable value of Services 22 rendered to the date of termination. 23 3.3 Documents. In the event of an early termination of this Agreement, all 24 documents prepared by CONSULTANT in its performance of this Agreement including,but not 25 limited to, finished or unfinished background investigations, shall be delivered to the CITY within ten (10) days of delivery of termination notice to CONSULTANT, at no cost to CITY. Any use of uncompleted documents without specific written authorization from 1 CONSULTANT shall be at CfI'Y's sole risk and without liability or legal expense to 2 CONSULTANT. 3 4.0. INSURANCE 4 4.1. Scone and Limits of Insurance. CONSULTANT shall obtain and maintain 5 during the term of this Agreement all of the following insurance coverages: 6 (a) Commercial general liability, including premises-operations, 7 products/completed operations, broad form property damage, blanket a contractual liability, independent contractors, personal injury with a 9 policy limit of One Million Dollars ($1,000,000.00), combined single 10 limits,per occurrence and aggregate. 11 (b) Automobile liability for owned vehicles, hired, and non-owned vehicles, 12 with a policy limit of One Million Dollars ($1,000,000.00), combined 13 single limits,per occurrence and aggregate. 14 (c) Workers'compensation insurance as required by the State of California. 15 4.2. Endorsements. The commercial general liability insurance policy shall contain 16 or be endorsed,using general policy endorsements,to contain the following provisions: 17 (a) Additional insureds: "The City of San Bernardino and its elected and 18 appointed boards,officers, and employees are additional insureds with 19 respect to their vicarious liability arising out of CONSULTANT'S 20 performance of the Services hereunder." 21 (b) Other insurance: "Any other insurance maintained by the City of San 22 Bernardino shall be excess and not contributing with the insurance 23 provided by this policy with respect to claims arising solely and directly 24 from CONSULTANT's provision of the Services." 25 4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of insurance showing the insurance coverages and required endorsements described above, prior to performing any services under this Agreement. 1 4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way, 2 the indemnification provision contained in this Agreement, or the extent to which 3 CONSULTANT may be held responsible for payments of damages to persons or property. 4 4.5 Notice of Cancellation: CONSULTANT shall provide the CITY thirty(30)days 5 prior written notice of cancellation of or a material change in any of the required coverages. 6 5.0. GENERAL PROVISIONS 7 5.1. Entire Agreement: This Agreement together with the Exhibits attached hereto 8 constitute the entire Agreement between the parties with respect to any matter referenced herein 9 and supersedes any and all other prior writings and oral negotiations. This Agreement may be 10 modified only in writing, and signed by the parties in interest at the time of such modification. 11 The terms of this Agreement shall prevail over any inconsistent provision in 12 any other contract document appurtenant hereto,including exhibits to this Agreement. 13 5.2. Notices. Any notices, documents, correspondence or other communications 14 concerning this Agreement or the work hereunder may be provided by personal delivery, 15 deemed served or delivered: a)at the time of delivery if such communication is sent by personal 16 delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48 17 hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such 18 communication is sent through regular United States mail. 19 IF TO CONSULTANT: IF TO CITY: Richard Hill,Principal Linn Livingston, 20 Mercer Health&Benefits,LLC Director of Human Resources 21 4695 MacArthur Court, Suite 600 City of San Bernardino Newport Beach, CA 92660 300 North"D" Street 22 Telephone: (949)222-1300 San Bernardino,CA 92418 Telephone: (909)384-5161 23 Fax: (909) 384-5397 24 5.3. Governing Law. This Agreement shall be governed by and construed under the 25 laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto 1 agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San 2 Bernardino County, California. 3 5.4. Assignment: CONSULTANT shall not voluntarily or by operation of law 4 assign, transfer, sublet or encumber all or any part of CONSULTANT's interest in this 5 Agreement to an unrelated third party without CITY's prior written consent,which consent shall 6 not be unreasonably withheld or delayed. Any attempted assignment, transfer, subletting or 7 encumbrance shall be void and shall constitute a breach of this Agreement and cause for 8 termination of this Agreement. Regardless of CITY's consent,no subletting or assignment shall 9 release CONSULTANT of CONSULTANT's obligation to perform all other obligations to be 10 performed by CONSULTANT hereunder for the term of this Agreement. 