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8ACRP Project 03-06 produced ACRP Report 37: Guide- book for Planning and Implementing Automated People Mover Systems at Airports. ACRP Project 03-07 provides this report as a companion to ACRP Report 37. Taken together, these two guidebooks provide airport staff and other appropriate stakeholders a recommended pathway forward that spans the range from initial APM conceptualization to measuring and maximizing the efficiency of the actual day-to-day operation and maintenance of the APM system. The reader is encouraged to consult ACRP Report 37â particularly Chapter 10, APM System Procurement and Chap- ter 11, Operations and Maintenance. These chapters offer a high-level overview of moving from the planning of an APM system to its actual procurement, as well as options for its on- going operation and maintenance. Chapter 3 herein reiterates some of the highlights of Chapters 10 and 11 of the other report, elaborates on related aspects, and offers recent developments in procuring O&M services that have occurred subsequent to the research and publication of ACRP Report 37. Chapter 3 discusses the contractual aspects of transition- ing from planning and implementing an APM to the actual operation and maintenance of an APM. These contractual aspects primarily involve the contractual procurement op- tions for securing the O&M services. Although it is ultimately the terms and conditions of the O&M contract that specify the performance measures discussed in this report, the pur- pose of this transitional chapter is not to discuss in detail the particulars of those terms and conditions. Rather, this chap- ter offers a high-level overview of four different methods for procuring O&M services. These methods are the historic sole- source method of procuring O&M services, the more recent competitive procurement of O&M services, in-sourcing the O&M services to airport staff, and combining a competitive procurement with a sole-source contract for parts and tech- nical support. This chapter compares these four procurement options via three primary measurement factors (cost, risk, and other) and offers a summary of this comparison. Lastly, this chapter summarizes the O&M contractâs relationship to performance measurement. 3.1 Recent Developments in Procuring Ongoing O&M Services Since the publication of ACRP Report 37, several devel- opments in the O&M procurement area have occurred or are occurring at the time of publication of this guidebook. These include legal precedents, changes to what were formerly typical O&M contract durations, and internal changes within the O&M contract proposer pool (i.e., those companies capable and willing to propose on such contracts). 3.1.1 Legal Precedents Airport authorities that govern airports of the physical size and operational intensity that necessitate an APM are public entities. Such authorities are usually a city (or county) department, an arm of a city (or county) department, or an independent, quasi-governmental body such as a com- C h a p t e r 3 Transitioning from APM Planning and Implementation to APM Operations and Maintenance Photo: www.bombardier.com Maintenance Facility at San Francisco International Airport
9 mission, board, or council. Regardless of the particulars, each has legally empowered governmental authority and is an entrusted curator of public money. As such, the most common contracting method used by airports is designâbidâ build, also known as competitive public low-bid contracting, where the contract award is ultimately based on competing bids with the lowest price constituting the winning bid. This is arguably held as the most effective measure of protecting and ensuring proper and best use of public money and in most cases is legally dictated. Thus, sole-source contracting without good reason and/or justification by a public entity can be construed (either legally, politically, or publicly) as circumventing public bidding laws. The terms and conditions by which a public entity can legally engage in sole-source contracting differ by state. Some state statutes are relatively lenient, with many specific exceptions to public low-bid con- tracting that will allow sole-source contracting. Such excep- tions may involve the high tech nature or availability of the product that is being contracted (such as an APM system). Some states, on the other hand, allow virtually no exceptions to public low-bid contracting. With regard to O&M contracting specifically, legal prec- edent has allowed continuing O&M contracts to be sole sourced to the original APM supplier (in all locations where this has been legally allowed). Historically, there were excep- tions where the initial supplier had gone out of business, leaving no alternate but put the O&M services out for com- petition. Circa 2005, from the seed of these few exceptions, some legal departments opined that the very precedent of the few O&M contracts that were successfully put out for competition negated the option of sole sourcing. Within this same time frame, some airport authorities chose to put their continuing O&M contracts out for competition in the interest of seeking cost savings, thus adding to the number of precedents for competitive O&M contracting. Although it cannot yet be confirmed as a future trend, the possibility exists that if legal opinions continue to fall on the side of denying sole-source due to the increasing number of competitively bid O&M services, a time could come where the competitive precedent will be so overwhelming that few legal opinions could justify sole sourcing at all. If this were to occur, it would be a major paradigm shift in APM O&M contracting. Informal discussions with major APM O&M providers reveal that they are aware of this possibility. 