BOARD OF AIRPORT COMMISSIONERS

Transcription

1 1/31/2018: 1/29/2018 ElY init Init Init 4/0 Los Angeles World Airports REPORT TO THE BOARD OF AIRPORT COMMISSIONERS Meeting Date: Approv d by: Jake Adams, Chief Airport Engineer II 2/15/2018 I Completed Reviewed y: Roger A. Johnson, uty Executive Director CAO Review: Pending N/A Reviewed for i Date Approval Status By Finance I 1/30/2018 I NY N NA 1 CEQA I 1/29/2018 I N I!nit ief Executive Officer Procurement 1 LIY EN Cond 1 Guest Experience 1/31/2018 IN ON I!nit Strategic Planning I I NYE} N NA 1 SUBJECT: Authorization for Chief Executive Officer to Execute an Early Works Agreement with LAX Integrated Express Solutions, the Recommended Developer of the Landside Access Modernization Program Automated People Mover Project at Los Angeles International Airport and to Allocate Funds for Project Early Works in the Not-to-Exceed Amount of $42,000,000 Authorization for Chief Executive Officer to Execute an Early Works Agreement with LAX Integrated Express Solutions, the Recommended Developer of the Landside Access Modernization Program's Automated People Mover at Los Angeles International Airport, to Allow the Recommended Developer to Commence Pre-Construction Activities in Advance of Final Execution of the APM Design-Build-Finance-Operate-Maintain Agreement and Allocation of Funds for APM Early Works in the Not-to-Exceed Amount of $42,000,000. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.i of the Los Angeles City CEQA Guidelines. 3. FIND that this action is part of the procurement process in compliance with Los Angeles City Ordinance Nos , and184937, passed on May 27, 2015 and May 19, 2017 Page 1 APM.EARLY.WORKS FINAL raj clm.a

2 allowing Los Angeles World Airports to use the competitive sealed proposal selection process as provided herein and the Construction Manager at Risk, Design-Build, or Design- Build-Finance-Operate and Maintain alternative project delivery methods for the following projects, or any combination thereof: Automated People Mover (APM), Consolidated Rent- A-Car (ConRAC), Multi-Modal facilities, Central Terminal Area Parking Structures, pedestrian walkways, and a comprehensive set of roadway improvements. It also includes their components and integration into facilities and operations at LAX (collectively, the Projects.) 4. AUTHORIZE the Chief Executive Officer to Execute an Early Works Agreement with the Recommended Developer for the Landside Access Modernization Program (LAMP) Automated People Mover (APM) at Los Angeles International Airport (LAX) to Allow the Developer to Begin Pre-Construction Activities in Advance of Final Execution of the APM Design-Build-Finance-Operate-Maintain (DBFOM) Agreement. DISCUSSION: 1. Purpose The Early Works Agreement is a precursor Agreement to the estimated $4.5 billion APM DBFOM Agreement coming before the Board in April for execution. The purpose of the Early Works Agreement is to allow LINXS, the recommended APM Developer, to commence work prior to final execution of the full APM DBFOM Agreement, compensate the Developer for Early Works performed, and provide for reimbursement of amounts paid by LAWA to Developer for Early Works performed when Financial Close is achieved. Authorizing the Developer to make use of this period of time is critical to maintaining the APM project delivery schedule as set forth in the APM Request for Proposals. Final execution of the APM DBFOM Agreement, known as financial close, is targeted for July 15, The APM is the cornerstone project of the LAMP-- LAWA'S efforts to modernize and improve Iandside access. The APM will improve the guest experience, connect LAX to the regional public transportation network including rail and buses, mitigate vehicle traffic in the Central Terminal Area (CTA) and surrounding communities, and create more environmentally sustainable access to LAX. The APM will provide free, twenty-four hour a day, time-certain access to LAX, connecting passengers to the LAX CTA from public buses and trains at a station connected with the Los Angeles Metropolitan Transportation Authority's (Metro) Airport Metro Connector station, and from inter-modal parking, passenger drop-off, and rental car facilities. 2. Prior Related Actions April 16, Resolution No The Board of Airport Commissioners requested the Los Angeles City Council consider and approve an ordinance to allow use of Alternate Project Delivery Methods and Competitive Sealed Proposal Selection Process (CSPSP) for Design-Build, Design-Build-Operate and Maintain and Construction Manager at Risk Contracts for delivery of select Capital Improvement Projects related to the LAMP at Los Angeles International Airport. On May 26, Page 2 APM.EARLY.WORKS FINAL i-ajclm.a m. docx AMESHACK

