Living the Dream: Spotlight on Cornerstone Concilium, Engineering and Management Consultants

It’s been a great ride. For three decades, Cornerstone Concilium, Inc. has provided engineering, project management, and technology consulting services in the Bay Area. The San Francisco-based company’s roster includes municipal clients, government agencies, and commercial enterprises.

Since he was a child, CEO Wayne Perry has felt a calling to help build. Twenty-eight years ago, he answered that calling. He was working for the real estate/construction group of a large computer manufacturer when he decided to help non-profits and faith-based groups develop their building projects. Working with these groups, he assisted them with planning, design, and project oversight to get the projects off the ground.

Although he didn’t have any clients and had just bought a house, he decided to quit his high-paying Silicon Valley job to pursue his non-profit work full time. He had faith that the clients would come. Six weeks later, he got his first client, MCI telecommunications. That led to another, and then another, and another. Soon he had a packed client list.

Today, the company continues to work with faith-based organizations, government agencies, and other commercial clients both in the United States and abroad. In its capacity as engineering, planning, project management, it consults with airports, airlines, hospitals, high-tech facilities, and transportation. Clients include SFO, United, BART, Santa Clara Valley Transportation Authority, Washington Metro, Hewlett Packard, and the US Army. “Wherever there are major infrastructure projects, involving buildings, transportation, or a large technology rollout, Cornerstone is usually in the mix providing technological and project management solutions,” says Perry.

The company’s vision statement is to use “our unique, god-given ability to serve and enrich society with wisdom and integrity,” says Perry. To this end, there is a large focus on education.  The company is committed to helping disadvantaged kids enter the field of architecture and construction technology. The Cornerstone Institute offers a 16-week full time program that trains students in several fields in engineering. “We can train people in a short period of time, and we also have 100% placement rate,” says Perry.

On contract with MWIS, the Cornerstone Institute offers a series of workshops that offer training to the small business community in the construction field. These courses are useful for helping small contractors and professional services interested in San Francisco contracting understand how to succeed. Classes, such as “How to Avoid Pitfalls in Getting Paid” and “How to Succeed with The City,” are critical for a business’ success. The workshops, held four times a year, include valuable information such as knowing how to negotiate a contract with the city, understanding how to track and pay for the work that you perform, and how to create a niche position as a company for repeated contracts. The courses also include topics unique to local government, and to the City and County of San Francisco. Through case studies and hands-on training, participants become well-equipped for success.

Perry hopes the classes and seminars will avoid some of the common pitfalls he sees with growing firms. One of these is that small businesses do well on a contract, but don’t understand how to leverage this into other similar contracts so that the business evolves. “Most small businesses live in the moment,” he says. “If the market changes, which is does every 5-7 years, they should be positioned for the future and think strategically. My motto is ‘without vision, people perish’ in my industry. The firms that I’ve seen come and go are the ones that did not prepare for the future.”

Wayne Perry couldn’t be happier with how things have evolved over the past 28 years. “My whole life was geared toward making that step into what I’m doing now,” he says.

Breaking Down Barriers: Spotlight on the Risk Management Division, City and County of San Francisco

Some things get better with age. The City and County of San Francisco Surety Bond Program has been active since 1997 and became permanent in 2000, when it was under the Human Rights Commission (HRC). “The idea was conceived to take away the barriers for the local contractor community to be able to access bidding opportunities in the city contracting process, and to provide tools and education to be successful,” says Matt Hansen, Director, Risk Management Division. “It’s a pathway to break down the barriers and allow a larger group of contractors to participate in the public process.”

 The responsibility for the Bond Program has recently switched from the HRC to the Risk Management Division. “We were asked to administer the program about a year and a half ago. Given that our office is comprised of insurance subject matter experts, it made more sense for us to work with the bonding piece of the program,” explains Hansen. His office facilitates the approval processes, administration of the program, and approval of the guarantees.

Hansen appreciates the close involvement with MWIS. “It’s been a fantastic relationship,” he says. While he’s been involved with the program for six years, he’s spent the last year and a half working closely with the MWIS team to try and streamline the processes required in order to perfect the program. “Various public processes under the city contracting rules can appear somewhat onerous, and our goal is to ensure that the bonding requirements do not have a negative impact on the contractor community so that everyone can benefit.”

