Title
Subject: Contract Compliance and Employment Services Policy
From: Office of the City Manager
Recommendation: Approve the Report and Recommendation regarding Moving Oakland Forward Strategy 6-B, Contract Compliance and Employment Services Policy
Body
i : L @- 1-@
OFFICE OF THE (.!TY CLERY.
C! , ,
CITY OF OAKILAND -6j@
COUNCIL AGENDA REPORT 2003 JUL - 2 PM 5: 06
TO: Office of the City Manager
ATTN: Robert C. Bobb
FROM: Deborah L. Barnes
DATE: July 15, 2003
RE: FOLLOW UP TO JUNE 17,2003 CITY COUNCIL MEETING REGARDING
MOVING OAKLAND FORWARD - STRATEGY 6-B, CONTRACT
COMPLIANCE & EMPLOYMENT SERVICES POLICY
RECOMMENDATIONS.
SUMMARY
This report is a follow-up to item # 23 "Moving Oakland forward Strategy 6-13, Contract Compliance
& Employment Services Policy Recommendations" discussed at the June 17, 2003 concurrent
meeting of the Oakland Redevelopment Agency/City Council. This item was moved forward from
the May 27,2003 Community and Economic Development (CED) Committee with a recommendation:
to adopt the Strategy 6-B recommendations with amendments.
At the June 17, 2003 Council meeting, several Council members requested a copy of the background
information supporting the Strategy 6-13 recommendations and agenda reports. That information is
provided under Section 11 of this report.
In addition, per Council's request, Attachments # I provides the original set of Strategy 6-13
recommendations and Attachment #2 provides the amendments put forth by the CED Committee,
affected recommendations and a detailed description of "substantial presence".
FISCAL IMPACTS
There is no fiscal impact.
BACKGROUND
The following chronology is provided as a historical context.
September 2002 - The City Manager Summit Recommendations.
The City Manager put forward 22 recommendations relative to Strategy 6-B. The goal of Strategy 6-13
was "to assess goals, policies, processes & costs of complying with contract compliance programs and
recommend changes to make programs simpler and more effective while implementing multiple City
Councilpolicyobjectives. TheExecutiveSummarygivenattheSeptember2OO2SUnimitprovidesa
comprehensive overview of the 22 original policy recommendations relative to Strategy 6-B. That
Executive Summary is provided under Section II- Executive Summary. At that time, City Council
agreed to move Strategy 6-13 recommendations to the Community and Economic Development (CED)
Committee for further review, and to accept the recommendation to move the Local Employment
Program (LEP) policy recommendations to the Apprenticeship Advisory Board to defme details of
Item:
City Council
July 15, 2003
July 15, 2003 Page 2
implementation. The Apprenticeship Advisory Board was reconvened and volunteered countless hours
until a workable document was accepted by a cross section of stakeholders. The details of that effort
were outlined in the March 25, 2003 Council report found in Section 11 - March 25, 2003 Report.
March 25.L2003 - agenda report "Moving Oakland Forward "Strategy 6-13, Contract Compliance &
Employment Services Policy Recommendations".
The original 22 Strategy 6-13 recommendations were reviewed at the March 25, 2003 CED Committee.
The report also included the proposed changes put forward by the Apprenticeship Advisory Board. 'Me
March 25 agenda report is provided under Section II-March 25, 2003 Report
During the March 25, 2003, CED Committee, several stakeholders (Black Caucus, Black Board of
Trade & Commerce and Bay Area Black Contractors) requested the opportunity to address in more
detail, the Strategy 6-13 recommendations. As suck the CED Committee instructed staff to convene
working sessions with those stakeholders and report back to the committee. Feedback from the April
stakeholders meetings was provided in the report of May 27, 2003.
May 27, 2003 The May 27, 2003 agenda report was a follow up to questions posed by the CED
Committee as well as a report of recommendations put forward by the April stakeholder meetings that
included the Black Caucus, Black Board of Trade and Commerce and the Bay Area Black Contractors
Association. The CED Committee accepted the Strategy 6-13 recommendations with amendments.
Those amendments are provided as Attachment #2.
June IL19LOI - Concurrent Meeting of the Oakland Redevelopment Agency/City Council, item #23
"Contract Compliance and Employment Services Policy Strategy 6-13 Recommendations".
Council requested a follow up report to include a (1) clean copy of the original set of recommendations
put forward by the Strategy 6-B team and (2) a copy of the amendments put forth by the CED
Committee to include the definition of "substantial presence". The clean copy of the Strategy 6-13
recommendations is found in Attachment #L Attachment 42 includes the amendments put forth by the
CED Committee.
The chronology above, along with attachments, outlines the progression of discussions regarding the
Strategy 6-13 policies and administrative procedures. As of June 17, 2003, the CED Committee
recommended accepting the Strategy 6-13 recommendations with amendments.
In addition to copies of the March 25, 2003 and May 27, 2003 reports referenced above,
Section 11 of this report also includes for your convenience, the detailed support documentation and
Executive Summary outlining the rationale for each recommendation. This information was presented
at the September 2002 Summit.
KEY ISSUES AND IMPACTS
During the June 17, 2003 discussion, Council Member Wan asked if the recommendations would result
in the City of Oakland paying more for goods and services if provided by Local and Small Local
Businesses. Councilmember Brunner suggested that a cap would keep the City from paying excessive
amounts for compliance with a 25% participation requirement. Currently, the City will afford a 5% bid
discount to competitively bid construction projects only. In this instance the using agency may put forth
a recommendation to award a contract to a local firm if the bid falls within 5% of the lowest bidder.
Item: 3(-
City Council
July 15, 2003
July 15, 2003 Page 3
The above example is not the same condition as for the purchase of commodities. Purchasing Services
will discount a local bid by 5% and a small local bid by an additional 5%. Therefore, only in the case
of purchasing commodities through Purchasing Services, will a small local firm receive up to a 10%
discount. It is also important to note that while the City may agree to pay a certain percentage above
the lowest bidder, the residual impact of contracting with local firms brings added value to the
economic stability of the Oakland community such that the added value may actually exceed the cost of
the discount.
ACTION REQUESTED OF THE CITY COUNCIL
The Strategy 6-13 Team and the CED Committee have forwarded recommendations for your
consideration. Staff requests Council adopt the Strategy 6-B recommendations as amended by the CED
Committee.
Respectfully Submitted
Dr. C@orge kus@ove', Assist4t City Manager
Prepared by:
Deborah Lusk-Bames
Contract Compliance & Employment Services Manager
APPROVED AND FORWARDED TO THE
CONCURRENT MEETING OF THE OAKLAND REDEVELOPMENT AGENCY/CITY COUNCIL
017@,CE Q@ TITE CITY MANAGER
Item: 3o
City Council
July 15, 2003
Attachment # I
Original Strategy 6-B
Recommendations
(Clean Copy)
ORIGINAL STRATEGY 6-B RECONEVIENDATIONS: (Clean Copy)
I Definition of Small Local Business Enterprise (SLBE): Define size limit for SLBEs as 70% of the US Small
Business Administration (SBA) Standards. These standards are based on national statistics and are adjusted
annually.
2 Definition of Local Business Enterprise (LBEs): Eliminate size limit (revenue cap) for LBEs.
3 Definition of Local Business Enterprise (LBEs): Eliminate local headquarters requirement for LBEs.
4 Eliminate the category of broker from certification.
5 Allow eligible nonprofits to be certified as SLBEs and LBEs.
6 Make the process of certification more accessible through significant simplification and by outreach efforts with the
business community. Institute a self-certification process requiring minimal documentation and streamlined review.
Support efforts by local business organizations (e.g., chambers) to hold "Certification Days".
7 Replace the optional "Good Faith Effort" with a mandatory "Local Subcontracting Outreach Requirement".
8 Eliminate the 3-year commitment for the Mentor-Protdg& program and instead require that the relationship last at a
minimum for the duration of the project.
9 Eliminate the 50% Local Subcontracting requirement, and instead provide incentives in the form of bid discounts
(construction) or preference points (professional services) of up to 5% for achieving up to 501/o in local
subcontracting, or having an SLBE serve as the prime contractor.
10 Allow businesses to accumulate credit for using Certified Local Firms on non-City Projects, and use that credit to
achieve bid discounts or preference points on a City project.
I I For City-assisted private developments (generally Disposition & Development Agreements "DDAs" and Affordable
Housing projects), require primes to seek competitive bids firom subcontractors and comply with the Subcontracting
Outreach requirement (see # 7 above). Primes must give SLBE subcontractors a 5% bid discount and LBE
subcontractors a 2% bid discount. Prime must hire lowest responsible bidder. Thus primes must hire LBE/SLBE
subcontractors that bid within 2%/5% of the lowest bid. Replace the special requirements for trucking with this
more simple, fair and uniform process.
12 Change the informal contract threshold from $15,000 to $50,000 for professional service contracts and from
$50,000to$100,000forconstructionprojects. Maintainthegoalofawarding75%ofinformalcontractdollarsto
local firms, but require that at least 50% go to SLBEs and remaining (up to 25%) to LBEs. Create an award for the
City Department that does the most to support small local businesses.
13 Eintain the basic Hire Oakland Policy - 50% project hours to be worked by Oakland residents and 50% of new
hires to be Oakland residents - but simplify compliance by eliminating the trade-by-trade requirement and by not
allowing more than half the total hours to be in a single trade.
14 LOCAL EMPLOYMENT PROGRAM - Primes can bank project hours worked by Oakland resident employees on
non-City projects during the year prior to issuance of notice to proceed on the City contract and apply those banked
hours to their 50% requirement. Primes can also apply project hours worked on non-City projects during the
contract.
15 When a contract is finished without meeting the Local Employment requirements, the City will withhold from final
payment of either double the average wages for the deficient hours or I% of the non-complying subcontractor's
contract, whichever is less. The business will have one year to work off double the hours owed by working Oakland
residents on non-City projects at which time the business will forfeit the retained amount to the City as a fine.
16 I Limit purchasing bid preferences for SLBEs to 5% and LBEs to 2% and encourage departments to aggressively
seek the lowest prices on goods.
17 Professional Services contracts will be assessed a 1% fee; construction contracts will be assessed a 1.5% fee.
Certain categories will be exempt from paying a fee (but not from compliance) such as grant-restricted contracts.
18 Give the Budget Office the mandate to transfer the assessed fees from departments to the CC&ES budget (like they
currently do for the public art assessment fee).
19 Advertise all contracting opportunities, including informal bids, on the City's web site for a minimum of one week
before proposals or bids are due. Create email list serve that businesses can subscribe to in order to receive email
notification of City opportunities.
20 (a) Random/Spot Compliance Audits (b) First level compliance monitoring functions performed by Construction
Inspectors, and (c) Automated office functions, particularly the certified payroll intake.
21 Unfreeze Senior Compliance Officer position and convert to I Administrative Assistant and I field & outreach
position
22 Create a method for tracking key costs that can be tracked over time and compared with other cities, e.g., cost per
unit of affordable housing, cost per foot of paving, etc. Track growth of certified businesses and other appropriate
performance measures to assess the full valuelcost of all of these policies.
Attachment # 2
CED Committee
Amendments
CED Committee Amendments
At the CEDA Committee meeting of May 27, 2003, Chairperson Brunner put forth the following alternate
recommendations. Seconded by President De La Fuente, the report moved forward to the June 17, 2003 council
meeting with the same recommendation to "move to accept staffs recommendations with changes noted below.
ORIGINAL STRATEGY 6-B CED Committee Amendments
RECOMMENDATIONS
Definition of Small Local Business 1,Insteadof7O%oftheSBAuse3O%oftheSBAtodefinea SmallLoGal
Er' 'se ' -5
s s
LBE): Define size limit for SLBEs as Z'Srof the TBusinetss Enterprise (SLBE)
US Small Business Administration (SBA)
Standards These standams are based on
national statistics and are Ousted annually.
#6 2. "Ado San Francisco's definition of @Substanfial Presence'.
Make the process of certification more accessible
through signillcant simpffication and by outreach 'A fixed and established place where work is carried on of a derical, administrative,
efforts with the business community Institute a professional or production nature directly pertinent to the business being certified. A
seff-cartification process requiring minimal tem .porary location or movable property or one that was established to oversee a
documentationandstrearrilined review Support protect such as a construction pqect office does not qualify. Businesses with offices
efforts by local business organizations (e. g., both within and outside of the Qty that seek certification as a local business must
chambers) to hold 'Certification Days'. demonstrate the existence of a bona fide local office in accordance with the following
criteria:
(1) IndependentOfficeS :Thelocalofficecanand does function as an
independent office site. The local office is not merely a sham operation set up
by a non-IoGal business for the purpose of gaining USLBE certification;
(2) Fixtures and Equipment The local office contains all fixtures and/or equipment,
including but not limited to, as appropriate, cornput0s) software, copy
machine(s), furniture, vehicle(s), tools, appliances and/or machinery necessary
to operate the business for which the certification is sought;
(3) space: The local office contains all space necessary to operate the
business for which certification is sought including but not limited to, as
appropriate, office space, warehouse space, parking, yard area and/or
shop area;
(4) Dedicated Personnel: The local office must be the main office for assigned
personnel who conduct a full range of the business' activities out of the
local office including but not limited to, as appropriate, professional,
clerical and/or administrative staff assigned and dedicated to the local
office as necessary to operate the business for which certification is
sought;
(5) Daily Function: The local office functions on a daily basis, or a regular
basis as otherwise appropriate, providing all services to operate the
business for which certification is sought;
(6) Local Overhead: The overhead costs associated with the local office,
including but not limited to rent wages and salaries, must place the
entity seeking certification at an economic disadvantage compared to
businesses not located within the City (e.g., a business in the City
staffed by a clerk who forwards substantive work to a location outside
the City is not considered disadvantaged compared to other businesses
not located within the city, and does not meet the criteria for
cerfificabon).'Reference - SF -HRC Schedule A Application. Revised
10/1 5/01 Page 3 of 9
ORIGINAL STRATEGY 6-B CED Committee Amendments
RECOMMENDATIONS
7 -P. # 3 Remove the requirement that bidders must mail subcontracting
Replace the optional 'Good Farth Effort' with a opportunities to certfied businesses; maintain requirement that the
mandatory local Subcontracting Outreach City post subcontracting opportunities on Ks viebsite.
Requirement'
Replace 'Good Faith Effort ' waiver with a
Subcontracting Outreach Requirement'as a
condition for prime contractors to bid on projects
The City wil/ post bidding opportunities on its
website, and potential primes will be required to
mail. fax, or e-mail subcontracting opportunities to
a list provided by the City on labels (however, until
the web site is up, any mailed bid invitations must
be by codified mal) This requirement is waived in
any areas where the prime promises to self-perform
(riot to subconhaact) that type of work To simplify
enforcement, primes interested in a particular
project would post their names on a City webske,
allowing for local firms to police the outreach
mquiremovit. For example, if a local foundation
contractor did not receive a solicitation for a bid on
a cilyproject involving foundation work, that firm
could file a complaint with MES.
9
Eliminate the 50-A Local Subcontracting 4 Replace this recommendation with a 25% local business
requirement, and instead provide incentives in the participation requirement, comprised of 15% participation for SLBE
form of bid discounts (construction) or preference and 10%.
points (professional services) of up to 5% for
achieving up to W% in local subcontiracting, or
havinganSLBEserveasthe mecontractor
#10
Allow businesses to accumulate credit for using #5Stipulat thattheabilityoffimistobankhoursonnon-City
Certified Local Firms on non-Cify Projects, and use projects WIl start with the adoption of this policy and YAII not be
that credit to achieve bid discounts or preference retroactive. Firms Ml only have one year to credit these hours.
points on a City pitied
#11 6 Same as Recommendation 9.
For City-assisted private developments (generally
Disposition & Development Agreements TDAs'
and Affordable Housing prqjects), require primes to
seek competitive bids from subcontractors and
comply with the Subcodracting Outreach
requirement (see # 7 above). Primes must give
SLBE subcontractors a 5% bid discount and LBE
subcontractors a 2016 bid discount Prime must hire
lowest responsible bidder Thus primes must hire
LBEISLBE subcontractors that bid within 290% of
the lowest bid. Replace the special requirements
for trucking with this moresimple, fair and uniform
process
2
gi.
li'L
CITY HALL I FRANK H. OGAWA PLAZA OAKLAND, CALIFORNIA 94612
JANE BRUNNER (510) 238-7001
Councilmember FAX (510) 2 3 8-6 9 1 0
District I TDD: (510) 238-7413
TO: City Councilmembers
FROM: Councilmember Jane Brunner
I move to accept all of staff's recommendations with the following
changes:
I . Recommendation #11: Adopt the 30% of the SBA standard
2. Recommendation #6: Adopt San Francisco's definition of
"substantial preference"
3. Recommendation #7: Remove the requirement that bidders
must maif@iubcontracting opportunities to certified businesses;
maintain requirement that the City post subcontracting
opportunities on its website.
4. Recommendation #9: Replace this recommendation with a
25% local business participation requirement, comprised of
15% participation for SLBEs and 10% participation for
SLBEs or LBEs.
5. Recommendation #10: Stipulate that the ability of firms to
bank hours on non-City projects will start with the adoption of
this policy and will not be retroactive. Firms will only have one
year to credit these hours.
6. Recommendation #1 1: Same as Recommendation #9.
City C /ORA
J e 003
MARCH 25, 2003 AGENDA
REPORT
MOVING OAKLAND FORWARD -
STRATEGY 6-B CONTRACT
COMPLIANCE & EMPLOYMENT
SERVICES RECOMMENDAITONS
CITY OF OAKLAND
COUNCIL AGENDA REPORT
TO: Office of the City Manager
ATTN: Robert C. Bobb
FROM: Contract Compliance and Employment Services Division
DATE: March 25, 2003
RE: MOVING OAKLAND FORWARD - STRATEGY 6-B, CONTRACT
COMPLIANCE & EMPLOYMENT SERVICES POLICY
RECOMMENDATIONS.
SUMMARY
This report presents recommendations for significant changes to the City's two main programs
that relate to contracted expenditure of City dollars: the Local and Small Local Enterprise
Program (S/LBE) and the Local Employment Program (LEP). These Tecorn endations are
based on the work of the Moving Oakland Forward Goal Team 6-B, as well as subsequent work
on the LEP by the working group that developed the City's successful Apprenticeship Program.
These recommendations aim to simultaneous simplify the administration of the programs while
enhancing their effectiveness. They represent, in some ways, substantial departures from the
way the programs have been implemented to date, and have been vetted with stakeholders to
ensure their acceptance and practicality. Staff recognizes the complexity and sensitivity of the
issues covered by these policies and has endeavored to reengineer the programs in such a way as
to remain true to the spirit of the policies.
Staff is requesting that the City Council accept this report and the recommendations contained
herein.
FISCAL IMPACTS
There are no immediate fiscal impacts associated with the proposed program changes. Some of
the team's administrative recommendations, not discussed in detail in this report, will have
nominal fiscal impact, which will be incorporated into the Division of Contract Compliance &
Employment Services' proposed FY2003-05 budget.
BACKGROUND
The City has a number of policies to provide opportunities for Oakland residents and businesses.
The Local Employment Program and the Small/Local Business Enterprise Program (S/LBE) are
the major programs created to serve these respective groups. Supporting and/or complementing
these programs are policies regarding living wage, prevailing wage, disadvantaged business
enterprises, apprenticeship, and domestic partners.