3 2015 the City Council approved Ordinance No authorizing the use of alternate project delivery methods as requested, Council File March 17, Resolution No Release of Automated People Mover Operating System Supplier Eligibility Determination February 16, Resolution No Recommendation for City Council to approve an ordinance amending the Los Angeles Administrative Code and otherwise authorizing the Board of Airport Commissioners to allow use of certain requirements and procedures for procurements and contracts related to the Landside Access Modernization Program at Los Angeles International Airport under Ordinance and clarifying the intent of said ordinance with regard to contractorprovided project financing. April 20, Resolution No Authorization to enter into Proposal Agreements with short-listed proposers for the Automated People Mover Project of the Landside Access Modernization Program at Los Angeles International Airport; such an Agreement includes the terms and conditions by which Los Angeles World Airports may purchase and use the work product from said short-listed proposers. July 13, Resolution No Authorization to release a Request for Proposals to qualified short-listed firms to submit proposals to design, build, finance, operate, and maintain an Automated People Mover for the Landside Access Modernization Program (LAMP) at Los Angeles International Airport. 3. Current Action Today, Staff of Los Angeles World Airports are notifying the Board of Airport Commissioners (Board) of the intent to recommend award of a 30-year DBFOM Agreement to LAX Integrated Express Solutions (LINXS) team, the Developer found to be the Lowest Ultimate Cost Proposer (LUCP) to deliver the APM project. The Staff recommendation of the LINXS team to be the Developer to deliver the APM project, and today's recommendation that the Board authorize the execution of an Early Works Agreement with LINXS, are the latest steps in a rigorous, competitive selection process carried out over approximately two years. This procurement process engaged some of the most innovative and respected firms in the global transportation and infrastructure delivery industries. LAWA staff have full confidence in the determination of LINXS as the LUCP. Taking the step today to enter into the Early Works Agreement with the Recommended Developer is an affirmation of that determination and a critical precursor to executing the Design-Build-Finance-Operate-Maintain Agreement to deliver the APM project at LAX. The full DBFOM Agreement will come before the Board in April, Background The APM Project The APM is the cornerstone project of the LAMP-- LAWA'S efforts to modernize and improve landside access. Page 3 APM.EARLY.WORKS FINAL Jajclm.a

4 a The APM, a 2.25 mile long automated train system, will improve the guest experience, mitigate vehicle traffic in the CTA and surrounding communities, improve pedestrian safety in and around the CTA, and create more environmentally sustainable access to LAX. The APM will provide free, twenty-four hour a day, time-certain access to LAX, connecting passengers to the LAX Central Terminal Area from public buses and trains at a station connected with the Metropolitan Transportation Authority's Airport Metro Connector station, and from inter-modal parking, passenger drop-off, and rental car facilities. The APM is to be delivered through a Public Private Partnership (P3) design-build-financeoperate-maintain (DBFOM) development deal. The Early Works Agreement under current consideration is a precursor Agreement to the full DBFOM Agreement that will come before the Board in April, 2018 The scope of work in the APM DBFOM Agreement includes design and construction of the following: o Approximately 2.25 miles of elevated guideway running from a new ConRAC facility near La Cienega and the 405 Freeway, terminating at the Tom Bradley International Terminal. o Six Passenger stations, three inside the CTA and three outside the CTA. From east to west as follows: The ConRAC, near La Cienega and the 405 Freeway. This station will provide a direct connection from the terminals to a newly constructed ConRAC. The Airport Metro/Inter-Modal Transportation Facility-East (ITF East) Station at Aviation Blvd. The Inter-Modal Facilities are being developed to provide alternative parking and passenger drop-off and pick-up facilities outside of the CTA. The Inter-Modal Transportation Facility-West (ITF-West) near Airport Boulevard and 96th Street. The CTA East Station located above Center Way between parking garages P1 and P7. The CTA Center Station located along Center Way west of the Theme Building. The CTA West Station located between parking garages P3 and P4. In addition to the APM station, the CTA West Station construction will include additional levels of parking connecting parking garages P3 and P4 and approximately 50,000 square feet of space suitable for occupancy. o Pedestrian Passenger Walkway Structures with moving walkway platforms connecting the CTA Stations to various terminal vertical cores. o New garage vertical cores in various garages connecting the garages to the Pedestrian Passenger Walkways allowing the elimination of at-grade pedestrian crossings in the CTA from the parking garages to the terminals. o A Maintenance and Storage Facility located east of Airport Boulevard between Arbor Vitae and 96th street. o Various roadway improvements to facilitate APM access and mitigate traffic both during and after construction. DBFOM Agreement Staff will be recommending that LAWA enter into a 30-year agreement with the LINXS team for the design, construction, financing and operations and maintenance of the APM system. The Page 4 APM. EARLY. WORKS FINAL _raj clm.

