Board approves first reading of 'best-value' contracting ordinance with exemption under $1.5 million

San Francisco supervisors on May 17 approved on first reading an ordinance allowing city departments to award certain public-works contracts using a "best value" procurement process that weighs price alongside contractor qualifications and past performance.

Why it matters: Supporters said the change will help the city avoid projects that are low-priced but later generate costly change orders, delays or poor workmanship. Opponents — chiefly Supervisor John Avalos — argued the approach could disadvantage small local businesses and local business enterprises (LBEs) that rely on a 10 percent LBE bid discount.

What the ordinance does

The legislation permits departments authorized to perform public works to use best-value procurement for projects above a monetary threshold and requires that selection criteria be defined publicly and objectively before solicitation. The draft maintains the existing 10 percent LBE bid discount.

Supervisor Scott Wiener, the ordinance’s lead sponsor, said the change is intended “to make sure the taxpayers get the quality infrastructure, construction and work that they deserve,” and described best value as a method to account for repeated poor performance that can increase overall project costs.

An amendment negotiated with Supervisor Aaron Peskin exempts smaller contracts from the best-value standard. The amended ordinance states that best-value procedures would not apply to very small contracts, defined in the amendment as under $1,500,000.

Debate and concerns

Supervisor David Campos and Supervisor John Avalos said they were sympathetic to the aim of reducing poor-performing contractors but warned that the change could create barriers for small and local contractors who have less experience documenting qualifications or who rely on price-based awards. Avalos said he had heard from small contractors who have struggled under the existing process.

Supervisor Yee, who co-sponsored the ordinance, defended the change as a way to save money in the long run by avoiding contractors who underbid and then generate additional costs through change orders.

Vote and next steps

The board took the item as amended and recorded a roll-call vote of 10 ayes and 1 no (Supervisor Avalos). The ordinance passed on first reading as amended and will return for a second reading and final adoption.

Legal and administrative context

Supporters noted that civil grand jury and controller audits have recommended improvements in public-works contracting. The ordinance requires departments to establish objective, transparent best-value criteria before issuing RFPs and to maintain contractor performance evaluations.

Ending

Advocates for both reform and for small-business protections said they will continue working during the second-reading process. The adopted amendment establishing a monetary exemption for contracts under $1,500,000 was presented by the sponsor as a compromise to limit the effect on small contract awards.