PHOENIX — San Francisco's $25 billion construction portfolio, including bond-financed projects, suffers from a serious lack of oversight, according to a new
The report, titled "San Francisco's City Construction Program: It Needs Work," cites problems with transparency, reviews of progress on the city's construction program, and contractor selection.
California civil grand juries are made up of volunteer citizens charged with investigating local governments to recommend improvements.
The San Francisco jury found that the current procedures for projects, including those financed by voter-approved general obligation bonds, put the city at risk.
The report focused on the Department of Public Works.
The department handles major public buildings in the city, and is presided over by a director who reports to the city administrator. The report said that the jury investigated the construction management process based in part on audits presented at meetings of the Citizens' General Obligation Bond Oversight Committee, which is responsible for ensuring that GO bond proceeds are spent properly. Reviews of those and other audits revealed a construction management process that could be costing the city money, the jury said in its report.
"Construction projects always involve change orders, which authorize work to be added to or deleted from the original contract," the report said. "In many instances, the change order management process was weak which could expose the city to increased cost and/or delays."
There have also been deficiencies in ensuring that all contractual terms of construction contracts are met, design errors that could be costing the city more money, , the report found, adding that there have been no final reports summarizing the financial and operational outcomes of each product.
The report further found that the city and county's Board of Supervisors has no oversight of the public works department, making it the only city department the board does not oversee.
"Given the magnitude of what the city is spending, the jury felt the Board of Supervisors should at least review the progress of major building projects annually," said foreperson Janice Pettey.
The report made a number of recommendations, including amending Chapter 6 of the San Francisco Administrative Code to require consideration of past performance in awarding bids to contractors, rather than simply awarding them to the lowest bidder.
DPW spokesperson Rachel Gordon told The Bond Buyer that the department agrees with much of the report, and has already been proactive in addressing some of the issues.
"San Francisco Public Works has been taking the lead in reforming Chapter 6 of the Administrative Code and are coordinating the changes to the contracting rules to take past performance into account in the awarding of contracts," she said. "These changes should ensure the delivery of better quality projects while still maintaining contracting transparency safeguards."
The Department of Public Works, the mayor, the Board of Supervisors, and the comptroller must each file responses with the court saying whether they agree or disagree. They must explain their disagreements. Beyond that, the grand jury has no power to implement its recommendations other than its powers of persuasion.
