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THE CITY OF NASHUA “The Gate City’

Financial Services

Purchasing Department

June 8, 2016
Memo #16-158

TO: MAYOR DONCHESS
FINANCE COMMITTEE

SUBJECT: TO APPROVE CONTRACT AWARD FOR HEALTHCARE STOP LOSS INSURANCE
(VALUE: $750,692)
DEPARTMENT: HUMAN RESOURCES; FUND: BENEFITS SELF INSURANCE FUND

Please see attached communication from Thomas DeLacey, Principal Consultant, Workplace Benefits
Solutions (WBS) dated June 6, 2016 for information related to this contract award.

Bay way of background, the WBS solicited several firms to bid on the Step Loss insurance with deductible
levels of $250,000 and $350,000. WBS has recommended that the City renew Stop Loss insurance with
HCC at the higher $350,000 deductible level. HCC was selected for several reasons. 1) the City does
not have to fill out additional disclosure forms relative to any claims we may know about (i.e., a $600,000
claim just materialized). 2) as HCC is the incumbent, there is no risk of any items falling through the
cracks during a transition period. 3) we have worked with HCC in the past and have a higher comfort
level with their ability to integrate data with both Anthem and Harvard.

The Human Resources Director, Chief Financial Officer and the Purchasing Department recommend
awarding this contract to HCC in an amount of $750,692.

Respectfully,

Dan Kooken
Purchasing Manager

Ce: L Budreau J Griffin

jaz9 Main Street | Nashua, New Hampshire 03061 » Phone (603) 589-3330 » Fax (603) 589-3344

ae er

Employee Benefit Advisors

June 6, 2016

Mr. Larry Budreau
Director of Human Resources
City of Nashua NH

Re; Stop Loss

Stop loss insurance is purchased by self-funded medical plans to help smooth out the risk of large
unpredictable claims. Stop loss comes in two forms, Individual (or Specific) and Aggregate. Individual
Stop Loss (ISL) is where the stop loss carrier pays for all claims that are paid on an individual that exceed
a certain threshold {$250,000 for the City of Nashua} in a plan year. Aggregate Stop Loss insurance pays
for all claims in excess of the aggregate attachment point for the entire plan in a given plan year. The
aggregate attachment point is usually set at 125% of the plans expected claims. Aggregate Stop Loss
payments are very rare as large plans (over 1000 lives} rarely if ever hit the aggregate stop loss
threshold. The City of Nashua does not purchase Aggregate Stop loss insurance but the City does
purchase Individual Stop Loss Insurance.

As stated above, individual stop loss insurance is purchased to smooth out the unpredictable nature of
large claims that can easily exceed $500,000, $1,000,000 or more for an individual with any number of
ailments including Cancer, End Stage Renal Disease, Congestive Heart Failure, Blood Disorders
(Hemophilia) and such things as premature birth or serious accidents. It is impossible to predict the
number and severity of these incidents in advance. Additionally, medical and genetic technology gains
make cost for future treatments more expensive and more unpredictable.

According to the 2015 SunLife stop loss survey, the frequency of $1,000,000 claims have increased by
over 1000% from 2010 to 2014. 71% of those claims were from dependent children, while the cost of
bone marrow /stem cell transplants increased 177% from 2011 to 2014.

Private and Public employers typically turn to medical stop loss insurance to cover this unpredictable
risk in the same way you may turn to stop loss in a self-funded property insurance policy. Stop loss
allows for predictability in the budgeting process for unpredictable expenses.

However, very large employers, generally over 5,000 employees have been known to increase ISL limits
to reduce their premium. This reduction in premium has a corresponding increase in claims exposure.
Entities with significant operating capital or claim reserves are able to absorb this additional claim
liability. Even larger firms over 10,000 employees may forego stop loss insurance all together. They are
prepared to take on the additional risk by putting funds aside or are able to manage the risk through
operating income. Typically private employers will not want to set millions of dollars aside in a claim

reserve to cover the possibility of multiple large claim hits in one year, they would rather put that
money to work in their business.

WBS has managed the City of Nashua stop loss program for six years. In those six years the City has run
a 72% loss ratio; about 7 to 12 percent higher than industry targets. {Loss ratio is the comparison of
claims paid by the insurer to premiums received by the insurer.) The City has run very favorably over
the last four years (F¥13-FY16) with about a 50% loss ratio. Prior to that the loss ratio in FY 11 was 172%
and FY 12 was 107%. Asa testament to the unpredictability of claims, a $600,000+ claim just
materialized within the last two weeks.

The bottom-line is that WBS does not recommend eliminating stop loss insurance because you have
paid in more than you have received in reimbursements. That is a basic tenant of insurance. We do not
purchase stop loss to beat the insurance company, we purchase it to mitigate risk and smooth out our

experience for budgeting.