5 30-year agreement is divided into an approximate five-year design and construction period and 25-years of Operations and Maintenance. LAWA will make a total of six milestone payments to the LINXS Team during and upon completion of the design and construction period covering a portion of the costs of design and construction. LAWA will then make Availability Payments to the LINXS Team on an annual basis covering the remaining costs of construction, financing and operations and maintenance. The elements of the contract are described in more detail in the following. Design and Construction The LINXS Team is responsible for the design and construction of the APM System. The LINXS proposal, including their proposed aesthetic design, is included as part of the contract documents. The LINXS Team is responsible for meeting all of the requirements of the contract specifications included in the RFP as well as any addition commitments made within their proposal. These provisions include requirements related to performance of the work including but not limited to things such as Maintenance of Traffic (MOT), Stakeholder Outreach and Communication, and Project Safety and Security. The LINXS Team has also proposed additional Inclusivity commitments. These commitments will be discussed in more detail later in the report. In addition, staff has identified some Alternative Technical Concepts (ATCs) proposed by the other two proposers that we will include in the final contract. LAWA purchased the work product from the non-selected proposers through the previously approved Proposal Agreement and has full rights to include any of the proposal's features into the final APM project. The final project will also include some additional work required to mitigate certain Threat and Vulnerability Assessment findings. The design and construction period of the project will commence with the notice to proceed of the Early Works Agreement. The LINXS team has a contractual obligation to meet a passenger availability deadline of March, The contract allows for an early completion of up to three months. The DBFOM Agreement includes a built-in deduction for failure to meet the deadline. If the LINXS Team fails to achieve Passenger Service Availability by the March, 2023 date, and such delay is not caused by LAWA, and/or events outside of the LINXS Team's control, the Team will lose Availability Payments for the delay period. These payments cannot be recouped. LAWA also has certain contractual obligations during the design and construction period under the DBFOM Agreement. These include: Delivering access to the property required to build, operate, and maintain the APM system in accordance with the dates listed in the RFP, Completion of certain enabling projects, Facilitating inter-agency coordination with the project's third party stakeholders, such as City of LA Departments responsible for review and approvals, Facilitating interfaces between the APM Developer and other projects such as the ConRAC, Terminal Vertical Cores, and Intermodal Transportation Facility. Failure on the part of LAWA to achieve any of these obligations could result in additional costs to the project. Page 5 APKEARLY.WORKS FINAL raLcItn. a

6 The LINXS Team has assumed a number of risks related to construction, including design risks. However, similar to other construction projects, LAWA maintains certain risks associated with the construction including: Certain unforeseen site conditions including paleologic /archeological, endangered species, discovery of unknown or misidentified utilities Acts of God such as earthquake or tidal wave Terrorism Issuance of injunctions, restraining orders, or other legal actions that prohibit prosecution of the work. The LINXS Team's proposed costs for Design and Construction are $1.95 billion, which is approximately 4% below staff's estimate. The final Design and Construction costs will vary slightly because of the additional work discussed above. LAWA will make six payments to the LINXS Team during and upon completion of construction. These milestone payments will partially cover the cost of design and construction. The LINXS Team will finance the remaining cost of design and construction and will include this cost and finance costs in the availability payments discussed below. Maintenance and Operations The LINXS Team will be responsible for the operations and maintenance (O&M) of the APM System for a period of 25 years. This includes: The APM Operating System (i.e. trains, controls systems, etc.) The Fixed Facilities (i.e. guideway, stations; including elevators, escalators, etc.) The O&M requirements include refurbishment and replacement schedules for portions of the system. At the end of the 25 year O&M period the LINXS Team is required to hand the APM System back with a minimum of five-years remaining life. The condition at handback will be determined by an independent engineer. Upon initiation of system operations LAWA is responsible for making Availability Payments to the LINXS Team. These Availability Payments include the non-lawa funded cost of construction, annual O&M costs, and the costs of financing. Under the terms of the DBFOM Agreement the LINXS Team is contractually obligated to operate the APM System at a minimum of 99.5% availability. System performance requirements, as well as deductions associated with failure to meet the requirements are included within the DBFOM Agreement. An example of the deduction table is presented below. Failure to meet the performance requirements will result in deductions to the Availability Payments. Page 6 APM. EARLY.WORKS FINAL rajclm. a

