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30 C H A P T E R Â 6 Six airports were selected as case examples for this synthesis. Justifications and airport char- acteristics are provided for each case example. Case Example 1 â MinneapolisâSaint Paul International Airport Procurement Process Each business unit at MinneapolisâSaint Paul International Air- port (MSP) plays a unique role in technology procurement processes. The entire technology stack, including software, hardware, and ser- vices, is assembled in a lifecycle plan owned and managed by the IT department. The IT department anticipates needs, aligns sourcing, and coordinates with procurement, informed by technology lifecycle analysis. The Metropolitan Airports Commission (MAC), which owns and operations MSP, approves procurement policies and ensures their compliance with the State of Minnesotaâs Uniform Municipal Contracting Law. As a separate, statutorily defined public corporation under Minnesota law, the MAC has also developed its own set of purchasing policies, which are reviewed and approved by its board. All MSP business units can review the policies, which include definitions, department responsibilities, standards for purchasing processes, and procedures for purchasing vehicles. The IT department works in partnership with both the Purchasing and Legal departments to facilitate all technology purchasing transactions. Software purchases of $175,000 or less must be authorized by the chief information officer (CIO) but do not require MAC board approval. Software purchases exceeding $175,000 must be authorized by the CIO and require MAC board approval. Other associated rules include purchasing authorization, signature delegation, and specific rules pertaining to target-group businesses. Effective Procurement Practices MACâs IT department meets with each business unit at least annually to map and analyze system components with respect to technology requirements. Quarterly meetings are scheduled for system lifecycle analysis, portfolio management review, and to assess business unit changes. FigureÂ 6-1 illustrates a software program used by the IT department. Case Examples Airport Characteristics Location: Minnesota (MN) FAA Region: Great Lakes (AGL) NPIAS Classification: Large hub Reason for Case Example Inclusion: Authority governance; fully realized procurement processes inclusive of the Information Technology (IT) department
Case Examples 31 Leveraging digitized workflows, the IT department is poised to make purchases that make use of timing and volume. Buying in bulk and in aggregate at a supplierâs fiscal year end allows for negotiations, which optimize the procurement outcome and create the best value for the airport. Challenges and Barriers to Procurement Process The father of classical economics, Adam Smith, identified three factors of production: labor, capital, and land (Smith 1776). Smith argued that value is created via a combination of these three factors; to a large extent this argument still holds true today. In modern economics, the factor of land has in many verticals given way to technology, which is now considered one of the critical factors for enabling organizational value creation. Scaling and being agile in sourcing these three elements, in addition to technology, is a critical need for any organization. Procure- ment red tape has the potential to be a significant barrier to obtaining the tools required for a modern public-sector agency. Furthermore, as technology displaces human labor with auto- mation, procurement can require a labor impact analysis in situations where this change has an impact on a fundamental business process and a different factor of production mix. Agile and responsive technology procurement is strategic to the modern organization value creation proposition: being able to secure what is needed and when it is needed is as important as having the right people and right capital investments for the enterprise. Timely scoping to stay ahead of business needs is complex. Business units can struggle to communicate their exact business challenges and need, causing the IT department to invest time and effort to understand business problems and look for technology solutions. Compounding this challenge, technology solutions and approaches are not static and continue to evolve. Plan- ning for such changes requires timing and effective communication with the airport staff. Some staff members are highly resistant to change. Benefits to Procurement Process Procurement for technology tools is managed via global policy but can follow separate pro- cedures depending on the technology type, amount needed, and category, among others. This FigureÂ 6-1. Software program used by the Metropolitan Airports Commission.
