Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No.

10f

ACTION ITEM

Date of Meeting

November 29, 2022

DATE : November 17, 2022

TO: Stephen P. Metruck, Executive Director

FROM: Dave Soike, Chief Operating Officer

Aaron Pritchard, Commission Chief of Staff

SUBJECT: Introduction of Resolution No. 3810: A Resolution Repealing Resolution Nos. 3605,

3628, 3704, and All Preceding Resolutions Pertaining to the Commission’s

‘Delegation of Responsibility and Authority to the Executive Director’ Policy

Directive, and Adopting a New Policy Directive as Set Forth in Exhibit A of this

Resolution.

Amount of this request:

n/a

ACTION REQUESTED

Request Commission introduction of Resolution No. 3810, a resolution repealing Resolution

Nos. 3605, 3628, 3704, and all preceding resolutions pertaining to the Commission’s ‘Delegation

of Responsibility and Authority to the Executive Director’ policy directive, and adopting a new

policy directive as set forth in Exhibit A of the resolution.

This policy directive increases the previously delegated Commission threshold to the Executive

Director and provides clarity in delegated process directives to Port staff.

EXECUTIVE SUMMARY

An updated delegations policy will improve the Port’s efficiency and maintain our high bar for

accountability and transparency. The updated policy directly addresses the Port’s Century

Agenda Goal to be a Highly Effective Public Agency.

The Port Commission, through Resolution Nos. 3605, 3628, 3704, and preceding resolutions, has

adopted a policy directive ‘Delegation of Responsibility and Authority to the Executive Director,’

delegating specific areas of their authority to the Executive Director of the Port of Seattle. The

monetary limits in the policy directive have not been substantially reviewed or updated since

2009 and has only been modified once in the past 26 years.

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Meeting Date: November 29, 2022

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In 2021 – 2022, a comprehensive review of the policy directive has been undertaken. It is the

recommendation of the project team conducting the review and data analysis that the policy

directive be amended/recodified at this time to bring it current with today’s purchasing power

and operational demands and in-line with jurisdictions of comparable size and complexity in

operations; and to provide needed clarity in areas of the policy directive identified by staff and

the project team as previously silent, ambiguous, or outdated. This recommendation has earlier

been presented to, and is supported by, the recommendation of the Commission’s Governance

Committee.

If approved, the action to create a leaner operational strategy regarding the delegation policy

directive and Commission Memo process will assist Port stakeholders in reaching a higher level

of efficiency – Port staff, Commissioners, the Executive Director, and some firms or persons doing

business with, or receiving services from, the Port of Seattle.

BACKGROUND AND JUSTIFICATION

The current outdated delegation policy requires Port staff and the Commission to inefficiently

spend too much time on routine day-to-day and operational decisions that the Executive Director

could make and report to the Commission for accountability and transparency.

In December 2021, the Internal Audit Department reported to the Commission’s Audit

Committee regarding its internal operational audit of the ‘Delegation of Responsibility and

Authority to the Executive Director’ policy directive. This audit reviewed the 18-month period of

January 2019 to July 2020.

The goal of the audit was to evaluate internal controls to assure monetary and contractual

delegation compliance with rules, policies, and dollar limitations governing re-delegations by the

Executive Director to staff. The audit findings concluded that:

“…internal controls are operating effectively and had no issues to report. …Based

on discussions with management, review of the data, and benchmarking with

other organizations, the Internal Audit Department recommended management

work with the Commission to identify if the current delegations process and

thresholds could be modified to maintain or increase transparency and

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governance, while alleviating part of the burden on staff… with frequent (monthly)

and robust reporting to the Commission and the public.”

The Commission’s Audit Committee agreed with the recommendation of the Internal Audit

Department at that time.

