Senate Budget Committee Report: April 1

SB 7146 Relating to Citizens Property Insurance Corporation (“Citizens”), filed on March 28, 2011 by the Senate Budget Committee (“Committee”), passed favorably with limited questions and no debate during the Committee’s meeting today, April 1, 2011. 

The Committee opened with a summary description of the bill.  SB 7146 establishes statutory standards for Citizens’ competitive procurement of goods and services by substantially amending § 838.014(6) F.S., setting forth “definitions” that apply to Chapter 838, “Bribery; Misuse of Public Office.”  In addition, SB 7146 creates § 627.3514, F.S., and repeals § 627.351(6)(e) and (f), F.S.

By way of background, Citizens is a not-for-profit, tax-exempt government corporation whose public purpose is to provide insurance protection to Florida property owners whom are unable to find coverage in the voluntary admitted market. Citizens operates in accordance with the provisions in § 627.351(6), F.S., and is governed by an 8 member Board of Governors (“Board”) that administers its Plan of Operations, which is reviewed and approved by the Financial Services Commission.  Presently, Citizens operates pursuant to purchasing requirements set forth in § 627.351(6)(e), F.S., requiring:

Purchases that equal or exceed $2,500, but are less than $25,000, shall be made by receipt of written quotes, written record of telephone quotes, or informal bids, whenever practical. The procurement of goods or services valued at or over $25,000 shall be subject to competitive solicitation, except in situations where the goods or services are provided by a sole source or are deemed an emergency purchase; the services are exempted from competitive solicitation requirements under s. 287.057(3)(f); or the procurement of services is subject to s. 627.3513. Justification for the sole-sourcing or emergency procurement must be documented. Contracts for goods or services valued at or over $100,000 are subject to approval by the Board.

In implementing these requirements, Citizens follows policies and procedures as approved by the Board, which govern the implementation of the statute. 

Given Citizens’ role, size, and overall importance in Florida’s insurance market place today, additional regulations on its competitive solicitation process are necessary to ensure that the goals of Citizens are continually met.  Key provisions of SB 7146 include:

• Requires competitive solicitation of goods and services valued at or above $35,000, except office space, which is subject to the public property and publicly owned building statutes.
• Requires that purchases of goods or services over $10 million include a business case review before review and approval by the Citizens Board of Governors. (These projects are generally multi-year, enterprise, information technology projects.)
• Prohibits the division of goods or services to circumvent the provisions of the bill.
• Specifies under which circumstances a competitive solicitation shall use each of the following methods: Invitation to Bid (“ITB”); request for proposal (“RFP”); invitation to negotiate (“ITN”); or, reverse auction. The bill outlines the criteria that must be used for evaluating ITBs, RFPs and ITNs.
• Requires that all contracts executed on or after January 1, 2012, be posted electronically on Citizens’ website for public access.
• Requires that all qualified sole source purchases be posted to the website for ten business days prior to execution. Requires that Citizens’ purchasing policy include procedures for protecting against any conflicts of interest by Citizens Board members, employees, and other expert consultants who are acting as evaluators in the purchasing process.
• Prohibits solicitation respondents from communicating with Board members, employees, or any public official, officer, or employee of the executive or legislative branch concerning any aspect of the solicitation.
• Provides that Citizens shall strive to increase business with minority business enterprises and with Florida small business enterprises.
• Requires the Board to annually review and adopt the purchasing policy of the corporation to ensure compliance with this section and to submit a copy of the policy to the OIR.
• Provides the Auditor General with access to any Citizens procurement documents and related material.

After a brief introduction, only one question was raised; Senator Eleanor Sobel asked, “just for reassurance” purposes, whether there were “any deregulation of insurance rates provisions in this proposal.”  There was laughter among the Committee members and Senator Sobel was assured that no, there were no hidden deregulation provisions in the bill.  There were no further questions, no debate, close was waived, and SB 7146 was favorably passed by the Committee.

Should you have any questions or comments, please contact Colodny Fass.

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