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(A) Good Faith Efforts by Awarding Authorities to Obtain LBE Bids on Prime Contracts. Contract Awarding Authorities shall use good-faith efforts for all Contracts subject to the Discount provisions of this Chapter to solicit and obtain Bids from the broadest possible diversity of LBEs and to ensure that MBEs, WBEs, and OBEs are not arbitrarily excluded from participation. Good faith efforts shall include the following:
(1) Arranging Contracts by size and type of work to maximize the opportunities for LBEs to participate. This includes dividing projects into smaller parts.
(a) As soon as practical before soliciting Bids, Contract Awarding Authorities shall submit Large Contract Proposals to the Director for review. The Director shall determine whether the proposed Contract can be divided into smaller Contracts so as to enhance the opportunity for participation by LBEs. For purposes of this paragraph, "Large Contract Proposals" means any Public Works/Construction Contract estimated to cost more than $5,000,000, any Professional Services Contract estimated to cost more than $1,000,000, and any Commodities Contract with a term greater than one year, including any options to renew or extend.
(b) If the Director determines, after consulting with the Contract Awarding Authority, that the Contract can be divided into smaller Contracts, then the Director and the Contract Awarding Authority shall confer regarding all of the costs and benefits of soliciting the Contract as a single Contract or dividing it into smaller Contracts, including but not limited to the potential for enhanced opportunities for LBE participation as Prime Contractors, the potential for LBE participation as Subcontractors, suitability of procuring the work through Micro-LBE Set-Aside under 14B.7(K), relative costs, administrative issues, and any other matters relevant to the accomplishment of the purpose of the subject Contract or Contracts. If, after exchanging information and conferring regarding these issues, the Contract Awarding Authority and the Director are unable to agree on whether to divide the Contract into smaller Contracts or how to divide the Contract, the Mayor or the Mayor’s designee provided that the designee is not the department head of the Contract Awarding Authority shall resolve the matter.
(2) Outreaching to all LBEs with appropriate certifications for the work or services to be performed to solicit their interest in specific contracting opportunities when not impracticable to do so, and encouraging LBEs to attend prebid meetings.
(3) Posting contracting opportunities on the Department, Office of Contract Administration, and/or other centralized City website, as applicable, with adequate lead time for LBEs to effectively respond to the opportunity.
(4) Providing all Bidders, including LBEs access to adequate information about the plans, specifications, and requirements of the proposed Contract.
(5) Using the services of community and contractors' groups to assist in the recruitment of LBEs.
(6) For Professional Services, General Services, Architect/Engineering and Commodities Contracts, the estimated cost of which exceeds $10,000 but is less than the Minimum Competitive Amount or for Public Works/Construction Contracts, the estimated cost of which exceeds $10,000 but is less than the Threshold Amount, Contract Awarding Authorities are not required to undertake the good faith efforts steps set forth in Section 14B.7(A)(3) when it is impracticable to do so.
(B) Best Efforts on Contracts Not Otherwise Subject to this Chapter. Contract Awarding Authorities shall adopt the same good faith efforts set forth in Section 14B.7(A) for the award of leases, franchises, concessions, and other Contracts not subject to the Discount provisions of this Chapter, unless impracticable to do so. At a minimum, Contract Awarding Authorities shall notify LBEs that are certified to perform the work contemplated in a Contract and solicit their interest in the Contract.
(C) Equal Opportunity in Prime Contracting. Contract Awarding Authorities shall ensure that all aspects of their contracting process are transparent, fair, and do not arbitrarily disadvantage or discriminate against LBEs or any other business or Person on any basis prohibited by law. Contract Awarding Authorities shall document their selection processes as required by the Director to monitor and ensure compliance with this provision. The Director shall report any contracting process by a Contract Awarding Authority that the Director believes may be discriminatory in nature to the Human Rights Commission.
