SEC. 6.22. PUBLIC WORK CONSTRUCTION CONTRACT TERMS AND WORKING CONDITIONS.

All construction Contracts awarded under this Chapter 6 by the City shall contain the following minimum terms and conditions:

(a) Bonds. Before the execution of any Contract for Public Work or Improvement in excess of $25,000, the Department Head shall require the successful Bidder to file corporate surety bonds for the faithful performance thereof and to guarantee the payment of wages for services engaged and of bills contracted for material, supplies and equipment used in the performance of the Contract. Each bond shall be for a sum not less than 100% of the awarded Contract amount.

The City, acting through the City Administrator, intends to provide guarantees to private bonding assistance companies and financial institutions in order to induce those entities to provide required bonding and financing to eligible Contractors bidding on and performing City Public Work Contracts. This bonding and financial assistance program is subject to the provisions of Administrative Code Chapter 14B.

(b) Insurance. All construction Contracts awarded under this Chapter 6 must conform to the insurance requirements established by the Risk Manager. The Risk Manager shall develop uniform insurance requirements for City Contracts subject to this Chapter 6. The Risk Manager shall review and update such insurance requirements as necessary to protect the City’s interests.

Every Contractor and subcontractor shall comply with the provisions of California Labor Code Section 3700. Prior to commencing the performance of work under any Public Work Contract, the Contractor and all of its subcontractors shall file with the awarding department a certificate of insurance against liability for workers compensation or proof of self-insurance in accordance with the provisions of the California Labor Code.

(c) Indemnification. All construction Contracts awarded under this Chapter 6 shall require that the Contractor fully indemnify the City to the maximum extent provided by law, such that each Contractor must save, keep, bear harmless and fully indemnify the City and any of its officers or agents from any and all liability, damages, claims, judgments or demands for damages, costs or expenses in law or equity that may at any time arise.

This indemnification requirement may not be waived or abrogated in any way for any Contract without the recommendation of the Risk Manager and the express permission and approval of the Board of Supervisors.

(d) Assignment. No Contract shall be assigned except upon the recommendation of the Department Head concerned and with the approval of the Mayor, relative to the department under the Mayor's jurisdiction, or the approval of the board or commission concerned for departments not under the Mayor.

(e) Prevailing Wages. All Contractors and subcontractors performing a Public Work or Improvement for the City shall comply with the requirements of Articles 101 through 107 of the Labor and Employment Code, as applicable.

(f) Hours and Days of Labor. Contractors and subcontractors performing a Public Work or Improvement for the City shall comply with the Hours and Days of Labor requirements of Labor and Employment Code Article 105.

(g) Local Hiring Policy. All Contracts and subcontracts for performance of Public Works or Improvements that exceed the Threshold Amount are subject to the requirements of the San Francisco Local Hiring Policy for Construction as set forth in Chapter 82 of the Administrative Code (“Local Hiring Policy”) and shall include compliance with the Local Hiring Policy as a material term of the Contract, directly enforceable by the City as described therein. As a condition of performance of Project Work, as that term is defined in Administrative Code Section 82.3, each Contractor and subcontractor agrees: to comply with all provisions of the Local Hiring Policy; that provisions of the Local Hiring Policy are reasonable and are achievable by the Contractor or subcontractor, including the reporting requirements and consequences for noncompliance described in Chapter 82 of the Administrative Code; and that the Contractor or subcontractor had a full and fair opportunity to review and understand terms of the Local Hiring Policy, in consultation with counsel if so desired.

(h) Modifications - Requirements. If it becomes necessary in the prosecution of any Public Work or Improvement Contract to make alterations or modifications or to provide for extras, such alterations, modifications or extras shall be made only on written recommendation of the Department Head responsible for the supervision of the Contract, together with the approval of the Mayor or the board or commission, as appropriate to the department, and also the approval of the Controller, except as hereafter provided. The Mayor or the board or commission, as appropriate to the department, may delegate in writing the authority to approve such alterations, modifications or extras to the Department Head, except as provided below. The Controller may delegate in writing the authority to encumber funds from prior appropriations for such alterations, modifications or extras

to the Department Head prior to the certification for payment. Such authority, when granted, will clearly state the limitations of the changes to be encompassed.

(1) Increasing or Decreasing Price. Alterations, modifications, or extras in any Contract, which will increase or decrease the Contract cost or scope, may be made or allowed only on the written recommendation of the Department Head responsible for the supervision of the Contract stating the amount and basis for such increase or decrease. For any cumulative increase or decrease in price in excess of 10% of the original Contract price or scope, the Department Head shall obtain the approval of the Mayor or the board or commission as appropriate and also the approval of the Controller notwithstanding any delegation provided for above.

sible for the supervision of the Contract stating the amount and basis for such increase or decrease. For any cumulative increase or decrease in price in excess of 10% of the original Contract price or scope, the Department Head shall obtain the approval of the Mayor or the board or commission as appropriate and also the approval of the Controller notwithstanding any delegation provided for above.

