Preliminary Union BOE ruling alleges favoritism

UNION, NJ — The State of New Jersey’s Office of Administrative Law has made a preliminary ruling against the Union Board of Education after the bid of a long-time vendor employed by the board was passed over and a different vendor hired.

Business and Governmental Insurance Agency, who has been employed by the Union BOE for the past 23 years, filed a petition with the Commissioner of Education on Oct. 31, challenging a determination made by the board of education to award a contract for insurance brokerage services to Willis of New Jersey, Inc. In conjunction with the petition, the petitioner filed a motion for emergent relief.

Administrative Law Judge Richard McGill has sided with BGIA, taking issue with the fact that the board rejected four vendors who submitted proposals to the board on time, while accepting Willis’s bid after it was submitted months after its due date.

In his decision, McGill cites alleged favoritism and collusion on the part of the board.

After the Business and Governmental Insurance Agency filed its petition with the Commissioner of Education in October, the matter was transferred over to the Office of Administrative Law on Nov. 1 for determination as a contested case, and oral arguments for emergent relief were later conducted at the Office of Administrative Law in Newark.

In its petition, filed by attorney Christopher Harriott, of Florio Kenny Raval, LLC, BGIA alleges that the Union BOE issued a Request for Proposal for insurance brokerage services in early 2016. In regard to the deadline of any proposal, the request stated that proposals had to be submitted by March 15, that proposals would be opened at 11 a.m., and that proposals had to be received prior to that date and time.

According to the preliminary court order obtained by LocalSource, BGIA submitted a “fully responsive proposal.” In addition, timely proposals were submitted by three other vendors to the respondent, the Union Board of Education, including Brown and Brown Metro, LLC, Atlantic Associates Insurance Agency, Inc., and Arthur J. Gallagher and Co. “Despite the four timely responses, respondent awarded the contract to Willis, which did not submit a proposal until September, 2016,” reads court documents.

According to the documents, Willis allegedly served as a consultant to review insurance options, as well as meeting with the board’s finance committee on several occasions after proposals were received from the other vendors but before the contract was awarded. “After discussing insurance options with respondent and reviewing the proposals submitted by petitioner and the other vendors, Willis subsequently submitted its own untimely response to provide insurance brokerage services.”

On Sept. 20, according to documents, the board adopted a resolution to accept Willis’s proposal. Prior to that, states the motion, the board did not receive consent to extend the deadline to award the contract beyond the sixty days set forth in N.J.S.A. 18A:18A-36. “Further, respondent did not take any action to reject the proposals of petitioner and the other vendors that submitted timely responses,” states court papers.

According to documents, BGIA — who has provided services to the board for 23 years — received notice from Flagship Dental Plans, a third-party provider of dental benefits to the board, that the agency had been removed as broker of record for respondent effective Oct. 1, 2016.

As relief, BGIA filed a motion for emergent relief seeking an order to stop the board from awarding or proceeding with any contract in regard to the Request for Proposal. The company also wants the board to rescind its contract with Willis, along with a request that the 2016 contract for insurance brokerage services be awarded to one of the four vendors who submitted timely responses to the request for proposals.

The motion also disputes the board’s claim that savings from the contract awarded to Willis would save the school district approximately $130,000.
According to court documents, the board asked Willis to submit a proposal, and they later entered into a contract with the vendor Oct. 18. “As the incumbent provider of the service in question for 23 years, petitioner has suffered real, substantial and immediate harm through the loss of the contract,” reads the motion. “Respondent acted arbitrarily, capriciously and unreasonably by awarding the contract to Willis, which did not submit a timely response to the request for proposals,” states the motion regarding the board.

But, according to court documents, the board maintains that the contract awarded to Willis would not only save the district $130,000, but that BGIA participated in the entire process and never objected to the alleged legal deficiencies in the board awarding the contract to Willis. In addition, the board maintains, Willis did not review proposals from other vendors, nor did Willis have an unfair advantage.

Willis also maintains in court papers that it never reviewed the proposals of any other vendors, and that the company was never retained by the board in a consulting capacity.

In his decision, McGill states that “the undisputed facts are that the proposals were due March 15, 2016, and that Willis submitted its proposal in September 2016,” and that “the lateness by five to six months is far removed from the periods of a few minutes that were found to be brief delay that was not a violation of the public bidding laws.”

McGill stated in his order that the board “has disregarded a gross deficiency in the proposal of Willis in that it was filed five or six months after the deadline.
Moreover, there are indications of collusion and favoritism in that Willis filed its proposal at the urging of respondent and was awarded the contract.”

In his order, McGill states that in requesting the relief, BGIA would “preserve the status quo as it is already the incumbent vendor” and that the board will not be negatively affected in any way during the interim since the company will continue to provide services. “Further, the public will be harmed if the requested relief is not granted in that a decision to allow respondent to proceed in this fashion will undermine the purpose and spirit of public bidding laws, harm the public’s confidence and discourage competition,” reads court papers.

McGill has ordered that the contract between the board and Willis be rescinded and deemed null and void. The ruling also determines that the board can award
the contract for insurance brokerage services to any of the four vendors who submitted timely responses to the request for proposals.

In a public statement put out by the board, McGill is accused by the board of putting forth gratuitous and misleading comments. “The Union Township Board of Education is very disappointed with the preliminary decision of Judge Richard McGill which is subject to final approval by the Commissioner of Education,” reads the statement. “Importantly, the Board vehemently takes exception to the Judge McGill’s gratuitous and misleading comments that there were indications of collusion and favoritism in the process seeking a health insurance broker that would benefit the taxpayers of Union Township and the employees of Union Township Public Schools.

It appears that the Board’s request for competitive quotations may have been the first time the process was followed in a number of years. The process followed by the Board was open, transparent, and time-consuming including, as required by law, adopting a resolution and publishing a notice in the newspaper setting forth in detail the reasons for awarding the contract. The process included a public presentation by all brokers. The contract approved by the Board achieved a substantial savings to the taxpayers of approximately $130,000. Also, because the contract award is derived from a fixed fee rather what has historically been commission-based, it permitted, unlike in the past, the Board to know the exact cost of employee health insurance coverage. The Board will continue its efforts to be open and transparent in awarding contracts that will benefit the taxpayers of Union Township.”

The purpose of the public bidding laws is to secure for the public “the benefits of unfettered competition,” reads court papers. “Further, the purpose of competitive bidding is not protection of individual interests of bidders but rather the advancement of the public interest in securing the most economical result by inviting competition in which all bidders are placed on an equal basis.”

The final determination may be made by Kimberley Harrington, Acting Commissioner at the state’s Department of Education. If the commissioner does not adopt, modify or reject McGill’s order, the order will become the final decision.