3.1.2 O&M Contract Durations As noted in Chapter 11 of ACRP Report 37, historically the typical time period for initial O&M services has been 5 years. Typically, renewals of the contract for continuing O&M services have also been 5 years. Recent contracts for continuing O&M services, either competed or sole sourced, have been longer. Some examples include a base contract of 5 years with option years that can be approved for a total contract duration of up to either 7 or 8 years. Other examples have a base contract of up to 8 years. One example has a base contract of 10 years. These longer durations ease the administrative burden on airport authorities simply because they need not engage in the contract administration work necessary to extend the O&M services as often. If the services are put out for competition, this contract administration work involved is particularly substantial. These longer durations also offer the O&M provider a contractual certainty that can allow it to implement capital investments in the APM system that are desired by the owner. One large airport with a large airside APM recently included provisions and funding for midlife improvements to the Photo: www.bombardier.com Multiple Trains in Maintenance Facility at HartsfieldâJackson International Airport Photo: Lea+Elliott, Inc. Single Train in Maintenance Facility at Detroit Metropolitan Wayne County Airport
10 APM system that were purposely built into the second gen- eration O&M contract. The terms and conditions of this contractual aspect provided much flexibility in the type of improvements and the schedule for their implementation to ensure that work was done only when needed and as needed. This innovative approach changes the implementation of midlife system improvements to a process instead of an event because typically such work is accomplished in one specific time window under separate contract from the O&M contract. By doing what is needed when it is needed under the ongoing O&M contract, gains in efficiency should be made in terms of dollars, effort, and (lack of) system disruption. 3.1.3 O&M Contract Proposer Pool The O&M contractor pool, or those companies that are willing and capable of providing APM O&M services, is small and likely to remain small, even with the recent trend of competitive procurement. Chapter 11 of ACRP Report 37 best explains this by stating that âthe APM industry is highly specialized, with each supplierâs system being proprietary in nature. Thus, there has historically been no established com- petitive market for APM O&M services, and the universe of responsible third parties capable of providing such services remains very limited despite the recent solicitations.â Even among the initial APM suppliers, some small suppliers are not capable of providing O&M services for larger APM systems due to major technological differences such as cable propulsion versus a self-propelled system or the raw scale differential of the APM system and/or size of the provider company. Although the provider pool remains small, changes have occurred within the pool subsequent to the publication of ACRP Report 37. Examples include one significant third-party O&M provider that has apparently left the market as evidenced by their not bidding on recent O&M competitive solicitations commensurate with their past work. Another example involves a major APM supplier of new systems that has opened several large APMs in the United States over the last several years, but who has yet to venture into proposing on O&M services for other suppliersâ systems. However, informal discussions with this supplier indicate that providing O&M services for systems implemented by other suppliers may be in their busi- ness plan for the future. Another example involves a major supplier of cable-propelled systems that has apparently left the supplier pool in terms of providing new systems. However, this supplier continues to provide O&M services for their existing systems and in one case competed to provide O&M services for a system by another supplier. Efforts by an APM O&M provider to protect and main- tain its position within the provider pool are understandable because installing an APM system represents a one-time profit, whereas O&M services provide a revenue stream into perpetuityâor for at least as long as the provider can success- fully retain the O&M contract. This difference in the revenue streams is universal to all APM suppliers that are also O&M providers. Recently, as competition has become more common, some within the proposer pool have taken specific measures to help secure their positions. One example is taking a corporate stance