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. the report they wrote in 2009, they said there was an 80% chance this project would cost 2 billion or a 420 million contingency. in the consultant's report, the average has been 39%, requiring a contingency of 600 million.

this project will go over budget. >> mr. chair. commissioners, al norman, -- bayview contractors. i am against your awarding the contract to tutor perini. the only way you work for them as they take your number; you don't think there's. the majority of the people who get left out are the ones for whom you paid these laws. we ask you not to award this contract,; you will not get participation from anybody. those are the same contractors i work for 10-20 years ago and

i got in trouble just working for them. i am asking you not to word this contract. it is not worth it. what happened to us, the people who have to go to the polls and vote the measures for you to get the, money for transportation and of the tunnel, and the system and get out and support the mayor? we ask you as citizens and business owners in the city and county of san francisco not to award this contract. i don't care who you give it to but you need to go out and then again and do it all over again. if nothing else put it back out to bid. >> thank you. >> -- >> good afternoon everyone.

i just could not help coming up here and making a few comments. first we are very cognizant of the local business enterprise hiring programs in the city. we have done some of the largest public works in the city from the mosconi second phase to the muni metro turnaround; to the majority of the san francisco airport. we understand these are small business goals. we talk to all the local contractors despite to what you hear. this job is a very complicated, very difficult, one-of-a-kind belowground station excavation project. we did not get a lot of local enterprise quotes on the major categories because it's extremely complex and larger. one of the largest subcontractors is a local

subcontractor. we did everything within our power and are still open to local businesses who really have an interest in providing service on what's remaining to be done. your agency has all the quotes we took from local businesses; i think you would be interested to find out that there weren't that many quotes despite all the rhetoric to the contrary; we did everything within our power to incorporate them. we have a saying, if you don't bid, you don't work. >> excuse me just a second. in the spirit of what people are saying here, sounds like you are saying the local businesses cannot do the work. >> i'm saying that this is an complexity of the job, there are that many categories were we can utilize local businesses.

in the final analysis we held those same meetings and we got a certain number of quotes; we turn in all the quotes to your mta agency and you would be amazed at how few local quotes we got as compared to those quotes outside of the city. in other words what i was trying to say is, in order to incorporate local businesses they have to come, to have to talk, and have to quote to us. those quotes are all a matter of record we turned them all in. >> i would be interested to see. >> first of all thank you for standing up. you do not have to. i can think of 840 million reasons. >> i am here to be culpable. >> i'm not looking for culpability.

one of the concerns is not so much that when you put the work into a few categories; but by putting work into some of the categories you preclude some of the local businesses from bidding and i want to get a better understanding, your response to what is called the rebundling of the contract; maybe the rebundling is necessary. but i think that what we are hearing is that the rebundling, as they call this, made it more difficult for local business participation and it would be helpful to hear your response to that. >> the truth is that when we went out to bid, in all the circulars, we spoke to each and every subcontractor and supplier and we said we will take rises on each of the four separate contracts and we'll break them up into four separate pieces, is that be

the way the competitive bids come in. electrical in our proposal is split into three packages; roadway electric on the station, and -- electric. split it into 35, 29, and 11 million dollar separate contracts. we offer that in all categories. you can bid on one; all came in broken down by station and tried to mix and match. but that is not how it worked out. >> director -- bridges. >> director bridges: you work

on other projects in san francisco. you had other lbes in those projects? >> yes we did. >> director bridges: am struggling with the rebundling, and not signing local businesses. i would think that you would find some contractors. i'm struggling with that fact. >> i understand. let me clarify. on all the other projects that we bid other than the muni metro tunnels; we find that many of the good one already subcontractors are more directed to the building business as opposed to tunneling subway stations 100 feet below the street, heavy excavation, we have chemical routing, compensation routing, piling, only two bids from

contractors in the u.s. there is so little competition, in the past we got our strongest minority and local support in building finishes; these stations have a limited amount in building finishes and for whatever reason we got bids and gave of his preference to small business; and believe it or not we try to bring in local business where it was possible but we did try to stay with competitive pricing and low bids. unless they were close, we gave the benefit to locals and/or minorities but not to the extent to where our bid would be fouled. our job was under such financial pressure from and not his budget that i do not see how we could do that;

i thought our primary goal was to meet the small business to the extent practical meet as much local involvement; the bid that we have on file with them straight the gaps and how few local business quoted to us. >> thank you. >> last speaker is keith gilliam. >> afternoon. >> good afternoon. my name is keith gillam, i am a quality engineering. we are a small business, a local business. we are part of the tutor saliba team; i want to applaud the city and sfmta for a world-class project at this point; i would ask that you move forward in the word of project and really look at the composition of not

