DPH Implementation of the Locally-owned Business Enterprise (LBE) - PowerPoint PPT Presentation

DPH Implementation of the Locally-owned Business Enterprise (LBE) Ordinance

LBE Ordinance Purposes: 1. Assistance to Small Local Businesses to Compete for City Contracts • Mayor sets Citywide LBE contract participation goals • LBE Ordinance provides tools to reach goals – Bid Discounts – Subcontracting Goals – Set Asides – Information and Training – Other Assistance (bonding, mentorships) • Contract Monitoring Division (CMD) of the City Administrator’s General Services Administration (GSA) assists City departments in meeting goals 2

LBE Ordinance Purposes: 2. Ensuring Non-discrimination • For purposes of ensuring non-discrimination in City contracting and subcontracting , Small and Micro- LBEs (excluding non-profits) are certified as: – MBEs (Minority-owned Business Enterprises) • “Minority” defined as: African, Arab, Asian, Iranian, Latino or Native American – WBEs (Woman-owned Business Enterprises) – OBEs (Other Business Enterprises; which are not MBEs or WBEs) 3

Administration of LBE Ordinance • The LBE Ordinance is administered and monitored by the City’s Contract Monitoring Division (CMD) (formerly at the Human Rights Commission/HRC). CMD performs the following: – Certifies qualified entities to become LBE’s – Sets LBE contracting participation goals and monitors solicitation and selection processes – Conducts workshops and provides technical assistance to bidders, prime contractors, subcontractors, and City staff – Facilitates the Bonding and Financial Assistance Program – Determines pre- and post-award compliance – Tracks and reports City departments’ LBE participation – Investigates, mediates and resolves certification and compliance complaints, including prompt payment issues 4

Who Qualifies to be an LBE? • For-profit or non-profit enterprises which: – Provided all services in San Francisco (for at least the past 6 months) – Perform a commercially useful function, independent and continuously in operation • Suppliers must maintain a warehouse in the City stocked with inventory consistent with their certification • Non-profits must demonstrate that the majority of their paid and volunteer staff are based in a San Francisco office. 5

Maximum Annual Economic Thresholds for LBE, PUC-LBE, NPE & SBA Certification Qualification “Micro” “Small” “SBA” Bid Discount: Bid Discount: Bid Discount: 10% 10% 2%* Class A and B General Contractors $7,000,000 $14,000,000 $33,500,000 Specialty Construction $3,500,000 $7,000,000 $17,000,000 Trucking and Hauling $1,750,000 $3,500,000 $8,500,000 Goods, Materials and Equipment $3,500,000 $7,000,000 $17,000,000 Suppliers General Services $3,500,000 $7,000,000 $17,000,000 Architects and Engineers $1,250,000 $2,500,000 $7,000,000 Professional Services $1,250,000 $2,500,000 $7,000,000 Note: LBE size thresholds based on average annual gross revenues for the past 3 years. 6

LBE Availability • LBE Ordinance historically has focused on City contracts for Construction and for Architecture and Engineering, with the majority of LBEs certified into these categories. • DPH Contracts often have additional specific requirements within an LBE service category (HIPAA, healthcare environment experience, IT knowledge specific to existing programs, etc.). • As a result, not all registered “available” LBEs within a designated service category will be ready, willing and able to deliver the required service, and not all LBE service categories will have a sufficient number of available LBEs. 7

How Does DPH implement the LBE Ordinance? • LBE language included in all: – RFPs/RFQs – Contracts • LBE Subcontracting goals set in Facilities Maintenance contracts • Good faith efforts (outreach) 8

Waivers of the Ordinance • Waivers are available when: – Contract is Federally or State funded – Contract awarded as the sole source of services – Contracts over $5 million: • Qualified LBEs are not available, or • Bid discount results in additional costs 9

Project Overview LBE Utilization - DPH Construction – SFGH Rebuild • Local Hiring: 845 San Franciscans 35.0% Local Hiring % employed to date 30.0% • Represents 25 % field labor hours 25.0% Local Hiring • Exceeds 20% goal. Minimum 20.0% 15.0% • 151 Local Business Enterprises LBE % 10.0% Utilized • $62.1 million in contracts 5.0% LBE Goal awarded 0.0% Represents 9% of trade • packages awarded to LBE’s • Exceeds 5% goal 10

LBEs Utilization - DPH Construction Facilities Maintenance Awards Service Area % LBE/SBA participation Concrete 100% Plumbing 100% Fire Curtains 100% Fire Doors 100% Glass Repair 100% Modulator Furnishing Systems 100% Motorized Doors and Gates 100% Carpentry 80% Electrical 75% Landscaping 67% Roofing 50% Pigeon Abatement 50% Steam Cleaning 50% Painting 40% Flooring 33% Air Ducts, Mechanical 0% 11

LBEs and Professional Services – Operating Contracts • While DPH has a significant operating budget for professional services, the bulk of these expenditures fall into categories where the City has a limited number of certified LBEs • The table on the following page lists major categories of services by operating expenditure, and LBE availability 12

LBE Utilization: DPH Professional Services FY 13-14 (Excludes Capital and Facilities Maintenance Projects) Actual Services Expenditures # of DPH LBE's # of Available LBE's Transportation Services 370,627 1 2 Special Inspection & Testing Services 1,800 0 0 Auditing & Accounting 244,150 0 12 Management Consulting Services 1,213,041 0 0 Systems Consulting Services 13,849,855 0 7 Stipends 52,520 0 0 UC Medical Services 1,275,872 0 0 CHN Services 2,500 0 0 Other Medical and Professional Services Community Based Organizations 250,574,553 5 10 PPN - Mental Health Provider 3,815,857 0 0 Housing 4,919,725 0 0 Fiscal Intermediary 7,805,685 0 0 Medical 5,391,370 0 4 Translation 17,960 0 0 Environmental Health 473,439 0 7 Facilities 396,387 1 16 IT Consulting 748,160 1 7 Public Health Consulting 760,399 0 0 San Francisco Health Plan 24,417,606 N/A N/A State 1,380,702 N/A N/A Other Professional 132,159 0 0 Subtotal 300,834,002 Total 317,844,368 13

Reforms proposed by Mayor Lee and Board President Chiu • Citywide goal of 40% or more of total available contract dollars (“aspirational”) (may be met with combination of prime and subcontracts) • Subcontracting goals must be 20% (unless CMD justifies a lower goal) Contracts $10 million-$20 million: Additional 2% bid discount for LBEs • • Contracts <$10 million: SBA “graduates” get new 5% bid discount • To allow continuing participation for “graduates,” thresholds for certification increased in certain industries • Development agreements to included LBE utilization plan 14

Reforms proposed by Mayor Lee and Board President Chiu (cont.) • SF First program: Departments to make Good Faith Efforts to at least 3 LBEs before opening competition (bid/RFP/RFQ) for: – Construction contracts <$400,000 – Professional service contracts <$100,000 • Mentor-protégé program to foster partnerships between established contractors and local businesses • Subcontractor Advance Program (City departments enabled to make loans to subcontractors against invoices for work already performed, when prime contractor has not paid subcontractor) 15

Increasing LBE availability for DPH contracting needs • Identify any service categories where there are more opportunities to meet goals • Examine DPH use of small contracts • Work with CMD to identify more LBEs • Focus outreach to increase LBE participation 16