on october first, 2012, the mta concluded that the money the remaining station packages to one contract, contract 1300, would reduce overall schedule and coordination and integration for the city. the program is also engaged since incorporation of contract 1300 the specialist services of small business of returns and one thing is concerned to encourage and assist sb anticipation and contract 1300. on april 18th, three minutes were received, prices range from -- tutor perini operation of the lowest responsible bidder with it price approximately 12 percent over the engineers' estimate range. staff analysis indicates three factors that contributed to the

final bid rise exceeding the engineers' estimate. the first is market conditions; current high demand for contractors in california essentially reducing the bid pool, contract completion scheduled is challenging, and site conditions. contract 1300 contains significant amount of similar work to that currently being performed under contract 1252 in the union square area, essentially a congested site with tight tolerances. sfmta central subway program 1300 will be funded by a combination of federal , state and local monies with approximately 25 percent of the base contract work to be awarded to small businesses, tutor perini exceeded the small business with dissipation goal and a minimum of 50 percent of trucking and hauling work for small businesses, invest a

minimum of 1.5 million in hiring -- providing on-the-job training for construction management positions within the program working alongside with experienced tutor perini personnel. staff recommends that the sfmta board i subject to thetutor perini corporation. >> the social economic advantage employment, 1.5 million, what does that mean? >> will be working with community based organizations that will screen potential candidates to perform a pre-apprenticeship program; essentially graduates from this program will be offered seats

essentially in apprenticeship seats within the local trade unions. >> let's go through the nurse when you mentioned the, minority and disadvantaged businesses and all that. >> the small business participation goal for the program was amended at 20%. and tutor perini came in at 25% level, exceeding the goal by approximately 5 percent. >> of these local businesses? >> california state small businesses. of the listed subcontractor for the contract, approximately a quarter of the businesses have addresses located in san francisco. >> and the minorities? >> the disadvantaged db, center

enterprises, would be incorporated as part of the sbe umbrella, but i have not segregated out the list of sub contractors, db versus lbe. >> it seems like a huge project, an extraordinary opportunity to do something for small businesses in san francisco. whatever we can do to support that he ought to look into it very seriously. >> if i could clarify, locally funded projects have a prohibition on locally geographic base preferences such after 14b of the city administrator code that provides for such preferences that we use for non-federally funded work is not applicable; we are not allowed to apply here. what we can do is set an sbe goal. which we have done.

and with the contractor has exceeded. despite our efforts through meet and greets, berries outreach efforts in advance of the word, in advance of the bid, to connect local businesses with prospective bidders, the firm that won didn't have a whole lot of san francisco firms on his team. the opportunities that remain, the public contract law says you have to list of the contractors that will do at least one half of one percent of the value of the contract, in this case a little more than four million dollars. for work subcontract below the

level, there may still be opportunities and we can be encouraged and facilitate conversations and make sure the prime knows of the ability of local firms who by law we cannot compel them. >> i hope that they will respect the spirit of this. i understand the federal probation all that. i hope the contractor listens to this and does everything they can to make this is representative of the seven cisco workforce as it possibly can. members of the board? >> one question. i noticed here mr. fungi, thank you, this includes the construction of the stations. my understanding is that the underground portion of the stations, the work that will go on about the stations whatever's going on above that,

that is still sort of to be decided and awarded in the future? >> this is the balance of the work for the simple supper program; we have two small programs. the tone contract executed last year. it does include the aboveground portion at stockton in washington and fourth and folsom to build the head houses of the station and union square. to the extent there is the desire to build up above where the stations head houses are, that will happen separately, it is not part of the 1.5

billion dollar program. >> the reader care of you care to speak to the comments suggesting that the federal funders are concerned about the pace at which we are going? >> i will give a short answer and john can fill in. for a project of this magnitude, the federal government engages consultant to provide oversight. they meet with us on a regular basis and issue varying numbers of reports based on the analysis of the project including the large muscle report to which folks were referring to. the consultant engaged in the federal government is concerned that with the award of this contract will have schedule and cost contingencies below the level that they are comfortable with, that they would like for us to have.

