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Supervisors consider major rewrite of local business enterprise rules, Hsu seeks 40% participation goal
Summary
President Hsu introduced an ordinance to reform Chapter 14B (Local Business Enterprise) with a citywide 40% participation goal, bid discounts, mentorship and contractor advance payments; stakeholders broadly supported modernization while urging changes to size thresholds and incentives for large contracts.
The Board of Supervisors committee took up an ordinance to comprehensively revise Chapter 14B — the Local Business Enterprise and nondiscrimination in contracting law — aimed at increasing local small‑business participation in city contracting.
"Part of what we are trying to do is to establish a new overall citywide participation goal of 40% for all contracts," President Hsu said as he outlined proposed amendments that also would raise LBE size thresholds, expand bid discounts, require good‑faith efforts to solicit multiple bids from micro or small LBEs for certain procurements, create a mentorship program, and institute a contractor advance payment program to support subcontractors.
Bill Barnes, representing City Administrator Naomi Kelly, told the committee that Proposition 209 constrains use of race or gender in contracting decisions and that the administration is working to find ways for local businesses to participate within those limits.
Coalition and LBE community representatives expressed broad support while flagging technical issues and requested additional drafting time. Oren Sellstrom of the Lawyers Committee for Civil Rights, speaking on behalf of the Coalition for Economic Equity, said the 40% goal and a mandatory contracting minimum were longstanding asks from the small‑business community.
Several LBE representatives urged refinements: Miguel Galarzo, chair of an LBE subcommittee, recommended different baseline years for size thresholds and argued for raising certain SBA goals; Julianna Choi Summer, president of the Asian American Contractors Association, asked for clearer oversight and escalation processes for CMD determinations; Wayne Perry and others requested stronger incentives for large primes to team with LBEs on contracts above $10 million.
President Hsu said he would circulate proposed amendments and invited stakeholders to submit written suggestions during the week before the next meeting. He then moved the circulated amendments; the chair adopted them "without objection" and the committee continued the item to the call of the chair with the aim of scheduling one more meeting before a possible full‑board vote.
No final ordinance vote occurred today; staff and stakeholders will continue technical drafting and outreach before the committee reconvenes.
