Shortly after Daniel Lurie was elected mayor of San Francisco last November, I interviewed Peter Madonia, the first chief of staff for former New York City Mayor Michael Bloomberg. Madonia told me how, in 2001, he advised the newly elected business titan and political outsider that it would take time to win over the city’s workforce.
“There is a permanent government, and they have a philosophy: This too shall pass,” Madonia said. The point he was making to Bloomberg was that career employees had been around before your arrival and will be around after you’re gone. Cross them at your peril.
I thought about that advice as I considered the simmering controversy over OpenGov, the software company chosen by San Francisco to automate its permitting process — a promising Lurie initiative known as PermitSF. Not quite a year into the job, Lurie and his team of Bloombergian outsiders, several of whom decamped from the business world, have begun to learn Madonia’s lesson the hard way: If you don’t feed the bureaucracy, the bureaucrats will feed on you.
The imbroglio shows the first instance of a culture clash that was predictable from the moment the wealthy, well-connected Lurie was elected: What happens when the mayor’s pledges of speed and accountability collide with his vast web of business and social contacts? If there’s even a whiff of impropriety, his political opponents — including those burrowed within San Francisco’s own “permanent government” — will pounce.
This is the situation in which Lurie finds himself over l’affaire OpenGov, which has been the first stumble in an otherwise sterling first year in office.
As a quick review, in late August, I published a column that praised Lurie’s “try-new-things approach” to fixing a perennial San Francisco problem. His team planned to buy software from OpenGov, a 13-year-old local firm whose technology automates permitting processes across city departments. The administration’s sense of urgency, its businesslike approach, and its ability to look beyond the city’s list of familiar technology suppliers were laudable, I wrote at the time.
But I also noted some red flags. For one, Katherine August-deWilde, a prominent supporter of the mayor who sits on the board of Tipping Point Community, the anti-poverty nonprofit Lurie founded, had previously held a stake in OpenGov. And I heard grumbling from within the city’s workforce that abandoning the existing software would be a colossal mistake.
Since then, The Standard’s Gabe Greschler and Josh Koehn have dug up more evidence of possible chicanery. They reported that city employees rated a competing vendor higher and less costly than OpenGov; that Zac Bookman, CEO of OpenGov, had made donations to Tipping Point; that Lurie’s policy chief Ned Segal has begun greasing the wheels for OpenGov a month before the city officially began the bidding process; and that Lurie and his wife once indirectly held an investment in the firm.
Lurie’s investment and Bookman’s Tipping Point connections may look bad, but they are unlikely to trip up the mayor. A spokesman said Lurie didn’t actively choose the investment — he had merely put money into “a fund that had an investment in a fund that had an investment in OpenGov” — and didn’t know about the indirect stake he held in OpenGov until The Standard began asking questions. That’s plausible, given the complexity of the Luries’ family trust, though the mayor would have been better served by scouring his past holdings and disclosing hidden bombshells himself.
As for the Tipping Point ties, as Segal, a former board member for the nonprofit, told me, “the last thing people would want is for the city to not make the right decisions because somebody gave money” to a philanthropic organization before Lurie became mayor.
Put differently, there are a tremendous number of well-meaning, deep-pocketed San Franciscans who have donated to Tipping Point, which has dispensed more than $400 million over the past two decades. (I should know: For many years, after attending the outfit’s annual pre-Christmas breakfast, I too have donated.)
What’s far more complicated is unpacking how the city chose OpenGov, particularly because it used a process called a “request for information” that allowed it to bypass the typical “request for proposal” procedure.
The mayor’s team hasn’t communicated this process well, but RFIs are common. They allow the city to gather information by asking potential bidders to tell them how to attack a problem, rather than the other way around. This process can surface new vendors that can do what more established ones cannot.
For example, the city used an RFI in 2022 to find vendors for a Health Service System program on “healthy aging.” The Port of San Francisco deployed one in 2020 on a project to spruce up Heron’s Head Park. The federal government routinely uses RFIs, also known as a (opens in new tab)“sources sought” process (opens in new tab).
The mayor’s office could have followed the RFI that landed it on OpenGov with a competitive RFP. Why didn’t it? “At minimum, it would have taken us another 14 weeks,” said Florence Simon, director of the Mayor’s Office of Innovation, which coordinated the PermitSF technology selection process. “Most likely, it would have taken us another six months.”
And so in the name of speed, the mayor’s team instead sought and received a waiver from the city’s solicitation requirements, which is allowed under contracting rules. The fact that those waivers come from the Office of Contract Administration isn’t necessarily a great look. That office reports to the city administrator, who reports to the mayor. In other words, City Hall’s justification for suspending a competitive bidding process is that it got permission to do so — from itself.
I asked Segal, a former investment banker and, more recently, CFO of Twitter, why the city disregarded the scoring process that rated a competitor, Clariti, as better and cheaper than OpenGov. He suggested that the quantitative ratings represented the viewpoints of some but not all agencies involved in the vetting process.
“We didn’t ask people to fill out a survey across all the departments,” he said. Instead, Segal and Elizabeth Watty, the SF Planning official in charge of PermitSF, took feedback from all departments — then made the final decision themselves.
Regarding pricing, Segal contended that a simple comparison of dollar values isn’t sufficient given the level of support OpenGov promises, relative to the competition. “The pricing that they provided for the services that they quoted us, as we added all that up, made the most sense for the city,” he said.
Segal also disavowed a prior relationship with Bookman, saying the OpenGov CEO was one of many executives who asked to be considered for the city’s business. “I did not know Zac, nor did I know the leaders of many other companies who reached out to us over the course of this year, until I got to City Hall and they all saw an opportunity to help the city solve a problem around permitting,” Segal said.
I told Segal I had heard from a CEO in the private sector that the initial cost of the OpenGov contract, $5.9 million, didn’t warrant all this hullabaloo. The public, this CEO argued, should allow the Lurie administration to do its thing — and throw the mayor out of office if he screws up.
Segal disagrees. “Every penny of our residents’ dollars is precious, especially today,” he said. “We’re in the midst of a budget crisis, whether it’s $5.9 million or much more. We should take the investment very seriously. We should also take very seriously the time required to deliver the great outcomes that we are intending to deliver through permit reform.”
Those outcomes are what will matter most. On Feb. 13, the mayor issued an executive directive creating PermitSF and calling for the launch of the “first phase of [a] cross-department permit solution” within one year. Among other goals, the directive called for “any permit to be filed online” and for customers “to be able to track the status of their permit across departments.”
Not coincidentally, the city’s contract with OpenGov requires a long list of permit automations to be up and running by Feb. 13, 2026 — a year to the date of the mayor’s proclamation and a bit over four months from when Segal signed the OpenGov contract. That’s an incredibly tight timeline for a complicated technology implementation with clearly defined goals by which the city and its chosen vendor can be judged.
If it works, the mayor’s team will gain considerable leeway for its new way of doing things — and a leverage point for cajoling the “permanent government” of city bureaucrats in the future.
If it doesn’t, then the long knives will really come out.