Council Report Attachment: 1. Future Melbourne Committee, Agenda Item 5.8.1.3, 12 February 2013 1

C O U N C I L R E P O R T Agenda Item 5.3

Council

INSURANCE BROKERAGE SERVICES TENDER NO 3478 – EVALUATION REPORT

26 February 2013

Committee Future Melbourne (Finance and Governance Portfolio)

Presenter Cr Mayne

Purpose

1. The purpose of this report is to seek Council approval to award a contract to Jardine Lloyd Thompson for the provision of insurance brokerage services for three years with a two year extension option.

Recommendation

2. That Council award the contract for Insurance Brokerage Services to Jardine Lloyd Thompson Pty Ltd for a term of three years, for a contract sum of $158,000 with an option for a further two years and otherwise in accordance with the negotiated terms and conditions of the contract.

C O N F I D E N T I A L

Attachments: 1. Supporting Attachment 2. Tender Evaluation Report for Contract

F U T U R E M E L B O U R N E ( F I N A N C E A N D G O V E R N A N C E ) C O M M I T T E E R E P O R T

Agenda Item 5.8.1.3

CONTRACTUAL MATTERS 12 February 2013 INSURANCE BROKERAGE SERVICES TENDER NO 3478 – EVALUATION REPORT Presenter: Keith Williamson, Manager Governance Services

Purpose and background

1. The purpose of this report is to seek Council approval to award a contract to Jardine Lloyd Thompson for the provision of insurance brokerage services for three years with a two year extension option.

2. The successful tenderer is required to renew insurance cover on an annual basis for all policies currently held by Council, as well as the provision of ad-hoc insurance advice.

3. The current insurance broker for the City Of Melbourne is Jardine Lloyd Thompson Pty Ltd and this contract expires on 31 March 2013.

Confidentiality

4. The information contained in this report has been designated as confidential information by the Chief Executive Officer because it contains information about contractual matters.

Key issues

5. The tender was advertised in The Age newspaper on 1 December 2012.

6. In addition to the published advertisement, staff contacted the following four insurance brokerage firms to notify them of the tender advertisement: Marsh, Aon, Willis and Jardine Lloyd Thompson.

7. Jardine Lloyd Thompson Pty Ltd was the only tendered. A copy of the Tender Evaluation Report is contained in Attachment 2.

8. The cost to Council of appointing the recommended service provider is $158,000 over three years.

9. A strategic service review of the current contract was undertaken in October 2012 and it was determined that the most suitable and cost-effective method for undertaking these services was via an external specialist rather than through in-house resources. Insurance Brokers have extensive networks and knowledge of the insurance industry and market and in order for this service to be provided internally, a specialist practitioner with the appropriate qualifications and registration would need to be employed.

Recommendation from management

10. That the Future Melbourne Committee recommends Council:

10.1. award the contract for Insurance Brokerage Services to Jardine Lloyd Thompson Pty Ltd for a term of three years, for a contract sum of $158,000 with an option for a further two years and otherwise in accordance with the negotiated terms and conditions of the contract; and

10.2. approve this resolution being made public following the successful tenderer being issued with a

letter of acceptance.

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C O N F I D E N T I A L

1

SUPPORTING ATTACHMENT

Legal

1. When Council intends to enter into a contract for services valued at $150,000 or more, section 186 of the Local Government Act 1989 imposes a duty on the Council to invite tenders or to invite expressions of interest by public notice.

2. Council is required under section 76A of the Local Government Act 1989 to take out appropriate Public Liability and Professional Indemnity insurance. This insurance is secured through the provision of this contract.

Finance

3. This service is to be funded through ongoing annual budget allocations.

Conflict of interest

4. No member of Council staff, or other person engaged under a contract, involved in advising on or preparing this report has declared a direct or indirect interest in relation to the matter of the report.

Stakeholder consultation

5. No stakeholder or community consultation was considered necessary as this is an internal facing service.

Relation to Council policy

6. No Council policies currently exist that impact upon, nor are impacted by the provision of this service.

Environmental sustainability

7. In developing this proposal, environmental sustainability issues or opportunities have been considered and there is no significant impact on Environmental Sustainability related to this service.

Attachment 1Agenda Item 5.8.1.3

Future Melbourne Committee 12 February 2013

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Memorandum

Attention: Keith Williamson Date: 01/02/13

Sender: Dale Ashley File Number:

Subject: Tender Evaluation Report for Contract

Contract Name: Insurance Brokerage Services

Contract Number: 3478

1. Purpose

The purpose of this Tender Evaluation Report is to provide details on the tendering program undertaken for this project, the evaluation processes and the findings reached, together with a recommendation to enable the relevant Manager to advance the tendering process to the stage of awarding a contract for the specified services.

The standards, processes and templates utilised for the tendering process complied with the CoM Corporate Contract Management System.

2. The Business Requirement

A suitably registered, qualified and experienced Insurance Broker is required to provide the following range of core services:

1. Provide support and professional advice in relation to any insurance related issues within reasonable time frames to the full satisfaction of the Contract Manager.

2. Invite tenders as required under the Local Government Act and Council’s contracting guidelines to ensure that the range of insurance classes required for Council’s insurance portfolio is renewed at competitive rates, complies with best value principles, and related guidelines and requirements. This includes achieving suitable pricing and levels for policy premiums, excesses, coverage and exclusions for Council.

3. Ensure that the Council’s insurance portfolio is fully underwritten by reliable and authorised insurers.

4. Provide Council with alternative policy quotations, cost comparisons, risk financing recommendations and optional approaches.

