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RTA and The Kennedy Group Contract
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DESCRIPTION: This RTA Board of Commissioners action will authorize the CEO to negotiate and execute an amendment and provide funding of the Amended RTA/Kennedy Group Contract. |
AGENDA NO: Click or tap here to enter text. |
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ACTION REQUEST: ☒ Approval ☐ Review Comment ☐ Information Only ☐ Other |
RECOMMENDATION:
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To authorize the Chief Executive Officer to negotiate and execute an amendment to the RTA/Kennedy Group Contract to provide insurance brokerage and retiree medical and life benefit services. The total funding requested which is explained below, is $1,128,541.57
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ISSUE/BACKGROUND:
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The RTA and Kennedy Financial Services Group have a contract for the provision of insurance brokerage services and to offer certain former TMSEL/NOPSI retired transit employees medical and life benefits pursuant to the 1983 Health and Welfare Benefit Agreement services. As RTA’s insurance broker, Kennedy secures all commercial insurance coverages required by RTA including but not limited to property, crime, public officials, overhead catenary, flood auto liability, general liability and auto physical damage. As RTA’s retiree employee medical benefits service providers, Kennedy secures all the health benefits for eligible TMSEL/NOPSI retirees. “The original five-year contract between RTA and Kennedy Group was awarded February 22, 2011, pursuant to RTA Resolution Number 11-021. The second Award of a five-year contract between RTA and the Kennedy group was completed May 24, 2016, pursuant to RTA resolution Number 16-027. This board action represents a third award amendment of this five-year contract. The “Term/Termination provisions of the contract specifically state term of this Agreement shall be from April 1, 2016, to March 31, 2021. Thereafter, this Agreement shall automatically renew for successive renewal terms under the same terms and conditions as the initial term unless either party provides the other with written notice of nonrenewal at least sixty (60) days prior to the end of the initial term or of any renewal term.” Funding on the existing RTA purchase order has been exhausted since November 2022.
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DISCUSSION:
As stated above, the existing contract provided for an automatic five-year renewal, unless either party provides the other with written notice of nonrenewal at least sixty (60) days prior to the end of the initial term or of any renewal term. Therefore, pursuant to this provision and no notice of nonrenewal, this current term of the RTA and Kennedy Financial Group contract would be April 1, 2021 to March 31, 2026. Both RTA and the Kennedy Financial Group have agreed to amend the current contract to remove the automatic renewal provision. Both parties have agreed to replace this provision with a two-year term effective April 1, 2023 and ending March 31, 2025. The Amendment will also have a thirty-day (30) cancellation for convenience provision. Additionally, both parties have agreed to reduce the annual compensation associated with this contract from $632,499.96 to $432,499.96, as a result of the reduction TMSEL/NOPSI of retirees eligible for medical and life benefits.
During this two-year period, Staff will determine if decoupling the insurance brokerage and retiree medical benefits services components make business sense. Once a determination has been made, then a recommendation will be made to the RTA Board of Commissioners.
FINANCIAL IMPACT:
The two-year (April 1, 2023 - March 31, 2025) cost of insurance brokerage and retiree medical benefits and life services is $864,999.92 .and are budgeted under 1770002.7070.167, 1830002.7070.169 and 1121.7070.187. Additionally, required funding for the period November 2022 to March 2023 totals $263,541.65. The total financial impact is $1,128,541.57 ($864,999.92 + $263,541.65) If funding was requested for the five-year term, the cost would be approximately $3,162,499.80.
NEXT STEPS:
Upon adoption of the resolution, the RTA purchase order for the Kennedy Financial Group will be amended by $1,128,541.57 to reflect approval by the RTA Board of Commissioners.
ATTACHMENTS:
1. Resolution to fund the Regional Transit Authority and the Kennedy Financial Group contract for insurance broker and benefits.
2. Purchase Order No. 912079
3. Resolution No. 16-027 Resolution to Ratify the execution of a contract with the Kennedy Financial Group, etc.
Prepared By: Mark A. Major
Title: Deputy CEO of Administration and Finance
Reviewed By: Gizelle Johnson-Banks
Title: Chief Finance Officer
4/4/2023
Lona Edwards Hankins Date
Chief Executive Officer