It is not surprising that a quarter of the city’s streets are in poor condition and our city has accumulated almost $2 billion in unfunded capital needs. What is surprising is the continuing mismanagement of public works in the city, despite having the resources. The problems include unspent bond money gathering interest, projects selected by an opaque bureaucracy that do not meet the needs of the community, lax oversight of contractors’ quality of construction and unaccountable cost overruns.
Councilmember Carl DeMaio, with the backing of contractors, is now proposing to remove public input and accountability in the awarding of contracts and to limit competition. This is the same formula used by the federal government — a system that enriches contractors. This could prove costly for taxpayers, as has been seen in federal contracting, with rampant waste, fraud and abuse.
As taxpayers, we need to take a hard look at current initiatives on government contracting in the San Diego region. They are shortsighted and ultimately bad for the local economy.
On Tuesday, the San Diego City Council will vote on a proposal to streamline the Capital Improvement Program and public works contracting process. Streamlining is a fine idea, but this proposal could have long-lasting effects as to who will make contracting decisions and who will benefit from those decisions. Streamlining would change when and how council will approve public construction projects in order to move funds faster, and it cuts citizens out of the process. It has some positive features (like posting contracts online and minority business quotas), but the most significant changes are:
· removes public input on the award of contracts. Once the City Council approves projects in a budget, the mayor will be able to award contracts up to $30 million without a public hearing. This is significantly higher than other comparable jurisdictions surveyed by the independent budget analyst.
· limits competition. A new process, multi-award contracting, using a federal model will be used to select a short list of contractors for $100 million of water pipelines, and indefinite future projects. This will limit any future competition to only these short-listed contractors. The mayor will have the authority to award task orders up to $10 million to anyone on the list, including sole-sourcing. No other local jurisdiction surveyed by the independent budget analyst in the nation seems to have this process. No other private business uses it.
The city of San Diego's so-called streamlining proposal would hand out massive contracts to a handful of pre-selected large contractors and then allow those big contractors to choose and hire subcontractors without adequate standards to protect the community. Diversity, local hiring and prevailing wage will be the casualties.
The council should insist on three major changes to the proposal:
· Community members must be meaningfully involved in deciding what gets built and who actually builds projects in their neighborhoods.
· Standards must be set to ensure that these taxpayer-funded projects have a trained and certified work force and that opportunities are created for the next generation of construction workers by requiring the utilization of state-approved apprenticeship programs.
· All workers must be paid at the prevailing wage. This keeps local residents employed and contributing to the local economy. A larger, adequately paid local work force not only provides a larger tax base, but it also reduces the number of residents collecting government benefits either because they’re unable to find employment or because the employment available to them pays a wage so low that it doesn’t cover basic needs, such as shelter, food and health care.
Building infrastructure is an investment in communities and a time-tested way to create jobs in tough economic times. The investment can be leveraged to benefit communities that need the projects and the overall regional economy at the same time. By creating quality jobs in underserved communities, responsible public works contracting grows the middle class and the local economy. Imagine the spending power of local workers who are paid middle-class wages.
Studies have shown that for every dollar paid out on a prevailing wage project, $1.50 in spending is generated in local communities. This in turn allows other local businesses such as restaurants and shops to thrive, thanks to the increased spending power of workers.
Contrary to rhetoric from developers, prevailing wage has been shown to have virtually no impact on the total construction cost. The average cost of labor, including benefits and payroll taxes, accounts for less than one-quarter of construction costs, so even a 10 percent increase in wages would impact project cost by less than 2.5 percent.
Paying prevailing wage pays off in the end because it attracts more experienced workers, who are more likely to complete projects on time, on budget, and without defects that create a need for retrofits and repairs. Paying prevailing wage results in a more skilled work force and has been shown to increase productivity by as much as 20 percent.
As citizens of San Diego, we need to send the current streamlining proposal back to the drawing board to make sure our public works contracting works for the public.
Lemmon is the business manager of the San Diego County Building and Construction Trades Council AFL-CIO overseeing 22 trades affiliates and 14 joint labor-management apprenticeships.