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Open letter from Willie Ratcliff of Liberty Builders to San Francisco Department of Public Works Contract Administration Division Manager Gordon Choy, dated Dec. 29, 2010 (Ratcliff is also publisher of the SF Bay View newspaper)
Dear Mr. Choy:
Thank you for your letter emailed December 15, which concludes: “DPW had hoped to proceed with Liberty Builders, particularly given its ties to the Bayview Hunters Point community but could not further delay commencement of the project. From the very beginning of the selection process, DPW advised all parties that time was of the essence. As a result of Liberty Builders’ inability to provide the necessary insurance coverage, the project has suffered weeks of delay. DPW will continue to proceed with its award of contract to KCK Builders, Inc.”
Our response has not changed since we summarized it on November 12: “It is our position that Liberty Builders remains the low bidder, has complied with City requirements, has not been provided the protection and assistance mandated by law nor the collaboration called for by the terms of Contract No. 7529A, and is entitled to reinstatement as the prime contractor for construction of the Bayview Branch Library.”
Has construction of the Bayview Library been delayed?
My contracting career is known for curing delay, not causing it. Liberty Builders was commended for topping off Boarding Area A at SFO ahead of schedule, even though the project was significantly behind schedule when our work began.
To clarify the progress on the Bayview Library project, we have constructed the attached timeline. Please note that the DPW Project Schedule published in the Request for Proposals for this project allows about three months for preparation – preconstruction services and selection of subcontractors – prior to the start of construction. And please further note that DPW’s decision to begin construction in the spring still allows those three months, plenty of time to begin on time.
Has Liberty Builders provided the necessary insurance coverage?
The insurance coverage at issue in the rescission of the Bayview Library contract award to Liberty Builders is the Commercial Auto policy. We had purchased that same policy in July for our work on DPW Contract 1573J for Williams Avenue. DPW had found no problem with it then. We have consistently paid for that policy since and have complied with all requests from DPW to the best of our ability. We have requested that the deficiencies you note be cured by both the carrier, Infinity Commercial Auto, and the broker, Statewide Insurance Brokers.
As we commented at the end of the attached timeline, “A contractor should not be punished with rescission of a contract – in this case a contract for $5.1 million – for the incompetence and/or negligence of an insurance broker or carrier,” especially when the contractor has complied with all requirements in good faith, as Liberty Builders has. Excellent construction work and completion of projects on time and on budget are the primary responsibilities of the contractor, and in them, Liberty Builders has always excelled.
DPW has enormous discretion in administering public works contracts, as was evident the last time I recall a new City building, the Martin Luther King Pool, being built in Bayview Hunters Point. See http://www.sfweekly.com/2001-08-08/news/dirty-pool/. In that case, DPW’s discretion in favor of the prime contractor appears excessive.
Liberty Builders is not asking for favoritism, only for fairness – to us and, even more importantly, to our job-starved community. Now that Mandatory Local Hire is the law in San Francisco – a victory won largely by the people of our community who expect to build the Bayview Library – we must ensure that they don’t face a hostile workplace.
Of the bidders on the Bayview Library, only Liberty Builders is trusted by the people of Bayview Hunters Point, who have long been locked out of City construction work, to give them full and fair opportunity to build the library they love. We look forward to prompt reinstatement to Liberty Builders of the award of Contract No. 7529A to build the new Bayview Branch Library, a decision that will save the City both time and money*.
Willie Ratcliff, Liberty Builders
*KCK Builders’ bid to build the Bayview Library is $310,000 higher than Liberty Builders’ bid, so the City would pay substantially more for choosing a White contractor over a Black contractor with a long history of hiring from the community. The higher price is one of many good reasons for reinstating the award of the library contract to Liberty Builders.
Bayview Library Timeline
Timeline of events relating to the City’s rescission of the award of the Bayview Library contract to Liberty Builders
March 1, 2010: The Request for Qualifications (RFQ) for the Bayview Branch Library is advertised.
March 19: Samuel Chui of the Branch Library Improvement Program issues “a Revised RFQ for CM/GC for the Bayview Branch Library” with the due date of April 9.
April 9: Liberty Builders submits its completed RFQ.