A cross-departmental project team was then established to identify operational efficiencies and

opportunities in the Delegations process. The review built upon the Audit review of other

comparable agencies and included analysis of:

• the Commission Memo creation process (including a robust and statistically significant

survey of process users’ experiences and time in preparation and execution of actions);

• three years of Commission actions over 65 public meetings;

• delegation categories that compared relatively low level approvals versus high dollar

level approvals, policy and strategy versus operational approvals, etc.;

• Executive Director authority as it relates to the position’s ability to run the operations of

the Port in terms of time in any given day;

• the type and nature of reporting currently prepared by staff at the directive of the

Commission;

• existing regulatory, statutory, and legal rules and guidelines that ensure compliance with

purchasing regulations and provide transparency;

• technical amendments and process clarity needed in the policy directive;

• safeguards to ensure transparency;

• staff and Commission time spent addressing smaller more general and routine

authorization; and

• a new internal delegation workflow to save considerable human resource programming

previously dedicated to the Commission Memo process.

Project Team Members

Michelle M. Hart, MMC, Commission Clerk

Ryan Stamper, Senior Port Counsel

Nora Huey, Director, Central Procurement Office

Mandela Thomas, Sr. Mgr., Central Procurement Office

Kyle Dilbert, Sr. Mgr., Construction Contracting

Bettina Friese, Business Intelligence Program Manager

Michael Fang (previously with the Port)

Jared Thatcher, Process Improvement Prog. Mgr., Office of Strategic Initiatives

Marin Burnett, Sr. Mgr., Strategic Initiatives

John Okamoto, Okamoto Strategies (consultant)

Aubree Payne, Deputy Commission Clerk

Jami Ng, Information and Communication Technologies

Marnie Gonzales, Information and Communication Technologies

Eric Baird, Information and Communication Technologies

Hugh Hastings, Executive Assistant, Executive Department

Carlene Tudor Lee, Executive Assistant, Executive Department

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Template revised June 27, 2019 (Diversity in Contracting).

Aaron Pritchard, Commission Chief of Staff (sponsor)

Dave Soike, Chief Operating Officer (sponsor)

And approximately 200 staff who provided survey information

Key Findings

• The Delegation is outdated. The Port of Seattle Delegation level to its Executive Director

is not commensurate to similar-sized local and complex jurisdictions – Port delegations

are outdated.

 As noted above, overall monetary delegations’ limits have only been adjusted

upward twice in 26 years, and most recently 13 years ago.

 Delegation buying power is down from an inflationary perspective, while Port

budgets and demands on staff time are up, creating inefficiency in the Commission

process and absorbing valuable policy and strategy planning time for

Commissioners and staff. (Purchasing power in all delegations has eroded by 29%

since the $300,000 delegated threshold was set in 2009, while Capital

delegations purchasing power has eroded by 47.3%. In contrast, Port operating

budgets are up 37% within the same timeframe and the Capital 5-year forecast

is up by 75%, not including the Sustainable Airport Master Plan that itself is

expected to exceed the current 5-year capital forecast.) At the existing current

delegation threshold, the Executive Director can currently run the Port for a period

of 63 minutes (expense) or 37 minutes (capital), without additional Commission

action.

• The Commission approval process is bogged down by many routine operational items.

A thorough review of prior Commission meetings provided significant trend information

that serves as a foundation for updating the Port’s delegation thresholds. A three-year

review of Commission actions over 2018 through 2020 demonstrated that 664 items were

reviewed by the Commission over 65 public meetings. Approximately half, 332 items,

were monetary action approvals. Those were categorized by dollar category up to $10

million. Each item within each category was re-screened to determine if it represented a

policy or strategy item even though it was a relatively smaller dollar approval. That subset

of policy or strategy items were identified as needing to go to Commission rather than an

Executive Director approval. This yielded approximately 200 items that could be

approved in an effective manner by the Executive Director, which would free up

Commissioners’ time for larger monetary items and all policy and strategy items.

 In 2020, 25 full business days were spent in Commission business meetings

approving relatively lower dollar, and often general operational, authorizations.

On average, the Commission spends approximately 18 to 20 full business days

annually attending Commission business meetings. (This does not include time

spent in other Port-related, regional, or individual Commissioner meetings.)

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Template revised June 27, 2019 (Diversity in Contracting).

