Proposed Changes to Chapter 6 of the Administrative Code

Status as of February 2, 2015

Office of the Controller

1

Presentation Outline

1) Working Group process and members

2) Threshold Amount

3) Existing contracting methods

4) New contracting methods

2

Chapter 6 Working Group Process

2012-13: Chapter 6 changes process started by DPW

June 2014: Controller’s Office, City Services Auditor begins to provide facilitation, reporting, and research support

July 2014: Working Group kick-off meeting

July-Present: Bi-weekly meetings

• Considered over 50 recommendations

• 43 currently moving forward

• Controller’s Office has discussed specific recommendations with key stakeholders including the Contract Monitoring Division and Risk Management

3

Chapter 6 Working Group Members

21 members representing 10 departments

Airport Cynthia Avakian, Reuben Halili and Betsy Hugiens

City Administrator Bill Barnes and Jennifer Johnston

City Attorney Yadira Taylor, Julie Veit and Heather Wolnick

Department of Public Works Edgar Lopez, Stacey Camillo and Sung Kim

Municipal Transportation Agency Shahnam Farhangi and Joon Park

Office of Contracts Administration Jaci Fong

Office of the Controller Rachel Cukierman and Inger Brinck

Port of San Francisco Tim Leung

Public Utilities Commission Ivy Fine, Alaric Degrafinried and Mario Valdez

Real Estate Division Robert Monroe

Recreation & Parks Department Toks Ajike 4

Proposed Changes to the Threshold Amount

The Working Group recommends

1) Increasing the Chapter 6 Threshold Amount from $400,000 to $600,000.

– Current Threshold Amount is scheduled for adjustment on January 1, 2015. Adjustment will be based on past five- year changes to the regional CPI-Urban index. Expected increase is $44,000 or ~ 10 percent.

– Department contracts under both the current ($400k) and proposed ($600k) Threshold Amount comprise minor shares of Departments’ total contract values (see next slide).

5

0.98% 0.68% 0.49%

2.08%

0.94%

0.26%

DPW AIR PUC

% of total contract dollarsbetween $400k-$600k

% of total contract dollarsunder $400k

Department contracts under the current and proposed Thresholds account for minor share of all

contract dollars

6

$400k

$600k

(data from July 1, 2013 to August 31, 2014)

Proposed Changes to the Threshold Amount

Increasing the Threshold Amount to $600K will also:

– Sec 14B8(A) – Place LBE subcontracting goals on contracts $300k or more (instead of $200K or more).

– Sec 14B.7(K) – Enable Departments to set-aside larger contracts for Micro-LBEs (departments must set aside 50% of eligible contracts for Micro-LBEs).

– Sec 6.20(B) – Increase the amount that may be performed by City employees.

7

Proposed Changes to the Threshold Amount

2) To standardize contracting thresholds, the Working Group recommends linking task orders for Job Order Contracts, As-Needed and Professional Services to the Threshold Amount. Currently, task orders are capped at $400,000, but are not pegged to the Threshold Amount.

8

Existing Contracting Methods

Working Group proposes changes to the following existing contracting methods:

1) General Clean Up

2) Bonding

3) SEC 6.60 – Emergency contracts

4) SEC 6.62 – Job Order Contracts (JOC)

5) SEC 6.64 – As-Needed Contracts

6) SEC 6.63 – HazMat

7) SEC 6.65 – Master Agreements

8) SEC 6.61 – Design-Build

9) SEC 6.68 – Integrated Project Delivery 9

Working Group recommends the following changes:

1) All references to “Human Rights Commission” and “HRC” will be replaced with

“Contract Monitoring Division” and “CMD”.

2) Adds clarifying language to the construction contract approval process for non-Ch.

6 departments. The new language will state that these contracts will be approved

by Ch. 6 commissions or boards, or the City Administrator and NOT by non-Chapter

6 commissions or boards.

3) Allows departments to advertise bids on a public website instead of just a local

newspaper or periodical.

4) Adds language to the Admin Code informing Chapter 6 departments how to handle

a professional services solicitation that only has one bid.

5) Remove the 3 day advertising requirement for quotes under the threshold amount.

General Clean Up

10

Working Group recommends the following changes:

1. Codify existing practice of requiring a performance and payment bond in

an amount equal to the direct costs of construction and not for the cost

of pre-construction services for Design-Build and Construction Manager

/General Contractor contracts. Payment and performance bonds are

intended to cover the cost of construction, not pre-construction, and are

for a specific, limited period of time.

2. Allow departments to bond a minimum of 25% (instead of 50%) of a JOC or

As-Needed contract. Bonding will be cumulative up to the full value of the

contract.