(2) Extensions of Time. Upon finding that work under a construction Contract cannot be completed within the specified time because of an unavoidable delay as defined in the Contract, the Department Head may extend the time for completion of the work. If the cumulative extensions of time exceeds 10% of the original Contract duration, the Department Head shall obtain the approval of the Mayor, board or commission, as appropriate to the department notwithstanding any delegation provided for above. The Department Head may seek such approval after completion of the work if the Department Head makes a written finding in the time extension that no basis exists to assess liquidated damages for delay against the Contractor. All time extensions shall be in writing, but in no event shall any extension be granted subsequent to the issuance of a certificate of final acceptance.

(A) Time Extension Not Waiver of City's Rights. The granting of an extension of time because of unavoidable delays shall in no way operate as a waiver on the part of the City or the Department Head, Mayor, board or commission of the right to collect liquidated damages for other delays or of the right to collect other damages or of any other rights to which the City is entitled.

(B) No Extension Granted When Contract Based on Time Estimates. When any Award of Contract has been made in consideration, in whole or in part, of the relative time estimates of Bidders for the completion of the work, no extension of time may be granted on such Contract beyond the time specified for completion, unless the liquidated damages for each day the work is uncompleted beyond the specified time shall be collected; provided, however, that this shall not apply to unavoidable delays as specified in the Contract.

(C) Avoidable and Unavoidable Delay; Limitation of Damages for Delay. The Department Head administering the Public Work or Improvement shall have the authority to specify in the Contract the delays that shall be deemed avoidable or unavoidable. The City shall not pay damages or compensation of any kind to a Contractor because of delays in the progress of the work, whether such delays be avoidable or unavoidable; provided, however, the City may pay for (1) delays caused to the Contractor by the City and (2) such unavoidable delays as may be specifically stated in the Contract. Such latter delays will be compensated for only under the conditions specified in the Contract.

compensation of any kind to a Contractor because of delays in the progress of the work, whether such delays be avoidable or unavoidable; provided, however, the City may pay for (1) delays caused to the Contractor by the City and (2) such unavoidable delays as may be specifically stated in the Contract. Such latter delays will be compensated for only under the conditions specified in the Contract.

(D) Notice of Delay Required. The Contractor shall promptly notify the Department Head in writing, of all anticipated delays in the prosecution of the work and, in any event, promptly upon the occurrence of a delay, the notice shall constitute an application for an extension of time only if the notice requests such extension and sets forth the Contractor's estimate of the additional time required together with a full recital of the causes of unavoidable delays relied upon. The Department Head may take steps to prevent the occurrence or continuance of the delay, may classify the delay as avoidable or unavoidable, and may determine to what extent the completion of the work is delayed thereby.

(i) Liquidated Damages. Any Contract may provide a time within which the Contract work, or portions thereof, shall be completed and may provide for the payment of agreed liquidated damages to the City for every calendar or working day thereafter during which such work shall be uncompleted.

(j) Progressive Payments Authorized; Retentions. Any Contract for construction services may provide for progressive or milestone payments, if the Advertisement For Bids shall so specify. Each progress or milestone payment shall constitute full compensation for the value of work performed

and materials furnished for a specified period, less amounts withheld as a result of dispute or as required by law.

(1) For all Contracts entered into on or after the effective date of this subsection 6.22(j), from every progress payment, the City shall hold 5% in retention.

(2) Notwithstanding the subsection 6.22(j)(1) above, the City may hold greater than 5% but not more than 10% in retention if the Department Head responsible for the Public Work determines that the Public Work or Improvement is substantially complex and therefore warrants a higher retention amount, and the retention amount is specified in the Advertisement For Bids. For Contracts with retention amounts greater than 5%, if the Department Head responsible for the Public Work determines that the Contract is 50% or more complete, that the Contractor is making satisfactory progress, and that there is no specific cause for greater withholding, the Department Head, upon the written request of Contractor, may authorize one of the following two options: (A) the City shall release part of the retention to the Contractor so that the amount held in retention by the City, after release to the Contractor, is reduced to an amount not less than 5% of the total value of the labor and materials furnished, and the City shall proceed to retain 5% of any subsequent progress payment under the Contract; or (B) the City shall continue to hold the already withheld retention amount, up to 5% of the total Contract price, and shall not deduct further retention from progress payments.

