Oakland spent roughly $330 million on capital improvement projects — buildings, roads, sewers, and traffic lights — from mid-2022 through mid-2025, but a new city audit finds the oversight behind that spending has been full of holes. City Auditor Michael Houston's report points to staff vacancies, slow contractor payments, missing bond audits, and no long-term capital plan since fiscal year 2022-2023.
The findings, first detailed by The Oaklandside, describe a construction management division where roughly half of civil engineer positions have sat vacant for the past three fiscal years, forcing the city into dual-role arrangements it otherwise wouldn't use. Houston's office warns those dual roles can mean less oversight, staff overreliance, and potential conflicts of interest. The city spends hundreds of millions of dollars annually on this kind of work, according to the same report.
Payment delays traced back to staff vacancies, holdups in getting permission to withdraw bond funds, and the invoice-submission process itself. On average, the city took 47 days to process audited capital-project invoices — and on one project, those delays cost Oakland $66,000 in interest payments. In another instance, city staff charged a transportation payment to a fund that was restricted for sewer work.
Bond Audits Still Missing
Houston's report confirms Oakland has not conducted the mandatory audits of Measure KK and Measure U funds — the same gap the Alameda County Civil Grand Jury flagged in its June 2024 report, which found the city's precarious financial state had prevented it from issuing infrastructure bonds in 2024. Oakland's Measure KK and the $850 million Measure U, approved in November 2022, were followed by the city resuming sales of municipal debt in December 2025, issuing $285 million in Measure U bonds for transportation, park, and housing projects after a two-year pause tied to budget deficit concerns, per The Oaklandside.
Houston said the city needs to manage its resources efficiently and effectively beyond the short term. Betsy Lake, per the report, agreed largely with the auditor's recommendations, which total 17 suggestions for improving how Oakland manages construction projects — including a push toward a qualifications-based selection process for bidders.
A Small Circle of Contractors
The audit also found that five companies received 61% of Oakland's capital improvement dollars in fiscal year 2024-2025. Gallagher & Burk Inc. and McGuire and Hester together took in 41% of the city's construction spending between 2022 and 2025 — more than $48 million and more than $40 million respectively — while the same two firms captured 51% of on-call spending from fiscal years 2022-2023 through 2023-2024. Other major recipients included Ray's Electric with $18.6 million, JUV Inc. with $17.4 million, and Andes Construction with $16.7 million.
Oakland maintains 51 pre-approved vendors for on-call contracts, but the auditor's report notes that on-call contracting may contribute to higher costs by reducing bids for larger projects. In one contract example from five years earlier, Oakland received 10 bids for multiple paving projects; the report also describes an instance where the city received just five compliant bids a year after facing bidding trouble. Less competition among a small group of contractors can result in higher costs for the city, and the Alameda County Civil Grand Jury has estimated Oakland could save 10% to 15% on projects with more competitive bidding.
By comparison, the audit found San Leandro employed 131 firms for capital projects in fiscal year 2024-2025, with its top contractors receiving 36% of capital project funds, while Berkeley employed 172 firms, with its top contractors taking 33%. Oakland, by contrast, employed only 109 firms during the same period.
Local Business Rules Cut Both Ways
Oakland's Local and Small Local Business Enterprise program, established in 1993, promotes local participation on public construction contracts. The city provides background information about the program through the City of Oakland.
Yet the auditor's report found the program's implementation sometimes increased capital-project costs and delayed contracting, and that the majority of subcontractor work went to businesses that were not local or small despite the targets. In one case, City Council declined to waive local-business requirements for a proposed $59 million award to three vendors. Oakland also reduced a trash-capture task order from $1.9 million to $660,000 in 2024, resulting in fewer trash-trapping devices being installed. A separate 2024 Disparity Study by consultant Mason Tillman Associates, publicly released in January 2026 after being held for 20 months, found that participation by minority- and women-owned businesses in municipal contracts was significantly lower than their availability in the marketplace, according to reporting from the Oaklandside.
Part of a Broader Pattern
Houston's contracting report is the latest in a string of oversight findings from his office. In March, Hoodline reported on an auditor's finding that Oakland spent nearly $69 million on homelessness contracts over three years without adequate performance tracking. In August, the auditor's office also detailed findings on capital-project financial management. And in July, city administration had not published its legally mandated annual transparency report on contracts under $250,000 since October 2023 — a gap that leaves millions of dollars in non-competitively awarded small contracts unexamined, since the city administrator or designee can approve contracts up to that amount without prior City Council authorization.
Mayor Barbara Lee's administration has moved on a separate track, announcing in July that the City Council authorized funding for an independent forensic audit of the city's contracting practices, targeting capital improvement projects and Human Services Department contracts specifically. Michael Houston leads the auditor's office.
Tension between the auditor's office and city departments over follow-through is not new. In May 2025, KQED reported that Oakland continued making unbacked overtime payments two months after a City Auditor investigation had declared the practice wasteful, prompting the City Attorney's Office to retain outside legal counsel to review the findings. Whether the latest 17 recommendations fare better than past ones may hinge on how quickly Oakland can fill the civil engineering vacancies that Houston's report says have hollowed out its capital-project oversight for three straight fiscal years.