ORAICOUNCIL
'JUL 1 5 2003
The intended outcome of these policies is to stimulate economic development by supporting the
development of the iocal workforce and business community. To the extent that the locally
unfettered economic market places them at a disadvantage, these policies are warranted and can
potentially meet numerous objectives simultaneously. However, there are challenges associated
with meeting this type of policy intent. First, since the intent is premised on the economic and
disadvantaged status of Oakland businesses and residents, it is difficult to measure the policies'
effectiveness because it is hard to gather relevant and credible economic data. Second, it is
difficult to translate the policies into programs that simply and effectively meet their intent due
to the intricate nature of public spending and the additional complexity of monitoring it. As a
result of these challenges, we are left with questions about the policies' effectiveness and
concerns about their implementation.
A team of City Associates convened as part of the Moving Oakland Forward process during the
spring and summer of 2002 to answer these questions and address these concerns. The team
presented initial recommendations to the City Manager in September of 2002 and to the City
Council in November 2002. Following is some background information that supports the
recommendations contained in this report.
a. Overview of internal research findings
The S/LBE and Local Employment programs are central to the implementation of the
City's local participation policies in terms of impact and opportunity for improvement.
As such these programs were the ultimate focus of the team's activity. Internal research
revealed that on the whole, these two programs were meeting their goals of directing half
of City spending on construction and professional services to Oakland residents and
businesses. Less clear were the costs to the City of implementing these programs.
Research also revealed that internally there is a lack of understanding of how the
programs do or should work and that, in fact, their implementation and interpretation
were not consistent across the organization. This discovery underscored and confirmed
the perception that the programs, while well meaning, are too complex. Some
quantitative data shows that the City pays relatively high prices for some contracts while
receiving few bids. While these facts do not expressly implicate City Council policies,
they do provide cause for concern. Attachment F includes data and a report relevant to
this matter.
b. Overview of external research findings
The team itself did little in the way of external research but had the benefit of previous
research completed by the Division of Contract Compliance & Employment Services
(CC&ES) and the Offices of the Council President and Council member Danny Wan.
Regarding precedent or best practices from other cities, there are few comparable policies
or programs to evaluate. A few other California cities do have programs in these areas,
but their differing structures and lack of data to measure their effectiveness limit the
value of comparisons. Discussions with focus groups of affected stakeholders have been
significantly more revealing. The main theme emanating from these discussions was
general support for the programs in concept but frustration with their implementation.
Frustration was centered on the bureaucratic complexity, inflexibility, and unintended
adverse consequences of the programs.
2
c. Stakeholders meetings regarding the S/LBE program
the Metropolitan Chamber of Commerce spent several months assessing the City's programs
and submitted a number of recommendations, including using federal size standards instead
of 70% of those standards. In addition, the Black Board of Trade and Hispanic Chamber
memberships provided valuable feedback.
The tentative recomm udations for the S/LBE program were presented in September to about
20 individuals that represented businesses, membership organizations, building trades, and
others. The stakeholder group was very pleased with the recomm ndations on the whole,
viewing them as big improvements over the status quo.
d. The Local Employment Program (LEP) working group
The initial team recommendations regarding the LEP met with some concern from a number
of stakeholders. As a result, the City asked the working group that developed the City's
Apprenticeship Program to refine the team's LEP recommendations in order to make them
workable for labor, business, community, and the City. The City is deeply grateful to the
LEP working group for the countless hours volunteered to this effort. Throughout the entire
process, the task was taken on with great conviction and dedication in order to delicately
balance employment policies that were both fair to Oakland residents and reasonable for
business stakeholders.
The working group membership is shown below. An asterisk (*) denotes the chair and
double asterisks (**) denote the lead document facilitator.
First First
Last Name Name 0 Last Name Name Organization
I Brauer John 0ABWDC/BACSlC 19011a Joe Nibbi Brothers
2 Christophe Don Anderson Carpet 20 Price John Concentric
3 Conway jim Bay Area JMACNA 21 Reagan Bemida Port of Oakland
4 Flores Gabriela Roberts-Obayashi Corp. 22IReiskin Ed lCity/CM0
5 Fong Melanie City/CMO 23 Schaaf Libby lCity Council President IDLF
6 Francois Alex BACSIC 24 Slivka Andrew lCarpentcrs Union
7 Halterman Lee Lee Halterman/Port 25 Smith Larry @oberts-Obayasbi Corp.-
8 Homer Justin City/Council District #1 26 Spikes Ronnell Carpenter
9Kernighan Pat City/Council District #2 27 Stagg Jim 113EW 596
I 0 Lieser Mary M. Carpenter-Apprenticeship 28 Suafai Susie NEDLC
I I Lindquist Mark M.A. Lindquist Co., Inc. 29.Thomas James Emergency Svcs Network
12 Lockett Dennis City/CC&Es 3O Van Buren Obray Pipe Trades
13,Luboviski Barry Building Trades ouncil 31 Vasey Meg Port of Oakland
14 Lusk- Barnes Deborah City/CC&ES 32 Walterhouse Dick Pankow Builders
15Miller Jack DC# 1 6 Painters #3 33 Walton Rick rEA
16 Mongerson M. Duan RoofingfWaterproofing 34 Werner Rick ISheet Metal Workers U#105
17 Newton lBarbarette iRedwood Resources 35Youhn Beth @radeswornen Inc.
18Nitoto iMonsa iCommuni
3
KEY ISSUES AND UVIPACTS
The result of the work on the SILBE and Local Employment programs are revised program
documents (Attachments A and B). These documents reflect changes to the programs based on
the following recommendations.
Recommendation #1 - Definition of Small Local Business Enterprise (SLBE): Define a size
limit for SLBEs as 70% of the US Small Business Administration (SBA) standards. These
standards are based on national statistics and are adjusted annually.
The current SLBE size sandards for each industry were adopted by City Council in 1997 or 1998
and have not been adjusted since then. It would be preferable to set the SLBE size standards as a
percentage of Federal size standards for small businesses, which are adjusted annually according
to statistical analysis done by the SBA. Thus the City's small business standards would be more
uniform with national standards and would automatically adjust to keep up-to-date without
Council action.
The SBA considers economic characteristics comprising the structure of an industry, including
degree of competition and average firm size. The SBA also considers technological changes,
competition from other industries, growth trends, and historical activity within an industry.
Over 90% of the firms certified by the City of Oakland fall into the construction industry or
professional services industry category. The 2000 Metropolitan Statistical Area (MSA) -
Business Patterns for Oakland, California, reveal a total of 58,456 businesses with an annual
payroll of $3,304,713 for construction and $4,764,239 for professional services.
With regard to size standards currently in use, the City's current small local business size
standard for the General Building Contractor industry (for example) is $8,200,000, and
$17,000,000 for local businesses. The SBA size standard for that same category is $28,000,000
and the Disadvantaged Business Enterprise size standard is $27,500,000. 70% of the SBA
standard for small would be $19,950,000. 70% of the SBA size standards would place Oakland
thresholds within the range of the previous size limits for large local firms. Attachment D gives
a breakdown of the various size standards considered.
Setting the City's size standards as a percentage of the SBA standards eliminates the need for
City staff to do their own analysis of each industry to determine a standard. Also, since the SBA
standard adjusts annually (and is widely published), the City does not need to take action each
year to keep the standards up-to-date with current economic conditions.
Recommendation - #2 - Definition of Local Business Enterprise (LBEs): Eliminate size limit
(revenue cap) for LBEs.
The existing criteria for participation in the LBE program are a size limit and a headquarters
requirement. Both were set with the intent of assisting small and medium-sized local firras,
which is a worthwhile goal. However, these criteria cause the Program to come into conflict
with another strongly held policy objective of the Mayor and City Council: encouraging
economic development and investment in Oakland. The current size limits (revenue caps)
4
exclude long-time larger local businesses from the City's preference program. These businesses
contribute significantly to Oakland's economic vitality. Many of the long-time businesses feel
they ought to be rewarded for their commitment to staying in Oakland even in tough economic
times. The existing LBE preference also may be discouraging larger or non-local Rims from
bidding on Oakland contracts or in setting up operations in Oakland. The size limit on LBEs also
makes it harder for prime contractors to meet our local subcontracting goals - particularly on
larger projects.
There will be some sinall efficiency realized in certifying LBEs, as the requirements are simpler
- no longer requiring revenue information. The main benefit is that larger local businesses will
be encouraged to bid on Oakland contracts. We are assuming that more competition for our
contracts will result in lower prices for the City
Recommendation -3 # - Definition of Local Business Enterprise (LBEs): Eliminate
headquarters requirement for LBEs.
The issue of whether to require LBEs to have an Oakland headquarters is part of the broader
policy discussion stated in Recommendation 2 above, particularly in striking a balance between
assisting small local businesses and encouraging economic development in general in Oakland.
The question is whether the headquarters requirement discourages non-local businesses from
bidding on City contracts and opening a branch office in Oakland.
To be certified as an LBE currently, a business must have its headquarters in Oakland (arid, as
discussed in Recommendation 2, be below a certain size). After much discussion, the team
decided to eliminate both the headquarters requirement and the size limits. The expected
economic impact of the new LBE definition is that out-of-state firms will have an incentive to
establish substantial branch offices in Oakland, thus contributing to economic development in
Oakland. The incentive for LBEs will be limited to a 2% bid discount, while the SLBEs will
receive greater preference, a 5% bid discount. (See Recommendation 9.)
The main benefit is that Recommendations 2 and 3 together (eliminating the size and
headquarters requirements) will substantially enlarge the pool of businesses that can qualify as
LBEs. This should increase the number of businesses bidding on City contracts and encourage
price competition. The new LBE definition provides an incentive for any business to locate an
office in Oakland, thus encouraging economic investment in Oakland.
Recommendation - #4 Eliminate the category of broker from certification.
There are two distinct categories of brokers - trucking arid non-trucking. Currently, very few of
either type are certified. Local brokers charge more to the City through the bid discount process,
but one-person operations provide little economic development benefit to Oakland.
Currently, non-trucking brokers can be certified just like any other business and earn preferences
up to 1 0%. Certified Trucking brokers, earn preference up to 5 % towards the trucking
participation goal.
This change will eliminate some very complex aspects of the S/LBE program, thus simplifying
the process, while adversely impacting very few individuals. This simplification will make the
program more attractive to other local businesses.
5
Recommendation - #5 Allow eligible, nonprofits to be certified as S/LBEs
There are many opportunities offered by the City for which nonprofit corporations are qualified.
Many nonprofits, in fact, contract with the City to provide both construction and professional
services. In some of these cases, nonprofits compete against for-profit corporations for City
contracts. Local nonprofits that would otherwise meet the requirements for certification are not
eligible due solely to their nonprofit status, though they arguably contribute nearly as
substantially to the City's economic development and more so in many cases to the City's social
goals.
Recommendation - #6 Make the process of certification more accessible through significant
simplification and by outreach efforts with the business community. Institute a self-
certification process requiring minimal documentation and streamlined review. Support
efforts by local business organizations (e.g., chambers) to hold "certification days".
[Completed Administratively]
There are many more businesses eligible for certification than there are certified firms.
A self certification process was initiated in July whereby businesses, under penalty of peijury,
self certify that the information provided in the application is true. The process of certification is
now more accessible through significant simplification and requires submittal of only the most
basic information. This approach significantly reduces the actual number of supporting
documentation to three or four items. The results are compelling. From July 1, 2001 to March 1,
2002, 34 new certification applications were processed, compared to 65 during July 1, 2002 to
March 1, 2003 under the new self certification process. The jump represents a 52% increase.
Under the new process, CC&ES staff uses three levels of scrutiny from simple re-certifications
of local firms to site visits to review certification requests. Out of the 65 applications processed,
five site visits were necessary.
Outreach efforts with the business community by district are being proposed as well as
certification days with various organizations. Under Attachment E, please find a copy of the new
"Self Certification" application and suggested outreach activities
Recommendation #7: Replace the optional "Good Faith Effort" with a mandatory "Local
Subcontracting Outreach Requirement".
Firms have complained that the "good faith" waiver process is impossible to meet. Advertising
and certified mail are expensive and labor intensive (particularly for small firms), yet we want to
ensure that our local firms are notified of subcontracting opportunities.
The current "good faith effort" is perceived to be burdensome and is suspected to contribute to
diminished interest by businesses in pursuing City work. With the exception of the "good faith"
effort, there is no outreach required by prime contractors for local subcontractors. Primes can
achieve their local subcontracting goal without necessarily doing an extensive outreach (e.g., by
using firms they previously worked with). The only reason for businesses to make a good faith
effort is to try to get a waiver for not using local firms (because of lack of availability), and to
not get penalized for not achieving the 50% local participation goal.
6
Ideally, businesses would always do an extensive outreach to local firms to maximize local
participation on every contract, and the process to verify this outreach effort should not be staff
intensive for the CC&ES division.
It is believed that the most appropriate solution to ensure that certified firms are notified of
subcontract opportunities would be to replace "Good Faith" waiver with a "Subcontracting
Outreach Requirement" as a condition for prime contractors to bid on projects. The City will
post bidding opportunities on its website, and potential primes will be required to mail, fax, or
email subcontracting opportunities to a list provided by the City on labels (however, until the
web site is up, any mailed bid invitations must be by certified mail). This requirement is waived
in any areas where the prime promises to self-perform (not to subcontract) that type of work.
We would expect a much greater outreach effort to local firms by mandating this as a condition
for submitting a bid or proposal to the City; yet by simplif@ing the process it should not be too
cumbersome for the businesses serving as the prime. Under this proposal, primes would self-
certify compliance with the Subcontracting Outreach Requirement using a simple one-page form.
To simplify enforcement, primes interested in a particular project would post their names on a
City website, allowing for local firms to police the outreach requirement. For example, if a local
foundation contractor did not receive a solicitation for a bid on a City project involving
foundation work, that firm could file a complaint with CC&ES.
In concert with the "Subcontracting Outreach Requirement" a City welisite constructed to
perform the recommended tasks should occur as soon as possible. In addition, The City must
train appropriate City staff in posting the information on the City website, and perform an
educational outreach campaign to inform stakeholders of the new changes.
Recommendation #8: Eliminate the 3-year commitment for the Nlentor-Protkg6 program
and instead require that the relationship last at a minimum for the duration of the project.
[Completed Administratively and is reflected in the revised SIEBE Program, page 10, section VII
- C.]
Under this recommendation, the City has modified the Mentor-Prot6g6 program to require that
the relationship needs to last, at a minimum, only for the duration of the project. The
recommended option is to create an annual City award that recognizes businesses that did the
most to help small local businesses grow. It is expected that implementing the proposed
recommendation will significantly encourage greater Mentor-Protdgd relationships in City
contracts, thus contributing towards fostering a friendlier environment for smaller, newer firms
to grow in.
Recommendation #9: Eliminate the 50% Local Subcontracting requirement, and instead
provide incentives in the form of bid discounts (construction) or preference points
(professional services) of up to 5% for achieving up to 50% in local subcontracting, or
having an SLBE serve as the prime contractor. For professional services, local firms shall
earn up to five additional points on evaluations.
Companies find it difficult and costly to meet the 50% local subcontracting requirements. Many
projects do not necessarily require very much, if any, subcontracting. The main exception is
building construction projects. Companies that perceive this requirement as cumbersome and
7
unfair do not compete for City projects - less competition results in higher prices. Since the pool
of local firms that primes must subcontract with is so limited, local firms may be tempted to
inflate prices or take on more work than they can handle. The existing requirement is very rigid.
In some cases, such as Public Works construction projects involving traffic signals, the City has
often times received just one bidder. AD informal review of other cities' costs for traffic signals
suggests that Oakland's costs are higher. For housing projects, anecdotal information from
developers suggests that current policies could lead to costs that are as much as 30% higher.
Currently, businesses looking to do business with the City are expected to achieve a 50% local
subcontracting goal, regardless of the nature of the work, or the opportunity within the specific
contract to subcontract, or the availability of local subcontractors to perform the work. SLBEs
acting as the prime contractor satisfy this requirement automatically, while LBEs acting as the
prime only satisfy 15% of the requirement, and need to subcontract 35% to SLBEs in order to
meettherequirement. SLBEsandLBEsactingastheprimeorinajoint-venturereceivea5%
bid discount, while non-local firms meeting the local subcontracting goal receive no bid
discount.
By replacing the current 50% subcontracting requirement with an incentive program, contractors
will be rewarded with up to a 5% bid discount on construction contracts or 5% in preference
points for professional service contracts for meeting the 50% subcontracting goal. The
recommendation is to award 1% for every 10% of contract dollar's subcontracted to SLBEs and
0.5% for every 10% of contract dollars subcontracted to LBEs; however, no more than 2% of bid
discount can be earned by subcontracting with LBEs and 5% for SLBEs. The prime contractor's
maximum bid discount or preference points that can be earned from all sources cannot exceed
5%. Primes would no longer be required to subcontract out any work typically performed in-
house. If they do, they can receive a bid discount or credit. This bid discount or credit is another
way to cam the existing bid discount/credit system for primes that are SLBEs or Joint Venture or
Mentor Protdg6 with SLBEs. By allowing the above, primes would now have multiple ways to
hire local businesses - as partners, prot6g6s or subcontractors - and to be rewarded for hiring
them with a bid discount/credit.
The recommended change in policy should yield a greater interest in bidding the City's work,
and thus lead to reduce costs. It also will continue to give preference to local firms and those
who subcontract with local firms, while capping the City's cost liability for such preferences to
just 5%.
Recommendation #10: Allow businesses to accumulate credit for using Certified Local
Firms on non-City Projects, and use that credit to achieve bid discounts or preference
points on a City project.
Currently there is no incentive for businesses to hire local firms on non-City jobs. The only time
businesses are given credit for hiring a local firm on a non-City job is when they did not meet
their local subcontracting goal on a City job, and in lieu of paying a fine, they agree to
subcontract with a local subcontractor an equivalent amount of dollars on another non-City
project.
An incentive would allow prime contractors to bank dollars paid to certified local firms on non-
City jobs during the year prior to their notice to proceed an a City contract, and allow those
8
banked dollars to count toward achieving a bid discount/preference points (up to 2%) on the City
contract.
It is anticipated that allowing businesses to accumulate credit for hiring local firms on non-City
jobs will encourage the use of local firms on non-City jobs.
Recommendation #1 1: Require City-assisted private developments (generally Disposition &
Development Agreements "DDAs" and Affordable Housing projects), to seek competitive
bids from subcontractors and comply with the Subcontracting Outreach requirement (see
# 7 above). Primes must give SLBE subcontractors a 5% bid discount and LBE
subcontractors a 2% bid discount. Primes must hire the lowest responsible bidder. Thus
primes must hire LBE/SLBE subcontractors that bid within 2% to 5% of the lowest bid.
Replace the special requirements for trucking with this more simple, fair and uniform
process.
While building construction projects have many subcontracting opportunities for local
businesses, a strict 50% requirement is difficult and costly to meet. The special trucking
requirements make compliance even more complicated. Companies that perceive this
requirement as cumbersome and unfair do not compete for City projects - less competition
results in higher prices. Since the pool of local firms that primes must subcontract with is so
limited, local firms may be tempted to inflate prices or take on more work than they can handle.