the execution of this contract award of this contract will not put us over budget or behind schedule; we'll just have less buffer. that is a situation we would rather not be in but given the state of the economy and the state of the project we still believe that this is the best going forward. in response to the vice chair's question this is the last conference we are looking down the cost and schedule for the rest of the project and we don't have other work to be bid were other parts of the project with unknown budget or schedule. this is the last kind of unknown and locks it down. in a year or two we'll have caught back up to where we would like to be in terms of having adequate

schedule and cost contingency. the concerns are valid but we believe we can manage the risk associated with a small contingency and feel that we can complete the project on schedule and on budget. >> by on schedule you mean revenue service in the end of 2018. >> revenue service at the beginning of 2019; special completion is 2018 that schedule has not changed. >> you're still confident we can meet that target. >> that's correct. >> and then, it goes without saying i believe but we are now the point where we don't have further federal funding and agencies. i realize this is funded sort of as we go but this is locking it in such is that we will not be in a situation, that critics have complained, that we will have local money in an have the

federal money pulled out. >> one more question in that vein. is this buffer unusual for large construction project like this, is it unusual for large infrastructure project of this size to have that scheduling and cost contingency buffer? >> not unusual for recent fta project that had that level of cost contingency and schedule contingency; keep in mind that the report is a bit dated. there wasn't any cost certainty; the project was still going out to bid.

this will essentially locked down and provide cost and schedule certainty. we will have a lot been completion date for this work prior to april; essentially the agency has approximately 9 months of start up and testing work to maintain revenue start up date in january. in about 18 months we will have dramatically reduced our risk for both cost and schedule. >> thank you. >> is it safe to assume you folks are regularly meeting with the fta? >> thank you for the question. we work closely with the project oversight, pmos, who

essentially wrote the report. we work in concert with them; they attend all of our meetings. what they are communicating is basically an action plan that we have internally. we made considerable headway; one of the comments was about the drilling work in union square. we have analyzed it and made recommendations. the contractor is actually in the process of and lamenting those recommendations in order to meet that schedule. in any construction enterprise, change is a constant. we need to be flexible. the point is we need to aggressively look at concerns and challenges and address those concerns and move onto the next one because there will be others. we meet with them regularly. i personally meet with the pmo, the individual that wrote that report, at least three to four times a week. >> thank you. >> anybody else? in that case, members of the

public who wish to address the board on this issue? >> julie choy, stanley chan and -- last speaker. >> good afternoon. >> chair nolan, board, director reiskin. i am president of the asian american contractors association, local businesses and construction industry all lbes. i'm here today to talk about the point that chair nolan brought up, the lack of participation of local san francisco-based contractors. i went through my e-mail archives to see her respondents about this project. it goes back to 2008, there with me as i go through some of the e-mails that i found . in march 2008, sfmta started to reach local businesses and

provide a network, in april 2008, the asian american architects and engineers, and the asian-american contractors association began to work with carter rohan and mr. fungi discuss this project to make sure local businesses get a part of this project. in september 2008, mr. fungi met with our association to discuss the opportunity to unbundling the project and our chance to participate .in 2008 there were more financial management seminars; in 2009, the former president of our association sent a letter to nathaniel ford [sounds like] suggesting unbundling and making sure we get part of the action. forward to 2011, 2012, we had meet and greets with the potential bidders. and then in 2012 october the

other shoe drops; we learned the package would be rebound the; we felt awash with the realization that this was not an average. we have a project that is low local participation. >> we have additional possibilities for local businesses? >> again, the public contract code requires doing at least one half of one percent; to the extent that there is work to be done that is below that threshold, there is potential for the contractor to engage firms to do that work, roughly four million or less.

i am not suggesting there is a whole lot of work out there outside of what has been listed in those very small, relative to the size of the contract, pieces but it is possible. >> you care to comment on that? >> yeah. we are going to have another member of our organization speak. with regards to that, again, we have found that there was one local contractor listed. non-minority. very disappointing to our organization, our constituents and i hope it is disappointing to the board. we buy our lunches and pay our payroll taxes here; we have been engaged with mta for five years. thank you. >> stanley chan, followed by

oren hellstrom [sounds like]. >> my name is stanley chan, president of value fire protection. we have been operating out of san francisco for 25 years. we have many projects in sfo, puc, parks and rec and so on. we are familiar with many agencies in san francisco. i want to share with you my very unpleasant and outrageous experience with mta in my experience. to summarize our company was poised to become a second-tier subcontractor to a first-tier subcontractor. upon learning that our first tier got the job, two hours

later they called us back to say tutor found a way to satisfy the sbe requirements him or somewhere else so they don't need us more. six months of work went down the drain; years of contact with the prime contractor went down the drain. this project is huge, 840 million dollars. i urge not to move forward for the following reasons. it sets a dangerous precedent to ignore chapter 14 lbe ordinance which many supervisors have supported.