32 Airport Software Solutions and Services Sourcing allows for higher-ticket approvals authorized by the CIO without the need for board approval. Procurement processes are often timed and coordinated to maximize buyersâ leverage, including combining volume and timing negotiations with suppliers. Technology lifecycle tracking allows for ongoing research of potential solutions to ensure that negotiations are conducted only with viable candidates capable of meeting the airportâs needs. Advice to Improve Procurement Process âPay attention and recognize . . . the constraints and interpretations of the rules, as they may be much more flexible to work with once fully understoodâ (Eduardo Valencia, personal com- munication, DecemberÂ 11, 2020). Understand that IT is a business unit that supports all other business units. A comprehensive understanding of the whole operation is a necessity. The only way to gather this level of learning is to ask intelligent questions. Gather the necessary knowl- edge to ask questions without fear or concern for an existing position. Example questions could include, Why do we need three bids? Why does a 15-day waiting period exist? Summary Technology requires rigor in governance and proactive planning. Sourcing technology in a timely and agile way is of strategic importance to a modern organization. Acknowledge the IT departmentâs centralized role in the airport. Question legacy processes to create a system capable of controlling timing and volume in procurement. Case Example 2 â Memphis International Airport Procurement Process The Memphis International Airport (MEM) IT department provides products and technical specifications to the procurement department to identify purchasing vehicles. RFPs, RFQs, and requests for bids (RFBs) are published in the local papers. Per state law, the Memphis Daily News, the Tri-State Defender (Black-owned), and La Prensa Latina (Hispanic- owned) run the announcements for two days. The airport also puts announcements on its website under the Do Business with MEM link. It stays on the website for three to four weeks post-award. A committee of seven individuals evaluates proposals submitted in response to RFPs. Each individual is provided hard copies of the pro- posals for independent review. For RFPs and RFQs, a panel interviews the responding suppliers. Each supplier is asked the same questions and provided an opportunity to ask questions. The panel has a score sheet with which to evaluate each supplier on a set of criteria. Final options are presented to the IT department. The IT department then selects the best option, and formal procurement procedures commence. The procurement department includes a director, manager, two buyers, the operator, and four warehouse staff members. The warehouse does the day-to-day purchasing. The buyers handle the RFP and RFQ process. Rules are based on standard operating procedures (SOPs) and the laws of the state of Tennessee. As of January 2020, purchases of over $3,000 required more than one quote. If a purchase was under $25,000, technology solutions could be procured with three quotes. Any purchase costing Airport Characteristics Location: Tennessee (TN) FAA Region: Southern (ASO) NPIAS Classification: Small hub Reason for Case Example Inclusion: Integration of cooperative purchasing programs and Disadvantaged Business Enterprise (DBE) opportunities
Case Examples 33 over $25,000 went out to public bid unless the purchase could be made through a cooperative purchasing program or state contract. In 2021, the procurement department recognized the increased costs of goods and services and requested to increase these thresholdsâto $5,000 to require more than one quote, and to $50,000 to require three quotes or (if over $50,000) a public bid. In rare cases, this process and the monetary thresholds can be bypassed because of the dif- ficulty of matching suppliers to the exact need. Shared use projectsâprojects in which new airport systems share a space (such as gates)âoften present such a difficulty. In these cases, the airport issues a public bid for a contracted consultant, who handles the shared-space project. Effective Procurement Practices The IT department works with the executive management staff on a 5-year plan. Procure- ments that will help to achieve the 5-year planâs vision are identified. One example of such a procurement is the process for opening a new terminal. Many IT needs for this are unusual and require extensive planning (such as work-from-home technology security). Smaller firms often have limited personnel, which creates a barrier for them to dissect and bid on RFPs and RFQs, which can exceed 100 pages in length. MAC created a standardized bid package and a small-bid project variation. Both are regularly used by bidders; the small bid variation is used more frequently because it removes cumbersome processes and burdensome requests for information (such as financial statements). The airport focuses on honest and competitive pricing. Multiple quotes are acquired as often as possible regardless of cost thresholds. Routinely awarded vendors must constantly assess amounts to remain competitive with new vendors, cooperative purchasing programs, and state contracts. Co-ops and existing state contracts allow for flexibility and increased speed, especially for purchases costing over $25,000. Piggybacking to use already-awarded consultants for shared- used situations is ideal. A selected vendor manages such projects and recommends products and suppliers needed to complete them. Technology services do not have to go out for public bid and are often procured through sole-source and single-source methods. This is because the airport has equipment that is already serviced by a contracted a company. The soft costs (such as for retraining) are too high; changing the equipment and related services does not make fiscal sense. A single-source or co-op method of procurement is most effective in this case. Challenges and Barriers to Procurement Process Software procurement is different from buying something standard (such as a maintenance vehicle). Trying to get the specifications to define the need and then process that need through a 2- or 3-month public bidding process can cause the request to become obsolete, making internal purchasing and external bidding processes more frequent than necessary. Doing business with the government is often work intensive. Education on government pro- curement processes can be a struggle and is one that needs attention. Vendors and suppliers may be unclear on expectations; this can deter them from pursuing business with the airport. Educational efforts, including symposiums and seminars, are ideal for increasing supplier par- ticipation. In Tennessee, educational efforts are led by the Mid-South Minority Business Council Continuum.