just the local firms but the local people. these firms might be located in else places but the individuals living san francisco. my team has four members who live in san francisco. >> i don't know as much as i would like about this. i am sensitive to the comments that mr. celstrum, and a very false that he represents; we would love to have as many san francisco businesses involved. i am impressive mr. tutor came to answer questions directly, i appreciate that. the way i see it is a little

bit of a legal box for us because of the nature of the funding of this project. putting aside mr. tutor and his firm and their efforts to engage local groups, we can't insist on 14b goals because it is a federally funded project; we cannot insist on local goals as opposed to sbe and those types of goals in a federal project. we are also committed to take the low responsible and responsible bid. if mr. tutor's firm comes in that needs those responsible goals, we are in a box to accept. otherwise if we reject this contract we are sort of stuck and that is where we are and we can't go forward with the

project as a whole. am i misunderstanding that? if that sort of the legal position that we find ourselves in which i realize is not solace for the local sbe's that is a situation that we are in? >> you captured it exactly right; chapter 14b, we are legally precluded from applying the requirements of chapter 14b of the admin code to the entirety of the project with the federal funds providing the lion's share; even if it were a minor share the project is federalized; and those kinds of local rules that are in conflict with federal law we cannot apply as much as we would like to. i spend a lot of time working on improving 14b to improve the outcomes from 14b when i was public works director; there has been a lot of good work

from the coalition, from the previously hrc, now the city administrator's office, it's been a great thing for severn san francisco businesses. to be honest, for 840 million dollars with the work in san francisco for such an important and visible and symbolic project, i concur with a lot of the comments of the people who spoke in terms of being disappointed that there's not more san francisco businesses, listed subcontractors that will be able to participate. i am heartened to hear that the contractor is willing instead

and try to make whatever opportunities remain available for local businesses despite the fact that we cannot compel him to do so. i think the last gentleman's comment, we did put a strong workforce by which in the contract; we did a local hire ordinance does not apply. first source requirements do and many of the source requirement individuals are local. we are hopeful that more local businesses have those opportunities. what we are faced with at this point, recognizing as you say, kind of where we are, our choices to award -- your choice -- to authorize a word of the contract and maximizes

opportunities or reject all bids and rebid the contract; about score, you heard talk of where are in terms of schedule contingency. given how costs are escalating in the market it would erode our cost contingency and ultimately i don't think we would get a different outcome. there was talk before about the bundling; you directed questions of the contractor. the public comment was directed at us because we had taken four separate contracts and bundled them. want impetus for doing that, we took into account the potential impact on small

business engagement and in the end the gaol that we set for this contract was 20 percent was higher; the low responsible bid we got exceed that goal, up to 25%. initially when we were in the unbundled mode, three different contracts, we bid the first one. the low bid came in not even meeting, i think 18%. the difference between 200 million dollar contract and 800 million dollar contract - i don't think it is a significant in terms of the local opportunities. you heard from this bidder and perhaps the others that there

were opportunities to try to unbundle and break up some electrical work. when i see in a rejection of the bids, would be almost guaranteed cost and scheduling impact without corresponding benefits of increased local participation. i know we all would, and the mayor, the board, everybody would love to see but it is not an outcome that we can guarantee or anticipate yet we would put the project in a customized position. i am 100 percent sympathetic to those concerns; in terms of the numbers of lbe anticipation and the rest of the agency's capital program. much is federal but we do getting good amount of dbes and

lbes the participate in the balance of the agency's programs. we can still achieve the spirit of what the city is trying to do and get san franciscans, and san francisco businesses to benefit. >> follow-up on that. how would you characterize the outreach to the minority and small business communities in san francisco? about the same as always? >> no. we did significantly a higher level of outreach than we do in a normal construction project. and because of many people in the local community really work hard to get this project to where it is, and advocate for it at the state and federal level. it was important for us to try to maximize the extent that we

could given the constraints of the law; as i mentioned, you even heard references, outreach going back five years to the contracting community. we required the bidders for this contract to come to meet and greet sessions with the contractors. we have a number of different forms and try to share all of the perspective bidding information so the program was funding positions in our sbe office and also in the office of economic and workforce development try to make sure we are maximizing opportunities. it is disappointing that despite what i believe was a legitimate, above and beyond effort in this case with regard to local, small and minority-owned businesses we are not where we would like to be but the contractor has fairly significantly exceeded the sbe goal, which is the

requirement that we can enforce and so i guess that is a consolation and it sounds like there are still remaining opportunities that we would be happy to see go to small, local, minority and other firms. >> chair nolan: individuals in san francisco can still be hired but is subcontractors and elsewhere, is that right? it's not good news for the local businesses sincerely but individual people in san francisco who are painters and -- >> you are correct. is one part of how we are trying to encourage that the funding those apprenticeship slots; we cannot require the those be san