City Council
Report
City Council Meeting: March 22, 2016
Agenda Item: 3.Q
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Risk Management Administration
Subject: Claims Management Software System
Recommended Action
Staff recommends that the City Council:
1) Award RFP# 36 to Origami Risk, Inc., an Illinois-based company, for a claims management software subscription service to support the City’s Liability and Workers’ Compensation Programs;
2) Authorize the City Manager to negotiate and execute an Agreement with Origami Risk, Inc., in an amount not to exceed $591,353 over a five-year period with future funding contingent on Council budget approval; and 3) Authorize budget changes as outlined in the Financial Impacts & Budget Actions section of this report.
Executive Summary
The City’s Finance Department is responsible for the internal management of the City’s Liability and Workers’ Compensation Programs. In June 2015, staff solicited proposals from software companies for a new claims management software system to support the City’s Liability and Workers’ Compensation Programs. This process yielded proposals from five software firms, three of which were invited to provide on-site demonstrations of their software’s capabilities. As a result of this effort, staff recommends the City pursue a five-year agreement with Origami Risk, Inc. (Origami) at a total cost of $591,353.
Origami’s software offers the greatest functionality, is competitively priced, and comes highly recommended by the firm’s existing customer base. The agreement will be funded by the City’s Self-Insurance Funds, which are financed with contributions from all City Departments.
Background
The Risk Management Division of the Finance Department is responsible for managing the City’s Self-Insurance Programs. Integral to this effort is a high functioning automated claims system that supports staff’s efforts to efficiently track, manage, and report on the City’s liability and workers’ compensation claims. For nearly two decades, Risk Management has used Ventiv Technology’s (Ventiv) IVOS claims management 2 of 4
software for this purpose. Staff’s most recent report to Council, on May 27, 2015 (Attachment A), describes the City’s history with this software. Approximately two years ago, however, Ventiv announced plans to introduce a new claims management system and discontinue support of IVOS. This prompted staff to begin preparations for purchasing a new claims management software system.
Discussion
Prior to releasing a Request for Proposal (RFP) for a new software system, staff formally solicited information from software firms on the capabilities of current state-ofthe-art claims systems. A total of nine firms responded to the Request for Information (RFI), of which five were invited to provide on-site demonstrations of their system’s capabilities. The information gained from this process was then used to prepare an RFP for a new claims management system. The results of this process are detailed below.
Origami provides the service through a cloud-based software subscription (rather than selling a software license) and no new equipment will be necessary. Staff estimates it will take six to nine months from agreement execution to implement the new system.
Once this occurs, the City will discontinue its agreement with Ventiv Technology.
Vendor/Consultant Selection
On June 15, 2015, the City issued an RFP for a claims management system. The RFP was posted on the City’s online bidding site, and notices were advertised in the Santa Monica Daily Press in accordance with City Charter and Municipal Code provisions. A total of 679 vendors were notified of the RFP; 15 downloaded the RFP; and five firms responded.
Responses to the RFP were reviewed by a selection panel composed of staff from the Finance, Information Systems, and Human Resources Departments. After an initial review, the selection panel narrowed the field to three firms and invited each to provide an in-depth, on-site demonstration of its system’s capabilities. Origami’s proposal rose to the top due to its software’s capabilities and ease of use. The firm also received high 3 of 4
praise from existing users (staff conducted on-site visits to obtain feedback on system performance and Origami’s responsiveness to service requests). Finally, Origami’s pricing was the least costly of the top three firms interviewed.
Consequently, the selection panel recommended the City pursue a five-year agreement with Origami in an amount not to exceed $591,353. This figure includes system conversion costs and ongoing software subscription, system maintenance, and file storage costs.
Financial Impacts and Budget Actions
The chart below summarizes the agreement’s cost by fiscal year:
FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 Total
Installation 75,000 75,000 - - - 150,000
Ongoing Costs* - 102,680 102,680 105,854 109,139 420,353 Contingency** - - 7,000 7,000 7,000 21,000
Total $75,000 $177,680 $109,680 $112,854 $116,139 $591,353
* Subscription, system maintenance, file storage costs
** For custom programming or additional file storage needs that may arise The General Liability/Auto (56), Transit (57), and Workers’ Compensation (59) SelfInsurance Funds will share the costs for the agreement, with 50% covered by Workers’ Compensation, and the remaining 50% split evenly between General Liability/Auto and Transit.
To fund the first two years of the Agreement (FYs 2015-16 and 2016-17), staff is requesting that funds of $250,000 previously budgeted in the CIP for this project be moved to the operating budget for subscription payments as follows:
Account FY 15-16 Amt. FY 16-17 Amt. TOTAL
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C569119.589000 ($62,500) n/a
C579119.589000 ($62,500) n/a
C599119.589000 ($125,000) n/a
Remove from CIP ($250,000) n/a ($250,000)
56232.533580 $18,750 43,750
57233.533580 $18,750 43,750
59235.533580 $37,500 87,500
Add to Operating $ 75,000 $ 175,000 $250,000
Net ($175,000) $175,000 $-0-
Following the transfer above, adequate funding will be available in each of the Self Insurance Funds operating budgets to finance the FY 2015-16 and FY 2016-17 contract payments. Staff will request funding for the remaining contract years’ costs in the FY 2017-19 Biennial Budget. Future year funding is dependent on Council budget approval.
Prepared By: David Bomberger, Workers' Compensation Administrator Approved Forwarded to Council
Attachments:
A. May 27, 2015 Staff Report (Web link)