facilitating the tax exemption and certificate of participation. when you approved the transaction last time it approved a public hearing that occurred in april 2012. since then we had another hearing because it expired due to the lag of when it was approved and now issuing a year later we were required to have the hearing which we did hold in april 28, 2013 so by approving this you're approving the public hearing that occurred. in addition we're also -- the second item is an administrative process. when the certificate of participation were approved we had used a portion of laguna honda as the pledge and security for the transaction. what this does as soon as the cruise ship terminal is completed the lean would move from laguna honda to the cruise ship terminal and stay with the transaction through the term and revert back to the port of san

francisco once the terminal of certificate is ended. with that i am happy to answer any questions. we know the commercial paper -- thank you to the board for extending that and increasing the amount. it's good to have that opportunity so that key with continue to lead on the project. >> >> thank you. colleagues any questions? we don't have a budget analyst report for either item? >> [inaudible] from the port. >> do you want to come up and speak? you have been waiting here. >> good afternoon supervisors. elaine from the port. we are appreciative that the city agreed to use this with the project and we we the city has a higher credit rating and this say win for us and we are thankful and you previously approved the issuance and as described this is the documents and et cetera to allow for the

sale of the projects to take out the commercial paper. >> great thank you. we will continue working on that rating improvements on our end. colleagues any other questions? seeing none public comment is closed. anybody wish -- >> >> and could i have a motion to move these to the full board? do so without opposition. mr. clerk can you call item 22. >> item 23 i believe. >> excuse me that's right. item 23. >> item 23 resolution authorizing the director to execute the agreement with alstom transportation incorporated for vendor inventory services not to exceed $39,158,000. >> okay. thank you very much. i believe we have the mta to speak on this item.

>> good afternoon chair farrell, supervisors avalos and mar. virginia harmen for mta. historically it's been our practice to purchase parts for all divisions by using competitive bids for all items using a purchase order process. this process can be administratively burdensome given what we do for our division. it can be challenging and complicated identifying reliable sources to provide age parts for the aging fleet and we have been negatively impacted to provide parts on a timely basis. the contract before you today, the vendor pilot is an initiative to have a supply chain for parts and supplies and cost parts on a cost efficient basis. the pilot is modeled after the contracts with the

administration for the purchase of office supplies like through office depot or staple and it is purchases for public health for hospitals and clinics. currently it takes 80 days on average to get materials and parts and the vendor must achieve a 80% fill rate and all other parts within 30 days and would result in the liquidated damages of thousand dollars a day. beyond the benefits of a reliable supplier of parts and there is additional cost savings in parts and we don't need to stock pile parts like previously. [inaudible] during the course of the pilot. overall we anticipate cost savings in addition to supply chain efficiencies. finally i

want to emphasize that this is a parts procurement contract. we are not out sourcing jobs here. the point is timely obtain parts and supplies necessary to repair our vehicles. staff presently assigned to that division will be reassigned to buses and facilities with the intention of improving performance for those divisions as well and staff will continue to function in the current capacity. we assured our employees and respective unions there are no jobs lost as a result the pilot and thank you for the consideration and ask that you approve this contract. i am here with contract manager angela harmon and we are happy to answer any questions. >> colleagues, any questions? supervisor. >> yes, i guess the union will

ask the same questions and you say it's want out sourcing but streamline and make efficient and timely our procurement process, but my understanding is that the purchasing order process involves staff that currently are processing hundreds of requests, and with this it will be contracted out to a company that will do that, and i am just wondering how it's going to impact the existing staff within the mta? >> well, we have a tremendous need in terms of purchasing parts for both the bus and rail divisions and we've had increased difficulties in purchasing parts begin of the aging fleet. >> >> as parts are obsolete we have to search for sources to find them and taking 87 days from request to obtaining a part is too long. we have vehicles out of service for parts. additionally we are facing increased demand for service.

given the increased demand for service and our aging fleet we really need to look at alternate methods of doing business. this pilot will allow us to test an alternate method in a risk free environment where we anticipate a more effective supply chain. we anticipate cost savings and we are committed to no job loss. >> and -- okay. but still there's the work currently done on the po system and that work is not going to be there anymore if it's contracted out to them; right? >> and there is additional work that need to be done to improve the performance in other divisions and particularly the bus division where we have vehicles out for parts. >> and the suggestion i think within the mta it's an inventory management system problem and the solution could be fixed internally as opposed going with a new process and i am just

wondering if you could respond to that. >> i'm not sure that i understand that. this as i mentioned it's a procurement process -- >> so it takes three months to access critical equipment and is it not -- or explain why it's not an internal inventory management system problem? >> it's not an internal inventory management problem because there is a backlog for the rail and bus side and in addition for our facilities, and as we work through those purchases we're making an effort to reduce the backlog of purchases required. >> and then as the mta staff and the santa clara valley transit authority manager had the different proposals. could you

