the five crewmembers, -- the five new members. we only have one vacancy left, which is the mayor's appointment for a large water users. that would be wonderful if anybody knows a large water users that would be willing to step up. as we look at these issues that might pertain to large water users. it has been vacant for about 18 months. it is difficult to find someone who is not in a position of conflict. we have had four meetings, our fifth meeting is tonight. we are on track for the first time at meetings nine times, which is something that our rules of order call for, but we were not able to do.

so far, but we have had no resolutions. we exp resolutions -- two resolutions. one is on the francisco reservoir. supporting community participation on future use of the property. we do not know if that is going to be voted affirmative or not, but that is encouraging the puc to look at that. the sewer system improvement validation, there is a resolution coming tonight, which is very much in support of the process that has gone on to date. these are some of the topics that we are expecting to talk

about for the balance of the year. and have many as -- many resolutions as we can squeeze out that make sense. we're going to propose an amendment to the rules of order of organizations so that we have a couple of members who are chronically not showing up and living up to the obligation. there is a way we can adopt rules that make it an automatic resignation if they do not show for a number of meetings. that will help us keep the fresh blood. we want to talk about reaching out to the public, some advanced notice for the rates that are coming up in the next five to 10 years.

they're pretty significant. pretty significant expected increases over the next five years. we do not think that is necessarily a problem, but we would like to encourage some outreach to the community. i will let people know that is coming down the road. other items that are going to be talked about. quickly. we have some concern about the $20 million annual general fund power subsidies. the vulnerability to a natural disaster. if something were to happen, that subsidy, if you would have to go to the market and by that power at full rates. that is something we will be looking at. there are a number of other things. i do not want to overdo my five minutes.

it is in the report. if anyone has any questions? president moran: commissioners? thank you. that brings us to the consent calendar. madame secretary, would you call the consent calendar? >> item a, approved plans and specifications and award contract number ww-507 in the amount of $3,029,321. to the lowest, qualified, responsible, and responsive bidder. b --approve the plans and

specifications and award a contract ww-522 to the lowest, qualify, responsible and responsive bidder, monterey mechanical company. c -- approve modification #12 contract number joc-26. d --approved and award a contract number joc-38r 4 san francisco/peninsula. e -- authorized the general manager to negotiate and execute a memorandum of agreement with the san francisco department of the environment and the san francisco unified school

district for an amount not to exceed $60,000 for continued support to the conservation connection program. f -- approve the terms and conditions and authorize the general manager to execute a revocable permit with the city of milpitas. g -- approve the terms and conditions and authorize the general manager to execute a permit with india committee center for an outdoor recreational area for the children attending the day camp. h -- operates the general manager to execute a permit with the city of south san francisco to use 5 acres of land near south spruce street. i -- authorize the general

manager or his designee to execute a permit would be hit as a very -- haight ashbury neighborhood council. president moran: i understand there is a protest for item 10b. i would like to separate that from the consent calendar. could i have a motion on item 10a and c through i. any discussion? all those in favor? opposed? the motion carries. item 10b? mr. kelly, would you like to explain what is going on?

>> on this project we have -- on the southeast water pollution control facility, we had a project engineer that identified with the project cost would be. at that time, they felt it was between eight and $9 million. we advertised for that. since then, we upgraded some of the materials and found out that some of the conveyance systems were more challenging than we anticipated. we also had some additional scope. the new testament at the time was over $10 million -- the new testament at that time was over $10 million. one of the contractors was complaining or had some concern that we went over the $10

million mark. projects over $10 million in a longer qualify for the discount. they get the 10% preference. what i did was to find out what was the actual cost. what would be the engineering estimates. i ordered a third party testament to look into it. they felt it was a $30 million estimate. with that information, we move forward. -- they felt it was a $13 million estimate. with that information, we moved forward. right now, we have one of the contractors here who is concerned that we went over $10 million. with a preference, they would have won.

and we have the actual contractor here because -- both are here to present to you. president moran: before we get to that, i do have speaker request cards. the way the ordinance reads, the applicability of the local business enterprise credits is based on the engineers as demand? >> correct. president moran: not on the actual bids. that could work both ways. you could go and low -- in low. >> that is correct. president moran: we have three cards.