The work with MWIS is an ongoing collaborative effort that directly benefits small and minority contractors. It could be a simple phone call to MWIS that changes the course of a contractor’s bidding process. Once they have more information, says Hansen, they can more easily compete. And after they graduate from the Bond Program, they are much more equipped to move on and compete on their own. “They have a newly learned sophistication,” he says.

Looking toward the future, the Risk Management Division will continue to work both with the internal stakeholder and program administrators to streamline the processes and work to make them even more efficient than they are today. He points to past successes, such as passing legislation that removed the sunset clause, a historical provision that was creating inefficiencies regarding the letter of credit and bond approval processes.

There are even more positive results on the horizon, as the division constantly reviews its processes to make sure they are in compliance with the regulations and laws, while also becoming as efficient as possible. “We will work for years to come, working with internal city departments who utilize the bond program, to better characterize the nature of the program, and invite feed
back on what’s working and what’s not.”

 

Making It Count: Spotlight on Jones, Henle, & Schunk, Strategic Accounting Advisors

Construction is so much more than being out in a job site. In fact, the success of a company can hinge on a properly performed construction contract. That’s why it’s important to have experts with a deep and wide knowledge of the construction industry.

Jones, Henle & Schunck (JH&S) started 35 years ago with two partners. One of the two, Kay Jones, was a chief financial officer for a construction company, which created the groundwork for a firm that focused on the construction industry’s accounting, income tax and general business consulting needs.

Tom Henle and Karl Schunck joined very shortly after the firm opened. While Schunck’s years with a “Big 8” firm primarily involved publicly traded companies and SEC compliance oriented work, he was ready for a change. “Although I valued that experience, I wanted to have a closer relationship with my clients, to make a difference,” Schunck says. Most of the privately-owned companies the firm serves do not have CPAs as controllers or CFOs. “This provides the opportunity to have an impact on their operations,” says Schunck. “It’s a very satisfying experience to save large sums of money by properly structuring events or transactions involving their operations.”

Schunck remembers one construction company who was having trouble obtaining surety bonds, because it was having a difficult time “making its case” with the surety bond underwriter and broker. One of the new client’s problems was a failure to understand and thus properly report in their financial statements the concept of “under” and “over” billing.

Schunck and the company president/majority stockholder cleared a conference table and analyzed how every line on their jobs in progress schedule worked, and how it impacted the balance sheet and income statement. After that meeting, the company’s issues with its bonding company and bank vanished, and it went on to be awarded honors in Washington, DC as the National Minority Contractor of the year.

Another key for owners and their financial personnel is understanding what’s in their financial statements and corporate income tax returns. It can be downright embarrassing to not be able to answer a banker’s question, for example, why gross revenues in the financial statement are different from what’s reported in the tax return. The owner needs to understand that one may be based on percentage of completion reporting, and the other on the completed contracts or cash method of reporting revenues.

Owners and their financial personnel also need to understand the impact of accounting transactions and how they “flow” into their balance sheets and income statements. They should be able to visualize how approval of a project change order, for example, affects under or overbillings, the working capital ratio, stockholders’ equity or any of a number of factors used by banks and surety companies in granting credit. Demonstrating such an understanding with a surety bond underwriter or a banker greatly enhances creditability with those business partners.

Almost all of JH&S’s construction clients emerged successfully from the downturn, including those in residential construction such as grading and paving, plumbing, electrical, landscape and the like. Yes, construction volumes generally decreased but the firm’s residential construction clients are poised for expected volume increases.

To assist them in processing their accounting data and construction activities, JH&S’s construction clients utilize a variety of accounting software, which are fully integrated and provide proper cut off and audit trails, work in progress or “bonding company reports” and estimating and construction equipment modules often necessary to contractors.

With its proven expertise in construction, it’s no surprise that JH&S has partnered with Merriwether & Williams for over ten years. Over the years, the firm has given construction accounting classes for their current and prospective clients and participated in MWIS’s contractor networking events. It’s a mutually beneficial partnership that yields great results on both sides.

