COMMISSION 
AGENDA MEMORANDUM                        Item No.          8b 
ACTION ITEM                            Date of Meeting      January 28, 2020 
DATE:     January 21, 2020 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Jeffrey Brown, Director Aviation Facilities and Capital Program 
Wendy Reiter, Director Aviation Security 
Wayne Grotheer, Director Aviation Project Management 
SUBJECT:  Baggage Optimization Phase 2 Bid Irregularity and Budget Increase (CIP #C800612,
WP #U00424) 
Amount of this request:             $190,737,800 
Total estimated project cost:        $540,050,000 
ACTION REQUESTED 
Request commission authorization for the Executive Director 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. 
EXECUTIVE SUMMARY 
Baggage Optimization is an airport-wide public safety and security program that improves
customer service for both airlines and passengers. This is a long-term, three-phase program 
that is anticipated to be completed by 2026. Although the bid results for phase two are greatly
in excess of the engineer's estimate due to multiple factors, proceeding with the project on the
current schedule is essential to maintain security and safety, replace aging systems, meet
airline and passenger needs, and enable multiple other projects to improve passenger service
and provide needed upgrades. 
The program replaces six aging individual baggage screening systems with one centralized
system at Seattle-Tacoma International Airport.  The new system will meet Transportation
Security  Administration  (TSA)  federal  safety  and  security  requirements  while  ensuring 
reliability,  flexibility  and  efficiency  for  airlines,  and  passengers.  The  program  allows  the 
flexibility for bags to be checked in from any ticket counter and be conveyed to serve any gate.
This program allows the airport to meet the demands of growing airlines. 


Template revised January 10, 2019.

COMMISSION AGENDA  Action Item No. 8b                                 Page 2 of 14 
Meeting Date: January 28, 2020 
Baggage Optimization Phase 2 is an extremely complex project. There are 64 sequencing steps
which include over 2000 infrastructure and baggage system shutdowns. The contractor has
only two hours and forty-five minutes where the existing baggage system is not operational to
perform steps involving impacts to live operations. In addition, there is no construction
materials or equipment storage laydown space within the project site; material and equipment
must be moved in and out of the project site daily. All bidders requested an additional year of
construction time beyond the three-year schedule that was projected. The  low bid contactor
will be working two shifts over the four-year contract duration. The contract terms put the
liability of operational impacts on the contractor, who must ensure that baggage operations
resume fully after each of the 2000+ shutdowns, or immediately implement contingency plans
required by the Port for each of those shutdowns. The high risks and construction inefficiencies
made this an unattractive project for bidders and was a major factor why we only received two
bids. 
The project team has evaluated the bids and concluded that the low bid is a fair and reasonable
price for the work in the current baggage industry, representing market conditions. The bids are
within nine percent of each other. Staff has evaluated the reasons for the high bids with the low
bid contractor. Staff also evaluated the bidder's experience and found that the contractor's 
team and their subcontractors met all the requirements that were requested in the bid criteria
to deem them the lowest responsible bidder. 
Staff is currently pursuing additional TSA funding (beyond the $93 million already committed
for the three-phase project) to help to offset the increased cost. 
The Aviation Project Management Group will be implementing the following lessons learned
based on this project outcome: 
1)  Require a second independent estimate for large or more complex projects. This is
currently underway for the pending C1 building project. 
2)  Improve risk communication to Commission in project briefings and authorization
requests to ensure knowledge of key risks. 
3)  Review selected projects with other airports/airlines. This was done for baggage
optimization phase 2 and will be applied more broadly. 
4)  Review and reevaluate contracting methods for phased projects including potential
use of outside expert advisors for project delivery method selection for large or
more complex projects. 
5)  Evaluate potential cost estimate increase factors for large or more complex projects. 




Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 3 of 14 
Meeting Date: January 28, 2020 
JUSTIFICATION 
The highly utilized and aging baggage handling system (BHS) is one of the most complex
systems in the airport.  To achieve the project goals the baggage system will need to be
replaced on the current schedule and the budget increased to accept the low bid as justified
below. 
Need for baggage system replacement on current schedule 
In its current state, the Airport's baggage system is not a single system, but rather six separate
outbound systems. After the events of September 11, modifying the separate systems was the
best way to rapidly increase security.  At the time, each separate system was designed to
include a nominal amount of passenger growth. Over the ensuing years as specific airline needs
emerged or as airlines were relocated, the separate systems have been updated to meet the
carriers' specific operating needs. Althoughvarious baggage projects have been implemented
to address operating needs over the years, the systems continue to have limited capacity to
meet both near- and long-term growth needs of the Airport. 
The airport baggage system is faced with three problems: 
1.  The existing systems have major subsystems, such as controls, that are aging and must
be replaced; 
2.  There  is  limited  ability  for  the  current  systems  to  be  expanded  in  their  current
configuration to adequately meet growing passenger demands; and 
3.  These separate systems lack interconnectivity between ticket counters and all their
aircraft gates. 
Passenger growth has increased in unprecedented amounts and is expected to continue. This is
a major and near-term challenge for the Airport due to both, the complexity of keeping
operations ongoing during construction and major space constraints on expanding the systems'
capacity to meet future growth. 
The capital program faces challenges within the airport, as the Baggage Optimization Phase 2
project impacts scope, schedule, and constructability of major capital projects that will improve
passenger service and provide needed upgrades. Stopping or delaying this project would
directly impact the following known projects: Main Terminal Optimization, Airline Realignment,
Main Terminal Low Voltage, Main Terminal Smoke Control, and C1 Building.  The current
schedule has the lowest impact to other major capital projects to improve passenger service
and upgrade existing systems that are dependent on work being completed by Phase 2.
The project has detailed construction sequencing plans that have been coordinated with
airlines and Port of Seattle stakeholders to minimize impacts during construction. In addition,
airlines have requested South Satellite makeups to be accelerated to meet demand, and a delay
would affect their operation.


Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 4 of 14 
Meeting Date: January 28, 2020 
Proceeding with the current construction bid poses  the lowest risk of baggage system
operational impacts which become more likely over time due to aging equipment and growing
demands on the existing systems. Proceeding is the fastest way to deliver the new system
elements, providing increased capacity, flexibility, redundancy, and higher reliability, and
meeting TSA federal requirement for security screening. 
As we go forward now, we can continue to prepare for Phase 3 including evaluation of General
Contractor/Construction Manager (GC/CM) contracting to complete the baggage optimization
project and meet the demands of growing airlines. 
Budget Increase and award of contract to low bidder 
We have received bids which exceeded our estimates and represent market pricing. Moving
forward with the low bidder will increase the overall program budget to $540 million. This
increase will cover Phase 2 construction and the design of Phase 3. Phase 3 construction will be
estimated at a later date based on market conditions and selection of the contracting method.
We will have two independent estimates completed and will return to commission for
authorization in the next three years. 
Prior to advertising Phase 2, the team conducted marketing meetings with contractors to
understand overall market conditions and baggage construction specialty companies. The
contractors confirmed that there is very limited competition in the baggage industry (only five
suppliers in the world capable of supplying the baggage handling equipment) and only a few
companies would have the capacity to handle a project of this magnitude. The team also
worked with two Airports: Raleigh -Durham (NC) and San Francisco (CA), to perform a peer
review on Phase 2's scope and estimates. Theairports felt that the scope and requirements
were in line in with their baggage projects; the port's estimates included lower soft costs than
their projects; and did not include findings that would direct the port to consider a change of
course, or practice. 
The low bid significantly exceeds the anticipated engineer's estimate. The project team has
analyzed and assessed the price difference between the engineer's estimate at time of bid and
bid amount. The project team met with the low bid contractor to gather information regarding
their bid composition.
The team evaluated the two elements of the low bid with the engineer's estimate: (1) Baggage
Optimization Phase 2 and (2) South Satellite. The contractor indicated that the following items
were of significant value in their bid amount for the Baggage Optimization Phase 2 bid item: 



Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 5 of 14 
Meeting Date: January 28, 2020 
Risk and Complexity: The contractor bears the risk of completing the job and staffing
contingency plans, while having minimal impacts to airline operations and keeping the
airport operational. The complexity of construction occurring in a short duration work
window, within a complex web of critical operating systems, and in a congested
footprint has significant risk to the contractor and is reflected in the bid price. Below are
examples of the complexity and risk: 
o  64 demolition and installation sequencing steps; 43 of which require overnight
cutovers to a live system. 
o  Phase 1 vs Phase 2 Risk: In Phase 1 at the end of the construction work shift, the
contractor was able to switch back to the existing system while in Phase 2
contractors have overnight cutovers with the expectation that existing conveyors
are demolished, new conveyors put into place, tested and are fully functional for
operations each morning. 
o  Phase 2 scope of work is complex in that it requires an immense amount of
ongoing coordination and buy-off from airlines, operations, maintenance, and
security in order to be able to construct in a web of live operating environment. 
o  The contractor's electrical subcontractor stated that on a scale of 1  10 for risk,
this project is a 10. 
Advertisement Period: The project was initially advertised for 60 days and extended
twice for a total advertisement duration of 120 days.  Details of the advertisement
include: 
o  Addition of one month: Addendum 1, at airline request, added scope. 
o  Addition  of an additional  month:  contractors requested multiple times an
extension to bid period as they needed more time to prepare this bid due to
complexity of the project. 
o  53 total plan holders; 3 of which were baggage handling manufacturers; and 5 of
which were general contractors. 
o  Two pre-bid meetings that included project briefings and site walks. 
The pre-bid meetings were well attended by 80-90 contractors' 
personnel. 
o  360 contractor questions were answered  Approximately 90 questions were
related to: 
(1) high risk due to the complexity of the project and the existing
conditions to work in; and 
(2) the work inefficiencies due to work hours and
blackouts/moratoriums. 
Labor Market: The competitive local construction market combined with a flood of
national baggage projects has escalated labor and material costs at a rate faster than
general inflation. For example, the electrical subcontractor stated that they are paying
33 percent more in labor due to night shift and employee retention. 
Schedule: During the bidding period the contractors made multiple requests for the
construction duration to be extended by 415 days. The port evaluated the request and
extended the construction duration by 325 days. Therefore, the contract duration

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 6 of 14 
Meeting Date: January 28, 2020 
increased the overhead and profit included in the bid price. The estimate at time of bid 
included escalation and contingency for the added duration but not to the extent shown
in the bids received. Examples of schedule constraints include: 
o  Limited Baggage System Work Hours: 12:15 am  3:00 am, including setup and
takedown. 
o  Blackout periods: work that would impact operations during high peak volumes
are limited or not allowed: 
Holiday closure 
Holiday Moratoriums: 5 weeks out of the year 
Summer Moratoriums: 108 days out of the year 
o  Baggage system work hours in Phase 2 were decreased  from Phase 1  to
accommodate the increase in Airline flights and Airline operations. These factors
were included in the final estimate; however, the team did not accurately
recognize the magnitude of inefficiency and associated costs that was shifted to
the contractor. 
Logistical inefficiencies: Phase 1 was in an area where the contractor had adequate
laydown space in the bagwell. In comparison, Phase 2 required the contractor to rent
warehouse space due to the lack of construction laydown area. The cost of the
warehouse rental and the logistical inefficiencies created by travel to and from the
warehouse and jobsite also contributed to the bid amount. The estimate at time of bid
included the cost of the warehouse but did not adequately capture inefficiencies. 
Construction Requirements: The port required the use of scaffolding and the associated
life safety and code requirements, such as temporary lighting and fire sprinkler systems
for the scaffolding. The scaffolding was intended to allow the contractor to perform
work over the live baggage system with minimal disruption to airline operations. This
requirement also incurs cost to the contractor that is reflected in the bid. The estimate
at time of bid did not capture the full cost of the scaffolding. 
Shutdown procedures: Shutdown procedures are put into place to protect the port and
to ensure that the contractor does the following: understands their scope of work, has
performed sufficient site investigations, understands impacts to critical infrastructure,
has plans in place to ensure continuity of airport operations, and has contingency plans
in place. Phase 2 will require over 2000 shutdowns of critical Airport infrastructure such
as power, mechanical systems, and baggage systems for the contractor to safely
perform work while minimizing disruption to operations. The contractor indicated that
this requirement was included in their bid price. 
Phase 1 lessons learned: The team also compared the estimates of Phase 1 and Phase 2
as part of the final estimate assessment. The fact that Phase 1 bids came in lower than
the estimate at time of bid by $24 million gave the team confidence in our estimating
methods. Baggage systems estimates are generally developed using recent national data
from similarly sized airports. Estimating risk and complexity is subjective and can affect
bid amounts significantly. 


Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 7 of 14 
Meeting Date: January 28, 2020 
The Phase 2 South Satellite bid amounts came in under the estimate at time of bid. The scope
of work for this bid item allows for 24/7 site access with no operational impacts and present the
least amount of risk which allows for less added cost. The contractor indicated that this work
bears less operational risk since South Satellite baggage system will be completely shut down
and turned over to the contractor to perform their work. 
The team learned, during the meeting with the contractor, that they will be working multiple
shifts in order to complete the project on time. The port has increased costs for project
management, construction management, and airport direct costs; to support the oversight of
multiple shifts and for the 325 days added project duration. 
Diversity in Contracting 
The project team with the Diversity in Contracting Department determined a Women and
Minority Business Enterprise (WMBE) participation aspirational goal for this project of two
percent. The contractor has committed to meet all WMBE contract requirements. 
DETAILS 
The purpose of this project is to optimize the BHS and achieve the maximum outbound baggage
capacity within the current airport footprint. 
When complete, this project will have achieved the following outcomes: 
Increased outbound system capacity up to 60 MAP; 
Increased system reliability, redundancy, and security; 
Flexibility in Airline ticket counter use and related gate assignments; 
Reduced minimum connect-times where possible; and 
Long term energy savings. 
Scope of Work 
Phase 2 will: 
1.   Demolish and replace existing C1, C25, C88, and C96 baggage handling systems; 
2.   Construct the final sortation matrix; 
3.   Install, test, and certify TSA provided Explosive Detection System (EDS) machines in
the basement level. This consists of two new EDS pods with two machines in each
pod; 
4.   Demolish and replace the entire C25 BHS from the underground tunnel to the ramp
level at the South Satellite. This adds outbound lines in the existing baggage tunnel,
replaces two makeup units, provides future availability for manual encode, and
demolishes the existing claims in the Federal Inspection Services (FIS) area; 
5.   Construct the new North-End odd-size BHS (Zone 7); 
6.   Demolish C22 odd-size BHS; 
7.   Construct C92 BHS final connections; 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 8 of 14 
Meeting Date: January 28, 2020 
8.   Remove and decommission various existing BHS components; 
9.   Demolish and install BHS makeup devices; 
10.  Construct a new tenant storage area from the Central Terminal Expansion (CTE)
basement level to the new area in the C1 building; 
11.  Relocate the existing tenant storage area from the Central Terminal Expansion (CTE)
basement level to the new area in the C1 building; 
12.  Relocate, modify and add new structural, architectural and utility systems; 
13.  Construct a new maintenance conveyor shop; 
14.  Relocate and demolish the existing maintenance conveyor shop; 
15.  Construct, modify and demolish various construction elements, such as wall, ceiling,
flooring and finish work; and 
16.  Perform various regulated material abatement. 
Phase 1 will be substantially completed in Q1 2020. Phase 2 construction is scheduled to start
in Q1 2020 and be completed in 2024. Phase 3 is anticipated to start in 2024 and be completed
in 2026. 
Project Phasing 
Phase 1 installed the new centralized screening system including the first set of TSA provided 
EDS machines and associated support functions to enable Phase 2 to proceed. Phase 1 which
was procured as a design/bid/build project, is under construction, under budget, and will be
substantially complete in early 2020.   The project is fully constructed and  is currently
completing contractor and owner testing prior to TSA certification.
Phase 2 will decommission the C1, C96, C25, and C88 screening systems. All bags previously
sent to those systems will be screened through the new central screening system. Phase 2 is
also a design/bid/build project, advertised the construction documents for four months and
received two bids on November 19, 2019, both substantially exceeding the $180M Engineer's
Estimate. The responsible low bidder contractor is Hensel Phelps (HP) with the bid of $294M.
The other bidder, Siemens Logistics, submitted a bid of $322M.
Phase 3 will tie in the C60, C61, and new IAF screening system into the central system. Phase 3 
was designed as part of the 100 percent comprehensive package and will need to be further 
developed  into  its  own  design  package.  An  alternative  to  design/bid/build,  General
Contractor/Construction Management contracting method will be evaluated for Phase 3 and
construction funding will be requested at a later date. The cost of Phase 3 construction is not
currently included in the $540,050,000 total project cost. 
Schedule 
Phase 2 design efforts started on October 31, 2017, 100 percent design documents were
received August 2018, and was advertised on July 2019 following extensive scheduling and
sequencing with airlines, operations, security, and maintenance. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                 Page 9 of 14 
Meeting Date: January 28, 2020 