11 5.5. Indemnification and Hold Harmless. CONSULTANT shall protect,defend, 12 indemnify and hold harmless CITY and its elected and appointed officials, boards, 13 commissions, officers and employees from any and all claims, losses, demands, suits, 14 administrative actions, penalties, liabilities and expenses, including reasonable attorneys' fees, 15 damage to property or injuries to or death of any person or persons or damages of any nature 16 including, but not limited to, all civil claims or workers' compensation claims to the extent 17 directly arising from or in CONSULTANT's negligent or wrongful acts or omissions in 18 connection with the performance under this Agreement, except to the extent caused by an 19 indemnified party's negligent or wrongful acts or omissions. Notwithstanding anything 20 contained herein to the contrary, in no event shall CONSULTANT be liable for any damages 21 not directly or proximately caused by CONSULTANT's negligent or wrongful acts or 22 omissions. 23 5.6. Independent Contractor. CONSULTANT, at all times while performing under 24 this Agreement, is and shall be acting at all times as an independent contractor and not as an 25 agent or employee of CITY. CONSULTANT shall secure, at his expense, and be responsible for any and all payment of wages, benefits and taxes including, but not limited to, Income Tax, I Social Security, State Disability Insurance Compensation, Unemployment Compensation, and 2 other payroll deductions for CONSULTANT and its officers, agents, and employees, and all 3 business licenses,if any are required, in connection with the Services to be performed 4 hereunder. Neither CONSULTANT nor its officers, agents and employees shall be entitled to 5 receive any benefits which employees of CITY are entitled to receive and shall not be entitled to 6 workers'compensation insurance,unemployment compensation,medical insurance, life 7 insurance, paid vacations, paid holidays, pension, profit sharing or social security on account of 8 CONSULTANT and its officers', agents' and employees' work for the CITY. This Agreement 9 does not create the relationship of agent, servant, employee partnership or joint venture between 10 the CITY and CONSULTANT. 11 5.7 Conflict of Interest Disclosure: CONSULTANT or its employee may be subject 12 to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires 13 such persons to disclose financial interests that may be materially affected by the work 14 performed under this Agreement, and (2)prohibits such persons from making or participating in 15 making decisions that will have a foreseeable financial affect on such interest. 16 CONSULTANT shall conform to all requirements of the Act. Failure to do so 17 constitutes a material breach and is grounds for termination of the Agreement by CITY. 18 5.8. Responsibility for Errors. CONSULTANT shall be responsible for its work and 19 results under this Agreement. CONSULTANT,when requested, shall furnish clarification 20 and/or explanation as may be required by the CITY's representative, regarding any services 21 rendered under this Agreement at no additional cost to CITY. In the event that an error or 22 omission attributable to CONSULTANT occurs, then CONSULTANT shall, at no cost to 23 CITY, provide all other CONSULTANT professional services necessary to rectify and correct 24 the matter to the sole satisfaction of CITY and to participate in any meeting required with 25 regard to the correction. CONSULTANT will assume the information supplied by the CITY, (or on its behalf by third parties) is accurate and complete. CONSULTANT'S responsibilities (and associated compensation)do not include independent verification of required information. I Problems with information quality and/or delays in providing such information may result in a 2 delay in the performance of the Services or an increase in fees. 3 5.9. Prohibited Employment. CONSULTANT shall not employ any current 4 employee of CITY to perform the work under this Agreement while this Agreement is in effect. 5 5.10. Costs. Each party shall bear its own costs and fees incurred in the preparation 6 and negotiation of this Agreement and in the performance of its obligations hereunder except as 7 expressly provided herein. 8 5.11. No Third Party Beneficiary Rights. This Agreement is entered into for the sole 9 benefit of CITY and CONSULTANT and no other parties are intended to be direct or incidental 10 beneficiaries of this Agreement and no third party shall have any right in, under or to this 11 Agreement. 12 5.12. Headings Paragraphs and subparagraph headings contained in this Agreement 13 are included solely for convenience and are not intended to modify, explain or to be a full or 14 accurate description of the content thereof and shall not in any way affect the meaning or 15 interpretation of this Agreement. 16 5.13. Amendments. Only a writing executed by all of the parties hereto or their 17 respective successors and assigns may amend this Agreement. 18 5.14. Waiver. The delay or failure of either party at any time to require performance 19 or compliance by the other of any of its obligations or agreements shall in no way be deemed a 20 waiver of those rights to require such performance or compliance. No waiver of any provision 21 of this Agreement shall be effective unless in writing and signed by a duly authorized 22 representative of the party against whom enforcement of a waiver is sought. The waiver of any 23 right or remedy with respect to any occurrence or event shall not be deemed a waiver of any 24 right or remedy with respect to any other occurrence or event, nor shall any waiver constitute a 25 continuing waiver. 