JH&S serves its clients with over 25 employees, including over 20 professionals, from its Danville, California and Orange, Southern California offices.

Program Partner Spotlight: The Leavitt Group, Kenneth Goodwin and John Daley

There are many groups that help make the City and County of San Francisco Surety Bond & Finance Program a success.  One of those is with Kenneth Goodwin and John Daley of The Leavitt Group, also one of our longest standing partnerships. We want to celebrate their efforts in helping our small business contractors here in San Francisco and help you understand what they are all about.

Q. What is your relationship with the City and County of San Francisco Surety Bond and Finance program? 

We have been a strategic partner of the San Francisco Surety Bond and Finance program for the past seven years. We provide surety expertise and brokerage services to contractors requiring performance and bid bonds on projects qualifying for assistance under the Program.

Q. How has the program assisted your clients with obtaining bonding? Have there been any memorable success stories for any of your clients?

The program has allowed a number of our clients the opportunity to bid larger projects than would not ordinarily be approved in the standard surety market. With the Program’s support, a contractor can gain experience managing larger projects. This can help sustain financial growth and increase bonding capacity, with the goal of transitioning the contractor into a suitable program with a non-collateral surety market.

We consider every bond issued with the support of The San Francisco Surety Bond and Finance Program a memorable success for our clients.

Q. How do you advise your clients to prepare for obtaining their first bond?

Sureties require a good deal of information to properly underwrite a first submission. Be prepared to submit business and personal financial statements, resumes, project and credit references, etc. Have information readily available in order to respond quickly to inquiries about yourself, your business and the job you are interested in bidding. Most importantly, make sure the project you wish to bid on is within your scope of expertise; never bite off more than you can chew.

Q. What are some of the key ingredients for a contractor to increase their bonding capacity?

• Successful completion of bonded and un-bonded projects
• Slow and sustained growth.
• Bid sensibly; do not “buy” (bidding only at cost in order to be determined the lowest bidder to keep your crews working) work.
• Maintain sustainable gross profit margins and be sure you can cash flow your entire backlog.
• Reinvest profits in the company – do not unnecessarily drain equity.
• Engage an experienced construction oriented CPA to prepare compiled or reviewed financial statements
• Utilizing resources like the bonding assistance program for support.

Q. Have you had any contractors significantly increase their bonding capacity to a level beyond the parameters of the program?

A number of our clients previously requiring support from the program have transitioned into the standard surety markets. Some of them have bonding capacities beyond the thresholds of the Contract Monitoring Division LBE Program.

Contact our Leavitt Group representatives for more information on their services:

Kenneth J. Goodwin

Vice President, Surety

1390 Willow Pass Road, Suite 800

Concord, CA 94520

Phone: (925) 822-9050

Fax: (925) 309-8076

Email: kenneth.goodwin@leavitt.com

John J. Daley

Vice President, Surety

1390 Willow Pass Road, Suite 800

Concord, CA 94520

Phone: (925) 822-9007

Fax: (925) 309-8075

Email: john.daley@leavitt.com

Seminar Highlight: Rob Garner, The Gordian Group

What is Job Order Contracting?

In 1981, Harry H. Mellon was serving as Chief Engineer in the Army Corps of Engineers for NATO operations in Europe. Faced with a number of high-priority projects that needed to be completed quickly with limited resources, he became frustrated with the sluggishness of the standard bid process for construction. So he invented a new process by devising, bidding, and implementing the first ever JOC system. By definition, JOC is a type of contract that allows owners to accomplish a large number of repair, maintenance, and construction projects with a single, competitively bid contract.

After JOC proved successful for NATO, Mellon was asked to do the same for the Department of Defense. When he realized the process was not only effective at the federal level, but cities and counties would benefit as well, Mellon founded The Gordian Group. Currently, The Gordian Group is working on the San Francisco International Airport project and in the bay area as a consulting firm specializing in JOC Management.

Project Manager Rob Garner explains the benefits of the JOC process: “JOC has always fit a niche. It allows a city or county to be more efficient and complete critical projects quickly, without having to go through the design process. The only information required is what is permitted. So for smaller projects like changing doors or hardware or doing a remodel, installing security – any of a thousand things – the city or county isn’t obligated to go through the long process of hiring an architect or design team. There are tremendous savings in both time and soft costs for those that are pressed to perform under these kinds of constraints.”