Several focus groups with affordable housing developers and contractors were held as a result of
concerns raised by developers regarding increased costs resulting from City requirements. As a
result, the Council exempted affordable housing developments from the SLBE local hiring
requirements until changes could be adopted. Few other cities have local hiring requirements,
which results in contractors working in places where there are no requirements when demand for
construction is very high. Non-profit housing developers reported few contractors interested in
bidding on jobs fimided by the City. Developers estimated that the two programs resulted in as
much as a 10% increase in costs.
Currently the requirements provide a burden on affordable housing and other development
projects that increases costs and makes such jobs less attractive to local and non-local
contractors. Each contractor and developer is required to meet SLBE/LBE contracting goals and
is subject to fines if the goals are not met. Increased costs and potential impacts on the projects
are the result.
For City-assisted private developments (generally Disposition & Development Agreements
"DDAs" and Affordable Housing projects, but also loans for construction projects), the
recommendation is to require primes to seek competitive bids from subcontractors and comply
with the Subcontracting Outreach requirement (see Recommendation 7 above). Primes must
give SLBE subcontractors a 5% bid discount and LBE subcontractors a 2% bid discount. Primes
must hire the lowest responsible bidder. Thus primes must hire LBE/SLBE subcontractors that
bid within 2% to 5% of the lowest bid. The special requirements for trucldng would be replaced
with this simpler, fairer and more uniform process.
In addition to the efficiency resulting from by a lessening of monitoring requirements, the
potential reduction in development costs could result in as much as a 20% reduction in subsidies
required.
9
Recommendation #12 Change the threshold at which the L/SLBE program applies. For the
informal contract threshold, raise it from $15,000 to $50,000 for professional service
contracts and from $50,000 to $100,000 for construction projects. Maintain the goal of
awarding 75% of informal contract doUars to local firms, but require that at least 50% go
to SLBEs and the remaining (up to 25%) to LBEs. Create an award for the City
Department that does the most to support small local businesses.
Currently the requirements for bidding of contracts result in a cumbersome and difficult process
for smaller contracts. The requirement that staff must contract with local firms for informally bid
contracts at a rate of 75% results in a high percentage of these smaller awards to LBEs.
Expanding the currently successful efforts to contracts with higher limits could result in
additional awards to local contractors and vendors.
The recommended limits at which the S/LBE policies will apply are $50,000 for professional
services contracts and $ 1 00,000 for construction services contracts. Below those limits, establish
a goal of spending 75% of informal contract dollars with local firms, and require that at least
50% of those dollars go to SLBEs and the remaining (up to 25%) to LBEs.
Recommendations #13-15 - Completed by Local Emoloyment Proeram - Workina Group
The City Manager reconvened the working group that developed the City's successful
Apprenticeship Program to rework the basic Hire Oakland Policy expressed in
Recommendations 13-15 as outlined in the September 2002 City Manager Summit
recommendations. As mentioned in that report, the current Local Employment Program is not
clear on how and when exemptions can be granted, and how to ensure the program comports
with collective bargaining unit hiring hall procedures. Moreover, the current penalty structure at
$ 1,000 dollars per day or I% of the contract amount is not reasonable when non-discretionary
conditions such as safety, are not considered in calculating penalties.
More than thirty experts from various areas worked through more than 15 full-group, sub-
committee and constituent meetings in order to craft the best possible Local Employment Policy.
The working group completed this task ahead of time.
The working group supports maintaining the basic Hire Oakland Policy. Several innovative
strategies were added such as incentives, a clear set of exemptions, a new penalty structure, and a
new paradigm for winning compliance and creating a better working relationship with
stakeholders.
While the working group did not recommend eliminating the trade-by trade compliance
requirement, carefully crafted strategies were inserted to balance that requirement with an
appropriate set of exemptions and incentives. To encourage long-term retention and early hiring
of Oakland residents as employees of contractors doing business in Oakland, the working group
recommends giving a contractor credit towards the LEP goals when the contractor employs
crafts persons, superintendents, and foremen that are Oakland residents. Banked or credited
hours may only be applied toward meeting 50% of the LEP requirement.
Penalties will be applied as the very last resort and after progressive violations. The priority is to
create employment opportunities. Therefore, when a contractor finishes its contract without
I 0
meeting the LEP requirements, the City will withhold from final payment up to 150% of the
wages for the deficient hours of the non-complying contractor's contract. The contractor will
have one year to work off the hours owed by working Oakland residents on non-City projects. If
at the end of this period all the deficient hours have not been eliminated, the Contractor will
forfeit 150% of the wages for any remaining deficient hours to the City as a fine.
It is also recom ended that repeated non-compliance with the LEP could lead to debarment
under City contracting policies. The full recommended Local Employment Program is provided
as Attachment B.
Slides that summarize and explain many of these recommendations are provided in Attachment
C.
RECOMAMNDATIONS
Accept the policy recommendations as highlighted below and detailed in the attached S/LBE and
Local Employment program documents:
For the S/LBE Program:
a) Set the Maximum size limit to qualify as a Small Local Business Enterprise at 70% of
the SBA size standards.
b) Eliminate the size limit (revenue cap) for Local Business Enterprise certifications.
c) Eliminate the local headquarters requirement for Local Business Enterprise
certifications.
d) Eliminate certifications for the category of broker.
e) Allow eligible nonprofits to be certified as S/LBE.
f) Replace the optional "Good Faith Effort" with a mandatory "Local Subcontracting
Outreach Requirement".
g) Ehminate the 50% S/LBE subcontracting requirement and instead provide incentives
in the form of bid discounts (construction) or preference points (professional services)
of up to 5% for achieving up to 50% in local subcontracting, or having an S/LBE
serve as the prime. For professional services, local firms shall earn up to five
additional points on evaluations.
h) Allow businesses to accumulate credit for using certified S/LBE firms on non-City
projects, and use that credit to achieve bid discounts or preference points on a City
project.
i) Require City-assisted private developments (generally Disposition & Development
Agreements "DDAs" and Affordable Housing projects), to seek competitive bids
from subcontractors and comply with the Subcontracting Outreach requirement (see
7 above). Primes must give SLBE subcontractors a 5% bid discount and LBE
subcontractors a 2% bid discount. Primes must hire the lowest responsible bidder.
j) For purposes of determining the point at which S/LBE programs apply, establish a
threshold of $50,000 for professional services contracts and $ 1 00,000 for construction
services contracts. For professional services and construction services contracts
falling below the thresholds, require agencies to spend 75% of those dollars with
SiLBEs so that 50% of that amount is spent with small local firms and 25% with local
firms.
For the Local Employment Program:
k) Clarify the requirements, applicability, and exemptions for the City's 50% local hire
policy. (As Attached)
1) Create an incentive in the program for businesses to hire Oakland workers on non-
City jobs by permitting banking of hours for application on City contracts. The
current program does not allow for banking of hours.
m) Modify the assessment and collection of penalties to make their application more
reasonable and collectable. Failure to comply with the policy will compel the City to
withhold 150% of the wages for the deficient hours, which the contractor will have
one year to work off through the employment of Oakland workers. Tle current
program requires assessment of a $1,000/day penalty.
ACTION REQUESTED OF THE CITY COUNCEL
Accept the recommendations outlined in this report and detailed in the attached documents and
direct staff to prepare the necessary legislation to initiate the revised Small/Local Business
Enterprise and Local Employment programs.
Respectfully submitted,
Prepared by:
Deborah Barnes, Manager, Contract
Compliance & Employment Services, with
direction from MOF Goal Team 6-B and
Apprenticeship Working Group
APPROVED AND FORWARDED TO THE
COMM'(JNITY & ECONOMIC DEVELOPMENT CONMUTTEE
OFFICE OF THE CITY MANAGER
12
MAY 275 2003 AGENDA
REPORT
MOVING OAKLAND FORWARD -
STRATEGY 6-B CONTRACT
COMPLIANCE & EMPLOYMENT
SERVICES RECOMMENDAITONS
0 F F I CC -- TLIE C!TY CLEPr,
CITY OF OAELAND 0 L "I.-:
COUNCLLAGENDA REPORT 2g--
14 V. A V 4: 4 0
4 im I
TO: Office of the City Manager
ATTN: Robert C. Bobb
FROM: Deborah L. Barnes
DATE: May 27, 2003
RE: MOVING OAKLAND FORWARD - STRATEGY 6-13, CONTRACT
COMPLIANCE & EMPLOYMENT SERVICES POLICY
RECOMMENDATIONS.
SUMMARY
TheCEDACommitteeconsideredtheabovereferencedreportonMarch25'h. Additional
infon-nation was requested, and is provided below under key issues and impacts.
FISCAL IMPACTS
This is an informational report.
BACKGROUND
Str-Aegy 6-B put forth recommendations for Council review. Specific questions were posed at the
March 25th CEDA Committee meeting. This report contains responses to those requests for
additiorial information.
KEY ISSUES AND IMPACTS
1. Expand on the discussion regarding size standards and include observations regarding the
impact on Oakland businesses?
Five areas am addressed below: (a) business tax data (b) L/SLBE certffied businesses (c) census
data (d) the State of California's small business size standard, and (e) the size standards for the
economically disadvantaged as defined by the City and County of San Francisco's Human Rights
Commission.
(a) Business Tax data
In a discussion of business size, it is important to assess reported revenue. However, in and of
itselt the findings are not compelling enough to support an assumption of actual business size.
Business tax data includes businesses operating in multi-jurisdictional markets. For example, a
firm based in Oakland may actually earn 99.9% of its 50 million dollar revenue in San Francisco,
and report business earnings of only $200, 000 in Oakland- Based solely on the business tax data,
the business appears small, yet in actuality it is quite large. Nevertheless, this data provides
picture of the extent to which dollars are earned in Oakland and reported by Oakland and n(
Oakland firms.
May 27, 200' ) Page 2
(a) Business Tax data (continued)
Table I shows a three-year period of revenue reported by Oakland firms. The first column shows
six dollar ranges (A-F). In this data, you will see that dollar range A represents the largest
percentage of firms (63.5%, 60.6% and 55.7% respectively) repordng revenue below $33,335.
DqIW range B ($33,336-99,999) represents the second largest number of businesses reporting
revenue. Overall, more than severity percent (70%) of the businesses reported revenue under
$99,999.
Business Tax Data - Constructon Contractors
TABLE 1- 2000 2001 2002
Ranges % % I %
A ; 33,335 1077 63.5% 1033 60,60% 8cAl 55.7%
B $ 33,336 - 99,999 257 15.2% 284 16.7% 3021 18.8%
C $100,000 - 499,999 256 15.1% 275 16.1% 283 17.6%
D S 500,wo - 999,999 51 3.0% 53 3.1% 53 3.3%
E $1 Mto lo M 2.8% 51 3. 0 0/d 61 3.8%
F $10 M to 100 M 6 0.4% 9 0.5 1 1 0.7%
Total 1695 1705 1 1604
Chart 2 represents the most dynamic observation. The chart demonstrates the number of non-
Oakland firms reporting revenue in Oakland compared to Oakland firms reporting revenue. It is
clear that non-Oakland firms outpace Oakland firms at approximately a I to 3.87 ratio. These
figures speak volumes to the number of non-Oakland businesses actually turning to Oakland's
economy.
NON-QAKLANDFUMS
6406 8 Goo
OAKLMOFIRMS
A
.2000
2000 2001 2002 200o 2001 2002
May 27, 2003 Page 3
(b) L/SLBE certified businesses (data up to June 2002)
The average gross receipts of Oak-land certified firms shows that 42 percent of the construction
firms certified by the City of Oakland, reported average gross receipts of I to 10 million dollars and
12 percent reported average gross receipts between 10 to 100 million.
Thirty seven percent (37%) of the certified professional services firms are within the I to 10
million-dollar- range. Table 2 and Chart 2 demonstrate the average gross receipts of Oakland
certified firms by category.
Table 2: Oaklan Professional
d
Gerlified Firms Construction Services
Range % %
A
$ 33,335 1 1% 16 11%
B $ 33,336 - 99,999 7 6% 19 13%
C PI 00,000 - 499,999 28 25% 33 22%
D ;500,000
- 999,999 16 14% 15 10%
E
1 mto 10 M 47 42% 55 37%
F N
Oomto 100 M 14 12% 11 7%
Total 113, 100% , 149 100% A E C
The majority of Oakland certified firms are ready, willing and able to respond to government
contract work and have the capacity to prepare and respond to solicitations andwork within a paper
intensive environment.
(c) Census Dat
Over 90% of the firms certified by the City of Oakland fall into either the construction industry or
professional services industry category. The 2000 Metropolitan Statistical Area (MSA) - Business
Patterns for Oakland, California, reveal a total of 58,456 businesses with an annual payroll of
$3,304,713 for construction and $4,764,239 for professional services. It is important to note that
these figures reflect payroll only and do not include profits or sales. Given this fact, the figures
above suggest that income in the Oakland MSA is larger than the payroll figures.
(d) State of Califontia
The State of California defines a small business as an "independently owned and operated business,
which is not dominant in its field of operation, the principal office of which is located in California,
the officers of which are domiciled in California, and which, together with affiliates, has I 00 or
fewer employees, and average annual gross receipts of ten million dollars ($ 1 0,000,000) or less
over the previous three years, or is a manufacturer with 100 or fewer employees."
May 27, 200i Page 4
(d)StateofCaliforni (continued)
The State of California also defines a micro-business as "a type of small business that, together with
affiliates, has average annual gross receipts of two million five hundred thousand dollars
($2,500,000) or less over the previous three years, or is a manufacturer with 25 or fewer
employees." 1
One flat rate across the board as in the case of size standards for a small business and micro-
business actually makes f6r a simple size standard structure.
(e) San Francisco's Human Rights Commission (SF/HRQ is the entity representing equity and
socialjusticeissues. CertificationsandcompliancemonitoringtakeplacethroughtheHRC.The
size standard structure for SF/HRC defines an "economically disadvantaged" business as a business
whose average gross annual receipts in the three fiscal years immediately preceding its application
for certification does not exceed the limits defined below in Table 3 which also shows Strategy 6-B
recommendation of 70% SBA and the City of Oakland's current size standards for small
businesses.
Table 3 SFIHRC 70% SBA Current Oakland
TypelTrade Size in in millions size (small)
millions
1 Public Works/Construction $14 $19.9 $8.5
2 Speciafty Construction Contractors $ 5 $ 8.4 $1.9 - 6.8
3 Mater&Equip. & General Services Suppliers $ 5 $ 8.4 $7.1
4 Professional Services $ 2 $ 2.8 $3.0 (A&E)
5 Trucking $ 3.5 $ 8.4 $4.5
6TT-ei-ecommunications $ 5 $ 8.4 $5.2
'Depwdng on spedalty area
At the March 25th CEDA Committee meeting, Council Member Brooks recommended considering
the size for a small business based on the average gross receipts as reported in business tax or
establishing one flat rate as the State's small business program. Sections (a) and (d) as noted above,
address those considerations.
Stakeholder Recommendations:
Earlier stakeholder meetings and survey results supported the 70% SBA size standard to define a
small Oakland business. It is important to note that the Strategy Team engaged in considerable
discussions regarding the unintended consequences of this recommendation-
Stakeholders who attended the March 25'h CEDA Committee meeting and participated in
workshops in April, expressed concern for the smaller businesses as well.
The Apr-it stakeholders meetings included representatives of the Black Caucus, the Black Board of
Trade & Commerce and the Bay Area Black Contractors Association (BABCA).
These groups expressed concern that the larger size limit may have unintended consequences on the
population of small to very small Oakland based businesses.
' Governor's Office of the Advocate for Small Business
May 1.7,200i Page 5
(e) San Francisco's Human Rights Corrunission (continued)
Specifically, that population of very small businesses with one office, no more than three
employees and average gross receipts of $500,000. It was this population that the Black Caucus
believed might fit into a "Very Small " category much Like the "micro business" under the State of
California's size standards.
To off set the impact of unintended consequences on smaller firms, April stakeholders
recommended either reducing the size standard for a small business or creating a "Very Small
Business (VSB) " category with additional points. The specific recommendations put forth by the
April stakeholders are as follows:
I .Take 30% of SBA instead of 60%; or
2. Attach to the economically disadvantaged, or business size standards put forth by San
Francisco City and County; or
3. Reference the average size of firms paying business taxes; or
4. Reference the State of California's size standard; or
5. Reference the average size for the metropolitan statistical area.
Additional Stakeholder Feedback:
In correspondence dated January 27, 2003, the Oakland Metropolitan Chamber of Commerce
supported the majority of the recommendations put forward. However, the Chamber recommended
that the SLBE size standard should be "directly tied to the National SBA standard, and not 70% of
the SBA size standard".
Impact of 70% SBA size standard
Extending the size limit up will increase the number of firms eligible for certification and
potentially the number of certified businesses competing for city contracts. In addition, very small
businesses will be in a larger competitive pool and may find it more difficult to compete with larger
firms.
Alternate considerations:
If Council chooses to consider an alternative to the Strategy 6-B recommendation and place more
emphasis on the very small business, the April stakeholders and Council Member Brooks have put
forward alternate considerations:
(a) Attaching to San Francisco's limits to determine the size of a small business;
(b) Attaching to the small business size standard defined by the State of California as put
forward by Council Member Brooks;
(c) Keep the 70% SBA size standard and create a "Very Small Business" category
comparable to either 30% of the SBX' category as recommended by the Black Caucus
or the State of California's "micro-business" size standard.
Either approach may reduce the impact of unintended consequences on very small firms and meet
the need to attach to a system that is formally updated on a reguh-x basis.
Mav 27. 2003 Page 6
2. Why /Why not certify nonprofits?
ff,rhy certify not-for-profits? As mentioned in the March 25 1h report, there are many opportunities
offered by the City for which nonprofit corporations are qualified. Many nonprofits, in fact,
contract with the City to provide both construction and professional services. In some of these
cases, nonprofits compete against for-profit corporations for City contracts. Local nonprofits that
would otherwise meet the requirements for certification are not eligible due solely to their nonprofit
status, though they arguably contribute nearly as substantially to the City's economic development
and more so in many cases to the City's participation goals.
Why not certijy nonprofits? Nonprofits are tax-exempt. This includes an exemption from paying
business taxes. Tax-exempt status creates an unfair financial advantage when for-profit and not for
profit entities compete for contracts that are price driven. In addition, for-profit firnis do not have
access to the same flinding streams provided through certain grants and loans set aside exclusively
for nonprofits.
San Francisco delineates the need to identify (certain) local businesses as a sheltered market (absent
nonprofits). This policy position is addressed in Ordinance 175-89 as follows: "local businesses
that seek to enter into contracts with the City and County of San Francisco continue to labor under a
competitive disadvantage with businesses from other areas because of the higher administrative
costs of doing business in the City (e.g., higher taxes, higher rents, higher wages and benefits for
labor, higher insurance rates, etc.). The City (of San Francisco) is continuing to use a preference for
local business in the award of City contracts in order to encourage business to locate and remain in
San Francisco and thereby enhance employment opportunities for persons living in San Francisco.
The cost of locating and doing business in San Francisco continues to be as much as 15 percent and
greater than the cost of doing business in the surrounding communities; affording a five-percent bid
preference for local businesses bidding on City contracts reduces the disadvantages under which
City-located businesses labor when competing for City contracts, affording them a five-percent bid
,,2
preference makes good sense...
