Loading...
HomeMy WebLinkAboutItem 8a. Study Session - Strategies to Support Local Contractors, Vendors, and Labor on Public ProjectsCouncil- Report Item 8a Department: Public Works Cost Center: 1009, 5101, 6001, 6101 For Agenda of: 09/21 /2021 Placement: Study Session Estimated Time: 60 minutes FROM: Matt Horn, Public Works Director Prepared By: Brian Nelson, Acting City Engineer SUBJECT: STUDY SESSION: STRATEGIES TO SUPPORT LOCAL CONTRACTORS, VENDORS, AND LABOR ON PUBLIC PROJECTS RECOMMENDATION 1. Receive a presentation on potential strategies to support local contractors, local vendors, and local labor on public projects; and 2. Provide preliminary direction to staff to guide alternatives evaluation, project plan, and policy development. :74101:i0IZE 1N142 With the adoption of the 2021-23 Financial Plan, the Major City Goal (MCG) for Economic Recovery, Resiliency & Fiscal Sustainability and work plan was formalized. The MCG intends to collaborate with local partners, continue to support economic recovery for all from the COVID-19 pandemic, and support a thriving local economy by supporting local businesses, arts, and culture, and downtown vitality, in addition to practicing fiscal responsibility, paying down unfunded pension liabilities, and investing in critical infrastructure. One of the approved tasks for this MCG is to establish an internal working group and hire a consultant to research various methods to support the participation of local contractors, local vendors, and local labor in public projects through workforce agreements, local purchasing requirements, alternative project delivery methods, and other options to support local businesses and workforce. The intent of this study session with the Council is to seek feedback from the Council for the purposes of generating the Project Plan for analyzing and implementing feasible local preference measures to ensure that staff and the City's consultant team have identified the appropriate pathway forward to meet Council's objectives and community expectations. Page 351 of 359 Item 8a DISCUSSION Background — Workforce Agreement Task in Major City Goal With the adoption of the 2021-23 Financial Plan, Council established a Major City Goal (MCG) of Economic Recovery, Resiliency, and Fiscal Sustainability. To achieve this goal, Council outlined a specific task to research methods to support the participation of local contractors, local vendors, and local labor in public projects through workforce agreements, local purchasing requirements, and alternative project delivery methods. This work effort has been broken into three general phases: Phase 1. Council Study Session to provide input and guidance on work effort and develop a project plan based on Council feedback. Phase 2. As framed by input and guidance from the phase one Study Session, utilize a consultant to develop a policy framework for Community Workforce Agreements (CWA), alternative project delivery, and local purchasing. Within this policy framework, identify negotiating objectives for Council consideration for CWA. Seek final Council approval of the Project Plan, including program implementation priorities. Phase 3. Council consideration of programs and policies and implementation of the same. As discussed in detail below, there are three areas of focus for this work effort. Each of the three topic areas is discussed in depth to help inform discussions during the study session so that Council can provide direction to City staff for the development and implementation of the policies and practices to support this work effort. Community Workforce Agreements 1. Definition and Purpose of a Community Work Force Agreement A Community Workforce Agreements sometimes referred to as Project Labor Agreements, or CWAs are a "pre -hire" collective bargaining agreements between a project owner and labor organizations, typically construction trade unions. A CWA establishes standard terms and conditions of employment for the qualified construction project, including work conditions, hiring procedures, wages and benefits, management rights, dispute resolution procedures, and procedures to prevent work stoppages. In addition, CWAs often include provisions to promote participation in covered projects by targeted workers and demographics, including local residents, apprentices, historically underutilized or underrepresented residents or groups, and veterans. CWAs can apply to a single project, projects with budgets over a specified threshold, different types of projects, or all projects undertaken by a project owner and must be part of the bid specifications for covered projects. Page 352 of 359 Item 8a 2. City Experience with a CWA The City entered into a CWA with the Tri-Counties Building and Construction Trades Council (Trades Council) for the SLO Water Plus Project (i.e., WRRF Upgrade) in December 2018 with the primary objective defined by