San Francisco Mayor Daniel Lurie, City Administrator Carmen Chu, and other officials announced plans to unify and strengthen rules around conflicts of interest and other ethics concerns in city contracting, at a Tuesday press conference.
Lurie and Chu, along with City Attorney David Chiu and Ethics Commission Director Patrick Ford, told reporters the changes would reduce favoritism, prevent corruption, and make it easier for businesses to compete for public contracts.
It’s the first major initiative under Proposition E, the contracting reform ballot measure approved by San Francisco voters last week. Proposition E gives the city administrator new powers to introduce legislation governing municipal contracting, while limiting the Board of Supervisors’ ability to amend or block it.
Proposition E passed with around 64 percent of the vote, despite opposition from several progressive organizations and neighborhood groups. Opponents warned that consolidating authority under a city administrator appointed by the mayor could weaken independent oversight and reduce the Board of Supervisors’ ability to scrutinize major contracts.
Lurie framed the initiative as a first step toward satisfying voter demand for more accountable government and restore public confidence in the contracting process.
“San Franciscans deserve to know that every one of those dollars is being spent wisely and in the public interest,” he said. “Now we’re taking the first step toward centralizing and depoliticizing contracting so it serves San Franciscans, not insiders.”
The move creates a new section of the city’s Administrative Code devoted exclusively to ethical purchasing. Current requirements are scattered among different sections of the Municipal Code, and standards and procedures can vary by agency and contract type.
The new rules would also ban civil servants from tipping favored vendors off to inside information on contacts, require declaration of conflicts of interest, and mandate recusal where appropriate. Violations could result in disciplinary action including termination.
The code will also expand prohibitions against “bid splitting” — chopping purchases into smaller contracts to evade competitive bidding requirements or compliance thresholds. It’s a practice that has long been unevenly handled by city rules, which currently differ depending on whether the purchase involves construction, goods and services, or nonprofit grants.
“Ethics and efficiency go hand in hand,” Chu told reporters. “Complicated, inconsistent rules don’t necessarily make us more accountable. They make it harder for employees to know what’s expected, harder for businesses to compete fairly and harder for the city to identify problems.”
“You have many definitions and applications, depending on what you’re buying,” Chu added. “These are confusions that create a bad system.”
The move comes in the wake of recent contracting scandals that have repeatedly damaged public confidence in San Francisco government, such as corruption involving former Public Works Director Mohammed Nuru and former Public Utilities Commission General Manager Harlan Kelly. Those cases exposed how relationships between city officials, contractors, and private interests could undermine oversight of public spending.
Lurie’s own contracting decisions have also attracted scrutiny.
Last year, his administration awarded OpenGov, a local software company, a contract initially worth $5.9 million to develop a new permitting system, despite objections‘ from city employees who preferred a competing product.
The San Francisco Standard reported that OpenGov had longstanding financial connections to Tipping Point Community, the nonprofit Lurie founded and led for 15 years. OpenGov executives and associates had contributed to the nonprofit, and the company’s chief executive had also donated to Lurie’s mayoral campaign.
The Board of Supervisors’ Budget and Legislative Analyst issued a report that found no evidence of wrongdoing, but noted that Lurie’s office bypassed a formal competitive bidding process, which weakened transparency and safeguards against favoritism.
Supervisors eventually approved an expansion of the agreement, but shortened its extension to allow for closer review.
Proposition E gives the city administrator sole authority to introduce most legislation governing purchasing and contracting. The Board cannot amend that legislation and has 60 days to reject it; otherwise, it takes effect, unless it’s vetoed by the mayor.
City Attorney Chiu said the new rules would strengthen competitive bidding and make clear that public contracts must be awarded on merit rather than connections.
“When contracts are awarded through a fair, competitive, and transparent process, businesses have confidence that they’re competing on a level playing field,” Chiu said. “And the public has confidence that decisions are being made on merit, not favoritism, personal relationships, or improper influence.”
“We don’t want the folks with the best connections; we want the best businesses,” former Small Business Commission President Sharky Laguana told reporters at the press conference. He added that opaque and inconsistent regulations make it difficult for companies to compete.
The proposal is only a first step in the broader review of city contracting.
Chu said her office would work with the controller to modernize outdated requirements, clarify instructions for civil servants and make it easier for small businesses and nonprofits to work with the city.
“Ethics can’t be an afterthought or simply another layer of compliance,” Chu said. “It needs to be built into how we do our business every day.”