talk about the process to choose the vendor? >> sure but i would ask the contract manager -- he actually oversaw that process to provide you with that information. >> good afternoon. mr. patel, contractor for procurement. we used the standard process in evaluation. we received two proposals from the advertising of the rfp. we had a panel of -- panel members who evaluated the written proposals and they scored the proposals based on the rite identified in the rfp and points associated with that. once we did that with the panel members we then asked the two proposers to come in and do a presentation and present their products and their services to us which was also scored by the panel members, and then the

highest ranked proposer was selected. >> is the vendor compliant with the equal benefits ordinance? >> that's correct. the vendor is compliant and has all of the rules and there is a enterprise goal i believe 17% local enterprise goal and that is the local businesses participating in that percentage are listed in your package. >> my last question are there strong controls to prevent an office depot by over charging us $6 million from a few years ago? are there controls in place to prevent from happening again? >> what we did with this vendor they guaranteed a fixed cost for

everything in the contract for the first two years and after that if we exercise the option we negotiate the rates and currently the fixed rate they have annually is approximately $550,000 less than we have been paying for individual parts competitive process that we go through. >> thank you very much. >> colleagues, any further questions? okay. at this point we will open to the budget analyst report mr. rose for item 23 please. >> mr. chairman, members of the committee on page 67 supervisor mar as a further clarification to your question about the present staff handling this work on page 67 we note that the sfmta represented that staff purchasing materials for the rail maintenance division will be assigned purchasing duties for other divisions, rail maintenance division, because

according to mr. patel they have a backlog of purchasing requests ranging up to 1,000 requests every two weeks and staff is reassigned to reduce the backlog and support other sfmta services like trolley buses, sustainable purchases and we asked that question and we were satisfied with that response. on page 68 of our report table two shows the contract want to exceed amount of 39.$2 million over the contract of the contract and include the two year term and the three additional one year options -- the option terms, and we also note that the according to the sfmta the fiscal year 13-14 budget of 8.7 million and this is reported by them. they

estimate savings of $48,000 less than the estimated less of 7.8 million to purchase the parts and supplies under the city's regular competitive processes so our recommendations -- we have a recommendation to address that because that is an estimate we think the board should get more information given this is a pilot project which we believe is a good project but we believe there further information and page 69 we recommend that you approve this contract and in the period listed and amend the legislation for the option to extend the two year term is up to three additional one year terms at the director of transportation sole's disresidence and not to exceed amount listed. on recommendation three there is a typo there that we say to amend

the report. we amend to say "amend the resolution" to require sfmta to report to the board of supervisors on actual savings realized as a result of the proposed contract based on mta's contract valuation at the end of the year fiscal year and that is the specific recommendation i clarified and we recommend that you approve the legislation as amended. >> okay. supervisor avalos. >> thank you. mr. rose, why would this necessarily be a prop j contract? services previously conducted in house and was handled by civil service employees and why not a prop j?

>> supervisor i think that is a valid question. it's between the department and the controller to determine if a prop j was needed. maybe she can clarify that to the committee? approximate. >> i recall in >> i recall in22009 and we were told it was for staff here at city hall and we were told no one would lose the jobs but they had to do a prop j and that was for work previously conducted and seems like a similar situation we're in now. >> correct. i am from the controller's office. we haven't been in contact with them and whether it meets the requirement of the mandate. we can look at

what the duties are. it sounds to some extent there are some processes that would be implemented and performed by this particular contractor but it's something that we need to analyze and also check with the city attorney >> i would like to hear about the response was from local 21 and 10 two onea and i understand there is cost savings involved. >> our part is determine whether there is savings to satisfy the charter section and we

generally advise departments whether i a particular change in practice, in operations, would result in a prop j requirement, and we would be happy to take a look at that. >> perhaps mta offer you a chance to comment on the items, both in terms whether you evaluated as a prop j matter with your attorneys and supervisor avalos' other comment and the meet and confer. >> [inaudible] management -- procurement. we did not communicate with our city attorneys about prop j specifically. the project was approved by the city attorney for advertising and so forth, but from a job and a job's function standpoint the current purchasers that we use on the assistant purchasers. their function when they conduct any

purchasing activity they go through the city's process like getting three quotes for any items under $100,000, doing a formal bid, whatever that maybe. the type and product they purchase doesn't matter. they still have to go through the quote and the bidding process so the four purchasers that we have currently purchasing rail parts would now be purchasing bus parts or other opposite supply parts. they. >> >> would go through the same process of bidding and getting quotes from vendors so we felt the job functions are not changing but instead of rail purchasing they are purchasing other parts. also over the course of years we do change purchaser's duties from purchasing rail parts to bus parts and purchase from bus and moving them over to rail, wherever the demand is higher

we will shift those purchases around so that is one of the reasons the functions were not changing. it's just they're doing something else. >> that is for employees that were doing the rail parts purchase. now they're still doing -- in the maa and in house and doing other purchasing. butd function of purchasing rail parts is contracted out to a vendor to do. correct? that's what is before us, meaning that previous work that was done by in house employees is now being contracted out. now, that to me is something i think could trigger -- maybe approved through a prop j resolution which is typically before us in the budget process, and i know it might seem different, but in fact i think it's pretty similar. it would be great to have -- i hate to

hold it up and i think it's important to get a little more information about whether it would meet the threshold. it doesn't seem like it was analyzed as much as it should have been. >> can i make a suggestion and unless there are other comments and i want to respect that but perhaps we can continue this item for a week and give us a chance to have additional -- we're not meeting next week. i'm going to reserve -- retract that comment, so why don't we try and have a further discussion here. ma'am. >> i am angela carmenhouse with sfmta and we went to the commission for this pilot. just to clarify this is a purchasing contract. we're purchasing parts. the job that the existing staff is doing -- they will still continue doing for other work within the agency.