7 D & C & M Element Category Inclusivity Maintenance of Traffic Operations Performance Required Task Small Business Participati on Requirem ents D &C Period Planned Lane Closure Pedestrian Walkways APM Operating System Shutdown Minimum Performance Requirements Utilize the services of firms certified as SBE at the minimum participation levels for Construction Work required by Section No lane shall be closed outside the time period detailed in the approved Traffic Control Plan on: World Way Upper & Lower levels Moving walkway shall be repaired within 5 hours of initial failure No APM Operating System Shutdown greater than 6 hours but less than or equal to 24 hours Non- Compliance Event Points for every 1% below the requirement Rectification Period Intery al of Recur rence D &C Non- Compliance Deductions in $ (for new or recurred events) N/A N/A Deduction will be calculated per LAWA Ordinance 10 N/A 15 minute 2 N/A 3 hours every hour shutdown continues beyond 6 hours up to 24 hours total N/A s Refer to formul a for points Relevant section of contract docs DBFOM A ,000 Part 2A, , Table Part 3, , ,000 every hour Shutdown continues beyond 6 hours up to 24 hours total 1 Part 3, In addition to financial deductions, the LINXS Team will be assessed non-compliance points for failure to meet certain operating requirements. Accumulation of non-compliance points (indicating a pervasive non-performance history) will trigger corrective measures to ensure the required performance is achieved. Corrective measures include, but are not limited to: Additional oversight from LAWA, at the LINXS Team's expense Potential removal and replacement of subcontractors Additional oversight from the LINXS Team's private sector financing agencies In the worst case, termination of the agreement. Operations and maintenance costs are adjusted annually, indexed to inflation. The O&M costs included in the LINXS Team's proposal are costs that LAWA would normally incur in various other contracts over the life of the APM System's operations. By procuring the APM through the DBFOM method, LAWA obtains price certainty over the life of the contract, and has a mechanism to tie performance to the O&M. How this action advances a specific strategic plan goal and objective This action advances this strategic goal and objective: To develop, maintain, and operate First Class Facilities: Deliver LAMP on time and on schedule Page 7 APM.EARL Y. WORKS FINAL _raj clm.a

8 \<, Procurement Process The process to select the team to deliver the APM system began in earnest in 2016 with an eligibility determination process to identify firms capable of supplying the APM operating system (the train operating system technology and vehicles). Firms interested in supplying operating systems were asked to submit an Eligibility Determination Request (EDR). Also in 2016, LAWA conducted a separate Request for Qualifications (RFQ) process to identify firms qualified to deliver the APM fixed facilities (stations, train guideway, maintenance facilities, utilities, and other infrastructure related to the APM). [See below graphic representing the procurement process] \el' 11 q-'' Ott <,, << A so ko c 01 aye '''..., 0 \e a 2, (.- A.2> e<<9 4,,,, e q-e' tc,e% ''2' \e,,a`' 1 (2-12' L,,,z, e ib* \gee os> 0 <(` 0.42 e e V".Rog c'z' MAR JUN OCT JUL NOV JAN PROPO- EDR OSS SOQ FFS INTEGRATED TEAMS DEVELOPER ENGAGEMENT SAL DEVELOPIV ENT TECHNICAL PROPOSAL EVALUA- TION & SCORING PRICE PROPOSALS EDR submissions from operating system suppliers underwent rigorous technical review to ensure that their respective systems could meet LAMP's operational, safety, environmental, and other performance objectives. Staff received five (5) complete submittals from system providers. In August, 2016, LAWA staff advised the Board that four suppliers were determined to be eligible to compete for the APM project. The following month, in September, 2016 LAWA staff advised the Board that five fixed facilities Developers had met the rigorous qualifications to respond to the RFP to design, build, and finance the APM infrastructure. After the two sets of firms were pre-qualified, the eligible Developers and operating system suppliers were free to partner to jointly deliver the APM system as an integrated team. Of the initial shortlisted operating system suppliers and fixed facility providers, three integrated teams responded to the final APM RFP, released by LAWA in July of The RFP, developed and finalized through a rigorous year-long series of technical, commercial, and aesthetic discussions with each of the teams in competition, called for technical proposals to be submitted on November 8, The final RFP established a two-step procurement process for the APM Developer which considered both the technical merits of the proposals as well as a separate cost proposal to identify the proposer presenting the Lowest Ultimate Cost (LUC) to the City. The Technical proposals were received, evaluated, and scored prior to submission of the cost proposals. In addition, the final technical scores were unknown to staff until the cost proposals were received Page 8 APM.EARLY.WORKS FINAL raj clm.a

9 and opened. The Technical Scores accounted for 60% of the overall score, cost accounted for 40% of the overall score. Technical Proposal The RFP established evaluation criteria requirements related to the APM Developer's proposed technical approach. The evaluation criteria were broken down into three general categories: 1. Technical Merit 2. Visual Appeal 3. User Experience Each of the three general categories was divided into subcategories. The categories and subcategories were assigned points based on the relative importance of the category with respect to the overall project. The scoring and evaluation table is presented below. APM SCORING AND EVALUATION CRITERIA Technical Merit Points 4000 APM System 700 Approach to Operations and Maintenance 700 I nclusivity 600 Approach to Execution of Project Construction 500 Approach to Maintenance of Traffic/Mitigation of Construction Impacts 500 Project Safety & Security 500 Sustainability 300 Public Outreach/Stakeholder Communication 200 Architectural-Appeal 1000 Architectural Appeal of the APM Fixed Facilities 750 Vehicle Aesthetics 250 User Experience 1000 Technical Points 6000 Price Points (100% to team with lowest price) 4000 TOTAL Available Points 10,0000 The technical proposal element of the procurement process was structured to allow classification of two tiers of proposers based on their technical submittals: Tier 1: To qualify as a Tier 1 proposer, the proposer had to achieve the following: o A minimum score of 70% of the available points in the Technical Merit category, including 70% of each of the subcategories o A minimum score of 40% of the available points in the User Experience category Page 9 APM.EARLY.WORKS FINAL rajclm.a

