Template revised September 22, 2016 COMMISSION AGENDA MEMORANDUM Item No. CTION ITEM March 14, 2017 Amount of this request: $2,2 00,000 ACTION REQUESTED EXECUTIVE SUMMARY JUSTIFICATION COMMISSION AGENDA Action Item No. __ Page of ��Template revised September 22, 2016. the purchase would move a 2006 ARFF vehicle into reserve status. The objective of this request is to allow the Fire Depart ment to meet the FAA agent discharge requirements and to also maintain a healthy fleet of vehicles allowing more reliability in meeting the needs of the FAA, Airlines, and Publ ic if an incident were to occur Scope of Work Purchase two (2) 3,000 gallon ARFF Vehicles at a cost $2,200,000 A current generic specification has been drafted working with CPO. Proposals will be evaluated for best value and capabilities. Purchase will be executed. Schedule Purchase to be execu ted in April 2017 for an end o year delivery. Activity se ate 2018 Quarter 1. Cost Breakdown This Request Total Project Procurement 2,2 00,000 2,2 00,000 Total 2,2 00,000 2,2 00,000 ALTERNATIVES AND IMPLICATIONS CONSIDERED Three different variations of the new service contract are proposed below. Alternative 1 elay purchase. Delaying even one year creates a greater risk as this option would continue to put us in a position to address continued breakdowns associated with aging vehicles as noted in the justification section of this memo. Cost implications : $0 capital now, $2.2 million plus escalation in near term (must eventually make purchase) Pro: Cost Savings Today Con Increasing risk of not being able to meet FAA requirements due to vehicle down time. ot being able to effectively meet our FAA required agent discharge requirements will cause us to be out of compliance. COMMISSION AGENDA Action Item No. __ Page of ��Template revised September 22, 2016. This is not the recommended alternative. Alter native 2 . Purchase only one 3000 gallon ARFF Vehicle in 2017 and delay the additional purchase to 2018 Cost implications: $1.1 million capital now, $1.1 million plus escalation in near term Pro Provides some benefit as it will allow us to meet current FAA expectation of two vehicles on location at the same time to meet agent discharge requirements This option provides opportunity to improve our current abilities Cons Does not allow us to solve current and upcoming challenges of replacing our aging fleet in a reasonable timeframe. Increases maintenance needs beyond the 10 12 year life expe ctancy, this option increases risk to safety an d down time due to maintenance by continuing to use a 17 year old vehicle. This is not the recommended alternative. Alternative 3 Purchase two 3000 gallon ARFF Vehicles in 2017 This option best fits our future strategic goals and operational needs. During the recent Asiana 777 incid ent in San Francisco it became apparent that immediate water supply is essential for efficient fire operations. This purchase will allow us to integrate new technology, increased water/foam capacities, and capabilities to effectively meet FAA agent dischar ge requirements. Cost implications: $2.2 million capital now. Pros Provides enhanced capabilities to meet current FAA expectation (Advisory Circular No: 150/5210 23) of being able to discharge 322 gallons in the first 60 seconds of an aircraft incident. Provides additional agent quantities to better mitigate larger incidents and will allow us to designate This is the recommended alternative. COMMISSION AGENDA Action Item No. __ Page of ��Template revised September 22, 2016. FINANCIAL IMPLICATIONS Is part of the Aviation Division 2017 Capital Improvement Plan. Cost Estimate /Authorization Summary Capital Expense Total COST ESTIMATE Original estimate 2,20 ,000 2,2 00,000 AUTHORIZATION Previous authorizations Current request for authorization 2,200,00 2,2 0,000 Total authorizations, including this request 2,20 ,000 2,2 0,000 Remaining amount to be authorized Budget Status and Source of Funds This acquisition was included in the 2017 2021 capital budget and plan of finance. We anticipate receiving a grant from the FAA for approximately 75% of the costs. The remaining costs will be funded with the Airport Development Fund. Financial Analysis and Summary Project cost for analysis $2,200,000 Business Unit (BU) Fire (mostly allocated to Airfield) Effect on business performance (NOI after depreciation NOI after depreciation will decrease IRR/NPV (if relevant) CPE Impact Less than $.01 in 2018 (grant funded costs are excluded from airline rate base). Future Revenues and Expenses ( Total cost of ownership ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS There have been no previous Commission acti ons related to this request for purchase.