Department Responses Cgj Year Report Title Finding Response Required 2015 Responses (Agree/Disagree) 2015 Response Text

The current lowest bid-contracting environment is not optimal for the City, Needs Work since it increases costs due to additional project change orders, and it reduces the number of quality contractors willing to bid on City projects. 2014-15 San Francisco’s City Construction Program: It Board of Supervisors Disagree, partially The Board of Supervisors passed Legislation amending Chapter 6 of the Administrative Code which took effect August 1, 2015. These changes,

The complexity of the contracting environment, especially as it relates to LBEs, Needs Work among other things, incorporate some industry best practices and therefore are more likely to attract contractors familiar with the most recent reduces the pool of contractors willing to do business with the City, thereby industry innovations, allowing us to grow our contractor pool and better serve the Public. limiting vendor selection. 2014-15 San Francisco’s City Construction Program: It F3. The complexity of the contracting environment, especially as it relates to LBEs, Mayor Disagree, partially The City's contracting process can be difficult for new entrants. However, the City continually strives to improve the quality of the bid pool-by Needs Work reduces the pool of contractors willing to do business with the City, thereby attracting flew contractors, improving existing contractors, and shoring up processes to minimize non-responsible/non-responsive bids. limiting vendor selection. Effective August 1, 2015, Mayor Lee signed legislation including more than three dozen changes to Chapter 6 of the City's Administrative Code. The changes are intended to simplify and streamline the process for both contractors and City employees. The changes inco1porate some industry best practices because updated processes are more likely to attract contractors familiar with the most recent industry innovations, allowing our competitive process to better serve the public. 2014-15 San Francisco’s City Construction Program: It F4. Change orders are not managed uniformly across departments, which Board of Supervisors Disagree, partially Though departments need to abide by their respective change order policies, having a uniform change order management policy is not Needs Work exposes the City to increased project costs. practical given the differing project types and project delivery methods citywide. 2014-15 San Francisco’s City Construction Program: It F4. Change orders are not managed uniformly across departments, which Mayor Disagree, partially The jury is correct that change orders are not managed uniformly across the City. As written, Chapter 6 of the Administrative Code provides for Needs Work exposes the City to increased project costs. Office of the Controller decentralized project management for the six departments it covers (the Airport, Public Works, the Port, Recreation and Park, SF Municipal Transportation Agency, and the SF Public Utilities Commission). Though departments need to abide by their respective change order policies, having a uniform change order management policy is not feasible given the differing project types and project deliver methods citywide. While change orders are not managed uniformly across City departments, each department has its own procedures and controls in place, allowing for greater flexibility and specialization, commensurate with the various sizes and types of construction projects carried out by each department. 2014-15 San Francisco’s City Construction Program: It F5. Construction contract close out procedures are not followed, which can result Board of Supervisors Agree When the Controller's City Services Auditor (CSA) conducted an audit of the closeout procedures it found a number of shortcomings including Needs Work in the City not receiving the services it contracted to receive. lack of sufficient documentation, adequate review or verification, and adherence to existing policies and procedures. 2014-15 San Francisco’s City Construction Program: It F5. Construction contract close out procedures are not followed, which can result Mayor Disagree, partially Contract closeout can vary by project complexity and staff, and results vary depending on these and other fact-specific issues; a uniform Needs Work in the City not receiving the services it contracted to receive. Office of the Controller construction contract closeout policy would not necessarily ensure that the City receives its contracted services. In all cases, however, the City strives to follow the most efficient and effective best practices to close out projects as promptly and cost- efficiently as possible. The City's use of the Controller's City Services Auditor (CSA), in addition to other auditing mechanisms, ensures adherence to these best practices. Over the last three fiscal years, CSA has completed construction contract closeout assessments involving all six Chapter 6 departments. Based on the results of these audits and assessments of various city departments' construction contract closeout procedures, and as noted in the Jury's report, CSA found some internal control weaknesses related to the audited departments' closeout procedures, including lack of sufficient documentation, adequate review or verification, and adherence to existing policies and procedures. CSA follows up on all open (unresolved) audit recommendations every six months to ensure that departments have implemented corrective actions. 2014-15 San Francisco’s City Construction Program: It Disagree, partially n addition to the wide variety of skills the department has in-house, the use of consultants gives the department flexibility to meet the needs