If the City’s desire is to reduce expenses by taking on additional risk | would recommend increasing the
specific deductible to $350,000. That will reduce the premium by about 25% on top of the negotiated
15% reduction we have on the table for the current $250,000 ISL. Given the healthy claim reserve fund
the City has accumulated in the last 5 years | think the additional risk is reasonable.

Sincerely,

Thomas G. DeLacey~
Principal Consultant

Workplace Benefit Solutions
a HUB International Company

Stop Loss Comparison for City of Nashua
For Effective Date: July 1, 2016 - June 30, 2017
ae Second Pass
Single 765 June 7, 2016
Two Person 607
Family 665
Total 2237
Curent | WBS Est | Renewal Proposed Options
¢ > . i 1 [RAE SURAACE = a
UD . #% HCC ese! Msc (ys onge 2 | oom: (SY QBE sen a VOVA
. crises | BEE | Maric REZ | “NOPTUM | = OED ons ~
faternational 2 AHO nes Coun us
ny “$250,000 "= srs, $350,000 5. yp ~~: $380,000 . | - $380 000-..
i Aaa a “242 Spec 30-4 > 242 Spec "242 Spec: | - 24/12 Soac
Individual Stop Loss Single $ 1855 $§ 20,41 10,58 - $ 13.25] $ 17.15/93 . $ - $ 13.321 $ -
Farnily $ 63.00 § 69.30 § 37.00 | $ - $ 35.64] 5 32.80) - $ - $ 35.23 | $
PEPM $ 47.80 $ 52.58 $§ 27.951 $ - $ 27.98] $ 27.45|$ - $ - $ 27,.74|$ -
Annual Premium $ 1,283,121 § 1,411,433 4 750,692 | §$ -1$ 751,180 | $ 736,816 | $ -1$3 -|§ 744,580 | $ -
Percent Change 10.0% 44.5% ) -100,0% -41,5% -42.6% -100,0% -100.0% 42.0% ~100,0% |
Additional Liability $ - $ - 4 . $ - ¥ - $ - $ - $ - $ - $
Total Premium and Liability $ 1,283,121 $ 1,411,433 $ 750,692 | § -|§ 751,180 | $ 736,816 | $ -1§ -1$ 744,680 | $ “
Parcant Changs 70.0% 41.5% -100.0% . 41.5% 42.8% -100.0% -100.0% 42.0% -100.0%
Carer notes (see $250k fab)
HCC
Optum
Serkey
Symatra
Munich Re
OBE
HM Life
Voya
Guardian
Sun Life
Reliance Standard

AIG

Stop Lass Comparison for: City of Nashua
For Effective Date: July 1, 2016 - June 30, 2017
Second Fass
leingle 785 June 7, 2016
Two Person 607
Family 865
Total 2237
Curent | WBS Est | Renewal Proposed Options
_, ae ' TUR ANSURANCE =< i :
\ &2 HCC fseRKLeY | fy" Murch REE | Sopra: A QBE fe « | VOVA
internatiSned™ iotower isk [ea tatnelints itm | MUTWORTE Se | OPTUM | tere as Pines
Baneéi ; iO | SeS0 "| = $250,000 = |= 260,000. _. $250,500 _
senplaess navies 2uH2 Spec | 242 Spec “942 Spec’ -} © 24712 Spec - } - 242 Spac
Coste:
Individual Stop Loss Single $ 7855 $§ 20.47 $ 15.70|$ 23.06] 3 19.67) 24.72) 5 26.23] $ 24.13) § 22.62) $ 24.39
Family f 63.00 ¢ 69.30 ¢ 54.53 | 5 66.67] ¢ 49.88) § 46.9715 67,98) ¢ 87,04; $ 56.3414 68.95
PEPM $ 47.80 $ 52.58 $ 41.25 |$ 51,761 % 39.51 | ¢ 40.86) 5 49.7513 52.371 $ 44.81) $3 53.71
Annual! Pramium $ 1,283,121 $ 1,411,433 $ 1,107,344|$ 1,369,360/$ 1,060,733/$ 1,091,936 ]$ 1,335,606]$ 1,405,708)$ 1,202,841;$ 1,441,833
Percent Cha 10.0% -13,7% 8.3% -17.3% -14.9% 4.1% 9.6% -6.4% 12.4% |
Vitae Be
Additional Liability $ - § . g . $ - $ $ - $ $ - |# - £ -
Total Premium and Liability $ 1,283,121 $ 1,411,433 $ 1,107,344)$ 1,389,350! § 1,060,733] $ 1,091,936 )$ 1,335,606) $ 1,405,708] $ 1,202,841|$ 1,441,833
Percent Change 10.0% ~13,.7% 6.3% ~77.3% -14.9% 4.1% 9.8% -6,3% 12.4%
Camer notes
HCG FIRM pending laser
Opium Pending underwriting
Berkioy Panding underniting
Symete Pending undermlting
Munich Re FIRM until 6/30/2016
Q5E Pending undarwriting - FIRM fer $500k only
HM Life FIRM until 45/2018
Voya FIRM until 6/30/2018
Guardar Not competitive
Sun Life Net competitive
Revance Standard Not competitive
AIG Nat competitive