>> good afternoon, commissioners. i represent cal state constructors. we are a local small-business certified by the human rights commission and have been doing quite a bit of work over the past years in the wake of pump stations and treatment plant works. we are here today to oppose this staff recommendation to request ww-522 not be awarded to monterey mechanical. the contract was an originally advertised with an estimate of $8 million to $9 million. the existence of the 10 persons died preference -- 10% preference was made clear by

city staff. subsequently, we understand that one or more large outside contractors lobbied the project staff to increase the value of the project to exceed the $10 million threshold. to take away the local business preference set forth under chapter 14b. the value of the project was increased in size through a series of addendums the added work and increased the engineer's estimate in excess of $10 million. the low bid submitted by monterey mechanical were both under $10 million. if the 10% bid preference was still in effect, cal state would have been a low bidder. i know there is disagreement

over whether or not the engineer's estimate was purposely manipulated to remove the 10% discount. however, what i don't believe is the fact that efforts to increase the size of the project to the point where the engineer's estimate exceeded $10 million. this was all done after the contract was advertised. making clear that the 10% discount applies. the changes were only distributed to plan holders. no additional advertisement was held to make it clear to the general public that the discount was being removed. special preference was afforded to a large contractor, such as monterey mechanical. the pool of bidders was

narrowed. the local businesses were weeded out by a sudden increase. this disruption in the competitive bidding environment is a regular enough to warrant that the commission reject all bids and to rebid the project would take clean start. making contact opportunities available by limiting the size of the contract to less than $10 million. thank you. president moran: thank you. >> ladies and gentlemen of the commission, good afternoon. i am representing cal state constructors. i would like to echo the statements by my partner and to ask is it the commission's current policy to make

construction opportunities available that will attract lbe bidders? the reply from the assistant gm was clearly yes. i am requesting that the commission take this opportunity to reaffirm to staff that they should be looking for ways to keep contracts small and opposite. we have been following the contract for the past few years, ever since it appeared in the public listings has been valued at $4 million to $5 million. we were surprised when it doubled in size. the local business preference still applied. what i cannot understand is why project staff decided to cater to large outside contractor interest and to increase the size of the project beyond $10

million. that seems to be exactly the opposite of what chapter 14b was enacted to do. the irregularities are such that all bids should be rejected for the sake of fairness. there has been some talk among staff that due to the facility being in such bad stage, there is no time for a rebid. i do not believe that is true. i think the commission owes it to the public to have the job rebid with a clean slate. i would instruct staff to follow through on their commitments. thank you. president moran: thank you. >> good afternoon.

i am the president of monterey mechanical. first and foremost, i want to make myself available should there be any questions that i could answer. moderate mechanical has been an organization said been in business 70 years. we specialize in water and wastewater treatment plant work. this particular project, we have an operating division that works almost exclusively with convey your work. -- ken there -- conveyor work. some of the comments i just heard, i want to say, i worked with city staff personally for 20 years. i think this city has some of the most reasonable, fair, honest, consistent -- they apply

standards consistently. about two years ago, i stood up here and we were the second bidder on the tesla project. $75 million drop equated to about $32,000. we were very upset. i think at that time, some of city staff recognize that monterey had a good argument. what the staff ended up doing is adhering to the plans and specifications. did we go enough -- did we go away mad? yes. but the city did just what they said they were going to do. i think this is an unfortunate situation for the second place better. monterey mechanical bid this

project fair and square. we were the lowest responsible qualified bidder and we should be awarded the project. i would be happy -- happy to answer any questions. president moran: commissioners? any other public comment before we proceed? >> commissioners, for the last two years, we have been involved and we try to support them by giving them contracts. so this is a system that favors

