Legislation will replace current low-bid system by allowing City departments to evaluate past performance of contractors when awarding public contracts
San Francisco — (March 8, 2016)Today Supervisor Scott Wiener will introduce legislation reforming San Francisco’s public contracting process, by allowing City Departments to evaluate contractors’ past performance when awarding public project contracts. Under the current bid award system, only the bid price is considered, with the lowest bidder automatically receiving the contract award. No other factor, including past performance, safety record, or relevant experience is included when awarding bids. Supervisor Wiener’s legislation will change that process so that City departments, in addition to considering bid price, can also consider the contractor’s track record. The legislation has been co-sponsored by Board President London Breed and Supervisor Katy Tang.
A recent example of this problem is the contractor that repeatedly ruptured utility lines during street work on Haight Street, causing massive neighborhood disruptions and ultimately being removed from the job. The same contractor has received a contract to do work as part of the Van Ness Bus Rapid Transit project.
The legislation will ensure that taxpayers receive the best value from public contracts. While bid price clearly plays a significant role in determining best value, a low bid followed by poor performance — whether poor workmanship, delayed work, under-staffed work, or excessive change orders — can result in higher costs to the public. By considering contractors’ track record, in addition to bid price, city departments can maximize overall value for taxpayers.
“We are making unprecedented infrastructure investments in San Francisco, and taxpayers deserve the best overall value when we spend precious public dollars to pave our streets, renovate our parks, or build our transit systems,” said Supervisor Wiener. “Awarding projects to the lowest bidder — without taking any other factor into consideration — leaves us vulnerable to getting lower quality results. This legislation will ensure the public is getting competent contractors who will complete these projects accurately, safely, on time, and within budget.”
John Doherty, Business Manager of International Brotherhood of Electrical Workers Local 6 expressed support for the legislation: “In the past year, both the City Auditor and the Civil Grand Jury released reports that were critical of the City’s current low cost bid contracting policy. It noted the lack of follow up on low bid contractors who repeatedly underperformed, yet were awarded work time and time again. Too often in the end, the low cost bid just costs more to complete and correct. The proposed legislation would be a win-win-win for all involved. It incentivizes quality, on-time and on-budget construction, it rewards safe work practices, and provides workers protection against contractors that have a history of wage theft and prevailing wage violations. It is a big step in the right direction.”
The legislation amends Chapter 6 of the Administrative Code to allow City departments to create a best value process for evaluating contractors. Each department head will be authorized to create a methodology to evaluate contractors based on a defined set of criteria, including but not limited to:
- Safety record: Possesses a prior history concerning the safe performance of construction contracts
- Past performance: Evaluates safety performance on prior City contracts
- Labor compliance: Has the ability to comply with requirements for the payment of wages and qualifications of the workforce
- Demonstrated management competence: Measures the experience, competency, capability, and capacity of management staff’s ability to complete projects of similar size, scope, or complexity
- Financial condition: Possesses the financial capacity needed to perform the contract, including at minimum a Bidder’s capacity to obtain all required bonds and insurance
- Relevant experience: Has the experience, competency, capability and capacity to complete projects of similar size, scope, or complexity
Under the legislation, once the Department has a score for each bidder based on the set criteria, each contractor’s final bid is then divided by this score. The lowest resulting cost per quality point will represent the best value bid.
Other jurisdictions, including Los Angeles and San Diego, use best value contracting for public projects. The San Francisco Civil Grand Jury issued a report in June 2015 titled “San Francisco’s City Construction Program: It Needs Work.” The number one recommendation from the Civil Grand Jury was to revise the City code to allow the consideration of past performance in addition to a low cost bid.