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Committee advances Chapter 6 contracting changes aimed at easing contractor cash flow and enabling alternative delivery
Summary
The Board of Supervisors' Government Audit and Oversight Committee referred an ordinance amending Chapter 6 of the San Francisco Administrative Code to the full Board with recommendation after presentations from PUC and DPW staff and broad public support from contractors and unions.
An ordinance to amend Chapter 6 of the San Francisco Administrative Code, intended to clarify contracting rules and ease cash-flow pressures on contractors, was sent to the full Board of Supervisors with the committee's recommendation on Monday.
Supervisor Ed/Chiu (introduced the item) told the committee the proposed changes implement recommendations of the city'wide Construction Contracting Task Force, formed in February 2006, to reduce barriers that have discouraged bidding on city projects and to improve procurement efficiency.
Harlan Kelly, assistant general manager for infrastructure at the San Francisco Public Utilities Commission, outlined the principal changes. Under the ordinance the city could reduce contractor retention more quickly and hold a standard 5% retention on progressing payments; the legislation would allow reductions in retention when projects reach late-stage completion and would permit the city to hold a limited reserve (described in testimony as up to 200% of the value of remaining work) while paying for punch-list items. Kelly also said the ordinance clarifies procedures when departments receive no bids or only one bid and authorizes integrated project delivery and prequalified shortlists for very large design'build contracts. For payments withheld beyond 90 days the city would pay statutory interest set by state law, which witnesses noted is capped at 10% annually.
Contractors and industry groups who helped craft the task-force recommendations urged swift approval. "Cash flows and money not being paid out to contractors severely hinders how businesses do business with the city," Russell Snyder, regional manager for the Associated General Contractors of California, told the committee. Mike Gelati, president of Gelati Brothers Contractors, called the package a critical modernization that would attract bidders back to San Francisco.
Union-signatory and small-contractor groups also supported the measure while flagging labor standards. "This is a real precedent-setting change that you're making," Tara McGovern of the Engineering Utility Contractors Association said while urging that prevailing-wage and labor protections remain in place.
Committee members asked for and received assurances from DPW and the city attorney's office that several departments reviewed the changes. Joe Chung of the Department of Public Works said roughly seven departments and private-sector stakeholders participated in drafting the proposal.
Outcome: Supervisor Tom Ammiano moved to send the ordinance to the full Board with the committee's recommendation; the motion carried "without objection." The committee record shows the item will proceed to a full Board hearing.
What remains: The ordinance updates multiple procurement rules in Chapter 6 (retention and progressive payments, failure/no-bid procedures, design'build prequalification and shortlisting, and integrated project delivery). The committee discussion and public testimony focused on the anticipated cash-flow benefits and the need to preserve prevailing-wage and related labor protections. Departments and the city attorney will remain responsible for implementing defined payment and procurement procedures if the Board approves the ordinance.
The clerk read the next agenda item, and the committee moved on.