(D) Contracts Subject to Prime Bid Discounts. Contract Awarding Authorities shall apply Discounts to all Contracts the estimated cost of which exceeds $10,000 and is less than $10,000,000, except that the Bid Discount provisions applicable to SBA-LBEs shall apply only to Contracts (other than Commodities Contracts) with an estimated cost no less than $400,000 and no greater than $20,000,000, and to Commodities Contracts with an estimated cost no less than $400,000 and no greater than $10,000,000. Discounts shall apply to Bids from LBE Prime or Joint Ventures only where the LBE Prime or Joint Venture Partner will perform a Commercially Useful Function on the Contract. A LBE Prime or Joint Venture whose Bid receives a Discount and who thereafter fails to perform a Commercially Useful Function under the Contract at least equivalent in scope and value to the role represented in its Bid documents may be subject to sanctions as set forth in Section 14B.17(D) for noncompliance with this Chapter.
(E) Amount of Discount. Unless otherwise provided in this Chapter, Contract Awarding Authorities shall apply the following Discounts to each evaluation stage of the selection process, including qualifications, proposals, and interviews:
(1) For Contracts estimated by the Contract Awarding Authority to cost in excess of $10,000 but less than $10,000,000, a ten percent (10%) Discount to any Bid from a Small or Micro-LBE. If after the application of the Discounts provided for in this Subsection 14B.7(E)(1) or Subsection 14B.7(F) to any Bid from a Small or Micro-LBE, the apparent low Bidder or highest ranking Proposer is not a Small or Micro-LBE, Contract Awarding Authorities shall apply a 5% Discount to any Bid from an SBA-LBE. Contract Awarding Authorities shall apply this five percent (5%) Discount to Contracts, except that the five percent (5%) Discount for SBA-LBEs shall not be applied at any stage if it would adversely affect a Small or Micro-LBE.
(2) For Contracts estimated by the Contract Awarding Authority to cost in excess of $10,000,000 but less than $20,000,000, a two percent (2%) Discount to any Bid from a Small, Micro, or SBA-LBE for Public Works/Construction, Architect/Engineering, Professional Services, or General Services Contracts. Bids from Small, Micro, or SBA-LBEs for Commodities Contracts in excess of $10,000,000 are not eligible for the Discount.
(F) Joint Ventures For Professional Services and Architect/Engineering. Unless otherwise provided in this Chapter, for Contracts estimated by the Contract Awarding Authority to cost in excess of $10,000 but less than $10,000,000, Contract Awarding Authorities shall apply the following Discount to Bids from Joint Ventures with a Small and/or Micro-LBE Joint Venture partner participation on Professional Services and Architect/Engineering prime Contracts:
(1) five percent (5%) to a Joint Venture with Small and/or Micro-LBE Prime Contractor participation that equals or exceeds thirty-five percent (35%) but is under forty percent (40%);
(2) seven and one-half percent (7.5%) to a Joint Venture with Small and/or Micro-LBE Prime Contractor participation that equals or exceeds forty percent (40%);
(3) ten percent (10%) to a Joint Venture exclusively among Small and/or Micro-LBE Prime Contractors.
(4) Contract Awarding Authorities shall apply the Discount to each stage of the selection process, including qualifications, proposals, and interviews.
(5) The Contract Awarding Authority shall apply the Discount described in this subsection (F) only to Bids from Joint Ventures, as defined in this Chapter and its duly promulgated Rules and Regulations, on Professional Services and Architect/Engineering Contracts, and only to those Joint Venture Bids where the Director finds that the Small and/or Micro LBE Joint Venture partner (a) will be responsible for, and has sufficient skill, experience, and financial capacity to perform a clearly defined portion of the work, and (b) shares in the Ownership, Control, management responsibilities, risks, and profits of the Joint Venture at least in proportion to the value of its assigned Joint Venture work. The Joint Venture's Bid must set forth in detail the Small and/or Micro-LBE Joint Venture partner's portion of the work separately from the work to be performed by the non-LBE Joint Venture partner, and such work must be assigned a commercially reasonable dollar value.
(1) Each Bidder and Contractor shall be required to sign an affidavit declaring under penalty of perjury its intention to comply fully with the provisions of this Chapter and attesting to the truth and accuracy of all information provided regarding such compliance.
(3) No person shall knowingly make, file or cause to be filed with the City any materially false or misleading statement or report in connection with this Chapter. If the Director has reason to believe that any person has done so, the Director may conduct an investigation, and after notice and a full and adequate opportunity to be heard, may impose appropriate sanctions under Section 14B.17(D), or the Director may refer the matter to an appropriate governmental law enforcement agency.