we still have an enormous amount of work for other departments that those staff will be doing. this in many respects is similar to -- virginia mentioned the contract concerns were?

the way that you thought that they were addressed. >> with the commission, but does that mean that they felt okay? >> we didn't get responses to... there was an initial request for information which we submitted and when we didn't receive any, we did get acknowledgment of that and subsequently, so we went forward to the civil service commission and they didn't come to the commission, but after it passed we did receive, you know, we act on them and we had meet and confers twice and they

also responded to requests for information that they submitted and similar to, you know, your questions regarding the work that they were doing and that sort of nature. and so based on your assurances. that they will have jobs in purchasing that they were okay with it? >> we have stated that the existing staff will not lose their jobs and now the assistant purchasers and the store keepers because there was a concern there. and so,... >> i would be, thank you. >> i would be fine to move, and the public comment there and i would be fine, okay, this is going forward without a recommendation, and perhaps getting a report back from the controller and the city

attorney about the board meeting. and i think that is a great suggestion, i am certainly in favor of moving this item forward, but think that in the days with the staff and the local 21 and the city attorney and making sure that we are in sync here and supervisor mark? >> i am supportive of that approach as well. but could i clarify that there is plenty of work for the existing staff? they will not be doing purchase orders for buses and trolleys. and the cars and the other purchasing that and there is a currently a backlog on many of the other purchasing items? >> they will still be doing purchase for the buses and the trolly and for the dbt and the other departments that we service. and within the mta. >> okay. >> so, let's open this up to

public comment, if there is anyone in the audience? >> good afternoon, members of the committee, my name is rashelle richmond and i am here representing technical engineers local 21, and i want to thank the agency for making assurances that current employees would not be displaced and we think that some work by the controller would help to clarify whether or not this is a prop j, that it is not only short term but longer term. >> we have a number of other concerns that we want to share with you, ken east ton from the

purser's chapter? >> representing the purchasers, and and we almost certainly will lose jobs and since the work is currently being done by the purchasers even if not the people who lose their jobs, the alternative would be to hire more purchasers and so we are moving jobs away from city employees and to outside contractors and also to say that in addition to being a employee for the city i am a resident in district six and when i read this contract and the associated documents, i was actually offended. and by the implications that somehow the purchasing staff at mta are not doing their job. or at least not doing it well. and the idea behind the contracts is that by outsourcing the purchasing

function, mta with can get what they need faster and cheaper, i believe that is true. but the reason that the contractor could get the needed commodities faster and cheaper is not because the purchasing has been too challenging, complicated or difficult for the mta purchasing staff, although, that allows the explanation that was given by the mta by the commission in order to get approval. the fact of the matter is that the reason that the outside contractor is faster than the city purchasing, is because of you, the board of supervisors. you would have enacted laws to make sure that the purchasing process is fair and open, that proper controls are in place to control the expenditure of the tax payer money and to encourage the social agenda that is important to the city. all of these things are important, but all of them take time. when i read or when i read this contract, when i read that this contract will allow for access to needed parts that have a

certain amount available to sfmta and they have found the process quote, too complex. i have to ask, what venders, sfmt, does not have access to? why not, anyone can be a city vender, but they must abide by the laws to receive a contract of the city. >> sfmta will verify that the vendor has paid the tax and when they do it to the vender, that purchase order will have three pages of requirements that that vendors that to agree with in order to continue doing business to the city. what they are proposing to do is to put a broker between themselves and these slow vendors that do not meet these requirements, so that their vendor is 12 b compliant but the actual source of materials

do not have to be compliant with the benefits, regulation or any of the other social legislation required by city vendors. they also tend to have the process by implementing a consolidated monthly billing process, quoting the documents just like oca had with office depot. i want you to remember that this type of billing that by quicker and the lower administrative costs also allowed office depot to over charge the city by more than a million dollars a year for the five years of that contract. at the end of that contract, the controller's office with the contract, and it required additional controls to be in place and subsequent office supply contracts. none of those controls are written into this contract. finally, i would like to point out the alternative that sfmta has rejected when they chose to get this contract. they reject the idea of accomplishing these objectives

and improvements in house because it would require, and i quote, a significant investment in technology and training i submit that investing in the technology infrastructure and employee monthly base would have better benefits to the city than outsourcing jobs. >> thank you very much. anybody else wish to comment? >> seeing none, public comment is closed. i appreciate the comments from local 21, i actually didn't know that you were here. i am less likely to move it to the full board i would like to keep it here in committee and it would be great to get a report from the city aor