Lurie stands by S.F. permitting contract despite questions of impropriety

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Mayor Daniel Lurie on Wednesday praised a new contract with a tech company to overhaul San Francisco’s embattled permitting system, despite reports this morning that revealed one of Lurie’s deputies overruled staff recommendations in awarding the contract to a product that had “gaps so significant” that it “shouldn’t be considered.” 

The company that won the $5.9 million contract, OpenGov, had significant ties to Lurie: Advisory board member Katherine August-deWilde is a major donor to and sits on the board of Tipping Point Community, the foundation where Lurie served as CEO until 2019, and board chair until 2023.

She and her husband donated $60,000 to a pro-Lurie PAC in the 2024 election and $100,000 to Lurie’s inauguration.

Its co-founder and former chairman, Joe Lonsdale, and CEO, Zac Bookman, are both major donors to Tipping Point. Bookman donated $500 to Lurie’s campaign.

The San Francisco Standard reported this morning that Ned Segal, Lurie’s policy chief responsible for housing and economic development, awarded the contract to OpenGov, even though another company scored higher and offered what staffers found to be a superior product at a lower cost.

During brief opening remarks this morning at an all-hands town hall on his program PermitSF, Lurie declined to address the scandal. His spokesperson did not directly answer questions about whether Lurie stood by his deputy and approved the behavior outlined in the Standard’s article.

Lurie, who ran for office pledging “accountability” and transparency, defended the decision to “try this OpenGov” despite the irregularity of the decision-making.

“I am hoping and asking you all to be with me on this,” said Lurie at the town hall “I know it’s going to be a pain in the butt. I’m sure all these transitions always are, but I’m telling you, it’s going to be worth it.”

OpenGov leaders also have significant ties to President Donald Trump. Lonsdale gave $1 million to Elon Musk’s super PAC supporting the president. Marc Andreesen, another tech Trump ally, lists himself as sitting on the OpenGov board.

Segal, for his part, also defended the decision to award OpenGov the contract over city staffers’ recommendations. 

“I’ve been here nine months now. I’ve made a lot of mistakes. I’m going to keep making mistakes. They’re always going to be well-intended, hard-working, ethical mistakes,” said Segal, his voice slightly hoarse but energetic.

But awarding the contract to OpenGov “was not one of them,” he continued. “There are ways that I’m always learning where I wish we’d done things differently here. I feel really good about the decision we made.”

PermitSF is an initiative Lurie announced in February to streamline and centralize the city’s permitting process, which residents often find confusing.

Lurie is not the first San Francisco mayor to take on permitting reform, a longstanding headache he promised to tackle on the campaign trail: He entered office with an ambitious goal to “create a consolidated permit application and allow for any permit to be filed online” within a year.

OpenGov plays a central role in that promise. But city staffers found it inadequate to the task. 

The Standard noted that a July report with input from 16 technical city workers found that Clariti, a competing bidder, was deemed “the most suitable of the 3 products.” OpenGov’s system, meanwhile, had “gaps so significant” that it “shouldn’t be considered.” 

Clariti scored an average of 4.42 out of 5, compared to OpenGov’s 2.88. 

Today, Segal attempted to brush off those concerns.

“Sometimes the decision-making criteria that the leadership uses to make a decision is different than the decision-making criteria that might be reflected in scoring, but that really gets to the heart of it,” he said. 

OpenGov has worked with more than 2,000 government agencies across the country. The company has “people on staff who used to be building officials, who used to be planners, and worked in the public sector recently and went through some of these experiences,” said Elizabeth Watty, another political appointee co-leading PermitSF.

Watty, who is also the director of current planning at the Planning Department, said one of “the big decision-making factors” for her was that OpenGov is taking a very different approach from Accela, the Planning Department’s public portal that has caused “a lot of pain points.”

Segal said he met OpenGov’s team for the first time only when the city had already narrowed the bidders to a few software companies. He said that, technically, the city had asked for a “request for information” and gathered information from interested parties, not a more formal “request for proposal” to evaluate bids and choose a vendor. 

“We weren’t ready to ask all the very specific questions you might ask in an RFP,” Segal said. 

Multiple government hands were confused at how a large contract could be awarded through an RFI process. OpenGov’s contract is valued at a minimum of $5.9 million and will take at least three years to fully implement, according to Sarah Bindman, product manager for PermitSF.

“We didn’t feel we had the luxury of waiting and going through more processes,” Segal said today. “So we then moved quickly into a contract with the company that we chose.”