all other supervisors support it. two, it ignores the impact of the local economy that could be generated from participation in this. can i submit this? >> of course. we would be happy to see it. next speaker. >> good afternoon. >> good afternoon oren feldstrom -- the coalition is an umbrella group composed of numerous minority owned trade associations here in seven cisco such as the african american chamber of commerce, the asian-american contractors association and others. we have been working with many years to increase opportunities for smaller, local, minority owned firms the cities 14 lte program and the federal dbe program.

local businesses and especially minority businesses are hurting. when the economy goes south it is our members who get first and hardest. we have had a number of our businesses over the last couple years just hanging on, downsizing, leaving the city or going out of business. that is why there was commenced excited about this project, 840 million dollar contract right in the heart of san francisco, what an opportunity to engage local and small minority owned businesses that is why to us it is unbelievable to us that this body is poised to award a contract of that size , that magnitude one of the largest ever in the city with virtually no local participation in the local minority business

participation , we also think there are serious legal questions about whether or not this contractor working go forward. mr. chan just gave you his story; others that we have heard since we sent in our letter objecting to this concert the word racist serious questions about the good faith and fair dealing that this . rant contractor has been involved with we are not asking for local preferences. we are asking that this received the scrutiny that this deserves, but it gets sent back to muni's dbe contract compliance officer to interview folks like mr. chan and other businesses that were rejected. >> next speaker please. >> deraline davis [sounds like] >> i am also on the cbe coalition of business equity.

i am appalled to with this but is done as it relates to small businesses. it is unacceptable. i have been in the central subway project and then kicked off that project for no apparent reason. also there are other small contractors, they have not had a fair opportunity to participate. this body should go back and look and review the legalities of this contract, and how it impacts small businesses like mine to work in san francisco, where we pay taxes every day. >> thank you. next speaker please. >> alex chu, followed by lance carren [sounds like], last speaker. >> my name is alex chu,

president of the asian-american attorney and cpa firms. we are also a member of the coalition for economic equity and also the council of asian-american business associations. we are here to voice our request that you reconsider the awarding of this contract. we support wholeheartedly what has been said so far about opposing this contract. we support the coalition's position. i don't know. there is much more i can say this point. the small businesses in san francisco are suffering. even though there is an uptick in the economy, the uptick has not helped small businesses.

we request that you consider this contract. without taking into consideration the impact on the local economy as well as the lack of assistance to the local, small businesses. thank you. >> next speaker. >> lance carrin, last speaker. >> mr. carrin. >> let's see. two minutes. hello again. i want to follow the discussion, not sure your name, mr. heinicke, mr. fungi, regarding the problems of the schedule. i recommend the article in the morning's examiner by joe

eskinosi [sounds like], a full rundown of the problems. you have a 4.7 week contingency where you should have 10 -- i'm sorry, 4.7 month contingency, should have a 10 month contingency as far as scheduling on a 65 million dollar contingency. you should have 160. mr. fungi said it was dated, it was dated may 16th, reflected up until the end of april. if we were in year four of six years, it would not be a big deal but you have not started this project. you are already in deep trouble as far as the federal government is concerned. i really recommend that you bone up on this;

[indiscernible] and get the agency back on track. i would like to point out also that apparently there's serious trouble at union square station, driving piles. maybe-- those are my comments. i encourage the board to get up to speed on this and stay with your agency. thank you. >> albert wong, followed by howard wong. >> i like to follow up - my name is albert wong, value fire, i work with stanley. i like to follow-up with other points of view brought up. not only by moving up the project said a dangerous

precedent for the city agency to ignore the lbe ordinance, in disregarding the benefits to the local economy that can be generated. but also many of us, the contracting communities, have dreamt and aspired to participate in a once-in-a-lifetime 840 million project. now we are about to have this dream taken away not by others but by our own agency. this project will be built and maintained with local monies for many years to come; local communities are to arrive benefits throughout the project especially from the onset, where it impacts the most. this project must be billed by san franciscans.

finally, we are to use everything in your power and wisdom to disapprove this unprofitable proposition. the lbe organizations will applaud and remember your actions. >> afternoon mr. wong. >> howard wong, savingmuni.com. half of my career has been overseeing large city projects; i am aware of the problems that projects can fortell at any point in the project. with the award of the tutor perini contract, the project report dated may 16, 2013, will drop the central subway contingency to 65 million

dollars, or approximately 4% of the project cost. when the federal requirement at this point according to the fta is 10%, or 160 million. but - savemuni.com analysis indicates that perhaps this is even worse than it seems based on records that we have obtained the contingency might be closer to 3%. given the fact that major construction of tunneling and station deep excavation has not started at this point of the project is prudent to have large contingencies for project with high risk as the fta acknowledges. in 2009, the fta recommended a contingency of 20%, 330 million dollars