San Francisco’s procurement system plays a vital role in the city’s operational framework, contributing significantly to its annual budget of $16 billion. This system, which directs massive spending—accounting for over one-third of the city’s budget—affects the everyday lives of residents and has far-reaching implications for the local economy.
Despite its goals of improving service delivery and promoting sustainability, the procurement process is hindered by a labyrinth of regulations. More than 100 sections within various city codes outline intricate rules, making compliance a formidable challenge. Both city staff and vendors frequently find themselves tangled in this complex web, resulting in a procurement process that can stretch for months or even years. This lengthy approach stifles competition and inflates costs for public goods and services, ultimately affecting the quality provided to residents.
Data from the fiscal year 2022–23 highlights troubling trends: nearly half of the city’s solicitations garnered either few or no responses. A recent report by SPUR titled “Purchasing Power: Nine recommendations to improve San Francisco’s procurement process and make it a core part of the city’s strategy to deliver more equitable services” suggests that these low engagement levels point to a troubling culture of mistrust and a heavy-handed reliance on compliance-driven oversight.
Nicole Neditch, SPUR’s Governance and Economy Policy Director, noted that the city’s procurement process has become overly complex, leading to significant negative consequences. The multifaceted rules encompass all aspects of contract bidding, the types of work that can be procured, and mandatory wages and benefits for contractors and subcontractors. The city’s charter also contributes regulations on contracting, making the system even more difficult for staff to navigate.
A challenging procurement process adversely affects all participants. City staff often prioritize meeting compliance requirements over effective project management, weakening the procurement process. Vendors unfamiliar with these convoluted procedures may shy away from contracting opportunities, resulting in a non-competitive environment that delivers lower-quality goods and services at inflated prices to San Franciscans.
SPUR’s analysis reveals that many well-intentioned policies have unfortunately resulted in a confusing web of requirements, jeopardizing the city’s objectives for equitable service delivery. Staff resources are often drained by the need to maneuver through the complexities of this system rather than focusing on effective vendor selection or contract management. The structural barriers further exacerbate issues of competition, favoring organizations with existing relationships and experience navigating the process.
Furthermore, problems within the procurement culture often lead to finger-pointing at individuals rather than addressing systemic flaws, creating a climate of fear and excessive oversight. Though improvements have been made, the decentralized structure and limited resources inhibit significant advancements. The current thresholds for contracting do not correspond to the level of risk or amounts involved. SPUR’s report advocates for a fresh collective understanding to explore strategies that could save time and reduce costs within the procurement process.
Discussions with stakeholders highlighted a desire for a more effective procurement system alongside the understanding that realizing this change requires long-term vision, adequate resources, and committed leadership. SPUR suggests that the City Administrator’s Office should spearhead citywide operations, particularly in procurement, to improve outcomes efficiently.
Currently, the various 52 city departments independently manage different facets of contracting, lacking a unified coordination strategy. The COVID-19 pandemic exposed these inadequacies, prompting the formation of the Government Operations Recovery Initiative by the City Administrator’s Office—focusing on core city functions, especially procurement.
To transition procurement from an administrative task to a strategic initiative, SPUR recommends empowering the city administrator with the authority to coordinate procurement efforts across all departments. The administrator should lead interdepartmental collaboration, establish policy, and improve the overall procurement experience for both vendors and city staff. Adequate resources will be essential for this endeavor.
The disparity in workload between high-value and low-value contracts is another aspect of the procurement process that needs addressing. It has been noted that a $100,000 contract requires nearly the same level of work as a $5 million contract; however, contracts under $200,000 account for approximately 59% of the total number of contracts without yielding a proportional return in terms of spending. Streamlining the procurement process for these lower-value contracts would enable city staff to focus on entering into and managing contracts that have a higher financial impact. SPUR advises enhancing the Delegated Departmental Purchasing Authority, also known as Prop. Q, to expedite smaller contract responses.