Phase 1 Substantial Completion                 2020 Quarter 1 
Phase 2 Substantial Completion                 2024 Quarter 2 
Phase 3 Projected Substantial Completion       2026 Quarter 4 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Repackage the design to include Phase 3 and pursue an alternative delivery
method for construction GC/CM. 
Cost Implications: Phase 3 estimate would need to be updated to match the contract method
and verified. 
Pros: 
(1)   No risk of loss in continuity of contractors between Phases 2 and 3; 
(2)   There will be an opportunity to optimize risk allocation with the GC/CM in developing
a construction sequencing plan; 
(3)   A GC/CM delivery method allows for prequalification of the general and electrical
contractor; and 
(4)   GC/CM delivery method leverages innovations/ideas/expertise in design and
constructability. 
Cons: 
(1)  Major capital projects to improve passenger service and provide needed upgrades are
dependent on work being completed by Phase 2. In addition, Airlines have requested
South Satellite makeups to be accelerated to meet demand, and a delay would affect
their operations; 
(2)  Potential TSA OTA funding expires in 2023 unless TSA grants extension, and the project
could lose the funds 
a)  TSA would oppose this due to risk of system failure due to further delays in
replacement of outdated screening equipment. Increased cost in TSA staffing and
equipment maintenance. 
(3)  Construction will be even more inefficient and therefore more costly if the construction
is delayed due to continued growth in passenger and baggage volume; 
(4)  Due to the aging systems, lack of sortation capacity and flexibility to keep up with
Airport growth, the existing baggage system will experience increased operational
demand and stress that will likely cause impacts to airlines and passengers. The port
would still need to invest in upgrading the aging existing system to keep the airport
operational; 
(5)  Design will require repackaging and redesign 
a)  Phase 2 design cost beyond 70 percent would be lost; 
b)  Schedule impact of 1.5-2 years; 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                Page 10 of 14 
Meeting Date: January 28, 2020 
c)   New  design  will  create  unknown  schedule  impacts  to  develop  construction
sequencing plan with contractor and stakeholder buy-in; 
d)  No guarantee of an improved construction sequencing plan; and 
e)  No guarantee of any cost savings. 
(6)  Contractors  including  small  businesses  have  invested  four  months  and  significant
expense in preparing a bid. Rebidding this project may not result in low bids and/or 
sufficient bidder interest. The port may also be perceived as a less preferred owner if
bids are rejected. 
This is not the recommended alternative. 
Alternative 2  Significantly change the Phase 2 scope of work and/or contract terms to readvertise
the project. 
Cost Implications:   Taking the design back to 70  percent plus cost for redesign equals
approximately $4 million. 
Pros: 
(1)  Bid amount could potentially come in lower. 
Cons: 
(1)  Major capital projects to improve passenger service and provide needed upgrades are
dependent on work being completed by Phase 2. In addition, Airlines have requested
South Satellite makeups to be accelerated to meet demand, and a delay would affect
their operations; 
(2)  Potential TSA OTA funding expires in 2023 unless TSA grants extension, and the project
could lose the funds 
a)  TSA would oppose this due to risk of system failure due to further delays in
replacement of outdated screening equipment. Increased cost in TSA staffing and
equipment maintenance. 
(3)  Construction will be even more inefficient and therefore more costly if the construction
is delayed due to continued growth in passenger and baggage volume; 
(4)  Due to the aging systems, lack of sortation capacity and flexibility to keep up with
Airport growth, the existing baggage system will experience increased operational
demand and stress that will likely cause impacts to airlines and passengers. The port
would still need to invest in upgrading the aging existing system to keep the airport
operational; 
(5)  There are limited opportunities to modify the scope of work to deliver a valuable
project at the end of Phase 2 
a)  Holiday moratoriums could be reduced and relaxed to reduce contractor risk. This
could cause operational impacts to airlines during busy holiday seasons; 
b)  Add port contracts for portering services for system shutdown and contractor
system impacts; 
c)   Schedule impact of 1-1.5 years; 
d)  Redesign  will  create  unknown  schedule  impacts  to  develop  construction
sequencing plan with contractor and stakeholder buy-in; 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                Page 11 of 14 
Meeting Date: January 28, 2020 
(6)  Contractors  including  small  businesses  have  invested  four  months  and  significant
expense in preparing a bid. Rebidding this project may not result in low bids and/or 
sufficient bidder interest. 
This is not the recommended alternative. 
Alternative 3  Proceed with constructing Phase 2 as originally planned and evaluate GC/CM
contracting for Phase 3. 
Cost Implications:  Requested amount of $180,737,800 additional Phase 2 budget and $10
million for management reserves to be managed by the Executive Director. 
Pros: 
(1)    Lowest risk of operational impacts due to aging equipment and growing demands on
the existing systems; 
(2)    Fastest  alternative  in  terms  of  delivery  of  the  new  system  elements,  providing 
increased capacity, flexibility, redundancy, and higher reliability; 
(3)    Lowest impact to major capital projects that are dependent on work being completed
by Phase 2; 
(4)    Construction sequencing plans have been coordinated with airlines and Port of Seattle
stakeholders to minimize impacts during construction; 
(5)    Port can begin to prepare for Phase 3 including evaluation of GC/CM contracting to
complete the intended design and meet growing airport demands; 
(6)    Provides opportunity to seek additional TSA funding 
Cons: 
(1)   Increase in overall program budget 
This is the recommended alternative. 
FINANCIAL IMPLICATIONS 
Cost Estimate/Authorization Summary               Capital        Expense           Total 
COST ESTIMATE 
Original estimate (2013)                        $317,000,000       $150,000   $317,150,000 
Previous changes (2017)                       $127,584,000       $316,000   $127,900,000 
Current request                                 $95,000,000              $0    $95,000,000 
Revised estimate (not including Phase 3
$539,584,000       $466,000   $540,050,000 
construction) 
AUTHORIZATION 
Previous authorizations                        $348,846,200       $466,000   $349,312,200 
Current request for authorization 
Bid Irregularity/Additional Soft Cost  $167,737,800 
$190,737,800             $0   $190,737,800 
Management Reserve              $10,000,000 
Phase 3 Design                     $13,000,000 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                Page 12 of 14 
Meeting Date: January 28, 2020 
Total authorizations, including this request      $539,584,000       $466,000   $540,050,000 
TBD (Phase 3
Remaining amount to be authorized                     $0             $0 
construction) 

