Council delays vote on $1.96 million benefits-administration contract, asks for one-week procurement review

The Detroit Committee of the Whole postponed action on a proposed three-year, $1,958,400 contract with WEX Health Inc. for benefits-administration services and asked the Human Resources director to return in one week with additional procurement details.

The item (contract no. 606754) would give WEX Health Inc. a city-funded contract to administer open enrollment, COBRA processing and the call center that answers employees’ coverage questions for roughly 10,215 city employees and their families. Denise Starr, director of Human Resources, said the vendor handles high-volume processes city staff cannot currently support and that without the vendor the city would revert to paper processing.

"This is a contract for our benefits administration. This company helps us with all the administration for our open enrollment for our 10,000 employees and their families," Director Denise Starr said, describing the vendor’s role in processing terminations, COBRA and employee calls. Starr told the committee she believes replacing the vendor would require a multi‑year, resource‑intensive build and significant staffing.

Why it matters: Council members pressed procurement and cost questions and said the committee needs more detail before approving a multi‑year, city‑funded contract that expires for the vendor on June 30. Member Angela Whitfield Callaway asked whether the city had 10,215 employees (Starr confirmed that figure) and moved that the item be brought back in one week so Human Resources could provide information on other bidders, which municipalities WEX serves, and how a one‑year extension would compare on price and procurement obligations.

Starr said the vendor’s current contract runs through June 30 and that the city went out to bid; she also said non‑Detroit vendors bid at higher price points and that no local vendor matched the costs. "We did put it out for bid," she said. "There were no Detroit vendors that had been on it that had the price point that this contract has."

Member Callaway asked specific follow-ups: how many employees would be needed to build an in‑house system, a timeline to do so (Starr estimated multiple years and substantial cost), how long WEX has served the city (Starr said at least a decade under predecessor company names), and whether a one‑year extension would raise rates or require rebidding. Starr agreed to work with procurement and return next week with answers.

Action and next steps: Member Callaway moved to bring line item 6.1 back in one week with a list of written questions; the chair noted "hearing no objection, that action shall be taken." The committee did not approve the three‑year contract at this meeting.

The committee discussion emphasized the operational risk of disrupting benefits administration for more than 10,000 employees, the cost and time required to build an in‑house system, and the need for an updated procurement and price comparison to determine whether the city should continue a multi‑year agreement or seek a shorter extension while studying alternatives.

Members asked Human Resources to report back with: a) a list of other companies that bid and their prices; b) the municipalities or clients WEX serves; c) the procurement implications of a one‑year extension versus a multi‑year award; d) a realistic timeline and staffing estimate to develop an in‑house solution; and e) current contract end date and any recent extensions.

Ending: The committee postponed final action and directed Human Resources to return with the requested procurement and cost details in one week, leaving the current vendor arrangement in place only through any administrative extensions until the committee receives the requested information.