San Francisco supervisors eye ending contract ban covering states with anti-LGBTQ laws, abortion bans

  • by Matthew S. Bajko, Assistant Editor
  • Monday February 13, 2023
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San Francisco Supervisors Ahsha Safaí, left, and Matt Dorsey support ending the city's contracting ban on states that have anti-LGBTQ laws, saying it has stifled competition. Photos: Courtesy Twitter, Facebook
San Francisco Supervisors Ahsha Safaí, left, and Matt Dorsey support ending the city's contracting ban on states that have anti-LGBTQ laws, saying it has stifled competition. Photos: Courtesy Twitter, Facebook

A controversial proposal that San Francisco end its contracting ban with companies headquartered in states that have adopted anti-LGBTQ laws, abortion bans, or restricted voting access in recent years will be taken up by the Board of Supervisors in late February. At this point, the city's ban on most taxpayer-funded travel to the banned states would remain in place but is also being eyed for repeal.

Critics of the policy, known as 12X, contend it has not achieved its goal of convincing lawmakers in the covered states to repeal the laws that landed them on San Francisco's banned list. As of September, there were 30 states impacted by the policy.

According to a 16-page memo the City Administrator's Office sent to the Board of Supervisors February 10, in response to a request from five of the board members last October that it review the 12X policy, what its impacts have been "are not clear." The office informed the board that it "was not able to find concrete evidence suggesting 12X has influenced other states' economies or LGBTQ, reproductive, or voting rights."

The review did conclude that the 12X policy "has created additional administrative burden for city staff and vendors and unintended consequences for San Francisco citizens, such as limiting enrichment and developmental opportunities."

District 11 Supervisor Ahsha Safaí, one of those who requested the review, last November authored the ordinance to do away with the contracting ban. At a February 13 hearing on it before the supervisors' Rules Committee, on which he sits, Safaí acknowledged that he voted to institute the 12X policy. But he argued it has not done what it was intended to do and its contracting provisions need to be repealed.

"I believe this is the right step at this moment in San Francisco," said Safaí.

Gay District 6 Supervisor Matt Dorsey, who now chairs rules, not only agreed with Safaí on the need to scrap the contract ban but also indicated his support for ending the travel ban as well. At a time when the city is facing a $728 million budget deficit over the next two years, ensuring the cost of construction projects are not inflated due to 12X could mean other priorities like keeping libraries open and HIV services funded do not get cut in order to balance the budget, argued Dorsey.

"There has been a lot of frustration over the years about how cumbersome and expensive and labyrinthine our contracting processes can be. I am convinced if San Franciscans had any idea how much money, how much of their taxpayer dollars we are wasting on processes and the performative things we do with our contracting, they would be furious about it and rightfully so," said Dorsey.

According to the memo about 12X, even though its exact cost to the city "is difficult to quantify," the budget and legislative analyst has noted, "a loss in competition is likely to increase the city's contracting costs by 10-20% annually. These costs could continue to increase and compound overtime as the city's potential contractor pool shrinks if the list of banned states grows."

Still pro-LGBTQ

Safaí stressed that doing away with the contracting ban should not be seen as the city eschewing its progressive values or support for local minority-owned and LGBTQ-owned companies. He pointed to other city contracting rules that would continue to be enforced to ensure locally-owned businesses do not lose out.

"This legislation does not change any aspect of our local subcontracting requirements or local hire rules. Any prime contractor must deliver local jobs regardless of where they are based and must follow 14B requirements," said Safaí, referring to another city contracting rule aimed at supporting local, minority, and LGBTQ business owners. "It does not change the city's commitment to LGBTQ equality."

District 10 Supervisor Shamann Walton, the other rules member, criticized Safaí's ordinance and voiced his opposition to it. He said there is no reason to reward companies headquartered in states that have taken legislative action against the values that San Francisco and its residents support.