10 o Staff initiated a separate Aesthetic Review process which included a series of meetings with the proposers' teams. The Aesthetic Review process was designed to ensure that each proposer's design met a minimum requirement prior to the formal proposal. Consequently, no minimum score was established for the Visual Appeal criteria. Tier 2: Tier 2 proposers failed to meet the above requirements. o Tier 2 proposers were not eligible to move on to the scoring round. Proposal Evaluation The Technical Proposals were evaluated by three separate panels: Technical Review Panel Scoring Panel Executive Panel The Technical Review Panel was comprised of approximately 70 subject matter experts organized around the evaluation criteria. The technical panel evaluated the proposals against the requirements of the RFP. Following a review of approximately 30-days, the Technical Review Panel developed a set of consensus comments which were presented to the scoring panel. The Scoring Panel was comprised of nine members, each an expert in their respective fields of transportation, infrastructure delivery, and airline operations. (Scoring panel composition is in below table.) APM INDEPENDENT SCORING PANELISTS Deputy Chief Executive Officer Project Manager, Group Manager of Train Control Modernization. General Manager Deputy Executive Director, Facilities Maintenance & Utilities Group Deputy Executive Director, Environmental Programs Chief Innovation and Technology Officer Chief Experience Officer Deputy Program Manager Deputy Chief Executive Officer Long Beach Transit (LBT) San Francisco Bay Area Rapid Transit (BART) City of Los Angeles Department of Transportation (LADOT) LAWA LAWA LAWA LAWA LAWA Los Angeles County Metropolitan Transit Authority (Metro) The Scoring Panel members reviewed each proposal independently, but were also able to request additional information from the Technical Review Panel members as needed. The Scoring Panel members' scores were averaged to determine the final technical score for each proposer. (Following completion, each individual panel member's score was delivered to the LAMP APM Procurement Manager and the City Attorney. The final scores were not known until the financial proposals were received.) Page 10 APM.EARLY.WORKS FINAL _rajclm.a

11 The Executive Panel was comprised of the LAWA Chief Development Officer, LAWA Chief Financial Officer, LAWA Chief Operating Officer, and the LAMP Program Executive. The Executive Panel provided oversight to ensure the evaluation and scoring process was conducted fairly and was consistent with the procurement rules set forth in the APM RFP. Financial Proposal Financial proposals were received following completion of the technical proposals evaluation and scoring. The financial proposals were evaluated by the Chief Financial Officer and a team of financial experts. Unlike the technical proposals, which were evaluated against the scoring criteria in the RFP, the financial proposals were evaluated against each other with the lowest financial proposal receiving 100% of the available points. Higher priced proposals were compared to the lowest price and received points proportionate to the cost differential with one exception. Price proposals exceeding a net present value of $300 million or more above the lowest price proposal received zero price points. The $300 million price differential threshold was incorporated into the procurement process to foster additional price competition amongst the proposers and represented 15% of LAWA's estimated design and construction cost for the project. The Recommended Developer LAWA received technical and price proposals from three developer teams: Gateway Connectors, the LAX Connecting Alliance (LAXCA), and LAX Integrated Express Solutions (LINXS). After a review of the technical and financial proposals in accordance with the criteria discussed above, the LINXS Team has been identified as the Team presenting the Lowest Ultimate Cost proposal to the City. In addition to presenting the Lowest Ultimate Cost, the LINXS Team submitted the highest scoring technical proposal and the lowest price proposal. The LINXS Team scored highest in all three major categories: Technical Merit, Visual Appeal, and User Experience. The LINXS Team scored first in six of eleven (11) subcategories; o APM Fixed Facilities, Approach to Maintenance of Traffic, Approach to Operations and Maintenance, Inclusivity, Sustainability, and User Experience. The LINXS Team scored no lower than second place in all other subcategories. The LINXS Team presented the lowest cost for both design & construction and operations & maintenance. The key members of the LINXS Team include ACS Infrastructure Development, Inc., Balfour Beatty Investments, Inc., Bombardier Transportation (Holdings) USA Inc., Flour Enterprises, Inc. and HOCHTIEF PPP Solutions GmbH. The unique features of the LINXS proposal are discussed below in more detail: With respect to fixed facilities, LINXS's design had many enhancements. One enhancement was increasing the length of the station platforms to facilitate better passenger circulation. They also added an impressive Theme Building Viewing Platform, taking full advantage of the opportunity to feature the LAX Theme Building and to reinforce our guests' sense of place conveyed by this iconic building. This was one of many thoughtful opportunities for art and enhanced guest experience that the LINXS team designed. The platform station roofs have circular skylights, filling the platforms with natural light and harmonizing with the airport's dominant mid-century modern aesthetic. Page 11 APM. EA RLY.WORKS F INAL taj clm. a

