San Francisco Mayor Daniel Lurie announced planned reforms on Tuesday he said were intended to make the city’s contracting rules more consistent and competitive.
The proposed changes come just a week after a trio of propositions were passed by voters, giving the mayor more power to reorganize certain aspects of city government with less input from the county Board of Supervisors.
One of them, Proposition E, gives the city administrator — who is appointed by the mayor — largely exclusive authority to introduce legislation related to contracting rules under the city’s Administrative Code.
The proposition limits the Board of Supervisors’ ability to alter the city’s contracting rules but gives it the power to disapprove proposed legislation, effectively giving it a veto but limiting its ability to make its own legislative changes.
The reforms unveiled are designed to target notorious practices of insider dealing, including directing contracts to favored recipients and breaking up larger contracts into smaller amounts to evade triggering existing rules on competition, according to the Mayor’s Office.
The changes to the city’s contracting process were drafted in consultation with City Administrator Carmen Chu and City Attorney David Chiu, who said at a press conference with Lurie in Civic Center Plaza on Tuesday that the changes would make it harder for insiders to game the system.
Part of that effort includes reforms that will standardize processes city employees will be required to follow when contracts are being considered, such as communicating through official channels. The new rules would also prohibit employees from sharing nonpublic information during the bidding process.
A major reason for the reforms is also to simplify a system that has grown byzantine and complex over the years. A patchwork of changes to the code over time led to nonstandardized rules across different areas of spending, leaving outdated regulations that make it harder for small businesses to do business with the city and harder for employees to understand, Chu said during the press conference.
“Ethics and efficiency go hand in hand,” Chu said. “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.”
Critically, the rules outline disciplinary action for violations that could include termination, something the mayor has also been seeking more unilateral authority to do for certain positions.
Lurie cited multiple city department heads who were convicted in separate instances of corruption-related charges in recent years as examples of why the reforms were needed, in his view.
The city awards roughly $6 billion in contracts annually, according to Chu and the Mayor’s Office.
A history of corruption scandals
The city has endured a series of public corruption scandals since 2020. That’s when Public Works Director Mohammed Nuru was arrested on federal bribery charges for taking kickbacks for city contracts dating back to 2008, according to the U.S. Department of Justice. He was sentenced to seven years in federal prison in 2022.
Multiple city employees in the Public Works Department faced ethics violations or criminal charges in relation to the Nuru case. Several other cases in subsequent years added to the perception that San Francisco had a corruption problem.
In 2023, Harlan Kelly, the general manager of the San Francisco Public Utilities Commission, was convicted in a separate case for accepting millions of dollars in bribes from a contractor seeking city business, according to the DOJ. He was sentenced to four years in federal prison in 2024.
A former assistant director of finance and technology, Stanley Ellicott, was sentenced earlier this year to three years in state prison for defrauding the city out of money by creating a fake business, registering it as a vendor with the city, and making hundreds of thousands of dollars in payments to it, according to the San Francisco District Attorney’s Office.
The changes will be made by adding a new legislative chapter to the city’s Administrative Code once the results of Prop. E are certified by the county Elections Department and declared official by the Board of Supervisors. Unofficial results showed the proposition passing with about 64% of voters in favor. It needed a simple majority to pass.
Sharky Laguana, the former president of the city’s Small Business Commission, which advises the Board of Supervisors, said during Tuesday’s press conference that the reforms will make it easier for small businesses to operate in the city and win contracts from it.
“Every day small businesses wake up, and go to work, and follow the rules, but it’s increasingly hard to do so when the rules are opaque, byzantine, entirely a maze and thicket of regulations that are hard for businesses to follow and for employees to follow,” Laguana said. “I can’t be more excited about this. It’s been such a problem for small businesses in San Francisco — what a relief that we’re finally making some progress.”