Herrera’s ordinance would expand grounds to block entities from City funds
SAN FRANCISCO (Aug. 12, 2020) — City Attorney Dennis Herrera announced today that he has introduced legislation to help the City prevent corrupt contractors from receiving public funds. The ordinance submitted to the Board of Supervisors on Monday would allow the City to block entities from receiving grants or contracts if a government agency has charged that entity with willful misconduct in a criminal, civil or administrative matter. The legislation also explicitly adds giving illegal gifts or money to public officials to the list of specified types of willful misconduct.
“Corrupt contractors have no place in San Francisco,” Herrera said. “We need to ensure that our laws provide robust protections that empower the City to block contractors engaged in misconduct from receiving taxpayer dollars. The City must be able to prohibit somebody who bribes an official from doing business with the City. Period. If there is enough evidence to charge someone in a criminal, civil or administrative matter, they should not be receiving City grants or contracts while the case is being decided. This legislation gives San Francisco another tool to keep local government clean. It’s our job to make sure that contractors have a level playing field to compete on and that those who cheat the system don’t benefit.”
Currently, San Francisco has an administrative enforcement procedure that authorizes the City to ban contractors from applying for or receiving City contracts for up to five years for willful misconduct. The procedure is formally known as “debarment.”
Herrera’s legislation would strengthen that process in three main ways:
- It adds offering or providing money or gifts to public officials who are legally prohibited from accepting them as an express ground for debarment.
- It amends the definition of “contractor” to make explicit that grant applicants and recipients are included in the definition.
- It adds a procedure authorizing the City to suspend contractors (including grant applicants and grantees) that have been indicted or charged in a civil, criminal, or administrative matter with conduct that, if convicted, would be a basis for debarment. Grounds for debarment include the following types of willful misconduct: submitting a false claim against the City; breaching the terms of government contracts; conviction of a crime relevant to the contractor’s ability to honestly perform contracts; or collusion to obtain a City contract.
The legislation also includes minor provisions to improve the debarment process. For example, it would allow the City Administrator, rather than the Director of Administrative Services (a vacant position), to be one of the officials who can appoint a hearing officer for debarment proceedings. It also would allow the hearing officer to determine that a hearing should be held virtually rather than in person.
Herrera’s legislation stems from a public corruption investigation that began in January 2020 shortly before federal prosecutors announced charges against former Public Works Director Mohammed Nuru. The sweeping investigation, which the City Attorney’s Office is conducting in partnership with the Controller’s Office, is still in progress. The City Attorney and the Controller are investigating a variety of potential legal or policy violations. Areas of investigative focus include alleged improper gifts to City officials or employees and allegations that companies with City contracts funneled money through nonprofits to fund City programs and events, like Public Works holiday parties. The City Attorney’s Office has issued 24 subpoenas to various companies and nonprofits as part of the investigation.
Aside from Nuru, who was forced out after federal prosecutors filed charges against him, the investigation led then-Department of Building Inspection Director Tom Hui to resign in March. Both Nuru and Hui resigned while under investigation. Evidence showed Hui had accepted improper gifts, violated City law by giving preferential treatment to a developer and a permit expediter, and abused his official position to help his son and his son’s girlfriend obtain City jobs.
In July, Herrera filed charges to stop the construction contracting company AzulWorks, Inc., and its Chief Financial Officer and Vice President, Balmore Hernandez, from bidding on or being awarded contracts with the City and County of San Francisco for the next five years after the investigation revealed the contractor was running a bribery scheme with Nuru that violated local laws.