the Council of prioritizing the employment of local residents. This was the first such agreement the City has approved. The agreement included a local worker participation goal of 30%. By July 2021, approximately 77% of all labor hours (70,300 hours) have been performed by workers residing in San Luis Obispo, Santa Barbara, Monterey, and Ventura Counties (i.e., "local workers"), representing a significant reinvestment of construction funds into the local economy. Table 1 presents the labor hours worked by residents of each tier on the SLO Water Plus Project. Table 1. SLO Water Plus Project Labor Hours by Tier ier Descriptio Labor Hours Percentage of To tm - AM6 Lak&r Hours 1 City of San Luis Obispo 6,004 6.5% 2 San Luis Obispo County 41,557 45.2% 3 Monterey and Santa Barbara Counties 22,719 24.7% 4 Ventura County 38 <1 % N/A Non -Local 21,662 23.6% 3. CWA Alignment with Major City Goal The City's ongoing Capital Improvement Program (CIP) includes numerous construction projects that will provide the infrastructure required for economic vitality, neighborhood wellness, housing, transportation, sustainability, active and passive recreation, public safety, cleanliness, and other basic amenities. The City's CIP budget has increased significantly with the 1.5 cent sales tax approved by the City's voters in November 2020 under Measure G; this has increased the General Fund CIP Budget to approximately $25 million per year from approximately $7.5 million per year in prior Financial Plan periods. The public projects included in the City's CIP present an opportunity to continue to promote the employment of local residents by negotiating a CWA with the Trades Council that includes a local worker participation goal. CWAs can fundamentally change the way craft workers are employed and compensated on covered projects and the way the City procures inspection and surveying services. Consequently, it will be important to evaluate how typical CWA provisions align with the successful delivery of the City's CIP. An in- depth analysis is needed to better understand various impacts, and this analysis will inform policy recommendations and negotiation objectives should Council direct staff to proceed with negotiating a CWA policy and agreement framework. Page 353 of 359 Item 8a Alternative Project Delivery 1. Definition and Purpose of Alternative Project Delivery Alternative project delivery describes capital project delivery methods that focus on collaboration between the owner, the engineer, and the contractor from design through construction. This collaborative approach can provide multiple benefits including expedited project delivery, reduced project lifecycle costs, and greater opportunity for risk mitigation. Examples of alternative project delivery methods include design -build, progressive design -build, construction manager at risk (CMAR), and public -private partnerships. 2. City Experience with Alternative Project Delivery The City has historically delivered its public projects utilizing the traditional design -bid - build (DBB) model, with certain exceptions for maintenance projects and job order contracts. This approach is consistent with prevailing municipal procurement practices throughout the state for public works construction and the Public Contract Code, which did not include provisions for alternative project delivery by general law cities until 2009. Many charter cities have since incorporated Public Contract Code provisions related to alternative project delivery into their municipal codes, where consistent with the cities' charters. Under the DBB model, separate contracts are awarded for design and construction services. The City's Financial Management Manual allows for a qualifications -based selection of professional service providers for design services; however, both City Charter Section 901 and the City's current purchasing ordinance and financial management policies require that construction contracts must be awarded to the lowest responsible bidder who provides a responsive bid. Alternative project delivery methods such as design -build (DB) combine design and construction services into a single contract. Collaboration between the engineer and the contractor under this model can provide multiple benefits, including expedited project delivery, reduced project lifecycle costs, and greater opportunity for risk mitigation. 