Thank you for your balanced coverage of the town of Smithfield's improper termination of our contract to manage the town's employee health insurance program.We would like to respond to and clarify some key points:
For about 15 years, JRW Associates has successfully managed the town's employee-benefits program - and contained its costs - as Smithfield's agent of record with the town's chosen medical insurance carriers.
Far from charging too much, as some have wrongly claimed, JRW has saved Smithfield hundreds of thousands of dollars by aggressively negotiating low health-insurance rates for the town's employees. In the past four years alone, JRW saved the town more than $400,000, as documented in a formal report provided to town officials. We provide superior service at a reasonable cost, which is good for Smithfield, its employees and its taxpayers. For example, a July 14, 2010, email from the town manager to the mayor and town council noted that while Blue Cross raised rates an average 12 percent that year, the town's rate rose only 3 percent, with no reduction in benefits. The town manager credited the savings in large part to "the hard work of our partners at JRW."
Without regard for our excellent service under a continuing five-year agreement, the interim town manager proposed cancelling our contract and retaining another provider. Based on incomplete and misleading information, a majority of the members on Smithfield's Town Council voted to terminate JRW without prior notice or any opportunity for JRW to participate in the interim manager's flawed, ad-hoc "bidding" process.
As your reporting noted, the interim town manager's process to replace us as the town's broker bypassed the customary clear statement of the services being sought, a public request for bids, a careful evaluation of the qualifications of each bidder and a thorough, open comparison of each bidder's offer of price vs. services.
As you also noted, the winning bid was one sentence long and provided no description or guarantee regarding any specific services to be provided to the town. In contrast, JRW's contract with the town ran six full pages and included considerable detail regarding the services we provide.
That the bid process was flawed is revealed in the interim manager's Oct. 10 memo to the mayor and town council, in which he acknowledged having informal discussions with each "bidder" during the process, instead of documenting a neutral, arm's-length process in writing, as is customary.
According to the memo, the interim manager disclosed the first bidder's initial offer to another prospective bidder. The memo also states that the manager reviewed yet another bidder's offer with him as soon as it was submitted. And the memo states that the winning bidder lowered his offer 60 percent while the discussions were going on - and did so only after the interim manager reminded the bidder to submit his revised offer. Furthermore, the record shows that the winning bid is dated five days after the next-lowest bid.
In contrast with such a haphazard process, from January to May of this year, representatives of the town and JRW met five times, for three to five hours each time, to finalize JRW's 2011-2012 contract and work plan. During that process, JRW fully disclosed its commission fees, which were then incorporated into the total amount that the medical insurance carrier billed the town. The current medical insurance provider, not the town, issued JRW's payments.
The town's purported justification for terminating JRW's contract is that the wrong town administrator signed it, which we dispute. But in any case, that rationale is hardly fair to JRW, which did nothing wrong and worked in good faith with various town officials over many years. The town, not JRW, was responsible for ensuring that the correct town officials followed correct procedures on behalf of the town, including signing the agreement with JRW.
We believe the interim manager's claimed savings of about $58,000 from wrongfully breaching our contract are incorrect and disregard a likely plunge in service to the town. Indeed, the interim town manager's Oct. 10 memo noted that he verbally solicited quotes for "just the basic service to manage our accounts on an as-needed basis."
Despite the town's breach of JRW's contract, the company would like to continue serving the employees and citizens of Smithfield. We will seek a mediation conference and to avoid litigation. We believe that if the town council is provided with all the relevant facts, it will do the right thing for the town, its employees and its taxpayers, and honor its agreement with JRW.
Randy Willis
CEO, JRW Associates Inc., Raleigh
For about 15 years, JRW Associates has successfully managed the town's employee-benefits program - and contained its costs - as Smithfield's agent of record with the town's chosen medical insurance carriers.
Far from charging too much, as some have wrongly claimed, JRW has saved Smithfield hundreds of thousands of dollars by aggressively negotiating low health-insurance rates for the town's employees. In the past four years alone, JRW saved the town more than $400,000, as documented in a formal report provided to town officials. We provide superior service at a reasonable cost, which is good for Smithfield, its employees and its taxpayers. For example, a July 14, 2010, email from the town manager to the mayor and town council noted that while Blue Cross raised rates an average 12 percent that year, the town's rate rose only 3 percent, with no reduction in benefits. The town manager credited the savings in large part to "the hard work of our partners at JRW."
Without regard for our excellent service under a continuing five-year agreement, the interim town manager proposed cancelling our contract and retaining another provider. Based on incomplete and misleading information, a majority of the members on Smithfield's Town Council voted to terminate JRW without prior notice or any opportunity for JRW to participate in the interim manager's flawed, ad-hoc "bidding" process.
As your reporting noted, the interim town manager's process to replace us as the town's broker bypassed the customary clear statement of the services being sought, a public request for bids, a careful evaluation of the qualifications of each bidder and a thorough, open comparison of each bidder's offer of price vs. services.
As you also noted, the winning bid was one sentence long and provided no description or guarantee regarding any specific services to be provided to the town. In contrast, JRW's contract with the town ran six full pages and included considerable detail regarding the services we provide.
That the bid process was flawed is revealed in the interim manager's Oct. 10 memo to the mayor and town council, in which he acknowledged having informal discussions with each "bidder" during the process, instead of documenting a neutral, arm's-length process in writing, as is customary.
According to the memo, the interim manager disclosed the first bidder's initial offer to another prospective bidder. The memo also states that the manager reviewed yet another bidder's offer with him as soon as it was submitted. And the memo states that the winning bidder lowered his offer 60 percent while the discussions were going on - and did so only after the interim manager reminded the bidder to submit his revised offer. Furthermore, the record shows that the winning bid is dated five days after the next-lowest bid.
In contrast with such a haphazard process, from January to May of this year, representatives of the town and JRW met five times, for three to five hours each time, to finalize JRW's 2011-2012 contract and work plan. During that process, JRW fully disclosed its commission fees, which were then incorporated into the total amount that the medical insurance carrier billed the town. The current medical insurance provider, not the town, issued JRW's payments.
The town's purported justification for terminating JRW's contract is that the wrong town administrator signed it, which we dispute. But in any case, that rationale is hardly fair to JRW, which did nothing wrong and worked in good faith with various town officials over many years. The town, not JRW, was responsible for ensuring that the correct town officials followed correct procedures on behalf of the town, including signing the agreement with JRW.
We believe the interim manager's claimed savings of about $58,000 from wrongfully breaching our contract are incorrect and disregard a likely plunge in service to the town. Indeed, the interim town manager's Oct. 10 memo noted that he verbally solicited quotes for "just the basic service to manage our accounts on an as-needed basis."
Despite the town's breach of JRW's contract, the company would like to continue serving the employees and citizens of Smithfield. We will seek a mediation conference and to avoid litigation. We believe that if the town council is provided with all the relevant facts, it will do the right thing for the town, its employees and its taxpayers, and honor its agreement with JRW.
Randy Willis
CEO, JRW Associates Inc., Raleigh
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