12 Other LINXS design innovations include placing the Maintenance and Storage Facility at-grade, instead of building it at the same elevation as the APM guideway. This is a significant aesthetic improvement and also a significant savings on construction costs and impacts. One of the most significant choices that the LINXS team made was to engineer the guideway around Parking structures P2A & P2B, eliminating the need to demolish and rebuild these structures in the course of the project construction. This design feature is a significant cost savings; perhaps more importantly, because of the time savings, this design enhancement boosts confidence that the project can be delivered on time Eliminating the demolition and reconstruction of the two parking structures was also an enhancement to the Recommended Developer's strong Maintenance of Traffic (MOT) proposal. Minimizing construction impacts on LAX guests and maintaining the smooth flow of traffic during construction are top priorities for LAWA. LINXS was the Developer team that showed the most nuanced understanding of how to construct a mega-project amidst the complexities of one of the busiest operating airports in the world. LINXS's comprehensive MOT plan was focused on safety, coordination, and advanced construction methods that would minimize construction impacts on the traveling public. For example, the LINXS team will construct longer guideway spans, minimizing the number of foundations and columns to be constructed in traffic and near public rights of way. Their plan also provides for clear separation of work zones from vehicular traffic, minimizing danger to the public. They also clearly understand the need for coordination with our many third-party stakeholders in the project, such as the City of Los Angeles Department of Transportation, and Cal Trans. With respect to the technical criterion of Sustainability, the LINXS team has committed to generating more than double the amount of solar energy required by the APM RFP. They have also committed that the Maintenance & Storage Facility (MSF) will meet the LEED gold standard, instead of the LEED silver standard required by the APM RFP. The trains will be washed at the MSF using recycled water. LINXS also exceeded the minimum requirements by committing to install not only the required electric vehicle charging station infrastructure for 10% of all parking spaces in the project, but installing complete charging stations for 6% of the parking spaces, which was not required. Among the most important criteria to LAWA on which LINXS excelled, was the criterion of Inclusivity. Inclusivity makes real LAWA'S commitment to provide meaningful career and business opportunities for local communities and to invest in regional human capital. LINXS's strong Inclusivity proposal was the most comprehensive, the most strategic, and the most innovative. Their proposed Inclusivity Manager has an outstanding reputation in the field. The entirety of the team working under the Inclusivity Manager is robust with clearly defined roles in areas including community outreach, workforce development, training, contractor capacity building, compliance, tracking/monitoring, and employee development. The work of the team is structured through LINXS's Training Institute of LA program. Each section of the eightpiece program is designed to serve a targeted stakeholder segment, including subcontractors, community members at-large, employees/future employees, youth, and community members facing barriers to employment such as status as a former foster youth or being a member of the re-entry population. Page 12 APM.EARLY.WORKS FINAL raj clm.a m. docx AMESHACK

13 Additional Inclusivity commitments from LINXS: Hire 90% of D&C first period apprentices from HireLAX and local pre-apprenticeship training programs that focus on working with disadvantaged & underrepresented local populations Hire 60% local workers during O&M period, with 50% from the LAX Impact area 5% commitment to LSBE'S during construction represents approximately $85M Total commitments to certified firms: $555,000,000 Set-aside packages for every phase of project; Set-asides are the most effective method to ensure certified firms have access to scopes of work Provide 300 scholarships for local youth during D&C Establish Union Sponsorship Fund to pay for new apprentice union dues Establish a 1-to-1 standard for replacing women employees In addition to the sample of Inclusivity commitments listed above, below is a table summarizing key Inclusivity commitments that are contractual obligations within the DBFOM Agreement, and will be integrated into the non-compliance table. If the Developer fails to meet the requirements set forth in the non-compliance table, the Developer will be subject to non-compliance points and payment deductions calibrated to each incident of non-compliance. Project Phase Local Hiring Small Business Enterprise (SBE) Local Business Enterprise (LBE) Design No requirement 22% 8% Construction 30% of work force 18% Local, Small Business Enterprise (subset of LBE) 3% 7% 5% Disabled Veterans Business Enterprise 3% 3% Operations & Maintenance 60% of hours worked by local workers, 10% disadvantaged, 50% from LAX impact zone 17% 10% 5% 3 0/0 Once again, given the LINXS Team's outstanding technical score, coupled with the most competitive price, LAWA is confident in the selection of this team as the right partner to deliver the APM. Now LAWA Staff are before the Board recommending that LAWA enter into an Early Works Agreement with the recommended Developer, LINXS. Staff will return to the Board in April, 2018 to seek Board approval of the final APM DBFOM Agreement. Approval of the Early Works Agreement is integral to the entire APM DBFOM Agreement's scope of work and price proposal. The Early Works Agreement Due to the structure of the APM DBFOM Agreement, the recommended Developer must put in place financing for the project's design and construction. Finalizing the financing after recommendation as selected Developer, but before the final APM DBFOM Agreement can be executed (known as achieving financial close in the terms of the APM DBFOM Agreement), requires several months. LAWA anticipates that LINXS will achieve financial close no later than the targeted July 15, 2018 financial close deadline. Page 13 APM. EARLY.WORKS FINAL rajclm. a

