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8 State of the Practice To be successful, technology procurement demands open communication channels and demystification of processes. This is accomplished through the âmeet, talk, learn, agree, actâ methodology for rightsizing each project. Adoption of these recommendations is included in published formulas (FigureÂ 2-1) for successful procurement and implementation that are appli- cable to airports regardless of governance (Defant etÂ al. 2013). Summary of Common Themes Needs Determination Procurement needs are determined by the size and classification of the airport and the scope of the projects therein. In some cases, procurement needs are formally identified at a particular level or within a structured process at the airport. Other airports use less formal methods and can employ multiple routes to meet identified needs at any level and at any time. Needs determination can also be conducted organization-wide on the basis of forecast- ing. AustinâBergstrom International Airport (AUS) launched its master plan in 2014, which included a technology needs assessment. The organization is now working through the imple- mentation of the plan in stages. Though it accepts individual requests, the organization deter- mines need using an existing catalog. Recommendations outside this scope are discussed for consideration (Diana Heath, personal communication, DecemberÂ 10, 2020). For many airports, needs are often determined as they arise and thus procurements are more reactive. After a ransomware attack, Cleveland Hopkins International Airport (CLE) considered whether to perform a system recovery on existing equipment or to wait to procure new equipment, which had already been scheduled for implementation. The organization elected to restore critical systems on the old equipment before procuring the upgraded equip- ment in order to best meet the immediate need (Javier Badillo, personal communication, JanuaryÂ 13, 2021). Rapid growth or decline can also have an impact on needs assessments. In five years, Seattleâ Tacoma International Airport (SEA) went from being the 13th-busiest to the eighth-busiest airport in the United States, requiring the construction of 12 new gates. SEA combated these growing pains by realigning procurement with its 10 top priorities and linking IT goals to each initiative (Dave Wilson, personal communication, JanuaryÂ 15, 2021). Technology procurement and implementation can scale to current technology as new sys- tems and software strain existing capabilities. For example, network bandwidth (described as the capacity to transmit data over a given amount of time on a network connection) is an issue for Fairbanks International Airport (FAI) in Alaska. Limited bandwidth at FAI has the potential C H A P T E R Â 2
State of the Practice 9 to affect the functionality of new technology such as artificial intelligence (AI) and internet of things (IoT) devices (Erik Weingarth, personal communication, DecemberÂ 15, 2020). Key Stakeholders As with needs determination, the involvement of key stakeholders in technology procure- ment varies across organizations. ChapterÂ 3 synthesizes governance structures relative to airport software solutions and services sourcing. However, most entities also have an approval process they must go through before such purchases. This process may involve departmental leadership within the airport, airport tenants, a board of directors, city or locality government, or a panel of experts. In some cases, identifying and approving technology procurement begins with a joint rela- tionship between airport leadership and the IT department working for such stakeholders. For example, AUS conducts an internal process between its IT department and the Department of Aviation to determine next steps in technology procurement. At Memphis International Airport (MEM), the IT department and executive leadership collaborate apart from procurement. âThe IT department works with the executive management staff. Procurement does not get involved with IT needs. The only time procurement gets involved is when they get the capital outlay budget. They look at what departments want, call up IT, then start looking at proactive ways to get the item(s)â (Kenneth Parrish, personal communication, DecemberÂ 1, 2020). Stakeholder approvals may involve city and locality governments, depending on need. At CLE, technology procurement decisions include the city of Clevelandâs approval (Javier Badillo, personal communica- tion, JanuaryÂ 13, 2021). FAI receives final approval from the state of Alaska Northern Regionâs director of the Department of Transporta- tion, contingent on funding availability (Neil Doran, personal commu- nication, DecemberÂ 10, 2020). Eastern West Virginia Regional Airport leverages the expertise of a board of directors for some of its procurement processes. âIn technol- ogy, they might call upon different members of the board of directors. For example, the vice-chair is an IT professional with a computer com- pany and consulting firmâ (Erik Weingarth, personal communication, DecemberÂ 15, 2020). Finally, stakeholder involvement may be topic-driven when deter- mining procurement, especially when technology is used across mul- tiple departments internal and external to airports. This is often the case for companies that provide cooperative contracts with government, education, and nonprofit agencies. âThe technology discipline must work for all silos and have an understanding of the full operation. For example, techÂ nology supports police and fire as well as the human resources department. They have different challenges and needs, yet the same technology support organization. The technology side has a really good view across the organization that business units seldom have across the board.â Eduardo Valencia, Vice President, Chief Information Officer (VP/CIO) at Metro- politan Airports Commission (MAC) FigureÂ 2-1. Formula for successful procurement (Source: Defant etÂ al. 2013).