(3) The Department Head shall authorize the release of retention, in whole or in part, for work completed by subcontractors certified by CMD as LBEs. The Department Head shall do so only upon a written request by the Contractor certifying (A) the work by the certified LBE subcontractor is completed and satisfactory in accordance with the plans and specifications for the project; (B) the total amount paid to the certified LBE subcontractor by the Contractor as of the date of the written request and the total amount of the subcontract; and (C) the amount of retention associated with the work performed by the certified LBE subcontractor. Following a release of such retention, and in order to calculate retention and retention withholding from further progress or milestone payments, the City will reduce the total retention required under the foregoing paragraphs (1) and (2) by the amount paid to the certified LBE subcontractor(s) for whom the City released the retention. The release of retention under this subsection 6.22(j)(3) shall not reduce the responsibilities or liabilities of the Contractor or its surety under the Contract or applicable law.

ress or milestone payments, the City will reduce the total retention required under the foregoing paragraphs (1) and (2) by the amount paid to the certified LBE subcontractor(s) for whom the City released the retention. The release of retention under this subsection 6.22(j)(3) shall not reduce the responsibilities or liabilities of the Contractor or its surety under the Contract or applicable law.

(4) The Department Head shall authorize the release of retention, in whole or in part, for work completed by subcontractors under any Public Work Contract awarded under this Chapter 6 with a duration of more than two years. The Department Head shall do so only upon a written request by the Contractor certifying (A) the work by the subcontractor is completed and satisfactory in accordance with the plans and specifications for the project; (B) the total amount paid to the subcontractor by the Contractor as of the date of the written request and the total amount of the subcontract; and (C) the amount of retention associated with the work performed by the subcontractor. The City may issue or authorize the release of retention within six months of the date of the request. Following a release of such retention, and in order to calculate retention and retention withholding from further progress or milestone payments, the City will reduce the total retention required under the foregoing subsections (1) and (2) by the amount paid to the subcontractor(s) for whom the City released retention. The release of retention under this subsection 6.22(j)(4) shall not reduce the responsibilities or liabilities of the Contractor or its surety under the Contract or applicable law.

(5) Retention shall be withheld solely for the benefit and protection of the City.

(6) When the Department Head responsible for the Public Work determines that the Contract is 98% or more complete, the Department Head may reduce retention funds to an amount equal to 200% of the estimated value of work yet to be completed, plus any amount necessary to cover offsets by the City for liquidated damages, defective work, stop notices, forfeitures, and other charges. The City shall release retention to the Contractor upon the following conditions: (A) the Contractor has reached final completion under the Contract terms and conditions and (B) the Contract is free of offsets by the City for liquidated damages, defective work and the like, and is free of stop notices, forfeitures, and other charges.

s, defective work, stop notices, forfeitures, and other charges. The City shall release retention to the Contractor upon the following conditions: (A) the Contractor has reached final completion under the Contract terms and conditions and (B) the Contract is free of offsets by the City for liquidated damages, defective work and the like, and is free of stop notices, forfeitures, and other charges.

(7) For all Contracts awarded under this Chapter 6, in no event shall the City be liable for interest or charges arising out of or relating to the date the City issues any progress, milestone, or other payment, or the date the City releases all or part of the retention, except that the City will pay interest at the legal rate, as set forth in Section 685.010(a) of the California Code of Civil Procedure, as may be amended from time to time, on any improperly withheld amounts commencing no earlier than 90 days after the date the City should have made any progress payment or released all or part of the retention. Under no circumstances shall the legal rate of interest paid by the City under this provision exceed 10% per annum. The payment of interest under this provision is the limit of the City's liability with respect to any claim for interest on improperly withheld amounts.

(k) Inspection and Acceptance of Completed Work; Final Payment. The Department Head shall be responsible for the inspection and acceptance of Public Works or Improvements on completion. Such acceptance shall be in writing and shall include the certificate of the Department Head concerned that the work covered by the Contract has been fully and satisfactorily completed in accordance with the plans and specifications therefor. Receipt of copy of such acceptance in writing shall constitute the Controller's authority to complete any payments due the Contractor under the Contract; provided that the Controller may make such additional investigation or inspection as is provided by Administrative Code Section 10.07.

(l) Termination for Convenience. In all Contracts for the construction of any Public Work or Improvement, the Department Head may include in the specifications setting forth the terms and conditions for the performance of the Contract a provision that the City may terminate the performance of work under the Contract whenever the Department Head shall determine, with the approval of the Mayor or the board or commission concerned, that such termination is in the best interest of the City. Any such termination shall be effected by delivery to the Contractor of a notice of termination specifying the extent to which performance of work under the Contract is terminated and the date upon which such termination becomes effective. The Department Head is hereby authorized to include within such construction Contract the appropriate language to implement this subsection 6.22(l).

f the City. Any such termination shall be effected by delivery to the Contractor of a notice of termination specifying the extent to which performance of work under the Contract is terminated and the date upon which such termination becomes effective. The Department Head is hereby authorized to include within such construction Contract the appropriate language to implement this subsection 6.22(l).

