Imagine you're a procurement official who is suddenly confronted with a seismic emergency which requires bringing in a geological expert as a sole source request. The requesting department is pressuring you to sign a contract ASAP – even without the insurance in place – and time is of the essence.
What do you do?
This is a real-life scenario. In it, the purchasing agent held their ground until insurance was in place – despite immense pressure to sign without it – so that the geologist could enter the area and start monitoring. With the insurance in place and the contract signed, the geologist arrived on scene just before the earth shifted, destroying a six-lane highway, a city park, and several homes.
As media and city officials swarmed to the scene, the procurement agent was called to produce the contract and insurance. They were able to show authorization for the geologist to be onsite, and most importantly the city was insured when the disaster occurred.
The City of Burbank
Alisa DeHoyos, Purchasing Manager for the City of Burbank, was not involved in the event but considers it a learning opportunity for procurement professionals.
“Even sole proprietors doing work for an agency must have appropriate coverage,” she says. “A procurement manager’s worst nightmare is to have a catastrophic event occur, and then when the city attorney requests a copy of the insurance, you can’t locate the certificate or it isn’t compliant with the contract."
While serving as Senior Manager of Procurement at Burbank-Glendale-Pasadena Airport Authority in 2017, DeHoyos witnessed what could potentially have been a procurement nightmare.
“We were meeting in Hollywood Burbank Airport’s Sky Room, and it was pouring rain outside. The sky was a dark grey,” DeHoyos recalls. “Everyone’s cell phone was going off at the same time, and people were rushing out of the room. An airplane had skidded off the runway and went into the Engineered Material Arresting System (EMAS), which prevented it from going onto Hollywood Way.”
Fortunately, there were no injuries. The biggest damage to the airport facility was the EMAS system, and DeHoyos had already implemented PlanetBids’ Insurance Certification module as part of the airport’s contracted automation.
“We had all of the insurance paperwork, and the airline’s insurance covered the replacement of the EMAS system,” DeHoyos recounts. “Everything operated exactly as it was supposed to.”
When DeHoyos was hired by the City of Burbank in 2022, insurance tracking was done semi-manually. She knew from experience that it needed to be fully automated.
“When you have so many projects you are tracking on an Excel spreadsheet, a deadline for renewal can easily be missed,” she says. “Insurance is a thorn in the side of any agency, but it should be at the top of any checklist because vendors must be required to indemnify the agency. If you have a good indemnification clause in your terms and conditions, both the agency and the vendor are protected.”
DeHoyos led the charge to automate the tracking process that notifies procurement, the vendor, and the broker when insurance is going to expire. But ensuring vendors also have the appropriate amount of liability coverage is just as important
“It’s a training issue,” says DeHoyos. “Sometimes small businesses don’t really understand the risks, and while we want to give these vendors the opportunity to work with the government and make money, we have to help them understand the risks before they submit a bid.”
Staff should also be fully aware of the coverage types and amounts needed for different procurements. It's not a one-size-fits-all type of process.
DeHoyos is currently working with the City of Burbank's Risk and Legal teams on updating work-risk categories for the City.
“We should have a review for each service category,” she explains. “The risks for hazardous waste hauling, for example, are much different than bus transportation for a Parks and Recs program, which requires a much different type of coverage, even though both are transportation-related.”
Burbank is a city of 105,000 residents, but on any given day there are about 300,000 people within its boundaries. The city is home to The Walt Disney Studios, Warner Bros. Studio, Nickelodeon Animation, and other film studios – and daily throngs of people travel to Burbank to enjoy the entertainment.
“Their being here is a privilege for us, and we need to provide services for our visitors along with our residents,” she says. “The struggle of smaller and mid-size cities is to get to a place, from a risk perspective, where we feel confident that our insurance and contracts are in place and all of our ducks are in a row.”
The City of Burbank uses PlanetBids PB System™ to not only track insurance online but also to work on the project DeHoyos initiated to create the special categories of work risks for insurance coverage required by vendors. The City is able to build insurance request templates based on service needs, further streamlining the process and ensuring purchasing is meeting risk requirements when reaching out to vendors.
“Any tool that helps us improve our response rate and quality of service for our constituents is worth the spend,” she says.
The City of La Mesa
A consultant hired by the City of La Mesa was involved in a car accident while on the job, harming a citizen – and the City's insurance certificate was not up to date.
Immediately after this debacle, Purchasing Officer Scott Munzenmaier signed up for PlanetBids’ Insurance Certificate Management module to track expiration dates as new contracts are implemented. PlanetBids now serves as the City of La Mesa’s insurance database.
“On a scale of 1-10 in level of complexity of implementation, it’s been seamless,” Munzenmaier says.
The module enables risk managers, procurement teams, and contract administrators to automate, maintain, and retrieve up-to-date information regarding vendor or contractor insurance certificates. Insurance certificates can be added or edited by agencies or vendors with real-time workflow processes to ensure a review has been completed, as well as a repository of the actual ACORD Certificates of Insurance with AM Best ratings.
Most importantly, the Insurance Certificate Management module features automated notification settings and custom email alerts. Paired with My Insurance, agencies and vendors can conduct all insurance-related tasks on the cloud with PlanetBids.
To learn more about eProcurement and automating insurance certification or to discover how to take all your purchasing processes online, visit our homepage or contact one of our procurement experts.
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