5.15. Severability. If any provision of this Agreement is determined by a court of I competent jurisdiction to be invalid or unenforceable for any reason, such determination shall 2 not affect the validity or enforceability of the remaining terms and provisions hereof or of the 3 offending provision in any other circumstance, and the remaining provisions of this Agreement 4 shall remain in full force and effect. 5 5.16. Counterparts: This Agreement may be executed in one or more counterparts, 6 each of which shall be deemed an original. All counterparts shall be construed together and 7 shall constitute one agreement. a 5.17. Corporate Authority. The persons executing this Agreement on behalf of the 9 parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said 10 parties and that by doing so, the parties hereto are formally bound to the provisions of this 11 Agreement. 12 5.18. Limitation of Liability. The aggregate liability of CONSULTANT,its affiliates 13 and any officer, director or employee of CONSULTANT and its affiliates("CONSULTANT 14 Parties')to the CITY its elected and appointed officials,boards, commissions,officers, directors 15 or employees and any third party(including any benefit plan,its fiduciaries or any plan sponsor) 16 for any and all Losses arising out of or relating to this Agreement shall not exceed five times the 17 compensation for the Services. CONTRACTOR shall have no liability for the acts or omissions 18 of any third party(other than its subcontractors and affiliates). 19 In no event shall either party or its affiliates be liable in connection with this Agreement 20 or the Services for any loss of profit or incidental, consequential, special,indirect,punitive or 21 similar damages. The provisions of this Section shall apply to the fullest extent permitted by 22 law. Nothing in this Section limiting the liability of a party shall apply to any liability for 23 property damage or personal injury or that has been finally determined by a court to be a breach 24 of the confidentiality provisions contained herein or have been caused by the fraud or such party. 25 For purposes of this Agreement"Loss"means damages, claims, liabilities, losses, awards,judgments,penalties, interest, costs and expenses, including reasonable attorneys' fees, whether arising in tort, contract or otherwise. For the avoidance of doubt, multiple claims arisin 1 out of or based upon the same act, error or omission,or series of continuous, interrelated or 2 repeated acts, errors or omissions shall be considered a single Loss. 3 4 IN WITNESS WHEREOF,the parties hereto have executed this Agreement on the day 5 and date first above shown. 6 ATTEST: CITY OF SAN BERNARDINO Municipal Corporation and 7 Charter City s Rachel Clark Linn Livingston 9 City Clerk Director of Human Resources 10 11 CONSULTANT: 12 By: 13 14 Approved as to form: 15 JAMES F. PENMAN City Attorney 16 17 18 By: 19 20 21 22 23 24 25 HR/Agenda Items:MERCER.2010 Exhibit A Health & Benefits Services Statement of Work ("SOW") Mercer is engaged as the Client's exclusive employee benefits insurance broker/consultant and shall perform the following services for the Client with respect to the lines of coverage listed below. The objective of this Statement of Work ("SOW") is to confirm the scope of our work and the compensation for this engagement. This SOW is subject to the terms and conditions contained in our Service Agreement to which it is attached. Mercer's ability to provide you the following services is conditioned upon Mercer's receipt of accurate and timely information related to you and the plans and products subject to our services. Mercer will not independently verify or authenticate information not originating from Mercer. Client shall be solely responsible for the accuracy and completeness of such information and other documentation furnished to Mercer. The Client understands that the failure to provide all necessary information to an insurer, employee benefit provider and third party vendor, whether intentional or by error, could result in the impairment or voiding of coverage or service. A. Core Broker/ Consulting Services: Mercer will: • Conduct strategic planning sessions to review current performance of Client's current employee benefits coverage and establish future objectives and strategies to manage Client's employee benefit coverages to which this agreement applies. • Meet with the Client's key people designated by the Client's Human Resources Director, on at least an annual basis, to discuss strategy and open items. • Develop a mutually agreeable renewal action plan and timeline that meets the Client's stated objectives. Details provided in the renewal services plan developed by Mercer and the Client. • Keep the Client informed of significant changes and/or trends in the employee benefits marketplace. • Benchmark medical plan costs and employee contributions to industry, size and regional standards on an annual basis. • Analyze factors driving Client's plan costs