Why the Port of Seattle Can’t Get Contracting Right

by Hanna Brooks Olsen

I-200, which passed 19 years ago, has made it nearly impossible to correct decades of discriminatory contracting processed—but that’s not the only reason

In late 2007, an audit of the Port of Seattle found numerous glaring issues, including the squandering of close to $100M. The report, which ultimately lead to the departure of two high-ranking officials and a criminal investigation, also found something else: Port leadership, it alleged, may have been exploiting loopholes in the rules around contracting to steer lucrative deals away from small businesses who had taken part in the bidding process and instead toward preferred providers.

“In my mind, one of our primary missions as a port is to really foster local small business,” said then-Port Commission President John Creighton, who’s up for election again this year. “We’ve been falling down on the job.”

Following the findings, the Port underwent all of the customary changes government bodies make when caught in an unflattering pattern of behaviors,  rolling out a transparency committee, vowing to improve, and “enacting strong accountability measures.”

Nine years later and many leadership changes later, new CEO Ted Fick was stepping down after being charged with misusing Port funds and giving illegal raisesThe transparency did not appear to have been much improved—and neither did the ongoing issues with problematic contracting processes.

Race, Diversity, and Priority Hiring at the Port

Every year, the Port of Seattle awards hundreds of contracts, from airport concessions and custodial deals to partnerships to provide technology, heavy machinery, materials, and labor. Every job that’s done at the Port of Seattle and its properties is done by a government employee or a contractor. And those are desirable contracts—they’re the kind of good jobs that lawmakers promise to bring back to their communities while on the campaign trail.

The bidding process can be daunting, though, and many newer or smaller businesses stumble when trying to apply. And even when they get it right, they may still not get the contract;  in recent years, the Port of Seattle has made news headlines for their contracting behaviors.

In 2015, after emails between two Port employees referring to a Rod O’Neal, co-owner of Seatac Bar Group and a Black man, as a “thug” surfaced, Creighton publicly denounced discrimination, stating on Twitter that any employees who “feels promoting diversity is hogwash…should find new work.”

Those same employees fired back, filing a wrongful termination suit and claiming that Creighton had terminated them not because of their email exchange, but because he was seeking revenge for their attempts to flag preferential treatment received by O’Neal and other non-white concessions providers.

From their suit:   

Commissioner Creighton and former Commissioner Rob Holland developed close relationships with a handful of the minority-owned business tenants operating restaurants and bars at the airport (“the Tenants”). These Tenants donated tens of thousands of dollars to Creighton’s and Holland’s campaigns, socialized and dined together, and attended Seattle Seahawks football games together.

The two Port employees believed Creighton was upset over their objections to a 2012 motion calling for priority hiring of businesses owned by people from marginalized communities. Again, from their suit:    

Although drafted as a motion “promoting racial diversity” among airport businesses, it was, in fact, carefully crafted legislation designed to benefit only the Tenants who drafted it. Granting the leases in 2012 under the terms sought by the Tenants would have resulted in a gift of public funds in excess of $8 million.

The dispute between the tenant and the Port employees stretched back for years; jockeying for position in the concourse is an ongoing battle among Port employees and airport tenants. But the crux of the suit appeared to be that the airport tenants were receiving special treatment not because of their race, but because of their deep pockets.

However, even if the tenant in question was receiving special treatment for diversity’s sake, that would have been illegal, too.

A Culture of Discrimination, a Law Supporting It, or Both?

The Federal government provides the Port of Seattle incentive to award some contracts to less privileged vendors. The Airport Concessions Disadvantaged Business Enterprise Program (ACDBE) is an FAA program that’s “designed to help ensure that there is a level playing field for socially and economically disadvantaged firms to compete for airport contracting and concession opportunities.”

But the truth of the matter is that, despite that program and many more, the Port of Seattle doesn’t do a great job when it comes to hiring and contracting with POC-run businesses.  A 2013 report from the Port of Seattle noted that it had increased its overall expenditure to small businesses that are considered “minority-owned (MBE), women-owned (WBE) and disadvantaged business enterprise (DBE)” to 3.2 percent.