34 Airport Software Solutions and Services Sourcing Compliance with all procurement requirements is a challenge for potential vendors. The air- port has rejected submissions because the applicant vendors failed to include everything that was requested, did not meet application deadlines, or otherwise failed to meet requirements. The air- port is reviewing specific requirements that may be unnecessary and have historically eliminated initial replies. An RFP that received 10 bids could have four or five removed before being reviewed because of such requirements; the review is intended to address this issue, among others. Electronic RFP submissions would reduce paper waste but would also incur the costs of a sub- mission portal and heightened security measures. Most firms offering a portal for submission will charge the vendors and suppliers a fee (such as to obtain a copy of the bid). A software pack- age that is free for everyone or cost-effective while still ensuring the bid submissionsâ integrity is necessary. For example, the bid review committee currently opens hard copy bids at the same time; this would need to be replicated if an online is used. Benefits to Procurement Process Potential suppliers can self-register at MEMVendor.com. Announcements and copies of the bid process are provided to registered vendors via email. All potential vendors can watch the website as well as the newspapers for these. The airport has a solid Disadvantaged Business Enterprise (DBE) program, which is spearheaded by the diversity division and powered by the B2Gnow (diversity, procurement, and grant manage- ment software) system. B2Gnow complies with 49 CFR PartÂ 23 (Airport Concessions Disadvan- taged Business EnterpriseâACDBE) and 49 CFR PartÂ 26 (DBE). The system connects with MEMVendor.com for the holistic distribution of opportunities. Engagement with the community and qualified DBE firms is also available in order to facilitate onboarding success with these firms. Advice to Improve Procurement Process âWithout the co-op and state contracts, the airport would never catch up. Identify capabilities that create more with less. Narrow the scope of the problem and set to direct your attention to a solutionâ (Kenneth Parrish, personal communication, DecemberÂ 1, 2020). Summary The airport has a system that works and is becoming modernized. Job fairs and shark tank options can expand the scope of participation in the public bidding process. The use of GSA contracts began in 2021 as a result of the successful use of cooperative purchasing programs. Networking to gather best practices from other airports and public entities continues to shape innovation in procurement practices. Case Example 3 â Tampa International Airport Procurement Process At Tampa International Airport (TPA), procurement of a technol- ogy requirement begins when the need is identified by a business unit or the IT department or when a problem arises and a solution is needed to fix it. A business unit can sponsor one or more solutions to address its needs and will go through the procurement process in partnership with IT. Technology procurements can occur in several ways in order to find the right solution. Solutions that meet a certain set of criteria Airport Characteristics Location: Florida (FL) FAA Region: ASO NPIAS Classification: Large hub Reason for Case Example Inclusion: Proof of concept and invitation to negotiate processes for sourcing and procurement
Case Examples 35 or financial thresholds are presented to the airportâs IT Governance Committee as part of the process in order to gain other business unitsâ approval to move forward. Government cooperative purchasing contracts, PoCs, and ITNs are the most common pro- curement processes used for technology purchases. The IT department budget funds most tech- nology purchases unless they are purchased using capital improvement plan (CIP) dollars. The IT department works with the business unit making the request to determine the size and costs of the needed technology. The IT department then produces an asset invoice that lists each departmentâs associated IT costs, which are part of the IT budget. The invoice is not paid, but rather is tracked to demonstrate why and how an annual budget for department-related tech- nology items is requested. When a new request comes in, the IT department joins with the requesting business unit on a CIP presentation to make the case for using available funding if the threshold for a CIP is met. Effective Procurement Practices The IT Governance Committee includes different business units around the Hillsborough County Aviation Authority (the Authority), which manages TPA. When a business unit identi- fies a requirement or potential technology expense, it seeks permission to move forward with a PoC or technology selection process for net new items. Other business units get a chance to review the request, allocate resources, and determine if their unit can benefit from the solution as well. A PoC typically requires a government cooperative contract vehicle to be identified before the process starts; the procurement department seeks to be certain that the product can be purchased if the PoC is successful. Potential suppliers are encouraged to complete an online training session and registration, and the procurement department collects applicant suppliersâ documents before the PoC in order to verify the purchasing vehicle. When a government coop- erative contract is not practical, an ITN process also serves as an effective practice. ITNs allow the organization to negotiate simultaneously with multiple respondents in order to obtain the best value for the organization. The Authority subscribes to a few consulting services that