Alternate considerations:
If Council chooses not to fully accept the strategy six recommendation, the following alternatives
are off-ered:
a. Certify nonprofits and the certifications must apply to contracts under the
recommended threshold of $100,000 for construction and $50,000 for professional
services; or
b. Certify only those nonprofits that provide human services such as para-transit
services, or foster care; or
c. Certify nonprofits, count participation toward meeting participation goals and
eliminate the bid discount advantage when competing in a for-profit market.
City and County of San Francisco Ordinance 175-89
May 27, 2000 Page 7
3. What checks and balances are in place to protect the integrity of the certification process?
(Preventing fronts)
It is easy to presume that there is not a process of review when certification is referred to as a "Self
Certification" process. However, under this new process, CC&ES staff members apply three levels
of scrutiny. The first level of review involves updating the existing file and making sure that the
firm still satisfies each certification requirement. The first level review can be completed within a
ten-day period. Applicants under a first level review typically have an established or historical local
presence without any changes since the last certification. The second level of review is typically for
firms applying for the first time. In this instance, a site visit, and/or additional documents may be in
order. Third level reviews are for applicants with challenges, debarments from other entities, or
highly questionable circumstances. A third level review may end in denying the applicant. When
the three level review process was discussed with participants in the April meetings, the description
of the current process for the "Self Certification" was acceptable.
Nevertheless, in an effort eliminate confusion, the Strategy 6-B team and the Black Caucus supports
removing "self' from the certification application title.
4. What will a Disparity Study provide? Do we have an idea of the level of participation by
ethnicity and gender?
A Disparity Study will provide an objective analysis of the proportional distribution of contract
dollars relative to the business population that stands ready, willing and able to respond. Secondly,
such a study will provide a hard look into the City of Oakland's contracting practices and can
determine if such practices serve as barriers to fair and equitable contracting oppoftunities for all
businesses that are ready, willing and able. The disparity, if one exists, would then be the
difference between the dollars we spend within a population and that portion of the population that
is excluded.
With regard to ethnicity, the Council may choose to take a position similar to that of San Francisco,
which has an "economically disadvantaged!' classification that includes race and gender, or opt to
continue under compliance with Proposition 209 and apply race neutral methods such as outreach
and advertisement to all segments of the business community.
Numbers are provided for you below, and at face value suggest that race-based disparities exist.
However, this data is not fully valid in that the minority status has not been confirmed or validated
through a certification process since 1997. Moreover, there may be ma y more firrris that might
qualify as a Minority Business Enterprise (MBE) or Women Business Enterprise (WBE) but choose
not to report ethnicity or gender status. Secondly, and perhaps most importantly, the subject of
racial and gender based disparities in contracting is very sensitive and potentially divisive. As such,
any data produced and used to influence policy must be objectively produced and highly reliable. In
the case of this report, it is merely suggestive based on one set of data. Numbers below are reliable
only in the context of contract amounts reported and not in terms of edinicity or gender.
The data includes contracting during the period of 7/l/2000 to 5/25/2002. During this period. a total
of $85,571,577 dollars were identified as dollars spent for construction services. Minority owned
firms identified as "se@freporting` (not certified) represented 27% of those dollars.
Mav 27. 2003 Page 8
4. WhatwillaDisparityStudyprovide?Dowehaveanideaofthelevelofparticipatiouby
ethnicity and gender? (Continued)
Oakland certified firms earned 53% of those dollars and non-certified firms earned 47%. When
compared to the total dollars, minority owned firms represent a very small margin of the total
dollars. The breakdown of total dollars by ethnicity shows that Native Americans received the
smallest portion of contract dollars. and Asian businesses are the next lowest at 3%.
Ethnicity Of Total Dollars Of MBE Dollars
(1) Asian 3.0 % 12.0 %
(2) African American 7.0 % 25.0 %
(3) Hispanic 16.0 % 61.0 %
(4) Native American .4% 2.0 %
Pie Chart I shows the percentage of MBE dollars shared among ethnicities for that particular
reporting period.
Native
*Hispanic American Asian African
2% 12% American
61%
*Pfeasenote.-DallarsrepreseV7tedbytisetniccategoryskewtheoveraiipjdu,re. OfMetotaldollarsreportedonly
one firm eamed 46% of the total dollars. In the other instances dollars were more widely distributed.
5. Expandontherecommendationtorequiresmailflrmstohaveaheadquartersora
"principal" office in Oakland.
The Strategy Team worked through lengthy discussions regarding this matter. It was believed that
the issue of whether to require LBEs to have ail Oakland headquarters is part of the broader policy
discussion particularly in striking a balance between assisting small local businesses and
encouraging economic development in general in Oakland. The question is whether the
headquarters requirement discourages non-local businesses from bidding on City contracts and
opening a branch office in Oakland.
To be certified as a LBE currently, a business must have its headquarters in Oakland. After much
discussion, the team decided to eliminate both the headquarters requirement and the size limits. The
expected economic impact of the new LBE definition is that out-of-state firms will have an
incentive to establish substantial branch offices in Oakland, thus contributing to economic
development in Oakland. The incentive for LBEs will be limited to a 2% bid discount, while the
SLBEs will receive greater preference, a 5% bid discount.
May 27, 200 3 Page 9
6. Comparison of San Francisco and Richmond Programs
CAJ oLRichmond.C@aliornta
The City of Richmond has a local employment program (LEP) and a local business program (LBE). These
programs are applicable to contracts valued at $5,000 or greater. The local employment program establishes
a 20% residential hiring goal and a 20% new hire goal. The local business goal is 20% for small local
businesses, 15% for businesses owned by veterans, and 10% for smafl veteran owned businesses. Annual
adjustments apply to availability and experience with projects of the same discipline and same size.
Chy ofSan Francisco
San Francisco's Human Rights Commission (HRC) has a local minority/women business program.
The dollar thresholds are $50,000 for construction projects and $25,000 for professional services.
The goals of the program are separate for minorities and women as follows:
Cateizo Minorities Women
(a) Architectural & Engineering 34% 14%
(b) Professional Services 13% 11%
(c) Purchasing- 11% 8%
(d) Construction- 33% 13%
(e) Telecommunications 12% 9%
San Francisco represents a more comprehensive set of best practice strategies. In particular, the
certification packet, a very detailed Joint Venture application, and the affidavit of compliance
submitted by businesses at project end can enhance the City of Oakland's current processes.
Finally, there is a commission structure that allows present and ongoing business involvement in an
advisory capacity. This structure appears to support communication between the business
community and the City/County government.
7. Reconsidering thresholds for the application of policies. Construction doubled and
professional services tripled.
The requirement that staff must contract with local firms for informally bid contracts at a rate of
75% results in a high percentage of these smaller awards to LBEs. Expanding the currently
successful efforts to contracts with higher limits could result in additional awards to local
contractors and vendors. The recommended limits at which the S/LBE policies will apply are
$50,000 for professional services contracts and $100,000 for construction services contracts. Below
those limits, establish a goal of spending 75% of informal contract dollars with local firms, and
require that at least 50% of those dollars go to SLBEs and the remaining (up to 25%) to LBEs. The
limits were suggested in light of a potential increase in current limits for informal contracts.
Alternate considerations
If Council chooses an alternative, Council Member Chang proposed equally doubling the irifirmal
limits for both professional services, as was done for construction, such that certain policies would
betriggeredat$29,998for,-rofessionalservicesand$100,000forconstructionservices. One
observation worth noting is that the Living Wage Ordinance and Equal Benefits Ordinance are both
triggered by contracts valued at $25,000.
Mav 27, 2003 Paize 10
8. Moving away from anecdotal data, do local businesses really charge more?
The cost of operating a business in the, Bay Area is higher than most surrounding cities and
counties. Higher administrative costs such as higher rents and higher taxes are major contributing
factors. As such. local businesses Work under a competitive disadvantage with businesses from
other areas.
The City of San Francisco contends that the cost of locating and doing business in San Francisco
continues to be as much as 15% and greater than the cost of doing business in the surrounding
communities. While perhaps not as costly as Sari Francisco, it is reasonable to assume that
Oakland, a Bay area neighbor, has a cost of doing business that is higher than the cost for
businesses in most other localities outside San Francisco.
A sample of contracting cost was evaluated in an effort to pin point competitive bidding prices.
The canvasses of bids from five projects were selected. The projects included two streetscape
projects and three sewer rehab projects. The categories were chosen because they were consistent
across the projects selected for comparison purposes.
Attachment A is a detailed breakdown of the unit bids. It shows that of the categories selected for
the two streetscape projects, the local firm was higher in both histances. However, the prices of the
three sewer projects that were compared show that the local firm was lower under one project,
higher on the second project, and the same as the non-local firm on the third project.
The data only suggests that in some categories of work, local firms are higher and in some
categories, local firms are more competitive. Recent surveys of cities conducted by the Public
Works Agency discovered that costs varied one locality from another because of factors such as
scope of service and approach to service which made the purchase of such services unique to each
locality and thus difficult to state with assurance that one cost was greater than the next.
Alternate considerations
If Council accepts the assumption that it costs more to operate a business in Oakland than in most
surrounding cities or counties, then it is reasonable to presume that Oakland based businesses must
charge more for goods and services in order to cover administrative cost. Information gleaned from
the streetscape and sewer sample of projects above supports the assumption that Oakland business
may charge more on some contracts and may not charge more on others. In Ordinance 175-89, San
Francisco states that the cost of doing business is at least I 5% for San Francisco businesses.
The antithesis of this cost factor debate however is the added economic value to any city. It is in
the area of positive economic impact that more data is needed.
Stakeholders Feedback:
Both the Black Caucus and BABCA strongly urged including into the discussion of cost, the
discussion of value added. For example, a local firm circulates revenue, employs Oakland residents,
employees visit local restaurants, and may shop at our stores. BABCA in particular recommended
an impact analysis using the 'TNTLAN" (Indirect Analysis for Planning) model to determine the
actual impacts that contracting with local firms have on the local economy.
MaY 27, 2003 Paize I 1
8. Moving away from anecdotal data, do local businesses really charge more? (Continued)
A similar study was conducted in the District of Columbia and the findings were compelling. The
impact analysis indicated, "For every dollar expended under a Local Small Disadvantaged
Business Enterprise (LSDBE) contract, about 55 cents of gross sales output of goods and services
,,3
was generated in the District.
9. Lifting the Moratorium on Affordable Housing upon acceptance of new Policies.
Council Member Brunner requested a statement specifically regarding the moratorium suspending
the L/SLBE and Local Employment programs for 2002 NOFA (Notice of Funds Available) funded
affordable housing projects while leaving intact the 15 % Apprenticeship Program
In exchange for the moratori= additional affordable housing units would be built under the
assumption of lower building costs. Also, affordable housing developers would report the level of
participation achieved, absent the programs.
It is important to note that as agreed, only 2002 NOFA funded affordable housing projects will
operate under the current moratorium and no fiu-ther moratoriums would apply once new policies
are adopted.
10. Meetings with the April stakeholders:
In response to comments made at the March 25h CEDA meeting and the directive put forward by
the CEDA Committee, additional stakeholder meetings were held. Attachments I and 2 are
provided as detailed recommendations. The summary below is not intended to exclude from
consideration any of the recommendations brought for-ward by each stakeholder group. The
information noted below offers a general summary of those recommendations by major Strategy 6-
B recommendation categories
3 Local Small Disadvantaged Bus ness Enterprise PropTam: Cost Effectiveness. and Financial Impact Analysis page 25,
December 2002.
In summary, April stakeholders support in total or in part with conditions, Strategy 6-13
recommendations except those regarding (1) size for a small local business, (2) certif@iiig non-
profits, (3) eliminating goals (including Disposition and Development Agreements and trucking),
and (4) eliminating the certification category of trucking broker.
Overall the April Stakeholders support in total or in part Aith recommendations, Strategy 6-B
Recommendations 4,6,7 & 8 and I I - 1 5.
In conclusion, all stakeholders expressed the critical need to define the economic impact of local
programs as a balance to the discussions of cost.
PROGRAM DESCRIPTION
RECOMMENDATION (S) AND RATIONALE
ACTION REQUESTED OF THE CITY COUNCIL
Acceptance of this report.
Respectfully submitted,
-4, q
Dr. @eorge qusgroq Ass'istarit GO Manager
APPROVED & FORWARDED TO THE
CON24UNITY & ECONOMIC DEVELOPMENT
COMMITTEE
Prepared by:
Deborah Lusk-Bames
Contract Compliance & Employment Services
Manager
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U C14 I
Bay Area Black Contractors Association
C 0 360 GrandAvenue, Sinte 354
Oalda&4 CA 94610
Ph. (510) 996-6636
Fx. (5JO) 996-6636
bfaaron-,'g@pacbellxet
April 29, 2003
Debra Barnes
NUnager,
Contract Compliance & Employment Services
City of Oakland
250 Frank H. Ogawa Plaza, Ste. 3341
Oakland, CA 94612
W Barnes:
Accompanying this correspondence are recommendations regarding the
City's S/LIBE and trucking programs. These recommendation have been
made after meeting and confining with the contractors, truckers and
suppliers whom I represent as well as other Oakland SgMEs.
We a are looking forward to the successfid implementation of working
S&ME and trucking programs which will be inclusive ot and a true benefit
to, the many small, local truckers and other businesses who over the years
have and continue to work to participate on City projects.
Sincerely.
@'q5:@R57: n i
The following are the comments and recommendations from the meeting held on April 04,
2003, for the City of Oakland's LBE and SLBE programs:
City of Oakland's recommendation #1: Definition of Small SLBE: Define size limit for
SLBEs as 70% of the US Small Business Administration Standards. These standards are
based on national statistics and are adjusted annually.
Comments: In light of the fict that the average size of businesses as reported by census
data and size adlizing the City business tax is $3 million, this size standard is too large for
local businesses.
Recommendation: Use the City and County of San Francisco's size standards as follows:
Construction Prime Contractors - $14 million
Specialty Construction Contracts - 5 million
Good, materials and Equipment Suppliers - 5 million
General Services (including Security Services- 5 million
Profesaional Services - 2 million
Trucking - 3.5 million
Telecommunications - 5 million
City of Oakland's recommendation 92: Definition of LBEs: Eliming e size Emit (revenue
cap) for LBEs
Comments: Programs are put in place to eliminate barriers or increase LBE utilization.
Since there are no studies or statistics that show large, major firms are not currently being
utilized on City of Oakland's contracts then they should not be included in the programs.
Recommendations: Maintain the existing policy.
City of Oakland's recommendation 93: Definition of LBEs: Eliminate local headquarter
requirement for LBE's.
Comments: There should be a benefit to the Oakland community.
Recommendations: The business must have & substantial presence ( independwit, fully
operating office) with Oakland residents making up 50% percent of their local office's
total workforce.
City of Oakland's recommendation -94: Eliminate the category of broker from
certification.
Recommendations: Maintain the trucking broker. However, the broker must be an
A-
C,C':,4 cqg'@'A@'2:0i :WDNA dRS*70 2002-62-H
owner and operator of at least one complete unit.
City of Oakland's recommendation #5: Allow eligible nonprofits to be certified as SLBEs
and LBEs.
Comments: This would give unfair competition given the reduced overhead costs for
non-profits and the absence of the same business tax requirements as for-profitg.
Also, there have been no studies to support the need.
Recommendations: Do not support.
City of Oakland's recommendation #6: Make the process of certification more accessible
through significant simplification and outre=h efforts to the business community.
Institute a self-certification process requiring minimal documentation and streamlined
review. Support effirts by local business organization (e.g chambers) to hold
'Certification Days"
Comments: Self-certification has not worked at other agencies because the correctness
and truthfulness of the information varies.
Recommendations: Establish and implement reciprocity agreement with agencies that
utilize the CFR guidelines. Certification should be for 2 years (which is what most
agencies in the area are doing) . Streamline the re-certification process.
City of Oakland's recommendation #7: Replace the optional "Good Faith Effort" with a
mandatory "Local Subcontracting Outreach Requirement'.
Recommendations: Include a "2 weeks prior to bid opening" component. Utilize local
papers and at least one that has a daily circulation.
City of Oakland's recommendation #8: Eliminate the 3 year commitirient for Mentor-
Protdgi program and instead require the relationship last, at a minimum, fbr the duration
of the project.
Comments: If a project is less than I year then there may be no real benefit for the
prot6gi.
Recommendations: For at least I year or the life of the project, Can not be continued
year after year ( or projects).
City of Oakland's recommendation #8: Eliminate the 50% Local Subcontracting
requirement and instead provide incentives in the form of bid discounts (construction) or
preference points (professional services) of up to 4$ for achieving up to 50% in local
subcontracting, or having an SLBE serve as the prime contractor.
Comments: Do not support. Economic impact of local goals have been greatly under-
estimated. A city can actually calculate the economic impact of compliance policies
using what is referred to as the RVIPLAN Economic Model). A recent study of the
Washington D. C. programs demonstrated a positive economic impact from goals, such
that for every dollar expended an a, local contract, approximately 55 cents of secondary
gross sales output of goods and services was generated. And, one secondaryjob resulted
for every two jobs created by the program and an additional 70 cents of secondary labor
income.
The direct effects on economic stability of local businesses include such dollars spent on
rents, leases taxes paid, wages earned and inventory: indirect effects on suppliers in dollars
spent on rents taxes, wages and inventory and induced effects on local households with
regard to earning from direct and indirect effect on dollars spent on consurnables.
Recommendations: Mairitain the existing policy.
J-- @ AM
CITYOFOAKLAND VW--W -11W
CITY HALL-1 FRANK H. OGAVVA PLAZ@A.-OAKLAND, CALIFORNIA 94612
Desley A. Brooks (510) 238-7006 Direct
Councomember. District 6 (510) 238-691 0 Fax
Emzid:dbrooIks@oaktanoneLC0M
TO: Chairperson Jane Brunner. Communirv & Economic Development Cortirnittee'.
IvIe'rnbers of the Committee
FROM:
istncY. b
DATE: March'25 -)4m/
I .1
RE: Recommendations to the Staff Report on Moving Oakland Forward -
Strategy 6-B, Contract Compliance & Employment Services Policy
Recommendations.
After review of the Staff recommendations for Moving Oakland Forward Strategy 6-B I am
requesting that your Committee consider for adoption the proposed r&commendations listed
below. I believe that these recommendations will strengthen the City's S/LBE program and
provide meaningful support to Cakland's Local and Small Local Business Enterprises.
Strategy 6 STRENGTHS CONCERNS Councilperson BTo-oi@@@
RECOMNIEDATIONS RECOMNIENDATIONS
-S e @is too larae Reduce size based on average
(a) Define small It is good to
business as 70% of the disdmguish for small gross receipts as reported to the
SBA size standards between small Oakland city to the business tax division,
and local businesses. Why and/or establish one flat rate as
not one flat the state's small business
amount. The program.
wide range
makes it difficult
for the very small
to compete.
(e) Allow nonprofits to What is the Don't certify nonprofits as
be certified as S/LBE revenue stream S/LBEs unless revenue streams
that nonprofits to the City from nonprofits is
bring to the City? similar to those from SILBE
What are we firms.
asking nonprofits
to pay for doing
business with the
City? Wh-3.-. are
I nonprofits federal
and state tax COW-L
obliaarions?
DEVE -CMTE
Competition with
S,IBE firms.
