CFO Alex Sink Proposes Contracting Changes to Citizens Property Insurance for More Accountability

TALLAHASSEE, FL – October 7, 2010 – (RealEstateRama) — Florida CFO Alex Sink today sent a letter to Scott Wallace, President and Executive Director of Citizens Property Insurance Corp., outlining proposed changes to Citizens’ procurement policy and contracting procedures. On August 13, CFO Sink called upon Citizens to review its contracting procedures and competitively bid its contracts after news reports revealed that the company did not competitively bid 33 contracts worth close to $50 million.

“Citizens has an obligation to be accountable and transparent to Floridians in its contracting processes, and I am pleased that my department was able to work with Citizens to identify changes that can help the company to do just that,” said CFO Alex Sink. “I am confident that these proposed changes –  to encourage more competitive bidding, including revising Citizens’ broad emergency exemption, and committing to enhancing training for contract managers – are in the best interest of Citizens and our state.”

A copy of the letter follows below:

October 7, 2010

Scott R. Wallace

President and Executive Director

Citizens Property Insurance Corporation

101 North Monroe Street, Suite 1000

Tallahassee, FL 32303
Dear Mr. Wallace:

Thank you for meeting with my General Counsel to discuss contracting reforms for Citizens Property Insurance Corporation.  I understand that you and your legal staff have been working closely with my lawyers in the Department of Financial Services for over a month to identify areas where Citizens can improve upon its procurement policies and procedures.   During my time overseeing the Department of Financial Services, we have developed a number of specific contracting reforms designed to ensure accountable and competitive contracting procedures.  We very much appreciate the opportunity to work collaboratively with Citizens on this important issue.

As a result of this collaboration, I am very pleased that Citizens is now in the process of implementing a number of significant contracting reforms, and has established a working group on procurement issues.  First, I understand that Citizens will present to its Board of Directors a procurement policy that revises the broad emergency exemption from competitive procurement.  In the past, Citizens has in certain instances issued emergency contracts when a delay in contracting would have been detrimental to the interests of the company.   I commend Citizens for taking steps to change its policy to encourage more competitive bidding, and to only enter into an emergency contract when there is a true emergency.  A more narrow exception will bring Citizens’ emergency procurement in line with the exemption used by all other state agencies.

Second, I urge your Board of Directors to consider posting all of Citizens’ contracts online for the public on a searchable website.  The Department of Financial Services posts all of its contracts online, and we have found this to be the most transparent way to let the public know about the Department’s contracts.  Given the public nature of Citizens’ mission, it is important for the public to be able to see the contracts entered into by Citizens, and how Citizens is spending its money.

Third, I think it is very important that Citizens has agreed to provide additional training for its managers and contracting staff in order to streamline the contracting and competitive bidding process.   Citizens’ competitive bidding process does not need to move too slowly for the company’s business needs.  I am pleased that my staff could assist you with our training manuals and procedures for your review.  By streamlining the competitive bidding process, and planning ahead within business units, Citizens will no longer need to rely on “emergency” procurement.

Citizens has made many beneficial changes to its procurement policy, but it must remain vigilant in enforcing that policy.  As the state’s fiscal watchdog, I know that oversight and review are vital parts of the procurement process. Citizens has agreed to undertake regular reviews of its contracts to identify and remedy any future problems with its procurement practices.

The intent of Florida law is to create open, competitive bidding practices in agencies serving the people of Florida.  Designing and implementing an efficient procurement procedure is not an easy task, and I commend Citizens for the many steps it has already taken to improve its contracting process. Citizens is showing diligence in reviewing active non-competitively bid contracts and entering into competitive solicitation when those contracts expire.

I know that Citizens is committed to creating an open, accountable, and efficient procurement procedure.  We look forward to continuing to work with Citizens to help meet that commitment.

Sincerely,

Alex Sink

cc:        Suzanne Murphy, Citizens, Chief Administrative Officer

Dan Sumner, Citizens, General Counsel

Jim Malone, Citizens, Chairman of the Board

Harold Knowles, Citizens, Board of Directors

Contact:
Jerri Franz or Jayme O’Rourke, 850-413-2842