of not providing technical assistance or proprietary parts directly to a competitor that is providing O&M services for their system. However, such a stance typically does not preclude providing technical assistance or proprietary parts directly to the owner via a separate small, on-call contract. Considering that the owner could then pass the technical assistance or parts to their contracted third-party O&M provider, one might wonder how effective such a corporate stance could be. Apparently, this corporate stance can be somewhat effective because recent industry experience has indicated that although such pass-throughs for proprietary parts do occur, they typically do not occur with the speed of delivery for the parts or reasonableness of cost for the parts compared to situations where the supplier holds the contract directly with the owner. 3.2 Procurement of O&M Services: Contractual Options Chapter 10 (APM System Procurement) and Chapter 11 (Operations and Maintenance) of ACRP Report 37 include in- formation about contracting for O&M services. Section 10.2.5 includes a discussion of the designâbuildâoperateâmaintain (DBOM) method of APM procurement. The DBOM method, sometimes referred to as âsuper turnkey,â includes an initial period of O&M services as part of the APM system procure- Photo: Lea+Elliott, Inc. Two-Car Train in Maintenance Facility at Dallas-Fort Worth International Airport
11 ment. The reader is particularly encouraged to read Chapter 11, which includes an overview of different O&M procurement options, including three of the four methods that are discussed in this section. Chapter 11 also addresses the procurement of future O&M periods and offers examples of competing APM O&M services. There are differences between and similarities in the initial procurement of O&M services at the time of APM system implementation and the future/continuing procurement of O&M services for a seasoned APM system. The focus of this chapter is the procurement of ongoing O&M services. The following four procurement methods are thus presented with the prerequisite assumption that the subject APM system is an existing system with O&M services that have reached a point in their contractual timeline that allows the owner an opportunity to consider different procurement options. 3.2.1 Option 1: Sole-Source Procurement of O&M Services Procuring ongoing O&M services via a sole-source contract with the original supplier of the APM has historically been the procurement method used most often. One reason for this is that the APM industry is highly specialized, with each supplierâs system being proprietary in nature. Thus, there has been no historical development of an O&M contractor pool or those companies capable and willing to provide O&M services for an APM system other than their own. Also, there have been no known problems with the original supplier continuing as the long-term O&M provider. It is reasonable to assume that the development of a long-term familiarity with the APMâs operation and maintenance, as well as a long- term proven relationship between the owner and the O&M provider, contributed to the best interests of the owner. It can also be reasonably assumed that these factors contributed to good APM system performance and thus contributed to the best interests of the public. 3.2.2 Option 2: Competitive Procurement of O&M Services Some recent examples of procuring ongoing O&M services for APM systems have departed from the historic precedent of sole sourcing the services. All of these departures have a common factor that is key to the procurement philosophy, and that common factor is competition. This competition, in turn, helps ensure that the owner realizes the lowest price for the O&M services. In all cases, this quest for low cost appears to be the sole reason for the competitive procurement, and as previously stated, no examples are known where there was a problem with the technical performance of the original O&M provider. There are many specific contractual approaches that are available to effect a competitive procurement of O&M services. These procurement types differ by what is desired by the owner and/or what is allowed by the specific state statutes where the airport and APM reside. These procurement types are referred to by a variety of colloquial and contractual names such as âbest value,â ârequest for competitive sealed proposals,â and âcompetitive two-step,â whereby technical qualifications and price are solicited separately. It is not the intent of this report to examine the particulars of these procurement types because the airportâs contract administrators and legal staff will already be well versed in the available options if a competitive procurement is desired. In terms of these competitive procurements being referred to as ârecent,â it should be considered that the APM industry is more than 40 years old, spanning from the late 1960s to the present. Although the APM industry is young in comparison to other industries such as railroads or even the airline industry, it should also be considered that all competitive procurements within the 40+ year-old APM industry have occurred within the last 6 years. 3.2.3 Option 3: In-Sourcing O&M Services to Airport Staff Another method to procure ongoing O&M services for an APM system is to in-source the services to airport staff. This could involve the staff of an existing airport department, or if warranted, could involve the creation of a new department with new staff dedicated to the O&M of the APM. Although having in-house staff provide O&M services for a transit system is not rare in urban settings (including some urban APMs), it is fairly uncommon for airport APM systems. The few examples are unique in how they came to be. For example, Photo: Lea+Elliott, Inc. Elevated Maintenance Facility at George Bush Intercontinental/Houston Airport