Procurement serves as a powerful tool for policy implementation, and the city must wield it effectively to positively influence the local economy. The various contract policies instituted by San Francisco aim to reduce social inequalities while supporting the wellness and economic security of its residents. While these requirements often reflect noble intentions, their cumulative complexities create barriers for smaller businesses and contradict the city’s objective of fostering local investment and equitable contracting. Recent legislative efforts to streamline procurement processes are steps in the right direction, yet they may inadvertently add to the confusion without addressing fundamental systemic issues.
For procurement policies to better achieve social goals, SPUR suggests that the city adopt a structured approach to clarify objectives, align varying policies, and deeply analyze the impacts of implementation. By integrating these assessments throughout the legislative process, San Francisco can ensure that requirements are both beneficial and feasible, promoting the overarching procurement objectives.
The report makes a compelling case for shifting from a culture of fear to one based on trust. Persistent scandals and lawsuits have eroded public confidence in government contracting, forcing the city to impose additional burdens on contractors and staff alike. Ironically, these added complexities in the procedures can obfuscate the detection of corruption and lengthen the overall procurement timeline. As a result, the focus inadvertently shifts away from effective outcomes. Staff often rely on rigid and outdated scopes of work dictated by compliance rather than pursuing innovative solutions that would deliver better results. Adopting a management approach that prioritizes successful outcomes rather than strict compliance could mitigate these challenges. SPUR recommends the city embrace an agile, test-and-learn methodology in its contracting practices. This would involve rewriting RFPs, rethinking scopes of work, and managing projects in more adaptive ways to promote effectiveness.
Furthermore, addressing the hurdles faced by contractors is vital for optimizing procurement experiences. To attract new vendors and local businesses, the city needs to streamline processes for discovering and applying for contracting opportunities. SPUR proposes that the City Administrator prioritize enhancements within the Digital Services team to design user-friendly contract creation workflows and improve vendor experiences. Additionally, a centralized platform for contracting opportunities—ideally the SF City Partner Portal—should emerge as the primary source for all relevant contracting information.
Automation of procurement processes would alleviate administrative burdens and enhance compliance, making it easier for vendors to navigate the system. SPUR encourages a test-and-learn approach that incorporates user feedback, alongside establishing key performance indicators to monitor equity, efficiency, quality, and overall user experience. Regular public reporting of these metrics would further enhance transparency and accountability.
The absence of a cohesive entity overseeing the end-to-end procurement experience for vendors and staff is evident. A significant need for technical support and training for both city employees and vendors persists. SPUR advocates that the City Administrator’s Office provide comprehensive resources—such as process maps and guidance documents—to enhance staff and vendor proficiency in navigating procurement systems. Moreover, clarifying the roles of preapproved-vendor lists and collaborative agreements would improve understanding and ease navigation. Centralized support for smaller departments lacking dedicated procurement staff should be a priority. Establishing a citywide community of practice could foster collaborative learning and sharing of best practices within the procurement landscape.
Moreover, SPUR underlines the importance of looking beyond city boundaries for solutions and partnerships. By leveraging as-needed contractor pools and cooperative contracts, the city can reduce solicitations and streamline procurement timelines. Updating administrative codes to waive local requirements for cooperative contracts from other government bids could simplify the process significantly. A centralized repository of executed contracts would facilitate sharing and further enhance efficiency across departments. Additionally, incorporating default language into contract templates could standardize and expedite their use across various agencies. Utilizing regional and state contracting mechanisms, like the California Multiple Award Schedule, can also lead to quicker and more cost-effective procurement for frequently required goods and services.
The overarching objective is clear: through increased collaboration and resource sharing across local governments, San Francisco can drive down procurement costs while simultaneously enhancing equity and service delivery for its residents.
image source from：https://www.spur.org/news/2025-04-22/how-san-francisco-can-improve-public-services-and-lower-costs-qa-nicole-neditch