Bonding

11

SEC 6.60 - Emergency Contracts

1) Currently, Departments cannot pay contractors more than $250,000 for work conducted in emergency situations prior to Board of Supervisors approval. Working Group recommends increasing the threshold from $250,000 to the Chapter 6 Threshold Amount to increase consistency throughout Chapter 6 and to enable Departments to provide a higher amount of payment for emergency services prior BOS approval.

12

SEC 6.62 - Job Order Contracts (JOCs)

Working Group recommends the following changes to JOC:

1) Allow departments to issue task orders up to four years instead of three in order to leverage more of the contract.

2) Allow departments the option to have Primes add subs at time of bid OR task order.

3) Link task order threshold to the Threshold Amount.

4) Allow contractors to bid on and obtain more than one contract within a department if the contracts are financed by separate sources, i.e. federal and local funds.

13

SEC 6.64 – As-Needed Contracts Working Group recommends the following changes to As-Needed contracts:

1) Allow departments to issue contract service orders up to four years instead of three in order to leverage more of the contract.

2) Allow departments the option to have Primes add subs at time of bid OR task order.

3) Link contract service order threshold to the Threshold Amount.

4) Allow departments to create prequalified pools for as-needed contracts that include multiple trades. Solicitations will not specify projects and work will be awarded based on lowest quote once a project is identified.

14

SEC 6.63 - HazMat Contracts

1) Currently, DPW is the only Chapter 6 Department with authority to procure contracts under this section. Working Group recommends that the code allow all Chapter 6 departments to have authority under this section.

15

SEC 6.65 – Master Agreements

1) To allow departments to respond quickly to issues that require immediate repair, the Working Group recommends expanding the list of trades that departments can enter into master agreements for inspection, maintenance and repair of existing equipment or systems.

– Current list: elevator, escalator, security, fire protection, fire alarm.

– New additions: power distribution, chillers, pumping, heating, ventilation and air (HVAC), supervisory control and data acquisition (SCADA), public address, airfield drainage, sewage and fresh water systems.

16

SEC 6.61 – Design-Build

17

Working Group recommends the following changes to Design-Build:

1) Allow Department Heads to approve the Design-Build contracting approach rather than Boards, Commissions, or the City Administrator. Departments now have the experience and expertise to choose appropriately.

2) Allow departments to pay partial design stipends that are not subject to Admin Code requirements.

3) In Best Value contracting, adjust the cost evaluation criteria to a minimum of 40% (instead of 65%). Quality should rank equally, if not higher, than cost due to the need to obtain the best possible design.

4) Allow for fixed budget contracting where evaluation criteria is based on quality, cost, and the number of desired project features proposed in the bid.

SEC 6.68 Integrated Project Delivery

18

Working Group recommends the following changes to IPD:

1) Allow Department Heads to approve the IPD contracting approach rather than Boards, Commissions, or the City Administrator. Departments now have the experience and expertise to choose appropriately.

2) In Best Value contracting, adjust the cost evaluation criteria to a minimum of 40% (instead of 65%). Cost is not the primary evaluation criteria because procuring a relatively small amount of the contract upfront. Also, most of the project costs live downstream in the trade packages. Quality should rank equally, if not higher, than cost due to the need to obtain the best possible design.

3) Add a new contracting approach that allows for the Construction Manager/General Contractor and key core trade subcontractors to be selected as a team. This approach has been approved by the Board of Supervisors in several ordinances.

1) The Working Group recommends adding a new “low-value” procurement method for contracts estimated under $10,000, similar to the authority in Chapter 21. Currently, all Chapter 6 contracts must be procured through a competitive solicitation process. Examples of “low-value” contracts are scaffolding, minor roof repairs, and specialized professional services such as acoustic engineering consultant.

- 14B San Francisco First requires all departments to try and obtain 3 quotes from LBEs for contracts over $10,000

New Contracting Method: Low-Value

19

New Contracting Method: Sole Source

1) The Working Group recommends adding a sole source provision to Chapter 6. Chapter 6 language will be modeled on Chapter 21 sole source provisions and federal regulations. Approval must be obtained through a commission or board, or if no board or commission, from the Mayor or Mayor’s designee. Reasons to add a sole source provision:

– Sole source ordinances require a lengthy legislative process.

– Increased sophistication of building technology drives need for sole source option, for example, with proprietary fire alarm systems and integrated medical and laboratory equipment.

20

New Contracting Method: Furniture, Fixtures, & Equipment (FF&E)

1) The Working Group recommends allowing Chapter 6 departments to purchase some types of FF&E (i.e. attached furniture) as part of a construction trade package instead of purchasing separately through Chapter 21.

– Allows for integration of FF&E when designing and constructing a building.

– Allows General Contractor to procure the equipment so the City has a single point for accountability.

– Enables the City to better manage the FF&E procurement schedule and its many dependencies.

21