#2) THE CITY OF NASHUA “The Gate City”

Financial Services

Purchasing Department

June 9, 2016

Memo #16-163

TO: MAYOR JIM DONCHESS
FINANCE COMMITTEE

SUBJECT: NASHUA CITY WIDE TELECOM PROJECT (VALUE: $2,200,000)
DEPARTMENT: 122 INFORMATION TECHNOLOGY; FUND: BOND
ACTIVITY CLASSIFICATION: 71 EQUIPMENT

Please see attached communication from Bruce Codagnone, CIO/IT Division Director dated June 7, 2016
for the information related to this contract award.

Pursuant to § 5-78 Major purchases {greater than $10,000) A. All supplies and contractual services,
except as otherwise provided herein, when the estimated cost thereof shall exceed $10,000 shall be

purchased by formal, written contract from the lowest responsible bidder, after due notice inviting bids.

The CIO/IT Division Director and the Purchasing Department recommend the award of this contract to
Custom Computer Specialists, Inc. of Lincoln, RI in the amount of $2,200,000.

Respecttully,

Dan Kooken
Purchasing Manager

Cc: BCodagnone J Graziano

i229 Main Street « Nashua, New Hampshire 03061 « Phone (603) 589-3330 « Fax (603) 589-3944

THE CITY OF NASHUA Thebes

Information Technology Division

Date: June 7, 2016

To: Dan Kooken, Purchasing Manager
From: Bruce Codagnone, CIO/IT Division Director

Re: Nashua City-Wide Telecommunications project
Mr. Kooken,

The City issued a Request for Proposal (RFP) with the aim of selecting a single vendor to deliver a City-
wide Telecommunications strategy for the City of Nashua.

The primary aim of the exercise was to identify available products and services in the market that would
satisfy any legal obligations and the commercial realities of all communications for a municipality. The
project team invited potential suppliers to provide information about their likely solution and service.

Creative solutions and the use of modern technology, parts of which need not have been previously used
in City government, were welcome. However, all aspects must use proven, robust and easily
maintainable components that integrate seamlessly with other relevant City systems and processes.

The current communications infrastructure is being supplied by a number of disparate suppliers, each
requiring effort to manage and maintain. In many areas, such as the Police Department and the Nashua
High schools, the systems are failing, adding risk to the operations of these critical services. City of
Nashua, NH is seeking economies of scale by combining all of the facilities into a single supplier
contract.

City of Nashua, NH sought information on what systems, services, products and suppliers that were
available for an integrated telecoms, data and messaging infrastructure offering a ftexible platform that
would allow for the introduction of new services and technologies as they arrive. Furthermore, providing
redundancy from both a switch and data circuit standpoint to ensure communications are uninterruptable
and critical services can be performed.

The goal of this project is for City of Nashua, NH to have a resilient, safe and secure messaging
infrastructure that has the following attributes:

e Diverse routing of voice connections
e Implementation of a fax solution (inbound and outbound) to replace all individual fax machines

e Maintenance and management of all direct extensions; from multiple locations and multiple
administrators; to include all outbound and inbound calls to the City of Nashua, NH site

« Full resilience of voice lines

« Redundant systems with fail over for high availability

*e Leverage the fiber optics network investment

*® Support required 24X7X365 with 2 hour response for complete data/voice loss and 4 hour
response times for less critical issues

229 Main Street | Nashua, New Hampshire OSO6C » Phone (603) 589-330C - Fax (603) 594-3494

The City received seven extensive proposals as a result of the RFP. The project team was composed of
representatives from Police, Fire, City !T, School District and Emergency Management. The team
reviewed the proposals in detail, narrowing their decision down to two vendors. These two vendors
performed site visits and made presentations to the tear.

As a result of an in-depth review, the project team selected Custom Computer Specialists, Inc. for the
Telecom solution.

The selection criteria and the weights associated with each criterion are in the chart below.

EMPHASIS

| Scala
0 !Fails ta Fit
Fit

4 Good Fit

The ranking is shown in the chart Delow.

