been heard by the human rights commission previously, and they support both pieces. back in february, the board had passed legislation sponsored by supervisor chu related to the edmund code. it was designed to streamline the city contract and processes and increase opportunities for san francisco businesses. -- related to the admin code. we were informed by the city attorney's office last week that this is in on substantive change. i would like to go over a few of the major points in chapter 14b. we are increasing the minimum competitive threshold amount for general services -- janitorial, pest control. we're going from $100,000 to $400,000. this change would create a

greater ease in entering into multi-year contract and would help create more micro lbe opportunities. we are clarifying certification requirements regarding ownership in a firm. this was made to address the complex ownership structure some small businesses may have. regarding micro lbe set-aside requirements, we're changing the requirements of the amount is not only based on the total number of contracts under the competitive threshold amount, but also on the availability of micro lbes as determined by the hrcs. we're providing an exception for architect, engineering, professional services, and general services contracts that are less than the minimum competitive amount, so long as goals are met. this is the same as with construction contract right now. this has to do with our amendment to the whole today, regarding lbe spa certification.

there was a problem identified by the city purchaser regarding commodities purchases. the amendment excludes the discounts being applied to commodities purchases. one technical change we are adding today would give the city treasury the ability to locate lines of credit for shorty bonds. otherwise, the city would have to issue -- surety bonds. otherwise, the city would have to issue rfps. i would like to bring up the hfc director to answer any questions you may have regarding those changes. chairperson maxwell: thank you. >> good afternoon, supervisors. our manager of our local business empowerment section will give you a presentation. we also have an abbreviated data

presentation as well. but we have a more detailed and more complete data presentation if you would like to see that. let me turn it over to alaric. he can present an overview of the amendments. if you want a more detailed presentation, we can present that as well. chairperson maxwell: this is the third time this has been in front of us. colleagues, do you need more in depth, or is the abbreviated version ok? would you like to ask questions now and they can answer them? supervisor mar: i understand that part of the need for this legislation came from the 25% requirement that was in the initial legislation that we had passed with the six pieces of legislation last year into this year. we had all been expecting amendments to that within a couple of months, which is what the legislation had required.

it is my understanding it has been about six months beyond the deadline of when we should have made the changes. at this time, we're actually out of compliance with current local law. -- supervisor chiu: >> that is correct. supervisor chiu: what is the reason this has taken so long? >> started negotiating with the purchasers office, with naomi kelly, last year between christmas and new year's. we continue negotiating in january and february. we continue to have discussions. we're ready to make presentations early summer and may. for one reason or another, and i will take full responsibility for this -- we were unable to get on the agenda of the board of this committee. so it has languished for about six months. we have already done training for many of the department purchasing agents. we've already done training with

many of our lbes anticipating this would pass this year. i will take full responsibility, supervisor. i apologize. supervisor chiu: another set of changes that are being proposed here around reporting requirements -- i am very eager to see what these reports are. i think when we had passed legislation a year ago, there were a number of reporting requirements to give us a sense of monitoring whether we are moving in the right direction. i hope we are about to see in this presentation is exactly that. the questions i have -- i know there are a number of reporting requirements being proposed. i am a little bit concerned about what we are moving so we do not lose the monitoring ability of what we had originally agreed to do a year ago. perhaps in your presentation it would be nice if you could address the reporting requirements, what has been reported, what we know, and what we do not know. >> i appreciate that. we fully agreed with your

requirement to do quarterly reports. we have seen a reporting of the data seems to give the departments a strong incentive to go forward, particularly micro lbes. you will see we have had a substantive increase in participation because of the reporting. we have reported quarterly to our lbe committee and to our commission. we are fully expecting to continue to report quarterly to this body as well. supervisor chiu: ok. one of the things i want to know is it appears that we were taking out quarterly reporting requirements in the proposed legislation, at least according to what we received from the city attorney. i will pause that as a question to you. "will pose -- i will close that as a question to the rest of the staff and perhaps we can address that later on.

>> good afternoon, supervisors. i am alaric. i work for the hrc. as was mentioned before, we will do a presentation which is kind of abbreviated, which talks about the lbe program reporting as well as proposed amendments. i want to briefly before i start, with regards to the reporting requirement changes that supervisor chiu mentioned -- we did not extract the requirements in the ordinance. what we're doing is changing the date from which it would start. it would be 90 days from the passage of the legislation, not a reduction of the reporting. i think to the contrary, we began doing as an agency and as a city is try to make the process ever more transparent and more open to everyone so we can see what is actually taking

place in contracting, whether it be on some of the city's smaller contracts, the second level, which are typically referred to as the set aside contracts, and along with all the other contracting. i am sorry if any of that was confusing in the legislation. it is my understanding and the intent, i am assuming, of myself, naiomi, and the hrc to not diminish or reduce the amount of reporting but to have it increase. supervisor campos: if i could -- supervisor chiu: if i could make one up for the rest of the staff, the document i received referred to the current section 14b7. that is being removed. there is another current section 12b7k4, which has cordially requirements during the first year. it seems the new proposed section would eliminate those