5. Advise on current insurance market conditions and take advantage of market trends and conditions to maximise available premium savings and achieve extensive policy coverage.

6. Provide full policy details, renewal terms and premium payment options. 7. Outline marketing activities. 8. Undertake a range of proactive risk management activities and analysis. These should

involve investigating Council’s risk appetite and exposures through a range of risk profiling and analysis.

9. Maintain an ongoing relationship with insurers.

Attachment 2 Agenda Item 5.8.1.3

Future Melbourne Committee 12 February 2013

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10. Develop a service plan and schedule tailored to Council’s requirements for administering their insurance program, including appropriate levels of reporting.

11. Ensure that the insurance brokerage services and renewal options fully comply with relevant legislation including Local Government Act 1989 (Vic), Insurance Act 1973 (Cth), and Insurance Contracts Act 1984 (Cth).

3. Corporate Social Responsibility

Consideration has been given to the inclusion of Corporate Social Responsibilities in the provision of the service and the tenderer has provided an extensive list of actions that they undertake as part of their tender submission.

4. Tendering Process Timetable

The timetable for the tendering process was as follows:

1/12/12 Tender documentation advertised

20/12/12 Tenders closed

19/03/13 Proposed Award of Contract

5. Tender Evaluation Panel

The responses to the Invitation to Tender (ITT) were evaluated by a Tender Evaluation Panel (TEP) comprising:

Dale Ashley, (Chairperson) Full member

Ibrahim Elkojje, Full Member

Jared Lingard, Full Member

Ron Leong, Advisory Member

All members of the TEP have completed and signed the Discloseable Interests and Confidentiality Declaration.

6. Evaluation Criteria

Evaluation Criteria Tender

Cost 50%

Experience & Capability

Company resource capacity

Relevant expertise

Technical/professional & systems capability

Past performance

35%

Plan for Proposed Services

Outline of proposed plan

Detailed plan

10%

Quality Assurance

Commitment to quality (policy & past projects)

Quality assurance processes proposed for this project

2%

Occupational Health & Safety (OHS)

Commitment to OHS (policy & past projects)

OHS processes proposed for this project

3%

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6.1 Cost Criteria

The evaluation criteria of Cost was designated at 50 per cent which was the figure used in the current tender for this contract from 1 April 2008 to 31 March 2013. A deviation from the standard contract figure of 60 per cent for the Cost criteria is required due to the high priority placed on the experience and capability of the service provider in obtaining appropriate and cost-effective insurance coverage across multiple classes of insurance.

7. Probity Management

Council's Probity Management was adhered to as detailed in the Procurement Plan.

8. Invitation to Tender (ITT) Process

8.1 ITT Advertisement

The ITT was advertised in “The Age” Newspaper on 1 December 2012. Along with the advertisement, the following service providers were notified by email about the Invitation to Tender:

Jardine Lloyd Thompson

Marsh

Aon

Willis

8.2 Tender Briefing

A briefing session for Tenderers was not conducted.

8.3 Tender Responses

Responses to the ITT closed on 20 December 2012. Only one tender was received and this was from Jardine Lloyd Thompson Pty Ltd.

8.4 Tender Evaluation Panel Meetings

The Tender Evaluation Panel (TEP) met on 9 January 2013 and only one meeting was required.

8.5 Tender Evaluation

The TEP examined the Tender response in detail before assessing the Tenderer’s acceptability against each criterion.

8.6 Results of the Tender Evaluation

A summary of the perceived strengths and weaknesses of the Tenderer and the scores assessed were documented by the TEP. An overview of the perceived strengths and weaknesses of the Tenderer are:

Strengths:

Extensive experience with local governments across Australia including the City of Melbourne.

Environmental sustainability plan provided.

High quality of service provision and knowledge of the insurance industry.

Highly experienced and qualified staff.

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Flexibility and a history of attending to queries on time.

Risk management plan in place and experience with risk management methodology including risk management staff.

No subcontracts are planned.

Active Corporate Social Responsibility plan which engages community and also donates large amounts to charity.

Program for continuous improvement and initiatives are in place.

A policy which covers occupational health and safety of staff as required under legislation

Weaknesses:

No weaknesses were perceived by the TEP.

From the rankings, the TEP has nominated Jardine Lloyd Thompson as the Preferred Tenderer.

9. Funding

The services are to be funded through ongoing annual budget allocations.

10. Relation to Council Policy

No Council policy currently exists that impacts, or is impacted by the provision of this service.

11. Recommendation of the Tender Evaluation Panel

The Tender Evaluation Panel recommends that the Chief Executive Officer accepts that a report to Council should be included in the February cycle with the recommendation that Council award a contract of three (3) years with the option of extension for a further two (2) years with Jardine Lloyd Thompson Pty Ltd for the provision of Insurance Brokerage services.

Signed by the Chairperson and Full Members of the Tender Evaluation Panel:

Name

(Chairperson):

Dale Ashley

Signature: Date:

Name: Peter Athanassiadis

Signature: Date:

Name: Jared Lingard

Signature: Date:

Name: Ibrahim Elkojje

Signature: Date:

12. Attachments

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There are no attachments as there is only one respondent and no evaluation summary was required. APPROVAL BY BRANCH MANAGER

I agree with the recommendation of the Tender Evaluation Panel.

I certify that the recommendation is in accord with the Tender advertisement and the Invitation to Tender.

Branch Manager

Signature:

Date:

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