Port of Seattle: Distinguishing public from private
Originally published on Washblog, September 13, 2005
By Noemie Maxwell

Public and private construction projects are classified differently in the state of Washington because justice dictates that those projects carried out using public resources should be accountable to the public and should adhere to standards that serve the public interest. Accordingly, under the RCW, public construction projects require greater levels of accountability to the public, higher levels of protections for workers, and certain other beneficial standards above what is required in private projects.

Imagine that a government agency say, for example, one such as our own Port of Seattle, is dominated by individuals who consistently favor private over public interests. Say that agency is predisposed to allowing private companies to run public construction projects as if they were private. And imagine that this agency must account for its actions in only a limited -- and retroactive -- manner. In such a case, we have a confusion of the public with the private, use of public funds for private gain without public oversight.

When public agencies such as the Port find ways to skirt accountability to the public and can break state law without meaningful repercussions, then we have a structural problem that breeds injustice.

Miriam Israel Moses, the Executive Director of Rebound, wrote to me recently about an apparent confusion of public and private by our own Port. Rebound is a not-for-profit building trades organization with a mission of ensuring that workers on public works projects are paid the prevailing wages, that the bidding process is fair for honest contractors, and that public projects are in compliance with the law. Here is her account of one of the Port's recent projects:

"Under the Washington State Public Works Act, 39.12 RCW a project is a public work when it constitutes a lien or charge on the government. This covers the state and all political subdivisions. A project may also be a public work when a public agency "causes" the construction to occur through a contract to rent, lease or own.

"Kinder Morgan (former Enron Executives) assumed a lease to operate a tank farm at the Port of Seattle. At a certain point in time, the Port determined that the tank farm was getting in the way of their barge operations and needed to be moved. There were a series of prior contracts regarding ownership of the tank farm that covered the circumstances under which the ownership of the public pipelines (which cross public lands) would transfer to the private owner. Kinder Morgan was grandfathered into these contracts which, essentially, state that ownership of the pipelines transfers if the Port advises the owner (Kinder Morgan) that the pipe needs to be repaired.

" In this case, the pipelines did not need to be repaired. Rather, the Port wanted them moved and entered into a contract with Kinder Morgan which caused this work to occur. The new pipelines were funded at about 70% by the public monies through the Port. This would normally make it a public work, subject to prevailing wage laws and to public contracting and bidding laws.

" The contract allowed Kinder Morgan to put the project out to bid. Under that scenario, the Port took the position that it was a private project, and set their attorneys to the task of making certain that they were on solid legal ground. Additionally, to ensure that there would be no problems with the prevailing wage law, the contract guaranteed that the workers would be paid the prevailing wages and that apprenticeship requirements would also be a part of the construction project.

" The problem is that the Port contracted with Kinder Morgan rather than letting the contract out for bid
under its own auspices. By doing so they, the Port made an end-run around public bidding laws. As
such, there was no public competitive bidding for the contract. The contract was awarded by Kinder
Morgan, rather than the Port, and to the best of my knowledge, only two contractors bid on the project.
It was awarded San Juan construction.

" REBOUND is a private non-profit organization that works to ensure compliance with public works laws.
Working together with the Mechanical Contractors Association and the UA Plumbers and Pipe Fitters,
Local 32, we sought to have the project declared a public work so that the public bidding process could
take place. Direct contact with the Port failed; however, the State Department of Labor and Industries, which has jurisdiction over these decisions, has determined that the project is, in fact, a public work. The Port did not change its view.

" It is my understanding that the State Auditor is conducting an audit of the Port and that this project will be a part of that audit. Based on L&I's determination, we gather that the Auditor will also determine that the Port violated public bidding laws. But this is a small slap on this wrist for a giant public agency and a very large project.

" Now that the project is just about over, how shall the Port be held accountable to the taxpayers, and why was it so insistent (since prevailing wages were required anyway) that the project not be subject to public bid, unless it wanted to allow Kinder Morgan to choose the contractor it wanted without the stringencies of public scrutiny.

" There is no question that the Port thinks of itself as a private, profit making corporation and acts accordingly. While the taxpayers should certainly applaud fiscal prudence, they should be angered by a disregard for the laws that protect workers and the competitive business practices from which all taxpayers benefit.

" As a private project, the public did not have access to records that it would normally have seen. The public did not have the right to know and was denied the benefit of fair competition for cost."

Miriam Israel Moses
Executive Director, Rebound
2700 First Avenue, Suite 103
Seattle, WA 98121
(206) 441-0455