“As a part of the port’s 25-year Century Agenda objectives, we are working to increase the proportion of funds the port spends with qualified small business firms on construction, consulting, goods and services to 40 percent of the eligible dollars spent,” the report reads.

And while plenty of attempts have been made to course-correct, there are numerous factors that keep the main benefactors of Port contracts looking largely homogeneous—which is to say, white, wealthy, and male.

Chiefly, there’s a law against it. And without repealing that law, the goal of 40 percent seems like a moonshot.

Newer residents and younger readers may not recall, but in the state of Washington, it is illegal to hire or give contracts based on race, gender, religion, or a number of other factors.

Thanks to voters in 1998, who passed Tim Eyman’s Initiative I-200, the law of the land expressly explains that “the state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”

Though the law’s stated intent was to prohibit government entities “from discriminating against or granting preferential treatment to individuals or groups based on race, sex, color, ethnicity, or national origin,” which would, according to backers (like Holland, ironically), “promote equal opportunity for all,” the impact has been about what a person might expect—without diversity or priority hiring requirements, contracts have continued to land in the laps of the same partners time and again.

“I-200 hinders our ability to grow port contracting with local minority and women owned businesses,” Creighton told the Emerald. John Persak, a longshoreman who’s now running for Port Commission #4, agrees, citing the current climate of progress.

“I-200 needs to be repealed,” he said. “Given that marriage equality was upheld by a vote and I-1552 failed to qualify, now is a good time.”

But of course, I-200 isn’t just a Port problem; since it was enacted, public agencies, including schools, have been tallying the fallout. In 2006, the PI declared that the initiative had “misread the future,” citing lower inclusion rates of students of color in higher education and reduced economic opportunity.

“I-200 was wrong because it let us pretend that we didn’t need to do anything to right the balance of decades of injustice,” wrote page editor Mark Trahant. “I-200 let us put off any urgency for another day.”

Public opinion has largely shifted on I-200—and on ideas of priority hiring and affirmative action, generally—and calls to strike the law have become an annual drum beat. In 2015, the Seattle Times Editorial Board—rarely a beacon for progressive changecalled for a repeal, stating that the law “does not serve the needs of Washington,” specifically noting the ways that the law narrows the college pipeline.

The following year, Creighton brought forward a motion by the Port Commission, calling on the Legislature to repeal I-200. It passed unanimously.  The language of the motion stated that a repeal would “allow the Port to continue to advance its mission of supporting family-wage job growth and ensuring that growing prosperity in the Puget Sound region is shared by all communities equally.”

Citing a study the Port had commissioned years before, which found that “utilization of minority-owned and women-owned business enterprises for construction and construction-related contracts was substantially below what might be expected based on the availability of those contractors,” the motion points the finger at I-200 for the Port’s contracting issues.

“This law constrains the Port in its ability to implement the findings of the disparity study by restricting programs designed to ensure that all qualified persons have fair and equal access to participation in public-funded contracts and to engage in employment policies that support regional economic growth and prosperity,” the motion reads.

Democrats in the House answered the call the following year, but the bill died a quiet death in committee.

What the Port Could Do

There are ways, though, to work around I-200, says Persak.

“One thing the Port could do is engage these communities,” he explains. Because, while repealing I-200 is certainly imperative, it’s not the only way they could be working to achieve that 40 percent goal. Education, direct outreach, and assistance with getting in the door could help increase the diversity of who gets Port bids without violating I-200—but you’d need to know who to talk to and how to do it.

“I think they want to do that, they know they need to do that, but they don’t necessarily know how to do that.”

Herein lies the pernicious cycle that I-200 and similar restrictions on priority hiring and contracting create; Port employees are rarely come from the communities that need direct outreach to get involved in the complex bidding process, and Commissioners almost never do.

