Commission Meetings

INTERNAL AUDIT REPORT 

Operational Audit 
Emergency Procurement Audit 

March 2020 – March 2022 

Issue Date: June 06, 2022
Report No. 2022-08

         Emergency Procurement Audit 


TABLE OF CONTENTS 

Executive Summary ...................................................................................................................................................... 3 
Background .................................................................................................................................................................. 4 
Audit Scope and Methodology ................................................................................................................................... 6 
Appendix A: Risk Ratings ............................................................................................................................................. 7 
Appendix B: Port of Seattle Memorandum ................................................................................................................. 8 












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         Emergency Procurement Audit 
Executive Summary 
Internal Audit (IA) completed an audit of emergency procurements in response to the COVID-19 pandemic.
The purpose of the audit was to broadly evaluate internal controls, including whether purchases were made
within the delegation of authority framework, whether state procurement laws were followed, and whether 
the costs of purchases were reasonable given the circumstances. The audit covered the period from March 
1, 2020, through March 31, 2022. 
Procedures related to emergency COVID-19 construction costs are performed through the Capital Internal
Audit function and were not included within the scope of this audit. As of May 3, 2022, approximately $8.75 
million was authorized for COVID-19 mitigation costs on major construction projects (see background
section for additional information). 
On March 16, 2020, the Port of Seattle’s (Port’s) Executive Director (ED) formally declared an emergency
due to the COVID-19 outbreak. The intent of the declaration was to “minimize the impact of COVID-19 to
Port of Seattle operations, its employees, contractors, and public health”, by providing authorization from
the ED to expedite the “award of any necessary contracts including those for goods and services, personal
services, professional services, and public works in accordance with all applicable laws, regulations, and
policies…”. 
Emergency purchase provisions are guided by the Revised Code of Washington (RCW). RCW 39.04.280 
defines an emergency as “unforeseen circumstances beyond the control of the municipality.” This RCW
and other related RCWs broadly waive competitive bidding requirements to expediate the procurement
process. 
In addition to RCW provisions, the Port’s procurement card policy (CPO-7) allows for routine purchases of
goods and services up to $25,000 for Central Procurement Office (CPO) employees and $5,000 for other
Port employees, and can be increased, when authorized in writing, to respond to an emergency. Finally,
Attachment A of the Port’s Delegation of Authority Schedule (EX-2), includes emergency spending limits 
based on role. Collectively, these requirements shaped procurement practices during the COVID-19
emergency. 
We concluded that purchases were made within the Port’s delegation limits and followed RCW 
requirements. We also validated that those costs appeared reasonable while acknowledging that the
primary objective of management was to acquire emergency supplies and services quickly. 
We extend our appreciation to management and staff of the Central Procurement Office for their assistance
and cooperation during the audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 


Responsible Management Team 
Nora Huey, Director, Central Procurement Office 
Dave Soike, Chief Operating Officer 


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         Emergency Procurement Audit 
Background 
On March 16, 2020, the Port’s Executive Director (ED) formally declared an emergency due to the COVID-
19 outbreak. The intent of the declaration was to “minimize the impact of COVID-19 to Port of Seattle
operations, its employees, contractors, and public health” by providing authorization from the ED to
expedite the “award of any necessary contracts including those for goods and services, personal services,
professional services, and public works in accordance with all applicable laws, regulations, and policies…”
(See Appendix B for the Declaration of Emergency Memorandum). 
The table below reflects the annual costs and type of purchase for the period beginning March 16, 2020
and ending March 31, 2022. 
Cleaning
Period                                       Service1       Masks    Sanitizer      Supplies2            Total 
2020 (March 16 - December 31)           $ 915,378   $ 239,323   $ 274,488   $ 1,178,337     $ 2,607,526
2021                                   1,519,083           0    180,146       144,010      1,843,239 
2022 (January 1 - March 31)                        0            0           0        10,699         10,699 
Total                                        $ 2,434,461    $ 239,323   $ 454,634    $ 1,333,046     $ 4,461,464 
The Port also reimburses Prime contractors for COVID-19 expense incurred on capital projects. The
amount of reimbursement depends on the type of expense. For example, hand washing stations and
hand tools are reimbursed at 50%, while the actual cost of a full-time COVID-19 site supervisor, plus the
applicable markup is fully reimbursed. As discussed, these costs were not included within the scope of
this audit, as they are audited through the Capital Internal Audit function. The table below reflects 
COVID-19 capital costs, as of May 3, 2022. 
Settlement of
Direct COVID-19   other COVID-19
Division                                                     safety costs       related costs               Total 
Aviation                                                    $ 7,348,378        $ 1,112,371         $ 8,460,749
Maritime                                                    183,364            98,170            281,534 
Economic Development                                  12,653                0            12,653 
Total                                                        $ 7,544,395        $ 1,210,541         $ 8,754,936 
Attachment A, of the Port’s Delegation of Authority Schedule (EX-2), includes emergency spending limits
based on role. Additionally, the Revised Code of Washington (RCW) allows for exceptions to standard
procurement laws during an emergency. RCW 39.04.280  Competitive Bidding Requirements – 
Exemptions defines emergency as “unforseen circumstances beyond the control of the municipality that
either: 
a) Present a real, immediate threat to the proper performance of essential functions; or 
b) Will likely result in material loss or damage to property, bodily injury, or loss of life, if immediate 
action is not taken.” 
According to the RCW, “If an emergency situation exists, the person or persons designated by the
governing body of the municipality to act in the event of an emergency may declare an emergency situation