grade suppliers (with justification) to help with initial supplier selection when they are searching for new technology solutions. This information positions the Authority to ask relevant questions of the suppliers and to have a third party provide an unbiased opinion on their capabilities and security. The open exchange builds a relationship with suppliers, provides advance vetting, and allows the supplier to improve on its vulnerabilities. Challenges and Barriers to Procurement Process Traditional procurement vehicles, such as RFPs and RFQs, have not proven to be as effec- tive for technology procurements at TPA. Due to their rigid requirements and ranking criteria, these vehicles can in some circumstances lead to a selection that does not align with the desired outcome. Poor scoping of the problem, suppliers who misunderstand the criteria, or needed over- sight on important procurement terms (such as selection criteria that heavily weights cost) can be problematic. Adding new tools alongside these traditional processes of procurement is necessary but continues to require ongoing education and innovative thinking. Education takes time and a willingness to provide it, as well as management of internal stakeholders and external suppliers. Benefits to Procurement Process Tampa International Airport conducts buyer and supplier events and supplier education, and also has procurement agents who specialize in the departmental businesses. The IT and
36 Airport Software Solutions and Services Sourcing procurement departments have regular meetings to review the upcoming purchases needed for departments and work to find suppliers and contracts to make sure those solutions can be pro- cured in the timeline needed. The IT department can help this process by sharing strategic plans and product roadmaps with the procurement department, which will allow for the creation of strategies for the best way to procure solutions outlined in the plans. Advice to Improve Procurement Process âLead with the protection of the organization by only doing business with responsible folksâ (Marcus Session, personal communication, JanuaryÂ 14, 2021). Summary Transparency and competitiveness within procurement rules and regulations are possible through nontraditional procurement processes. The Hillsborough County Aviation Authorityâs procurement department earned NIGP agency accreditation in 2014 for excellence in 132 best- practice criteria. Milestones necessary to achieve this honor included educational certifications and complete policy and procedural revisions. Case Example 4 â Eastern West Virginia Regional Airport Procurement Process Procurement processes are primitive. The staff of Eastern West Virginia Regional Airport (MRB) identifies needs and submits. The airport executive director can authorize purchases up to $10,000. Any- thing above the threshold requires approval from the board of direc- tors (BOD) for further publication of an RFP and RFQ on the airport website. Technology solicitations are received, awarded, then serviced by the county IT department. Effective Procurement Practices In late 2019, the BOD added a non-aviation executive director posi- tion. This individual is responsible for handling economic development, lobbying, governmental relations, public relations, and oversight of the budget and entity. This position created increased confidence on the board in the collective abilities of senior airport leaders. It also generated more freedom to expend funds in pursuit of the vision and goals for the airport. Challenges and Barriers to Procurement Process Self-reported numbers determine federal funding. Human error can generate discrepancies. Various reporting requirements and auditing standards based on airport activity exasperate the problem. Reliever airports generate a substantial amount of traffic yet receive limited funding necessary to advance technology. Benefits to Procurement Process Procurement processes are not cumbersome or complex, given the size and scope of the airport. Airport Characteristics Location: West Virginia (WV) FAA Region: AEA NPIAS Classification: Reliever Reason for Case Example Inclusion: Adding an executive director to the airport enhanced relationships and increased funding thresholds
Case Examples 37 Advice to Improve Procurement Process âIn lieu of standardized reporting to create increased funding through existing sources, enhance internal operating procures to maximize the budget and drive innovationâ (Neil Doran, personal communication, DecemberÂ 10, 2020). Summary When funding is limited, relationships are necessary to ensure holistic consideration of available options best suited for the airportsâ needs. Case Example 5 â Cleveland Hopkins International Procurement Process At Cleveland Hopkins International (CLE), needs are solicited inter- nally to all four airport departments at least annually for inclusion in budget requests submitted to the City of Cleveland. The City of Cleve- land procurement rules governs airport procurement processes. There is a 9-month process through the City of Cleveland to get approval and includes the following steps: 1. Requesting legislation for purchasing the software is required. 2. Legislation goes to the technical advisory committee at the city level, which meets and dis- cusses every purchase based on need, use by others, etc. When possible, the technical advisory committee looks at economies of scale to determine how software affects other entities in the city. If other entities can use the purchase, it is made through the airportsâ budget, but the legislation is written to join other entities. 