14 In the meantime, in order to maintain the APM project delivery schedule, LAWA seeks to execute the Early Works Agreement to allow LINXS, the recommended APM Developer, to engage in work for the approximately four-to-five months it will take to achieve final execution of the APM Design-Build-Finance-Operate-Maintain (DBFOM) Agreement. The Early Works Agreement was anticipated, and its structure and key provisions set forth in Appendix G of the Instructions to Proposers (ITP) in the final APM RFP. Each of the competing Developer teams understood that it would be required to engage in Early Works to maximize schedule efficiency. Each Developer team was required to submit a plan for Early Works as part of its technical proposal. The Early Works Agreement does not allow permanent construction work. The scope of work within the Early Works Agreement is limited to pre-construction activities such as administrative work, staff mobilization, design, and limited engineering/geotechnical assessments such as potholing. LAWA and LINXS have negotiated scope details specific to the LINXS Early Works Work Plan, and the final schedule of rates that the Developer will apply during the term of the Early Works Agreement. Structure of the Early Works Agreement The Early Works Agreement, once executed, is a stand-alone Agreement for the term during which it is in effect. During the term of the Early Works Agreement, LAWA will pay the Developer monthly for invoiced work it performs. LAWA is obligated to pay only for work identified in the approved scope of work of the Early Works Agreement. In return, any work performed by the Developer becomes the work product of LAWA, whether or not the work is completed, and even in the unlikely event that the parties do not achieve financial close of the APM DBFOM Agreement. It is important to note that the DBFOM Agreement is an "all-in" contract in which the totality of the Developer's costs for design, construction, financing, operating, and maintaining the APM system are part of one all-inclusive price, including the cost for Early Works. Upon reaching financial close on the DBFOM Agreement, the stand-alone Early Works Agreement terminates and the terms of the DBFOM go into effect. Per the terms of the Agreement, at the commencement of the APM DBFOM Agreement, the Developer will reimburse LAWA for any payments made on invoices submitted during the Early Works term. LAWA'S funds are at risk for Early Works only in the unlikely event that LAWA and the Developer fail to achieve financial close. Other Key Terms of the Early Works Agreement The Early Works Agreement contains an Early Works Work Plan that LAWA has approved. As stated above, LAWA is not obligated to pay for any Early Work not identified in the LAWA-approved Work Plan. The Developer must commence Early Works upon execution of the Early Works Agreement. No permanent construction work is permitted within the scope of the Early Works Agreement. Page 14 APM. EARLY. WORKS FINAL raj clm. a

15 In order to commence Early Works, the Developer must have in place and in force Early Works Insurance Policies, verified by LAWA. Business Inclusivity and Workforce Development Requirements Because the Early Works Agreement is ancillary to the larger APM DBFOM Agreement, there are no separate business inclusivity or local hire requirements set for the APM Early Works Agreement. However, work the Developer performs during the term of the Early Works Agreement is subject to the design and construction contracting inclusivity requirements that will be in effect upon execution of the DBFOM Agreement, as presented in the table above. Action Requested Staff requests that the Board authorize the CEO to Execute an Early Works Agreement with LAX Integrated Express Solutions, the Developer recommended to deliver the LAMP APM at LAX. Staff also requests that the Board appropriate funds in the not-to-exceed amount of $42,000,000 so that the Recommended Developer may commence pre-construction activities in advance of the execution of the APM DBFOM Agreement that provided the framework and key terms of the Early Works Agreement. Fiscal Impact Upon reaching financial close on the DBFOM Agreement, the stand-alone Early Works Agreement terminates and the terms of the DBFOM Agreement go into effect. Per the terms of the DBFOM Agreement, at its commencement, the developer will reimburse LAWA for any payments made on invoices submitted during the Early Works term. LAWA's funds are at risk for any costs incurred under the Early Works Agreement only in the unlikely event that LAWA and the developer fail to achieve financial close. The Early Works Agreement is a component of the larger total APM project. The DBFOM Agreement that will be the primary contractual agreement between the LINXS Team and LAWA includes the total costs for design and construction, operations and maintenance (O&M), and the finance costs associated with the developer portion of the capital costs of construction. Over the 30-year term of the DBFOM Agreement these costs will total approximately $4.5 billion. These costs are consistent with the costs LAWA would incur for the independent elements of the DBFOM Agreement (cost of construction, 25-years of O&M, finance costs) During the construction period, LAWA will pay the developer a total of $1 billion in milestone payments, spread out in equal installments. Following the completion of the project, LAWA will pay the developer annual availability payments (in equal monthly installments) to compensate the developer for principal, interest and financing costs of the project as well as annual operating and maintenance costs over the 25 year operating life of the contract. The initial annual availability payment is estimated at approximately $97million, and will increase annually, based on structured increases and adjustment inflation indexes. The initial payment is subject to adjustment based on the actual financing cost incurred by the developer at financial close. These payments will be allocated, along with LAWA's financing costs, to the airport's cost centers and recovered from their users. Charges to the aeronautical cost centers (airfield, apron, terminals) will increase air carrier rates and fees, initially adding approximately $2 to passenger air carriers' cost per enplaned passenger (CPE). Allocations to other cost centers (commercial and aviation) are expected to be paid from the revenues generated from land and building rents, concession and parking fees, ground transportation access fees and rental car customer facility charges. Staff has included these future payments and uses of revenue in its financial forecasts along with other current projects. These forecasts show that the airport will Page 15 APM. EA RLY.WORKS FINAL _raj clm.a

