Whichever way one looks at it, it is clear that the issue of the insurance coverage windstorm, hail, boiler machinery for the Brownsville Independent School District is not resolved.
The BISD trustees have never really voted to extend the coverage for 90 days with the current carrier, McGriff and Seibels and Williams of Houston, Texas, but it has carried on by its own inertia. As far as many are concerned, the Competitive Sealed Proposal (CSP) is still active.
But board members obviously weren't satisfied that the bidding process was properly followed and only grudgingly allowed McGriff to continue after Chief Financial Officer Lucio Mendoza took it off their hands and took upon himself to exercise his "fiduciary" responsibility to protect the district.
The district went out for bids on December 10, 2014 and its coverage ran out January 31, 2015.
What we do know is that the lucrative insurance award was continued with McGriff after Mendoza decided it was his – not the board's – responsibility to protect the district.
He sent then-Superintendent Carl Montoya that opinion in a memo, Montoya approved it and – based on their decision, directed Purchasing director Rosario Peña to issue a Purchase Order and payment P238491 made out for $3,277,604.54. (Click on graphic to enlarge)
That came back to the district and then the administration opted for the 90-day extension for $1.3 million, or about 35 percent of the annual premium. This included windstorm coverage although the hurricane season doesn't start until June 1. Think about that.
The district will pay more than one third of the annual $3.2 million premium to McGriff, the same company that has held that contract for the past eight years without any competitive bidding. This, by the way, is the same company that the BISD took to court after its carriers had refused to pay the district for damages to its facilities after a hurricane. In emails releassed in the course of the case, insurance company executives make numerous racially discriminating remarks about the BISD and its administrators.
This year, McGriff was joined in the bidding by three other companies. One was Bordon's Insurance of Corpus Christi and the others were the Montalvo Insurance Agency of Weslaco and the Klement Agency of Prosper and Harlingen.
At an insurance meeting BISD's Employee Benefits/Risk Management administrator Judy Cuellar advised Klements and Montalvo that their were judges to be non-bids and cited an opinion by the Texas Attorney General's and one by the Texas State Board of Insurance.
The gist of her reasoning is that a school district can not just select one agent and then let him get the bids. One agent does not have enough markets etc and the district could not get the best deal they could.
This, of course, favored McGriff, who had gone out ahead ahead of the bid in November. They contacted the markets that would write windstorm insurance in Cameron county for a school district (roughly 30 companies). The prior year, they had 13 companies sharing the risk already, so it is not too much of a stretch for McGriff to to get the market locked up ahead of the other competitors. BISD attorney Baltazar Salazar even opined that McGriff has a monopoly on the windstorm insurance contracts locally.
That is not all that doesn't pass the smell test with McGriff and Bordon's bids.
Competitors noticed that both McGriff and Bordon's listed the exact companies in their bids. The Bordon quote, they deduced, was just a ruse to be able to say another quote was turned in. The quotations match exactly, except the premium is higher with Bordon. McGriff, they suspect, knew that their position was in danger and had a plan B in case BISD, just did not want to do business with them.
The board also learned through public comments that McGriff was charging an extra 180,000 – 220,000 per year on top of their commissions. It is estimated that they got paid about $570,000 on the BISD account the 2014-2015 school year. They supposedly went out for bids on November 3, 2014 and turned in their quote on November 20, – $570,000 for 17 days of work is not all that bad.
The real issue is that the state requires that school districts purchase their coverage by going out for bids, or purchasing through an interlocal contract such as the one BISD has with the Texas Cooperative Purchasing Network (TCPN). But even then, the role played by McGriff as both a risk manager for the district and an agent receiving commissions from their client has been prohibited by the state insurance board.
The State does not allow an Agency/Agent to act in a dual capacity as both a Risk Manager and an Agent receiving commissions on the same line of business. The agent if acting as a risk manager represents the client and is paid by the client with signed disclosure forms. An agent that places insurance business, is paid commission and is an agent the insurance company.That move is also seen as bordering on the illegal.
Cuellar went into great detail about first having the TCPN quote from McGriff and who made the decision to utilize the TCPN – yet left her name out of any decisions and acted as a mouthpiece for all the actions without attributing under whose authority she was acting.