Often, JOC projects can seem intimidating to prime and subcontractors because of the many steps involved to qualify. Companies like The Gordian Group are there to help decipher the contracts that are based on each city’s administrative codes. “Developing the bid package and maintaining integrity of the process is one of our primary goals,” says Gardner. “We research, manage and publish the task catalog. For a client in the construction process, there could be 300,000 standard difficulty bid factors to our catalog prices.”

To become more informed and prepared to bid on JOC projects, contractors and sub-contractors are encouraged to participate in outreach programs. When pre-bids are mandatory, contractors benefit from completing upfront analysis of the programs. In pre-bids, The Gordian Group helps explain the risk and rewards of JOC. “It’s not a new process, but not everyone understands it,” Gardner adds. “We would love to see an auditorium filled with people learning about how they can benefit from JOC.”

There are some clear advantages for contractors and sub-contractors bidding on JOC contracts. It’s all about growth. Since these are smaller projects, pre approved contractors perform like on-call resources, ready to execute quickly on fixed-price projects. Since the JOC model doesn’t rely on design components the way conventional contracts do, contractors complete multiple smaller jobs that roll up into the overall value of their contract. Of course, contractors must perform high-quality work in order to continue receiving projects. However, it is typical that those contractors and sub-contractors who become very proficient at JOC also become very successful in growing their business, often developing whole teams devoted to JOC. As a result, projects get completed quickly, fairly, and at a high quality level so that everyone wins.

Spotlight: Naomi Kelly, San Francisco City Administrator

On February 7, 2012, Naomi M. Kelly was sworn in by Mayor Edwin M. Lee to serve as the City Administrator for a five year term for the City and County of San Francisco. As City Administrator, Ms. Kelly oversees the City’s General Services Agency consisting of 20 departments, divisions, and programs including the Department of Public Works, Department of Technology, Administrative Services, Office of Contract Administration/Purchasing, Real Estate, County Clerk, 311, Fleet Management, Convention Facilities, Animal Care and Control, Medical Examiner, Treasure Island, and more. The General Services Agency has an annual budget of over $450 million and approximately 2,100 employees. In this capacity, Ms. Kelly’s objective is to ensure responsible fiscal management and accountability to those who pay taxes for our local government to provide essential services.

Prior to her appointment, Ms. Kelly was the Deputy City Administrator where she assisted Mayor Lee in rolling out the City’s new local hiring policy by preparing and working closely with City departments, contractors, and the broader community to ensure compliance with the new legislation. The new policy required contractors performing public works or other capital improvement projects to meet mandatory levels of San Francisco resident participation that support the local economy.

In 2004, Ms. Kelly was appointed the City Purchaser and Director of the Office of Contract Administration by Mayor Gavin Newsom. Ms. Kelly managed the procurement of approximately $250 million in materials and supplies and approved approximately $500 million of professional service contracts that support the operations of city services in a fair and transparent manner. She also improved the department’s performance by enhancing and streamlining the procurement procedures.

Q: Has the local hire policy had any documented impact on local contractors seeking work with the City and County of San Francisco?

No, there has been no documentation of the Local Hire Ordinance’s impact on local contractors. However, the Office of Economic and Workforce Development (OEWD) did release the San Francisco Local Hiring Policy for Construction 2011-12 Annual Report in March which found that 34% of total craft hours and 68% of apprentice hours for 22 active Public Works projects have been performed by local residents. The City’s Local Hire Ordinance was adopted in December of 2010. As more information on the legislation’s impact is released, the Contract Monitoring Division (CMD) will work with OEWD to gauge the ordinance’s effect on LBE-certified firms.
Q: How has the city been assisting small contractors with bidding on local contracts?