 85.6% of the monetary approvals over the 3-year period were approvals greater

than $10 million. These represent the largest portion of Port expenditures that

have far greater long-term policy and strategy implications as compared to the

remaining 14.4% of authorizations that are primarily operational in nature.

 Therefore, increasing some of the monetary limits of delegations to $10

million does not affect Commission oversight into high-impact policy and

strategy items while operational items requiring can be handled by the

Executive Director, increasing efficiency, saving time and money.

Many monetary authorizations by the Commission during any year comprise a

secondary approval of the item in that most items have been reviewed previously in

public as part of the annual budget authorization. For example, in 2022 the

Commission has/will receive 9 budget discussions via public study sessions, briefings,

and action requests. The total approximate discussion time for these range between

13 and 16 hours in total.

• A significant amount of staff time is required. A statistically valid survey, with a 92%

response rate from process users (195 individuals responding) identified a significant

amount of timing challenges with authorization process and staff time dedicated to the

preparation and execution of Commission actions over the current $300,000 delegation

limit.

• Efficiency and transparency opportunities exist. There is a need to create efficiency while

expanding transparency. A process improvement is vital to responding to this need.

Streamlining process can be accomplished by shifting the lower-level approvals to the

Executive Director, allowing the Commission and Executive Director more time to focus

on the vast majority of budget and cost items, longer-term strategy, and higher value

public policy items of interest to the Community and Commissioners. Survey information

and data analysis demonstrate that the combination of inflation and growth in Port

objectives has created an efficiency opportunity to streamline the build-up over-time of

Port process bureaucracy.

Benefits to Raising the Delegation Level

 Benefits for Commission:

 Eliminates clogging the Commission’s calendar with lower priority Commission action

items.

 Allows added time for the many competing pressures upon Commissioners.

 Allows more focus time for Commissioners on high priority issues such as: policy,

strategy, business and community-related items, workforce development,

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apprenticeships, WMBE and small businesses, transportation, community and social

issues, etc.

 Increases time for Commissioner committee work and areas of interest.

 Allows time for more in-depth check-in briefings for ongoing initiatives.

 Provides an auditable transparency process that enables the Commissioners to be

made aware of certain approvals and a listing of all approvals above $2.5 million in

public session.

 Benefits for Executive Director and Port staff:

 Frees up existing staff time that can be redeployed to greater value work and goals

set by the Executive Director and Commissioners.

 Removes, on average, 4 to 8 weeks in preparation time per Commission

memo – creating more efficiency in executing often-times routine work.

 Provides an equivalent efficiency cost savings of approximately 6-8 Full-Time

Equivalent (FTE) staff positions during this era of FTE losses and hiring shortages.

 Human Resource Availability – Port staff have undertaken three separate

reviews of potential cost/time savings resulting from updating the

delegation. These 3 separate reviews all used different methodology, but

consistently resulted in considerable cost/time reductions for Port staff.

The initial review was undertaken by consultant KPMG in 2018, this review

assumed a lower delegation level and did not include ‘meeting time’ and

the basis for their conclusion was a Port staff survey on time spent working

in the commission memo process. The results of this review showed a 25%

reduction in staff time. The second and third reviews were done by

separate members of the delegation review project team and included

meeting time and the introduction of a streamlined routing process. The

existing meeting times can be reduced with significant ED delegation. The

third review produced our median result, and included time spent in

preparatory meetings in the representative sample. The conclusion was

the Port could expect an efficiency cost savings of approximately 6-8 FTEs

– up to $2.3M in port staff annual savings.

Transparency Measures

In making this important decision to increase the delegated threshold to the Executive Director,

the Commission and the public must have assurances with processes established and

transparency to the operational authorizations of the Executive Director.