3. Alternative Project Delivery Alignment with Major City Goal It is beyond the scope of this report to evaluate the merit of alternative project delivery as compared to traditional DBB delivery for the City's public projects, as there are various alternative delivery methods, and the considerations are unique for each project. In the context of supporting the Major City Goal, exploring how various alternative project delivery methods could allow the City to make a value -based selection of a single entity that would provide both design and construction services (i.e., the design -builder), rather than a selection based solely on price (i.e., low bid) should occur. Page 354 of 359 Item 8a The City has discretion in crafting the criteria used to determine the best value when selecting the design -builder, which could include consideration of the design -builder's geographic location, utilization of local subcontractors, and other criteria targeted at supporting the local economy. This value -based selection approach would increase the City's ability to reinvest construction expenditures in the local economy, which would otherwise go to the lowest bidder regardless of geographic location. Alternative project delivery methods could also help advance the Housing and Homelessness and Climate Action, Open Space & Sustainable Transportation Major City Goals by expediting delivery of capital improvements included in the strategic approaches and work programs for these Goals. 4. Considerations for City's Capital Improvement Program Delivery With the increased demand on limited City staff to deliver an ambitious CIP, alternative project delivery methods could be an important tool to aid the cost-effective and efficient delivery of the City's public projects while supporting local business. Incorporation of alternative project delivery methods into the City's Financial Management Manual would require changes to the Municipal Code and the City Charter and any Charter amendment would require voter approval. The legal analysis of alternative delivery methods available to the City and development of policies and procedures to implement this procurement approach is part of this work effort at some level. However, given the significance of the structural changes to the City's legislative framework that would be necessary to implement any such changes, staff is seeking Council direction on the threshold level of interest the Council has in evaluating and pursuing these changes, the relative priority and scope of the work effort Council would like to have directed at this piece of the Project Plan, and the priority of timing on this effort. The City's Financial Management Manual defines the thresholds City staff shall follow to procure goods, professional services, consulting services, public projects, and job order contracts. Local Purchasing 1. Definition and Purpose of Local Purchasing Policies While the CWA and alternative project delivery approaches in the preceding sections focus on opportunities to reinvest capital expenditures into the local economy, a local purchasing policy would allow the City to leverage its operational expenditures (City funds for goods and services)— which comprise a significant portion of the City's budget — to support local workers and businesses. Page 355 of 359 Item 8a Local purchasing policies are purchasing procedures that give preference to local vendors when procuring goods and services. These policies are designed to reinvest public expenditures into the local economy and support economic growth while preserving competitive procurement requirements. Local purchasing policies encourage, when feasible and in the interest of the City, procurement from local vendors and aims to reinvest public expenditures into the local economy to support economic growth. 2. City Experience with Local Purchasing Policies The City's Financial Management Manual defines the procedures that City staff follow to procure goods and services, which generally require competitive bidding of some form. Services are procured through a Request for Qualifications (RFQ) or Request for Proposals (RFP) process, both of which allow for consideration of factors other than price. Goods are procured through a Request for Bids (RFB) or Informal Quote process, with the lowest price used as the basis of award. The City's procurement policies do not currently include consideration of the respondent's geographic location when evaluating proposals for goods and services, with the exception of a narrowly defined local preference for vendors as defined in Municipal Code 3.24.060: "When the purchase can be made [from a cooperative agreement] ...the local dealer within the city limits can provide the same [product] identified in cooperative agreement at or below the cooperative net cost." Cooperative purchasing, also referred to as cooperative procurement or co-op contracts, allows two or more government entities to combine their purchasing power to buy goods and services through a common contract, so long as that contract was competitively solicited by at least one public agency in accordance with otherwise applicable public purchasing laws. In other words, it eliminates the need for multiple agencies to issue successive solicitations for the same goods and services, where one agency has issued a solicitation and the chosen vendor has committed to providing the same goods and services on the same terms to other public agencies. 