Local iviandator-i 1Advenising/publi Make sure that There is si-an off
Subcontructin- outreach makes cizmg
by the City to insure appropriate
Outreach Requirement sure local opportunities. steps have been taken.
businesses have I
the opportunitv Nmifyinp- via web
to coml)ete. is a must-
Up to 5% bid Affords 5% discount of a Place a Cap on bid discounts
discounts preference f mul , 'Ilion
Oakland S of doUnproject may
certified firms be too costly
(h) Credit for non-city Encourages Lhnit benefit Cap credit tamed on non-city
jobs using City of City of Oakland jobs at 2.P/o bid discount and 2.j
Oakland Certified certified SLBE points for professional services.
SILBE firras participation on
non-cityjobs
(i) DDA's Good strategy Lowest vs. lowest Require Prime Contractors to use
responsive and City procedures for selecting
responsible subcontractors under the DDA.
Change languaae to Primes must
hire the lowest responsive and
responsible bidder'@@
Additionally, I would request that there be a revision to the Staff Report to include:
a section indicating where each request for proposal (rfp) and/or request for
qualifications (rfq) and/or each contract extension was published. Failure to show
publication of a rfp, rfq and/or contract ex-tension will result in the item being pulled
from the Agenda until such time as publication has been completed.
Thanking you in advance for your consideration and action on this request.
ORAICOUNCIL
JUL 1 5 2003
COMMUNI NOMIC
DEVE CMTE
2 2003
Executive Summary
and
Details of Strategy 6-B
Recommendations
MOVING OAKLAND FORWARD[ City Manager Summit Recommendations
September 2002
EXECUTIVE SUMMARY
Team 6B
Goal: To assess goals, policies, processes & costs of complying with contract compliance
programs and recommend changes to make programs simpler and more effective while
implementing multiple City Council policy objectives
1 . Goal
In order to provide economic opportunity for its residents and businesses, the City of Oakland has
developed and implemented a number of policies that impact how public funds are spent. These
policies are aimed at using the power of the public purse to stimulate economic development through
the support and empowerment of the local community, especially those aspects of it that have been
placed at a disadvantage in the past. The City has demonstrated leadership through these policies
.and is in the vanguard nationally in terms of harnessing local resources to achieve local benefits.
The goal of this team was to examine these policies to determine their effectiveness in meeting their
policy intent and to improve the efficiency and user-friendliness of their implementation.
2. Background
The City has a number of policies to provide opportunities for Oakland residents and businesses.
The major programs that these policies were created to serve these respective groups are the Local
Employment Program and Small/Local Business Enterprise (S/LBE) Program. Supporting and/or
complementing these programs are policies regarding living wage, prevailing wage, disadvantaged
business enterprises, apprenticeship, and domestic partners.
Few would argue with the merits of the intended outcome of these policies, which is to stimulate
economic development by supporting the development of the local workforce and business
community. To the extent that the locally unfettered economic market places them at a disadvantage,
these policies are warranted and can potentially meet numerous objectives simultaneously.
However, there are challenges associated with meeting this type of policy intent. First, since the
intent is based on general premises about the economic and disadvantaged status of Oakland
businesses and residents, it is difficult to measure the policies' effectiveness because it is hard to
gather relevant and credible economic data. Second, it is difficult to translate the policies into
programs that simply and effectively meet their intents due to the intricate nature of public spending
and the additional complexity of monitoring it. As a result of these challenges, we are left with
questions about the policies' effectiveness and concerns about their implementation.
a. Overview of internal research findings
The S/LBE and Local Employment programs together constitute the core of the implementation of
the City's local participation policies in terms of impact and opportunity for improvement. As such
these programs were the ultimate focus of the team's activity. Internal research revealed that on
the whole, these two programs were meeting their goals of directing half of City spending on
construction and professional services to Oakland residents and businesses. Less clear were the
costs to the City of implementing these programs. Research also revealed that internally there is
a lack of understanding of how the programs do or should work and that, in fact, their
implementation and interpretation was not consistent across the organization. This discovery
underscored and confirmed the perception that the programs, while well meaning, are too
complex. Some quantitative data exists to support contentions that the City pays relatively high
prices for some contracts while receiving few bids. While these facts do not expressly implicate
Council policies, they do provide cause for concern.
Goal: To assess goals, policies, processes & costs Page 1 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
mulfiple City Council policy objectives.
MOVING OAKLAND FORWARD[ City Manager Summit Recommendations
September 2002
b. Overview of external research findings
The team itself did little in the way of external research but had benefit of previous research
completed by the Division of Contract Compliance & Employment Services (CC&ES) and the
Offices of the Council President and Councilimember Danny Wan. Regarding precedent or best
practices from other cities, there are few comparable policies or programs to evaluate. A few
other California cities do have programs in these areas, but their differing structures and lack of
data to measure their effectiveness render comparisons of limited value. Discussions with focus
groups of affected stakeholders have been significantly more revealing. The main theme
emanating from these discussions was general support for the programs in concept coupled with
frustration with their implementation. Frustration was centered on the bureaucratic complexity,
inflexibility, and unintended adverse consequences of the programs.
3. Overview of recommendations
With a focus on the S/LBE and Local Employment programs, as well as the general aclministratio@ of
contract compliance functions, the team developed nearly two dozen distinct but related
recommendations. Due to the complexities associated with implementing these policies, the team
had to consider and account for a number of trade-offs and had to be cognizant of possible
consequences of these recommendations. For the most part, therefore, it is the body of
recommendations - not each recommendation on its own - that the team is recommending.
Although each is distinct, they were developed iteratively as an integrated package of improvements.
Acceptance of some and rejection of others may substantially and adversely impact their
effectiveness.
The recommendations were made to the extent possible under the rubric of a winning compliance
philosophy. This philosophy uses an approach whereby the City endeavors to help business comply
with its policies and programs, rather than designing them to be complex such that they require
significant oversight.
Within that context, the main trade-offs that these recommendations are designed to balance are the
following:
the desire to provide economic opportunity to local residents and businesses while paying
competitive prices for goods and services;
the desire to have programs that are easy to understand and clear to apply while being fair and
effective for a wide range of scenarios and situations; and
the desire to support local economic development through local expenditure of funds while
continuing to attract outside investment.
Identification of the above considerations does not imply that the different goals (e.g., supporting local
businesses and paying competitive prices) are at odds with each other. They are merely factors the
team needed to address to ensure that one set of goals is not met at the expense of others.
The team's recommendations fall into three main areas.
Local and Small Local Business Enterprise Program
In order to optimize the pool of businesses participating in this program such that the City provides
incentives for local participation that will stimulate economic development, the team recommends the
following changes to S/LBE certification.
Businesses eligible for certification as a local business will be defined as those having a
substantial Oakland presence.
Currently, the policy requires Oakland headquarters, though that requirement is temporarily
waived at present.
Goal: To assess goals, policies, processes & costs Page 2 Team#: 68
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effeefive while implementing
multiple City Council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
Businesses eligible for certification as a small local business will be defined as those With
Oakland headquarters or ownership/control and revenues no greater than 70% of the revenue
standards defined by the US Small Business Administration.
Currently, the City establishes its own revenue standards for both SLBEs and LBEs.
Nonprofit organizations will be eligible for certification; brokers of goods and services will not.
Current program is not available to nonprofits, but is to brokers.
The certification process will be made more accessible through significant simplification and by
outreach efforts with the business community to certify more eligible Oakland businesses.
Prior to July of this year, the certification process had numerous requirements and was subject to
intensive City review. Current outreach to get businesses certified is limited.
In order to provide direct, objective incentive for local participation on City contracts and purchases,
the team recommends the following changes to S/LBE contract evaluation.
Bids on City contracts, above an increased dollar threhold, will be discounted by up to 5% for bid
comparison purposes depending on the level of certified local participation. Contracts failing
below that threshold wit( maintain the goal of directing three-quarters of their aggregate dollar
value to certified local businesses, but with two-thirds of that amount going to certified small local
businesses.
Currently, the program has fixed requirements - rather than incentives - for local participation
above the lower dollar threshold, allows for discounts of up to 10%, leaves discretion in the
process of determining whether requirements have been adequately met, and has a goal of an
even split between local and small local businesses to receive work for contracts below the
threshold.
. As prime contractors, certified small local businesses and businesses that enter into joint venture
or mentor-prot6g(5 relationships with small local businesses for the duration of the project, at
minimum, will receive a 5% bid discount. Certified local businesses will receive 2%.
Currently, both local and small local businesses receive a 5% discount and mentor-prot6gd
relationships are required to last for three years.
. The City will require that prime contractors make opportunities known to certified local
businesses, will enable primes to apply a limited number of banked dollars paid to certified local
firms for non-City work for City bidding credit, and will provide increasing bid discounts for greater
levels of certified local participation, with certified small local participation eaming proportionally
greater bid discounts.
Currently, outreach is required only when requirements are not met, banked dollar's do not apply,
and the discount is applied on an all-or-none basis.
The City will require that prime contractors bidding on City-assisted private developments make
opportunities known to certified local businesses and contract with local businesses if their bids
are within 2% and small local businesses if their bids are within 5% of the lowest competitive bid.
Currently, there are no such limits - the City may require a prime to contract with a local business
without regard to cost differential.
The City will award bid discounts of 2% and 5% respectively to certified local and small local firms
for City purchases of goods, and will require all City associates to aggressively seek the most
competitive prices for all purchases.
Currently, the awards are 5% and 1 0%, and some City associates do not aggressively seek
competitive bids from non-local firms.
Local Employment Program
In order to improve the City's ability to provide decent job opportunities for Oakland residents on City-
funded projects, the team recommends the following changes to the Local Employment program.
The City will require that Oakland residents represent half of all new hires and half of the total
workforce hours on City-funded projects, with no more than half of the total eligible local
workforce hours worked in any one trade.
Currently, the same requirements apply to each trade working on a project.
Goal: To assess goals, policies, processes & costs Page 3 Team#: 6B
of complying with contract rompliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple City Council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
The City will enable contractors to apply banked hours worked by Oakland residents on
contractors' non-City jobs to meet these requirements.
Currently, there is no such option.
Contractors will have an opportunity to fulfill these requirements retroactively (but at double the
rate of participation) to avoid paying a fine for noncompliance, which will be based on double the
value of the deficient hours or 1 % of the non-complying subcontractor's contract, whichever is
less.
Currently, though the ordinance does not explicitly provide for contractors to negotiate with Cdy to
work off penalties, which are assessed at $1, 0001day, that has been the practice.
The team recommends that some aspects of these recommendations be forwarded to the
Apprenticeship Advisory Board to define details of implementation.
Program Administration
In order to streamline the administration of the above and other Council programs and policies, the
team recommends the following changes.
The Budget Office will allocate departmental appropriations to the Contract Compliance Fund on
the basis of 1.5% of the value of construction contracts and 1.0% of the value of professional
service contracts, with certain categories of contracts (e.g., for grant-funded projects with
administrative cost caps) exempted.
Currently, the assessment is 3%, there are no exemptions, the CC&ES staff work with prcject
managers to transfer the funds pmject by project.
CC&ES will reorient its functions to match its new staffing levels by automating administrative
functions (e.g., data entry of certified payroll information) to the extent possible, by shifting from a
comprehensive field audit approach to a strategic and limited one, and by unfreezing and
converting a senior staff position to create two positions to enhance administrative, field, and
outreach capacity and effectiveness.
The City will post all City contracting opportunities on the City's website and will create an email
listserv to better inform local businesses of available City work.
Currently, no such outreach exists.
4. Financial Impact (sum) of all recommendations
There is no measurable immediate direct fiscal impact of these recommendations. A significant direct
cost of these policies' implementation - the staff of the Division of Contract Compliance &
Employment Services - was reduced over 50% by the City Council in July. The team does expect
that these recommendations will reduce some of the administrative burden that is currently placed on
some City staff members, both within and outside the Division, which will free their time to perform
more value-added work. In addition, by capping the amount the City pays for goods and services to
achieve the goals of these policies, the City should realize some direct fiscal benefit. Also, the
reduction in the contract compliance fee assessed on City contracts will release a significant amount
of funds for other value-added uses.
5. City Council action(s) needed
Staff will require City Council approval for all policy-related recommendations, which are
recommendations numbered 1 through 16, and 21 in this report. Staff will initially request approval of
the policy direction identified in these recommendations and will subsequently return to Council, as
necessary, to approve program details and to adopt legislation.
Goal: To assess goals, policies, processes & costs Page 4 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple City Council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
6. Team Members
Deborah Barnes - City Manager's Office Division of Contract Compliance & Employment Services
Deborah Edgerly - Financial Services Agency (strategy champion)
Raul Godinez - Public Works Agency
Mary Joseph - Community & Economic Development Agency
Pat Kemighan - Councilmember Danny Wan's Office
Ed Reiskin - City Manager's Office (team lead)
Libby Schaaf - Council President's Office
Roy L. Schweyer - Community & Economic Development Agency
Joseph Tanios - Public Works Agency
Iona Young - Financial Services Agency
Goal: To assess goals, policies, processes & costs Page 5 Team#: 6B
of complying with contract compliance programs
and reoDmmend changes to make programs
simpler and more effective while implementing
multiple City Council policy objectives.
MOVING OAKLAND FORWAROI City Manager Summit Recommendations
September 2002
RECOMMENDATION #11: Definition of Small Local Business Enterprise (SLBE)@ Define size limit
for SLBES as 70% of the US Small Business Administration (SBA) Standards. These standards are
based on national statistics and are adjusted annually.
1. Background
• Problem description: The current maximuni size limits (TC%enuc caps) for certification as a Small Local
Business Enterprise scern arbilrar '% aod are confusing aincing so mam other state and federal standards.
4dso. the Cit%'s existing re% critic caps haN e been criticized tn scale businesses as bcing unrcalisticalh lo%k.
• ONeriie" of research findings: The Cit 'N's nia\inium size limits b.% inclusin are much lo%%er [Ilan federal
or State SBA stancUrds for stnall businesses.
• What currentiv exists[What ideaffil should exist: The cur-rent SLBE size standards for each inclusirN
i%cre adopted b@. Ca% Council in 199 7 or 1998 and lia% c not been adjusted since then It %%ould be
preferable to set the SILBE size standards as a percentage of Federal size standards for smal I businesses.
%dlich are adjusted annitiallN according to statistical anah sis done bN the SBA. Thus the Cit% -s sniall
business standards %%ould be more uniform i% ith rialional standards'and @%ouicl aulonuilicallY adjust to keep
up-to-date mthout Council action.
2. Recommendation
• Recommendation Details: Set the maximum size limut to qLlallfN as a Small Local Business Enterprises
(SLBEs) at 70% of the SBA standards b% indusit-N.
• Anticipated smingslefficiencies/other benefits: Setting the Cih, s size standards; as a percentage of the
SBA standards eliminates the need for CAN staff to do their o%% n anah sis of each industr% to determine a
standard. Also. since the SBA standard adlusts annual[ 'N (and is %@ idek published). die Cit'N does not need
to take action each Near to keep the standards up-to-date x% ith current economic conditions.
• Who should imple ment: The Di% ision of Contract Compliance & Eniplo% ment Sen ices (CC&ES) %@ ill
achninister the nc%% standards.
• Citv Council action needed: The Cio Council %vill need to take legislafixe action to amend the SLBE
Oniinaticc
3 Implementation Plan
Implementation steps and timeline: This recommendation should be considered b% the Cit.N Council in
the context of the other recommended changes to the Cit.N's Contract Compliance programs. Changes to
the programs should he acted upon all at the saine time. hopeful]% before the end of 2((2. Cha@nges to the
LBE and SLBE definitions should be relatiNcIN easN to implement
• InNestments needed: Staff little needs to be made axailable to do outreach to the business cortununin, to
iiiforiiidienioftlieprogranichanges. OiieofflicprobleiiisN%itlitlieexislingprogranisisiliatitiatiN
btisiiiessesinistindcrstand%%hitourprogaiiisreail% require. Iiiorderlociicouragcniorebusitiessestobid
oil CitN contracts. theN need to knoN% that Oakland's contract compliance programs are simple. fair. and
flexible. Thus, Outreach and education are critical to the SUCUSS Of OUT re-woled programs.
• Plan to address potential issues/opposition (stakeholders): The tenlainc recomincricUlions of Tcani 6B
"ere presented to about 20 inembers of the business cornmunitN_ oicluchne representalnes of the ethnic
Clwinbers oil 9-10-02. The business people N%cre %er.N pleased Mill (lie reconimendalions oil (lie %Nholc.
%iei%iii-.theiiiiisbigiiiipro%ciiictitso%eriliest@itusquo. Ftiillicrstakeliolderfortiniscaiibecoii%ciied
Goal: To assims goals, policies, processes & costs Page 1 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARD[ City Manager Summit Recommendations
September 2002
RECOMMENDATION #2: Definition of Local Business Enterprise (LBEs): Eliminate size limit
(revenue cap) for LBEs.
1. Background
0 Problem description: The existing cnicria for participation in the LBE program - a size linut and a
headquarters requirement - %%ere set %%ith the intent of assisting small and medium-sized local firms- %%hich
is a %%orthwhdc goal. Ho%%cNer. these critena cause the program to coine into conflict N%ith another strongh
held policy objccti%e of the MaNor and City Council: encoura&g economic dc%clopinent and imesinient
in Qjklan@. The cm-rent size linins (reNentic caps) exclude long-time larger local businesses from the Ci"'s
preference prograrn. l"hese businesses contribute sigruficantlN to Clakland's economic %italm. Man% of
the long-line businesses feel be% ought to be rei%arded for their commitment to sta) ing in Qaklandc'%ell in
tough economic times. The existing- LBE preference also nNiN. be discouraging larger or non-local firnis
from bidding on Oakland contracts or in setting up operations ill Oakland. The size I imit on LBEs Wso
makes it hardcr for prime contractors to meet our local subcontracting goals - particularl '% oil larger
projects. HoNveNer. our small. lioniegro"n companies are the ones that need and deseme help to gro%%.
Our team debated long and hard oil hoN% to balance these considerations. Recommendations 2 and 3 are
Just part of the o% erhauled SILBE program. Much. taken as a %% hole. %%e hope %%ill scr%c the Cit) s Polic-N
goals in both areas.
Overiiew of research findings: The team does not haN c hard data about the economic impact of the
re%enue caps or the S/LBE program in general. Anecdotal infonnation from medium-sized mid larger local
businesses (from focus groups) sho%@ that tlic.N oppose the size limit and %%an[ to participate in the LBE
program.
0 What currently existsfWhat ideally should eximt: To be certified as all LBE cutrenth - a business must
lia%c annual revenue belo%@ a maximum set for that inclusin. The current reN enue caps are %cn lo%%. kftcr
much discussion- the team recommends that large local businesses be able to qualilA as LBEs
2. Recommendation
• Recommendation Details: Eliminate revenue caps for certification as a Local Business Enterprise (LBE).
(This recorninencLition is made ill conjunction vy ith other recommended changes to the LBE program. in
particular- Recommendation 9, Much elinlillatCS Our sub-contracting goals and substitutes all incelime
program for sub-contracting %viLh small and local businesses. The incentiNe for SLBEs is a 5% bid
discount. The incenme for LBEs is a 2% bid discount.)
