Public Hearing On 6/21/11

Town Board Meeting Agenda for 6/21/11 lists a Public Hearing to "Adopt a Resolution Adopting Local Law #1 of 2011 Amending Chapter 51 of the Town of Irondequoit Code Relating to Purchasing Policy". Basically, the amendments increase the "ceiling" of public works contracts, goods and services, and bids. The resolution below states that:
"the amendments and additions proposed by the Town Comptroller would conform the Town Code to amendments to the General Municipal Law relating to the dollar value of contracts for goods and services and for public works subject to formal bidding; would clarify the role of the Town Board relative to appropriations for contracts; would authorize the Town Supervisor to implement regulations consistent with Board policy; and would establish policy preferences for (a) considering the life cycle costs or goods or services when evaluating bids or proposals and (b) encourage environmentally preferable purchasing whenever feasible and economically responsible...."

Most of the amendments are consistent with what NYS General Municipal Law states, so it is not a surprise (to me) that they would adjust the Town Code to match NYS General Municipal Law - although there is one little part that interests me........

Page 8, it states: 

Insurance. The courts have held that insurance coverage is not subject to formal competitive bidding.

I find this interesting because at the last meeting (  May 17, 2011 TB Meeting - 1:56:07 of the video. ) Marasco asks Annie when the insurance premiums are up for renewal - Annie replies that they've "started" the process.  Marasco asks if they are sending it out to bid - Annie answers "No".  Marasco asks if there is a reason why they aren't bidding out the insurance policies - Annie pauses, and MJD says:  "In a sense we are.  Our broker of record is going to send them out."


Marasco says:  "But we're not bidding them out to other brokers.....the reason I'm bringing this up is because it's time sensitive, these are going to renew in July, and I just wanted to bring to everyone's attention that we're not sending it out for bid and there's a potential of 25%-30% savings, and I know we talked about savings tonight and every board meeting, and I think we have a responsibility to do that when we're talking about a potential $100,000 savings so I wanted to bring that to the table for my fellow board members.....and see what we want to do about it."


Perticone asks:  "What insurance are we talking about?"


Annie says:  "General liability - First Niagra is our broker of record and that's who we've started the process with this year...with First Niagra."


Perticone says:  "Well should we instruct the broker to....you know....get different quotes?"


MJD and Annie say:  "That's what we're doing - that's what he does."


MJD says:  "For us to go with a different broker of record right now is a bit of a sensitive issue with the pending lawsuits we have, and risk management of other cases."


Marasco says: "How so?  The insurance would stay the same, my concern is if you get the different insurance agencies and have different companies to bid, if you stick with the one broker they're only going to have certain companies and I just don't think that's competitive for the town."


Essley says: "Hmm - I'm curious why you didn't bring this up at the workshop?"

(What the hell does that have to do with insurance and saving the town money? Cripes.  You want all discussions to be done at "non video recorded" workshops, or would you rather have it open, honest, and in front of the public at a public Town Board meeting?  I know what I would choose.  I also give kudos to Marasco for bringing it up.  Thanks!)


Marasco answers: "Why?  Because I didn't know we were up for renewal."


Essley says:  "Oh."


Marasco says:  "Next month-that's why.  So, if we don't do anything about that....." somebody interrupts and he says "What's that?"


Somebody says:  "It's the same as last year."


Marasco says: "I didn't know that.  It was brought to my attention....so...."

Essley says: "Hmmph."


Marasco says:  "I personally think we should get it out for bid........that's my opinion."


Perticone says:  "Well the broker of record, how long have we had that?  Quite...a....while?"


Annie says:  "A few years."


Perticone says:  "Well there's no ...I mean...they shouldn't be getting any money from the insurance companies....correct?  Broker of record?  Do they?  I don't believe they do."

Annie says: "I don't believe they do. They will actually work to get the best rate for us."

MJD says:  "As it was they were able to lower our rate this year it was like $40,000 we were able to negotiate....we also went with a different broker of record for health insurance because we were able to negotiate a 3 year contract that was significantly less, and we also entered into another situation....what did we call that Beth?....ER...ERRB?...you might want to explain that...what we're doing."