April 23: Samuel Chui emails a letter to Liberty Builders, saying: “We are pleased to inform you that the City’s selection panel has determined that your firm meets the pre-qualifications outlined in the Request for Qualifications (RFQ) for Construction Manager/ General Contractor (CM/GC) for the Bayview Branch Library.”
May 20: Samuel Chui issues “the Request for Proposals for Construction Manager/ General Construction Services for the Bayview Branch Library” with the due date of June 22.
June 22: Liberty Builders submits its completed RFP.
July 9: On this date, the Department of Public Works (DPW) was supposed to “Notify Successful Candidate,” according to the “Project Schedule” on page 5 of the RFP. All the actions scheduled for March 1 through June 22 occurred on the specified dates. From that point on, however, DPW veered far off schedule.
Aug. 5: DPW issues the Tabulation of Bids. The four bidders, from lowest to highest, are Liberty Builders, KCK Builders, Inc., Chiang C.M. Construction/Oliver Transbay Construction Joint Venture, and Baines Group, Inc./Turner Construction Company Joint Venture. The bid of the second low bidder, KCK Builders, is approximately $310,000 higher than Liberty Builders’ bid.
Sept. 1: DPW emails Award of Formal Contract for the Bayview Branch Library to Liberty Builders in the amount of $5,166,110.80.
Sept. 9: Shirley Li of DPW Contract Administration emails Liberty Builders the Bayview Branch Library contract documents.
Sept. 22: Willie Ratcliff of Liberty Builders signs the Library contract and submits it to DPW.
Sept. 24: Carlos Batres of Statewide Insurance Brokers emails its quote to Liberty Builders for General Liability Insurance for the Library project. The total annual premium quoted is $4,003.00; the down payment is $2,050.75.
Sept. 27: Liberty Builders pays Statewide the $2,050.75 down payment for General Liability Insurance for the Library project.
Sept. 29: Shirley Li of DPW Contract Administration emails Carlos Batres of Statewide the insurance requirements for the Library project. Liberty Builders had previously faxed the Insurance Requirements section of the contract to Statewide and several other insurance brokers requesting quotes.
Oct. 5, 5:16 p.m.: Carlos Batres of Statewide emails its revised insurance quote “reflecting all required coverage.” The total annual premium has risen to $12,785.30, the down payment to $7,429.00. With credit for the $2,050.75 that Liberty Builders already paid, the balance due is $5,378.58.
Oct. 5, 5:57 p.m.: Shirley Li of DPW emails Liberty Builders: “The attached quotation meets the coverage requirements.
“Please reiterate to Carlos that liability policies shall endorse the City and the Spec page 00805-3 listed parties as additional insureds. Primary non-contributory endorsement, Waiver of Subrogation and Separation of insureds endorsements are also required.
“Once again, specification insurance requirements are provided for your insurance company underwriting reference.”
Oct. 8: DPW Deputy Director Fuad Sweiss meets with Willie Ratcliff of Liberty Builders, Frederick Jordan of F.E. Jordan Associates, Inc., and Willie Robinson of W.J. Robinson & Associates, Inc., at his office.
Oct. 12: Through Rashaun Raymond of PFN Insurance Services, Roland A. Lacanilao of J.R. Olsen Bonds offers Liberty Builders a Payment and Performance Bond for the Library project.
Oct. 13, 2:58 p.m.: Fuad Sweiss emails Liberty Builders, setting a deadline for submitting the correct General Liability Insurance for Oct. 14 at 2 p.m. and saying in part: “[I]t seems that even if you get the required insurance, it will be really difficult if not impossible for you to get the Bonds without a collateral of cash or irrevocable LOC for $1.8 Million. …
“So, you may work hard now and borrow money to pay for the insurance premium and later hit a brick wall with the bonding. In that case, it might be difficult for you even to get a refund for the money you would have spent on the insurance regardless whether you used it or not.
“As you know, DPW has a commitment to the SF Library organization and to the SF voters that approved the Bond measure to deliver this project within a specific time frame. We have already experienced delays in the implementation of the CMGC process to accommodate local contractors. However, further delay may cost the City and the taxpayers additional funds that may not be available to fully complete this project or others.
