REPORT TO COUNCIL
SUBJECT
Title
Award of a Three-Year Contract in the Amount of $345,000 to Carl Warren & Company, LLC for Third-Party Claims Administrator Services (F25-239)
Report
REPORT IN BRIEF
Approval is requested to award a three-year contract in an amount not to exceed $345,000.00 to Carl Warren & Company, LLC of Anaheim to provide third-party claims administrator services. Approval is also requested to authorize the City Manager to increase the not-to-exceed amounts and extend the contract for up to two additional one-year periods, with both actions subject to budget availability, demonstrated need, acceptable pricing, and satisfactory service.
EXISTING POLICY
Pursuant to Chapter 2.08 of the Sunnyvale Municipal Code, contracts for this type of service are awarded pursuant to a Request for Proposals (RFP) best value process, unless otherwise exempt from the competitive bidding process. Additionally, City Council approval is required for the procurement of goods and/or services exceeding $250,000 in any one transaction.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
BACKGROUND AND DISCUSSION
The Liability Program manages administration of claims filed against the City, ensuring compliance with state tort claim laws. The City is self-insured for liability exposures with a current self-insured retention of $1,000,000. The City is a member of an excess liability risk pool, which provides coverage to the City for claims in excess in $1,000,000. The City receives an average of 100 to 120 total claims per year. To effectively manage these claims, the City partners with a third-party administrator (TPA). The TPA supports the City’s Risk Manager and other City staff by handling day-to-day claims administration. This includes:
• Managing general liability, automobile liability, and property liability claims
• Conducting investigations and gathering information
• Tracking, reporting, and analyzing claims data
• Managing subrogation and recovery efforts
• Overseeing liability trust account activity
This structure allows the City to effectively manage liability exposures, monitor costs, and maintain accountability in the administration of claims. A Request for Proposals (RFP) was issued on March 14, 2025. The RFP was posted on the City’s DemandStar public procurement network, and four proposals were received.
The written proposals were evaluated by a committee from Human Resources and the City Attorney’s Office. Each component of third-party claims administrator services was evaluated separately to determine which proposers offered the best solutions for the City. Three firms were selected to be interviewed.
Based on the evaluation of the written proposals and the subsequent interviews, the committee selected Carl Warren & Company, LLC (Carl Warren) due to its extensive experience as a TPA managing general, automobile, and property liability claims. Carl Warren is the City’s current TPA, which provides continuity in claims management processes and ensures consistency in handling liability exposures. The firm’s experience with the City, combined with its specialized expertise in municipal claims administration, was a key factor in the committee’s selection. This relates to workplan item GO-10 to “Improve liability claims and management” and this contract will ensure that the assigned claims adjustor will effectively process claims and respond to claimants on behalf of the City.
FISCAL IMPACT
Funding for the TPA claims administration services is budgeted in Fund 645 - Property and Liability Insurance Fund. This is an Internal Service Fund established to capture liability and property insurance costs separately and is funded by direct transfers from other City funds.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Take the following actions:
- Award a three-year contract in substantially the same form as Attachment 1 to the report in the amount not to exceed $345,000 to Carl Warren & Company, LLC;
- Authorize the City Manager to increase the not-to-exceed contract amount, subject to budget availability, if needed to cover additional investigations or claim case increases, at the rates set forth in the agreement;
- Authorize the City Manager to execute the contract when all necessary conditions have been met; and
- Delegate the authority to the City Manager to extend and fund the contract for two additional one-year periods at the rates set forth in the agreement, subject to budget availability and if services and pricing remain acceptable to the City.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: David Battaglia, Purchasing Officer
Reviewed by: Matthew Paulin, Director of Finance
Reviewed by: Tina Murphy, Director of Human Resources
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Draft Service Agreement