City Council
Report
City Council Meeting: December 16, 2025
Agenda Item: 4.E
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To: Mayor and City Council
From: Dana Brown, Human Resources Director, Human Resources Department Subject: Approval of Second Modification to Professional Services Agreement with USMD Direct Inc. and Pacific Harbor Medical Group Inc. for Occupational Medical Testing Program Services
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Authorize the City Manager to negotiate and execute a second modification to agreement #3940 in the amount of $138,000 with Pacific Harbor Medical Group Inc. for occupational medical testing services for the Human Resources Department. This will result in a 23-month amended agreement with a new total amount not to exceed $369,850, with future year funding contingent on Council budget approval.
Summary
Pacific Harbor Medical Group Inc. provides Occupational Medical Testing Program (OMTP) services for current employees and new hires. Staff recommends extending the contract for an additional six months through June 30, 2026, to allow for additional time to complete a Request for Proposals (RFP) process and award contracts for future OMTP services.
Background
Pacific Harbor Medical Group Inc. provides Occupational Medical Testing Program (OMTP) services to protect employees from on-the-job health and safety risks through physicals, testing, and preventative health measures.
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The Human Resources Department manages the OMTP with assistance from operating departments and relies on private medical providers to carry out the testing required by the program. To comply with state and federal regulations, the City of Santa Monica (City) is required to provide employees in certain classifications with the following services: commercial driver medical examinations, Police Officer Standards and Training (POST) medical examinations, hazmat physicals, tuberculosis screenings, respirator medical clearance, and various vaccinations. In addition, as part of the OMTP program, all job candidates offered employment in physically demanding positions undergo a preemployment physical exam.
In June 2023, the City entered a five-year contract with Westchester Medical Group following the administration of an RFP process. Westchester Medical Group had been the City’s OMTP provider since 2009. Westchester Medical Group shuttered its operations in February 2024 without providing the City with sufficient advanced notification, which required the City to quickly retain services from another provider. On June 3, 2024, the Human Resources Department received authority approval for an exception to the competitive process (2.24.250.g) section of the Municipal Code and awarded Pacific Harbor Medical Group Inc. a contract to provide critical preemployment OMTP services for an amount not to exceed $95,000. The City reached the $95,000 limit earlier than anticipated due to an unforeseen increase in the need for such services.
In June 2024, the Human Resources Department received authority approval to modify agreement #3940 in the amount not to exceed $231,850, which provided for an additional $136,850 in funds to be used through December 31, 2025.
Discussion
The Human Resources Department recommends a second modification to the agreement #3940 in the amount not to exceed $369,850 which will provide an additional $138,000 in funds to be used through June 30, 2026. The estimated additional expenditure is based on past monthly cost experience with the highest monthly spend at $20,930 and adding a 10% contingency. The proposed amendment would result in a new total contract amount not to exceed $369,850 and would extend the contract term 3 of 4
for six months through June 30, 2026, to allow for additional time to complete a RFP process and award associated contracts.
Environmental Review
The agreement for ongoing classification and compensation services is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines, which states that CEQA does not apply, where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The agreement would provide medical exams for the City in El Segundo, California, and would not result in physical effects.
Therefore, it can be seen with certainty that the contract would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
Past Council Actions
Meeting Date Description
06/24/2025
(attachment A)
Staff Report 7141 for Approval of Modification of Agreement with PACIFIC HARBOR MEDICAL GROUP INC. for
Occupational Medical Testing Program Services
07/07/2025
(attachment B)
First Modification of Agreement
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Self-Insurance, Workers’ Compensation Fund to increase the amount of the contract with Pacific Harbor Medical Group Inc. to provide occupational medical testing services. Although the SelfInsurance, Workers’ Compensation Fund incurs the initial charges, it is subsequently reimbursed by the other funds through their annual premium charges.
Contract Modification Request
Agreement
#
Current
Authorized
Amount
FY 2025-26
Modified
Request
Amount
Dept Account # Total
Revised
Contract
Amount
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3940 $231,850 $138,000 74800002.552010 $369,850
Future year funding is contingent on Council budget approval.
Prepared By: Jennifer Garcia, Benefits Administrator
Approved Forwarded to Council
Attachments:
A. A - PHMG Staff Report 1st Modification
B. B - Pacific Harbor Medical Group PSA
C. Exhibits A-A9
D. Exhibit Pricing
E. SM Levine Act Disclosure 2025
F. SM Oaks Initiative 2025
G. Pacific Harbor Medical Group 1st Modification