(m) Articles Not to be Prison Made. No article furnished under any Contract awarded under the provisions of this Chapter 6 shall have been made in a prison or by convict labor except for articles made in prisons or by convicts under the supervision and control of the California Department of Corrections and limited to articles for use by the City's detention facilities.

(n) Employment of Apprentices. All construction Contracts awarded under this Chapter 6 shall require the Contractor to comply with the requirements of the State Apprenticeship Program (as set forth in the California Labor Code, Division 3, Chapter 4 [commencing at Section 3070] and Section 1777.5), as it may be amended from time to time, and shall require the Contractor to include in its subcontracts the obligation for subcontractors to comply with the requirements of the State Apprenticeship Program.

(o) Safety. All construction Contracts awarded under this Chapter 6 shall require the Contractor and all of its subcontractors to abide by the applicable Occupational Safety and Health statutes and regulations.

Additionally, all construction Contracts awarded under this Chapter 6 shall require the Contractor and all of its subcontractors to abide by the requirements of Administrative Code Section 64.1, prohibiting masonry-dry cutting and masonry dry-grinding, with exceptions.

(p) Claims. The City shall consider only those claims for additional payment under a Contract that are certified and that conform to the Contract requirements for claims, pricing, and schedule.

(1) Claims by Contractors. The Contractor shall certify under penalty of perjury that (A) the claim is made in good faith; (B) the supporting data are accurate and complete to the best of Contractor's knowledge and belief; and (C) the amount request accurately reflects the Contract adjustment for which the Contractor believes the City is liable. An individual or officer authorized to act on behalf of the Contractor shall execute the certification.

(2) Claims by Subcontractors. Subcontractors at any tier are not third-party beneficiaries of any Contract awarded under this Chapter. The City shall not consider a direct claim by any subcontractor. A Contractor presenting to the City any claim on behalf of a subcontractor must certify the subcontractor's claim in the same manner the Contractor would certify its own claim under the foregoing subsection 6.22(p)(1).

tractors.** Subcontractors at any tier are not third-party beneficiaries of any Contract awarded under this Chapter. The City shall not consider a direct claim by any subcontractor. A Contractor presenting to the City any claim on behalf of a subcontractor must certify the subcontractor's claim in the same manner the Contractor would certify its own claim under the foregoing subsection 6.22(p)(1).

(q) Contractor Prompt Payment. All construction Contracts under this Chapter 6 shall require the Contractor to pay its subcontractors within seven calendar days after receipt of each progress payment from the City, unless otherwise agreed to in writing in advance by both Contractor and subcontractor. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from a Contractor to a subcontractor, the Contractor may withhold the disputed amount but shall pay the undisputed amount.

Any Contractor who violates this subsection 6.22(q) shall pay to the subcontractor a penalty of 2% of the amount due per month for every month or portion thereof that payment is not made. This subsection 6.22(q) is enforceable in a court of competent jurisdiction, and is not intended to create a private right of action against the City.

(Added by Ord. 286-99, File No. 991645, App. 11/5/99; amended by Ord. 153-00, File No. 000805, App. 6/30/2000; Ord. 237-00, File No. 001207, App. 10/20/2000; Ord. 7-02, File No. 011675, App. 1/25/2002; Ord. 208-02, File No. 021221, App. 10/18/2002; Ord. 58-05, File No. 041571, App. 4/1/2005; Ord. 107-05, File No. 050215, App. 6/10/2005; Ord. 131-06, File No. 060444, App. 6/22/2006; Ord. 119-08, File No. 080277, App. 7/11/2008; Ord. 19-10, File No. 091163, App. 2/10/2010; Ord. 23-10, File No. 091233, App. 2/11/2010; Ord. 311-10, File No. 101311, App. 12/23/2010; Ord. 79-11, File No. 110330, App. 5/19/2011, Eff. 6/18/2011; Ord. 225-12, File No. 120750, App. 11/1/2012, Eff. 12/1/2012; Ord. 27-13, File No. 121200, App. 2/19/2013, Eff. 3/21/2013; Res. 80-14, File No. 140091, App. 3/21/2014; Ord. 32-14, File No. 140090, App. 3/27/2014, Eff. 4/26/2014, Oper. 6/25/2014; Ord. 85-14, File No. 140151, App. 6/19/2014, Eff. 7/19/2014, Oper. 9/17/2014 (part); Ord. 108-15, File No. 150175, App. 7/2/2015, Eff. 8/1/2015; Ord. 224-15, File No. 150817, App. 12/22/2015, Eff. 1/21/2016, Oper. 4/20/2016; Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017; Ord. 220-20, File No. 200949, App. 11/6/2020, Eff. 12/7/2020; Ord. 164-23, File No. 230647, App. 7/28/2023, Eff. 8/28/2023; Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)