Press Release: Board of Supervisors Passes Supervisor Wiener’s Best Value Contract Reform Legislation
Legislation allows City departments to evaluate and factor in past performance of contractors when awarding public contracts in addition to the bid price. Previously, only the bid price is considered, with lowest bidder being awarded the contract.
San Francisco — Today the Board of Supervisors approved Supervisor Scott Wiener’s 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 changes that process so that City departments, in addition to considering bid price, can also consider the contractor’s track record. The legislation was co-sponsored by Board President London Breed, Supervisor Katy Tang, and Supervisor Norman Yee.
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.
“Today we took a great step toward getting the best value for taxpayers when we contract for public projects,” said Supervisor Wiener. “If a contractor has a history of cost overruns or safety issues, we need to be able to factor that into the process for awarding a contract. As San Francisco embarks on tens of billions of dollars in public infrastructure investments in the coming decades, the public deserves to have the confidence that the City will work with contractors to deliver projects safely, accurately, and within budget.”
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.