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Committee continues consideration of $75 million cap on construction-manager liability for Calaveras Dam project
Summary
The committee heard extensive testimony on a proposed $75 million cap on construction-manager indemnity for the Calaveras Dam replacement project. PUC staff argued the cap is a market-driven mitigation to secure qualified bidders; several supervisors urged further vetting and asked whether the cap sets a problematic precedent. The committee continued the item for additional review.
Dan Wade, senior project manager for the Calaveras Dam Replacement Project, opened the item by stressing the dam's seismic vulnerability and the urgency of moving one of the SFPUC's largest projects forward. He told the committee the proposed resolution would approve a $75 million limit on the construction manager's indemnity for the construction-management contract while explicitly excluding gross negligence, statutory damages, wrongful death and similar categories from the cap.
Wade and PUC staff said the dam project is among the largest and most complex in the SFPUC's Water System Improvement Program, that only a small pool of qualified construction-management firms exist, and that firms have raised indemnity concerns with broad indemnification clauses. Matt Hanson from City Risk Management described a trend of professional-service firms seeking limitation of liability in response to insurance-market pressure and said the PUC, city risk manager and City Attorney worked together on a risk-mitigation recommendation.
Supervisors pressed staff on procurement timing and precedent. Several asked why the cap was presented before proposals were due (responses: staff wished proposers to know contract terms up front and said rejection could reduce bidders and delay the project). One supervisor warned that litigation often produces finger-pointing among designers, contractors and managers and said capping the construction manager's liability may complicate future litigation paths.
The Budget Analysis office characterized the proposal as policy-level in nature and recommended Board consideration. Given outstanding questions about bidder response, potential delays, and policy precedent, Supervisor Ross McCreamey proposed continuing the item for additional vetting and offline discussions. The Chair agreed and the committee accepted the continuation without objection; staff noted that rejecting the cap could force a one- to two-week extension of the proposal period or a six-month rebid in the worst case.
Next steps: Staff will pursue additional discussions with supervisors and stakeholders and return the item with supplemental materials; the committee continued the matter to allow that vetting.
Quoted in this story: Dan Wade, Matt Hanson (City Risk Management) and Supervisor Ross McCreamey.