if experience data is available. In connection with such analysis, Mercer will review utilization reports to determine possible causes of identified cost increases. Assist Client in managing risks and costs of its employee benefits coverages. • Establish comprehensive claims reports for identified coverages if available from carrier: Carrier medical/prescription drug detailing paid claims (and reimbursements 10 Mercer Service Agreement San Bemardino042110.doct if applicable), premium/funding and enrollment summaries. Mercer will review these reports with Client periodically and will identify and discuss trends and potential problems. • Provide cost projections and funding analysis (review of funding methodology with emphasis on employer costs and the tier structure of the contribution.) • When marketing your plans, prepare an analysis comparing current costs, plan designs, administration costs, network discounts and network accessibility. • With respect to the renewal process of Client's employee benefit program, Mercer will conduct an annual review during the renewal process to include negotiations, on Client's behalf, with current vendors/carriers, as per Client's request. • Upon the request of Client, Mercer will assist Client in the preparation of a RFP for purposes of obtaining competitive quotes from the marketplace. Mercer will be the primary point of contact during the bidding process. • Upon request of Client, evaluate and assist in the management of voluntary benefit products offered to Client's employees. • Assist Client in the implementation of the benefit program by dealing with vendor/carriers and performing contract and SPD review for purposes of determining conformity to agreed-upon plan provisions and costs. • Advise Client with respect to available technology platforms to support delivery and administration of its employee benefit plans. Support implementation and maintenance of the Mercer Administration suite of services purchased. • Assist Client in the development of paper and/or web-based communication strategies. • Identify and negotiate on the Client's behalf with insurers and other benefit program providers and keep the Client informed of significant developments. Mercer shall be authorized for purposes of this Agreement to represent and assist the Client in all discussions and transactions with all insurers/providers, provided that Mercer shall not place any insurance or vendor programs on behalf of the Client unless so authorized by the Client. • Assist with documentation and other steps to obtain commitments for and implement insurance policies and other services selected by the Client regarding its employee benefits program upon the Client's instructions, it being understood that Mercer will not independently verify or authenticate information not originating from Mercer necessary to prepare proposals or underwriting submissions and other documents relied upon by insurers/providers, and the Client shall be solely responsible for the accuracy and completeness of such information and other documents furnished to Mercer and/or insurers/providers and shall sign any 11 Mercer Service Agreement San Bemardino042110.doct application for coverage. The Client understands that the failure to provide all necessary information to an insurer, employee benefit provider or third party vendor whether intentional or by error, could result in the impairment or voiding of coverage or service. • Provide Client access to the national insurance marketplace and related services marketplace and use Mercer's commercially reasonable efforts to place insurance policies and other services selected by the Client regarding its employee benefit program on behalf of the Client, if so instructed by the Client. • Act as a liaison between the Client and insurers/ providers for the lines of coverage and services that Mercer has placed or obtained on behalf of Client or for which Mercer is named as the broker of record. • Provide the Client with detailed invoices, except in the case of direct billing by insurers or employee benefits providers. • Mercer may utilize the services of other intermediaries to assist in the marketing of the Client's program (including brokers in the London and other markets), when in Mercer's professional judgment those services are necessary or appropriate. Such intermediaries may be affiliates of Mercer or not related to Mercer. The compensation of such intermediaries is not included in Mercer's compensation under this Agreement and will be paid by insurers/providers out of paid premiums. • Follow up with insurance carriers/providers for timely issuance of policies and endorsements/contracts. • Follow up with insurance carriers/providers with respect to the payment or return premiums. • Review policies, contracts and endorsements for accuracy and conformity to specifications provided by Client and the related negotiated coverages. • Assist the Client in connection with issues relating to interpretation of insurance policies/contracts placed by Mercer. • Provide information/coverage summaries for all new coverages and updates on changes to existing coverages. • Following any such placement, deliver confirmation of coverages as promptly as practicable • Provide Client access to Mercer Select—HB KnowHow self service site. Also, provide access to topical Mercer publications, seminars, roundtables, executive forums, and webcasts. 