3. Local Purchasing Policy Alignment with Major City Goal An amended local purchasing policy beyond what is currently possible under the City's Municipal Code could help advance the Major City Goal by allowing local businesses to be more competitive when responding to City solicitations. The policy could be structured to allow the location of respondents to be considered by the City when reviewing bids, quotations, and proposals from prospective vendors. For services, proposal evaluation could include a criterion based on the location of the vendor. For goods, quotes from local vendors could be discounted by a specified percentage when determining the lowest price. Local vendors would have a greater chance of being awarded purchase orders and contracts by the City if a local purchasing policy were implemented. Similar programs have been implemented by charter cities throughout the state. Page 356 of 359 Item 8a When considering a local purchasing policy, it should be reviewed under the context of overall economic impact and climate action goals. Consideration of environmental and social criteria are important factors when sourcing goods and services, as is the overall economic impact through local workers and business support. Local and sustainable purchasing and the overall economic impact will therefore be evaluated concurrently in the proposed policy update. However, incorporation of a local purchasing considerations must be carefully crafted to ensure compliance with state, statutory, and constitutional requirements that are applicable to Charter cities and would require changes to the Municipal Code and purchasing policies adopted by resolution. The next steps include a more comprehensive legal analysis of local purchasing preferences. Based on these stipulations, the Purchasing Policy update scheduled before Council in Winter of 2021 considers broadening both the Local Preference and Sustainable Purchasing sections for integration into the Municipal Code and the City's Financial Management Manual. Previous Council or Advisory Body Action Council adopted the FY21/23 Financial Plan at the June 1, 2021 meeting. Included within the programs and projects identified within Major City Goal of Economic Recovery, Resiliency, and Fiscal Sustainability was a task/action with Strategic Approach #1.1f, which stated: "Hire a consultant, support legal review, and establish an internal working group and hire a consultant to research methods to support local contractors, local vendors, and labor through workforce agreements, local purchasing requirements, alternative project delivery methods, and other options to support local businesses and employees. The Community Services Group will be leading this effort". Policy Context Article IX of the City Charter sets forth the general requirements for public works contracts and purchases of equipment, services and supplies. Chapter 3.24 of the Municipal Code describes the procedures for payment of claims and purchases, which are further detailed in the City's Financial Management Manual/Purchasing Policy. Public Engagement Based on feedback received from Council, staff will coordinate with local stakeholders who could potentially be affected by changes to the City's procurement policies, including the San Luis Obispo Chamber of Commerce, Downtown SLO, the SLO County Builders Exchange, the Tri-Counties Building and Construction Trades Council, and local contractors and vendors. Page 357 of 359 Item 8a CONCURRENCE The Public Works and Utilities Departments concurs with the recommended action requesting Council feedback on this Major City Goal topic. ENVIRONMENTAL REVIEW The California Environmental Quality Act does not apply to the recommended action in this report because the action does not constitute a "Project" under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: Yes Funding Identified: Yes Fiscal Analysis: Budget Year: 2021-22 The appropriated budget for FY 2021-22 allocated $175,000 to hire necessary consultant support for this effort. Since four of the City's major funds will benefit from this analysis, the cost was proportionally shared between the General Fund and three enterprise funds - Water, Sewer, and Parking. Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ 105,000 $ $ $ Water Fund $ 26,250 Sewer Fund $ 26,250 Parking Fund $ 17,500 Total $ 175,000 $ $ $ STUDY SESSION FRAMEWORK FOR FEEDBACK TO STAFF At this study session, Council will receive a summary presentation of this report, hear input from the public, and provide questions and feedback to staff to guide further work program development. Below are a series of general focus areas and questions that Council may want to use to guide the discussion when providing feedback to staff. More specific questions will be presented and more detailed Council direction will be sought at subsequent Council meetings on this topic: Page 358 of 359 Item 8a Question #1. Do the methods identified (CWAs, alternative project delivery, and local purchasing policies) align with Council's objective of supporting local workers and local businesses? Question #2a. Does Council want staff to further evaluate each method discussed, and/or are there specific or additional methods that Council wishes to include within the scope of further consideration and analysis by staff and consultants? Question #2b. Does Council want to review the preferred methods at the same time with one action, or would Council be amenable to reviewing and taking action individually on these methods based upon resources available to implement? Question #3. Is Council supportive of amending the City Charter if required to implement alternative project delivery and local purchasing policies? Question #4. Does Council still support implementation of local purchasing policies for equipment, goods, and services? Question #5a. Is it the Council's primary objective in expanding the scope of CWA application that CWAs be used to require employment of local residents — both union and non -union? Question #5b. Is Council's objective in pursuing a CWA increased participation in the City's public projects by local contractors? Question #6. Are there other priority objectives or specific issues Council would like staff to consider when identifying negotiating objectives for a CWA? Would Council like to model a CWA agreement on the WRRF Upgrade Project CWA? Question #7. Have the correct stakeholders been identified or would Council like to include additional stakeholders in the evaluation? Based on feedback received from Council during the study session, staff will develop the project plan for the preferred methods of local economic support and return to Council for further direction regarding considerations for permanent policies and programs. Council's feedback will provide staff direction on strategy and scope and allow staff to develop key deliverable and additional timeframes for implementation with available resources in Phase 2. ATTACHMENTS None. Page 359 of 359 ONN 11 J 1• :101InUffe1►l0uIIM■I"J:l• 1 ` YY I • RECOMMENDATIONS 1. Receive a presentation on potential strategies to support local contractors, local vendors, and local labor on public projects; and 2. Provide preliminary direction to staff to guide alternatives evaluation, project plan, and policy development. MAJOR CITY GOAL Economic Recovery, Resiliency & Fiscal Sustainability In collaboration with local partners, continue to support economic recovery for all from the Covid-19 pandemic and support a thriving local economy by supporting local businesses, arts and culture, downtown vitality, practicing fiscal responsibility, paying down unfunded pension liabilities, and investing in critical infrastructure. ECONOMIC RECOVERY, RESILIENCY, AND FISCAL SUSTAINABILITY HOUSING AND HOMELESSNESS FY 2021-23 FINANCIAL PLAN Work Program Community Workforce Agreement Study Research methods to support local contractors, local vendors, and labor through workforce agreements, local purchasing requirements, alternative project delivery methods and other options to support local businesses and workers. STUDY SESSION OBJECTIVES 1. Review potential methods to advance Major City Goal of Economic Recovery, Resiliency & Fiscal Sustainability; 2. Identify preferred methods; and, 3. Provide feedback to staff to facilitate development of project plan and guide work effort. 0 LI METHODS TO SUPPORT THE LOCAL ECONOMY Community Workforce Agreements Alternative Project Delivery Local Purchasing Policies GAT Y Ofi ��xs o4 Capital Operational Expenditures Expenditures Local Purchasing Policies Community Workforce Agreements Alternative Project Delivery COMMUNITY WORKFORCE AGREEMENT DEFINED A Community Workforce Agreement (CWA) is a pre -hire collective bargaining agreement between a project owner and organized labor. The agreement establishes the terms and conditions of employment for the covered project. Also known as a project labor agreement agreement, project stabilization agreement, and community partnership agreement. COMMUNITY WORKFORCE AGREEMENT Alignment with Major City Goal �_---J Allows for preferential hiring of local workers Currently in place on WRRF Upgrade Project \l I ATVA,C11MF.NT C CITY OF SAN VERY FAC]LITY PROI[t e WATER RESi7 CRA"VEST FORM it this farm la the Ipplicabk gars- Plca?e ca11�Mc wuNkt<and for.acsma aemailioBYalrw Plc,xc Pnneyour Fax s`7. f. ; Pl�sss re � mre Walcel. ARa fast 6 �IFied beb 1 t Ill "C4_— remen W(+Ikela a88P drel full ll tltc Nn�n$ sT1 �c then yP�� ��f r your teWrils. Union receiP 1 and keep cnP to venfy r mei [,Community V.'