• Anticipated say ings/efriciencies/other benefits: There v% ill be some small efflicienc ill ccrtik ing LBEs.
as die requirements are simpler - no longer requiring rc%enue information The main benefit is that larger
localbusinesscs%%@ilik,encouragedtobidon0ak-laiidcontracts. Wcareasstuitirigiliatniorecoiiipetitiori
forotircoiitr,ictsN%,illresLiltitllo%NcrpricesfortheCit-,.
• Who should implement: CC&ES mll administer.
Cit) Council action needed: The Cih Council mll need to arriend the LBE Ordinance.
1. Implementation Plan
• Implementation steps and timeline: This recommendation should be considered b% the Cit% Council in
the context of (lie other recommended changes to the L/SLBE program- hopefull.% b@forc the'end of 2002.
CC&ES should be able lo institute program changes xer% quick] '% .
• Iniestments needed: Staff time lo do outreach to the business comnlUT111% about the ne%% program changes.
• Plan to address potential issues/opposition (stakeholders): As noted aboNc- a focus group of business
peopleoji9-10-02N%ere%er%lrcccpiiietotheicaiii'spropDsedrecoiiiiiien,i,ilioiis. There%%astiosignificant
opposition
Goal: To assess goals, policies, processes & closts Page 2 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple citv council Dolicv objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #3 ' Definition of Local Business Enterprise (LBEs): Eliminate local
headquarters requirement for LBEs.
1. Background
• Problem description: The issue of x%lictlier to require LBEs to liaxc an Oakland headquaners is part of the
broader polic% ciiscussion stated in Rec. 2 aboNe. partiCillarlN in sinking a balance bemeen assisting small
localbusinesscsandeiicotiragitigccoiioiiiicdc%elopinciiiiiigeneraiiii0akland. T'heclucstionisN%hether
the headquarters requirement discourages non-local businesses from bidding on Cm contracts and opening
a branch office in Oakland
• O%en iew of research findings: The learn does net hl\ e hard data abOL111 the economic impact of the
headquancrs; rcquirement or the S/LBE prograrn in general. Sci cral BaN Area businesses ha%c expressed a
desire to participate in Oakland's LBE prograin.
• What currentiv exists/What idealiv should exist: To be certified as all LBE currerith. a business nuist
ha\e its headquarters in Oakland (and- as discussed in Rec 2. be belo\% a certain size). After intich
discussion- the team decided to eliminate both the headquarters requirement and the size Imuts. Ths means
that c%en %m large businesses frorn another state could qualjf@ as all LBE. The balancing requirement is
that the out-of-state firm N%ould be required to do the bulk of anN Cit '%-funded i%ork in their Oakland office.
The expected economic impact of the nc%% LBE definition is that out-of-state finns %%ill lia%e all incenti%c to
establish substantial branch offices in Oakland. thus contributing to econornic deNelopnictit in Oakland.
The incentive for LBEs %%ill be limited to a 2% bid discount. Mule the SLBEs N% ill rccci%c greater
preference. a 5% bid discount (See Recommendation 9.)
2. Recommendation
• Recommendation Details: Eliminate the local headquarters requirement for certification as a Local
Business Enterprise (LBE)- but require that LBEs bidchng oil Cit@ contracts perforin a ina.ioritN of the Cil% -
funded %%ork in their Oakland off-ice.
• Anticipated sasings/efflciencies/other benefits: The niain benefit is that Recommendations 2 and
together (eliminating the size and headquarters requirements) mll substanualh enlarge the Pool of
businesses that can qualiR. as LBEs. This should increase the number of businesses bickling on Cm
contracts and encourage price competition. The ilcx% LBE definition pro%idcs an iiiccnti%c for anN business
to locate an office in Oakland thus encouraging economic imestruent in Oakland
• Who should implement: CC&ES Nkill administer
• Cit% Council action needed: The CaN Council mll need to amend the LBE Ordinance.
Implementation Plan
• implementation steps and timeline: This recommendation should be considered b the Cit.N Council ill
the context of the other recommended changes to the SiLBE program. hopeftill 'NIbefore the end of 2002.
CC&ES should be able to institute program changes %% ithin a month or mo follomng.
• Imestments needed: Staff time to do outreach to the business coninumuh about the lie%% program changes
(Essential)
• Plan to address potential issues/opposition (stakeholders): As noted abo%c. a focus group of business
people on 9-10-(2 %%ere %crv rcccpti\c lo the learn s proposed recommendations. No opposition oil [[its
recommendation @%as expressed Ho%%eNer. there could be opposition to (lie nei% LBE definition from sonle
sina If local businesses %k ho feel the.% call t Compete oil price %@ ilh 1 cr% large rultional fil rims. it hich 113% c (tic
Capacity 10 potentialk. lo%%-ball a bid
Goal: To assess goals, policies, processes & costs Page 3 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #4@ Eliminate the category of broker from certification.
1. Background
Problem description: Local brokers charge more to Cm through bid discount process. bill one-person
operations pro% ide little economic cleN elopincrit benefits to Oakland.
• O%cnie" of research findings: There are mo distinct categories of brokers - trucking and rion-trucking -
curreink. % cr% feN% of either IN pe are cerlified. The "av the S/`LBE progarn applies to brokers is quite
complicated. Net offers brokers little ad%antage. For non-trucking broker actiN itics. brokers often ser% e
mereIN as middlemen. adding to the cost to the CitN For trucking acth ilics. the brokers scr%e a niore N aluc
added role. as the% are integral to the tnicking dispatch process.
• What currentl% exis(s/What idealiv should exist: CurrentlN. brokers call be certified.lust like all% other
business. Preferences for brokers are more complicated. For non-micking brokers- discounts are based oil
the%altieofilicirconiiiiissioii. Fortnickingbrokers.discouiiisarcc@ippedai5qotoN%ardstlictrtickiiig
participatioiigoalanddependoiiN@lictlierthebrokerisdispaichingatractororatrailer Idealh.brokers
%%ould not be considered local businesses for purposes of this program because the '@ do not substanualIN
provide economic benefit to the City relati%c to the preference the% recene compared to other local
businesses.
2. Recommendation
• Recommendation Details: Eliminate the calcgor@ of broker from certification.
• Anticipated savings/efficiencies/other benefits: This chanpc M11 eliminate sonic %crN, complex aspects of
the S/LBE prograni. thus sirnplifNing the process. %%hileachersch impacting %cr '% Fe" iridnicluals. This
simplification x%ill make the program inore attracthe to other local businesses.
Who should implement: CC&ES
0 CUN Council action needed: The CitN Council %%Jill need to approve (his change.
Implementation Plan
• Implementation steps and timeline: This recornmencialion should be considered bN the Cm Council in
the conlcm of the other recommended changes to the S/LBE program. hopefuil-N before the end of 2002.
CC&ES should be able to insutute the change ininiccliatch thereafter.
• Imestments needed: none
• Plan to address potential is%ues/opposition (stakeholders): The focus group of business people on 9-10-
02.notedabo%c-%oicedilooppositiontolhisrecoiiiniciidatioii. StaffsliouldliaNecancbdconNersations
iNilhthefe"affecteditidi%idLials.%%Iioarelikel.%toopposclhiscli,inge
Goal: To assess goals, policies, processes & costs Page 4 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #6: Allow eligible nonprofits lo be certified as SLBEs and LBEs.
I Background
• Problemdescription: Qualifiediioii-profitstlialcontribiitetoOaklatid'secoiioniicdc%ciopinciii@ire
excluded front progirams.
• Oven ieA of rescarc h findings: There arc inariN opportunit ies offered by the C aN for %i hich nonprofit
corporations are qualified- N/lanN nonprofits. in fact- contract %%ith the CiiN to proN ide both construction
and professional serN ices. In son ic of these cases. nonprofits compete against for-profit corporations for
Cit'N contmc(s. Local nonprofits that N%ould otheR%isc meet the requirements for certification are not
eligible due soleh to their nonprofit status. though thex arguabl.N contribute nearl.N as substantialk to the
CnN's economic deN elopment and more so in man-N cases to the CiIN's social goals
• What currentiv exists[What idealb. should exist: Currelith, nonprofits are categoricalk c.\chicled from
certification eligibilm Idealk. eligible nonprofits %%ould lia%c the sanic ad% antage in bidding for Cm
%%ork as do for-profi(s.
2. Recommendation
• Recommendation Details: AJlo%% eligible nonprofits to be certified as SLBEs and LBEs.
• Anticipated sa% ingq/efriciencies/other benefits: This change %%ill enlarge the pool of cerlified finus and
recognize the %aloe that a healthy nonprofit communit% brings to Oakland. It m ill place local nonprofits oil
equal fooling %khen bidding against for-profits for Citv %%ork.
• Who should implement: CC&ES
• City Council action needed: The CitN Council x% ill need to appro%e this change
3. Implementation Plan
Implementation steps and timeline: -Hiis reconinicridation should be considered b% the Cit% Council in
the context of the other recommended changes to the S/LBE program. hopefulk before [he end of 2002.
CC&ES should beable to institute the change ininiechatch thereafter.
Investments needed: none
Plan to address potential issues/opposition (stakeholders): The focus group of business people on 9-10-
02- noted abox c. voiced no opposition to this recommendation.
Goal: To assess goals, policies, processes & costs Page 5 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
Simpler and more effective while implementing
multiple city council Policv obiectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #6: Make the process of certification more accessible through significant
simplification and by outreach efforts with the business community. Institute a self-certification process
requiring minimal documentation and streamlined review. Support efforts by local business organizations
(e.g., chambers) to hold "Certification Days".
1. Background
• Problem description: Thcre are mail% more businesses eligible for certification than there are certified
fimis. While some ma% liaxe no desire to e\ er become certified. others nim be reluctant due to tile
certification process's bureaucratic reputation and others ma 'y not understand [lie program. The
certification process is cumbersome and asks for urinecessar@. personal information. Current CC&ES staff
lias limited capacitN to police certification process. but still %%ants to ensure that -sham- operations or
'fronts do not bencht from Onkland progranis.
• O%eF-% ieA of research findings: The process of certification is considered to be one of the more onerous
aspects of [lie S/LBE program. Sonic businesses feel the CitN requests more documentation [thin it needs
torenderanappro\alorchsapproN@ilofanapplicatioii. IiiterrLalstaffrc%je%%ofthedocuineiiialio[iis
thorough but time intensi\c. Regardless of the process. man%, eligible firnis may not knoi% about the S/LBE
programs and the opportunities for @Aiiming Cilv contracts that it presents.
• What currenth exists/What idealiv should exist: Prior to tile staffing change compelled bN the Cit%
Council at tile start of thus fiscal Near- tile S[LBE certification process required numerous documents to
acconiparivanapplication. CC&,ESstaffexhatisflxcI -N re%iei%edandxerified(includijig\iafield%isits)tlic
infomiation contained in the documents. Subsequent to the staffing reduction. CC&-ES has adopted a much
siniplerprocess,%%hichistheniodelfor%kliatt[iistcaniisreconiinendiiig. Ideall.N.alleligiblelocal
businesses %%ould participate in the program and bid for Cit.% contracts.
2 Recommendation
• Recommendation Details: Make tile process of certification more accessible through significant
sitnplificalionaiidbN,otilrcaclierforts%kiththcbusiiiessconiiiitinit%,. (A)Iiistittiteaself-certification
process requiring minimal documentation and streamlined revie%%. This process requires submittal of onh
tile most basic information. reducing the actual number of pieces of supporting documentation to three or
four items dial should be relain ely eas@ for applicants to proN ide. CC&ES staff ill use three IeNels of
scrutiny (from automatic appro\ai to requiring additional documentation and site isits) to reN ie%%
certific ation requests. based on lamiliarm %% ith business and input from project managers. (B) CC&ES
staff k%ill also support efforts b%. local business organizations (e.g chambers) to hold "Cenificadon Do% s".
The Cit '% %%ould encourage Oalkland chambers and other organizations that represent and call reach a large
spectrum of Oakland businesses to organize wid host these dorks Miere CC&-ES staff %%cold be oil hand to
recei%c applications for certification and answer questions about the program.
• Anticipated saiings/efficiencies/other benefits: Attracting more eligible local businesses to the S/LBE
program %kill enhance the opportunm for these businesses to compete for and %%in CuNr contracts. Much is
thcobjectneoftheprograin. Wiiiiiitigcoiitracts%iifleiiablethesebtisitiesscstogaiiie.Nperienceajidgroi%.
ultiiiiatclNpro%icfiiigiiiorceconomicbenefitiottiecinaiidiiiorejobopportwiiiies-sotiicof%@lijcli%ii[Igo
to Oakland residen(s This change also occessarih and significand reduces all aspect of the %iork of
CC&ES - thorough and complete re% icN% of substantial information required of all certification applications
- that it call no longer perfonn.
• Who should implement: CC&-ES
• CitN Council action needed: none
3. Implementation Plan
• Implementation steps and timeline: CC&ES has ah-cach implemented tile streamlined cerlification
applicationprocess. CC&-ES%%illbegijidisetissioiis%Nithbtisinessorgaiiizatioiistobcgiii[iolding
CerlificatioiiDa%siiiiiieSpriiigof2OO',-oiiccalloftheotherprogr,iiiicliarigeslia%cbeciidirectedb%Cit%
Council.
• Imestmnts needed: minimal staff time to support Certification DaNs
• Plantoaddresspolentialissues/opposition(stakeholders):TliereconiiiieiidatiojiforCerlificatioiiDaNs
canicfroinagroupofstakeholdersalongN%illisoiiiccoiiiiiiiiiiieiitfrointliciiitostippotitlieni.thusiio
opposition is expected.
Goal: To assess goals, policies, processes & costs Page 6 Teann* 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy obiectives-
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
Goal: To assess goals, policies, processes & oDsts Page 7 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council Policy obiectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #7: Replace the optional "Good Faith Effort" with a mandatory "Local
Subcontracting Outreach Requirement".
1. Background
• Problem description: Firms lia%ecomplaineddiat 'goodfaith' N%akerprocess is unpossibletomeel and
doesn't takeintoaccount local firrinsgkinginflatccibids. Ad%ertisingancicertifiedinail aree\Pensi%cand
labor intensne (piniculark for small firnis). Net Nie X% rant to ensure that our local finnis arc notified of
subcontracting opportunities.
• 0%eirxieii of research findings: The current "good faith effort" is percci%cd to be burdensome and is
suspected to contribute to diminished interest bN businesses in pursuing Cit-N @%ork.
• What currentivexists[What idealh, should exist: Currenth- there is no outreach required bN prime
contractors for [ocal subcontractors-'prunes can achie%e their local subcontracting goal wthoul necessank
doing an extensi%e outreach (e.g b-N using finns the.% pre% ioush iNorked %vuh). The onIN reason for
businesses to make a good faith effort is to tn. to get a %%ai@cr for not using local finus (because of lack of
a%aflabiht@). and to not get penalized for not achic% ing the il)% local participation goal
Ideally, businesses would always do an extensive outreach to local firms to maximize
local participation on every contract, and the process to verify this outreach effort should not be
staff intensive for the CC&ES division.
2 Recommendation
• Recommendation Details: Rcplace"GoodFailli" %wi%erw1ha Subcontracting0trurcach Requirement'
as a condition for prime contractors to bid on projects The Cit '% " ill post bidding opportu-nides on its
%%ebsite. and potential primes Nvill be required to mail. fax. or email subcontracting opportunities to a list
pro% ided bN. the Cit% on labels (hoi%cxer. unul the "eb site is Lip, anN inailed bid inN itations must be bN
certified niail) Tlus requirement is %%at% cd in an.% areas " here the prime promises to self-perforill (not to
subcontract) that type of %Nork.
• Anticipated saNings/efficiencies/other benefits: We %%ould expect a much greater outreach effort to local
firnis bN mandating this as a condition for submitting a bid or proposal to the City@ Net INN sinipIffi ing the
process- it should not be too cumbersome for the businesses sen ing as the prinle.' 6nder'this proposal.
primes @Nould self-certiR compliance %% ith the Subcontracting Outreach Requirement using a simple one-
page forin.
To simplify enforcement, primes interested in a particular project would post their names
on a City website, allowing for local firms to police the outreach requirement. For example, if a
local foundation contractor did not receive a solicitation for a bid on a City project involving
foundation work, that firm could file a complaint with CC&ES.
Who should implement: CC&ES.
CitN Council action needed: Change themirrent policN to match the recommendation.
3. Implementation Plan
• Implementation steps and timeline: Prepare tic%% legislation to amend the prograin for COLHICII apprmal
b.N March 2003- and get a Cit.% %@ebsitc constructed to perforrin the recommended tasks tip as soon as
possible.
• luiestments needed: Train appropnate Cit% staff in posting the information on [tic Citx %@cbsitc. and
perform and educational outreach campaign to inform stakeholders of [lie neNN changes.
• Plan to address potential issues/opposition (stakeholders): no plan identified
Goal: To assess goals, polides, processes & costs Page 8 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORINARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #8: Eliminate the 3-year commitment for the Mentor-Protdg6 program and
instead require that the relationship last at a minimum for the duration of the project.
1. Background
• Problem description: The current Nlentor-Protege program does not build local business capacm.
Although the Mentor-Prolege program %@as designed to build capacm. firins are reluctant to use it because
it requires a three-%car commitment. %% hich man% firnis feel is too long.
• 0%erxiev% of research findings: Since it s inception. the McnIor-Prot6& program has been used %cr%. xen
rareh.
• What currentIv exists/What ideally should exist: What current1% c\ists is an arbitrarN. three-Near
requirement that does not recognize that the typical contract lasts @or a duration much 1'ess thanone N ear-
effecthch, cliscouraging businesses from entering into a Mcnior-Pro(6gd relationship.
Ideally, businesses would engage in Mentor-Prot6g& relationships to foster the growth of
smaller, newer business enterprises.
2. Recommendation
• Recommendation Details: Modif'N the Mentor-Prolege program to require that the relationship needs to
last at a minimum for the duration of [lie project. Create an annual CuN ai%ard that reco.-ni/es businesses
that did the most to help small local businesses grow
• Anticipatedsaiings/efficiencie4/otherbencrits: Itisexpectedthatinipleinctititigtheproposed
recommendation wf( significant(% encourage greater Mentor-Prot6gd relationships in Citv Contracts. thus
contribut ing to%N ards fostering a i@ricndficr en% ironnient for sinal ler. iic%N cr fi nins to grom i n.
• Who should implement: CC&ES.
City Council action needed: Change the current policN to match the recommendation.
3. Implementation Plan
Implementation steps and timelinc: Prepare ne%% legislation to amend the polic.% for Council approN a] b.N
March 2003.
Imestments needed: Perform art educational outreach campaign to iftforin stakeholders of the ne%%
changes.
Plan to address potential issues/opposition (stakeholders): outreach campaig
,n
Goal: To assess goals, policies, processes & costs Page 9 Team 6B
of complying vvith contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council Dolicv objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations.
September 2002
RECOMMENDATION #9: Eliminate the 50% Local Subcontracting requirement, and instead
provide incentives in th@-fornn of bid discounts (construction) or preference points (professional services)
of up to 5% for achieving up to 50% in local subcontracting. or having an SLBE serve as the prime
contractor.
