8b. Memo
Baggage Optimization Time Extension and Change Order
COMMISSION AGENDA MEMORANDUM Item No. 8b ACTION ITEM Date of Meeting January 24, 2023 DATE: January 17, 2023 TO: Stephen P. Metruck, Executive Director FROM: Eileen Francisco, Interim Chief Development Officer Wendy Reiter, Aviation Director of Security Janice Zahn, Director of Engineering SUBJECT: Baggage Optimization Program Transportation Security Administration (TSA) Other Transaction Agreement (OTA) Time Extension and Change Order Amount of this request: $0 Total estimated project cost: $955,000,000 ACTION REQUESTED Request Commission authorization for the Executive Director to: 1) execute an OTA with TSA for a 24-month time extension for the period of performance on the Baggage Optimization Program, 2) execute future Change Orders on the Baggage Optimization Project Phase 2 and Phase 3 construction contracts (C800612) up to the executed Commission authorization amount that exceed $300,000 and/or exceed 60 calendar days’ time extensions, and 3) include a Project Labor Agreement (PLA) for Phase 3. EXECUTIVE SUMMARY The Port of Seattle and TSA entered an OTA in 2013 to reconfigure the baggage system to meet both the TSA’s and Airport’s needs. The TSA benefits by making its portion of the baggage system more efficient, reducing maintenance costs, and improving working conditions (safety and comfort) for federal employees. In the long-term, the Airport benefits by creating a vision of how the overall baggage system could flexibly grow to meet the long-range capacity of the Airport. The Baggage Optimization Program is being delivered in three phases. Phase 1 has completed construction, Phase 2 is under construction, and Phase 3 pre-design has started. The overall program is anticipated to be complete in 2027. Phase 2 is approximately 45% complete with an expected completion date of August 2024. Due to the lack of interconnectivity until the project is complete, near continuous operation, and a fixed footprint, this project is complex and has various constructions requiring detailed construction sequencing plans. As part of this request, Phase 3 would benefit from entering into a project labor agreement. Template revised January 10, 2019. COMMISSION AGENDA – Action Item No. 8b Page 2 of 7 Meeting Date: January 24, 2023 JUSTIFICATION OTA Time Extension: The current OTA commits $94,043,296 toward the program and is currently scheduled to end in March 2023. This OTA would not increase TSA contributions. However, it would extend the duration by 24 months to March 30, 2025, when the funds are anticipated to have been spent. Approximately $3.3M would be returned and de-obligated from the Port of Seattle Baggage Optimization Program if this OTA is not extended. Change Orders: Phase 2 is currently under construction and Phase 3 procurement for a General Contractor and Construction Management contract (GC/CM) is being developed. Commission action is required under the General Delegation of Authority if the value of the change order is over $300,000 or the additional time is over 60 calendar days. The Baggage Program is requesting authorization for the Executive Director to execute any future change orders, so long as the change orders are within the approved budget. Phase 2 is a $293M project and Phase 3 is expected to be similar in magnitude. Projects of this size and complexity would typically anticipate several change orders that exceed $300k or 60 calendar days of time extension. Therefore, it is more expedient to grant the Executive Director authorization to execute these change orders. Project Labor Agreement (PLA): A project labor agreement will be used for these projects based on the importance of labor continuity and the need to minimize any risk of impact to operations during construction. Diversity in Contracting Phase 2 is projected to meet our 2% Women and Minority Owned Business Enterprise (WMBE) goal. The project team will work with Diversity and Contracting team to conduct outreach and setting an aspirational WMBE goal for Phase 3. DETAILS Scope of Work Phase 2 is currently under construction and scheduled to be complete Q3 2024. This work will expand the centralized baggage screening area in the airport’s Central Terminal. This phase will also replace conveyor systems to the north portion of the bagwell, construct the final baggage sortation matrix, and add more capacity to the South Satellite baggage system. Concession storage and the conveyance maintenance shop will be relocated to their final locations. Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA – Action Item No. 8b Page 3 of 7 Meeting Date: January 24, 2023 Phase 3 concludes the Baggage Optimization Program allowing for complete baggage flexibility to check in any bag into any ticket counter and be delivered to any airplane. It also accommodates passenger volume growth and meets TSA safety mandates. This phase will tie-in all the south end systems to centralized screening, including the International Arrivals Facility (IAF), and finalize the sortation and ticket counter connections. Schedule Phase 1 was completed in Q2 2020. Phase 2 Is currently under construction and scheduled to be completed in Q3 2024. Phase 3 design has started in Q3 2022 and is scheduled to be constructed Q2 2027. Phase Design Construction Phase 1 Q3 2015 Q1 2016 - Q2 2020 Phase 2 Q1 2020 Q3 2020 – Q3 2024 Phase 3 Q3 2022 – Q1 2024 Q4 2024 – Q2 2027 Activity Commission Design Authorization 2013 Quarter 1 Design start – Phase 3 2022 Quarter 3 Commission Construction 2024 Quarter 4 Authorization Construction Start 2024 Quarter 4 Substantial Completion 2027 Quarter 2 Cost Breakdown This Request Total Project Design $0 $80,731,152 Construction $0 $874,268,848 Total $0 $955,000,000 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 – Do not proceed with the request to execute an OTA with TSA for a 24-month time extension for the period of performance on the Baggage Optimization Program and future Amendments and Change Orders on the Baggage Optimization Program up to the executed Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA – Action Item No. 8b Page 4 of 7 Meeting Date: January 24, 2023 Commission authorization amount for additional design, project and construction management services that exceed $300,000.00, and/or exceed 60 calendar daytime extensions. Cost Implications: $3.3M Pros: (1) None. Cons: (1) Allocated TSA funds may not be fully utilized and returned to TSA; the Port would have to fund the money that was returned to TSA to complete the project. (2) If the change order execution request by the Executive Director is not granted, the project will have to repeatedly go back to Commission although the project budget has already been approved. This is not the recommended alternative. Alternative 2 – Approve the request to proceed with the execution of the OTA time extension with TSA, allow the Executive Director to execute change orders within the approved budget, and allow for PLA to be used on Phase 3. Cost Implications: $0 Pros: (1) All allocated funds from TSA will be used on Baggage Optimization. (2) Change order execution within the approved budget by the Executive Director allows for the project team to move forward without continuously returning to Commission for approval. (3) PLA will help to minimize risk to operations during Phase 3 construction. Cons: (1) None. This is the recommended alternative. FINANCIAL IMPLICATIONS Phase 1 was completed at $101,275,000. Phase 2 has a budget of $415,675,000 with a substantial completion date of Q3 2024. However, now that we are anticipating about a $20M savings, barring any major issues, that amount can be rolled into Phase 3. The team has been projecting a range of $400-$500M for Phase 3, with a likely cost of $432,450,000. Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA – Action Item No. 8b Page 5 of 7 Meeting Date: January 24, 2023 Current Estimate At Budget Budget Delta Notes Authorization Completion Phase 1 $101,375,000 $101,375,000 $101,375,000 $ - • Savings of $20M as of June 2022 Phase 2 $415,675,000 $415,675,000 $395,675,000 $(20,000,000) • Substantial Completion Q3 2024 • Commission Range presented April 2022 is $400M - $500M • MII anticipated Q3 Phase 3 $313,000,000 $13,000,000 $432,450,000 $119,430,000 2024 • Additional budget request assumes a $20M unspent from Ph2 will be transferred Executive Management $10,000,000 $10,000,000 $10,000,000 $ - Reserve • Commission Transfer $15,500,000 $15,500,000 $15,500,000 $ - approval April 2022 TOTAL $855,550,000 $555,550,000 $955,000,000 $99,430,000 Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $317,000,000 $150,000 $317,150,000 Previous changes – net $637,134,000 $716,000 $637,850,000 Current change $0 $0 $0 Revised estimate $954,134,000 $866,000 $955,000,000 AUTHORIZATION Previous authorizations $589,299,000 $466,000 $589,765,000 Current request for authorization $0 $0 $0 Total authorizations, including this request $589,299,000 $466,000 $589,765,000 Remaining amount to be authorized $364,835,000 $400,000 $365,235,000 Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA – Action Item No. 8b Page 6 of 7 Meeting Date: January 24, 2023 Annual Budget Status and Source of Funds This project, C800612, was included in the 2023-2027 capital budget and plan of finance with a budget of $954,134,000. This project has prior Majority In Interest (MII) airlines approval for Phase 1 and 2. The Phase 3 MII ballot is anticipated in 2024. The funding sources would be airport development fund and revenue bonds. Financial Analysis and Summary Project cost for analysis $955,000,000 Business Unit (BU) Baggage System Effect on business performance NOI after depreciation will increase due to inclusion of (NOI after