The Contract Monitoring Division works in collaboration with city departments when they award their contracts. For example, the City has a set-aside program that awards to Micro-LBEs depending on the size of the contracts. For public works contracts estimated to be equal to or less than $400,000, the amount will not be less than 50%. For public works contracts estimated to be equal to or less than $100,000, the set-aside award to Micro-LBEs will not be less than 25%.  In addition, during pre-bid, pre-proposal meetings, CMD encourages all contractors, including small and micro LBE firms to request technical assistance to ensure clarification on contracting requirements. Under the 12B, Equal Benefits Program, CMD ensures timely and efficient analysis of their 12B submittals, thereby increasing the pool of pre-qualified small contractors.
Q: How is the City prepared to assist small contractors with JOC contracts that are becoming more prevalent as a bidding mechanism throughout the City and County of San Francisco?

One of the main concerns by small contractors with respect to JOC contracts is the bonding requirement.  CMD worked with the PUC & DPW in order to set up a Micro Set-Aside JOC requirement that helps alleviate the bonding requirement concern (e.g. tying up small contractor bonding capacity). The City’s Bonding and Financial Assistance Program for small contractors assists in this endeavor.  The first JOC contract at the Airport will be advertised in early 2013.  CMD has set the Airport JOC contract with a 25% LBE sub-goal.  The license requirement is a “B” General Building trade.

Our City’s Risk Manager has also been working with the contracting departments and the City Attorney’s office to secure options for bond duration modifications on these JOC contracts.  It is still a work in progress but is something that is at the forefront of our attention.

Q: What is your history with the City and County of San Francisco Surety Bond Program?

As the City Purchaser, I worked closely with the Risk Manager on the Surety Bond program. I have been intimately aware and supportive of the program. I worked daily on LBE contracting issues and while my direct interaction with the program was limited, the coordination of LBE outreach was central to our mission.  As City Administrator, I have taken the lead in updating the program’s legislation to make the administration more cost effective and efficient.  Additionally, I am currently overseeing the complete review of the program from both a process and cost perspective to ensure it provides the most effective support possible to the contracting community, which in turn, gives the City a more competitive pool of bidders.

Q: How is the new local hire policy expected to increase work for small and micro LBE contractors?

Local businesses are more likely to hire local employees. Prime contractors may be more inclined to hire LBE-certified firms as subcontractors to meet both their LBE and local hire goals. In 2010, the HRC surveyed over 90 LBE-certified General A & B licensed firms and found that over 40% of employees working for these firms were local residents

Q: With the transition of the LBE program to your jurisdiction, what are a few of your targeted objectives for 2013?

• Continue to implement and expand the Elations Contract Compliance Tracking System to allow for online monitoring of contracts and certification of local firms.
• Increase the total dollar amount of contracts awarded to LBE-certified firms through micro set-aside and Proposition Q purchases
• Revise, update, and expand Chapter 14B of the administrative code to create greater opportunities for LBE-certified firms
• Provide targeted outreach, such as fencing, roofing, etc. These are categories needed by departments that lack LBE availability
• Continue to lower the barriers for LBEs to compete for City construction contracts through our Surety Bond Program. We want to improve program administration and increase access for local businesses. The Risk Management Office has a dedicated staff person working with city departments and companies. The Risk Management team understands the surety market and the many challenges that our LBE contractors are facing in the market place. They are currently working to streamline the bond approval process. We are exploring the possibility of expanding the eligibility of the participants from not just construction contracts to other contracts requiring performance and/or payment bonds.

Q: With the significant number of private major public/private projects like Block 6 and 7 of Transbay, 8 Washington, Warrior’s Project, what will LBE opportunities look like and how will the City capitalize on maximizing leverage negotiating with these private parties?

Under the current Chapter 14B Ordinance, CMD does not have jurisdiction over private development projects. However, the City has in the past negotiated agreements to include LBE subs and utilize the local hire process (Harding Park, AT&T Park, etc).  If the City negotiates an agreement to utilize LBE firms with private parties, CMD can provide technical assistance to developers on the program (e.g., setting LBE sub goals, good faith outreach, and contract monitoring, etc.).

Success Story: GECMS, Inc.

With goals of growing his San Francisco-based general engineering and building construction company exponentially, Bruce Giron realized he needed to focus on his business structure and then pursue partnerships to promote growth. He found companies in JOC projects that needed sub-contractors and developed a relationship with one, and then another. “It turned out they liked the work I did and with enough successful performances they recommended me for more jobs,” says Giron. Business is booming.

