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Although it's quite true that this 'observe and report' requirement was part of their contract, the issue remains profoundly disturbing for a wide variety of reasons. Among them:

Their jackets said 'security' which to most resonable people means that they are charged with maintaining order in a public place, and in this context a potentially violent public place. The fact that they were specifically instructed 'not' to do this constitutes misleading the public.
The body language and demeanor of the 'guards' was apalling...they projected an image of simply not caring at all while a young girl was being severely beaten right next to them. People can quite reasonably ask "what kind of a man are you? Are you any sort of a man at all?"
After the beating was over, simply leaning down to check to see whether the girl was alive or breathing would have been part of 'observing', but they apparently weren't even interested in doing that. Did they think that they would be fired from their precious jobs if they simply leaned over to gather such information?
At the end of the day, do they really want to work for an outfit that would fire them if the three of them simply surrounded the victim who had been trying to hide behind them?

The spectacle presented here is quite unnerving to people in Seattle because this sort of callousness is something that we tend to associate with 'other places'...this kind of 'it's not my job so I don't care if she dies' mentality hasn't been a part of the culture here....until now.

It also shows that society has lawyered itself away from its own security.

I think I’ll email King County Prosecutor Dan Satterburg to learn what I could have done as a private citizen if I saw such an incident happening while in the bus tunnel.