Small Business Enterprise Procedures - Frequently Asked Questions

View and download a PDF version of this SBE Frequently Asked Questions resource (PDF)

1.    My company is not a San Francisco (SF) SBE, but we ARE a California State-certified SBE through the Department of General Services (DGS). I understand that this is an acceptable SBE certification, although SF SBE's are given preference.

Exhibit 1 (page 1) of the Project’s SBE Procedures goes on to state that as a Criteria for Recognition Of Non-San Francisco-Based SBEs, gross annual receipts are required to average under $2,500,000 for a "Person that will provide Professional Services under a Professional Services Contract" and $20,000,000 for Person that will provide Construction Work under a Contractor Contract or a Subcontractor Contract.

The CA DGS certifies SBE's based on an average of $14,000,000 for any type of work performed. Is the $2,500,000 accurate for any other work outside of construction on this project?
Per Exhibit 1 of the SBE Procedures, an SBE may be certified SBE by State of California or any of its political subdivisions, but is required to meet the Gross Annual Receipts Test requirement of $2,500,000 average annual receipts shown on its three most recent tax returns to be recognized as an SBE for the Project.

2.    In addition to providing our SBE certification through the DGS, do we also have to provide proof of average revenues?
Yes, the firm will need to provide to Kate.Austin@sfgov.org (representing TIDA) all SBE requirements in the SBE Procedures to obtain certification. The requirements include a copy of the IRS return pages indicating the firm’s gross receipts on its three most recent returns. This information must also be submitted as part of the response to the RFQ.

3.    What is the difference between the SBE participation goal of 38% of Professional Services Contracts and the criteria of for SBE partners to have at least 35% interest to qualify as an SBE?
The SBE goal for the Project is 38% of the total dollar value of the Professional Services Contracts shall be performed by qualified SBE Consultants and Subconsultants
In order for a JV to be recognized as an SBE, the SBE component of the JV must have at least 35% interest in the JV.  A JV with at least 35% SBE interest in the scope to be performed by its proposed JV is considered to be an SBE for 100% of that JV’s Project scope of work and contract value.  

4.    With the $2.5M average annual receipts limit, many SBEs certified by the State or other jurisdictions will be excluded.  
The SBE receipts limits for this project are consistent with the definition of a qualifying SBE for projects with the City of San Francisco and the former Redevelopment Agency.  Along with the participation goal, the receipts limit is a requirement of the Project adopted as part of the Disposition and Development Agreement between TICD and the City of San Francisco. Firms wishing to participate in this project must develop strategies for achieving the participation goals as they would on other projects with agencies of the City of San Francisco.  


5.    Consider a firm that is managing billing for other SBE firms for which those receipts contribute to the firm’s annual gross receipts submitted for SBE qualification consideration.  The overall annual receipts may not reflect actual work performed by the firm itself.  Does this scenario qualify the firm as an SBE?
A firm that is itself not certified as an SBE would not be considered an SBE just because it manages the billing for other SBE firms.  A firm that is itself certified as an SBE would be considered an SBE for this RFP provided it subcontracts out no more than 50% of the work.

6.    How much of the work in its scope can an SBE subcontract out to non-SBE subcontractors without being no longer considered an SBE for this work?
An SBE cannot subcontract more 50% of its scope of work (i.e., the SBE must self-perform a minimum of 50% of its scope) in order for the scope to be considered as SBE participation towards the Project’s 38% SBE participation goal.  If it subcontracts less than 50% of its work to non-SBE, 100% of the work in the SBE sub-consultant contract is counted towards fulfilling the 38% SBE goal.  If it does subcontract out more than 50% of its work to non-SBE, then 0% of the SBE sub-consultant would be considered towards the 38% goal.

7.    Please clarify SBE Procedures, Section IV.A.2, “SBE Goals”. What qualifies as “double counting?”
If an SBE sub-consultant enters into a 2nd tier sub-consultant contract with another SBE, only the value of the 1st tier SBE sub-consultant contract would count towards the participation goal. As an example, if an SBE sub-consultant with an agreement to perform $100,000 in services subcontracted $40,000 of that scope to another SBE and self-performed the remaining $60,000 in services, the participation towards the SBE goal would be only $100,000 and not $140,000.  


8.    Why is it possible for SBE’s not based in San Francisco to be recognized as qualified to participate in achievement of the SBE goals for the Project?
The SBE requirements for the program – the participation goal, the SBE annual receipts limits, and the recognition SBEs – were negotiated and adopted in conjunction with the Disposition and Development Agreement and are embodied in the Jobs and Equal Opportunity Plan. The parties looked to the policies of the City and County of San Francisco and the former San Francisco Redevelopment Agency in developing requirements.  The recognition of participation by SBEs not based in San Francisco is consistent with the policies of the former Redevelopment Agency, now the Office of Community Investment and Infrastructure.  The Jobs and Equal Opportunity Plan and the SBE Procedures do provide that first consideration be given to San Francisco-based SBE firms.

9.    If a consultant is LBE but not SBE, do they qualify towards the 38% SBE goal?
An LBE must be a San Francisco certified Small-LBE or Micro-LBE to count towards the SBE goal.

