The City of Troy, New York, "Where Henry Hudson Turned Around."

Tuesday, July 25, 2006


It's day 9 of Carignanpalooza. We haven't yet explored any possible procurement policy violations. That's mainly due to watching the Yankees sweep Chicago (and the Playboy Channel). But Hestia Republicus is on the case.

By Politicus Ebonus Abyssus

Issues around the Carignan insurance bid continues to dominant this blog, although I would have loved to have seen the Gary Coleman interview. One issue that has been discussed though not in depth is to what extent did the City followed its own procurement policies in issuing the insurance contract. In short, the City is required to follow certain procedures in procuring services or commodities, in this case insurance.

Based on the level of the contract, the insurance bid process required competitive sealed bidding (Section 3-101.F of the City’s procurement law). While I don’t want to bore readers with the entire content of the procurement law, competitive sealed bids require a purchase description and all contractual terms and conditions (section 3-102.b), must be opened in a public place at a time and place designated in the invitation for bid (section 3-102.g), and that the invitation for bid must include the criteria under which all submitted all bids will be evaluated (section 3-102.h).

Listen to the drum roll as the suspense heightens. The City’s insurance bid violated at least these sections of the procurement policy. The City sent a two-page bid for quotes to seven different insurance companies, rather than a request for bid. While we could debate the semantics of quote versus bid, requests for bids generally have much more detail than the City provided. The request for quote also did not list the time and place for the bid opening and did not include the evaluation criteria as required for by procurement law. The bid for quote, however, did allow potential bidders to send in a letter if they could not provide quotations on the coverage.

As has been discussed, Carignan sent in a bid and Nicoll & MacChesney sent in a letter stating that they could not respond to the request for bid but could match Carignan’s bid. This begs a major question. If bids were sealed, how did Nicoll & MacChesney know they could match the Carignan bid? Oh well, that is a question for the lawyers.

Once the contract is approved by the City council, the mayor then issues a Broker of Record letter which is sent to all parties recognizing who the agent representing the city in insurance matters is. And as we know, the City Council did not vote on the contract at all and a Broker of Record letter was issued indicating that Nicoll & MacChesney held the City’s insurance.

Responses to this blog and comments from the City administration have rationalized the process by stating that it saved the City $65,000. But as we now know, the savings was less then $10,000. Talking about savings is a red herring, however. In the bid for quote, the City gave potential bidders multiple options (four for liability, three for self insured retention, and three for city buildings) to develop quotes for. Based on these options, there are 36 possible combinations. The only way to determine any savings would be to match the specific combination from the two different insurance companies. After reading Harry’s sworn testimony, I doubt that level of analysis was undertaken. And even if it was, Harry’s poor grasp of detail make it highly unlikely he would have understood the differences or been able to articulate them.

This is how the administration works. And now it is costing taxpayers more money because of the time and cost of defending the lawsuit. I wonder how that stacks up with whatever savings actually occurred?

* A ritual blood sacrifice and specific Druidic Incantations are also required

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