3. The request proceeds to the city CIO, chief financial officer (CFO) and Office of Economic Opportunity (OEO) commission for approval and permission to send out bids. 4. Bids are requested. Products on GSA with purchasing agreements that allow for access require two quotes. In all other cases, three quotes are required. 5. Once bids return, the airport justifies selection methodology to the Board of Control. 6. Contracting requires approval by legal. An attorney does all the terms and modifies them to reflect the city of Cleveland. The City Hall, Division of Accounts approves purchases. Existing services have codified ordinances for upgrades. Effective Procurement Practices Airport policy limits the employees to one issued device, so limited IT department staff service existing technology better. It also generates an equal opportunity for technological advancement throughout the airport inside a constrained budget. Asset management is a priority. A lifecycle management plan ensures tracking of every tech- nology order from the time of ordering until disposal. Upgrades to end-of-life equipment are tracked and managed. Challenges and Barriers to Procurement Process There are layers involved in the procurement decisions, making it cumbersome and lengthy. A business department must submit a request to the IT department. The IT department must Airport Characteristics Location: Ohio (OH) FAA Region: AGL NPIAS Classification: Large Hub Reason for Case Example Inclusion: Public governance procurement enterprise
38 Airport Software Solutions and Services Sourcing understand how the idea blends into the master plan, ensuring the airport stakeholders under- stand its implication. IT must gather the airport director and executive management team approval. City Hall makes the final approval to activate the formal procurement processes. Explaining the original need and associated airport-specific regulations within the process is time-consuming and can be challenging. Analytics, data management, and data collection are not centralized. Queries are not viable due to the number of existing systems. Explaining the value of data without the capabilities to demonstrate such value limits opportunities to advance data-based decision-making. Brand homogeneous decisions are beneficial in the short term but detrimental during turn- over. Onboarding technical services and creating relationships external to procurement also requires careful management for operational efficiencies. Benefits to Procurement Process Transparency is a focal point. Processes and materials are accessible and consolidated for ease of entry into functions as an employee within the governance structure and a supplier or vendor attempting to win work. Purchases are made for the collective good of the city for enterprise- wide enhancements and conformity. Advice to Improve Procurement Process âCreate a role for IT at the decision-making table. Technical expertise on software, hardware, and services reduces miscommunications and heightens awareness throughout the governance structureâ (Javier Badillo, personal communication, JanuaryÂ 13, 2021). Summary Knowledge is critical. Procurement processes and technology capabilities are complex. Under- standing each element increases value in an individual, department, and recommendation. Case Example 6 â Acadiana Regional and LeMaire Memorial Airport Procurement Process At Acadiana Regional and LeMaire Memorial Airport (ARA), a need is identified by airport staff and recommended for approval. Any- thing costing under $5,000 can be procured without airport authority approval and does not require quotes or bids. The airportâs chair can approve anything costing between $5,000 and $10,000. Anything cost- ing above $10,000 requires parish council permission. At least three bids or quotes (or a good faith effort to get the quotes) are collected before purchasing. Effective Procurement Practices Quotes are usually only appliable to purchases of over $5,000, but are regularly collected regardless of amount, in order to reduce any appearance of impropriety. Airport Characteristics Location: Louisiana (LA) FAA Region: Southwest (ASW) NPIAS Classification: General aviation Reason for Case Example Inclusion: Vendor and supplier recommendations from a quasiÂparish entity owned by a sixÂmember airport authority that rotates by appointment every 5Â years
Case Examples 39 Challenges and Barriers to Procurement Process Friction occurs when the best-suited item to meet the need is not offered at the lowest cost submitted. Justification for supplier selection must be submitted when the lowest-cost option is not selected. The airport staff must be able to respond to questions that may arise from this justification. These checks and balances are a necessity but have placed a burden on ethical employees. Technology tools that could apply to airports are not advertised and therefore do not tend to attract the airportâs interest. Vendors and suppliers rarely reach out with options that might be attractive to airports, thereby limiting airport exposure to innovative options. Outreach enhancement, especially to smaller airports, creates opportunities to evaluate past performance and future scalability of applicable technology tools. Benefits to Procurement Process A policy allowing the airport to justify selecting a supplier other than the lowest bidder creates flexibility in choice and provides documentation for auditing purposes. Advice to Improve Procurement Process âAsk questions to trusted colleagues to obtain information before initiating or executing procurement processesâ (Maurice Songy, personal communication, DecemberÂ 18, 2020). Summary Rules are used to justify decisions. Sourcing of software solutions and services should not cause a deviation in well-documented and streamlined controls.