quarterly requirements. if someone could address that at some point later in the presentation, that would be helpful. >> i have a power point. i don't know. to summarize for the audience, i am aware the supervisors know what the purpose of the program is. as you know, we released a current program of the lbe program in fall 2006. it is a way of trying to get the city small businesses actively engaged in the contracting process in various different doorways, if you will. in the fiscal year for 2009- 2010, what we saw was that the hrc contract compliance projects

were responsible for $980 million of public contracts. this is largely due to the number of contracts at the puc on such as the new tunnel and the bay tunnels. we saw a large number of contracts during the past fiscal year under expecting to see ache large -- expecting to see a large increase for several years, specifically as driven by the contracting activity we are seeing at the puc and wsip, the water system improvement

project. of those dollars that are governed by 14d, we saw that 7% of $168 million going to lbes at the prime level and subcontracting level. on the chart before you, the red bar relates to subcontracts. thhe hrc establish subcontracting goals. the blue bar is when lbes were awarded at the prime contractor level. it is important we start increasing opportunities at the prime contractor level. that is when they can build their management capacity. there would have a direct contracting relationship with the city. i want to focus on the percentage, the 17%, which i think is a strong number.

but i want to clarify that that number would be even higher if you backed out some of the larger contract at the puc we had during the last fiscal year, the project i was referring to earlier, the tunnels. if you buckles up because they are such large specialty contracts, -- if you back those out because they are such large contract -- large specialty contracts, the lbe percentage is higher. this program is growing stronger and stronger. we need to be proud as a city for having this type of program directing these types of dollars into the lbe community. when concept or principle behind the program we have seen is those dollars get reinvested into the community. when that contractor hires staff people, those staff people go out to lunch. the are probably going out to a

restaurant in san francisco. they are paying local payroll taxes. overall, the extent of the program is a bit misleading by that 17%. that does take into account those large mega-contracts we are seeing at puc. supervisor chiu: these are all 2009 numbers? >> these are for fiscal year 2009-2010. the start july 2009 through june of 2010. supervisor chiu: july of 2009 through june of 2010. i think your charts are mislabeled. these all seem to be 2009 numbers, which is before the legislation passed from last year, unless i am mistaken. >> the legislation passed in the middle of the fiscal year. the legislation passed -- was passed by the board in january

2010. it was signed by the mayor in early february and became effective in march. we have not had more than six to nine months of operation under the new legislation. supervisor chiu: your data goes to the end of last year, but we are not looking at any data per 2010, right? >> we are not looking at data that specifically isolates' only 2010. supervisor chiu: i am looking to the entire presentation and it seems like there is no 2010 data. we can talk about this later, but i am trying to understand what the 2010 picture looks like. >> we do not have anything that specifically looks at the lbe data at in isolation from the point that this legislation was passed. the one thing i can tell you regarding the legislation and timing of it -- one of the things that was -- one piece of the legislation that the hrc and lbes in general were glad to

see where the changes to the micro set aside program. that is one thing i can isolate. i do not have it as a slide. we have approximately five and 10 micra set aside -- mircro set aside contracts in previous years, and now we have a to 1520 -- and now we have 15 to 20. that has doubled, if not tripled. that strengthens the micro set aside program enforces departments to report on that in collaboration with hrc. one of the proposed amendments would strengthen that program

even further, specifically as it relates to general services contracts. it would increase that amount from the current $100,000 to four under thousand dollars. what i can commit to doing is weak -- to $400,000. what i can do is present an isolated snapshot right now. we are working on the first quarter of this fiscal year, july 2010 to the end of september 2010. we should have a report done within the next couple of days. we are going to be reporting it to our core commission on thursday night. we can forward that to you and the full board at that time. supervisor chiu: that would be great. i do want to compliment you for pulling this together. i know it is not easy to do. what i seem to see from these slides is that the progress between the first half of last year and the second half of last year was good progress. >> yes, sir. supervisor chiu: that said, we

passed six pieces of legislation. that was in early 2010. what i am curious about is what the impact of those changes were on the various programs we talked about. you discussed the micro lbes. it would be good to get that data. the more we measure things, the better. we have a chance of actually making some achievement. >> one other thing that i talked about with several departments that is not even covered by the courtb team -- 14b program is purchases for goods and services under $10,000. this does not even cover those types of contracts. as a city agency along with oca, we are now reporting on those with the same intent, by showing that they to two city departments that will shed light on them and make it more transparent as far as how spending goes for prop q

purchases. the amount going to lbes jumped from 13% to 15%. where will be reporting on this quarterly. -- we will be reporting on this courtroom. this is a new way of doing things with the reporting and things like the diversity sf program. we are trying to make this data more timely to not just the hrc but also to the supervisors. we have in mind being able to provide you guys tools like sending you district-specific lbe participation rate so you can see how your constituents are involved in the program and the way it is working for them as well. chairperson maxwell: and you. >> as the proposed amendments, i will not spend much time on this

