Before bidding on a political subdivision, it’s wise to do your homework first. What has been their bidding history? How were past decisions to award made? How was the process handled? Was a consultant involved, and if so, who was it? (Insurance Consultants Are Biased).
Bidding on political subdivisions is challenging for many reasons. The cost of responding to a RFP can be as high as $10,000 when factoring in time, allocated internal resources, travel and in some cases, entertainment expenses. Experience shows chances of winning an award is 10% or less in most cases. However, chances tend to increase with emphasis on entertainment expenses.
The following blog entry was posted on this website 29 August 2015 as an illustration of how one Texas school district’s RFP evolved and the surprise ending it brought. History is known to repeat itself. However, should your organization need practice in responding to public RFP’s, you will find a willing partner because San Benito ISD Believes Practice Makes Perfect.
San Benito School District Awards TPA Services to Highest Bidder
Financially strapped district leaves +$500,000 on the table
The San Benito Independent School District, located in deep south Texas, has awarded third party administration services to the highest bidder in a recent Request for Proposal process. Estimated annual fixed costs for this 1,533 employee group is approximately $920,000. The lowest bid was $280,000.
By Molly Mulebriar
SAN BENITO, TEXAS – A financially strapped south Texas school district has awarded third party administration services to the highest bidder in a recent Request for Proposal process. Estimated annual fixed cost is approximately $920,000.
The lowest bid submitted included annual fixed costs of approximately $280,000.
The district’s insurance consultant, Nick Long of Gallagher Benefit Services, recommended neither the highest or lowest bid. Instead, the recommendation was Meritain, an Aetna subsidiary with a total annual fixed cost of approximately $455,000.
The Board of Trustees rejected the consultant’s recommendation.
The winning proposal adopted by the Board of Trustees was submitted by three independent insurance agents despite instructions contained in the RFP that no agents were to be involved in the bidding process.
According to the RFP all bids were to be net of commission.
The three insurance agents listed as the submitting agents by the winning TPA, Blue Cross & Blue Shield, were Pierre Newkirk, Albert Salinas and Joe Salazar.
Bob Trevino, an insurance agent who did not submit the winning bid was chosen over the three who did.
The effective date of the contract year is October 1.
The San Benito ISD is in financial difficulty. The district is actively seeking remedies to improve finances, including closing their on-site medical clinic for employees.
See “San Benito Loses Millions of Dollars, Layoffs Forthcoming”:
http://www.valleycentral.com/news/story.aspx?id=1188370#.VeN1JflViko
Molly Mulebriar is an investigative reporterette from Waring, Texas and an infrequent contributor to this blog.