10.    Can firms who are out of state be given the SBE classification as long as they meet the gross income standards? 
A firm from another state that is certified in that state or by the federal government as an SBE would be considered an SBE under our Procedures (see the definition of a Non-San Francisco-Based SBE on page 3 of the SBE Procedures) subject to the Gross Annual Receipts Limits described in Exhibit 1.  The request and supporting documentation should be submitted to TIDA (Kate.Austin@sfgov.org) for review as soon as possible.  

11.    How can a non-certified firm be recognized as SBE?
TIDA will evaluate whether firms not certified by any other jurisdiction should be considered to be SBEs.  To be considered, a non-certified firm must complete/sign the Recognition of Non-Certified Firms Affidavit (see – SBE Recognition/Certification) and submit along with the required information and supporting document to TIDA (Kate.Austin@sfgov.org) for TIDA SBE evaluation.

12.    Do firms need to provide proof of good faith effort on outreach to SBE’s toward achieving the 38% goal?
Firms which do not achieve at least 38% SBE participation must provide documentation of its outreach efforts.  Firms that do meet the 38% SBE participation goal need not submit documentation of its outreach efforts.  The following proposals would meet the 38% SBE participation goal:
•    Proposals which subcontract 38% or more of the scope to recognized SBE subcontractors.
•    Proposals submitted by recognized SBE firms as prime contractors.
•    Proposals submitted by Joint Ventures which include a recognized SBE firm as a partner in the JV and that SBE partner performs 35% or more of the prime scope.

13.    What specific SBE forms from the SBE Procedures are required from our sub-consultants? 
SBE Procedures Exhibit 2, Forms 1, 2 and 5 (if applicable) are to be filled out at the time of proposal.  Form 3 is to be submitted with each payment application and Form 4 is due with the final progress payment request.

14.    If we propose a JV with greater than 35% SBE interest in the Project scope of work or if we have more than 38% of the project scope and fee going to SBE sub consultants, will we receive additional points during the evaluation of our proposal? 
We intend to award more points for higher SBE participation above the JV goal of 35% or for total participation above the 38% goal. There is not a pre-determined relationship between the points that will be awarded and the total amount of SBE performance; the points awarded will be determined by the relative participation achieved across all submittals received.  

15.    If we are not comfortable forming a legal Joint Venture prior to award of contract, can we submit a signed letter of intent to JV upon award of contract?
The SBE Procedures require that Joint Venture respondents complete Form 5: Joint Venture Form and provide a joint venture agreement and management plan with the proposal. For Professional Services only, we are willing to accept unexecuted joint venture agreements with the bid, provided that it is clear to us that the partners in the joint venture are willing and able to execute all necessary documents quickly upon being awarded the work.

16.    If we allocate the required 35% interest to our JV partner, can that 35% include outside services like drilling, lab testing, etc.?  Or do we need to subtract the estimated amount of outside services and their markups from our total contract value PRIOR to allocating 35% to our JV SBE partner?
 For example, if the total amount of the overall contract is $1,000,000 and we know our team is going to have $200,000 worth of outside services like drilling and laboratory testing, are we required to allocate 35% of $1,000,000 OR 35% of $800,000 (total contract value minus the cost of outside services) to our JV SBE partner?

The measurement of the joint venture partners’ interest is in the scope of work directly performed by the joint venture excluding subcontracted services.  In the example cited in the question, if the joint venture is performing $800,000 in scope and subcontracting $200,000 in scope the SBE partner in the Joint Venture would need to perform 35% of the $800,000 in scope ($280,000).

Carrying these figures forward into Form 5, the figures on Step 1 would show 20% of the scope being subcontracted and 80% performed by the JV, the cells at the bottom of the table in Step 2 would show 80% of the scope being performed by the JV at the bottom of Column A, 62% being performed by the non-SBE partner at the bottom of Column B, and 28% performed by the SBE Partner at the bottom of Column C.  The Step 3 calculation would calculate the SBE performance as a percentage of the JV performance; i.e., 28% / 80% = 35%.

Because the SBE partner in this example meets the 35% performance requirement, 100% of the scope performed by the JV – 80% of the contract value – would be evaluated as SBE performance in measuring the team’s SBE participation.  Any portion of the $200,000 in subcontracted scope that was subcontracted other SBEs would be added to the participation (i.e., if $50,000 of the remaining $200,000 were subcontracted to an SBE subcontractor, the total team performance would be 80% + 5% = 85%).

17.    Form 5 states "Joint venture/Association partners are encouraged to meet with the Authority regarding their joint venture prior to submitting their bid.”  How do we set up this meeting?
Please contact Kate Austin at Kate.Austin@sfgov.org to schedule the meeting.  A meeting with the Authority regarding your Joint Venture is not required if the Joint Venture/Association intends to divide work consistent with the formula/structure outlined in Form 5.


18.    Regarding the Form 2 – Contract Participation, can you provide guidance on the far right column of the table:   % of SBE Sub Work.  What exactly should we enter in this column – All SBE work or just the sub-consultants? 
For example:   If we are a Prime Consultant (SBE certified) and we have 40% of the work and we are not subcontracting any of our scope, should we enter 0%?  If one of our sub-consultants (SBE certified) has 10% of the work, should we enter 10%? Or should we enter our amount of SBE work in that column as well?  
 
Form 2 is meant to list all contract participation.  You’ll note that the first column “TYPE” which is intended by the note (*) to indicate whether the firm listed is a (P)rime, (J)V, or (S)ubcontractor.  Also, the fourth column totals to 100%, so it must include the prime participation in addition to all subs.