(H) Additional Requirements.
(1) Each Contract subject to this Chapter 14B shall incorporate by reference, and require the Contractor to comply with the requirements imposed on Contractors therein. In addition, all Contractors shall incorporate by reference in all subcontracts entered into in fulfillment of a Contract's subcontracting participation requirement, and require Subcontractors to comply with, all requirements applicable to Subcontractors under Chapter 14B. Contractor's compliance with Chapter 14B and Contractor's duty to impose specified requirements in specified Subcontracts are material elements of the City's agreement to enter into the Contract and failure to comply shall constitute a material breach of contract.
(2) If the Director finds that any Bidder, Subcontractor or Contractor fails to comply with any of the provisions of this Chapter, rules and regulations implementing the Chapter, or Contract provisions pertaining to any LBE, LBE participation, or outreach, such Bidder, Subcontractor, or Contractor shall be liable for liquidated damages for each Contract in an amount equal to the Bidder's or Contractor's net profit on the Contract, ten percent (10%) of the total amount of the Contract or $1,000, whichever is greatest, as determined by the Director. The liquidated damages assessed shall be payable to the City upon demand and may be set off against any monies due to the Bidder, Subcontractor, or Contractor from any Contract with the City.
(3) Contractors and Subcontractors shall maintain all records, including but not limited to such information specified by the Director, necessary for monitoring their compliance with the duties imposed on Contractors under this Chapter, for five (5) years following expiration of the Contract, or, as applicable, Subcontract, and shall permit the City to inspect and audit such records.
(4) During the term of the Contract, Prime Contractors shall fulfill the LBE participation commitments stated in their Bids and memorialized in their Contracts. A Contractor's failure to achieve the level of LBE subcontractor participation specified in the Contract shall be deemed a material breach of contract.
(5) Prime Contractors shall include in all Subcontracts with a LBE a provision requiring the Prime Contractor to compensate the LBE Subcontractor for damages for breach of contract or liquidated damages equal to 5% of the Subcontract amount, whichever is greater, if the Prime Contractor fails to use the LBE Subcontractor as specified in the Bid and Contract unless the Director and the Contract Awarding Authority both give advance approval to the Prime Contractor to substitute the LBE Subcontractor or otherwise modify the LBE commitments in the Bid and Contract documents. It shall be a material breach of contract for a Prime Contractor to fail to include such clause in all Subcontracts with LBEs. This provision shall also state that it is enforceable in a court of competent jurisdiction.
(6) Whenever amendments, modifications, supplements, or change orders increase the total dollar value of the Contract, the Prime Contractor must comply with those provisions of this Chapter that applied to the original Contract with respect to the amendment, modification, supplement, or change order.
(7) Contract Awarding Authorities shall submit to the Director for approval all proposed Contract amendments, modifications, supplements, and change orders that cumulatively increase by more than twenty percent (20%) the total dollar value of all Contracts originally valued at $50,000 or more. The Director shall impose or increase the Subcontracting participation requirement as necessary to reflect additional opportunities for LBE participation from the proposed amendment, modification, supplement, or change order as appropriate.
(8) Prime Contractors and Subcontractors may not engage in any Back Contracting or other work shifting to a lower-tier Subcontract to evade using LBE Subcontractors to perform work or for any other purpose inconsistent with the provisions of this Chapter, or rules and regulations adopted pursuant to this Chapter.
(9) For the duration of any Contract subject to LBE participation requirements, the Prime Contractor shall pay its Subcontractors within three working days after receiving payment from the City unless the Prime Contractor notifies the Director in writing within ten (10) working days prior to receiving payment from the City that there is a bona fide dispute between the Prime Contractor and the Subcontractor, in which case the Prime Contractor may withhold the disputed amount but shall pay the undisputed amount. The Director may, upon making a determination that a bona fide dispute exists between the Prime Contractor and Subcontractor, waive this three-day payment requirement. In making the determination as to whether a bona fide dispute exists, the Director shall not consider the merits of the dispute. The Prime Contractor shall submit within 10 working days following receipt of payment from the City, a statement, in a form specified by the Director, attesting that he or she has paid all Subcontractors all undisputed amounts from previous City payments.
