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Measure S – Construction Contract Procurement Modernization

Frequently Asked Questions

Q: What is Measure S?

A: Measure S is a ballot measure placed on the November ballot by the San José City Council.  Its purpose is to update the City’s process for hiring contractors to build public works projects.  The City Charter sets out rules that govern public works contracting.  These rules aim to ensure an open and competitive bidding process that makes efficient use of taxpayer money.  Measure S would amend the process established in the Charter to provide additional tools for evaluating contractors and to update contracting rules for inflation and changes in technology. 

Q: What changes would Measure S make to public works contracting?

A: Measure S would make the following changes to the City Charter:

  • Best Value Contracting: Measure S would allow the City to use “Best Value Contracting,” a procurement method that would allow the City to score contractors on factors like past performance, relevant experience, and financial condition, in addition to scoring them on price.
  • Minor Project Threshold: Measure S would update the threshold for minor public works projects from $100,000 or less to projects from $600,000 or less and would authorize annual adjustments for inflation in the construction industry.  The $100,000 threshold was established in 2000 and has not been adjusted for inflation in the past 18 years.
  • Bid Noticing: Measure S would change the Charter’s bid noticing provision, which currently requires the City to publish bid notices in a “newspaper of general circulation.”  The revised requirement would allow the City to publish notices online electronically.
  • Design-Build Threshold: Currently the Charter allows for design-build contracts on projects costing over $5 million, while State law allows design-build on projects over $1 million.  Measure S would align the Charter threshold with the $1 million threshold in State law.

Q: What is Best Value Contracting?

A: Currently the City Charter only allows the Council to award public works contracts to the lowest responsive and responsible bidder.  Measure S would allow the City to use an alternative process for bidding public works contracts known as “Best Value Contracting.”  Under the Best Value Contracting process, price would be the primary criteria for evaluating a contractor, but the City could also score contractors on additional criteria, including past performance, relevant experience, demonstrated management competence, financial condition, compliance with labor laws, and safety record.  This process is useful for complicated projects where the lowest bidder might not be the bidder with the best experience and expertise to deal with project complexity.

Q: Would San José no longer use the existing low bid process?

A: The current low bid process would still be used for most projects.  Best Value Contracting would only be used for complicated projects where contractor experience and expertise is needed to ensure the project is delivered on time and on budget. If Measure S passes, the City Council would need to enact an ordinance providing for the specific terms governing use of Best Value Contracting in San José before the City could use the Best Value Contracting procurement method.

Q: How is a minor public works project different from a major public works project?

A: The City Charter requires that major public works projects costing over $100,000 be procured through a formal bidding process.  Minor projects costing $100,000 or less are not governed by the Charter’s formal bidding requirements. For such projects, San José Municipal Code Section 14.04.500 allows for an informal bidding process. The Director of Public Works must attempt to “solicit informal bids” from at least three “responsible” contractors and award the contract to the lowest bidder. This Minor Public Works process can be accomplished by a project manager and does not require the multiple layers of procurement involved in the formal bidding process. 

Q: What is design-build?

A: Design-build is a process under which the City bids for the design and construction of a project at the same time and makes both design and construction the responsibility of a single contractor.  It’s different from the traditional method of bidding for design and construction sequentially and using separate contractors for design and construction.  Design-build can be useful on complicated projects that require close coordination between design staff and construction staff.  Currently, the Charter allows the City to use design-build procurement for projects costing more than $5 million.  State law allows for use of design-build on projects over $1 million.  Measure S would adjust the Charter to be consistent with State law.