A fiscal watchdog in City Hall is reviewing a controversial software contract Mayor Daniel Lurie’s office signed with OpenGov in October, after The Standard raised questions about favoritism and transparency in the process.
The Board of Supervisors’ Budget and Legislative Analyst has launched an inquiry into the contract to determine whether the selection of OpenGov to overhaul the city’s convoluted permitting system followed city rules. The results could undermine how Lurie is trying to rapidly implement his PermitSF initiative, which promises to cut through government bureaucracy, a cornerstone of his 2024 campaign.
The Standard was first to report in October that one of Lurie’s chief policy advisers, Ned Segal, steered the $5.9 million contract to San Francisco-based OpenGov after disregarding recommendations from city employees to contract with another company that offered a cheaper software option.
The Standard found that the company’s top executives had previously donated to the mayor’s nonprofit, Tipping Point Community, and that Lurie and his wife indirectly held investments in the company through their family’s trust.
During the selection process this summer, staffers from multiple city departments raised concerns about OpenGov’s software capabilities, including customer management and security.
Documents showed that Lurie’s family had previously made at least two indirect investments in OpenGov, which was acquired last year by Cox Enterprises for $1.8 billion.
Keeping tabs on SF’s movers and shakers.
Get the inside scoop on City Hall and local politics in our weekly Power Play newsletter.
The mayor’s office has denied that OpenGov received preferential treatment or that donations to his nonprofit and his family’s indirect investments factored into the contract.
The BLA’s review was prompted by Supervisor Jackie Fielder, chair of the Board of Supervisors’ Government Audit and Oversight Committee, and an increasingly vocal critic of the Lurie administration. She has scheduled a January committee hearing on the contract, during which the BLA’s findings will be presented, according to a spokesperson, who added that the supervisor also plans to request testimony from Segal.
Meanwhile, the Civil Service Commission, which conducts hearings about hiring and the treatment of city workers, is investigating whether the contract should have been presented to its governing body for approval.
A key focus of the BLA’s report will be how the mayor’s office structured the procurement process.
In May, as part of Lurie’s PermitSF initiative, the Mayor’s Office of Innovation released a “request for information,” a more informal process that allows the city to talk with a variety of vendors about their products for a project. Such a request also opens the door for vendors that aren’t approved by the city, such as OpenGov, to showcase their services. When a department is ready to make a purchase, it begins an official bidding process known as a “request for proposal.”
But the “request for information” process allowed the Mayor’s Office of Innovation to bypass a more rigorous and objective evaluation process and finalize the contract in August.
Mayor spokesperson Charles Lutvak said in a statement, “The city’s permitting process is slow, complicated, and opaque, and it’s holding back our recovery—with OpenGov, we’re going to continue our work to make it faster, simpler, and more transparent so we can bring our city back stronger than ever.”
The overhaul of the permitting system, which has long been criticized as overly cumbersome, is part of Lurie’s goal to streamline the city's bureaucracy. The mayor wants to make it easier for businesses to operate in the city, including streamlining permitting for events or expansions, which he sees as a way to help downtown’s post-pandemic economic recovery.
Under the current system, those seeking permits must apply through multiple city agencies, which use 20 types of software to manage the process.
The mayor’s office faces a February deadline to implement the OpenGov software, which promises a single landing page for permit approvals.
An Oct. 31 weekly status report obtained by The Standard showed the project’s status in red, meaning there were “issues present with major impact to scope, schedule [and] resources.” On Nov. 14, the status, issued by Angelica Au, OpenGov’s director of professional services, was changed to yellow, indicating a “potential risk to project delivery.”