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14 Ongoing Administrative Costs. These costs include the option has the advantage with regard to this sub-factor. Because administrative burden incurred over the life of the contract(s) it is understandable and it can be expected that any supplier and are not typically as intense as the initial administrative will strive to keep its actual costs for these items closely held, all burden incurred when setting up the contract(s). The sole- other procurement methods have a considerable disadvantage source option typically has a slight advantage because it is with regard to this sub-factor. assumed it may more easily be set up with contractual features that ease ongoing administrative burden such as a lump sum schedule of payments, for example. 3.3.2 Measurement Factor: Risk Because airport APM systems are critical to ongoing airport operations (particularly those APM systems of a Base Price must-ride nature), and because all involve the health, safety, This cost refers to the total cost of the O&M services paid out and welfare of the public, risk is an important measurement over the life of the contract. Although O&M costs are typically factor. See Figure 3 for rankings for the risk measurement paid monthly and allocated by year within the airport's fiscal factor. year budget, it is typical that the total cost of the contract must be covered by the airport's financial resources at the time of award. Continuity Disruption As previously stated, not enough case history exists to predict Continuity disruption refers to the risk of disruption which provider is most likely to win a competitive procurement. attributable to the procurement option that manifests itself However, it is a widely held contractual axiom that competi- in disruption to the operations and maintenance of the APM. tion is a powerful incentive for all proposers to offer their Examples of such disruption are a drop in system availabil- very best (lowest) price. Thus, it can be reasonably assumed ity or an increase in downtime events. The following two that the contractual options involving competition have an sub-factors can be considered with regard to continuity advantage in the measurement factor of base price. disruption. Initial. Initial disruption includes any disruption attrib- Escalation Cost utable to the initial hand-off or transitional period between Following the implementation cost and base cost of the two contracts resulting in different O&M providers. The O&M contract, the airport authority must be prepared to sole-source procurement option has by far the least risk with cover escalation costs. Often, the multi-year O&M contract regard to this sub-factor because there would be no hand-off is set up with pre-established escalation clauses built into or transition. the contract. Such clauses may provide for a reasonable set Ongoing. Ongoing disruption includes any disruption amount of yearly escalation that may be adjusted if various attributable to changes in staff. It is assumed that the pro- accepted indices indicate such adjustment is warranted. The curement options that use the original APM supplier or the airport's contract administrators will have the expertise to set airport's in-house staff have a depth of replacement staff that up escalation clauses within the contract that fairly protect the would give them a slight risk advantage with regard to this interests of all parties. The following two sub-factors should sub-factor. be considered with regard to escalation. Labor. Escalation of labor costs is the easier of the two Technical Expertise sub-factors to address because numerous published cost indices assist in verifying and/or establishing such costs. Such Technical expertise refers not only to the expertise of the indices vary from common to specialized. The airport's con- on-site O&M staff but also to the corporate expertise and tract administrator will be familiar with the most appropriate resources (both human and physical) available that can be indices to apply. considered as an available backup to on-site resources. In terms of risk, it is the lack of or the disruption of these resources Parts, Spares, and Consumables. Verifying the actual that is relevant. escalation of the costs for parts, spares, and consumables, particularly if they are proprietary, is difficult because no Depth and Availability of Experienced Labor Pool. With specific indices exist to gauge or verify such costs. Because cost regard to this sub-factor, the sole-source procurement option escalation for these items can be considered to be somewhat resulting in the original supplier providing the labor has built into a sole-source contract, the sole-source procurement an advantage and the least risk. Even if a third-party O&M

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15 Figure 3. Rankings for risk measurement factor. provider is a large APM supplier with a large backup labor Initial. The initial effort and time involving legal inputs pool, it is likely not a labor pool versed in the specifics of the and opinions is virtually equal for all procurement options APM technology at hand. because the primary product of the legal efforts will be the determination of which procurement options are available Availability and Speed of Delivery of Parts and Spares. and what particulars must be incorporated to ensure the legality This sub-factor, like the previous sub-factor involving the of the procurement. There is little risk involved in this process. labor pool, incurs the least risk by sole sourcing the original APM supplier. As with the labor pool, even if a third-party Ongoing. With regard to ongoing legal issues and risk, it O&M provider is a large APM supplier with an excellent can be assumed that the sole-source procurement methodol- system of parts warehousing, tracking, and delivery for their ogy resulting in the selection of the original APM supplier has own APM systems, these parts are not the parts needed for a slight advantage over the other procurement methods. This the specific APM technology at hand. is based on the assumption that once awarded, this contract would likely incur no further legal issues at all. Parts, Hardware, and Software Long-Term Sustainability. This sub-factor again favors the procurement option that sole sources the original APM supplier in terms of reducing Proposer Pool the risk of losing long-term sustainability of parts, hardware, Figure 3 indicates "N/A" for the procurement options and software. It could be argued that a third-party O&M involving sole sourcing and in-sourcing the O&M services with provider could, over time, make strides in providing and regard to the proposer pool. This is because these two options sustaining the supply of these items. However, the more likely do not involve the proposer pool. The other two procurement real-world scenario is that the original supplier would continue options that involve a third-party O&M provider or the small to evolve, change, and improve upon these items, leaving on-call contracts with the original supplier are shown with a a third-party O&M provider in an increasingly untenable negative risk ranking in consideration of the possible con- situation with regard to this risk. tractual complications. For instance, an upstart third-party O&M provider might propose an unrealistically low price due to its lack of understanding of the scope of real-world Legal Issues O&M requirements. The contractual and legal time and effort There is little risk of legal issues disrupting the smooth required to resolve this situation (such as finding the proposer flow of O&M services in any of the procurement options, not responsible) could risk complications if it were to happen and in both of the following sub-factors, risk is nearly equal within a timeframe of imminent expiration of the existing (and neutral) among all options. O&M contract.