Getting prepared for JOC required Bruce to assess his current situation and available resources. “The small business program is well intentioned, but at the end of the day, businesses like mine don’t have a lot of administrative time. They are trying to work from the field,” he says. “It’s necessary to fly co-pilot with people who are willing to help. The assistance from the city’s surety bond program and Merriwether & Williams was much needed to secure the bond. I’ve talked to other small businesses that are overwhelmed by the amount of administrative tasks required to participate in these types of bids. In San Francisco the bar is pretty high. Bond assistance programs are essential. For me this made all the difference in taking the first step.”

Giron has more advice to other contractors looking to get into JOC: “Work on one problem at a time. If you think about the mountain all at once, you won’t climb it. You are going to have to find others that have traveled the path to assist you. They can help remind you that you are not alone and you don’t have to climb the mountain in a single bound.”  Bruce came to realize that there are a lot of steps necessary in acquiring a bond. He says “Merriwether & Williams has been extremely helpful. Their expertise allowed me to continue to focus on the administrative needs of my business while getting the bond. Now I can. That’s another mountain I’ve conquered.” For Bruce it’s on to the next mountain.

SEMINAR SERIES HIGHLIGHT: OFFICE OF LABOR STANDARDS ENFORCEMENT

The City’s Office of Labor Standards Enforcement, (OLSE) enforces labor laws adopted by the San Francisco Board of Supervisors and by San Francisco voters. OLSE works to educate employers and workers about these requirements and serves as a resource to employers who need additional information.

OLSE also ensures that contractors on City funded construction projects comply with prevailing wage laws and other labor standards contained in local, state, and federal law. The prevailing wage rates are set by the California Department of Industrial Relations (DIR) and adopted by the SF Board of Supervisors. These rates can be found at: http://www.dir.ca.gov/DLSR/PWD.

The goal of the OLSE Prevailing Wage Unit is to ensure that workers are paid the correct prevailing wage rate for the type of work they perform. Enforcement of these requirements also promotes a level playing field for contractors bidding on City work.

In conjunction with the OLSE, San Francisco’s Surety Bond Program hosted three free trainings this spring regarding prevailing wage requirements that apply to work performed for the City & County of San Francisco. In the first seminar OLSE compliance officers Mary Marzotto and Shirley Trevino reviewed the DIR Prevailing Wage Determinations and how to read and understand what is required. This topic included information about wage rates, fringe benefits, classifications, apprenticeship requirements, travel and subsistence and other labor standards.

Scope of Work was reviewed in the second seminar. OLSE reviewed the types of work that may be performed by each craft based on the information published on DIR’s website. The seminars were very interactive and participants presented various work related scenarios which were analyzed by the group and the OLSE leaders.

In an effort to make contracting with the City more efficient, City departments implemented a web based system provided by Elation Systems, Inc., for projects advertised for bid after July 1, 2008. Ardis Graham of OLSE, who oversees the City’s contract with Elation, explained to contractors how to submit Certified Payroll Records using the electronic system. He also explained how to make corrections to payroll records when errors or omissions are made and the types of documentation that are necessary to support such changes.

The OLSE is committed to ensuring that stakeholders – including contractors, contracting officials, unions, workers and other interested parties – understand the wage and fringe benefit requirements that apply to city contracts. OLSE staffers said that they were pleased to provide the contracting community with these free prevailing wage trainings. They are a key component of the OLSE’s ongoing efforts to foster good relations through increased awareness of prevailing wage requirements.

Information about labor standards requirements is provided by OLSE staff at pre-bid and pre-construction conferences and is available at the OLSE website (http://www.sfgov.org/OLSE). Contractors and subcontractors are encouraged to call their office for information or to answer any questions about wage rates, classifications, apprenticeship, overtime provisions, certified payroll requirements or any other labor standards question.

Success Story: AJS Painting and Decorating

Alphonso Rhodes, owner of AJS Painting & Decorating, doesn’t like turning down jobs. But that’s exactly what happened when he got offers for big projects that needed bonding that were over his capacity.

But everything changed when he bid on a project for a million-dollar water plant project in San Bruno. with Keiwiet Infrastructure. They liked his company, which he started in 2001, but they told him they needed a bond.