12 one large airport with a large APM has a split of O&M services, with in-house staff handling the systemâs operation while the original APM supplier is under contract to provide the maintenance services. This arrangement was possible because this particular airport already had a ready pool of employees versed in APM O&M functions from a previous-generation APM on the airport. Most of the supplierâs employees versed in the O&M of this previous APM had joined the airportâs staff via mutually agreeable contractual arrangements among all parties. A more common variation of in-sourcing APM O&M services involves only a partial in-sourcing. In these examples, the higher-level management functions are handled by a relatively few airport staff, with the majority of the physical work being performed by a contracted O&M provider. Another fairly rare variation involves a reversal of this example. In this case, the majority of the physical work is accomplished by in-house staff with the added resource provided by retaining a few on-site staff members of the original APM supplier. This on-site presence of the original supplier may involve only a single staff member. 3.2.4 Option 4: Competitive Procurement with Technical and Parts Support Sole Source Contract Once the decision has been made by an airport author- ity to put the ongoing O&M services for their APM out for competition, the outcome cannot be predicted and may result in either the original APM supplier being selected or a third-party O&M provider being selected. There is not yet enough case history to offer odds on which entity is more likely to be successful. However, there is enough case history to suggest that when a third party is selected to provide O&M services, the original APM suppliers have been disinclined to provide technical support and propri- etary parts to their competitors. This is an understandable business model when considering the original supplierâs desire to retain its position of providing O&M services for its own systems. A contractual means for the owner to deal with this issue of technical support and proprietary parts is to supplement the primary contract with the third-party O&M provider with a smaller, secondary sole-source con- tract with the original APM supplier exclusively for tech- nical support and proprietary parts. This approach could include a single contract or separate contracts for the technical support and proprietary parts, respectively. Most typically, these supplementary contracts with the original suppliers are set up as time and materials contracts with a not-to-exceed value over the same duration of the primary O&M providerâs contract. The supplementary contracts are typically administered as on-call contracts, with the techni- cal services and/or parts being requested and paid for only when needed. Legal precedent in most states is more likely to allow these small on-call contracts to be sole sourced due to their highly proprietary nature as opposed to the primary O&M contract. 3.3 Measurement of O&M Procurement Methodology Criteria The four O&M procurement options presented in Sec- tion 3.2 differ significantly in contractual content as well as their practical application to the daily operation and main- tenance of an APM system. Differences in an APM systemâs size, complexity, and legal and contractual environment, as well as many other factors of the APM system, can have a substantial influence on which of the aforementioned pro- curement options is most applicable to a particular system. Nevertheless, there are certain criteria that can appropriately be applied to each of the four procurement methods in an effort to quantify and measure the advantages and disadvan- tages of each. These âmeasurement factors,â as they will be referred to hereafter, are cost, risk, and a collection of other factors. These three major categories of measurement factors can be further subdivided into more specific measurement âsub-factors,â as they will be referred to hereafter. All of these factors can be ranked for each of the four O&M procure- ment methodologies. Although such ranking will obviously be somewhat subjective in nature, actual industry experience with the different methodologies has revealed some con- sistent and repeatable aspects of each. A large international airport with a large airside APM system recently used the analysis described in this chapter to evaluate, and ultimately Photo: Lea+Elliott, Inc. On-Grade Maintenance Facility at Phoenix Sky Harbor International Airport
