SR 03-27-2018 3I
City Council
Report
City Council Meeting: March 27, 2018
Agenda Item: 3.I
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Procurement
Subject: Second 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 second modification to Contract No. 10435, in the amount of $600,000 for
three years with two additional one-year renewal options with Gafcon, Inc., a California-
based company, to provide citywide State and Federal labor compliance and certified
payroll monitoring on an as-needed basis. This will result in a five-year amended
agreement with a new total amount not to exceed $900,000, with future year funding
contingent on Council budget approval.
Executive Summary
Since 2016, Gafcon, Inc. (Gafcon) has provided certified payroll monitoring services for
city 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. Although a formal solicitation was
conducted, the original three-year contract was executed under City Manager authority
as a pilot to ensure compliance with state-mandated requirements in a timely fashion. At
the time, staff did not have a full understanding about the quantity of projects that would
require monitoring. The first modification on February 28, 2017, addressed this issue as
staff developed a better understanding of actual use. As of the first modification, Gafcon
was monitoring 81 projects. Gafcon is currently monitoring 105 active projects citywide.
Due to an increase in the number of projects currently monitored, in anticipation of
future large-scale projects, and to support the addition of Davis-Bacon Act Federal
Prevailing Wage compliance monitoring, staff recommends amending the agreement
with Gafcon in the amount of $600,000 for three years, with two additional one-year
renewal options, for a new total amount not to exceed $900,000 over a five-year period.
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Background
Two 2014 California laws (SB 7 and SB 854) define prevailing wage requirements, and
establish responsibilities for prevailing wage payment. Prevailing wage law applies to
any Public Works project that exceeds $15,000 for repair/maintenance and $25,000 for
new construction. The law requires prevailing wage payment to certain labor
categories identified in the State of California Labor Code (commencing in Section
1770et 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.
On May 31, 2016, following a formal Request for Proposals (RFP), under City Manager
authority, staff executed agreement #3142 in the amount not to exceed $80,000 over a
three-year period with Gafcon to provide certified payroll monitoring services for projects
subject to State and Federal prevailing wage requirements.
On February 28, 2017 (Attachment A), a first modification to Contract No. 10435 (CCS),
formerly known as agreement #3142, was approved by Council in the amount of
$220,000 over a three-year period with a new total amount not to exceed $300,000.
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. Gafcon is currently monitoring 105
active projects Citywide.
Gafcon ensures that the Prime Contractor and Subcontractors comply with all California
Labor Codes as outlined by California State Department of Industrial Relations (DIR).
During the span of a project, Gafcon assists with the following:
Audit of certified payroll records to assure compliance with laws/regulations;
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Compliance with apprenticeship laws/regulations and training fund contributions;
Identifies labor compliance violations and resolves issues and calculates
applicable penalties/fines;
Conducts on-site inspections and worker interviews;
Provides the City progress payment and withhold recommendations based on
the contractor’s compliance with labor laws/regulations through project close-out.
Gafcon will now also monitor Federal Davis-Bacon Act prevailing wage compliance
requirements. This work has been done on a case-by-case basis individually by various
contractors. Adding this scope to the existing contract with Gafcon will afford continuity
by providing one point of contact. The City has three to five federally-funded projects
which require adherence to federal and state prevailing wage laws. The added scope
for this work would be minimal as three to five projects represent only approximately
three to five percent of the total number of projects monitored.
The larger projects currently being monitored by Gafcon include: City Services Building,
Clean Beaches Initiative, Water Main Replacement, and Parking Structure Repairs.
These are larger projects that require significant labor compliance and monitoring.
Gafcon also oversees and manages the City’s Labor Compliance Program for Prop 84-
funded projects, which includes annual reporting to DIR. The two additional one-year
renewal options would ensure the projects mentioned above continue to be monitored
efficiently and would ensure a smooth project close-out.
Anticipated future large-scale projects include the City Yards Modernization Project,
with a requested project budget of $114,000,000, and Fire Station #1, with a requested
project budget of $41,000,000. Of the $600,000 requested for this second modification,
approximately half will fund compliance monitoring for the current and future large-scale
projects mentioned above. For example, the City Services Building alone will budget
approximately $125,000 for Prevailing Wage and Labor Compliance charges.
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Gafcon has agreed to honor their pricing for the two additional one-year renewal option
terms and the additional scope. The modification amount is based on a monthly
spending average of $14,700 by Departments and Divisions for a steadily increasing
number of City prevailing wage projects since May 2016. Staff recommends the
approval of a second modification to Contract No. 10435 (CCS) in the amount of
$600,000 with two additional one-year renewal options with Gafcon to provide citywide
State and Federal labor compliance and certified payroll monitoring services for a total
amount not to exceed $900,000 over five years.
Financial Impacts and Budget Actions
The contract modification to be awarded to Gafcon is $600,000 with two additional one-
year renewal options, for an amended agreement total not to exceed $900,000 over a
five-year period. 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
Attachments:
A. February 28, 2017 Staff Report (Weblink)
B. Gafcon Oaks Form
REFERENCE:
Modified Contract No.
10435
(CCS)