Recommendations of the Project Team

• Reporting Regardless of Authorization Threshold. Strategic decisions (decisions that

have political, long term, social, or community impacts on the Century Agenda or

other goals as set forth by the Commission) are identified by the Executive Director or

the Commission as items to provide reporting to the Commission and to the public,

irrespective of the dollar threshold assigned to those items. Commissioners routinely

receive reporting from the Executive Director, whether on an ad hoc or periodic basis

– this recommended action does not materially change that reporting. However,

COMMISSION AGENDA – Action Item No. 10f Page 7 of 10

Meeting Date: November 29, 2022

Template revised June 27, 2019 (Diversity in Contracting).

additional reporting is identified below to strengthen reporting and add transparency

associated with this delegation change.

• Monthly Transparency Reporting. Add a new monthly agenda item labeled ‘Executive

Director Actions’ to the Commission agenda with a listing of all actions between the

$2.5M and $10M authorization threshold taken in the prior period, one month in

arrears, for full discretionary review by the Commission beginning the first public

session following the effective date of the resolution adopting the revised policy

directive.

• Reporting through the Executive Director’s Report. The Executive Director should

utilize the Executive Director Report section on Commission business meeting

agendas to comment on any noteworthy, delegated authorizations for Commission

and public awareness.

• Other Opportunities to Inform. Agenda planning meetings with the Commission

President may be used to overview certain items of interest falling within the

Executive Director’s delegated authority of approval where they may choose to use

the Executive Directors Report for notification.

• Internal Audit. The Port’s Internal Audit Department is encouraged to perform a

delegations follow-up audit within 18 months of a new delegation policy

implementation to ascertain if the process itself and process controls are functioning

properly and providing clear direction and intended transparency. The public monthly

reporting could then be sunset upon a successful audit report, with the proviso that

future periodic audits may occur as requested by the Executive Director or

Commission Audit Committee members.

• Create an Efficient Process for Staff Requests Re: Authorizations within the

Delegated Authority to the Executive Director. Create a new system tool/process to

document the use of delegation that is streamlined, efficient, and does not contain

overly burdensome and time-consuming requirements of meetings, authors,

reviewers, and approvers.

• Executive Director Delegation. The Executive Director should provide clear written

authority and guidelines in his decision to delegate his authorization authority

downward, should he desire to do so.

• Remove Unnecessary or Redundant Reporting Requirements. As requested by the

Governance Committee, continue a review of current reporting requirements

requested by the earlier Commissions and/or required by statute. Remove

unnecessary and/or ‘reporting no longer needed’ for operational purposes to the

Commission, thus freeing up additional staff and Commission time (this potential

savings has not yet been calculated) to focus on critical reporting of key performance

indicators of policies, strategies, large projects, and Port and community metrics.

COMMISSION AGENDA – Action Item No. 10f Page 8 of 10

Meeting Date: November 29, 2022

Template revised June 27, 2019 (Diversity in Contracting).

Summary of Changes

Section 1 and Other General Changes

• Removed outdated references and language not necessary to the delegation (for example

other existing policies) that may be updated separately in the future.

• Revised language to delegate other agreements related to permits, including contracts to

expedite permits, restrictive covenants and hold harmless agreements.

• Added mitigation credits to Port property that can be conveyed.

• Added back insurance and surplus delegations from previous delegations.

• Updated Definitions, including Interlocal Agreements and Projects, while removing

definitions that are no longer referenced in the delegation.

• Included a specific delegation for Non-Disclosure Agreements.

Real Estate and Real Property Delegations

• Durational Delegation for Real Property Agreements will remain the same at five years or

less, but the monetary limit is increased from $300,000 to $1,000,000.

• Clarified that amendments for leases over five years are only delegated if term is not

extended, square footage does not exceed a 10% change, rates and environmental

provisions are not changed, security deposit is not decreased, and monetary obligations

do not exceed $1,000,000.

• Delegations related to Easements were streamlined to permit the Executive Director to

execute easements that do not deprive the Port of substantial use of the property or are

less than 1000 square feet, and monetary obligations do not exceed $1,000,000.

• Leasing, easements or otherwise using the property of others is delegated so long as

payments are less than $1,000,000 with no durational limit. The existing delegation

limited leases, easements or other uses of the property of others to five years and

payments of less than $300,000.