"Our local businesses need every opportunity to be successful," said Walton. "This, as written, is basically a giveaway and is in direct conflict with San Francisco values. Unless our values have somehow changed."

Walton said he saw no reason for why the proposal needed to be sent to the full board to be taken up at this time and voted against doing so. Dorsey and Safaí voted to pass it out of the committee without a recommendation to the full board, which will take it up at its February 28 meeting since it does not meet next week due to the Presidents Day holiday.

"As written, this is not something I think we should be supporting," said Walton. "This is not supporting businesses that share our values but those that have headquarters outside of the city to the detriment of our small businesses."

Opposition

Various local minority business groups and LGBTQ advocates oppose Safaí's ordinance and voiced their opposition to it at Monday's hearing. They also criticized Safaí for not consulting with them on it before introducing it last year.

Those speaking out included Nick Colina, a gay man who is the administrator of operations at Anco Iron & Construction Inc., which his grandfather and grand-uncle founded in San Francisco after emigrating from Mexico in the 1950s. He requested that the city show there is data that justifies changing the 12X policy.

"What would Harvey Milk say? This is not going to help LGBTQ-owned businesses," argued Colina, referring to the city's first gay supervisor who was also a small business owner of a camera shop in the Castro LGBTQ neighborhood.

Paul Pendergast, a gay man who owns a public affairs firm that works with construction businesses, is president of BuildOUT California, an association that promotes LGBTQ-owned firms in the construction field. He also questioned the need to ax the city's contracting ban and asked the city to determine how many companies awarded contracts have partnered with LGBTQ-owned firms on the projects.

"How many LGBTQ businesses currently or in the past have been brought on to your teams? Let us start with that economic data point and then move forward," said Pendergast.

Safaí said he is open to meeting with the business leaders over the coming weeks to hear their concerns.

First enacted in 2016
The 12X policy was first enacted in 2016 and initially only covered those states that had passed laws as of then that discriminated against their LGBTQ residents. In 2019, the policy was extended to include states that restricted abortion, and again in 2021 to include those with voter suppression laws. California also has a law banning most taxpayer-funded travel to states that have enacted anti-LGBTQ laws over the last eight years but does not ban contracts with companies in those states.

With more than half of the country now on San Francisco's banned list, critics argue it is hampering the ability of city departments to find qualified contractors and is increasing the cost of projects because companies that could do the work less expensively are not bidding on them in the first place if they are located in a banned state.

If they are submitting bids, they must do so by subcontracting with another company not impacted by the ban. Taking such a route, however, makes their bid more expensive because of the additional management needs and other costs such arrangements result in, according to city officials.

"We have been able to function, clearly, under 12X. But we have found it reduces competition on our projects," said Judi Mosqueda, the chief development officer for San Francisco International Airport. "We seek the most highly qualified firms. It lends our contractors to look to subcontract under other entities in order to still provide services to SFO. It drives up overhead and management costs on projects."

The impacts of the contracting ban gained widespread attention last fall over media coverage of the $1.7 million price tag to build a toilet at a public park in the city's Noe Valley neighborhood. Facing political and public backlash over the high costs to construct a single-stall restroom, recreation and parks department officials entered into negotiations to accept a prefabricated toilet gifted from the Public Restroom Company based in Reno, Nevada.

The city agency's oversight body is expected to approve the gifted loo at an upcoming meeting. Because Nevada is on the banned list due to enacting abortion and voting restrictions, the rec and park department is barred from paying for the roughly $135,000 toilet. It can accept it as a bequest, which is not restricted under the 12X policy.

Chad Kaufman, president of the company, noted he had installed toilets in cities throughout the Bay Area and across California. The majority of his business is in the Golden State, and he argued companies like his should not be penalized for the decisions made by their state legislators.

A better policy would be to ask the business owners what their stances are on such things as LGBTQ equality, reproductive freedoms, and voting rights, he said.

"Obviously, I don't set policy, but I am subject to what my state chooses," said Kaufman.


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