10 Airport Software Solutions and Services Sourcing Rules Governing Procurement There is a hierarchy of procurement regulation procedures based on the governing body. Federal rules are developed from U.S. DOT, the FAA, the Department of Homeland Security, the Transportation Security Administration (TSA), and the Federal Emergency Management Agency. Each state and sometimes local entities also impose procurement requirements. âIf there is a conflict between the federal requirements and any state or local requirement, the legal concept of federal preemption provides that the federal law will prevail over state and local lawsâ (Alfert etÂ al. 2013). An overarching procurement publication referenced by several airports was the Government Contracts Reference Book, 4th Edition (Nash etÂ al. 2013). Eastern West Virginia Regional Airport relies on board oversight and West Virginia state regulations for guidance. The stateâs Department of Transportation provides manuals with pur- chase thresholds and associated requirements (Neil Doran, personal communication, DecemberÂ 10, 2020). Connecticut Airport Authority (CAA), a quasi-public agency, establishes guidelines and rules to over- see procurement but is also held to several state guidelines and audits. Procurement rules come from the finance department, whereas FAA Airport Improvement Program (AIP)-funded projects must comply with federal regulations (Jeremy Killoran and Laurie Sirois, personal communication, NovemberÂ 25, 2020). AustinâBergstrom International Airport (AUS) adheres to the city of Austinâs central purchasing guidelines (Diana Heath, personal com- munication, DecemberÂ 10, 2020). Colorado Springs Airport (COS) also follows that cityâs procurement rules and processes, which are provided by an airport advisory committee (Chris Padilla, personal communica- tion, DecemberÂ 18, 2020). Monetary thresholds for purchases are supplied by governing bodies to determine whether the item or items (a) may be purchased on a credit card, (b) require quotes or cooperative con- tracts, or (c) must be purchased through a formal bid process. Dollar amounts and thresholds vary per airport and purchasing oversight. Memphis International Airport adjusted purchasing thresholds in January 2021 to make procurement easier because of increases in the costs of goods and services (Kenneth Parrish, personal communication, DecemberÂ 1, 2020). TableÂ 2-1 captures purchasing thresholds and requirements based on airport size. On average, smaller airports have stricter purchasing thresholds for requiring multiple quotes. Airports of âThe airport tries to look at each IT procurement separately, being mindful of the thresholds. Even if the request is under the threshold, it is best practice to get multiple quotes. This keeps everyÂ one honest, especially when dealing with routine vendors who know the amounts and set pricing accordingly.â Kenneth Parrish, Manager of Procurement at MemphisâShelby County Airport Airport Size Average Purchasing Threshold Requirement Small Over $3,000 More than one quote needed Less than $25,000 Three quotes needed; no contract required Medium Greater than $25,000 and less than $50,000 Three bids required Over $50,000 Public bidding process required Large Less than $50,000 Freedom to choose Over $50,000 Requires board approval Over $65,000 Three quotes and vetting required Note: Numerical values were collected through interviews and survey responses consolidated in 2020. Thresholds and requirements may be adjusted in response to changing conditions. TableÂ 2-1. The average purchasing threshold based on airport size.
State of the Practice 11 medium size have an average threshold of $50,000 to trigger a required public bidding process. Larger airports have a similar threshold to medium-sized airports; however, they only require three quotes and vetting of those bidders if the purchase exceeds an average of $65,000. Procurement Technology Tools Procurement technology tools are available and used throughout airports to streamline pro- cesses, register vendors and suppliers, and accept formal submissions to solicitations. In the cybersecurity process, subscriptions to technology tools can add an additional vetting layer. At Tampa International Airport (TPA), each potential vendor receives a grade along with justifica- tion for that grade. The IT department uses the grade to ask relevant questions that lead to an open exchange with the potential vendor. This is a win-win for the airport and vendor, allowing relationships to expand and vulnerabilities to be addressed (Marcus Session, personal commu- nication, JanuaryÂ 14, 2021). Variables within airport governance can create friction for procurement technology tools because of extensive and sometimes conflicting guidelines. According to transportation consulting company WSP Global, âCommercial service airports can have multiple requirements, forms, etc. that may or may not require specific training sessions for entry into the market.â (GaÃ«l Le Bris, personal communication, DecemberÂ 4, 2020). Technology tools can provide a standard- ized platform with educational modules serviced by a third party. This alleviates some of the education burdens on airport personnel, suppliers, and vendors. Further findings on this topic are outlined in ACRP Research Report 229: Airport Collaborative Decision Making (ACDM) to Manage Adverse Conditions (Le Bris et al. 2020).