AR 071806 Tristar Risk Management

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CITY OF COLTON ITEM #26 AGENDA REPORT FOR THE COUNCIL MEETING OF JULY 18, 2006 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: ANTHONY ARROYO, HUMAN RESOURCES DIRECTOR SUBJECT: AWARD CONTRACT FOR SELF-INSURED WORKERS' COMPENSATION CLAIMS ADMINISTRATION TO TRISTAR RISK MANAGEMENT DATE: JULY 3, 2006 BACKGROUND: In June 2002, the City of Colton entered into a three year contract with TRISTAR Risk Management to provide third party administrator of workers' compensation claims and related services. On May 17, 2005, the City Council approved a one year contract extension, beginning July 1, 2005, through June 30, 2006. DISCUSSION/ANALYSIS: Diligent effort was made to solicit competitive proposals from providers of Third Party Workers' Compensation Administrator Services. On February 27th, 2006 the Request for Proposal (RFP) was distributed to 22 potential bidders, and posted on the City's website. Staff obtained nine formal flat rate proposals ranging from $42,852 to $90,160 per fiscal year. All nine proposals were evaluated based on the criteria listed in the RFP, including Quality of Workplan/Methodology, Ability to Perform, and Overall Cost. On May 2nd, 2006 the evaluation team invited TRISTAR Risk Management, SCRMA, and Keenan & Associates to participate in on- site, comprehensive interviews. City staff and three outside risk management professionals conducted the interviews and gained additional insight into how each vendor investigates suspected fraudulent claims, generates OSHA 300/301 reporting, and its file conversion process. Although Keenan & Associates proposed a complete and integrated program, their software platform will migrate to a new platform fourth quarter, 2006. An award to Keenan would require that the City undergo two data conversions within a six month period. Consequently, only TRISTAR Risk Management and SCRMA were invited to participate in a Best & Final round. TRISTAR Risk Management aggressively bid its initial proposal and ranked the highest going into the Best & Final round. Even though SCRMA reduced its flat fee price by $40,300 and its Bill Review fee by 16.7%, it fell short of TRISTAR's offer with loss control services/training, on-line service, cost containment reporting, and a Medical Provider Network.