The variety of construction projects in the City creates a mismatch between Needs Work of other departments and meet peak demands without the need to increase its staff, departmental budgets and overall project costs the design and engineering skills required for current projects and the skills of the Board of Supervisors staff, resulting in duplicate labor costs when outside firms are retained and excess capacity when there is a decline in construction activity. 2014-15 San Francisco’s City Construction Program: It Mayor Disagree, partially The City relies on Public Works to maintain a broad professional skillset across multiple engineering, architectural, and professional disciplines

The lack of integrated construction management systems and the failure to Needs Work represented on the Capital Planning Committee and appoints members to the General Obligation and Revenue Bond Oversight Committees follow centralized construction management policies and procedures prevents which all review and monitor activities related to construction and capital projects. the City from generating citywide construction reports 2014-15 San Francisco’s City Construction Program: It F7. The lack of integrated construction management systems and the failure to Mayor Disagree, partially The Jury is correct that there is not an integrated citywide construction management system. There has not, however, been a consistent Needs Work follow centralized construction management policies and procedures prevents Office of the Controller finding of Chapter 6 departments failing to follow centralized construction management policies, as the report notes. In addition, the City has the City from generating citywide construction reports DPW developed a coordinated capital planning and budgeting process to review and prioritize capital budget requests, coordinate funding sources and uses, and provide citywide policy analysis and reporting on interagency capital planning efforts. Oversight bodies, including general obligation and revenue bond oversight committees, as well as departmental commissions, routinely review and monitor activities related to the City's capital and construction projects under their purview. 2014-15 San Francisco’s City Construction Program: It F8. The City does not have an independent management group reviewing Board of Supervisors Disagree, partially The Jury is correct that there is not an independent management group that monitors construction; However the Board of Supervisors is Needs Work citywide construction performance reports and monitoring adherence to change represented on the Capital Planning Committee which monitors and prioritizes infrastructure investments. In addition, the Board with their orders and construction contract close out policies and procedures. independent Budget and Legislative Analyst's office regularly analyzes construction performance. Finally the CSA on a quarterly basis presents an update on the implementation of their audits to the Government Audit and Oversight Committee. 2014-15 San Francisco’s City Construction Program: It F8. The City does not have an independent management group reviewing Mayor Disagree, partially The Jury is correct that there is not an independent management group that monitors construction; instead, the City has numerous Needs Work citywide construction performance reports and monitoring adherence to change Office of the Controller independent management groups. The Capital Planning Committee, a public decision-making body that monitors, crafts, and recommends orders and construction contract close out policies and procedures. policies related to infrastructure investments, is the lead in this area. Construction contracts and projects are further reviewed by various bodies, most notably, department commissions, the Budget and Legislative Analyst, and the Office of the Controller. Further, the Board of Supervisors may exercise its authority to hold hearings related to specific projects or contracts, or general construction closeout procedures and trends. In addition, in its capacity as the City's auditing body for contracts, CSA has found in previous audits and assessments of various City departments' change order management and closeout policies and procedures that some internal control weaknesses exist. Every six months, CSA follows up on all (open) unresolved audit recommendations at a hearing at the Board of Supervisors' Government Auditing and Oversight (GAO) Committee; all departments in question are required to publicly present updates and progress reports at these hearings. 2014-15 San Francisco’s City Construction Program: It F9. San Francisco City departments do not issue final reports on construction Board of Supervisors Agree While some reports are posted online and publicly available, City departments do not issue final reports when construction projects are Needs Work projects that are readily available to its citizens. completed. 2014-15 San Francisco’s City Construction Program: It F9. San Francisco City departments do not issue final reports on construction Mayor Disagree, partially The Jury is correct that City departments do not issue final reports on all construction projects when complete. City departments do, however, Needs Work projects that are readily available to its citizens. Office of the Controller report on projects-especially those funded via the General Obligation bond program, which includes mandatory reporting procedures before, during, and after construction. In addition, Chapter 6 departments must prepare closeout and acceptance documents that must be executed per Administrative Code Section 6.22(k). All reports prepared under these regulations are posted online and publicly available. FINDINGS AND RESPONSES 2014-15 Civil Grand Jury Construction Report Department Responses Response Required 2015 Responses CGJ Year Report Title Recommendation (implementation) 2015 Response Text 2014-15 San Francisco’s City Construction Program: It R1. NONE NONE Needs Work 2014-15 San Francisco’s City Construction Program: It R2. The BoS should amend Chapter 6 of the Administrative Code to Board of Supervisors will not be implemented The Board cannot commit to timing or outcome of future legislation. Needs Work require contractor performance as an additional criterion for construction contracts. 