Los Angeles World Airports
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1 Los Angeles World Airports TM May29,2013 LA)( LA/Ontario Vall Nuys City of Los Angeles Anlonio R. VlllareJigosa Mayor Board of Airport Commissioners tvlichacl A. Lawson Presidont Valeria C. velasco VlGe PresIdent Joseph A. Amdas Ruber l D. Beyer Boyd I'light Ann M. r\()\lls1er Fernando M. Torres-Gil The Honorable City Council of the City of Los Angeles City Hall -Room 395 Los Angeles, CA Reference: CF This is to hereby transmit for your information the Mayor approved City Administrative Officer's report covering the consideration and approval of the Proposed Contract with SITA Information Networking Computing USA, Inc. for Maintenance and Support Services for the Terminal and Airline Support Systems at the Los Angeles International Airport. Sincerely, Gina Marie Lindsey Executive Director Christine D. Iseri, Government Government Affairs Division Los Angeles World Airports Affairs Representative Attachments
2 TRANSMITTAL DATE TO Gina Marie Lindsey, Executive Director Department of Airports MAY COUNCIL FILE NO. FROM The Mayor COUNCIL DISTRICT 11 Proposed Five-Year Sole Source Contract with SITA Information Networking Computing USA, Inc. for Maintenance and Support Services for the Terminal and Airline Support Systems at the Los Angeles International Airport Transmitted for further processing, including Council consideration. See the ~Administrative Officer report attached. ~ t!l[{~ '4J-~ ~ MAYOR U MAS:WDC: t CAO 649-d
3 REPORT FROM OFFICE OF THE CITY ADMINISTRATIVE OFFICER Date: May 14, 2013 CAO File No.: Council File No.: Council District: 11 To: The Mayor From: Miguel A. Santana, City Administrative Officer {}. Cf- Reference: Transmittal from the Los Angeles World Airports dated March 21,2013; the Mayor for report on March 21, 2013 referred by Subject: REQUEST TO AWARD A FIVE-YEAR, SOLE SOURCE CONTRACT TO SITA INFORMATION NETWORK COMPUTING USA, INC. FOR MAINTENANCE AND SUPPORT OF THE TERMINAL AND AIRLINE SUPPORT SYSTEMS (TASS) AT THE LOS ANGELES INTERNATIONAL AIRPORT SUMMARY The Executive Director of the Los Angeles World Airports (LAWA; Department) requests approval to award a five-year, sole-source contract to current contractor SITA Information Networking Computing USA, Inc. (SITA; Contractor), a leader in air transport communications and information technology, to continue maintenance and support of the Terminal and Airline Support Systems (TASS) at the Los Angeles International Airport (LAX). The TASS is an information technology system used to allocate terminal resources (gates, stands, ticket counters, baggage carousels, bag sorting piers, flight information displays, gate information displays, and public address systems) to assist airlines with passenger processing. The proposed cost of $16,238, 192 will help the Department to continue use of a system that (1) is deemed to be an integral part of the Tom Bradley International Terminal (TBIT) modernization effort; (2) is being developed as a common use system for international airlines using LAX; (3) will be expanded airlines using to the Bradley West terminal, Terminal 3, and Los Angeles/Ontario International Airport (LAlONT); (4) is critical to the management of aircraft gates, ticket counters, baggage handling, and passenger processing; (5) has been determined by LAWA to be both cost efficient and scalable; and (6) in terms of the SITATEX messaging system component, is used by more than 800 airlines, 700 airports, and 250 airfreight carriers worldwide to exchange hundreds of millions of messages. The proposed contract provides for (1) maintaining continuous operation and support of six primary elements of the TASS for LAX; (2) the consolidation of the SITATEX messaging support and the LAlONT Flight Information Display Systems; (3) the lifecycle replacement of hardware; (4) the deployment of common use workstations in Terminal 3 that will, in turn, avoid the cost of acquiring and implementing a new system and related hardware; and (4) facilitating the execution of contracts between SITA and those airlines using TBIT with the intent to enable a common use solution for
