Port Commission Approves Changes to Baggage System Upgrades, Other Projects

Additional oversight, analysis given in light of audit findings

The Port of Seattle Commission today approved several construction project changes following previously implemented reforms for project oversight and cost controls, including those for two major baggage handling improvement projects at Seattle-Tacoma International Airport. The baggage systems, identified as C-60 and C-1, are improvements to meet federally-mandated 100% TSA bag screening, which Sea-Tac has been one of the first airports in the nation to meet that standard. One of the items approved for the C-1 system is a deductive change order for $450,000 - dollars saved by reducing the overtime costs of the project.

The Port Commission has made it very clear through several reforms already implemented that final authority for project oversight and cost controls rest with the Port's governing body. The Port has been implementing aggressive and thorough reforms to several contracting and policy issues, including those concerning change order approval. The items on the agenda today have been vetted thoroughly by Port staff, as cost increases are never accepted without significant review and concern. Generally, construction change orders are a common contracting tool, particularly on major construction projects that deliver strategic upgrades to critical infrastructure. As evidenced by the deductive change order for the C-1 project, change orders can also be used to recoup monies spent by an agency or allocate existing dollars in a project's contingency fund.

The $3.3 million change order for the C-1 project, which serves Alaska and Horizon Airlines, will extend the project timeline from July to December to allow the contractor to complete the work. The authorization will not increase the authorized budget of the project as contingency funds will be used. New mandated TSA design requirements contributed to the delays as well as limited contractor access to the construction site during airline operations. The complexity of the project includes building a new system while continuing to operate baggage screening for the airport.

The overall project budget for the C-1 system is being funded by nearly 50% through federal grants. The rest of the funding comes from airline fees. The overall budget is $231 million. Federal Grants will cover $113 million.

The C-60 system change order recognizes additional documentation from the subcontractor, minus liquidated damages for a resulting $937,081 payment. The Port and the subcontractor involved, G&T Conveyor Company, are currently in mediation to settle a dispute over outstanding costs. While the change order has been approved, the dispute resolution process continues.

The final change order for the C-1 system resulted in a credit back to the project due to overtime costs that did not reach the originally estimated level. The credit back to the project totaled $450,000.

On Tuesday, July 1st, the Port of Seattle will present the Performance Audit Summary Annual Report to the State Auditor. The changes implemented thus far in the Port's capital construction management program will be outlined in detail in that report, as are pending changes to Resolution 3181 which governs how the Commission delegates its authority to staff.

More information about today's agenda and a copy of the Port's Audit Response Action Plan are posted on this site.