City Admits Flaws in Awarding Lucrative Workers’ Comp Contract

STOCKTON - A remarkable scene took place at City Hall on Feb. 23 during the Stockton City Council meeting.
 
City Council members were so dismayed with how city staff members handled a process to award a city contract worth more than $670,000 that they decided to start the process all over again. They even acknowledged that the process seemed flawed and unfair, echoing the concerns of local and state Latino business leaders speaking on behalf of a local Latino-owned small business.
 
The issue stems from a lucrative contract to handle Stockton’s workers’ compensation claims, which amount to about $6 million a year. The city asked for proposals from businesses in June with plans to award a one-year contract worth $672,720, plus a bonus worth up to $9,750.

After narrowing the search to three candidates and conducting interviews with the remaining firms, a committee made up of city officials decided to stick with the company that was currently running the city’s workers’ compensation program, Bragg & Associates, Inc. The company was picked despite the fact that it turned in an incomplete proposal.

Bragg & Associates failed to include a $2,000 bond with its proposal by the city’s deadline as required. Two other firms bidding for the contract were disqualified for not turning in complete proposals on time.

Councilwoman Susan Eggman, who first raised concerns months ago, said the selection process appeared to be unfair.

“It just leaves a bad taste in my mouth,” Eggman said.

Formerly based in Roseville, Bragg & Associates has handled Stockton’s workers’ compensation claims since 1999. The business, which was bought two years ago by New Jersey-based York Insurance Services Group, has a Stockton office. Its most recent contract with the city expired Sept. 1. The company has been overseeing the city’s claims on a month-to-month basis since.

Of the six companies that submitted proposals, two were disqualified. Intercare Holdings Insurance Services, Inc. out of Roseville was dismissed because its proposal did not include a required questionnaire. Rancho Cordova-based Corvel Corp. was also disqualified because it did not submit a bond or fee schedule, both of which are required.

In a report presented to the City Council, staff members acknowledged that the city’s Purchasing Agent, Ed Wall, accepted Bragg & Associates’ bond the day after the city’s deadline of June 25. Wall considered the explanation the company gave “acceptable,” a city staff report states.

“Bragg & Associates indicated that they currently have a bond on file with the City (proof was submitted with their proposal) and that they were under the impression that they had met the bond requirements,” the report states.

The city’s selection committee for the proposals consisted of City Council member and Vice Mayor Kathy Miller, Assistant Director of Human Resources Di Smith, Stockton Fire Chief Ron Hittle, Deputy Chief of Police Tammie Murrell, and Human Resources Program Assistant Stephanie Chain.

Smith said the committee also inquired about the bond issue as well as whether a company name change would make Bragg & Associates ineligible. But the committee was reassured by the city’s legal department that the process was legit, she said. The committee also considered starting the process over at one point but thought it would be too costly and decided to move forward, Smith added.

“It sounds like we kind of circumvented a legal process,” said Councilwoman Leslie Martin during the City Council meeting.

City Attorney Ren Nosky quickly responded, “I don’t think I agree with that. These things come up all the time during a (Request for Proposal) process. There is no such thing as a pristine RFP process.”

The City Council decided to continue its month-to-month agreement with Bragg & Associates for the next six months to give city officials time to issue another request for proposals.

“If we follow the rules that are already written down, we won’t have these issues,” said Councilman Elbert Holman, Jr.

During the City Council meeting, council members heard strong opposition from leaders of the San Joaquin County Hispanic Chamber of Commerce, the California Hispanic Chambers of Commerce and the local NAACP chapter.

They argued that the city was showing a bias in selecting the company because it was a longtime contractor with the city. They urged the city to pick the next “responsible bidder” since Bragg & Associates did not submit a complete proposal on time.

“This is demonstrating preferential treatment,” said Mark Martinez, CEO of the San Joaquin County Hispanic Chamber of Commerce, calling the process “unethical and wrong…It’s just not fair.”