Something clicked for Rhodes. He had known about the San Francisco Bond Assistance Program for a long time through his network, but never really needed to apply. Now he did.

He applied, was accepted, and got the job. He got paid, and got to work. It was his first bond. A little procrastination aside, he says that the process was relatively quick and easy. The folks at the Bond Assistance Program not only made things easy, but also helped him better understand his contract, working out details on topics like liquidated damage.

He started the four-year job in December 2012, and plans to hire at least two more employees in the near future. “It’s a beginning, a new birth,” he said. “I was like a little kid waiting for the paperwork to come in, and when I got it, it was like Christmas,” he says.

The bonding has already helped him tremendously. And he’s confident that it will keep paying off. “If you want to make it out here with the big boys, you have to get one,” he says, noting that it will help him with bidding on a job as a prime. “I can bid on other jobs that I’ve been turning down.”

Spotlight: John Martin: Leading SFO into the Future

                            

John Martin is the Executive Director of San Francisco International Airport. We caught up with John recently to ask him about what’s happening at the airport.

Q: What are the major upcoming projects at SFO? 

 

We are remodeling boarding area E in Terminal 3, which is the old American Airlines boarding area, to make room for the expansion of United Airlines. This project should be completed by 2014 and is valued at $140MM. In addition, we are completely renovating Terminal 1 and building another boarding area B, encompassing approximately 20 gates, making it a very large project. It should be complete by 2014 and is valued at $1B.

We are also replacing the Air Traffic Control tower, which was originally built in 1983. The new tower is expected to be completed by 2015. This project is valued at $120MM We are also complying with a congressional mandate to make additions to the runway safety area. It’s valued at $220MM.

Most people are unaware of what happens behind the scenes to make the airport run smoothly and efficiently. We are continually reinvesting in maintaining state-of-the-art facilities – if not, our airport would fall behind other major international airports.

Q: What is SFO doing to assist small and local businesses to compete on SFO projects?

We package the contracts so that small businesses can bid as prime contractors. We also set goals so that large contractors must subcontract to local firms at a significant level that reflects the diversity of the City and region.

Big contractors by and large want to support the airport’s goals and achieve a high level of business inclusion. In a recent project, 50% of the $383MM went to local contractors.

We utilize a Design Build methodology – Prime contractors are chosen through an RFP process rather than a low bid. This encourages them to support local hire initiatives and deliver the project on-time and on budget.

Q: What is the history of SFO and the City and County of San Francisco Surety Bond Program?    The bond program was created in 1996 as a part of the $2.4B master plan for the airport. It began as a pilot program for the city, and the first for the airport, soon became city-wide.

The success of the bond program, really shows the value of pilot (test) programs. The bond program pushed the envelope at the time, it was a vanguard program, particularly because of the guarantees that the airport would provide. When the airport created their program, the underlying fear was that there would be many losses, which proved not to be true. In terms of risk management, these programs work, are effective, without any significant losses.

Q: Why do you feel that diversity and inclusion is important as a public agency?

Our vision at the airport is to provide an exceptional service and serve every part of our community. The airport is an economic engine for the region and everyone should see the progress we’re making as beneficial to the entire Bay Area. This is a large part of why our mission statement says “communities” and not “community” because it is our job to serve the diversity of the communities we serve.

Currently, we are rethinking how we serve the disabled community and how they experience the airport. We are working very hard to make sure everyone enjoys the benefits of our amazing airport.

Q: What is your vision of the next 10 years?

We really hope to use the airport as a model for other airports. We are currently a leader in environmental programs and we’d love to see more companies use the airport and our continued development spring board more small businesses to a national level.

I love to see small businesses get their start in San Francisco, especially at the airport, and become national companies. Luster Construction Management, Pacific Gateway Concessions. These companies started working on projects at SFO and have truly grown to become national companies.

One can say that MWIS was able to grow significantly through its partnership with the airport. That is refreshing to see and demonstrates the impact of these types of programs.

Over the next 10 years, the airport is investing in over $2B in improvement projects and we take pride in working with the community to make sure there are business opportunities for MBE and LBE firms to compete.