The State Auditor's Office released a performance audit of the Port of Seattle today. It isn't pretty.

• Port construction management lacks cost controls and accountability.
• The Port circumvents competition requirements in violation of its own policies and sometimes in violation of state law.
• Port policies and Port management’s interpretations of its policies result in a lack of transparency and thwart Commission oversight of construction management activities.
• Port construction management records are incomplete and disorganized.
• The Port fails to enforce basic contract requirements, resulting in delays, extra costs, and an inability to defend against claims.
• Port construction management is vulnerable to fraud, waste and abuse.

According to the report "auditors identified $97.2 million in unnecessary costs. The Port has the potential to avoid similar costs in the future if it institutes every audit recommendation."

Among the other conclusions of the audit:

• The Port lacks sufficient policies and procedures to safeguard public assets from misuse, abuse and fraud. In cases in which controls are in place, they are not always followed.
• The Port Commission has largely delegated decision making responsibilities for construction projects to Port management and employees. In some cases, vendors control projects and make decisions that should be made by the Port.
• Port executive management has withheld information from and sometimes has misinformed the Commission about the terms and progress of construction projects.

Auditors found these conditions are caused by:

"The Port Commission’s adoption of Resolution 3181, delegating some of its decision-making authority to Port administration, including some oversight of construction management. The former Chief Executive Officer’s broad interpretation of the resolution effectively distanced the Commission from information and oversight authority of capital projects. The audit found no record of the Commission reassessing or questioning whether it was meeting its responsibilities to oversee construction projects.

• Port management does not segregate the duties of procurement and contractor oversight. Port employees routinely award contracts and then oversee the contractors they selected. This creates a conflict of interest because those who work with the contractors may develop working relationships that prevent them from awarding and overseeing contracts with a higher degree ! of objectivity and diligence.

• Port commissioners have largely ceded the authority to award and manage contracts to low- and mid-level project managers.

• According to an e-mail to the contracted auditors, the Port maintains it “is not subject to any specific legislative framework governing its procurement practices other than those which govern public works design and construction contracts.”

• The Port does not enforce standard construction contract provisions, leading to significant cost and schedule overruns.

These conditions leave the Port’s construction management vulnerable to fraud, waste and abuse. For example, Port management authorized a Third Runway contract that cost $32.7 million more than the Port engineer’s original estimate. The contract violated state law, and details of the arrangement were concealed from the Commission.

In addition, a consulting agreement awarded in 1998 increased without competition from $10 million to more than $120 million and is being used to augment Port staffing, unnecessarily costing taxpayers $60.5 million."

I wonder if anyone at the Port will be getting a golden parachute as a result of this audit?