2014-15 San Francisco’s City Construction Program: It R3. The CGJ recommends that the proposed Chapter 6 amendment Board of Supervisors will not be implemented The Board cannot commit to timing or outcome of future legislation. Needs Work make past performance a construction award criterion for all future City construction contracts including LBE subcontracts. 2014-15 San Francisco’s City Construction Program: It R3. The CGJ recommends that the proposed Chapter 6 amendment Mayor has not been, but will be, The six Chapter 6 departments (Airport, Public Works, Port, Recreation and Park, SFMTA, and SFPUC), are committed to improving the pool of contractors Needs Work make past performance a construction award criterion for all future implemented in the future who bid on City construction projects. In conjunction with the City Attorney and the Office of the Controller, the Chapter 6 departments are actively working City construction contracts including LBE subcontracts. to revise Chapter 6 to require performance evaluations and to devise procedures to consider past performance in contract awards. The departments are meeting regularly with a goal of presenting amendments to the law and associated processes to the Board of Supervisors in 2016. 2014-15 San Francisco’s City Construction Program: It R4. The Office of the Controller should implement a standardized Board of Supervisors will not be implemented Given the wide variety of project types, sizes, budgets, and complexity undertaken by the Chapter 6 departments, a “one size fits all” approach is not in Needs Work change order management policy and require all City departments because it is not accordance with best practices. to adhere to any new change order policy. warranted 2014-15 San Francisco’s City Construction Program: It R4. The Office of the Controller should implement a standardized Mayor will not be implemented The Office of the Controller, and specifically the City Services Auditor (CSA), audits and assesses departments' adherence to relevant construction policies Needs Work change order management policy and require all City departments Office of the Controller because it is not and procedures citywide, and provides technical assistance to departments as needed. As presently written, the Administrative Code calls for a to adhere to any new change order policy. warranted decentralized approach to construction management for Chapter 6 departments, leaving this authority with each department. This allows for a segregation of duties between the Office of the Controller and the departments charged with construction management. Given the wide variety of project types, sizes, budgets, and complexity undertaken by the Chapter 6 departments, a "one size fits all" approach is not in accordance with best practices. However, as recommended by CSA's May 2014 audit of citywide construction practices, the Chapter 6 departments, in conjunction with CSA, are moving forward with amendments to the Administrative Code, including potential modifications related to change order management policies. Public Works has a change order management tracking system. Change orders are tracked, categorized and regularly discussed in order to inform project management decisions. This system could be tailored to other Chapter 6 department's needs. 2014-15 San Francisco’s City Construction Program: It R5. The Office of the Controller should implement a standardized will not be implemented Although the Board of Supervisors supports the recommendation, it is not within the jurisdiction of the Board. Needs Work construction contract closeout policy and require all City Board of Supervisors departments to adhere to any new policy. 2014-15 San Francisco’s City Construction Program: It R5. The Office of the Controller should implement a standardized Mayor will not be implemented The Office of the Controller, and specifically the City Set-vices Auditor (CSA), conducts audits and assessments of departments' adherence to relevant Needs Work construction contract closeout policy and require all City Office of the Controller because it is not construction policies and procedures citywide, and provides technical assistance to departments as needed. As presently w1itten, however, the departments to adhere to any new policy. warranted Administrative Code calls for a decentralized approach to construction management for Chapter 6 departments, leaving this authority with each department. This allows for a segregation of duties between the Office of the Controller and the departments charged with construction management. Given the wide variety of project types, sizes, budgets, and complexity undertaken by the Chapter 6 departments, a "one size fits all" approach is not always in accordance with best practices. However, as recommended by CSA's May 2014 audit of citywide construction practices, the Chapter 6 departments, in conjunction with CSA, are moving forward with amendments to the Administrative Code, including potential modifications related to construction contract closeout policies. At this time, Public Works is piloting new construction contract closeout procedures; if successful, this system is designed to be shared with the other Chapter 6 departments. 2014-15 San Francisco’s City Construction Program: It R6. The BoS should request the BLA or CSA to benchmark the City’s requires further analysis A benchmarking analysis could provide important and helpful insight into best practices for how to improve the organizational structure of the City's design Needs Work design and engineering workforce organizational structure against and engineering workforce, and merits further consideration. The Board of Supervisors will confer with their independent Budget and Legislative Analyst's Board of Supervisors comparable cities and issue a report. office to assess how to best address this recommendation by January 2016.