Summary Sheet- RFCA SUMMARY

CITY OF TEMPE
Meeting Date: 06/25/2026  
REQUEST FOR COUNCIL ACTION
Agenda Item: 8A4
ACTION:  Approve a two-year contract renewal with Allegiance Benefit Plan Management, Inc. to provide 
a Preferred Provider Organization (PPO) medical network and administration services, a Flexible Spending 
Account (FSA) administration, and a Consolidated Omnibus Budget Reconciliation Act (COBRA) 
administration services for eligible City employees and dependents.
FISCAL IMPACT:  The total cost of this two-year contract will not exceed $48,750,000. Sufficient funds 
have been appropriated in the Tempe Health Fund, Cost Centers 4167 (Employees) and 4169 (Cobra 
Participants), for anticipated expenditures during the current fiscal year and future fiscal years, contingent 
upon City Council approval of the City’s annual budget. The sources of the funds include both City and 
employee contributions to the Health Fund. The employee contribution for each of the fiscal years is 
estimated at $4,500,000 per year.
RECOMMENDATION:  Approve the contract renewal.
 
BACKGROUND INFORMATION:  (T20-062-01) City Council originally awarded the contract on March 3, 
2020, for an initial two-year period with four, two-year renewal options. This renewal request is the third of 
four renewal options.
This contract represents the services of a third-party administrator to provide a Preferred Provider 
Organization (PPO) medical network and administration services, Flexible Spending Account (FSA) 
administration, and Consolidated Omnibus Budget Reconciliation Act (COBRA) administration services for 
eligible City employees and dependents.
Key features of this contract include:

Provides for the utilization of an extensive medical network of physicians and hospitals

Administrative services associated with payment of claims as City medical plans are self-funded 
so payment must be made for the actual cost of medical claims incurred by the covered members

To limit the City’s liability, stop loss insurance is purchased to cap the City’s exposure on large 
claims

Flexible Spending Account (FSA) administration services

Combined Omnibus Budget Reconciliation Act (COBRA) administration services

Negotiated firm pricing for the two-year 
period
Contractor Performance
City staff evaluated the performance of the contractor as shown below: 
Criteria
Meets Contract 
Requirements
Does Not Meet 
Contract 
Requirements
Personnel are responsive and cooperative
x
The quality of products or services delivered
x

Timeliness of performance
x
Follow-up skills in resolving complaints or 
problems brought to their attention
x
 Promptness and accuracy of submitted invoices.
x

Renewal Pricing
Allegiance Benefit Plan Management requested a five percent increase for each year of the two-year 
renewal, representing a cumulative 10% increase.  After negotiations, the parties agreed to a 0% 
increase for the first year and a 3% increase for the second year, representing a cumulative two-year 
increase of 3%. 
ATTACHMENTS: N/A
STAFF CONTACT(S): Rebecca Strisko, Human Resources Director, (480) 350-8423
Department Director:  Laura Calder, Financial Services Director  
Legal review by:  Dave Park, Senior Assistant City Attorney
Prepared by:  Eric Kraenzle, Senior Procurement Officer