Creighton says, despite the difficulty, they are working on it.

“We have been looking at best practices for increasing port contracting with WBEs and MBEs, and the City of Seattle appears to have had some success increasing its contracting numbers while working within the restrictions of I-200,” Creighton told the Emerald. “Still, repeal of I-200 would be best.”

Unfortunately, with I-200 on the books, it’s incredibly difficult for a government body like the Port of Seattle to set out to correct the decades-long course of action, even if the political will is there. But it’s not impossible—and if it really is a priority, now’s the time to move on it.

With so much support for a repeal, there’s one additional question: Why doesn’t the Port, an entity with huge sums of money behind it and extremely powerful friends and allies in Olympia, throw all of its weight behind a campaign? In Washington State, the initiative process is a political hammer that can be used both as a tool and a weapon—and, Persak says, it seems like a repeal would likely pass at the ballot in this climate.

“It’s going to be expensive,” he said, referring to a potential ballot initiative. But if it’s one of the most restrictive pieces of legislation on the books and is actively damaging our public agencies’ ability to hire and retain a quality, diverse workforce, isn’t it worth it?

The Port of Seattle needs a big PR win and quickly. Decades of bad news—corruption, fraud, discrimination of multiple kinds—mean the Port ought to be trying make some new allies, and that opening their contracting to new partners would be advantageous. Unfortunately, as long as I-200 stays on the books, any calls for more diverse contracting seem largely ceremonial.

Hanna Brooks Olsen is a co-founding editor of Seattlish and has written for the Atlantic, CityLab, and Seattle Met. When not stringing together words or making sounds she enjoys music on vinyl, bourbon, college football, making impulse purchases at second-hand stores, ballet, and sitting in dark bars with friends. She also sings a mean rendition of Walking in Memphis.

Featured image is a wiki commons photo

 

 

 

2 thoughts on “Why the Port of Seattle Can’t Get Contracting Right”

  1. The Port of Seattle has increased outreach and training for small businesses and those owned by women and minorities and the results show progress. We value the diversity of our region’s small, minority and disadvantaged business community and are working to reduce barriers to increase participation in Port contracts.

    Our Airport Dining and Retail (ADR) Program is a prime example of this outreach with recent lease group opportunities and the results of intense outreach, including:
    • 168 small, minority and women-owned businesses participated in an Airport Concessions Opportunity Summit in January 2016 to increase awareness of ADR opportunities ;
    • 44 attendees of a five-week program focused on training small, local, disadvantaged businesses on opportunities and challenges with participation in the ADR Program as well as how to become certified as an ACDBE;
    • over 700 firms are registered on our ADR leasing website (a 41 percent increase) since an increase in outreach beginning in 2015
    • We have also created new introductory and intermediate kiosk programs at Sea-Tac Airport to provide small businesses with the opportunity to experience operating here with less financial risk and lower barriers to entry than full in-line locations.

    Overall with the Port, increased outreach and support for small business include:
    • Small Business Roundtables have been held with Port Commissioners (Bowman, Albro, Gregoire) to hear from the small, minority and disadvantaged business community on how the Port can reduce barriers and increase WMBE participation.
    • PortGen (opportunity workshops and outreach for WMBE and small business on upcoming contracting opportunities) – 2017 held 6 sessions with 180 participants (year to date)
    • Promoted contracting opportunities through local community meetings such as Tabor 100, NAMC (National Association of Minority Contractors), Chamber activities as well as regional contracting forums and trade shows
    • Coordinated WMBE outreach with PRIME contractors on Port projects
    • Undergoing an assessment of the City of Seattle’s WMBE program to determine what best practices the Port of Seattle might adopt.
    • Will be sponsoring/hosting the 2018 annual meeting of the Airport Minority Advisory Council, the only national, non-profit trade association dedicated to promoting the full participation of minority-owned, women-owned and disadvantaged business enterprises (M/W/DBEs) in airport contracting and the inclusion.

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