Quality Trumps Bid for Operation & Maintenance Contract at Orlando Int'l

Nicole Nelson
Published in: 

When it comes to bidding airport work, airports and respondents alike know that the bottom line of a proposal usually seals the deal-and eventually the fate-of a potential contract.

So what's an airport to do when quotes come in alarmingly high or low? 

At Orlando International (MCO), it redefined the bidding process. The issue at hand was a $45.5 million contract for the operation, maintenance and repair of MCO's baggage handling system, passenger boarding bridges and ground support equipment. When the three initial bids came in surprisingly off target (two high, and one low), the Greater Orlando Aviation Authority discarded all of them and approached its executive director, Phil Brown, about going back to the drawing board. 

Project: Awarding Operation & Maintenance Contract
Location: Orlando Int'l Airport
Operator: Greater Orlando Aviation Authority
Contract Scope: Operation, maintenance & repair services for baggage handling system, passenger boarding bridges & ground support equipment 
Method Used: Invitation to Negotiate
Point of Difference: Selection committee shortlisted & ranked top 3 candidates before seeing associated price quotes. After prices were revealed, it negotiated with final choice. 
Process Duration: 17 months (12 to write proposal requirements; 5 to select contractor)
Winning Respondent: JSM & Associates
Subcontractors: Southeast Airport Services; JRS Industrial
Contract Terms: 3-year contract with options for two 3-year extensions 
Approx. 3-year Contract Value: $45.5 million
Start Date: April 1, 2017

"We asked for permission to do an 'invitation to negotiate' because we wanted the best company that we could get at the best price," explains Denise Schneider, the authority's assistant director of Purchasing and Material Control. 

Redefining Procurement 

Like a "request for quote" or "request for proposal," an "invitation to negotiate" is a competitive solicitation for goods or services. Where the methods differ is that invitations to negotiate temporarily mask respondents' price quotes while other factors such as experience, special credentials and project strategies are considered. In other words, price was not factored into the award-only in the negotiation was the bottom line used as a starting point.

Schneider reports that the invitation to negotiate approach has trended throughout the state of Florida for over a decade in the information technology sector, and she became familiar with the alternate procurement method when the authority used it with favorable results for a 2014 software contract. 

With Brown's approval, the authority opted to use the competitive invitation to negotiate process to award the contract for MCO's baggage handling system, passenger boarding bridges and associated ground support equipment such as pre-conditioned air and ground power units. 

Of the original six proposal qualifications submitted and evaluated, two were removed from the process for unresponsiveness or lack of minimum qualifications. The remaining four firms were further evaluated for interviews and presentations with the authority's Concession and Procurement Committee. It then narrowed the field to three finalists after another round of interviews and ranked the companies according to preference. Upon board approval of the rankings, the authority was authorized to negotiate with the top-ranked firm. After presentations, the evaluations of the three firms were adjusted to reflect the results of the presentations. When the top ranked firm was established, the committee then secured authority to begin negotiations with the top ranked firm.

"Price was never a factor in choosing the ranking of the companies," Schneider explains, noting that all financial quotes stayed in sealed envelopes alongside the proposals. "After they were ranked, we opened the pricing only of the first three, and that was just to give us an idea of where we wanted to start our negotiation."

Overall, the process took 17 months-one year to craft  specific terms of the invitation and five months to select a provider. 

JSM & Associates, a Florida-based engineering firm, was ultimately selected and approved to receive the $45.4 million operations and maintenance contract, which became effective April 1. The initial contract is for three years, with two additional three-year options.  

Merit vs. Money 

JSM President John Majewski considers the invitation to negotiate process an innovative strategy that he expects to see again. "[It] gave us an opportunity to be selected exclusively on our qualifications and merit," he comments. 

Blair Cox, the company's vice president, agrees that it is a novel approach to procurement. "We knew the Greater Orlando Aviation Authority had the intentions of trying to pick best value vs. awarding on price alone; but we didn't really have a real good feel for how this was going to play out until we were thrust into it," Cox adds.  

As the incumbent provider of operations, maintenance and repair for the airport's baggage handling system and passenger boarding bridges, JSM was bidding to continue its contracted responsibilities while also vying for a much larger piece of the pie: the baggage handling contract held by Aircraft Service International Group. The bag jamming service in the north terminal complex was added to the contract along with the operations, maintenance and bag jamming services at the Remote Sorting Facility.

Cox's interpretation of what was required for coverage, service levels and staffing levels netted a higher price than what JSM ended up negotiating. 

"Once (the authority) had done all the evaluations and ranked everybody in accordance with their evaluations, it then opened up the second envelope to look at pricing components for each of those bidders," Cox explains. "JSM ended up slotted at No. 2-we were not the low, nor were we the high.

"At the end of the day, once we had agreed upon the service levels and the coverage levels that they were looking for, we were able to negotiate a price that matched the scope of services desired within the budget the authority established for the work." 

JSM for the Win

Tom Draper, director of airport operations, explains that a culmination of many factors lead to the authority's selection: "It was JSM's willingness from the very beginning to show how they wanted to incorporate themselves into the day-to-day operation and be a strong part of our organization; it was the amount of staffing that they had proposed for the job and the level of training that they were proposing; and then, it was also their small business subcontracts and how they were continuing to grow them individually and as businesses, to be more productive here at 
the airport."

Draper also highlights the company's willingness to develop talent from within: "JSM was taking baggage handlers who were handling bag jams and starting to give them more duties, and they were also incorporating them into doing more mechanical things as they could get them trained and they offered them a lot more training programs."

The contract winner also incorporated subcontractors-Southeast Airport Services and JRS Industrial-into its proposal, he adds. 

"JSM seemed to be an all-around positive fit for the aviation authority," summarizes Draper. 

Collaborative Effort

As an operations man himself, Draper emphasizes the substantial internal collaboration needed behind the contractual transaction for MCO's ops environment.

"We work closely across all the department lines, and we are very close with Purchasing on all of our contracts and our agreements even after we get them signed," he explains. "We are always meeting with (Purchasing) just to make sure that we are all on pace and we are following all the rules, the regulations, and the guidelines in the contract. Purchasing understood what we were trying to do, and because we are Ops, we understood all the nuts and bolts about putting it together."

Looking back, Draper says advice from Purchasing and the overall collaboration between the two departments helped make the new contract process very successful. 


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