Mayor Breed Orders Increased Scrutiny of San Francisco Contract Work, Grantees

Outside contractors and grantees will face tighter scrutiny in order to receive city dollars, according to a directive Mayor London Breed issued Tuesday.

The order, which is effective immediately, comes after numerous high-profile scandals in City Hall. Breed is facing a tight reelection this fall, and her move comes as opponents lay out their own competing plans to clean up corruption in San Francisco.

“Misconduct from those that would wrongfully take advantage of City resources has not been tolerated during my administration, and these new efforts expand on this commitment,” Breed said in a statement. “We are putting stronger protections in place and expanding the guidance of our Departments to strengthen the public trust and improve accountability in how our government operates.”

Breed’s directive orders city departments to ensure by Nov. 1 that any staff involved with grant-making understands and complies with the City Controller’s standards for agreements with external nonprofits. Those standards include tracking performance measures, engaging in regular fiscal monitoring and retaining all records from the selection process. It also requires departments to follow these rules when payments are issued in advance and to give grantees clear written instructions about timelines for payments and invoices.

By September 30, the City Administrator and City Attorney’s Office are also required to create a set of policy guidelines for conflicts of interest on grant selection panels for all departments.

On Tuesday, Breed also announced legislation to support her directive that would require contractors to keep separate accounts for political activities, prevent them from using city funds for advertising or lobbying city officials, and bar contractors from receiving public funds if they do not follow the city’s competitive solicitation process.

The moves are in response to multiple incidents in recent years where city grantees have misused funds, failed to pay workers, or sought reimbursement for ineligible work.

In July, the former leader of the nonprofit SF Safe, Kyra Worthy, was arrested for allegedly misusing public funds and donations intended for crime-prevention programs. Prosecutors allege that Worthy funneled more than $700,000 into her personal bank account and to throw lavish parties through a combination of fake invoices and employee wage theft.

The city is also still working to earn back voters’ trust after a spiraling corruption scandal within the Department of Public Works and the Department of Building Inspection, which has led to convictions for Mohammed Nuru, former head of the Director of Public Works, and former Public Utilities Commission General Manager Harlan Kelly.

“Those who undermine our contracting processes and exploit public resources are not welcome to do business with our City and will be held accountable,” said City Attorney David Chiu. “I am proud of our attorneys and investigators who have worked diligently to root out corruption and maintain the integrity of City government”

Meanwhile, those hoping to unseat Breed in the mayoral election are laying out their own plans to combat corruption in City Hall.

“You can’t solve the problem when you are the problem, and we can’t trust the same people who built this broken, corrupt bureaucracy to turn it around,” nonprofit founder and Levi Strauss heir Daniel Lurie said in a statement. “I am the only candidate who will bring a new culture of accountability to City Hall on day one.”

Lurie wants to remove a campaign fundraising loophole where candidates are able to raise more than the $500 contribution limit through ballot measure initiatives. He also wants to raise candidate filing fees for those who have records of ethics misconduct, fully fund the Ethics Commission, require reporting for any meals costing over $500, and create an ethics enforcement dashboard to track campaign finance reports, lobbying disclosures, gifts, contracts and other areas for potential conflicts of interest.

The plan explicitly targets several of the ethics complaints that former interim mayor and supervisor Mark Farrell, who is also running for mayor, has faced in the current election cycle. He has come under scrutiny for his ties to the moderate political organizing group Together SF Action, which has raised millions of dollars through a ballot initiative to slash the number of city commissions.

Farrell faced similar accusations for campaign finance violations during his bid in 2010 for San Francisco Supervisor. The Ethics Commission fined Farrell $191,000 – the largest in the city’s history – and he later paid the city $25,000 to settle the case.

Still, Farrell has sought to portray his candidacy as a break from past City Hall scandals.

“I will bring new transparency and accountability from day one,” said Farrell, who has defended his record on the current campaign trail. “I will centralize all third party non profit contracts under the Office of the Mayor to reduce fraud and waste while bringing greater accountability.”

Supervisors running for mayor criticized Breed for the corruption that has come to light during her administration, pointing to their own efforts to weed out corruption in City Hall from within.

“​​Our current mayor’s administration is one of the most corrupt in San Francisco history,” said Supervisor Ahsha Safaí. “More of her senior officials have been convicted of corruption than in any other administration in modern times.”

The Excelsior supervisor pointed to his efforts to maintain funding for the Ethics Commission when Breed attempted to reduce it and said mandating audits of nonprofits and other city contractors will be a priority if he is elected.

Board of Supervisors President Aaron Peskin, meanwhile, is sponsoring Proposition C on the November ballot, which would create an Inspector General whose jobs would be to monitor for corruption and fraud and hold elected officials accountable, “so that we don’t need to rely on the FBI to maintain public integrity,” he said.