12 Mercer Service Agreement San Bemardino042110.doct • Other Services: • Mercer will provide annual creative services through its Benefits Publishing Product. Communications Brochures development is included within the quoted fees. Printing fees may be billed separately or alternatively the Client may use its own printer for printing of the benefits brochures. • Mercer will provide its annual series of wellness materials, called the Healthy Habits Newsletter within the quoted fees. These newsletters will be provided in PDF format only, but may be printed by the Client at its own expense B. Employee Benefit Programs related to the Core Services: • Group Life • Group AD&D • Long Term Disability • Short Term Disability • Medical Plans • Prescription Drugs • Dental Plans • Vision Plan • Flexible Benefits and FSA Accounts C. Additional Terms: 1. Mercer does not act on behalf of any insurer or other service provider, is not bound to utilize any particular insurer or service provider, and does not have the authority to make binding commitments on behalf of any insurer or service provider. In addition, Mercer does not guarantee or make any representation or warranty that coverage or service can be placed on terms acceptable to you. Mercer is not responsible for the solvency or ability to pay claims of any insurance carrier or for the solvency or ability of any service provider to provide service. Insurance carriers or service providers with which your other risk or insurance coverage or other business is placed will be deemed acceptable to you, in the absence of contrary instructions from you. 2. You understand that the failure to provide, or cause to provide, complete, accurate, up-to- date, and timely documentation and information to us, an insurer, or other service provider, whether intentional or by error, could result in impairment or voiding of coverage or service. 13 Mercer Service Agreement San Bemardino042110.doct You agree to review all policies, endorsements and program agreements delivered to you by us and will advise Mercer of anything which you believe is not in accordance with the negotiated coverage and terms within thirty (30) days following receipt. 3. You expressly acknowledge that, with respect to the provision of the Services, Mercer is not, nor are any of our Affiliates or subcontractors, an "administrator'within the meaning under applicable law, including the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), nor, with respect to the provision of the Services, are we or any of our Affiliates or subcontractors a "fiduciary"within the meaning under applicable law or ERISA, unless provided otherwise herein or required by applicable law. 4. Title V of the Gramm-Leach-Bliley Act and related state laws and regulations establish limitations on the use and distribution of non-public information collected by financial institutions from their customers and consumers. Our insurance-related work qualifies us as a financial institution under this Act. Our Privacy Policy Notice is available at www.mercer.com/transparency. At this web address you will also find information regarding Marsh & McLennan Companies, Inc. and its subsidiaries' equity interests in certain insurers and contractual arrangements with certain insurers and wholesale brokers. 5. Without limiting the generality of Section 2 of our engagement letter, you will inform us at the commencement of our work under each SOW (and thereafter in the event of any change) as to whether or not you or any of your Affiliates are subject to any restrictions or obligations directly relevant to the Services as a result of or in connection with having received any federal financial assistance in connection with any federal law or program, including, but not limited to, the American Recovery and Reinvestment Act of 2009 and the Emergency Economic Stabilization Act of 2008, including the Troubled Assets Relief Program. In the event that you or your Affiliates are subject to such restrictions or obligations, you will also promptly describe such restrictions and obligations to us in writing in reasonable detail and make an expert (including internal or external counsel)available to us for additional clarification that we reasonably request regarding the analysis or interpretation of any such restrictions or obligations. You agree that we will be entitled to rely on, and have no liability for, the accuracy and completeness of the information, analysis or interpretation that is provided to us in connection with the foregoing. D. Period of time over which work will be performed: July 1, 2010 through June 30, 2013. The contract may be extended for up to two (2) additional one (1)year terms at the City's discretion. E. Compensation and Fees: Mercer will deliver the services as outlined in Exhibit A with respect to the stated coverages (the "Fee Coverages")for annual broker/ consulting fees in accordance with the schedule below, .payable and to be invoiced as follows: Monthly Installments. 