Beth says:  "The Early Retirement uh Reference Program I'm going to call it because I can't remember the second "R"....but basically it's  Federal money that will assist us with retirees health care from age 55 to 65, and we did contract another broker to take care of that for us."  

MJD says: "So, we have been doing that as we see it with the different policies....and First Niagra has indicated to us that that's exactly what they're doing  - they're going out to different policy holders."

Marasco says: "For health care though."


MJD says:  "Not for health care - we have Brown & Brown for health care. This is going for liability and general insurance for the Town."

Marasco says:  "I understand that but again - each agent only has certain carriers they deal with - and I think it would be advantageous to the Town to  get bids from several various agents just to see how competitive they are, and if our current broker of record is the most competitive then fantastic.....but I don't think it hurts to see if we have a substantial savings....that's all I'm suggesting."

Annie says: "We can look into it, but the lead time might not be there right now....but our broker of record will get the best for us and this is up for renewal right now so basically ....the lead time that we need.....that will be an issue right now.  We can look into it Paul."


Marasco says: "We can look into it but the problem is July is right around the corner, so no one's going to be able to bid, probably, right?  Not enough lead time?"

Annie says:  "We can look into that, but right now I don't think we have the appropriate amount of lead time.  But, I will look into that. "

Perticone says: "I wouldn't expect our broker right now...like Paul's talking.... just to renew to whoever we have, right?  I mean, you know, whoever the carrier is now.....yeah he (Paul?) wants to change the broker as well...


Essley says: "There might not be enough time to do it, but you'll look into it."


They move on to the approval of minutes.


So - I am curious about the little tidbit about insurance in this resolution/Public Hearing to change Town Code.


The courts have ruled that insurance coverage is not subject to formal competitive bidding (according to page 8 on the below PDF) - but does that mean you shouldn't do that if it will enable the taxpayers to pay less for it?  I don't think the courts have said you "absolutely CANNOT subject insurance coverage to formal competitive bidding" - you can still send it out for bid.  Or an RFP.  You don't have to....but it is ok to do so, and something I would recommend (and kind of expect).  If you don't want to bid it out - then just do some homework and try to find a broker who can offer the least expensive insurance coverage - if you're going to base your decision for a broker on "a relationship of personal trust and confidence" - I, the taxpayer PAYING FOR this insurance, would like to see if there's a better deal from another broker out there.  You can decide this on a "case by case basis" for bids or RFP.  It's allowed.  It's within the law.  

I don't understand why you wouldn't do that anyways - send it out to bid (or RFP) for brokers - to see if there is substantial savings.  Just because the courts ruled that insurance brokers are exempt from the competitive bidding process - doesn't mean that you don't still have that option to do so.  You can, if you want to.

Here is the PDF of the Public Hearing and all the details about the amendments to Town Code.  There is a section in there about "Professional Services" which states:

Professional Services. The courts have held that professional services are not contracts for public work, as that phrase is used in the bidding statutes, and, therefore, are not subject to competitive bidding procedures. The determination of whether the professional service exception is applicable in given situations must be made on a case-by-case basis, examining the particular services to be acquired.
Generally, professional services involve specialized expertise, use of professional judgment, and/or high degree of creativity. Also, the services generally are to be performed by particular designated individuals. Finally, the courts have noted that professional service contracts often involve a relationship of personal trust and confidence. Among the services that have been held to be exempt from competitive bidding under this exception are those of an engineer, architect, land surveyor, attorney, physician, and insurance brokers. Generally, if the situation warrants a solicitation of costs, an effective method would be a Request for Proposal (RFP). The extent of the RFP would be decided on a case-by-case basis.

"The courts have held that professional services are not contracts for public work, as that phrase is used in the bidding statutes, and, therefore, are not subject to competitive bidding procedures."

I disagree - in this case, a broker is negotiating on behalf of the "town" for general liability insurance.  The "Town" = the public/citizens in Irondequoit.  The broker is doing work for the public "good", therefore, it is public work and could be (and should be) subject to the competitive bidding process.
PUBLIC HEARING 6.21.11 990542_1