13 select, the most appropriate procurement methodology for its next-generation O&M contract. Although the results obtained for that one particular airport cannot be assumed to be universally applicable, there is again industry experience that indicates such results can at least be deemed typical. Thus, an abbreviated version of that approach is presented in this chapter without any specifics applicable to that airport. The intent is to offer a general outline of an analysis that can be usefully adapted and emulated by other airports in their quest to objectively evaluate procurement methodologies for ongoing O&M services. In this section, each of the three main measurement factors, cost, risk, and other, are defined and discussed along with the sub-factors applicable to each. Ranking of the three measure- ment factors along with their associated sub-factors is shown in tabular format with a figure dedicated to each of the three main factors. Ranking is defined as âpositive,â âneutralâ or ânegative.â If ranking does not apply, âN/Aâ is shown. Lastly, a summary figure is presented and discussed. The particular rankings presented are based on industry experience to date. Specifically, the rankings are an assemblage of the results from the procurement efforts of the large airport previously men- tioned as well as the five examples outlined in Chapter 11 of ACRP Report 37. The rankings may be considered representa- tive based upon industry experience to date but should not be considered absolute because such experience is limited. When applying the methodology of the case studies to other airport APM systems, the ranking of the measurement factors should be tailored to the legal, contractual, and operational environ- ment of that particular airport APM system. 3.3.1 Measurement Factor: Cost As previously stated, cost, or more specifically, the quest for the lowest cost, is the apparent primary reason for airport authorities recently departing from the historic contractual model of sole sourcing ongoing O&M services. Thus, in com- paring the four contractual procurement options, cost is an important measurement factor. See Figure 2 for rankings for the cost measurement factor. 18.104.22.168 Implementation Cost The first cost to be incurred by the airport authority is the cost of implementing the new, ongoing O&M contract, which will include the following sub-factors: In-House Costs (Initial Costs). These costs include the administrative time spent by in-house airport staff in set- ting up or soliciting the contract. A competitive solicitation includes many unknowns and will likely involve iterative questions and answers with proposers, resulting in addenda. The option involving supplementary contracts for techni- cal support and proprietary parts, by its nature, involves the administration of multiple contracts, which increases the administrative burden. Figure 2. Rankings for cost measurement factor.
14 Ongoing Administrative Costs. These costs include the administrative burden incurred over the life of the contract(s) and are not typically as intense as the initial administrative burden incurred when setting up the contract(s). The sole- source option typically has a slight advantage because it is 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. 22.214.171.124 Base Price This cost refers to the total cost of the O&M services paid out over the life of the contract. Although O&M costs are typically paid monthly and allocated by year within the airportâs fiscal year budget, it is typical that the total cost of the contract must be covered by the airportâs financial resources at the time of award. As previously stated, not enough case history exists to predict which provider is most likely to win a competitive procurement. However, it is a widely held contractual axiom that competi- tion is a powerful incentive for all proposers to offer their very best (lowest) price. Thus, it can be reasonably assumed that the contractual options involving competition have an advantage in the measurement factor of base price. 126.96.36.199 Escalation Cost Following the implementation cost and base cost of the O&M contract, the airport authority must be prepared to cover escalation costs. Often, the multi-year O&M contract is set up with pre-established escalation clauses built into the contract. Such clauses may provide for a reasonable set amount of yearly escalation that may be adjusted if various accepted indices indicate such adjustment is warranted. The airportâs contract administrators will have the expertise to set up escalation clauses within the contract that fairly protect the interests of all parties. The following two sub-factors should be considered with regard to escalation. Labor. Escalation of labor costs is the easier of the two sub-factors to address because numerous published cost indices assist in verifying and/or establishing such costs. Such indices vary from common to specialized. The airportâs con- tract administrator will be familiar with the most appropriate indices to apply. Parts, Spares, and Consumables. Verifying the actual escalation of the costs for parts, spares, and consumables, particularly if they are proprietary, is difficult because no specific indices exist to gauge or verify such costs. Because cost escalation for these items can be considered to be somewhat built into a sole-source contract, the sole-source procurement option has the advantage with regard to this sub- factor. Because it is understandable and it can be expected that any supplier will strive to keep its actual costs for these items closely held, all other procurement methods have a considerable disadvantage with regard to this sub-factor. 