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Friday, Nov. 28, 2014

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Thursday, September 27, 2001

Letter to the board

I am writing in regard to the manner in which the Board of Education recently conducted its procurement of insurance coverage.

The history as I know it to be is this:

The Board of Education hired Charlesworth & Associates LC to review the Sikeston Public Schools insurance program, prepare bid specifications, assign markets for agent consideration, correspond with agents, review submitted bids and to make a recommendation to the Board of Education for insurance coverage placement. For these services the consultant was paid $12,900 of the taxpayers' money.

At the direction of the Board the consultant sent bid packets to six agencies, including The First National Insurance Agency (TFNIA). Each agency was requested to submit the names of the top three carriers from which bids would be quoted by their agency. Four of the agencies submitted Zurich as their number one choice. TFNIA, as the sole local agency participating in this process, was one of the four agencies ranking Zurich as their first choice. The reason behind Zurich's popularity is no secret. Zurich has the only viable program available to the agents at this time to serve the client's needs. The assignment of Zurich to an agency was made by drawing names from a hat. A Jefferson City agency won the draw for Zurich. Other assignments were then made.

One of the two carriers assigned to TFNIA could not provide all of the requested coverage. The second carrier's pricing is known to be uncompetitive. TFNIA - a local company employing 10 tax-paying Sikeston residents - was effectively shut out of the process. I contacted your insurance consultant as required in the bid specifications and requested that the two non-viable TFNIA assignments be exchanged for the Zurich assignment. Your consultant recognized that the "pulling a name out of a hat" method of assignment worked to the detriment of the Sikeston community by sending our tax dollars out of town unnecessarily. He agreed to the reassignment based on the validity of my request.

At some time during the six days following the reassignment decision, the consultant was contacted by the president of the Board of Education and instructed to revert to the original assignment. This was done because an agency violated the bid specs by contacting a board member directly. When I learned of this action, I contacted every member of the Board, urging each of you to support your consultant's decision allowing our agency - the only local agency - to quote and work with Zurich. Instead of following the recommendations of the consultant we paid for, you chose to override him. Why hire him in the first place if you were not going to follow his recommendations and your own bid specifications?

Ultimately, only two bidders presented proposals to the Board. Why? Because the other four bidders knew that Zurich was the only viable choice and there wasn't any point in submitting any other bid. Our agency did participate in the bidding, but it was no surprise to me that when the bids were opened, Zurich had the best quote at $128,418. The Wallstreet Agency in Jefferson City was awarded the bid for property and liability coverage. Had TFNIA been allowed to submit the Zurich bid, the quote and the coverage would have been identical. What would have been different is that a local company providing our local school district with local service, and which pays local taxes and provides jobs and financial support for local families, who then in turn support other local businesses and pay taxes that also support the Sikeston R-6 Public School District, would have been the successful bidder.

Our agency, family and employees have been paying taxes that help support the Sikeston R-6 School District since 1920. It seems reasonable to expect tax-supported entities to make every effort to do business with the very citizens that provide support to that entity, all else being equal. That is exactly what would have happened in this case if not for the action of the Board. Instead, our hard-earned tax dollars are supporting an agency and a community 250 miles away.

I urge the Board of Education to develop and implement a local vendor preference policy. I am not asking that local businesses receive additional consideration to the detriment of our school district's budget or insurance coverage matters. The City of Sikeston has such a local vendor preference policy, and rightfully so. What could possibly be wrong with keeping local money at home in the hands and wallets of local people as much as possible? In fact, I am unsure of what might motivate members of the Board of Education to do otherwise. Please consider this letter a formal request to establish such a policy.

Sincerely,

Charles R. Scott Jr., CIC

Agency manager