For the second time this month, the Board of Mayor and Aldermen stretched the city's business into the wee hours, ending Tuesday's meeting at 1:15 a.m. Wednesday.

Two of the three most controversial items of the night — the city's health insurance administration contract and what to do with the Hackett Hill fire station contract — were postponed to another night.

During the meeting, aldermen had a lengthy debate about the insurance contract. Manchester is self-insured, which means it pays employee medical bills directly. The city also employs a company to administer the paperwork, monitor costs and negotiate fees. That contract is now held by Anthem, but the aldermen and the school board received a recommendation from an advisory committee to switch to Cigna HealthCare, a move that could save the city $1.5 million over three years.

The item was tabled after questions arose about which company provided the better deal and service.

Some aldermen and members of the Board of School Committee, who were asked to attend the joint meeting, took issue with how the requests for proposals originated.

They questioned who authorized going out for RFP and who put together the vetting committee that decided which final bid would be recommended to the aldermen.

Mayor Ted Gatsas said he put together the committee, made up of members of the city and school Human Resources and Finance departments; Alderman At-Large Dan O'Neil; and representatives from Workplace Benefits Solutions. WBS wrote up the request for proposals on behalf or the city, according to Human Resources Director Jane Gile. It's one of the services WBS provides the city as a health care consultant.

The matter was complicated further after an Anthem representative came before the aldermen and promised an additional $1 million in savings not included in the RFP.

Essentially, the split on this issue is between those who typically side with unions and those who do not. The aldermen in 2009 switched to Anthem from Cigna after concerns were raised about the level of service Cigna provided. Then-Mayor Frank Guinta urged the aldermen to stick with Cigna to save the city money.

It's Gatsas this time in the Cigna camp.

On Tuesday, he called out Anthem for meeting with city unions at the Chop House Monday night, asking them to call aldermen and school board members to squash the Cigna recommendation. But Gatsas has also been sour on Anthem since the company failed to discover the $4,000 bone marrow cheek swabs conducted on behalf of the Caitlin Raymond International Registry.

The two companies will submit their final and best offers to the school board on Wednesday and to the aldermen in two weeks.

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THE ALDERMEN ALSO didn't decide what to do with the Hackett Hill contract between the city and the Danais Realty Group. About half of the board members want to take developer Richard Danais to court to void the contract, which calls for Danais to build a new fire station in exchange for land off of Hackett Hill Road. The other half and the mayor want to work out something. As long as the mayor has veto power, the aldermen in favor of going to court need 10 votes to override.

Count on the half that wants to go to court to lobby the other half hard in the next two weeks.

The contract changes would have released Danais from his responsibility to build the fire station in exchange for the city-owned land. The city would then build the fire station with its own money and lend Danais $2.6 million for the land, which Danais would start paying back two years from now.

“This was a bad deal from the beginning,” said Alderman Garth Corriveau. “I'm not going to make a bad deal even worse.”

The aldermen have been mulling for some time now whether to cut ties with Danais. His aligning with companies looking to build a prison on Hackett Hill didn't help either.

Outside counsel has advised resolving the matter without going to court, Gatsas said.

“If we were to take it through the court system, it could be three to four years,” which would mean more delays for the new fire station, said Gatsas. While the amended contract is not ideal, it's the better of the two deals and would protect the city, he said. The aldermen already met a half-dozen times with Solicitor Tom Clark about moving forward with a lawsuit, said Gatsas.

“The question was: Do we want to work it out, or do we want to go to court and kill it,” he said. “We should have killed it eight months ago if that's what they wanted to do.”

Said Alderman Patrick Arnold: “I know the majority of aldermen were hopeful and optimistic a resolution to the Hackett Hill deal would occur in timely fashion. That included construction of the fire station.

“When it became clear that was not going to occur, a majority of aldermen voiced interest and voted to unwind the entire deal. The mayor publicly acknowledged several times this is a bad deal. Rather than standing with the majority of city aldermen, he proposes making a bad deal worse.”

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THE ALDERMEN ALSO approved a tentative agreement with the Highway Department's American Federation of State, County and Municipal Employees union (AFSCME) and are set to finalize the contract next week.

The city also received a tentative agreement from the Welfare Department employees. The only two city unions that have yet to make concession deals are the police support staff and Water Works.

Read Beth LaMontange Hall's coverage of Manchester City Hall in the New Hampshire Union Leader. Email her at bhall@unionleader.com.