TCPN has a contract with McGriff for Risk Management Services ( Risk Manager). The State of Texas has an insurance license for this and they also have one for an agent. McGriff holds both. The Risk Manager is hired by the customer (BISD) and is paid a fee for their work. They represent the customer. An agent represents the insurance company – they are paid by the insurance company by commission.
TCPN does not sell insurance, nor do they hold any type of insurance license to sell insurance. It is speculated that since McGriff could not secure the votes, they figured to go to plan B: Use the TCPN and say they went through a interlocal government contract to buy the insurance. That way, they don’t need a vote. BISD attorney Baltazar Salazar stated that no laws were broken. But if TCPN is not authorized to sell insurance and McGriff is acting like an agent, and yet is authorized to be a risk manager, then the entire purchase is invalidated.
If the BISD administration and McGriff have used the TCPN subterfuge for the past three years, it is obviously an attempt to bypass the bidding process.
The Texas Dept. of Insurance quotes from this in Bulletin B-41-07 making it clear that McGriff may have acted illegally in its dual role. http://www.tcpn.org/Contracts/
Obviously, many questions still remain on how it came to be that the BISD administrators (and some board members?) may have deliberately steered the $3.3 million contract McGriff's way not just this year, but also in the past. If that is the case, some people may have trouble sleeping these days.
The BISD trustees have never really voted to extend the coverage for 90 days with the current carrier, McGriff and Seibels and Williams of Houston, Texas, but it has carried on by its own inertia. As far as many are concerned, the Competitive Sealed Proposal (CSP) is still active.
But board members obviously weren't satisfied that the bidding process was properly followed and only grudgingly allowed McGriff to continue after Chief Financial Officer Lucio Mendoza took it off their hands and took upon himself to exercise his "fiduciary" responsibility to protect the district.
The district went out for bids on December 10, 2014 and its coverage ran out January 31, 2015.What we do know is that the lucrative insurance award was continued with McGriff after Mendoza decided it was his – not the board's – responsibility to protect the district.
He sent then-Superintendent Carl Montoya that opinion in a memo, Montoya approved it and – based on their decision, directed Purchasing director Rosario Peña to issue a Purchase Order and payment P238491 made out for $3,277,604.54. (Click on graphic to enlarge)
That came back to the district and then the administration opted for the 90-day extension for $1.3 million, or about 35 percent of the annual premium. This included windstorm coverage although the hurricane season doesn't start until June 1. Think about that.
The district will pay more than one third of the annual $3.2 million premium to McGriff, the same company that has held that contract for the past eight years without any competitive bidding. This, by the way, is the same company that the BISD took to court after its carriers had refused to pay the district for damages to its facilities after a hurricane. In emails releassed in the course of the case, insurance company executives make numerous racially discriminating remarks about the BISD and its administrators.
This year, McGriff was joined in the bidding by three other companies. One was Bordon's Insurance of Corpus Christi and the others were the Montalvo Insurance Agency of Weslaco and the Klement Agency of Prosper and Harlingen.At an insurance meeting BISD's Employee Benefits/Risk Management administrator Judy Cuellar advised Klements and Montalvo that their were judges to be non-bids and cited an opinion by the Texas Attorney General's and one by the Texas State Board of Insurance.
The gist of her reasoning is that a school district can not just select one agent and then let him get the bids. One agent does not have enough markets etc and the district could not get the best deal they could.
This, of course, favored McGriff, who had gone out ahead ahead of the bid in November. They contacted the markets that would write windstorm insurance in Cameron county for a school district (roughly 30 companies). The prior year, they had 13 companies sharing the risk already, so it is not too much of a stretch for McGriff to to get the market locked up ahead of the other competitors. BISD attorney Baltazar Salazar even opined that McGriff has a monopoly on the windstorm insurance contracts locally.
That is not all that doesn't pass the smell test with McGriff and Bordon's bids.
Competitors noticed that both McGriff and Bordon's listed the exact companies in their bids. The Bordon quote, they deduced, was just a ruse to be able to say another quote was turned in. The quotations match exactly, except the premium is higher with Bordon. McGriff, they suspect, knew that their position was in danger and had a plan B in case BISD, just did not want to do business with them.
The board also learned through public comments that McGriff was charging an extra 180,000 – 220,000 per year on top of their commissions. It is estimated that they got paid about $570,000 on the BISD account the 2014-2015 school year. They supposedly went out for bids on November 3, 2014 and turned in their quote on November 20, – $570,000 for 17 days of work is not all that bad.
