Small firms cut out of $1.3 billion Seattle tunnel project

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by SUSANNAH FRAME / KING 5 News

Bio | Email | Follow: @SFrameK5

KING5.com

Posted on October 2, 2013 at 10:45 PM

Updated Wednesday, Oct 2 at 11:35 PM

Small businesses have received just a fraction of the $90 million Washington state hopes to steer their way from the $1.36 billion Seattle deep-bore tunnel project.

With the project more than half-way complete, small and minority-owned construction companies have signed contracts potentially worth $25 million to complete tunnel-related work. But to date, just $7 million has been paid out to these small firms.

The Washington State Department of Transportation awarded the huge contract to Seattle Tunnel Partners in 2010 with a federally mandated condition: sub-contract a certain percentage of the work to small and minority-owned construction companies. If that condition isn’t met -- or at a minimum, if the prime contractor can’t show a good faith effort was made to meet the condition -- federal dollars for the project can be withdrawn. For the bored tunnel contract, the U.S. Department of Transportation is kicking in nearly $500 million.
  
WSDOT set the goal at 8 percent of the total contract value, or $91 million. Records obtained by KING show that currently $25 million in contracts have been signed with women and minority owned businesses, but to date, only $7 million has been paid to the small contractors. It’s unclear if STP will be able to make good on fully executing the contracts signed.

One small firm that does have a subcontract with STP is still waiting for work assignments. STP signed a $630,000 contract for street sweeping near the tunnel project with Seattle-based company DHD Trucking.

DHD owner Shawn Vinson said he was thrilled to get the security of work with a signed contract.

"This is history, we thought we were going to be part of history," he said.

Vinson signed the paperwork in June, but since that time he said he hasn’t been called once to do any street sweeping. Instead, STP bought its own street sweepers.

Prior to signing the contract, DHD Trucking had received full-time sweeping work from STP, but once the prime contractor acquired its own equipment -– the same time the contract was signed -– all the work dried up for the small company. Vinson said he believes STP cut him out of the process in order to keep more of the lucrative project money.

"We had six full-time, 40-plus-hour workers and now we're down to no employees. I'm the only one working. Because there's no work for the employees I had to lay everybody off," said Vinson. “They’re taking food off our table.”

Bob Armstead, president of the Washington state chapter of the National Association of Minority Contractors, said his organization has worked diligently to get its members work on the mega-project without success.

“(I would give this project) an F-minus,” said Armstead. "It's totally bad for the local economy. It's mean, spiteful, hateful, it's damaging to the community."

Todd Trepanier, Alaskan Way Viaduct project administrator, said WSDOT is increasing its efforts to include small, local businesses.
 
"We are putting a lot of emphasis on this," said Trepanier.

"To be at 7 million [in payments] at this time, we would like to see that number higher. There's some things that probably could have been done differently, but at this point we're very pleased with how much attention DOT is putting forth on this and that STP is putting forth."

Ultimately, WSDOT is responsible to follow federal highway regulations and make sure the prime contractor, STP, makes a good faith effort to attain the goal of including small businesses on this project.

Members of the minority contracting community told KING 5 that WSDOT isn’t providing the leadership needed to make that happen.

"They're trying to get all of the money and WSDOT is not policing them (STP) so they're just letting them do what they want to do," said Vinson.

“There are businesses available to do the work, that are ready, willing and able to the work but they’re not getting the opportunity,” said Armstead. “The huge problem is that WSDOT is not enforcing the (minority contracting) regulations.”

WSDOT said one of the ways the agency is showing its renewed commitment to small local businesses is by hiring Bruce Watts, a Portland-based consultant who has a track record of helping government agencies meet goals of giving a fair portion of mega project work to small, struggling construction firms.

"We are turning over every stone possible to try to find opportunities at this point. I can't tell you how much ground they can make up but I can tell you they are becoming, they are extremely attentive to trying to make up as much ground as humanly possible," said Watts.

Watts was hired in August, more than three years into the project. His contract is worth $73,000 for six months of work.

KING 5 asked Watts if he was brought in too late to fix the problem.

“I can’t say too little too late. Ideally I’ve always been at the beginning of a process. That’s where you have the most bang for your buck. That didn’t happen this time. But I can tell you that when I’m done here WSDOT will be a lot more attentive to this piece in the very beginning (of projects),” said Watts.

Seattle Tunnel Partners is actually a joint venture of two out-of-state powerhouse contractors -- Tutor Perini of California and the New York based Dragados USA.

The federal government has charged both companies with breaking minority contracting regulations on other projects. In 2009 Tutor Perini paid $9.7 million to the federal government for allegedly cheating minority contractors out of work in New York. Last spring, Dragados USA paid $7.5 million for the same sorts of allegations.

The Association of Minority Contractors said WSDOT shouldn't have hired companies with that kind of track record.

"It's horrible, worse than horrible," said Armstead. "To me it's a criminal act. If someone has a history of not performing, why would they believe that they would perform here.?"

DHD's Vinson said he still hopes he’ll get a phone call from STP to begin sweeping streets on the tunnel project again, but at this point he thinks the six-figure contract he signed is a meaningless pile of paper.

"It's really worth about 15 cents. It's not worth nothing but ink and blank paper. That's all it is. It's $630,000 worth of hope and false dreams," said Vinson.

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