Mayor Ed Lee issues directive to reform San Francisco construction projects

S.F. Examiner File PhotoBuilding dispute: San Francisco is facing a pending lawsuit regarding city capital contracts at Laguna Honda Hospital.

In worst-case scenarios, public construction projects in San Francisco can drag on for years, suffer from cost overruns, end up in litigation and have workers complaining about not being paid.

Mayor Ed Lee issued an executive directive Wednesday aimed at improving public construction contracting by requiring better communication and new payment requirements for The City and its contractors.

The directive requires city departments such as Recreation and Park, Public Works and the San Francisco Municipal Transportation Agency to engage in “partnering” to help resolve construction issues and disagreements. The directive requires a “partnering” provision in city contracts and bid proposals for city jobs.

Meanwhile, city employees will undergo training and develop internal procedures to implement so-called “partnering practices.”

“The idea is to avoid problems down the line in contracting,” said Department of Public Works spokeswoman Rachel Gordon. “You don’t want to go to court over a dispute on a contract.”

In response to complaints from subcontractors about not being paid on time, some for months past due, The City will establish an online payment system for prime contractors and subcontractors to track invoices and payments, Gordon said.

“Each department with an automated payment system will send email notifications to all listed subcontractors when the prime submits its invoice,” the mayor’s directive said. Contractors will henceforth have to pay their subcontractors within seven days of being paid by The City.

While it’s unclear if such reforms would have prevented previous construction debacles, The City has experienced more than a few of them. For instance, the Fourth Street Bridge project was hundreds of days past schedule and plagued by millions of dollars in cost overruns. Although bridge work finished in 2006, The San Francisco Examiner reported last year that legal bills were still mounting from litigation over the project.

Meanwhile, a rebuild of San Francisco’s 19 library branches suffered from construction cost overruns, with delays forcing the postponement of at least five branch renovation projects.

As a former city administrator and head of the Department of Public Works, Lee is intimately familiar with city contracting.

His directive builds on previous work to improve city contracting. In 2006, City Attorney Dennis Herrera formed a Construction Contracting Task Force, which issued recommendations in response to complaints from businesses working with The City. According to the City Attorney’s Office, as of today there is one pending lawsuit related to city capital contracts, for design work at Laguna Honda Hospital.

jsabatini@sfexaminer.com

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