difficulties. formerly, when i worked at a federal agency, in all of our contracts, we placed a value. when somebody one, you could sit down with them and goal line item by line item -- and the line item by line item to see if they give us the best value for the work. what is happening in san francisco, and i spoke at length at one of the town hall meetings, is that this city means well by putting out the contracts. it does not do anyone a favor

when small contractors, local business enterprise, women- owned, it disadvantaged are pitted against big developers. the reason why i am speaking is because i had the actual experience of certifying and helping certify small-business this and i encountered difficulties when you bid right, you bid with having standards, and you fail. so i am here to state that i know one of the contractors

pretty well. i do not know the other contractor. i am here to state that in this case, some of the key elements as far as the cap on the project was moved, for whatever reason. however, in adjudicating, we have to focus on the local business enterprise. we have to focus on how long and how many projects did they do for sfpuc and how well they did it. i am talking about one of the contractors, they have a pretty good racket.

it is not a very difficult to adjudicate this case co, based n what elements you put forward to educated. if you just a dedicated -- if you educate -- adjudicate on a long-term experience, you may arrive at a different conclusion. thank you very much. president moran: any other public comment? commissioner torres: are there any liabilities we should be concerned about from the facts that were presented? >> i do have john white, are construction attorney, here to answer specific questions. the city attorney's office

stands behind the staff recommendation, in the award of this contract follows the rules. there is not any concern about the change that was made to the scope of the project. there is a legitimate basis for that. you can always be sued, but we don't think there is anything improper about the staff recommendation to award the contract. >> i was not suggesting the word improper, i was suggesting the question i had regarding the process. thank you. president moran: commissioners? i have a question for mr. kelly. the me understand this process. when we go out to bid, the

bidders are aware of the engineer's estimate, correct? >> that is correct. commissioner caen: they would be bidding based on that? >> to some degree. one caveat is that many of our projects have three qualification to we have a subset of people requalify the bid. you are absolutely right, we come out with an engineering estimate that as an order of magnitude this show if certain contractors are interested in performing that work, but it is up to them to look at the scope of the work and determine what costs they can provide it to the city back. commissioner caen: that being said, i would assume that lbe's

bid it assuming that they will get the percentage discount. correct? >> under $10 million, the engineering test and that, it falls under the ordinance that the 10% applies. if the estimate those above that, it does not apply. commissioner caen: they are aware of that? >> yes. they were aware. in fairness, when it went from 8 to over 10, they identified they were concerned that it went under 10 million. that is when i learned about it and i ordered them then -- i ordered an independent estimate. i tried to validate that the best way i could. it is easy to do monday morning quarterbacking when you have

everybody's bid. that is what i did. that was the best way i felt that i could address the problem. the other issue about if we can wait, the project manager can decide if you want to hear why we feel it is urgent to perform this work. commissioner caen: what i am going for here is the concept of fairness. it would be over 10, correct? the estimate will still be the same mess that? -- same estimate? >> we look at ways to bring what the estimate would be under 10 million, breaking it down. there are issues about it having

to contractors to perform work at the same time in the same area. there are some concerns, but how can the department make an effort to break in this contract hundred 10 million said they will have the 10% benefit? >> i would like to hear from the project manager. >> in the afternoon, commissioners. i am the project manager for waste water treatment plant project. i have worked on these projects the last 14 years and i like to show photographs why this work cannot be divided into maybe it will be helpful making a decision here. most of the work has been in the left side of the photograph, the

building that represents the last step in the treatment process. after digestion occurs, it goes into the watering building and a eventually sends it off for beneficial reuse. the right side picture that is the conveyor system to the glove out area where the trucks come had taken to prod the out, the next picture shows the constraint of the site. if we work hard to encourage participation. in this case, some of the photos you will see is very tightly constrained. on the left side, you see the six-inch line that is under pressure. if breakage occurs, there will be flooding of the entire building.