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Council delays vote on $1.96 million benefits-administration contract, asks for one-week follow-up
Summary
Council members pushed a three-year, $1,958,400 contract with WEX Health Inc. for city employee benefits administration off for one week and asked the human resources director for a written cost/alternatives analysis, including what a one-year extension would cost and what it would take to bring the function in-house.
Detroit — The Detroit City Council Committee of the Whole paused final action on a three-year, $1,958,400 contract with WEX Health Inc. to provide benefits-administration services for the city's roughly 10,215 employees, asking Human Resources to return with more information in one week.
"This is a contract for our benefits administration," Human Resources Director Denise Starr told the committee, saying WEX handles open enrollment, COBRA administration and a volume of employee inquiries that the city does not have in-house systems to process. "Without this contract, we would have to go back to paper processing ... we just do not have the capacity, plus we do not have the systems to be able to support something like this."
Council member Angela Whitfield Callaway moved that the item be brought back in one week with additional detail; the motion carried without objection. Callaway said she wanted to know which other municipalities WEX serves, which vendors bid on the contract, and whether a one-year extension would change the rate or raise procurement issues.
Starr said WEX's current contract runs through June 30 and that the company — which took over an earlier vendor through purchase or merger — has provided these services to the city for at least a decade. She told the council the city currently counts about 10,215 employees and that an in-house replacement would be a multi-year project. "It will at least take 3 years to do ... to bring in-house," she said, adding that implementing and testing a comparable system would require a substantial up-front investment and ongoing staff to operate it.
Starr said the city typically receives fewer cost-competitive bids because vendors price in the transition uplift for moving the city's benefits into a new platform. She recommended approving a contract to avoid reverting to manual processes but agreed to provide the committee the requested procurement details, a list of municipalities WEX serves, and analysis of a one-year extension versus a multi-year award.
The committee's action was procedural: there was no vote on approving the contract; members directed staff to return with the requested information in one week so the body could consider a shorter-term extension or other options.
Why it matters: Benefits administration covers health enrollment, terminations and eligibility matters for thousands of city employees. The committee’s follow-up will be used to weigh short-term continuity against the cost and timeline to build municipal capacity.
What happens next: Director Starr committed to provide the requested vendor list, bid history, and a feasibility study timeline and cost estimates for an in-house alternative. The item will return to the committee in one week.
