Port responds to audit

The Port of Seattle went public Wednesday with its detailed response to a damning state audit, keeping its pledge to be more transparent about its business.

State Auditor Brian Sonntag called the 34-page response a "refreshing change" to the Port's earlier more defensive reactions.

But Port CEO Tay Yoshitani and Port commissioners said the response wasn't thorough enough — yet — for them to move forward with new construction projects, including a proposed $413 million new rental-car facility at Seattle-Tacoma International Airport. And David Cotton, the Virginia-based expert Sonntag hired to conduct most of the Port review, said he views the Port's response with skepticism.

Port commissioners have said in recent weeks they will not approve big new projects until they are satisfied with the Port's audit response. How the Port responds to the audit is crucial, commissioners say, to regaining public trust in the countywide agency that runs Seattle's seaport and the Sea-Tac airport.

The state audit, issued last month, found the Port violated contracting procedures, misled commissioners and wasted $97 million in public money. It led the U.S. Justice Department to announce a criminal investigation into possible fraud.

Yoshitani and Commission President John Creighton said the chief value of releasing the response now, before it's fully fleshed out, is to show taxpayers the progress the Port is making and to elicit public comments about its plan.

"What impresses me about this report is its accountability," said Commissioner Bill Bryant. "It not only identifies what needs to happen, but identifies dates and, more important, who is responsible for making it happen."

The Port response agrees with 37 of the audit's 49 recommendations, Yoshitani said. Many of the responses deal with technical contracting and record-keeping procedures. But some are more basic. For instance, the Port will immediately cease informal ways of resolving disagreements with contractors, known as "tummy rubs."

The state audit detailed a case in which a Port construction manager wrote a contractor "let's figure that out [project cost] via tummy rub in lieu of you all documenting what is undocumentable." The Port manager and contractor in that case disagreed about the price of one task. The manager offered $54,500 and the contractor countered with $62,000. The manager wrote back saying, "If it starts with a '5' we're there." They settled on $59,999.

In another episode, auditors said a Port manager told them that the Port's chief lawyer authorized contract negotiations the audit deemed illegal. The lawyer, Craig Watson, denied authorizing the contract talks and told auditors he didn't have a written record of his advice. The Port's audit response calls for all legal advice to be written.

Sonntag said he only had a chance to skim the audit response on Wednesday. But he said he was encouraged by its tone. "The tone conveyed was 'We're going to address these things; we know change has to happen.' "

But Cotton, who authored much of the state's 334-page audit, said he believes the commission should view the Port's response "with a high degree of skepticism."

Cotton said the Port's response misrepresents several of his findings and doesn't address underlying problems detailed in some findings, thereby evading some needed reforms.

Creighton, the commission president, stressed the audit response "is just one piece" of the Port's larger reaction. The commission will conduct its own investigation, he said, into possible fraud in Port construction contracts and likely strengthen its oversight authority.

Yoshitani said the audit's findings will not cause Port employees to be fired, unless they're found to have committed fraud. He said those who failed to comply with proper procedures would get another chance under new, clearer rules laid out in the response.

Yoshitani, who came to the Port this year, said it would be unfair to punish employees for practices that had been common at the Port before he was hired.

"What I want to do is draw a line in the sand today and say, 'The culture has to change. We are going to put changes in place, and going forward you have no excuse. You know the policies. You've been trained in them. So there will be no excuses in the future.' "

Bob Young: 206-464-2174 or byoung@seattletimes.com