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INTERNAL AUDIT REPORT
Operational Audit
Procurement – Personal Service Agreements
January 2023 – March 2026
Issue Date: May 20, 2026
Report No. 2026-06
Procurement – Personal Service Agreements
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TABLE OF CONTENTS
Executive Summary ................................................................................................................................................. 3
Background ............................................................................................................................................................. 4
Audit Scope and Methodology ............................................................................................................................... 5
Appendix A: Risk Ratings ......................................................................................................................................... 6
Procurement – Personal Service Agreements
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Executive Summary
We completed an audit of the Port of Seattle (Port’s) Central Procurement Office’s (CPO) Procurement
process, specifically relating to Personal Service Agreements, for the period January 2023, through
March 2026. The audit was conducted to test the overall compliance of CPO with its own internal policies
and procedures, with local state laws and regulations, and with the industry’s best practices.
As a recipient of public funds, the Port has a duty to assure that spending is aligned with its overall
mission and goals while being fiscally responsible. Each year, as the Port continues to grow and evolve,
it also continues to enter into a multitude of service agreements with external consultants and vendors
to address various concerns and needs. As such, the Port’s CPO continues to be a crucial key
department responsible for leading the effort regarding these procurement processes, assuring they are
carried out efficiently and in compliance with Port policies and federal/state regulations.
We concluded that Port management, monitoring, compliance, and internal controls, relating to
Personal Service Agreements, aligned with established policies and procedures. We did not
identify any issues that warranted reporting.
We extend our appreciation to Port management and staff for their assistance and cooperation during
this audit.
Glenn Fernandes, CPA
Director, Internal Audit
Responsible Management Team
Karen Goon, Deputy Executive Director
Sofia Mayo, Director Central Procurement Office
Procurement – Personal Service Agreements
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Background
The Port’s CPO aims to “deliver innovative, responsible procurement solutions through transparent
engagement and a predictable process.” The department is comprised of four different teams:
Purchasing, Public Works, Service Agreements (Personal and Professional Services), and Planning &
Analytics. For this particular audit, Internal Audit (IA) focused on Service Agreements, specifically
Personal Services. The Service Agreements team is responsible for procuring and managing all
consultant services, assuring that the procurements are completed efficiently and transparently while
complying with Port policies, procedures, and federal/state requirements.
Personal services, per RCW 53.19, encompass any “professional or technical expertise provided by a
consultant to accomplish a specific study, project, task, or other work,” except Architectural and
Engineering (A&E) Services, which are specifically addressed by RCW 39.80. Each service
agreement is a contract between the Port and an external consultant and can be tailored and contain
very specific terms. All agreements will include the following: contract price, duration, scope of work
(background, tasks, deliverables, schedule), insurance requirements, and fee schedule. Depending on
the contract category, there are different requirements related to required approvals and the overall
competitive solicitation process. As noted in the table below, there are three different categories:
Category I
Category II
Category III
Contract Amount
$49,999 and under
$50,000 to $199,999
$200,000 and above
Commission/Executive
Director (ED) Approval
Not Required
Not Required
Required at
$300,000+
Competition Requirement
Not Required
Competitive Selection
Competitive
Selection
Selection Process
IA obtained a full listing from CPO of all personal service agreements from January 2023 to March
2026, noting the following breakdown:
Category
Count
Cat I
138
Cat II
67
Cat III
124
Total
329
Once the contract is executed and signed by all parties, the responsibility of managing the contract
transfers from CPO to the respective Project Manager (PM). However, CPO will continue to monitor
agreements for any amendments/modifications, contract expiration dates, and missing or expiring
insurance.
Procurement – Personal Service Agreements
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Audit Scope and Methodology
We conducted this performance audit in accordance with Generally Accepted Government Auditing
Standards and The Institute of Internal Auditors’ Global Internal Audit Standards. These standards
require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objectives. We believe the
evidence obtained meets this requirement and supports our audit objectives.
We used a risk-based, judgmental approach to select items for testing. As a result, the findings reflect
only the items tested and should not be interpreted as representative of, or extrapolated to, the entire
population.
The period audited was January 2023, through March 2026 and included the following procedures:
Inquiries
• Conducted inquiries with CPO employees to gain an understanding of:
o The overall procurement process related to personal service agreements
o How potential conflicts of interest between CPO and external consultants/vendors are
addressed
o How contract prices are determined, benchmarked, and agreed upon
Document Review
• Obtained and reviewed key documents, including:
o CPO Internal Policies and Standard Operating Procedures (SOPs):
▪ CPO-1 Policy for Consulting Services
▪ CC-02 Consultant Ethics and Conflict of Interest
▪ SOP & Checklist (for Category I, II, and III)
▪ Negotiation/ Action Summary Template
o Municipal Research and Services Center (MRSC) Contracting for Services: Guidelines
for Local Governments in Washington State
o Personal Services Contracting Manual for Washington Ports, by MRSC and Washington
Public Ports Association
o Contracting for Services – A National State Auditors Association (NSAA) Best Practices
Document
Validation
• Compliance Testing:
o Obtained a full listing of personal service agreements for the audit period
o Haphazardly selected five agreements (two for Category III, two for Category II, and one
for Category I) to test compliance, in accordance with significant clauses from the
following:
▪ Internal policies and SOPs, as noted above
▪ State Laws and Regulations, specifically RCW 53.19 Personal Service Contracts
▪ Industry best practices, per the NSAA Best Practices Document
Procurement – Personal Service Agreements
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Appendix A: Risk Ratings
Observations 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 an observation to be rated High, Medium, or Low. Low rated
observations will be evaluated and may or may not be reflected in the final report.
Rating
Financial/
Operational
Impact
Internal
Controls
Compliance
Public
Commission/
Management
High
Significant
Missing or
partial
controls
Non-compliance
with Laws, Port
Policies,
Contracts
High probability
for external audit
issues and / or
negative public
perception
Requires
immediate
attention
Medium
Moderate
Partial
controls
Not
functioning
effectively
Partial
compliance with
Laws, Port
Policies
Contracts
Moderate
probability for
external audit
issues and / or
negative public
perception
Requires
attention
Low
Minimal
Functioning
as intended
but could be
enhanced
Mostly complies
with Laws, Port
Policies,
Contracts
Low probability
for external audit
issues and/or
negative public
perception
Does not
require
immediate
attention