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PUC delays vote on $141 million SFPUC administration building contract after lengthy debate
Summary
The commission postponed a decision on a $141 million construction-manager/general-contractor (CMGC) contract for a new SFPUC administration building, citing unresolved questions about cost controls, owner protections and procurement method; the item was continued to Jan. 8.
The commission declined to award a CMGC contract for the SFPUC’s new administration building at 525 Golden Gate and instead continued the matter to its Jan. 8 meeting after an extended debate over delivery method, contingency levels and owner protections.
Ivy Fine, contracts manager, asked the commission to approve award of construction contract 2559R to Webcor Builders with a contract value of $141,000,000 — presented as $133,000,000 in construction costs plus $8,000,000 in contingency. Fine described the procurement process and the selection of Webcor as the best-value proposer.
Commissioners probed the contract structure. Questions focused on contingency sizing (staff said the $8 million contingency is approximately 7 percent of construction costs), how escalation and trade-package bids would be handled, whether Webcor’s fee would rise if trade-package bids escalated, and whether the contract could be converted to a guaranteed-maximum-price (GMP) after trade packages are in. Several commissioners asked for explicit contract language capping the CMGC fee and aligning incentives so a contractor does not profit from escalating trade-package costs.
Deputy public-works staff explained the CMGC approach aims to bring the builder in early for constructability review, cost estimating and sequencing on a technically complex “green” building that includes renewable-energy features. Supporters cited the San Francisco Academy of Sciences as a successful municipal example of a similar delivery method.
Commissioner Sklar said the CMGC model raised fiscal concerns and asked that an independent owner-side review of the draft contract be conducted before awarding it. He and other commissioners requested language to cap contractor profit (staff discussed an 8.85 percent fee cap keyed to the estimated construction value as one option) and offered other guardrails including clear GMP conversion language and stronger value-engineering and oversight clauses.
Given unresolved fiduciary and procurement-policy questions, the commission voted to continue the Webcor CMGC award to the January 8 meeting. Staff was directed to work with the city attorney and outside reviewers as needed and to provide a schedule and more explicit cost-control language before the next hearing.