3.3.2 Measurement Factor: Risk Because airport APM systems are critical to ongoing airport operations (particularly those APM systems of a must-ride nature), and because all involve the health, safety, and welfare of the public, risk is an important measurement factor. See Figure 3 for rankings for the risk measurement factor. 188.8.131.52 Continuity Disruption Continuity disruption refers to the risk of disruption attributable to the procurement option that manifests itself in disruption to the operations and maintenance of the APM. Examples of such disruption are a drop in system availabil- ity or an increase in downtime events. The following two sub-factors can be considered with regard to continuity disruption. Initial. Initial disruption includes any disruption attrib- utable to the initial hand-off or transitional period between two contracts resulting in different O&M providers. The sole-source procurement option has by far the least risk with regard to this sub-factor because there would be no hand-off or transition. Ongoing. Ongoing disruption includes any disruption attributable to changes in staff. It is assumed that the pro- curement options that use the original APM supplier or the airportâs in-house staff have a depth of replacement staff that would give them a slight risk advantage with regard to this sub-factor. 184.108.40.206 Technical Expertise Technical expertise refers not only to the expertise of the on-site O&M staff but also to the corporate expertise and resources (both human and physical) available that can be considered as an available backup to on-site resources. In terms of risk, it is the lack of or the disruption of these resources that is relevant. Depth and Availability of Experienced Labor Pool. With regard to this sub-factor, the sole-source procurement option resulting in the original supplier providing the labor has an advantage and the least risk. Even if a third-party O&M
15 provider is a large APM supplier with a large backup labor pool, it is likely not a labor pool versed in the specifics of the APM technology at hand. Availability and Speed of Delivery of Parts and Spares. This sub-factor, like the previous sub-factor involving the labor pool, incurs the least risk by sole sourcing the original APM supplier. As with the labor pool, even if a third-party O&M provider is a large APM supplier with an excellent system of parts warehousing, tracking, and delivery for their own APM systems, these parts are not the parts needed for the specific APM technology at hand. 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 the risk of losing long-term sustainability of parts, hardware, and software. It could be argued that a third-party O&M provider could, over time, make strides in providing and sustaining the supply of these items. However, the more likely real-world scenario is that the original supplier would continue to evolve, change, and improve upon these items, leaving a third-party O&M provider in an increasingly untenable situation with regard to this risk. 220.127.116.11 Legal Issues There is little risk of legal issues disrupting the smooth flow of O&M services in any of the procurement options, and in both of the following sub-factors, risk is nearly equal (and neutral) among all options. Initial. The initial effort and time involving legal inputs and opinions is virtually equal for all procurement options because the primary product of the legal efforts will be the determination of which procurement options are available and what particulars must be incorporated to ensure the legality of the procurement. There is little risk involved in this process. Ongoing. With regard to ongoing legal issues and risk, it can be assumed that the sole-source procurement methodol- ogy resulting in the selection of the original APM supplier has a slight advantage over the other procurement methods. This is based on the assumption that once awarded, this contract would likely incur no further legal issues at all. 18.104.22.168 Proposer Pool Figure 3 indicates âN/Aâ for the procurement options involving sole sourcing and in-sourcing the O&M services with regard to the proposer pool. This is because these two options do not involve the proposer pool. The other two procurement options that involve a third-party O&M provider or the small on-call contracts with the original supplier are shown with a negative risk ranking in consideration of the possible con- 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 O&M requirements. The contractual and legal time and effort required to resolve this situation (such as finding the proposer not responsible) could risk complications if it were to happen within a timeframe of imminent expiration of the existing O&M contract. Figure 3. Rankings for risk measurement factor.