1. Background
• Problem description: Companies Find it cliffictill and cosih to meet the 50%) local subcontracting
requirements. MariN projects do not necessarily require i er% much. if an%. subcontracting: the niain
exceptioiibeiiigbiiildingconsLnictionprqiects. Companiest@utperceixethisrequireiiient@iscunibcrsoiiic
and unfair do not compete for Cit.N projects - less competition results in higher prices. Since the Pool of
local firius that printes inust subcontract mth is so lonited- local finns ma% be tempted to inflate prices or
take on morc Nkork than thin can handle. The existing requirement is %cr% rigid.
• Oicniew of research findings: hi sonic cases. such as Public Works construction projects imok ing
traffic signals. the City has often times receixedjust one bidder. An informal re% ie%; of other cities' costs
for traffic signals suggests that Oakland's costs are hig-her. For housing projects- anecdotal inforruation
from dcN clopers suggests that current policies could lead to costs that are as much as 30% higher.
What currentl% existstWhat ideall% should exist CurrentlN. businesses looking to do business %% ith the
CitN are expected to achie% c a 50% local subcontracting goal- regardless of the nature of [lie %wrk.
opporlurinN " ithm the specific contract to subcontract. and a%ailabilit.N of local subcontractors to perform
the N%ork. SLBEs acting as die prime contractor satisA this requirement autorrialicalk. Ni hile LBEs acting
as the prime only satisA. 15'11.) of the requirement. and need to subcontract 359@,. to SLBEs in order lo niect
the requirement. SLBEs and LBEs acting as the prime or in a joint-% enture recei%e a 5P,@@ bid discount.
Mule non-local finns meeting [he local subcontracting goal receixe no bid discount.
Ideally, businesses would look to maximize local participation of subcontractors on their
own, and local subcontractors (absent any City mandate to hire them) would strive to continue to
be competitive within their respective lines of work.
2 Recommendation
0 Recommendation Details: ReplacedleCUrrent 50'@i,subcontractingrequirenieiit%%-itliaii inceritheprograiii
that rc%%ards prime contractors mth up to a 5% bid discount on construction contracts or 50,0 in preference
points for professional scr% icc contracts for ruccling the 50% Subcontracting goal. A%%arcl 1% for cxcr%
10%ofcojitracidollar'ssubcontractedloSLBEsandf.';'@',)foreNer-% 10",1,ofcontracidollar's
stibcoiitractedioLBEs-lloi%cxer.iioiiiorelliatil.%ofbiddiscouiiicajibeeaniedb 'N subcontracting %% ith
LBEs. and 5% for SLBEs. The prime contractor's niaxonurn bid discount or preference points that can be
eamed from all sources cannot exceed
Note: Primes are no longer required to subcontract any work, just if they do, they can
receive a bid discount or credit. This bid discount or credit is another way to earn the existing bid
discount/credit system for primes that are SLBEs or Joint Venture or Mentor Prot6g6 with SILBEs.
Primes now have multiple ways to hire local businesses - as partners, prot6g6s or subcontractors
- and to be rewarded for hiring them with a bid discounVcredit.
Anticipated sa% ings/efficiencies/other benefits: The recommended change in policN should % ield a
greater interest in bicicling the Cit'N -s "ork- and thus lead to reduced costs It also %% ill continue to gh c
preference to local finnis and those %% ho subcontract NN ith local fimis. %% bile capping the Cit-%'s cost liabiliR
for such preferences lojust i%.
• Who should implement: CC&ES.
• Citv Council action needed: Change the current polic% to nialch the recommendation.
I Implementation Plan
• Implementation steps and finneline Prepare ric%% legislation lo arnend the program for Council approNal
bN March 2001. Dexelop an educational outreach program to promote and niarket the nex% changes in
policy lo the Narious stakeholders (contractors. de%eloper. professional finus. etc.) to generate greater
interest in Cm contracts.
• Investments needed: Staffing to continuall outreach to local businesses to get thern certified. and to non-
local businesses to promote our ne%% 'bUSiness-friendl)" policies.
Goal: To assess goals, policies, processes & costs Page 10 Team #: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
0 Plan to addrem potential issues/opl)oSition (.4takeholders): Le% c rage other organi/at ions' resou rees b@
hjN Ing "certi fication daN s" periodica I h ii i th % arious busi ness organizat ions.
Goal: To assess goals, policies, processes & costs Page 1 1 Team #: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implemeniting
multiple citv council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #10: Allow businesses to accumulate credit for using Certified Local Firms on
non-City Projects, and use that credit to achieve bid discounts or preference points on a City project.
1. Background
Problem description: The current programs do not do as much as the% could to build local business self-
sufficienc% - (c.g - theN do not encourage use of local subcontractors on art on-going basis. including on non-
Cih.jobs).
• O%eniew of research findings: Ariecclotalk. it is said that for some local firms. Cit 'N %% ork constitutes a
significant portion of their firm's oNcrall uork. NNhich maN not be a sustainable or healiliv arrangement for
the business in the long term
• What currenth exists/What ideallN should exist: CurrentlN there is no incerimc for businesses to hire
local I'mms on non-Cit% jobs. The cob time businesses are gi%cn credit for hiring a local fir-m on a non-
CiIN job is %%hen theN @licl not nice[ Ilic'ir local subcontracting goal on a Cir% job. and in lieu of laming a Fine.
the% agree to N%ork a local subcontractor an equi%alent amount of dollars on another non-CitN project
[dealt%. businesses %%ould continue to emploY local firms on non-Cil.N jobs. i%ilhotit an% incenine.
2. Recommendation
• Recommendation Details: Allo%@ prime contractors to batik dollars paid to certified local firnis on non-
Cityjobs during the Near pnor to their notice to proceed on a ChN conlract- and allo%k those baliked dollars
to count to%Aard achic% ing a bid discount/preference points (up to 2%) on (he CM, contract
• Anticipated sa%ings/efficiencies/other benefits: It is anticipaled that allo%%ing businesses to accumulate
creclit for hiring local fir-nis on non-Citvjobs will encourage the use of local firms on noii-Cit% jobs.
• Who should implement: CC&ES.
• Citv Council action needed: Change the existing polic% to match the recommendation.
3. Implementation Plan
Implementation steps and timeline: Prepare ne%% legislation to aniend the current policN. for Council
approNal in March 2003
Investments needed: Conduct an outreach campaign to educate stakeholders about the ne%% policN
Plan to address potential ksues/opposition (stakeholders): Outreach campaign.
Goal: To assess goals, policies, processes & costs Page 12 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council Policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #1 1: For City-assisted private developments (generally Disposition &
Development Agreements "DDAs" and Affordable Housing projects), require primes to seek competitive
bids from subcontractors and comply with the Subcontracting Outreach requirement (see # 7 above).
Primes must give SLBE subcontractors a 5% bid discount and LBE subcontractors a 2% bid discount.
Prime must hire lowest responsible bidder. Thus primes must hire LBE/SLBE subcontractors that bid
within 2%/5% of the lowest bid. Replace the special requirements for trucking with this more simple, fair
and uniform process.
1. Background
• Problem description: Wliilebuilditigcoiisinictioiiprojects haNe niarn subcoiitractliigOPPC)IlLniiticsfor
local businesses. a strict 5W.'@ requirement is difficult and cosil 'N to meet. The special trucking
requirements make compliance e%en more complicated. Companies that percciN c [his requirement as
cumbersome and unfair do not compete for Cm projects - less competition results in higher prices Since
the pool of local fimis that primes must subcontract mili is so limited. local fimis ma 'N be templed lo inflate
prices or take on more %@ork than the%, can handle. Primes are allmied to Wre subs mthout bidding the
%%ork lo insure the best responsible price.
• 0%erwiew of research findings: Sc%eral focus groups x%ith affordable housing de%elopers and contractors
N%cre held as a result of concenris raised by deN clopers regarding increased costs resulting front CiIN
requirements. Asaresult-tlieCotuicilex'eiiipledaffordabicliousjiigdc%clopiiiciitsfroiiitlicSLB@loc@iI
hiring requirements uruil changes could be adopted Fcxi other cities ha%c local hiring requirements. %%Iuch
results in contractors %%orking in places %%here there are no requirements when dernand for construction is
%cr% high. Non-profil housing de%elopers reported feNN contractors interested in bidding onjobs funded bN
the CiIN (See CEDA report to Council for more details.) De% clopers estimated that the t"o programs
resulted in as much as a 10% increase in costs.
• What currentlN exists[What idealls should exist: Current]% the requirements pro% ide a burden on
affordable housing and other clexclopment projects that increases costs and makes such jobs less atiractiNc
to local and rion-local contractors Each contractor and deNeloper is required to meet SLBE/LBE
contracting goals and is subject to fines if the goals are not met Increased costs and potential impacts on
the projects are the result. Idealk. AJI contractors doing the business should %oluntarik (or as the nornial
course of doing business) hire local subs in significarit percentages because the 'y arc the niost
kno%fledgeable about local conditions and mll do the best qualit.N %%ork for the loi%est cost
2. Recommendation
Recommendation details: For CUN-assisted prixate cle%elopments (gencralk Disposition & DeNclopirient
Agreements "DDAs" and Affordable Housin.- projects. but also loans for construction projects). require
primes to seek compentiNc bids from subcontractors and comph "ith the Subcontracting Outreach
requirement (see Recommendation 7 abo%e). Primes must ghe SLBE subcontractors a 5% bid discount
aiidLBEsubLoiitractorsa2%bid(fiscount. Primemustliireio%%estrespoiisiblebidder Thusprinicsouist
hireLBE/SLBEstibcontractorstbalbidi%ithin2@,o/50/nofiheio%%estbid. Replacetliespecialrcqtiireinctits
• Anticipated smingslefficiencies/other benefits: In addition lo the efficiencN caused by a lessening of
monitoring requirements. the potential reduction in clex elopment costs could result in as much as a 2Wo
reduction hi subsidies required.
• Who should implement: CC&ES.
• Citv Council action needed: Aniend the program as suggested.
Implementation Plan
• Implementation steps and timeline: Arnend the program w1h detailed input from dc%clopcrs, contractors.
CEDA staff. the Cit-% Attorno and CC&ES Council adoption b.N 3/03 Train participants o% er seN eral
months.
• briestments needed: little to none.
• Plan to address potential issues/opposition (stakeholders): Stakeholders appear to be in agreement i@ ith
recommended changes. aldiough there is some concern in lie%% @%c idenuk [lie lo%wst responsible bidder.
Goal: To assess goals, policies, processes & costs Page 13 Team #: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARD[ City Manager Summit Recommendations
September 2002
RECOMMENDATION #12 Change the informal contract threshold from $15TOOO to $50,000 for
professional service contracts and from $50,000 to $100,000 for construction projects. Maintain the goal
of awarding 75% of informal contract dollars to local firms, but require that at least 50% go to SLBEs and
remaining (up to 25%) to LBEs. Create an award for the City Department that does the most to support
small local businesses.
1. Background
• Problem description: Thechanges proposeclaboNe to thesubcontractingpolicies nuglitornuminot
reduce re%eiiues eamed bN LBE/SLBEs through subcontracting. Could the Cit% increase direct contracting
rcNcnue to LBE/SLBEs lo make up for an 'N real or percei%ed losses in subcontracting re%enues"
• O%erNiei@ of research findings: Anecdotal information in addition to preN ious %%ork performed b% the
Banishing Btireaucracv Office and %%ork of the current contracting team suggest that the current linu(s are
too lo%% and thereb) subject too man 'N contracts to the niore for-ruali/ed S/LBE proccss
• What currentIN exists/What idealiv should exist: Cur-rcritIN the requirements for biddingof contracts
result in a cumbersome and difficult process for smaller contracts. but the requirement thdi staff must
contract %% ilh local firnis for informal[% bid contracts at a rate of 75% results in a high percentage of these
smaller a%%ards lo LBEs. Expanding the CUITC1111% Successful efforts lo contracts ii i1h higher ]units could
result in additional ai@ards to local contractors and % coders.
2 Recommendation
• Recommendation Details: Change infornial contract threshold from $1,3.000 to V0.0(0 for professional
senicecoiiiracisandfroni$50,000to$10()-OoOforcoiistnictioiiprojects. Maintainthegoalofai%arding
7i% of informal contract dollars to local finns. but require that at [cast 50% go to-SLBEs and remaining
businesses.
• Anticipatedsaiings/efficiencies/otherbenefits:liifemialbiddingredticestliecosisofprocessiiig
coii[racisatidoheiireducestlictinierequiredforappro%als. Addiliotiala"ardstolocalfimisarealikel.N
rcsull.
• Whoshouldimplement:CC&,ESinconcerl%NillitlicCMOaiidAgeiicics
• Cit.% Council action needed: Appro%al ofilic iic%% lonils for informal bidding
3. Implementation Plan
• Implementation steps and timeline: Council to adopt nei% linifts is earl.% 200, mth immediate
implciocniation.
• Investments needed: None.
• Plan to address potential issues/opposition (stakeholders): No opposition %%as noted.
Goal: To assess goals, policies, processes & costs Page 14 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #13: Maintain the basic Hire Oakland Policy - 50% project hours lo be worked
by Oakland residents and5o% of new hires to be Oakland residents - but simplify compliance by
eliminating the Irade-by-trade requirement and by not allowing more than half the total hours to be in a
single trade.
1. Background
• Problem description: The requirement for 50%, resident %%orkforcc hours oil Cit 'N construction projects is
extreinel difficult and cosd% to meet. The fact that this requirement must be met oil a trade-b.N -trade basis
is particularIN daunting. It diSCOUrages niam businesses front bidding on OaklanclJobs - less competition
cqualshighercosis. Additionall%-Ihctridc-bN-traderequireiiieiitresultsiiigraiititigof%%aiNers%%hena
%%orkerisn-taxailableitillialtm@e.sototalOaIJ@indi%orkforceliourseiidupbeitigfci%ertliaii';O"'0.
Ho%%e%er-thetrade-b%-Iraderequireiiieniensuresih,,itOaklandresidctitsareiiio%itigiiiloallaspectsofilic
construcrion industr% - paniculark, into trades that fornierk had little Oakland representation.
• Oier%ic" of research findings: This requirement has often led to significant penalties for non-
compliance. most of %iluch liaxe been %@orkcd off bN using Oakla.iicl residents on otherjobs. Contractors
haic testified that the reporting requirements are di@`icult and the requirement 10 Cornpl% r oil a dav-bN -daN.
trade-bN-trade basis is not feasible and results in difficulty meeting schedules mthout % iolating rules.
• What currentl% exists[What idealiv should exist: Current program requires that contractors and
subcontractors oil construction jobs generate 50% of their %%ork hours for local residents on a diN -bx-( lam.
trade-b% -trade basis. In addition. it)"'.) of neNk hires must be Oakland residents. A waixer program exists
that allox%s a contractor to proceed to hire a non-Oakland %%orker if the% shox% that none are a%ailable.
IdeallN. unions and subcontractors should % oluotarih (or in the nornial course of doing business) hire at
least @0'@'o of their %%orkers localk because there is an abundant supply ill all trades.
2. Recommendation
• Recommendation Details: Maintain the basic Hire Oakland Polic% - iO% project hours to be NNorked b)
Oakland residents and 5001,@ of nc%k hires to be Oakland residents but siiiiplifx compliance bN eliminating
the trade-b -N -trade requirement and b '% not allo%A ing more [hall half (lie total hours to be in a single tradc.
Contractors i%ould be able to niect the 50% requirement oN er the entire course of a job. If dieN did not
meet the targets. then the penalties and corrections noled in later recommendations %Nould apph. but oil]% at
the end of (lie job.
Detailed discussion mth union and contractor representam es %i ill be referred to the
Apprenticeship Ad% isor% Board (AAB) so that details of %%ai%crs and a determination i0elherjob size
Could inipact implementation can be developed in all enN ironnient %%here both union and contractors
represcrilalk es haN c successftill 'N de% eloped other Cit-% programs.
• Anticipated saNings/efficiencies/other benefits: Contractors could more casih fill positions as the
become a%ailable and inect (lie ifto requirement mill less paper%%ork. There i%ould be reduced
requirements for ongoing monitoring b%. CC&ES staff
• Who should implement: CC&ES.
City Council action needed: Change the c-uling program to match recommendation.
3. Implementation Plan
• Implementation steps and timeline: Prepare lie" legislation to aniend [lie prograin for Council appro% al
bN March 2003. Refer issues regarding Waner polic% under lie%% guidelines to the Apprenticeship
XdN ison Board for clexelopritent of recommendations b -% 6/2003
• Imestments needed: O%er the long terni- addressing (lie fact that local residents arc undcr-represented in
se%cral trades maN require imesuncin b-N sc%cral participants so that the pohcN does not chininish efforts to
assure that Oaklanders bcnefil at all Ic%cls of construction %%ork.
• Plantoaddressl)otentialissijes/opl)osition(stakeholders): Inorderloassurctll,'l[Akch@i%cbu 'N -in to tNs
processfroiiiiheuiiioiis.tlierefermlioilicAAB%%illscr%cas-,i\cliicleloaddrcsstlicircoiieems.
Contractorsseemtobeinagreenieiit"itlilliepropo@als.
Goal: To assess goals, policies, processes & costs Page 15 Team#: 6B
of complying vilith contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARM City Manager Summit Recommendations
September 2002
RECOMMENDATION #14: LOCAL EMPLOYMENT PROGRAM - Primes can bank project hours
worked by Oakland resident employees on non-City projects during the year prior to issuance of notice to
proceed on the City contract and apply those banked hours to their 50% requirement. Primes can also
apply project hours worked on non-City projects during the contract.
I Background
• Problem descripfion: CurTciii prograin doesn't build resident %%orker scif-sufficieric): e.g doesn't
encourage use of resident N%orkers on an on-going basis. including oil rion-Cit.N jobs. The present
requirements impact onl.N Cit.N %% ork. Allomng credit for hours N%orked oil otherjobs could e%pand the use
of Oakland residents on more construction jobs.
• O%cn ic-A of research findings: The present program calls for x%orking of fines bN using Cialcland residents
on otlicrjobs after completion of the i%ork and after non-compliaricc is descrolincd. This requirement has
resulted in significant additional hours @@orkccl b. Nr Oakland residents oil othcrjobs.
• What currentiv existsfWhat ideall% should exist: Current].% onl.% hours oil the Cit.% job under contract
count to%%ard the 50% requirement for using local iiorkers. Man% contractors report theN arlificialh nioNe
Oakland residents to the Calklandjob to meet the requirement, %%isich is inefficient and does not act'ua[[N
result in more %%ork for Caklanders IdeallN. Contractors x%ould use a high percentage of Oakland %korkcrs
oil all jobs because there is an adequate suppl.% of N%orkers a%ailable in all trades
Recommendation
• Recommendation Details: Prime contrac(ors can bank project hours %Norked bN. Ciakland resident
emplo%ces oil non-CiIN projects during the Near pn.or to issuance of notice to proceed on the CitN contract
and appi 'y those banked hours lo their '30% requirement. Prioses can also appl.%. protect hours %%orked on
non-Cit.N. projects during he contract.
• Anticipated sa%ings/efficiencies/other benefits: More contractors niaN bid oil Oakland projects since the
requirements %kould be easier to meet resulting in significant. but unspecified cost smings. The principal
benefit is that Oaklancl.lobs and %%orkers "ould be less stigmatized as meeting local quotas. but be hired in
the nomiai course of business onjobs throughout (lie rce-ion.