depreciation) capital (and operating) costs in airline rate base IRR/NPV (if relevant) N/A CPE Impact $0.26 in 2020, $1.03 in 2024 and $2.75 in 2028 ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS • July 26, 2022 – Request Commission authorization for the Executive Director to: (1) execute an agreement with the Transportation Security Administrative (TSA) to provide clear access to screening equipment for Phase 2, (2) authorize $34,215,000 for Phase 3 to complete preconstruction services, (3) utilize, advertise, and execute a General Contractor/Construction Manager (GC/CM) for Phase 3, (4) advertise and execute a project specific Construction Management (CM) and Airline Technical Representative (ATR) contract for Phase 3, (5) amend Service Agreement (SA) P-00317641 to add $18,340,000 for a total contract value of $49,500,000 to complete design services and provide construction support for Phase 3, and (6) utilize Port crews for Phase 3 activities, for Baggage Optimization Project at Seattle-Tacoma International Airport. The total amount of this request is $34,215,000. • April 19, 2022 – Baggage Optimization Program Update – Quarter 2, 2022 • January 28, 2020 – Commission Authorization to: (1) execute a construction contract with the low responsive and responsible bidder for the Baggage Optimization Phase 2 Project at Seattle-Tacoma International Airport, notwithstanding the low bid exceeding the estimate at time of bid by more than 10 percent, and (2) authorize an additional $190,737,800 for Phase 2 construction and Phase 3 design for a total program authorization of $540,050,000. • April 23, 2019 – Commission Authorization to: (1) advertise, award, and execute a construction contract for the Baggage Optimization Phase 2 project at Seattle-Tacoma International Airport; (2) employ a project labor agreement (PLA); and (3) utilize Port crews and small works contracts to perform construction work. • February 26, 2019 – Baggage Optimization Quarter 4 Project Briefing • October 23, 2018 – Baggage Optimization Quarter 3 Project Briefing Template revised June 27, 2019 (Diversity in Contracting). COMMISSION AGENDA – Action Item No. 8b Page 7 of 7 Meeting Date: January 24, 2023 • June 12, 2018 – Baggage Optimization Quarter 2 Project Briefing • January 9, 2018 – Baggage Optimization Quarter 4 Project Briefing • September 26, 2017 – Baggage Optimization Quarter 3 Project Briefing • June 27, 2017 – Commission authorization to (1) authorize additional design and project management funds to expand the capacity to 60 million annual passengers (MAP); (2) use Port crews and small works contracts to perform additional construction work; and (3) amend Service Agreement P-00317641 to add $10,160,000. • October 25, 2016 – Baggage Optimization Quarter 4 Project Briefing • July 12, 2016 – Commission authorization to advertise and execute a contract for construction Phase 1. • June 28, 2016– Baggage Program Briefing • May 17, 2016 – Checked Baggage Optimization Project Briefing • March 8, 2016 – Commission authorization for the Chief Executive Officer to amend the Baggage Optimization Design Services contract. • June 23, 2015 – Checked Baggage Optimization Project Briefing • September 10, 2013 – The Commission authorized the execution of an Other Transaction Agreement (OTA) with TSA for reimbursable costs for design and construction, to authorize $15 million to continue from 30% to 100% design and execute a consultant service agreement for program management support services. • August 20, 2013 – Response to questions from Commissioners asked during the August 6, 2013 Commission Meeting. • August 6, 2013 – The Commission was briefed on the near-term and long-term challenges related to handling checked baggage at the Airport. • January 22, 2013 – The Commission authorized $5 million for staff to begin design through 30%, and to enter into an agreement to allow reimbursement from the federal government to the Port for eligible elements of the 30% design effort. • January 8, 2013 – Baggage Systems Briefing • August 14, 2012 – Baggage system recapitalization/optimization was noted in the 2013 business plan and capital briefing as a significant capital project not included in 2013-17 capital program. • August 7, 2012 – Baggage system recapitalization/optimization was referenced as one of the drivers for the need to develop an Airport Sustainability Master Plan • June 26, 2012 – The Airport’s baggage systems were discussed during a briefing on terminal development challenges. • May 10, 2012 – TSA’s interest in a national recapitalization/optimization plan for all baggage- screening operations was referenced in a design authorization request for the C60-C61 Baggage Handling System Modifications Project. Template revised June 27, 2019 (Diversity in Contracting).
Limitations of Translatable Documents
PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.