Historically Underutilized Historically Underutilized Business ProgramBusiness Program

Texas Department of InsuranceSpecial Deputy Receiver Program

January 2008

Good Faith EffortGood Faith Effort

The Texas Department of Insurance encourages equal business opportunities with all businesses and promotes the Historically Underutilized Business (HUB) program by making a good faith effort to utilized minority and women owned business in the procurement process.

Main Topics of DiscussionMain Topics of Discussion

HUB Subcontracting Plan (HSP) How to Complete When to Complete Disqualifying Factors

Amending an HSP

Administering an HSP

Mentor Protégé Program

The HUB Subcontracting PlanThe HUB Subcontracting Plan

(HSP)

HUB RequirementsHUB Requirements

The Texas Department of Insurance (TDI) and the Commissioner as Receiver have determined that subcontracting is a probability with Special Deputy Receiver Contracts.

…….. The HSP .. The HSP

Subcontracting is not mandatory

Completing the HSP is mandatory

…….. The HSP.. The HSP

All RFP Respondents must submit a completed HSP packet before the RFP deadline to be considered compliant.

HSP Instructional VideoHSP Instructional Video

http://www.window.state.tx.us/procurement/prog/hub/hub-subcontracting-plan/

In Review

If SubcontractingIf Subcontracting

1 – Respondent and Solicitation Information2 – Subcontracting Intentions - Check “Yes”3 – Subcontracting Opportunity 4 – Mentor Protégé Program - Optional5 – Professional Service Contracts Only - Optional6 – Notification of Subcontracting Opportunities7 – HUB Firms Contacted for Opportunities8 – Subcontractor Selection

10- Affirmation

Complete Sections…………………Complete Sections…………………

If If NOTNOT Subcontracting Subcontracting

1 – Respondent and Solicitation Information

2 – Subcontracting Intentions - Check “No”

9 – Self Performance Justification

10 - Affirmation

Complete Sections…………………Complete Sections…………………

Disqualifying FactorsDisqualifying Factors

All supporting documentation must be included with RFP and HSP response by the RFP deadline.

All Subcontracting categories must be listed on Page 1, Section 2.

Page 2, Sections 3 through 7 must be completed for each subcontracting opportunity listed on Page 1, Section 2.

Disqualifying FactorsDisqualifying Factors

Subcontractors must be given five (5) working days from their receipt of notice to respond.

Minority Organizations must be notified five (5) working days prior to the submission of your response.

Disqualifying FactorsDisqualifying Factors

Failure to attach supporting documentation demonstrating evidence of the good faith effort performed for all subcontractors contacted will disqualify the RFPwill disqualify the RFP.

Examples: letters, phone logs, fax transmittals, electronic mail, etc.

QuestionsQuestions

HSP AmendmentsHSP Amendments

When do you amend a HSP?When do you amend a HSP?

If a SDR decides to subcontract after the contract has been awarded

If at any time during the contract the SDR wants to use a subcontractor not identified in the HSP.

If Liquidation Oversight expands the scope of work and determines that additional subcontracting is required.

How to Amend a HSP?How to Amend a HSP?

The SDR will submit a cover letter requesting change and explanation for change.

The SDR will submit a revised or new HSP form.

The SDR must ensure that the HSP is complete and accurate.

The SDR must ensure that the HSP is approved by Liquidation Oversight prior to initiating a purchase for goods or services with the subcontractor.

If the selected contractor subcontracts any of the work without prior authorization and without complying with the HSP requirements, the contractor would be deemed to have breached the contract and be subject to any remedial actions.

Texas Government Code, Chapter 2161

Agencies may report nonperformance relative to its contracts to the Comptroller of Public Accounts.

HSP Amendment ApprovalHSP Amendment Approval

Liquidation Oversight shall approve changes by providing SDR with written approval.

The reasons for amendments or other written approval must be recorded in the contract file.

QuestionsQuestions

HSP ComplianceHSP Compliance

Special Considerations Special Considerations

Employees and Contractor Relationships with Companies in Receivership.

The HSP should not include former employees of the company in receivership, vendors and contractors with whom the company had a pre-receivership relationship even if this relationship is extended or continued by the SDR.

Special CircumstancesSpecial Circumstances

Example1. Expenses related directly to the

adjudication and litigation of claims such as defense costs or other costs that are incurred as a result of the benefits under a policy of insurance or are direct claim adjudication expenses.

Special CircumstancesSpecial Circumstances

Example 2.

Expenses necessary for the continued operation of the company in receivership such as equipment leases, rent, utilities, payroll and employee benefits, office supplies, computer maintenance and similar expenses that would be considered normal business operating expenses of the insurance company.

Miscellaneous One-Time PurchasesMiscellaneous One-Time Purchases

The SDR may have expenses necessary for the operation of the receivership that would constitute one time expenses less than $2,000 for which the SDR would not require a contract for the good or service.

This type of miscellaneous expenses would be included on the Expense Report under ‘Other Vendors/Expenses’. All expenses will be reviewed and approved by Liquidation Oversight to ensure compliance.

Subcontractors contract relationshipsSubcontractors contract relationships

The HSP should not include any vendors or subcontractors hired by the SDR’s subcontractors.

Miscellaneous Administrative FeesMiscellaneous Administrative Fees

The HSP should not include non professional vendor expenses related to the continuing administration of the receivership for which the SDR would not seek a contract such as:

bank charges Insurance or reinsurance premium Liquidation oversight and special master fees third party server hosting court fees records storage, and other miscellaneous payments.

Liquidation Oversight Mandatory Liquidation Oversight Mandatory VendorsVendors

The HSP should not include vendors that the Liquidation Oversight Division requires the contractor to use.

QuestionsQuestions

HSP ReportingHSP Reporting

Monthly HUB Assessment ReportsMonthly HUB Assessment Reports

The SDR must submit monthly HUB progress assessment reports.

The assessment reports are based on the information submitted in the HSP response.

The SDR is required to amend the HSP as the needs of the receivership operation become apparent and additional subcontractor's) are required.

Monthly HUB Assessment ReportsMonthly HUB Assessment Reports

Any amendments to the HSP must be reviewed and approved by the Liquidation Oversight.

All subcontractors added to the HSP must be included on subsequent monthly progress reports.

HUB HSP DocumentationHUB HSP Documentation

The SDR must maintain copies of the HSP documentation throughout the life of the contract. The SDR must report subcontracting activities for all subcontractors included in the HSP.

Monthly Expense ReportsMonthly Expense Reports

The SDR is required to submit a monthly statement of expenses. This statement must include all contractors and vendors that are named in the exhibit to the SDR’s contract in the ‘Subcontractor’ section.

Expenses that are not required under the HSP process should be reported in the ‘Other Vendors/Expenses’ section. The SDR should maintain records on each vendor paid documenting the status of the vendor and the justification for any vendors that was excluded from the HSP process.

Monthly Expense ReportsMonthly Expense Reports

The SDR is also required to submit a Cost Benefit Analysis (CBA) to Liquidation Oversight for approval of expenses.

When submitting a CBA for a project involving a new contractor the SDR must specify the status of the recommended vendor and document its efforts in obtaining a HUB using the HSP forms. If the vendor does not qualify as a SDR subcontractor, the SDR must document why.