1 Includes enhanced cleaning and sanitation for TSA checkpoints and baggage screening requested by TSA valued at $2,149,017. 
2 Includes installation of screening camera, cruise industry consulting services related to COVID-19, installation of UV
sterilization device, and customer service support for elevated body temperature screening. 

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         Emergency Procurement Audit 
exists, waive competitive bidding requirements, and award all necessary contracts on behalf of the
municipaltiy to address the emergency situation.”
State procurement and contracting laws promote open competition and transparency for goods and
services, unless specifically exempted  due to an emergency. Listed below are three  emergency 
procurement provisions:
RCW 39.04.280 Competitive Bidding Requirements 
Waives the competitive bidding requirements of public works contracts in the event of an emergency. 
RCW 39.80.060 Architectural and Engineering Services 
Permits an agency an exemption from following regularly required contract negotiation requirements for
architectural and engineering services at a fair and reasonable price. 
RCW 53.19.020 Personal Service Contracts
Gives an agency an exemption from competitive solicitation when an emergency exists. 














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         Emergency Procurement Audit 
Audit Scope and Methodology 
We conducted the engagement in accordance with Generally Accepted Government Auditing Standards
and the International Standards for the Professional Practice of Internal Auditing. Those standards require
that we plan and conduct an engagement to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our engagement objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our engagement
objectives. 
In some cases, we used a judgmental method to determine the samples selected for our audit test work.
In those cases, the results of the work cannot be projected to the population as a whole, as we did not
select a statistical sample.
The period audited was March 2020 through March 2022, and included the following procedures: 
Evaluation of Internal Controls 
• Reviewed policy and procedural documentation, most notably, the Port of Seattle’s Delegation of
Authority Schedules (EX-2). 
• Validated that the ED declared an emergency and provided his consent to expedite procurement
of contracts (good and services, personal services, professional services, and public works) to
mitigate the impact of COVID-19. 
• Obtained an understanding of emergency RCW statutes, including 39.04.280 (Competitive
Bidding), 39.26.130 (Emergency Purchases), 39.80.060 (Architectural and Engineering Services),
and 53.19.020 (Personal Services Contracts). 
• Validated through discussions with management and review of documentation that requirements
were adhered to. 
Substantive Procurement Testing 
• Selected a sample of procurements and validated that the emergency purchase was made by an 
individual who had proper authority (within limits contained in the EX-2 schedules).
• Analyzed emergency procurements between March 2020 and March 2022. These purchases were
coded to program code 8100, using either a purchase order or procurement card. 
• Discussed with management how and if they determined whether purchases were reasonable,
prior to procurement.
• Assessed the reasonableness of the amount paid for emergency goods and services by comparing
the amount paid to third party sources. 
The audit did not include COVID-19 construction change orders for job site safety. Procedures related to
construction costs, including COVID-19, are performed through the Capital Internal Audit function. 






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         Emergency Procurement Audit 
Appendix A: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one of
the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will be
evaluated and may or may not be reflected in the final report.
Financial      Internal                                               Commission/
Rating                                   Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Missing or not   Non-compliance
for external audit    Requires
with Laws, Port
High       Significant     followed                          issues and / or     immediate
Policies,
negative public     attention 
Contracts 
perception 
Partial controls   Partial              Potential for
compliance with   external audit
Requires
Medium   Moderate                  Laws, Port       issues and / or
attention 
Not functioning  Policies            negative public
effectively         Contracts           perception 
Functioning as
Low probability
intended but     Mostly complies                       Does not
for external audit
could be        with Laws, Port                       require
Low      Minimal                                   issues and/or
enhanced to     Policies,                            immediate
negative public
improve        Contracts                           attention 
perception 
efficiency 









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         Emergency Procurement Audit 
Appendix B: Port of Seattle Memorandum
















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