16 22.214.171.124 Safe and Secure Operations All APM systems at airports operate in an environment with unique prerequisite requirements for safe and secure opera- tions that typically go beyond the operational requirements for urban or entertainment venue APM systems, particularly in a post-911 environment. For instance, antiâair-piracy and anti-terror considerations are aspects of an airport APMâs operation that are less important (or non existent) in non- airport APMs. In addition, because an airport APMâs opera- tion is typically tied to the airportâs and airlinesâ operations, a disruption to APM operations risks a severe negative impact to the traveling public. Thus, to reduce risk, an airport APM must operate with very high availability and reliability. The following three sub-factors address this risk with regard to the procurement options. Availability (Routine). The service availability of an APM system is discussed in depth in subsequent chapters of this report. For the purposes of this transitional chapter, it is sufficient to explain that an APMâs availability is not simply the percentage of time it operates versus the time it is out of service. Rather, availability is calculated by various methodologies, and the important point is that an airport APMâs availability must consistently be very high on a routine, day-to-day basis. This high availability should be achiev- able via any of the four procurement methods, although sole sourcing to the original supplier may incur a small advantage due to the previously discussed issues involving technical expertise. Reliability (Routine). Reliability is not synonymous with availability, although poor reliability could obviously negatively impact an APMâs availability percentage. Reliability refers more to the required degree of internal operational and maintenance efforts and how they are effectively applied to the APM system to ensure a reliable system. High reliability should be achievable via any of the four procurement methods, although, again, a slight advantage is assumed for the sole- source method due to the previously discussed issues involving technical expertise. Response to Non-Routine Circumstances/Incidents. The previous two sub-factors considered aspects of routine, day-to-day APM operations. This sub-factor considers the risk involved with non-routine circumstances or incidents. An example would be the failure of a vehicleâs guide wheel that, in turn, damages hundreds of feet of power rail along the guidewayâa length far in excess of the length of replace- ment power rail on hand at the site. In a rare example such as this, the sole-sourced original supplier would have the advantage of its home office and corporate resources being able to rapidly respond and repair the damage in order to resume operations. A third-party O&M provider would not have such resources and the APM would likely sustain a much longer service outage. 3.3.3 Measurement Factor: Other In addition to cost and risk, the following sub-factors constitute a category of other measurement factors that may be affected by the different procurement methods. See Figure 4 for rankings for the âotherâ measurement factor. 126.96.36.199 Community Participation Airports are typically held in esteem by the local communi- ties they serve, and in the case of large international airports, the airport typically serves as a substantial economic engine for its host city and region. Experience has shown that airport authorities typically strive to keep the positive economic effects of the airport localized, and accordingly, strive to procure and award contracts with consideration given to the following two sub-factors. Opportunities for Minority, Woman, and/or Dis- advantaged Business Enterprises. As public entities, air- port authorities typically have well-developed programs designed to promote contractual opportunities for local businesses certified as minority, woman, and/or disadvantaged business enterprises (M/W/DBEs). This sub-factor is essen- tially ranked equally and as neutral among the procurement methods, with the exception that it is not applicable with regard to the in-sourcing method. No major APM O&M pro- viders are known to be M/W/DBE certified, and successfully meeting local M/W/DBE goals has been historically challeng- ing for O&M providers because the specialized nature of the work requires that it be performed by their own forces. Typi- cally, M/W/DBE goals have been met by the O&M provider subcontracting to local certified businesses for temporary and/or administrative office staff, janitorial services, shipping services, office supplies, and any other such services that are applicable. Local Participation. In addition to promoting M/W/ DBE participation, and for basically the same reasons, air- port authorities typically strive to promote local participa- tion in the contracts they award. This sub-factor has also been ranked equally and as neutral among the procurement methods, again with the exception that it is not applicable with regard to the in-sourcing method. Because of the small size of the O&M provider pool, it is extremely unlikely that
17 a prospective O&M provider will reside in the host city and be considered a local company. Thus, the goal of enhancing local contractual participation has been historically chal- lenging and is usually met in the same way M/W/BE goals have been met. Assuming the M/W/DBE participants are local businesses, both of these sub-factors could be satisfied with the same companies subcontracted by a prospective O&M provider. 188.8.131.52 Future System Expansion For purposes of this discussion, âexpansionâ is broadly defined as a change to the existing APM system, including an extension to or expansion of the existing APM system. The possibility exists that such expansion work could occur during the term of a particular O&M contract, either by unforeseen necessity or by planned design. It is possible that various types of expansion work could be accomplished by separate contract, could possibly be added by change order to the ongoing O&M contract, or may have been already included in the O&M contract award as in the example discussed in Section 3.1.2. In any case, a procurement methodology that ensures selection of the original APM supplier would have the greatest advantage, while a procurement methodology that results in a third-party O&M provider would have the greatest disadvantage. This is again due mostly to the corporate resources of the original supplier. The following two sub- factors amplify this point. Modification, Upgrades/Enhancements to Existing System. The possibility of modifications and/or upgrades to the existing system could take many forms and could involve any number of the subsystems of the APM. These include the automatic train control system (ATC), vehicles, communications, graphics, the central control facility, and a virtually endless assortment of other possibilities. However, all of the possibilities have commonality in that the original supplier would have a substantial advantage in performing modifications and/or upgrades and in many instances would be the sole entity with the ability to do so. It is appropriate, and not unlikely, that this type of modification or upgrade/ enhancement work could be performed under an O&M contract. Extension/Expansion of Existing System. An extension of the existing APM system could involve a physical exten- sion of the guideway in order to serve additional facilities. An expansion of the existing APM system could also involve a physical extension or could expand the APM systemâs capac- ity by increasing train length or adding operating trains to the fleet. As with the previous sub-factor, extending and/or Figure 4. Rankings for âotherâ measurement factor.
