san francisco's business-as-usual is costlier and worse
Not exactly Bond-villain material here. But that’s fine for the feds. They can still hold 20-year prison sentences and $250,000 fines over the heads of the accused, and apply that as leverage to land what the feds always want: a bigger fish.
On any given agenda, you’ll find a number of items affecting San Franciscans’ lives for generations and costing millions of dollars. Let’s take item 10e at the Dec. 8 meeting: approving two $9 million contracts for a pair of joint ventures to undertake, among other endeavors, “Construction Management Services for the East Bay Region, to provide construction management services and staff augmentation to manage multiple overlapping Regional Water Enterprise construction projects … ”
The classification of Local Business Enterprises — or LBEs — sprang up after California voters kneecapped larger efforts at affirmative action. LBEs allowed for many of the same goals — the classification ensured that small, local companies employing local people got work and money, and not all the jobs went to the same big players.
That’s the idea, in theory. In practice, however, longtime PUC sources tell us that — throughout the decades — often the only person at the so-called LBE doing any work was the guy processing the invoice. The actual work was passed through to other entities. Entities that were not necessarily local, nor small.
And this brings us back to the PUC Commission meeting of Dec. 8 and the awarding of those two $9 million contracts. The Public Utilities Commission heavily rewards bidders for its lucrative contracts who partner with LBEs — a bonus of 7.5 percent or even 10 percent of the scoring total. That’s a big deal. Especially because the top four finishers in this contract bid were separated by just 33 points — out of 1,000.
It’s clear that getting that LBE bonus was pivotal if you wanted to land one of those PUC contracts. What’s decidedly not clear, however, is if the LBEs involved really were LBEs — and if those points should have been awarded, and if this process was wholly legitimate.
Well, that was fascinating. Because, based upon the city’s own data, one company, MCK, appears to have grossed far more than the $2.5 million three-year average the city has set as a ceiling, by statute, for LBEs in its category. Over the past three complete fiscal years, it averaged $3.47 million —and that’s not even factoring in joint ventures, which nearly triples that figure.
Mission Local inquired about this with the PUC. We were sent memos indicating that all is well — and that the City Administrator’s office has ruled that the lapsed certification was immaterial, as the company was certified “at the time of the proposal” in May.
That’s fascinating, too: Because, in April, the PUC itself issued an addendum on this matter stating that the LBE bonus would be applied at “each phase of the selection process” including “written proposal” and “oral interview” — and only certified LBEs would be eligible for such a bonus
The PUC’s own timeline notes a shortlisting of firms “to continue to participate in oral interviews” coming on Sept. 3, with additional steps in the selection process continuing into October and a vote being made in December.
Why does this matter? For one thing, minus federal agents running through unlimited money and time to make cases on splashy but ultimately inconsequential crimes, it indicates the level of scrutiny necessary to scour arcane and routine — but lucrative — contracts. If there were envelopes of cash involved, nobody has found them yet. Same goes for lavish overseas junkets, some stone, or expensive bottles of booze.
But contracts such as these are far more consequential and costly — and commonplace — than most anything yet recounted in the bevy of affidavits and charging documents fluttering around San Francisco. Lurid alleged crimes provide leverage for G-men and could lead to the demise of accused bad actors. But contracts such as these, writ large, form the basis of a working government. Or a non-working one.
And, in San Francisco, the game is that contracts tend to go to insular groups of connected operators — and contractors unwilling to play this game do not find themselves on the winning end of bids, come what may. If an equity program intended to aid small and local businesses is debased, the obvious losers are honest small and local businesses. But that’s not all.
“The cost of corruption is not measured in the money allegedly exchanged between, say, Walter Wong and Harlan Kelly,” says construction management executive Ali Altaha. “It can be measured in: how much more is it costing taxpayers to build a project?”
Separate and apart from the competency and honesty of those receiving the contracts, in an artificially constrained pool of bidders, the cost of doing business goes up. “They’ll name their price,” Altaha says.
Altaha contracted with the PUC and city for a decade, but now says he can no longer abide a system in which turning a blind eye to corruption and cronyism is a prerequisite for participation. And he has been saying this publicly for a while — since well before the erstwhile PUC director was arrested and charged by the feds.
Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left.
“Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior...
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Starting from the top, the DPH, MTA, DPW, SFO, Rec and Park, MOH is where the bulk of capital contracts are let. City Planning, MOEWD and DBI are where the entitlements are let, economic rents sought, licenses to print money stamped out onto plans.
We’re starting to get to the point where people are beginning to agree that cops can’t punish someone summarily for failing to kiss that cop’s ass. That’s what we’ve got here, city potentates who are rotating through as players setting the terms of being eligible to a contract as kissing the potentate’s ass. Increased public costs for no public benefit. It is time to put the hired help back into their box
Still haven’t seen anyone from BOS or Mayor’s offices address the rolling back the Rechology contract or addressing/revoking the monopoly on their services via a Proposition for an Ammendment to the 1932 City Charter
The even bigger scam is expecting these CM consultants to provide good representation to the SFPUC and not give away the farm on change orders to contractors or stay on top of the project and not allow a lot of delay due to not processing paperwork. Hey, it’s not their money and PUC has a Commission that will simply keep throwing more money at projects without holding the incompetent party responsible. The amount of money thrown away by CM consultants to “maintain a good working relationship with the contractor” should be criminal. But, as always, City staff and the Commission will not dish out or accept any accountability.
This should be reviewed. Oh yeah, review the scam of the Central Subway while you are at it. Where is the accountability for that fiasco? Oh yeah, the responsible person left and had no accountability. Too bad they can’t take away some of that SF Employee Retirement System money
The current Commission is a joke, made up of mainly of ex-SFPUC GM’s. Keep it in the family. I always wondered when Harlan hired a defense attorney, why didn’t the Commission question him and make a determination of whether or not he was fit to continue to serve? Oh yeah, keep it in the family as long as you can
This is why the PUC should not be allowed to sell San Francisco property such as the Balboa Reservoir to developers like Avalon Bay. It doesn’t take much to buy a commission vote in San Francisco. All sales of San Francisco property should be voted on by registered San Francisco voters not a appointed board that a bag of cash can by a vote
Given the Commission sat by while the GM easily made fools of the ratepayers under their supervision the organization should disband. They are figureheads lead by a figurehead with figurehead underlings. The Acting GM was watching the farce unfold the whole time, as were the AGMs. Power, Water, Sewer how do you justify your jobs? That’s over a million in yearly compensation for getting fleeced by 4 managers folks. Make the managers wear a camera and microphone streaming live while they are on the clock. No edits
the major reason why the member countries of the warsaw pact, with the soviet union leading, failed:
the unbendable dominance of the nomenklatura.
look up the word and you will find the exact description of SF gov
See SF Weekly, Dec 16-22 2009. “The worst run big city in the US”. The Worst-Run Big City in the U.S.
Spend more. Get less. We’re the city that knows how.
Benjamin Wachs • 12/16/2009 4:00 am What was true then is worse now