Phase               Current Budget     Estimate at Completion         Requested Budget 
Phase 1                $101,375,000               $101,375,000              $101,375,000 
Phase 2                $248,033,200               $425,675,000             $425,675,000 
$13,000,000 
Phase 3                 $95,641,800            Construction TBD 
(Design Only) 
Total                     $445,050,000                 $527,050,000               $540,050,000 

Annual Budget Status and Source of Funds 
This project, C800612, was included in the 2020-2024 capital budget and plan of finance with a
budget of $444,584,000. The budget increase of $95,000,000 was transferred from the
Aeronautical Reserve CIP C800753 resulting in zero net change to the Aviation capital budget.
The funding source would be future revenue bonds. 
Financial Analysis and Summary 
Project cost for analysis              $540,050,000 
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, $1.33 in 2024 and $1.32 in 2025 
Future Revenues and Expenses (Total cost of ownership) 
TSA will realize staffing efficiencies and a reduction of EDS machines from 28 to 12 by the end
of Phase 2. 
ADDITIONAL BACKGROUND 
The Baggage Optimization program was scoped in 2012 to accommodate 45 MAP with an
expandable design to accommodate future growth. At the time, growth forecasts were flat and
predicted that 45 MAP would be adequate through 2027. The decision was made to proceed in
building an expandable 45 MAP system with the expectation that an expansion would occur in
the future in time to accommodate growth up to the 60 MAP level.  Due to unprecedented
growth at the airport, the 45 MAP threshold was met in 2016, over ten years earlier than
anticipated. In June 2017, the Commission authorized the project to incorporate a capacity
expansion of the Baggage Optimization program in order for the new outbound baggage system

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                Page 13 of 14 
Meeting Date: January 28, 2020 
to accommodate 60 MAP. The additional capacity expansion increased the budget to $445
million. 
Starting in October 2018, the project team has briefed the Commission on the changes in
market conditions such as: increase in baggage equipment prices, sharp steel price increases,
added scope requested by airlines, and a competitive construction market, which together have 
escalated labor and material costs at a rate faster than had been anticipated in the 2017
program budget. The program cost was expected to increase but nowhere near the magnitude
that was seen in the Phase 2 bid. 
ATTACHMENTS TO THIS REQUEST 
(1)   Presentation slides 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
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 
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; construction,
and 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 August 6,
2013 Commission Meeting 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8b                                Page 14 of 14 
Meeting Date: January 28, 2020 
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).