Title
Recommendation to Authorize the City Manager to Execute Two Separate Three-Year Agreements, Each with Up to Two Optional Three-Year Extensions, with Kaiser Permanente Medical Group for Occupational Medical Services for a Total Aggregate Not-to-Exceed $780,000, and with Preferred Alliance, Inc., for Drug Testing Services in Conjunction with Services Provided by Kaiser Permanente Medical Group for a Total Aggregate Not-to-Exceed $120,000 (Total Expenditure of $900,000). (Human Resources 10025060)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) hires approximately 70 full-time employees as well as a number of part-time staff each year. Depending on the classification or position, after the conditional offer of employment, the City may require candidates to participate in a medical examination prior to hire. These medical examinations ensure the candidate can safely perform the essential functions of their position. Certain classifications are also required to have medical examinations during employment in order to be compliant with United States Department of Transportation (USDOT) regulations.
Candidates in a limited number of classifications must also pass a drug screen prior to hire. Additionally, employees who drive commercial vehicles for the City are also required by the USDOT to be subject to drug and alcohol screens during employment on the basis of random selection, reasonable suspicion, post-accident, and potentially, follow-up.
In 2015, City Council approved three-year contracts with Kaiser Permanente Medical Group to perform the medical examinations and with Preferred Alliance, Inc. to support the drug and alcohol screening testing service. These contracts allowed for two additional three-year terms. In 2018 and in 2021, City Council approved a three-year contract extension with Kaiser Permanente Medical Group and Preferred Alliance. Staff are recommending City Council to authorize the City Manager to execute new agreements with Kaiser Permanente Medical Group, and Preferred Alliance, Inc. (Preferred Alliance) effective September 1, 2024 through August 31, 2027.
BACKGROUND
In July 2014, the Human Resources Department published a Request for Qualifications (RFQ) seeking letters of interest from potential Occupational Medical Providers for the City of Alameda. The selection committee unanimously selected Kaiser Permanente (Kaiser) based on Kaiser’s experience with the public sector, particularly public safety; accessibility to all City employees with various location options; and cost effectiveness.
On September 1, 2015, City Council approved contracts with two vendors to support the City’s employee onboarding and ongoing medical examination program. The contractors were Kaiser Permanente ($200,000) and Preferred Alliance ($30,000). Both contracts were for three years with two optional extensions of up to three years each.
On July 10, 2018, the Human Resources Department presented a recommendation to City Council to extend the contracts, from September 1, 2018, through August 31, 2021, with Kaiser Permanente Medical Group in an amount not-to-exceed $230,000 and Preferred Alliance in an amount not-to-exceed $40,000. City Council approved this recommendation.
On July 20, 2021, the Human Resources Department presented a recommendation to City Council to extend the contracts, from September 1, 2021, through August 31, 2024, with Kaiser Permanente Medical Group in an amount not-to-exceed $260,000 and Preferred Alliance in an amount not-to-exceed $40,000. City Council approved this recommendation.
The City is in the ninth year of an Agreement with Kaiser for the City’s employee medical services related to onboarding medical examinations and ongoing medical screening. Compensation averages approximately $45,000 annually and in the ninth year of an Agreement with Preferred Alliance.
DISCUSSION
Kaiser is a full-service occupational medicine provider that includes pre-employment physicals, drug and alcohol testing, fitness for duty exams, and other services. The agreement also includes services for staff onboarding medical examinations and ongoing medical screening. Staff recommends execution of a new three-year agreement with the option to extend the terms by two (2) additional three-year terms.
Kaiser outsources its drug and alcohol testing services to a third-party administrator, Preferred Alliance, which is a Workplace Compliance Drug Alcohol Testing Administrator that has substantial experience administering drug and alcohol programs pursuant to USDOT regulations. As a result, the City is also required to separately contract with Preferred Alliance. Preferred Alliance contracts with a licensed laboratory that meets the requirements of USDOT regulations, and also contracts with a Medical Review Officer (MRO) that will work closely with the City in the event of positive drug or alcohol tests.
The separate contract with Preferred Alliance will be for three years and will cover the administration and testing for all City DOT-regulated employees as well as the administration of the random or post-accident drug testing for our non-DOT regulated employees. The contract will also include the cost of training provided by Preferred Alliance, which includes training of the Designated Employer Representative (DER) and Department Supervisors who are required to conduct random or reasonable suspicious drug testing. Preferred Alliance also provides various live workshops and online training that will be accessible to the City. Compensation averages approximately $11,500 annually. Staff recommends execution of a new three-year agreement with the option to extend the terms by two (2) additional three-year terms.
Both contractors have been meeting the needs of the City during the last nine years and Human Resources Department staff are now recommending to extend the contracts with Kaiser Permanente Medical Group in an amount not-to-exceed $260,000 for City employee medical examinations and follow up, and with Preferred Alliance in an amount not-to-exceed $40,000 for drug and alcohol testing services, effective September 1, 2024 through August 31, 2027. With aggregate total of the terms for Kaiser Permanente Medical Group not-to-exceed $780,000 and aggregate total of the terms for Preferred Alliance not-to-exceed $120,000.
ALTERNATIVES
• Authorize the City Manager to execute the new contracts for both Kaiser Permanente Medical Group and Preferred Alliance at the recommended amount.
• Require the City to complete a RFP for these services to identify a different vendor. This would require approval of a short-term contract with the current vendors in order to ensure the City could continue to meet the legal requirements fulfilled by these contracts for pre- and post-employment medical and drug screens during the RFP period.
FINANCIAL IMPACT
No additional funding is being requested as part of the new contract. The funds for these contracts are budgeted in the Human Resources Fund (10025060). Sufficient funding is included in the Biennial Budget Fiscal Years 2023-25 and sufficient funding will be proposed for Fiscal Year 2025-27.
Under the current contracts the Human Resources Department pays for services provided to all City departments apart from Alameda Municipal Power and the Alameda Fire Department. The total three-year agreement amounts are $260,000 to Kaiser Permanente Medical Group and $40,000 to Preferred Alliance (for a total three-year expenditure of $300,000). Each agreement has up to two optional three-year extensions so the total aggregate of both agreements is not-to-exceed $780,000.
However, the actual amount expended will be determined by the number of occurrences requiring service under the contracts. The cost of services under the recommended contract extensions will remain in effect for the three-year period effective September 1, 2024, through August 31, 2027.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code. This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the City Manager to execute two separate three-year agreements, each with up to two optional three-year extensions, with Kaiser Permanente Medical Group for occupational medical services for a total aggregate not-to-exceed $780,000, and with Preferred Alliance for drug testing services in conjunction with services provided by Kaiser Permanente Medical Group for a total aggregate not-to-exceed $120,000.
Respectfully submitted,
Jessica Romeo, Human Resources Director
By,
Nafisah Ali, Senior Human Resources Analyst
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
Exhibits:
1. The Permanente Medical Group Agreement
2. Preferred Alliance, Inc. Agreement