The federal government has concluded that Seattle Tunnel Partners and the Washington State Department of Transportation are responsible for failing to meet small business contracting goals set for the Alaska Way Viaduct replacement project. The U.S. DOT's Federal Highways Administration(FHWA) issued a report on Friday which found that the state's tunnel contractor, Seattle Tunnel Partners, intentionally discriminated against small, minority-owned business owners and that WSDOT knew about it, but looked the other way.

WSDOT has failed to intervene when there is clear evidence to support that STP is not (following federal regulations), wrote the FHWA.

Last month, the KING 5 Investigators reported that just $7 million had been directed to minority and woman-owned businesses, far short of the $91 million goal set for the project. If the goal is not met -- or at a minimum, if the Seattle Tunnel Partners can t show a good faith effort was made to meet the condition -- federal dollars for the project can be withdrawn.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.

FHWA began investigating the tunnel project's contracting after it received a complaint in August 2012 from the owner of a small trucking firm based in Kirkland.

Elton Mason, owner of Washington State Trucking, alleged that small firms were being discxriminated against and purposefully cut out of the project.

Nothing has ever been done. It's been swept under the rug by the state agency. This (action by FHWA) is turning the corner in a huge way, said Mason. Small businesses are the backbone of our economy. This (decision) is very beneficial. It's a win for me and for any small business in the state.

Other members of the minority contracting community told KING 5 that WSDOT was partly to blame.

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 Shawn Vinson, owner of Seattle-based DHD Trucking.

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 Bob Armstead of the Washington chapter of the National Association of Minority Contractors. The huge problem is that WSDOT is not enforcing the (minority contracting) regulations.

The U.S. DOT agreed that WSDOT failed to hold its contractor accountable, even though federal regulations require action by the state.

WSDOT may not aid and abet STP's outright refusal to (try to hire small businesses). obliged to intervene, wrote a Federal Highways Office of Civil Rights official. WSDOT's 'hands off' approach to STP's practices ....does not meet the requirements of (receiving federal highway dollars).

In a letter sent to Mason today, the FHWA wrote: It is clear that STP is not actively and aggressively using all measures that one would reasonably undertake if intending to meet the Project's DBE goal; it continues to engage in pro forma efforts that do not yield DBE participation while submitting inflated DBE participation reports based upon unsubstantiated commitments. WSDOT has failed to intervene when there is clear evidence to support that STP is not making adequate good faith efforts to achieve the Project goal which was a condition of contract award.

WSDOT sent an email blast on Friday with a statement from Transportation Secretary Lynn Peterson. Peterson said WSDOT will determine what actions are available and appropriate under the terms of the contract with STP in light of FHWA s findings. We intend to make that determination within 30 days. She also said the agency is in ongoing discussions with FHWA about our oversight of DBE compliance on this project. We will identify future actions necessary to address the issues they identified and will provide a response to FHWA within 30 days.

Peterson said WSDOT has asked the state Attorney General to hire an independent third party to review the FHWA findings and the documents used during the investigation, and to recommend next steps for the tunnel project. Those recommendations will be incorporated in the plan WSDOT will submit to FHWA outlining steps the agency will take to improve monitoring and oversight of DBE utilization.

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