The real issue is that the state requires that school districts purchase their coverage by going out for bids, or purchasing through an interlocal contract such as the one BISD has with the Texas Cooperative Purchasing Network (TCPN). But even then, the role played by McGriff as both a risk manager for the district and an agent receiving commissions from their client has been prohibited by the state insurance board.
The State does not allow an Agency/Agent to act in a dual capacity as both a Risk Manager and an Agent receiving commissions on the same line of business. The agent if acting as a risk manager represents the client and is paid by the client with signed disclosure forms. An agent that places insurance business, is paid commission and is an agent the insurance company.That move is also seen as bordering on the illegal.
Cuellar went into great detail about first having the TCPN quote from McGriff and who made the decision to utilize the TCPN – yet left her name out of any decisions and acted as a mouthpiece for all the actions without attributing under whose authority she was acting.
TCPN has a contract with McGriff for Risk Management Services ( Risk Manager). The State of Texas has an insurance license for this and they also have one for an agent. McGriff holds both. The Risk Manager is hired by the customer (BISD) and is paid a fee for their work. They represent the customer. An agent represents the insurance company – they are paid by the insurance company by commission.
TCPN does not sell insurance, nor do they hold any type of insurance license to sell insurance. It is speculated that since McGriff could not secure the votes, they figured to go to plan B: Use the TCPN and say they went through a interlocal government contract to buy the insurance. That way, they don’t need a vote. BISD attorney Baltazar Salazar stated that no laws were broken. But if TCPN is not authorized to sell insurance and McGriff is acting like an agent, and yet is authorized to be a risk manager, then the entire purchase is invalidated.
If the BISD administration and McGriff have used the TCPN subterfuge for the past three years, it is obviously an attempt to bypass the bidding process.
The Texas Dept. of Insurance quotes from this in Bulletin B-41-07 making it clear that McGriff may have acted illegally in its dual role. http://www.tcpn.org/Contracts/
Obviously, many questions still remain on how it came to be that the BISD administrators (and some board members?) may have deliberately steered the $3.3 million contract McGriff's way not just this year, but also in the past. If that is the case, some people may have trouble sleeping these days.
13 comments:
Césa Lopez and Mendoza got paid under the table. Incredulous as it is the board didn't not authorize the issuance of payment in the sum of $3,000,000 plus. The article is presented in black and white factual information.
Attention: All BISD employees! The board requested that administration present the best proposal in terms of coverage and price for the district. Instead, administration disqualified any proposals that weren't with the exsisting broker. The board allowed this to happen under there watch. The savings to the district was substantial.
How were they substantial ? The district paid $900,000 more for the coverage .
The "savings" we're "substantial" because the district paid $900,000 MORE.
Shouldn't the taxpayers be allowed to view all of the proposals including the ones that were disqualified? We the taxpayers would like to compare all the bids to determine if administration and the board are working in our best interest. This deal smells bad!
Cesar Lopez has been wheeling and dealing since he worked in Purchasing as Rosie Pena's hand picked gofer employee. Not surprised after his Mercedes shenegans with American Survillance to do this corrupt scheme at BISD.
Hasn't learned.
So WHAT did El Chirinos, get... what amount. . Con dinero baila el perro.... Para sus Charlie s angels... do you really think he is not still doing the girls that he had since Porter Nation years. ..
Juanito, these guys aren't losing sleep! Cesar, Minerva, Judy, Baltlrazar, Mendoza, Chi rings are a bunch of corrupt lowlife. Heard Cesar and Mendoza were meeting at Lubys, Cesar was the instigator of this whole deal never mind what the Board had directed.
This really smells bad, and Minerva and of course Balthazar Salazar say there's nothing illegal done? How can they say they went through the TCPN when they don't sell Insurance??? No bid, 3.3 million, no board approval?? Who do they think they are fooling here? This needs to be investigated by the FBI, Texas Rangers etc.
You are correct. The district would have saved about $900,000 had they not kept the carrier.
Checks and balances BISD?
El Mendigo M. Parece la gran Kaka en la foto .
El Chirinos chingaba cuando estaba de jefe de los buses del distrito. Remangaba mas de vara con los kickbacks. Que no se haga pendejo .
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