14 Mercer Service Agreement San Bemardin0042110.dOct 7/1/2010—6/30/2011 $114,301 7/1/2011 - 6/30/2012 $117,417 7/1/2012 -6/30/2013 $120,536 Mercer will provide a suite of Administrative Services which are governed by a separate agreement through its Mercer Administration operation and subcontractor(s). These services are provided for a separate annual administration fee in accordance with the schedule below and invoiced monthly as more fully described in that Agreement. 7/1/2010-6/30/2011 $160,699 7/1/2011 - 6/30/2012 $165,083 7/1/2012 - 6/30/2013 $169,464 Mercer will invoice these fees monthly on a consolidated billing to the City. Total annual fees are: 7/1/2010—6/30/2011 $275,000 7/1/2011 - 6/30/2012 $282,500 7/1/2012 -6130/2013 $290,000 7/1/2013 -6/30/2014 Fees to increase no more than 3% over prior year 7/1/2014 -6/30/2015 Fees to increase no more than 4% over prior year Mercer will continue to instruct insurance carriers that all coverages be provided "net" of commissions as directed by the City of San Bernardino. Such commissions do not include, and Mercer shall be entitled to receive and retain, as to all lines of coverage, wholesale commissions with respect to placements for the Client. Should commissions be received, Mercer will disclose to the Client any commissions or wholesale commissions collected by Mercer. Method of Billing. Consultant may submit invoices to the City for approval. Said invoice shall be based on the total of all consultants' services, both consulting and administrative, which have been performed in accordance with the terms of this Agreement during the period covered by such invoice. City shall pay Consultant's invoice within thirty(30) days from the date City receives said invoice. The invoice shall describe the services performed and the associated time for completion. Any additional services approved and performed pursuant to this Agreement shall be designated as "Additional Services" and shall identify the number of the authorized change order, where applicable, on all invoices. 15 Mercer Service Agreement San Bcmardmo0421 IO.doct CITY OF SAN BERNARDINO (CITY) PERFORMANCE STANDARD GUARANTEES EXHIBIT B Health and Welfare Plans and Programs MERCER HEALTH &BENEFITS,LLC (MERCER) Performance Standard Performance Standard Methodology Financial Description Amount at Risk Timely response to verbal City to receive verbal response within two(2)City 2%of the cost of inquiries business days of verbal inquiry the service related to each inquiry.Penalty to be assessed at the end of each quarter. Timely response to written City to receive written response within 2 City 2%of the cost of inquiries business days of receipt of inquiry the service related to each inquiry.Penalty to be assessed at the end of each quarter. Projects completed by Mercer shall reduce the total cost of the service 2%of the cost of predetermined deadline " related to the specific project or project phase(for the project or multiple-phase projects)by two percent(2%)for each project phase(for business day that the service is delinquent with a multiple-phase maximum penalty not to exceed ten percent(10%)of projects)for each the project cost City business day that the service If the service related to the project or project phase is related to a delayed by the City,the number of days the project or project or project project phase is delayed will be added to the original phase is delayed. due date) Penalty to be assessed at the end of each project. Account management An account management satisfaction score of`3' or 2%of the total satisfaction better on a"1-5"scoring system based on a survey cost of services tool mutually agreed upon by the City and consultant. for the quarter The survey tool will be completed on a quarterly basis being rated. 16 Mercer Service Agreement San Bemardino0421 1 0.doct Consulting team continuity If a key personnel is no longer employed by Mercer, Timing of Mercer shall notify the City within 72 hours of the replacement of person leaving and shall promptly replace such person key personnel— with a reasonably acceptable replacement. City shall 1%of the total have the option to interview up to 2 Mercer cost of services employees before selecting a replacement. The for the three replacement shall be assigned to the City within three months following weeks of either the notification date if no interviews the change in key are conducted or one week from the City selecting personnel. from interviewed employees. A City"key personnel transition"satisfaction score of Satisfaction with "Y'or better on a 1-5 scoring system based on criteria key personnel mutually agreed upon by the City and Mercer,to be transition- I%of assessed at the end of three months following the the total cost of change in key personnel. services for the three months following the change in key personnel. Total Financial Liability 10% of the total per Contract Year Not to cost of services Exceed er Ian ear *Penalties will be waived or reduced if project delays are due to extenuating circumstances outside of the control of Mercer. These situations will be reviewed on a"case-to-case"basis. 17 Mercer Service Agreement San Bemardino0421 I O.doct