• Added a specific delegation for avigation easements.

Legal Delegations

• Updated the monetary limit for Claims and Settlements from $300,000 to $1,000,000.

• Reporting frequency requirements have been consolidated from quarterly, as issues arise,

or no required frequency to reporting annually.

• Updated and clarified language throughout the section, including the supervision of legal

services; the retention of counsel and experts, including an update to the definition of

“litigation” to limit the delegated authority to retain an attorney to represent an

individual employee or commissioner to litigation matters, but not allow such retention

for responding to a Port inquiry about workplace conduct or ethics; and the standards for

settling litigation and claims.

COMMISSION AGENDA – Action Item No. 10f Page 9 of 10

Meeting Date: November 29, 2022

Template revised June 27, 2019 (Diversity in Contracting).

Delegations related to Projects

• Delegations for agreements relating to Projects have been consolidated from three

separate sections into a single section and streamlined.

• Defined the term “Project” and updated the monetary limits for procurements and other

agreements in furtherance of Projects from $300,000 to $10,000,000.

• Added delegation for agreements and amendments to agreements involving an exchange

of goods or services with public or private entities that are not covered by any other

specific delegation but are less than $10 Million dollars and promote operational or

logistical efficiency, such as reimbursement agreements with entities like TSA or CBP.

• Monetary limit for Preliminary work on Projects is increased from $300,000 to

$2,000,000, and the definition of Preliminary work is updated.

• Updated the threshold for Critical Work from $500,000 to $15,000,000 for work requiring

immediate action to avoid significant adverse consequences to public health, safety or

property.

• Updated the Project Changes sections to allow amendments and change orders if the

changes are within the approved Project budget.

• Removed sections related to bid irregularities, non-public work projects, and other areas

that were consolidated.

• Updated language relating to Alternative Public Works contract delivery methods,

reporting requirements, competition waivers, small works and job order contracts.

Other Monetary Increases to Delegations

• Updated monetary limit for Budget Transfers from $300,000 to $10,000,000 so long as

budget funds are for transferring scope of work from one executed contract to another.

• Updated monetary limit for Airport Tenant Reimbursements from $200,000 to

$10,000,000.

• Updated monetary limit for Utilization of Port Crews from $300,000 to $10,000,000.

• Monetary limit for Street Vacations delegation is increased from $300,000 to

$10,000,000.

• A summary of the updates to monetary limits are shown in the Table below:

Monetary Limits

2009

2022

Real Estate Agreements

$300,000

$1,000,000

Claims and Settlements

$300,000

$1,000,000

Preliminary Work

$300,000

$2,000,000

Capital Projects and Contracts

$300,000

$10,000,000

Utilization of Port Crews

$300,000

$10,000,000

Airport Tenant Reimbursement

$200,000

$10,000,000

Street Vacations

$300,000

$10,000,000

Budget Transfers

$300,000

$10,000,000

Critical Work

$500,000

$15,000,000

COMMISSION AGENDA – Action Item No. 10f Page 10 of 10

Meeting Date: November 29, 2022

Template revised June 27, 2019 (Diversity in Contracting).

Continuing Work

As noted above a list of reports, provided by staff to the Commission (requested by the

Commission) has been gathered. This list is being reviewed for relevancy and need. This is a

continuing effort to be responsive to the requests of the Commission to streamline the way we

do our work. A follow-up discussion will be provided to the Governance Committee regarding

the outcome of this request.

FINANCIAL AND TIME IMPLICATIONS

Up to 8 weeks in time savings per Commission authorization (memo/action); and a total

estimated annual savings of approximately 16,600 hours per year which is conservatively

equivalent to a range of 6-8 FTEs.

ATTACHMENTS TO THIS REQUEST

(1) Draft Resolution No. 3810 with Exhibit A (Policy Directive)

(2) Presentation slides

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

December 10, 2020 – Audit Committee Meeting

March 16, 2021 – Governance Committee Meeting

July 28, 2022 – Governance Committee Meeting

October 17, 2022 – Governance Committee Meeting