San Francisco

Naomi KellyOn 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.).

SF Recreation and ParksWith 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.

Fair Wages

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:

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 ( 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.

John Martin - Executive Director SFO

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.