4 CAO File No LAWA and the airlines. The Department is requesting approval of a sole-source contract with SITA for the following reasons: The software is proprietary with no third-party resellers or business partners able to provide administration, support, or maintenance services for the TASS product The software and services form the basis of a common use system for various terminals at LAX, including the new TBIT, the Bradley West terminal, and Terminal 3 It The software and services form the basis of a common use system for international carriers using TBIT The SITATEX messaging application has been in use at LAX and with LAWA for more than 20 years It It conforms to the requirements of Charter Section 371(e)(10) that provide for exceptions to the City's competitive bidding process in that contracts where the contracting authority finds that the use of competitive bidding would be undesirable, impractical, or impossible are exempt Pursuant to Charter Section 373, "Long Term Contracts Approved by Council," and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," Council approval ofthe proposed contract is required in that the cumulative term of the contract exceeds three years. Additionally, to become effective, the City Attorney must approve the agreement as to form. The above-referenced aspects of the proposed contract with SITA Information Networking Computing USA, Inc., and this report, incorporate revised information received from the Department subsequent to the initial request submittal. Background The SIT A contract for hardware, software, and professional services was originally awarded through a competitive process as part of the TBIT modernization process. The initial cost was $7.6 million. Subsequently, in 2010, the Board of Airport Commissioners awarded a three-year, sole-source contract to SITA for TASS maintenance and support services in the amount of $7,342,596. The current contract will expire on June 30, The proposed contract, for five years and $16,238,192, will provide, among other services, the following operations and support for six primary components of the TASS: Airport Operations Database It Resource Management System It Electronic Visual Information Display System Bag Message System (a system that provides outbound bag information {e.g., bag tag number, flight number, route, connecting flight information, etc.} from the airlines' departure control systems to the terminal's baggage handling and reconciliation systems) It Message Broker System (a system that provides the server and software for distributing messages from the Bag Message System from the airlines' departure
5 CAO File No, ,I control systems to the baggage handling system in Terminal 3 and the baggage reconcillationsystem in TBIT) Common Use Terminal Equipment Servers The $16,238,192 cost was determined through an analysis of the details of the scope of work and negotiation of the price based 'upon a cost proposal by SITA. From a comparison of costs for other airports using both the SITA and non-sita systems, LAWA determined that the proposed cost is equal or superior to that for the airports it evaluated. The following table reflects the annual maintenance and support costs, as well as those for what is termed "technology refresh" (the periodic replacement of equipment to ensure continuing reliability of equipment and/or improved speed and capacity) and contingency, for the proposed contract over its five-year term: ' TASS Maintenance & Support Expand TASS info Terminal 3 Expand TASS info Bradley West SITATEX Messaging LAfONT FIDS* Consolidation Contingency Subtotal Technology Refresh for Lifecycle Replacement $1,500,000 Grand Total $16,238,192 *Flight Information Display System According to the Department, once the design for the lifecycle equipment replacement technology refresh has been finalized, a final price will be negotiated. The $1.5 million estimate shown in the' above table is a maximum cost placeholder until the final cost is available. Equipment that was part of the original TASS implementation has been in use since 2009 and is (1) reaching the end of its useful life, and (2) costing more to maintain; therefore, equipment replacement has been included in the proposed contract. The proposed contract also includes services to expand TASS into the Bradley West terminal and Terminal 3 at LAX and consolidation of the SITATEX messaging support and the LAfONT Flight Information Display System contracts. Cost savings attributable to both efforts are anticipated. By expanding TASS into Terminal 3, it allows for further efficiencies and cost avoidance in that a common solution will be available without the need for new servers and software. It also allows the Department to leverage $7.6 million already invested in the TASS implementation for the TBIT modernization program.