• Who should implement: CC&ES.
• Cit% Council action needed: Amend the ctirreril program as recommended
3. Implementation Plan
• Implementation steps and timeline: Dc%clop legislation for Council appro%al by 1/2001.
• Imestments needed: None.
Plan to address potential issues/opposition (stakeholders): Contractors and Union representath es
seemed to suppori [lie proposal.
Goal: To assess goals, policies, processes & costs Page 16 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #15: When a contract is finished without meeting the Local Employment
requirements, the City will withhold from final payment of either double the average wages for the
deficient hours or 1% of the non-complying subcontractor's contract, whichever is less. The business will
have one year to work off double the hours owed by working Oakland residents on non-City projects at
which time the business will forfeit the retained amount to the City as a fine.
1. Background
Problem description: CurTent $1.000 it ciaN periallies are unreasonably high and unenforceable. Create
false impression that policy isenfiarcedon ada%-bNr-djN basis
• Oieriiew of researchrindings: Contractors indicatethatthepotentialof firiesresultsin highcrilictsb%
both tile contractor and the sobs. CC&ES staff has successfull -% implemented all existing program lo trade
Oakland resident hours oil o(herjobs for fines IcN. led oil Oaklaridjobs.
• What currentiv exists/What idealli should eiist: The cuffent sN stern fines $ LOW a da% for non-
compliancembilieprograni. Stadiiegotiatesat(heeiidofthec'oiitract@ipotciiti@ii%NorkoLlifortliefiiies
thalbecameclueduringthejob. Tlijs%agueprocessreSLIllSifILInk-noi%nsforconirictorsajidgeatdifficult.N
in meeting the requirements. Ideal] 'N.cotitractorsN%otildbcciicoiiragedtoiiirelocalresideiits%kiiii
incentnes that %%ould result in a good disinbution ofjobs across all trades.
2. Recommendation
• Recommendation Details: Wheiiacontractisfinishedi%ithoutiiiectiiigtlicLoca]Elllplo%mclit
requirements. the Co rN%ill N%ithhold train final payment either double the a%crage %kages for the deficient
hours (based oil a %%eighted-axerage preNailing "age) or lNe of the non-cornplying subcontractor's contract.
Muche%er is less. The business %Nill haNe one Near to %Nork off double the hours oN%ed bN i%orking Oakland
residents oil non-01% projects. [fat [lie end ofone Near the hours arc not %%orked off. th'e business %Nill
forfeit the retaitned amount to the Cit-, as a fine. up to double tile a%cmgc %@agcs for tile still-deficient hours
Hours %korked as a penalt% nia% not be banked for future Cir% -jobs The aniount of tile penalt.% %%ould be
[he @%eighted merage of the %Q'ges paid on the enitre -job.
• Anticipated sai ings/efficiencies/other benefits: The nionilonng requirements of the program %%otild be
lessened since compliance is deterrifined at the end of the contract and the contractor %%ould kno" i0at the
tradeoffs %%ould be in ad%ance. Additional jobs for Oakland residents on projects outside the cit.N could
lacconic a nornial pan of doing business resulting in more long-term eiiiplo.N nicill.
• Who should implement: CC&ES.
CitN Council action needed: To change tile program as described.
3. Implementation Plan
• tmplementation steps and timeline: Prepare changes for Council adoption in 3/03,
• Itnesliments needed: None
• Plan to address potential issues/opposition (stakeholders): The concern of the unions that [lie use ofthe
%%eighted axerage to determine the penalty can be assuaged mill additional comersations and assurance
that there is no attempt to aniend pre%ailing %;age requirements.
Goal: To assess goals, policies, processes & costs Page 17 Team#: 6B
of complying with contract oDrnplianGe programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policV objectives.
MOVING OAKLAND FORWARDII City Manager Summit Recommendations
September 2002
RECOMMENDATION #16: Limit purchasing bid preferences for SLBEs to 5% and LBEs to 2% and
encourage departments to aggressively seek the lowest prices on goods.
I Background
• Problem description: Nian suppliers dent bid on purchasing contracts because IhcN kyio%% an SLBE can
recei% e a 10% bid preference. Less competition @ higher prices. Ai%archng significant bid preferences can
result in significanth. higher prices.
• O%er-%iew of research findings: According to leslinionN b% contractors. suppliers and the Purchasing-
Section- %cr-% fe%% contracts are aN%arded based on preferences
What currentiv exists[What idealh should exist: Currentl.%. for construction and professional scr% ices
bid e%aluations' LBEs recciNe a i% preference o%er non-local business enter-pinses. and for procurement
bid cNaluations LBEs recene a i% preference o%cr non-local business enterprises and SLBEs recei%c an
additional 5% preference o%er LBEs and non-local business enterprises. Ideall.N. LBEs should receiNe a
preference for construction and professional serx ices.
2. Recommendation
• Recommendation Details: Limit purchasingbidprefierences for SLBEsIo @%andl-BEsto 2%and
ciicoura-,Cdep,irtniciitsioaggessi%cl.% secktheloi%est pricesongoods.
• Anticipated sa%,ings/efTiciencies/otherbencrits: Negligibleasexpericiiceiiidicates fei% contracts liaNc
actuall'N been ax%arded based on preferences.
• Who should implement: CC&ES.
• CitY Council action needed: Change the existing pofiC.Nr to niatch the recommendation.
3. Implementation Plan
• Implementation steps and timeline: Amend the current polic.% for Council approN al in March 2003
• Iniestments needed: None.
• Plan to address potential issues/opposition (stakeholders): CC&-ES %% ill track the number of contracts
lost and a%%arded base on preferences in order to sho%% proof that the local suppliers for PrOCUrernent
contracts ha%c not been negati%el.@ impacted b.N this reduction in the LBE preference
Goal: To assess goals, policies, processes & costs Page 18 Team #: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effecfive while implementing
multiple city council Policy objectives.
MOVING OAKLAND FORWARD[ City Manager Summit Recommendations
September 2002
RECOMMENDATION #17: Professional Services contracts will be assessed a 1% fee; construction
contracts will be assessed a 1.5% fee. Certain categories will be exempt from paying a fee (but not from
compliance) such as grant-restricted contracts.
1 Background
• Problemdescription: Co. deparinicinsha%cclifficultx pa%iiig3'.,feetocoiitr,-iclcoiiipliaiice i%ould
prefer to spend that nionc@ oil more proj.ects- e.g affordable housing
• Oven ieis of research findings: CC&ES has all operational deficit due to its difficult-% in collecting- its fees
front the % arious agencies that use its ser% ices.
• What currently exis(s[Whal ideally should exist: Currcinh, a 100 fee is assessed each department [ha[
require the sen ices of CC&ES. At the end of the contract. CC&ES contacts tile department requesting
pa@nicnt of the accessed fees. Often tile departments lime not saNed sufficient funds to pax the fees.
IdealIx. these fees should be paid to CC&ES autotiiaticalt.x after the budget has been appro\ed and tile
proj ect commences start tip.
2 Recommendation
• Recommendation Details: Reduce Professional Ser% ices contract assessments from 3@,i, to I%- reduce
construction contract assessments front 1% to I 5"N, Certain categories %k ill Ix, exenipt from pa@ ing a fee
(but not from compliance ox ersight) such as grant-restricted contracts.
• Anticipated sasings/efficiencies/other benefits: CC&ES %% ill spend less time In ing to collect its fees and
be able to reduce the amount taken from the Ciix's General Fund account to pa@ for its serx ices.
• Who should implement? CC&ES and the Budget Office
Cit 'v Council action needed: Authorize CC&ES to change its existing pohox lo match the
recommendation
3. Implementation Plan
Implementation steps and timeline: CC&ES %% ill aniend its procedures accordingk upon appro%al bx the
Council.
• Iniestments needed: None
• Plan to address potential issues/opposition (stakeholders): It is anticipated that opposition N% ill be lo%%
due to the fact that the assessment fees ha%c been reduced An) opposition that does arise wil be
addressed on a case-bN -case basis.
Goal: To assess goals, policies, processes & costs Page 19 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple citV council pdicv objectives.
MOVING OAKLAND FORWARD! City Manager Summit Recommendations
September 2002
RECOMMENDATION #18: Give the Budget Office the mandate to transfer the assessed fees from
departments to the CC&ES budget (like they currently do for the public art assessment fee).
1. Background
• Problem description: CC&-ES lacks the authorih and staff resources to collect all the fees ol%ed to them
by other departments. resulting in a lox% collection rate. Ha%ing contract compliance fee a line item ina
contract. rather than taking off file top front the department. creates contractor rescritnieril.
• ONer% iew of research findings: Assessed fees taken at the beginning of a contract %% ill not be used for
other purposes.
What currentl% exisis[What idealiv should exist: Currenth a 3% fee is accessed each department that
requires tile scr% ices of CC&-ES. At the end of the contract. CC&-ES contacts the department requesting
pax nient of the accessed fees Often tile departments ha% e not sa%cd sufficient fluids to pay the fees.
Idealk - these fees should be paid to CC&ES automatically afler [lie budgel has been appro%cd and the
proj eel commences start up.
2. RecominencLuion
• Recommendation Details: Gi% e the Budget office the mandate to transfer tile assessed fees from
departments to the contract compliance budget (like the%. currcritIN do for thepUblic art assessment fee)
• Anticipated sa% ings/efficiencies/other benefits: CC&-ES %x ill spend less time tr-% ing to collect its fees and
ma-@ be able to reduce the amount taken from the CaN -s General Fluid account to pax for its scr% ices
• Who should implement: CC&,ESand the Budget Office
• Council action needed: none
3. Implementation Plan
• Implementation steps and timeline: CC&ES and the Budget Office " ill amend their procedures
accordingh and noiffi staff.
• Investments needed: None
• Plan to address potential issues/opposition (stakeholders): It is anlicipaled dial opposition %% ill be lo%%
due to [he fact that the assessment fees lia%c been reduced. Anx opposition dian does arise x% ill be
addressed oil a case bN case basis.
Goal: To assess goals, pofides, processes & costs Page 20 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implernenbrig
multiple cftv council policv objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #1 9: Advertise all contracting opportunities, including informal bids, on the
City's web site for a minimum of one week before proposals or bids are due. Create email list serve that
businesses can subscribe to in order to receive email notification of City opportunities.
1. Background
• Problem description: Local businessesdo liotal%%a-%s knoN% %%hat Cit% contraclinvopportunifiesare
aN ailable. so can't compete or benefit.
• Clicnic-A of researchfundings: Tliis%%ill bringtheCit) current mth industr.% standards- sa%e nloneN in
inailingandprintingcosts. aiidreacha%%ider@irri.N.ofpoleiiiiaI bidders ManN ollici-ciliesaircacK ha%cthis
capacit'% and offer this sen icc.
• What currentiv exists/What ideally should exist: Current1v each department inputs bid solicitation
itiforiiiationotithebidhattine;tiidLici\crtisesintlictocalnc%kspaperforformalbidsolicit-,iliolls. Ideath.-
bid solicitations should be A% idel'NadNertisedinasnian.\ niediurnsaspossible Retric%alofthebid
infoi-ruation should be quick and simple.
2. Recommendation
• Recommendation Details: AdNcriiscall contractingopportunitics- includinginfornial bids.on thcCit%'s
%NcbsiteforaiiiiiiimLiniofoiie\%eekbcforeproposalsorbidsaredue. Createeniail list senethal
businessescansubscribc to inordertorecenecruail notification ol-Cit.\ opportunities
• Anticipated saN ings/eff-iciencies/other benefits: The Cit 'N. %%ill sa\c nione% b'N reducing bid mailings to
uninterested bidders and to obsolete addresses. All potential bidders. panicillarl.% local businesses. mll
much more easilN be able to sta% current on Cit-, business opportunities
• Who should implement: The Cit\\%ide Web Team in conjunclion mth CC&ES and otheragencies.
• Citv Council action needed: none
3. Iniplcmentation Plan
• Implementation steps and timeline: City\%iclc Web Team i%ill N%ork NNith CC&ES and userdeparinients to
de\elop process and initiate. PlaceholderalreacK exists on nc%@ \%cbsite.
• Iniestiments needed: Mininial to none.
• Plan to address potential issues/opposition (stakeholders): It is not anticipated that there mll be In%
opposition. Kiosks; and other computer stations "ill be criticallN located that ikill allo%% access for those
stakeholders Mm do not lime computers or access to the "cb.
Goal: To assess goals, policies, processes & costs Page 21 Team#: 6B
of oonnplying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policv objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #20: (a) Random/Spot Compliance Audits (b) First level compliance
monitoring functions performed by Construction Inspectors, and (c) Automated office functions,
particularly the certified payroll intake.
1. Background
Problem Description: Before Juk 1. 2ti02 operations included I'2 staff for professional ser% ices compliance
monitoring sen ices@ and construction compliance monitoring included 2 Compliance Officers- I Sr.
Compliance Cifficcr. 2 Field Represenlati%cs, and I Actinimistrafixe Assistants. Compliance monitoring also
includes Pre%ailing Wage and LiN ing Wage Circhnance
• O%cn ici% of Research Findings: Compliance function %@as one of fi% c targeted for re-engineering and cost
reductions.
• What currentIN exisils(What ideallb, should exist: As a result of budget cuts. starting in the current fiscal Near.
professional and construcuion compliance monitoring functions include three compliance officers and one field
mprescrualme. Clerical and Field/Cu(rcach hinctions arc critical elements of an ideal staffing structure.
2. Recommendation
Recommendation Details: Full 'N Automate office operations. Maintain collection of certified pa@rolls. but
replace data entr-% %% ith a nionthk sunimar '% of pre%ailing iNagc pa@inents. ne" hires. %@orkforce apprenticeship
hours. Train CEDA/PWA staff to perform first-le%el field construction monitoring
Anticipated saiings/efficiencies/other benefits: Significant sa% ings of apprONinialch $687-3 10 in reduced
sLaffingaIrcach realized.
Who should implement: CC&ES. and mili regard (o on site monitoring, in conjunction %%ah PWA and CEDA.
CitN Council action needed: none needed
3Implementation Plan
• Implementation steps and timeline: Gue month penod of intemal and extemal otareach and public forum
introduction of riei% policies and procedures
• Irrvestments needed: 01T professional or outside consultant needed to fijll% automate operations. Estimated
cost of $2-000.00 for outside consulting ser% ices and approxiniatch, $1.200.00 for soft%%are if needed. Nominal
cost compared to sax ings in staffing.
• Plan to address potential issues/opposition (stakeholders): Report back to Council through bi-annual
reporting schedule.
Goal: To assess goals, policies, processes & oosts; Page 22 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.
MOVING OAKLAND FORWARDI City Manager summit Recommendations
September 2002
RECOMMENDATION# 21: Unfreeze Senior Compliance Officer position and convert to 1
Administrative Assistant and 1 field & outreach position
1. Background
• Problem description: CC&ES cannot adequatel 'N hancUe its current iNorkload. but the current frozen
position is not the best fit %% ith current department needs.
• O%er%icw of research findings: Ne%% policies and procedures place greater emphases on outreach and
public relations and the capacit 'N lo further promote "inningconipliance Ns. enforcement.
• What currentiv exists/What idea]IN should exist: Currciuk. there is one fro/cri Sr. Contract Compliance
Officer. ldeallY the Di% ision N@ould ha%e one Adininistratke Assistant and one position to handle field
%iork and outreach- essential aspects of this entire bod.% of reconinienclations
2 Recommendation
Recommendation Details: The Sr. Contract Compliance Officer salar% cost (%kith benefits) is
appro.\iniatch, $94@535.44. That cost could be better utilized b% breaking the position into a
ClericaLfReceptionist classification at S30-35,000 and a Field/6titreach position at M-60.000
Anticipated sa%ings/efficiencieVother benefits: Inipro%cd understanding and better appreciation of nci%
programs and policies, enhanced buNr-in for %%uining compliance. more efficient dcli@crN or neiN sen ices.
and a doubling of%ah1c added b% ch initiating the Sr. Compliance Officer position and replacing it iiiih mo
inore functional classes
Who should implement? CC&ES along %Nith Office of Personnel and RMUrce Management. InterN ieN%
panel should include at least mo ineiribers of the 6B icani
Cit.% Council action needed: Appro%al to unfreeze and comert the position
Implementation Plan
Implementation steps and timeline: Obtain Council approxal and then haNe CPRN1 identifY appropriate
classifications and inidate recruitment process inimcdiatch after council approNal.
• tmestments needed: none identified
• Plan to address potential issues/opposition (stakeholders): none anucipated
Goal: To assess goals, policies, processes & costs Page 23 Team#: 6B
of complying with contract oDrnpliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple cRV council policV objectives.
MOVING OAKLAND FORWARDI City Manager Summit Recommendations
September 2002
RECOMMENDATION #22: Create a method for tracking key costs that can be tracked overtime and
compared with other cities, e.g., cost per unit of affordable housing, cost per foot of paving, etc. Track
growth of certified businesses and other appropriate performance measures to assess the full value/cost
of all of these policies.
I Background
0 Problem description: We do not real[ kno%% if i%e are pa@irig too much for goods and seR ices and lim%
out policies might affect these costs- and N%hat the oxerall economic impact of these policies is.
Overvicii of research findings: CwTctitl%- the Ca% does not ha%c adequate measures to track,-III rcle%aru
data nor does it haNe in-house capacit 'N lo perforni a conipi-chensi%c economic impact sluclN.
0 What currentIN exists[What ideallN should exist: See comment aboxe. Idealk. the Cit% should ha%c ail
objecli%caiial%sisoftliecostsofgood-gaiidser%icesaiidtheexteiitthiitsocialpolicies.iffecitliatcost. III
2. Recommendation
0 Recommendation Details: ThetcaiiireconiiiieiidsreeN@iluafiiigcxistiiigpcrlbmiaiicciiieasuresas%%elI as
ourdatatrackingiieeds@iiidcap,,ibilitiesrela(iNeicillicscpolicics. TlictcaiiialsorecotiiiiiciidseiigigingaiI
economist to perform an economic impact stu(h.
0 Anticipatedsasings/efficiencieslotherhencrits:BetterpublicpolicN.aiidagreaterecononiiciiiipact.
There is a need to rca II-%ktio%NifN%carepa@iiiglooiiiucliforgoodsandser%icesaiidlioi%ourpolicies
illightaffectflicsecosts Tllc('itN inustbeabletoidentif -% [he best and inost efficient use of tax dollars to
influence economic cle%reloprileril and groN%Ili for both businesses and residents.
0 Who should implement: CC&-ES %%ith 9111dance of CMO through [lie Budget Office and/or CEDA.
0 01% Council action needed: none
1. Implementation Plan
• Implementation steps and timeline: Assess current data tracking capabilities and recommend additional
cLila tracking and per-fiarinance measures - bN 12A)2i de% clop scope of work for economic stud% - b% 3/0,
• Iniestments needed: Unkrioi@ it le% el of funds for economic stud N .
• Plan to address potential issues/opposition (stakeholders): Cost inav be prohibith e Local unn ersit@
input may ser% e as an alternatiN e approach to consulting ser% ices
ORAICOUNCIL
JUL I 6 2003
Goal: To assess goals, policies, processes & costs Page 24 Team#: 6B
of complying with contract compliance programs
and recommend changes to make programs
simpler and more effective while implementing
multiple city council policy objectives.