(J) Waivers. The Director shall waive the Discount provided in Section 14B.7(D), and post all approved waivers online on a CMD website, if:
(1) The Director finds, with the advice of the Contract Awarding Authority and the Office of Contract Administration, that needed goods or services are available from a sole source that is not currently disqualified from doing business with the City; or
(2) For Contracts in excess of $5,000,000, a Contract Awarding Authority establishes that sufficient qualified LBEs capable of providing the needed goods and services required by the Contract are not available, or the application of the LBE Discount will result in significant additional costs to the City if the waiver of the Bid Discount is not granted.
(K) Micro-LBE Set-Aside Program.
(1) Each fiscal year, each Contract Awarding Authority, in consultation with the Director, shall set aside the following for award to Micro-LBEs:
(a) Not less than 50% of eligible Public Work/Construction Contracts and
(b) Not less than 25% of Eligible Services/Commodities Contracts.
(2) Contracts under the Micro-LBE Set-Aside Program shall be competitively awarded in accordance with the Administrative Code, except that if (a) fewer than two qualified Micro-LBEs submit Bids, or (b) the Contract Awarding Authority determines that the Contract would not be awarded at a fair market price, then the Contract Awarding Authority may reject all Bids and rebid the Contract outside the set-aside program.
(3) Each Contract Awarding Authority shall include the following information concerning its compliance with the Micro-LBE Set-Aside Program to the Board of Supervisors as part of its annual report under Section 14B.15(B):
(a) Each Eligible Public Works/Construction Contract and, each Eligible Services/Commodities Contract awarded under the Micro-LBE Set-Aside Program, and its dollar amount; and
(b) Each Eligible Public Works/Construction Contract and each Eligible Services/Commodities Contract not awarded under the Micro-LBE Set-Aside Program, accompanied by an explanation as to why each such Contract either was not set aside, or, if set aside, was not awarded under the Micro-LBE Set-Aside Program.
(4) Contracts that are set-aside for award to Micro-LBEs shall not be subject to the subcontracting participation requirement under Section 14B.8. Micro-LBEs that subcontract any portion of a set-aside Contract should subcontract to businesses certified as Micro-LBEs, to the maximum extent possible. Micro-LBEs that subcontract any portion of a set-aside Contract must serve a Commercially Useful Function based on the Contract's scope of work, and must perform work directly with a value of at least twenty-five percent (25%) of the total Contract amount.
(L) San Francisco First Program.
(1) Unless otherwise provided in this Chapter, Contract Awarding Authorities shall use the good faith efforts set forth in Section 14B.7(A) to attempt to obtain at least three Bids from Micro or Small LBEs for all Public Works/Construction Contracts estimated to cost in excess of $10,000 but less than the Threshold Amount and all Commodities, Architect/Engineering, Professional Services, and General Services Contracts estimated to cost in excess of $10,000 but less than the Minimum Competitive Amount.
(2) If the Contract Awarding Authority is unable to obtain at least three Bids from Micro or Small LBEs, the Contract Awarding Authority shall prepare a written finding explaining why at least three Bids from LBEs were not obtained.
(M) Prompt payment. The City shall pay LBE Prime Contractors within thirty (30) days of the date on which the City receives an invoice for work performed for and accepted by the City.
(N) Best Value Public Works Contract Discounts. For Contracts authorized under Administrative Code Section 6.74, Contract Awarding Authorities shall apply the applicable Discount to the price or cost portion of the Bid only. No Discount shall apply to the qualifications portion of the solicitation.
(Added by Ord. 92-06, File No. 050784, App. 5/11/2006; amended by Ord. 20-10, File No. 091405, App. 2/10/2010; Ord. 97-10, File No. 100333, App. 5/13/2010; Ord. 8-11, File No. 101006, App. 1/7/2011; Ord. 250-14 , File No. 140999, App. 12/17/2014, Eff. 1/16/2015, Oper. 7/1/2015; Ord. 94-16 , File No. 160225, App. 6/3/2016, Eff. 7/3/2016; Ord. 220-20 , File No. 200949, App. 11/6/2020, Eff. 12/7/2020)