In a saucepan cook unpeeled potatoes, onion, and celery in boiling lightly salted water for 10 - 15 min or possibly until potatoes are just tender; drain.
(note, I prefer not to cook the celery and onion)
In a saucepan combine the 1.3 c. water and cornstarch.
Stir in vinegar, sugar, salt, celery seed, and pepper.
Cook and stir until thickened and bubbly.
Cook and stir 2 min more.
Stir in bacon and vegetables Cook 3 - 5 min more or possibly until potatoes are heated through, tossing lightly to coat potatoes with dressing.