“Willie, I totally feel with your pain and frustration in getting financing for your project but there is really little that we can do at this time. Maybe there is a smaller project for you to work on in the near future or maybe you will be able to submit a bid on one of the trade packages and contribute to the construction of this library. Also, I believe that some of the trade packages on this project will be within the $750,000 range that the City Bond Financing program can assist you with.”
Oct. 13, 4:21 p.m.: Willie Ratcliff of Liberty Builders emails Fuad Sweiss saying: “My meeting with the credit union was very successful. They will loan what we need for the general liability insurance today if possible (I’ve submitted my application) and tomorrow at the latest. They also will approve a $650,000 line of credit if the bank won’t. I’m sure the CEO I met with would be happy to talk with you.” Unfortunately, the CEO was not available the following day and the commitment was not fulfilled.
Oct. 14: Liberty Builders pays Statewide an additional $1,000.00 toward the increased down payment for General Liability Insurance.
Oct. 15: Fuad Sweiss emails Liberty Builders a letter that begins: “By this letter, the City and County of San Francisco (the ‘City’) Department of Public Works (‘DPW’) hereby notifies you of its intent to rescind Order of Award No. 178,840, awarding the Bayview Branch Library Renovation Project Construction Management/General Contractor services contract to Liberty Builders. The reason for the rescission is that Liberty Builders is unable to provide the required insurance coverages.” He adds in the concluding paragraph:
“DPW will provide Liberty Builders with one last and final opportunity to obtain all of the insurance coverages as required in the contract bid documents. Therefore, Liberty Builders has until 4:00PM on Tuesday, October 19, 2010 to submit its original insurance certificates to DPW Contract Administration, 875 Stevenson Street.”
Oct. 19: Liberty Builders pays Statewide the balance of $4,378.58, completely paying the increased down payment for General Liability Insurance.
Oct. 19, 12:27 p.m.: Liberty Builders emails Fuad Sweiss, saying: “Carlos Batres at Statewide Insurance has promised to produce a Certificate of Insurance within two hours. The funds are in the bank. In just one day, yesterday, the pledges from friends – most right here in the community – responding to an email appeal tripled the need. We accepted only the amount required to pay for the insurance.
“Thank you very much for extending the deadline. We hadn’t wanted to ‘go public’ with our appeal but are glad we did. The support has been very heartening. People are excited about this great opportunity for our community to partner with City Hall and produce a beautiful new library that we all can take pride in for decades to come.”
Oct. 19, 3:19 p.m.: Carlos Batres of Statewide emails “the required documents for the insurance policy” for General Liability Insurance.
Oct. 22: DPW approves an “Order to Rescind Contract,” which is not signed or issued until Nov. 5.
Nov. 3, 1:07 p.m.: Fuad Sweiss emails Willie Ratcliff of Liberty Builders a letter that begins: “This is a follow up to our correspondence dated October 15, 2010.” The letter sets a deadline of “2:00 PM Thursday November 4, 2010” for submission of an “Automobile Insurance endorsement” and concludes:
“We have given you several opportunities to meet your requirements for this contract and we can no longer do that. If we don’t receive the above listed documents by the stated deadline, then I will recommend to the Director of Public Works to immediately proceed with rescinding his Order of Award No. 178,840.”
Liberty Builders’ comment: This was our first indication that proof of proper Commercial Auto Insurance had not been submitted by Statewide to DPW. Our recent research has revealed that the relevant policy is the same Commercial Auto policy we had purchased and submitted to DPW on July 20, 2010, for DPW Contract 1573J, for which Liberty Builders was subcontracted by Ghilotti Bros., so DPW had had in its possession since then proof that Liberty Builders was covered by Commercial Auto Insurance.
Nov. 5, 2:44 p.m.: Rashaun Raymond of PFN Insurance Services emails Liberty Builders to report that through her negotiations with J.R. Olsen Bonds, the price of Liberty Builders’ Payment and Performance Bond for the Library project has been significantly reduced.
Nov. 5, 3:21 p.m.: DPW Contract Administration Staff emails to Liberty Builders an “Order to Rescind Contract,” which states it had been approved Oct. 22, though not signed – by DPW Director Ed Reiskin – until Nov. 5.