[11kFOfCi Al;u"'enC 4nifioelion ReF�° �covery Facility Prajcc Ille Prol�t shall be frrrrn 4'flided tnst Transmiasio° work+xt an in ltr+u Water Reevutts: Fitat. Area R<tidenlu tesidlnE The City of San Lais p�u� all M t11e Cnnatfuilin � ���,�de� aMxhed liscaf ip tea' �� w,�n nariacr���,�I,mh cot er theC �5aM�a dfior�m�y��end �n��a dk sof whe�ah Pu�d Ube re they lia 9i C uoty.lW1� ae l3l areas, nPltYt �^ ssitdinS widr of these du Sack to the f z this faro' rokrtcd to as Laval Ittsi Uniun Use Ud7" section un the nezl Page xd ° tomPlem t� a �P7 of [Iris form Fa* 7'vuT fetl0fds .1_ '1'llk:lolnl(ac[M.. Be yyeta r rc9u�nB CpNTR,4,CfOR USE ONLY fHte: — FaxNL--L, Union I.oeal # � Ta: .iw Watk7bKeC" na Rued By: n. Comm Frew: CoinP°ny" Car�tui Fax: [omm� Phate: Lam'-- PF WORIfFRS PLl:ABE PItOVIUE )fE WI'1'li i!•'OLI.fiWT"1G 11N[ON CR liU. A Non�ber Rapon Time Jatncs^'art Loyal RcsidcN of M"t Date frcation t wor>o Crag Claesi mrcr. ur rc,.IlYsnatch Deeded f,,e„ Plumbar. w APPsentia cu.7 — TVBTAL K.D�yRB REQUE$TEU to the f0 v�iue � a� urdicated below. i Ad&cse'.— Pleouhave—,keA0'WP t so:— 1}tr•xileFax:— prgert Name—pn�ileTzl: — Rapart oo: — Canmscnt or Seeial lneuusbona: Cpnnntmily Wel%farce As MM 40 Civ of San Luis phI51N LABOR HOURS WRRF UPGRADE PROJECT Ventun <1 City of San Luis Non -Local Obispo 9:10/. 6% Goal: 30% an Luis po County 44% ALTERNATIVE PROJECT DELIVERY DEFINED Alternative project delivery describes capital project delivery methods that focus on collaboration between the owner, the engineer, and the contractor from design through construction. Examples include design - build, construction manager at risk, and public -private partnerships. ALTERNATIVE PRO'�CT DELIVERY Alignment with Major City Goal Consideration of location when �o making value -based selection of F�{\ team Greater ability to keep construction funding local $ Streamline CIP delivery E O J LOCAL PURCHASING POLICIES DEFINED Purchasing procedures that give preference to local vendors when procuring goods and services. These policies are designed to reinvest public expenditures into the local economy and support economic growth while preserving competitive procurement requirements. LOCAL PURCHASING POLICIES Alignment with Major City Goal Potential to leverage City's capital It & operational expenditures Consider location of respondents t to City RFQs, RFPs & RFBs Increase competitiveness of local o,.OAn businesses 0 Q J RESPONSE TO COUNCIL QUESTIONS NEXT STEPS • Phase 1 — Council Study Session to provide input and guidance on work effort and to inform Project Plan development. • Phase 2 — Utilize a consultant to develop a policy framework for Community Workforce Agreements (CWA), alternative project delivery, and local purchasing. Within this policy framework, identify negotiating objectives for Council consideration for CWA. Seek final Council approval of the Project Plan, including program implementation priorities. • Phase 3 — Council consideration of programs and policies and implementation of the same. STAKEHOLDERS • Chamber of Commerce • Downtown SLO • SLO County Builders Exchange • Tri-Counties Building and Construction Trades Council • Local Contractors • Local Vendors RECOMMENDATIONS 1. Receive a presentation on potential strategies to support local contractors, local vendors, and local labor on public projects; and 2. Provide preliminary guide alternatives direction to staff to evaluation, project plan, and policy development. QUESTIONS FOR COUNCIL Question #1. Do the methods identified (CWAs, alternative project delivery, and local purchasing policies) align with Council's objective of supporting local workers and local businesses? Question #2a. Does Council want staff to further evaluate each method discussed, and/or are there specific or additional methods that Council wishes to include within the scope of further consideration and analysis by staff and consultants? Question #2b. Does Council want to review the preferred methods at the same time with one action, or would Council be amenable to reviewing and taking action individually on these methods based upon resources available to implement? Question #3. Is Council supportive of pursuing a City Charter amendment if required to implement alternative project delivery and local purchasing policies? Question #4. Does Council still support implementation of local purchasing policies for equipment, goods, and services? Question #5a. Is it the Council's primary objective in expanding the scope of CWA application that CWAs be used to require employment of local residents — both union and non -union? Question #5b. Is Council's objective in pursuing a CWA increased participation in the City's public projects by local contractors? Question #6. Are there other priority objectives or specific issues Council would like staff to consider when identifying negotiating objectives for a CWA? Would Council like to model a CWA agreement on the WRRF Upgrade Project CWA? Question #7. Have the correct stakeholders been identified or would Council like to include additional stakeholders in the evaluation?