because i think katie did a good job walking you through those proposed changes. one of the things we are trying to do is looking at hrc certification process, allowing for some flexibility as it relates to certification. the one area, for example -- this is coming up more and more. as lbes are taking on more complex infrastructures and the way they are organized -- some of them are not that complex. it is making it more and more difficult for hrc to certify some firms. if you have a plumbing business with three equal partners who are all brothers and sisters, let us say the license holder is the sister. under the current guidelines, which technically could not ever certified the company. if they each own a third, and the only owner of the plumbing license is the sister, that sister does not have more than 51% ownership. so we cannot technically

certified that company. we are proposing in these amendments to allow some discretion to analyze those types of situations and possibly certify those companies. this is not unbridled discretion. one thing we are going to build into this process is within the hrc rules and regulations, we would have to report back to the full commission along with the lbe advisory committee to explain the instances throughout the course of the year we exercised that discretion. we would do that quarterly. we do not want these to serve -- these discretionary exceptions to overrun the rule. some other things i mentioned before are changes to the micro set aside program. supervisor chiu, we were supposed to come back to you after 90 days of the legislation being passed before. the second bullet is to address

that issue. we would set micro set-aside targets based on availability. as the legislation is currently structured, it requires hard targets based on all the contracts under a certain threshold. but from a basic principle within the hrc, we have always based targets and goals on availability. for example, if you are at the dpw and have 10 contracts that would fall under that amount, we do not expected to put up 50% of those micra set-asides, especially if you only have five contracts with lbes that could provide those services. it would be a measurement of the% on available contracts. -- of 50% on available contracts. we are trying to bring the micra set asides under the same way we manage other guidelines, if you will. the third bullet, like i

mentioned before, would increase the number of general services contracts and informal contract to $400,000. that would allow us to have multi-tier and general services set aside contracts. right now, with the amount being set at $100,000, if you have a janitorial service contract for a building, it is very difficult to find a multi-year contract under $100,000. this would allow us to expand the micra set aside program to cover those types of contracts -- micro set-aside program to cover those types of contracts. this deals with a good faith exception for the city formal contracts. we already have the provision for construction. we want to make it consistent for the professional services, general services contracts. i think that was an oversight when it was drafted originally, because it would not -- if the

city were going to be conservative, you would have not provided the exception for construction, because we have a lot more of those in terms of volume. i think we forgot to put it, or an and under the original legislation. -- i think we forgot to put a comma or an and under the original legislation. the last bullet, as kitty talked about, would allow the trevor to negotiate lines of credit on behalf of the city's -- would allow the treasurer to negotiate lines of credit on behalf of the city. that allows lbes to compete on various construction contracts. supervisor chiu: one question about a reach to the community vendors that would be affected by this. i know a year ago when i worked with our colleagues, the was a

lot of conversations with the coalition for economic equity and other representatives of lbes, wes, mbes. what sort of the back have you received here? i have not heard about our reach being done for this set of amendments. -- out reach being done for the set of amendments. >> there was a draft for the coalition earlier this summer, the late summer or fall time frame. when it was introduced, it sat dormantit just sat dormant untit week when i did -- [unintelligible] i just spoke this morning again about it. because of the timing that the coalition was made aware of it coming to land use. and hasn't really had a chance

to make a formal position or to take a formal position on this piece of legislation. but in talking to them, i don't they are in disagreement with the legislation. they did express some concern about the timing of it and not having enough time to respond. one area they wanted to talk about had to deal with the certification as it relates to ownership for businesses. i explained that this issue was not in the legislation because it was substantive in nature and can have more of a fundamental change regarding which firms can be certified. i told him that over the next six months or one year, it can be something that we go back and look at. if those types of businesses can

be certified or not, in my mind, it is a more substantive change overall, and it is something that the agency along with a coalition should explore. it is a complicated process. supervisor chiu: thank you. >> i just wanted to respond to supervisor chiu's responding to the requirements. we are ok with making one change. if you look on page 22 starting at line five, each contract will be compliance with the program to the board of supervisors to submit the following information. we would like it to say quarterly in the year 2011.

>> if there are no other questions, regarding chapter 21, both of the changes we are making are technical in nature. >> as she mentioned, these are mostly held keeping amendments. the first is to make the competitive threshold consistent to those threshold's within the ordinance. in particular, increasing the minimum threshold from 100,000 to 400,000. that is a good thing. we have more availability in the general services category. would we were breaking down

general service contracts, many were multi-year contracts over 100,000 the year. the smallest building we could break down was where the public defender's office is. that is over 100,000 a year. we are very happy about the minimum this correctional service is going up to 400,000. another technical amendment, this is reflecting the current city's procedures have by way of history. the computer store are originated with the comptroller. that entity and the computer -- that has become a more overseeing entity for technology purchases and standardizing.

the actual administration of the contract, where this reflecting legislation that the purchaser is procuring in during the competitive salicylate -- solicitation for the store. the next is clarifying language and moving it back, making it official. making it clear that it is official misconduct to circumvent the competitive solicitation process. created a policy position to give local preference to 1.25% for businesses located within the geographical boundaries of san francisco before there was a section at had complicated formula and whether or not to give a ne