18 expanding the APM system could involve a plethora of pos- sibilities, and again, the original supplier would have a sub- stantial advantage. Although it is possible that some of this type of work could be performed under an O&M contract, it is far more likely that such major work would be performed under a separate contract. This highlights a possible scenario where a physical expansion or extension to an existing APM system is performed by the original APM supplier while the existing system is being operated and maintained by a third party. This scenario actually occurred at a major international airport and required careful coordination between the two entities. A disadvantage from the ownerâs perspective was that the owner did not have a single point of responsibility for the expansion work, which would not have been the case if the original supplier had held the O&M contract. 3.3.4 Summary The summary in Figure 5 indicates that in terms of the measurement factors, the sole-source procurement option has the most positive score, while the procurement options allowing a third-party O&M provider have the lowest score. While not intending to diminish the impact of the other measurement factors, these results indicate that an airport authorityâs preference in choosing an ongoing O&M pro- curement option can be primarily distilled to an issue of cost versus riskâspecifically, the possibility of cost savings versus the possibility of increased risk. Possible cost savings are a worthy goal for any public entity and, if realized, are a tangible and measurable advantage. On the other hand, the possibility of various kinds of increased risk is a subjec- tive and elusive factorâat least until something negative actually occurs as a result of the increased risk. Real-world experience is currently not substantial enough and does not contain enough specific examples to predict the outcome of the cost-versus-risk aspect for the procurement types that allow a third-party O&M provider. There are positive real-world examples of a third-party O&M provider pro- viding the owner with increased availability percentages for APM systems. There are also negative real-world exam- ples of accidents involving APM systems, sometimes with personal injury to passengers, while the system was under contract to a third-party O&M provider. The real-world experience of original suppliers providing ongoing O&M services has a much longer history, and despite this much longer time frame for the possibility of negative incidents, it is comparatively devoid of accidents and personal injury to passengers. Despite the sole-source procurement option having the highest score, the purpose of this summary is not to make a definitive recommendation, particularly in light of the fact that some owners will not have the legal flexibility to even consider all of the procurement options. Rather, as previ- ously stated at the beginning of this section, the intent is Figure 5. Measurement factor summary.
19 to offer a general outline of an analysis that can be usefully adapted and emulated by airports in their quest to objectively evaluate procurement methodologies for ongoing O&M services. For example, if such an evaluation indicates that the increased possibility of specific risks at a specific airport is not great, the ranking of the risk measurement factors can be adjusted accordingly. If such an evaluation does not involve the possibility of system expansion, then the measurement factors involving expansion can be considered superfluous. Or, if such an evaluation commences with a prevailing goal of cost savings, the ranking of the cost measurement factors can be adjusted accordingly. By making such adjustments within the framework of the analysis used, results should be accurate to the degree of aiding and adding credibility to the decision-making process for choosing the most appropriate O&M procurement option. 3.4 O&M Contractâs Relationship to Performance Measurement Chapter 3 has presented different procurement options for securing ongoing O&M services and has offered a model analysis for comparing the procurement options with various measurement factors. Some of the performance measurement factors show that the type of procurement process and how it is administered can have an effect on the APM systemâs performance. However, it is ultimately the actual O&M contract and its specific terms and conditions that establish the performance benchmarks for the APM. The actual O&M contract also establishes precisely how that performance is measured. The following chapters elaborate on performance measurements for APM systems at airports and offer specific contractual approaches for such measurement.