Nov. 5, 8:25 p.m.: Upon receiving the Order to Rescind, Liberty Builders emails Carlos Batres of Statewide Insurance saying: “Please verify that the Commercial Auto certificate has been transmitted to DPW as you promised it would be no later than today. You made that promise to me and said you made that promise to DPW. I conveyed your promise to Shirley Li of DPW on Wednesday that the certificate would be issued no later than today, Friday, Nov. 5.
“If the certificate was not transmitted today to DPW, please transmit it tomorrow, Saturday, Nov. 6, with a copy to us. (I tried to call you, but your voice mail box was full.) And please take notice that we are looking to you and Statewide and Infinity Commercial Auto to repair the damage and cause this rescission order to be reversed.”
Nov. 8, 12:48 a.m.: Liberty Builders emails a letter to DPW Director Ed Reiskin “to request reconsideration of the Order to Rescind Contract issued Friday, November 5, ‘for failure to provide insurance documents,’ which have since been provided.”
Nov. 12, 5:23 p.m.: DPW Director Ed Reiskin emails a letter to Liberty Builders denying the request: “Please be advised that we will not cancel the Order,” adding “insurance documentation remains incomplete and unacceptable.”
Nov. 12, 7:15 p.m.: Liberty Builders emails a response to DPW Director Ed Reiskin’s letter, saying his letter “is our first indication that the [insurance] documents we submitted were unacceptable” and asking for an explanation. The response adds: “Please explain precisely on what basis you allege that Liberty Builders has breached its responsibilities. As for delays, please examine the record and explain which delays for what duration were caused by DPW and by Liberty Builders and whether any delays have substantially jeopardized construction of the new Bayview Library.”
Nov. 19: DPW Contract Administration Staff emails Liberty Builders a notice of award of the Library contract, saying: “The contract has been awarded to KCK Builders, Inc.” KCK’s bid is approximately $310,000 higher than Liberty Builders’ bid.
Nov. 27: Liberty Builders emails DPW Director Ed Reiskin a Notice of Protest of Award to KCK Builders of Contract 7295A Bayview Branch Library, reiterating a statement made Nov. 12: “‘It is our position that Liberty Builders remains the low bidder, has complied with City requirements, has not been provided the protection and assistance mandated by law nor the collaboration called for by the terms of Contract No. 7529A, and is entitled to reinstatement as the prime contractor for construction of the Bayview Branch Library.’
“We also have received no response to our request for an explanation of what you meant by saying in the attached November 12 letter that Liberty Builders’ ‘insurance documentation remains incomplete and unacceptable.’ We had submitted everything your staff requested and had no prior indication that the documents we submitted were unacceptable.”
Dec. 15: DPW Contract Administration Division Manager Gordon Choy emails a letter to Liberty Builders in response to the Notice of Protest, saying: “DPW hereby denies your protest.” Regarding the insurance documentation, he wrote: “As of the date of rescission – November 5, 2010 – Liberty Builders had submitted no endorsements for its Auto Liability coverage. Liberty Builders’ insurance broker submitted one (waiver of subrogation) endorsement in the days after the rescission, but the Auto Liability coverage still lacked an additional insured endorsement, a primary and non-contributory endorsement, and cross-liability (separation of insured) endorsement. While these may seem like technical issues, these insurance coverages and endorsements are standard requirements for all DPW contractors, whether large companies or micro-LBEs.”
The letter concludes: “As a result of Liberty Builders’ inability to provide the necessary insurance coverage, the project has suffered weeks of delay. DPW will continue to proceed with its award of contract to KCK Builders, Inc.”
Liberty Builders’ comment: Contractors must rely on insurance brokers and carriers to issue policies that meet the project owner’s requirements. A contractor should not be punished with rescission of a contract – in this case a contract for $5.1 million – for the incompetence and/or negligence of an insurance broker or carrier.
The Commercial Auto Insurance policy in force for the Library contract is the same policy that had been submitted on July 20, 2010, to DPW for the Ghilotti Bros. contract. Mr. Choy says that “these insurance coverages and endorsements are standard requirements for all DPW contractors,” yet DPW found no fault with the same Commercial Auto policy when it was submitted in July.
This letter and timeline were sent to Mayor Gavin Newsom, the Board of Supervisors and a long list of others concerned with this issue. Willie Ratcliff, owner of Liberty Builders and publisher of the San Francisco Bay View, can be reached at (415) 671-0789 or firstname.lastname@example.org.