Joint Audit and Investigation Finds Contract Steering at San Francisco’s Office of the Treasurer & Tax Collector in Bidding Contest to Replace City’s Business Tax System

SAN FRANCISCO — The Office of the Controller and the Office of the City Attorney today released findings of a joint audit and investigation stemming from allegations first made public in September 2025 about contract steering and conflict of interest in the selection of a vendor to replace the business tax system at the San Francisco Office of the Treasurer and Tax Collector (TTX).  

The independent investigation, which was launched at the request of the City Treasurer, found that TTX’s former Chief Assistant Treasurer Tajel Shah systematically bypassed ethics rules and city procurement policies to steer a multi-million-dollar contract to a personal friend’s firm, undermining public trust and violating city standards. The report details how Shah abused her authority to favor Mechanical Orchard, a company whose then-Chief Revenue Officer was a close personal friend. The misconduct compromised both a 2023 preliminary "discovery project" to inform the scope of work needed, and a subsequent Request for Proposal (RFP) to replace the City’s aging business tax system. Shah failed to disclose her personal friendship before both procurements and understated her role and involvement.

Mechanical Orchard was one of several vendors bidding for the $7 million contract to replace the City’s outdated system for administering business taxes and ultimately won due to the improper interference of Shah. The numerous ways Shah directly or indirectly had her hand on the scale to favor her friend’s company included:

• Bypassing a competitive process and using a sole source contract to let Mechanical Orchard conduct the discovery project, which they were paid $65,000 for.
• Sharing access to information unavailable to other bidders, giving the firm an unfair advantage in its eventual contract bid.
• Not requiring staff to verify minimum qualifications.
• Altering the scoring method to improve Mechanical Orchard’s ranking; and
• Adding $1.7 million in undisclosed, unsubstantiated costs to competing bidders, resulting in Mechanical Orchard appearing like the cheaper option and ultimately giving them the highest scoring proposal.

The audit and investigation concluded that while TTX could not have prevented all of the former official’s actions, the department should have implemented stronger controls to detect, deter, or prevent misconduct earlier on. While Shah clearly abused her positional authority and had a management style largely defined by intimidation, TTX’s organizational structure at the time — which had Shah overseeing most of the department’s operational teams and the department’s Human Resources function — discouraged staff from raising concerns and contributed to a lack of appropriate checks and balances.

“Preventing bias, favoritism, and the misuse of public funds requires every individual to recognize their ethical responsibility to speak up against wrongdoing — and that needs to happen in an environment where transparency and collective accountability are non-negotiable in every part of our government,” said Controller Greg Wagner. “The findings point to an effort to undermine the integrity of the procurement process, and underscore why organizational culture and professional competency are our strongest lines of defense.”

“While the audit findings show a deliberate attempt to steer City funds in violation of City rules, they also demonstrate that competition remains the most effective way to guard against favoritism and ensure integrity in public contracting,” said City Attorney David Chiu. “I applaud the department for swiftly requesting an independent investigation and encourage all City employees to report concerns to the Controller’s Whistleblower Program, if they do not feel comfortable raising them with a supervisor. Every City employee must act with the highest integrity to ensure that San Francisco is an example of good government.” 

Mechanical Orchard withdrew from contract negotiations in September 2025, one day before the news broke about the allegations against Shah, and the contract was never finalized. TTX confirmed it will cancel the existing Request for Proposal, since it was tainted by the misconduct identified in this report, and is committed to restarting the process with proper procedures in place and in a fair and transparent, competitive process. TTX has also reorganized its leadership to address structural deficiencies and is committed to implementing all eight recommendations outlined in the audit report, including the improvement of their workplace culture.

The Controller’s Office reminds all city employees that the San Francisco Whistleblower Program remains a secure, strictly confidential, and independent avenue to report fraud, waste, and abuse outside of their departmental chain of command.