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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
3.3.1.2 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. 3.3.2.1 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-
3.3.1.3 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
3.3.2.2 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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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 3.3.2.4 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
3.3.2.3 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.
