City Council
Report
City Council Meeting: February 28, 2017
Agenda Item: 3.F
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Procurement Subject: Modification to Gafcon Contract for Citywide Prevailing Wage and Labor Compliance
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to Agreement #3142 in the amount of $220,000 with Gafcon, Inc., a California-based company, to provide citywide labor compliance and certified payroll monitoring on an as-needed basis. This will result in a three-year amended agreement with a new total amount not to exceed $300,000, with future year funding contingent on Council budget approval.
Executive Summary
In May 2016, staff executed an agreement in the amount not to exceed $80,000 with Gafcon, Inc. to provide certified payroll monitoring services for projects subject to State and Federal prevailing wage requirements. Services consist of job classification selection, certified payroll compliance monitoring, on-site interviews of workers, and enforcement if needed. The contract was executed under the City Manager’s authority based on estimated need and initially monitored 40 projects. Currently the City has 81 projects being monitored, and staff has spent approximately $53,000 of the initial $80,000 contract through February 2017. Based on a better understanding of actual use, and to ensure service provision continues, staff recommends additional contract authority, which puts the agreement at the threshold for Council approval. Staff recommends that the City Council authorize the City Manager to amend the agreement with Gafcon, Inc., by $220,000 for a new total amount not to exceed $300,000 over a three-year period.
Background
Two 2014 California laws (SB 7 and SB 854) define prevailing wage requirements, and establish responsibilities for prevailing wage payment. SB 7 establishes that Charter cities must pay prevailing wages to receive or use State funding or financial assistance for construction projects, and SB 854 introduces a public works contractor registration program, and sets additional compliance requirements. Prevailing wage law applies to any Public Works project that exceeds $15,000 for repair/maintenance and $25,000 for 2 of 3
new construction. The law requires prevailing wage payment to certain labor categories identified in the State of California Labor Code (commencing in Section 1770 et seq.) when employed for any work on or in the execution of a Public Works project. The City must 1) award public works bids in compliance with the law and report these bid awards to the California Department of Industrial Relations (DIR); and 2) ensure contractors/subcontractors register with the DIR and provide certified payroll records to the Labor Commissioner.
Staff determined that an external group with specific expertise would be best suited to monitor prevailing wage compliance, given the City’s large number of affected projects, and the detail and complexity required for effective oversight. Following a competitive process, staff contracted with Gafcon, Inc. in May 2016 to assist with prevailing wage labor compliance and payroll monitoring. The contract was executed under the City Manager’s authority based on estimated need. Staff has spent approximately $53,000 of the initial $80,000 contract through February 2017.
Discussion
City prevailing wage projects include construction and maintenance of public buildings, housing, public work infrastructure and similar facilities, and could include projects funded in part or in whole by Federal or State grants. Monthly, on average, the City has 30 projects requiring Department of Industrial Relations review and labor compliance.
The consultant verifies that job classifications called for in bids are appropriate for the scope of work, and ensures that the contractors and all of their subcontractors meet certified payroll requirements.
Staff recommends that Council approve a first modification to purchase agreement #3142 in the amount of $220,000 with Gafcon, Inc. to provide citywide labor compliance and certified payroll monitoring services for a total amount not to exceed $300,000 over three years. The modification amount is based on average annual spending by Departments and Divisions for City prevailing wage projects over the past 10 months.
Vendor/Consultant Selection
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In February 2016, the City published a Request for Proposals (RFP) for Prevailing Wage and Certified Payroll monitoring. The RFP was posted on the City's on-line bidding site. The system notified 1,125 vendors; 33 vendors downloaded the proposal, and nine proposals were received on March 1, 2016. The proposal was evaluated based on the criteria listed in the RFP, including successful prior experience working on State and Federal projects, references, project team, sample reports and cost. Gafcon, Inc. has extensive experience monitoring and reporting on prevailing wages, conducting on-site labor interviews, and reviewing certified payrolls. Gafcon also has extensive knowledge of labor laws, apprentice program requirements, and other requirements to ensure compliance with State regulations. Based on the RFP criteria and in accordance with SMMC 2.24.073, staff selected Gafcon, Inc. as the best qualified firm. The recommended modification is to increase the contract amount and extend contract length.
Financial Impacts and Budget Actions
The agreement modification to be awarded to Gafcon, Inc. is $220,000, for an amended agreement total not to exceed $300,000. Funds are available within existing budgets, and would be charged to the appropriate Division or project account based on request for oversight and labor compliance services. Future year funding is contingent on Council budget approval and budget adoption.
Prepared By: Araceli Esparza, Purchasing Services Manager Approved Forwarded to Council