6 CAO File No As briefly discussed above, airlines using the TBIT are presently negotiating new five-year contracts with SITA for common use terminal equipment (CUTE) servers and workstations maintenance with the understanding that SITA will continue to be the common use system solution for LAWA. As a consequence, both the Department's operations and those of the international carriers will benefit from use of a common system. Alternatives to the Proposed Agreement According to the Department, there are two alternatives to approving the proposed contract with SITA as follows: o Request a three-year rather than a five-year replacement contract: The Department recommends a five-year contract in order to provide the greatest degree of continuity for the airlines using TBIT and to correspond with the new five-year contracts being negotiated between the airlines and SITA. During the airlines' five-year contractterm, LAWA will evaluate its operations and support model for LAX common use systems deployment to both identify cost savings and leverage its costs across the various terminals o Issue a Request for Proposal (RFP): This approach is not recommended by the Department. Of the four terminals where common use systems have been implemented (Terminals 2, 3, 6, and TBIT), three of the four terminals' systems were implemented using a competitive process, and SITA was the selected contractor. As a consequence, LAWA believes that by leveraging the costs already expended on the TASS common use system, and by retaining SITA to continue its maintenance and support-and expansion-rather than seeking a new solution, savings in both time and costs can be obtained. At the conclusion of the equipment's normallifecycle (five to seven years), consideration can be given to finding a new solution using a competitive process Compliance with City Administrative Requirements Due to the proprietary nature of the SITA services, no subcontracting opportunities were identified for the contract. Consequently, the Contractor is exempt from the provisions of the MinoritylWomen Business Enterprise program. The Contractor must, however, comply with the Affirmative Action Program provisions, the Child Support Obligations Ordinance, the Living Wage/Service Contractor Worker Retention Ordinances, the Contractor Responsibility Program, the First Source Hiring Program for all non-trade airport jobs, and the provisions of the Bidder Contributions CEC (City Ethics Commission) Form 55 pertaining to the City's contract bidder campaign contribution and fundraising restrictions (Charter Amendment H) that became effective in April The Contractor has approved insurance documents, in the terms and amounts required, on file with LAWA. A determination must be made by the Department of Public Works, Bureau of Contract Administration that SITA is in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the contract. With respect to the Charter Section 1022 (Use of Independent Contractors), the Department determined that the required work can be performed more feasibly or economically by an independent contractor than by City employees.
7 CAO File No City Council approval of the proposed Amendment is required in accordance with Charter Section 373, "Long Term Contracts Approved by Council," and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," because the cumulative period of the contract exceeds three years. Additionally, to become effective, the City Attorney must approve the First Amendment as to form. Compliance with California Environmental Quality Act Guidelines Since the proposed agreement is for continuing administrative and personnel-related activities, it is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2(f) of the Los Angeles City CEQA Guidelines. RECOMMENDATIONS That the Mayor: 1. Approve, subject to City Attorney approval as to form and determination by the Department of Public Works of compliance with the Equal Benefits Ordinance, the proposed contract with SITA Information Networking Computing USA, Inc. for five years and a not-to-exceed amount of $16,238,192 to provide maintenance and support services for the Terminal and Airline Support Systems for the Los Angeles World Airports, specifically at the Los Angeles International and Los Angeles/Ontario International Airports; and 2. Return the proposed Contract to the Department for further processing, including Council consideration. FISCAL IMPACT STATEMENT Approval of the proposed contract will have no impact on the General Fund. Funding has been requested in the Department's Operating Budget in Cost Center ARCC Management Division and ONT Cost Center ONT IT Ops Info Tech Svcs, Commitment Item Contractual Services. Future years' funding will be requested as part of the annual budget process. This project complies with the Department of Airports' adopted Financial Policies. Time Limit for Council Action Pursuant to Charter Section 373, "Long Term Contracts Approved by Council," and the Los Angeles Administrative Code Section 10.5, "Limitation and Power to Make Contracts," the proposed Contract with SITA Information Networking Computing USA, Inc. must be approved by the Council before it can become effective. Unless the Council takes action disapproving a contract that is longer than three years within 60 days after submission to Council, the contract will be deemed approved. MAS:WDC:
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