Firm Evaluation Matrix

Telephone Network Custom Computer CT. Communicettan Metroporiten
Reviewer Technotogres Spectailea Technologies cen ema Telephone Signet
School Deparrren| 24 [420 2.62 246 4
Civ IT Divielan 272 | 396 337 10 Ral
Fire 339 ad i35 3.40 [1.62
Police | 2 2 64 18 253 Sf
Clty IT Technical 22 | 376 57 338 04
oo [009 y_O.n0 ooo _0.00
oo oo 40 0.00 on
Average Rating 2.08 2.70 206 247 2.05 1.90 4.21
Regards,

besa b Cope

Bruce R. Codagnone
CIO/IT Division Director

229 Main Steet * Nashua, New Hampshire O3OGC | Phone (603) 589-330( « Fax (603) 594-3424

CONTRACT FOR PRODUCT AND PROFESSIONAL SERVICES

TITLE: RFP0909-020416 CITY-WIDE TELECOMMUNICATIONS

A CONTRACT BETWEEN

THE CITY OF NASHUA, 229 MAIN STREET, NASHUA, NH 03061-2019

AND

CUSTOM COMPUTER SPECIALISTS, INC., 6 BLACKSTONE VALLEY PLACE, SUITE 402, LINCOLN,
RI 02865

WHEREAS, the City of Nashua, a political subdivision of the State of New Hampshire,
from time to time requires product and services for a City-wide Telecommunications project; and

WHEREAS, it is deemed that the product and services herein specified are both necessary
and desirable and in the best interests of the City of Nashua;

Now, THEREFORE, in consideration of the agreements herein made, the parties mutually
agree as follows:

1. DOCUMENTS INCORPORATED. The following exhibits are by this reference incorporated
herein and are made part of this contract:

Exhibit A--General Conditions for Contracts
Exhibit B—Product and Scope of Services

The Contract represents the entire and integrated agreement between the parties and supersedes
prior negotiations, proposals, representations or agreements, either written or oral. Any other
documents which are not listed in this Article are not part of the Contract.

In the event of a conflict between the terms of the Proposal and the terms of this Agreement, a
written change order and/or fully executed City of Nashua Purchase Order, the terms of this
Agreement, the written change order or the fully executed City of Nashua Purchase Order shall
control over the terms of the Proposal.

2. WORK TO BE PERFORMED Except as otherwise provided in this contract, Custom Computer
Specialists, Inc. shall furnish all services, equipment, and materials and shall perform all
operations necessary and required to carry out and perform in accordance with the terms and
conditions of the contract the work described.

3. PERIOD OF PERFORMANCE. Custom Computer Specialists, Inc. shall commence work on a
mutually agreed upon date and complete all work within the time periods set forth and may only

AG 1 of 3

be altered by the parties by a written agreement to extend the period of performance or by
termination in accordance with the terms of the contract. Custom Computer Specialists, Inc.
begin the project upon receipt of an Executed Contract and a valid Purchase Order issued from
the City of Nashua.

4. COMPENSATION. Custom Computer Specialists, Inc. agrees to perform the work for a total

cost of
Dollars ($ )

Custom Computer Specialists, Inc. shall submit monthly requests for payment for product and
services delivered and performed under this agreement directly to:

City of Nashua

Attn: Accounts Payable
PO Box 2019

Nashua, NH 03061-2019
Atten:

To facilitate the proper and timely payment of invoices, the City of Nashua requires that all
invoices contain a valid PURCHASE ORDER NUMBER.

Requests for payment shall be submitted no later than fifteen (15) days after the end of each
month and must include a detailed summary of the expenditures reported in a form that supports
the approved budget. The forms shall include the project purchase order number, a listing of
equipment delivered, services and other expenditures for which payment is sought.

Product shall be invoiced upon receipt and acceptance of the equipment. Cabling Services and
Professional Services shall be invoiced upon completion and acceptance of services by the
designated representative of City of Nashua.

The City of Nashua will pay for work satisfactorily completed by Custom Computer Specialists,
Inc. The City of Nashua will pay Custom Computer Specialists, Inc. within 30 days of approval
by the City of Nashua of the submitted invoice forms. The City of Nashua will make no
payments until the invoice forms have been submitted and approved.

5, EFFECTIVE DATE OF CONTRACT. This contract shall not become effective until and unless
approved by the City of Nashua.

6. NOTICES. All notices, requests, or approvals required or permitted to be given under this
contract shall be in writing, shall be sent by hand delivery, overnight carrier, or by United States
mail, postage prepaid, and registered or certified, and shall be addressed to:

CITY OF NASHUA REPRESENTATIVE: REPRESENTATIVE:

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