Local leaders weigh investigation into concrete suppliers over bid-rigging and collusion concerns

In 1984, the City of Seattle suspended Gary Merlino Construction from the right to bid on city contracts for one year, over findings that the company failed to meet certain legal thresholds for employment of women and minorities. That was the last time the city leveraged a process known as debarment, but city leaders are once again exploring that option as Seattle approaches the fourth month of a concrete strike that has brought major construction projects to an effective standstill.

Concrete strike negotiations worsen as supplier offers terms that penalize picket lines

In February, King County Executive Dow Constantine called on Washington Attorney General Bob Ferguson to investigate collusion concerns among the region’s concrete suppliers — Cadman and Leigh, CalPortland, Stoneway Concrete (jointly owned with Gary Merlino Construction), and Salmon Bay.

“I am concerned that coordination among the concrete companies has created an effective oligopoly and rendered fair and effective bargaining, including mediation, untenable,” the letter reads. “I request that your office investigate whether this apparent arrangement among the companies controlling nearly the entire concrete supply for our region, including industry bid practices and market allocation, is contrary to federal or Washington state law.”

The letter references a number of issues against the concrete suppliers, much of which is taken from the word of Teamsters Local 174. Among them was the allegation that individual suppliers were willing to come to terms with the union representing the concrete delivery drivers, but those suppliers ready to negotiate were threatened with supply boycotts were they to reach terms outside of consensus. It adds that legal representation on behalf of one of the suppliers said in negotiations with a federal mediator that an agreement among all suppliers must be reached for a deal, which Constantine notes is “evidence of coordination.”

While some coordination in labor negotiations is allowed, “the companies cannot boycott, price fix, or otherwise collude in bargaining with their employees’ union,” Constantine added.

The letter continues with speculation that the suppliers engage in bid-rigging. Broadly, it implies that the suppliers have handshake deals among themselves that split King County into individual supplier territories. The county executive notes that concrete has special considerations — he references the expedition of delivery required before the material hardens, necessitating some supplier regionalization — but complaints he has received suggest the possibility of bid-fixing.

Councilmember Lisa Herbold has asked the City’s Department of Finance and Administrative Services (FAS) to “pursue additional inquiry on this matter and review the information to determine how we might best seek assistance from the Seattle City Attorney to determine whether this is sufficient evidence to initiate an investigation and to conduct the investigation,” a public statement reads.

Ferguson was unable to confirm an ongoing investigation into the suppliers but tells MyNorthwest that he met with Teamsters Local 174 with an antitrust team.

“Six weeks ago, I met with workers on the picket-line and heard their concerns,” Ferguson wrote to Constantine. “Afterwards, my antitrust team followed up and met with the workers. I stand in solidarity with these workers in their fight for a fair contract.”

Herbold notes that the FAS responded to her concerns with the suggestion that debarment is only reserved for “the most serious and egregious instances of violating fair contracting practices.”

The Seattle City Attorney’s Office could not be reached for comment on the status of an investigation.

MyNorthwest contacted a spokesperson on behalf of the suppliers late last week who collectively declined interview requests.

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