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Measure S changes how SJ contracts public works projects

Published on 10/12/18, 10:00 AM

Will this make the public bidding process more efficient or corrupt?

How does the process work now?

When San José wants to build a public works project, like improve a park or playground, that costs between $100K and $5M, the City has to publicly request bids from contractors. Currently, San José awards these contracts to the cheapest bidder. In theory, this public bidding process would lead to hiring the least expensive contractor, but in practice, businesses can potentially game the process by submitting artificially low bids and later inflate their "change orders."
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Um, that’s not cool

The City Council thought so too. They put Measure S on the ballot to:
  • Change the procurement criteria for public works projects
  • Modify the public bidding threshold for public works projects to $600K and $1M (subject to inflation)
  • Lower the threshold for "Design-Build" contracts from over $5M to $1M
Measure S would allow the City to consider additional criteria for hiring contractors, like their propensity to be on budget and on time, comply with labor laws, and have relevant experience. An independent panel would review all bids, without seeing the bid amount, to consider the contractor's qualifications, aka Best Value Contracting. SF and the UC system uses this evaluation model too. Supporters of Measure S say only using the low-cost requirement can hamper the City's ability to contract quality construction services, and, paradoxically, increase overall costs.

Relatedly, the city can currently skip the public bidding process for DB contracts, which is where a single contractor handles the design and construction of a project, as long as it saves time and money. Measure S would lower the threshold for DB contracts from $5M to $1M, which would give the City more flexibility to bypass the public bidding process.

What’s the flip side?

We haven't found any published statements against Measure S, but based on similar policies in other states, critics have argued that allowing additional public bidding criteria could make the process more subjective, leading to nepotism and corruption. While the current public bidding process can accrue additional costs overtime and extend timelines, it can also be argued that it's concrete enough to prevent government officials from modifying the criteria to give their buddies contracts.

It’s a balancing act though. If the city requires too many projects to be publicly bid on, then public works projects become painfully slow and expensive; if it restricts the number of projects, then businesses with established government connections may have an advantage to win contracts, reducing competition.

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