16 have sufficient revenues available to meet its financial obligations under the airport's bond indentures and meet all other anticipated operational and safety requirements. By entering into the Early Works agreement, LAWA will pay the developer for costs incurred under the contract. Should LAWA fail to reach either commercial or financial close with the developer, these costs would not be reimbursed under the final DBFOM agreement and would likely need to be written off. Under the eventual DBFOM agreement, LAWA is expected to retain certain obligations and certain risks. The most significant of these may include, but may not be limited to: 1) upward adjustment to the availability payment stream proposed by the developer based on changes in market based financing rates included in the proposal through the date of financial close - if municipal rate indexes increase, the level of LAWA's initial availability payment will increase to account for the developer's increased cost of financing, 2) LAWA must provide the developer access to certain properties and facilities on dates specified in the agreement or may be required to pay costs associated with resulting delays, 3) if the developer experiences delays caused by LAWA's lack of performance of any of its obligations, LAWA will be responsible for additional financing and direct costs incurred by the developer in constructing the project, 4) should the developer default on the agreement after financial close, LAWA will be responsible for up to 80% of the outstanding debt issued by the developer (but not for repayment of the developer's equity investment). 4. Alternatives Considered Take No Action If the Board does not approve execution of the Early Works Agreement, the recommended APM Developer will not be able to mobilize prior to financial close of the larger DBFOM Agreement, potentially delaying delivery of the project by up to five months, and jeopardizing the service availability date the recommended Developer is responsible for meeting under the terms of the APM DBFOM Agreement. Failure to execute Early Works is also inconsistent with the scope requirements of the APM DBFOM Agreement. The Early Works Work Plan is an essential part of the scope of work that the recommended Developer's proposal is based upon and for which the Developer is accountable under the terms of the APM DBFOM Agreement. Further, the cost of Early Works is part of the net present value (NPV) price set by the recommended Developer. Needless to say, the recommended Developer's NPV, inclusive of its Early Works costs, was determinative to the LINXS team being deemed to be the Lowest Ultimate Cost Proposer, (along with the team's high technical score.) Therefore, the Early Works Agreement is an essential step in the selection and eventual contract award to the recommended Developer. Entering into the Early Works Agreement with the recommended Developer is a critical and clear step expressing the Board's intention to adopt the Staff's Developer recommendation and to move forward with final execution of the APM DBFOM contract with the LI NXS team once all provisions of the DBFOM Agreement are finalized, in keeping with the commercial close and financial close procedures set forth in the APM RFP. Page 16 APM.EARLY.WORKS FINAL rajclm.a

17 APPROPRIATIONS: Staff requests that for this item, funds in the not-to-exceed amount of $42,000,000 be appropriated and allocated from the LAX Revenue Fund to WBS Element A-700 (Automated People Mover (APM) System for the Early Works Agreement for pre-construction activities in advance of the final execution of the APM Design-Build-Finance-Operate-Maintain Agreement. STANDARD PROVISIONS: 1. Any activity (approval of bids, execution of contracts, allocation of funds, etc.) for which the underlying project has been previously been evaluated for environmental significance and processed according to the requirements of the California Environmental Quality Act (CEQA) is exempt from further review pursuant to Article II, Section 2.i of the Los Angeles City CEQA Guidelines. The Landside Access Modernization Program Environmental Impact Report (El R) was certified by the Board of Airport Commissioners for this project on March 2, 2017 [Resolution (2028)]. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section LINXS will comply with the applicable provisions of the Living Wage Ordinance and the Labor Code of the State of California (Prevailing Wage). 5. Procurement Services has reviewed this action (File No ) and established mandatory goals of 22% SBE, 8% LBE, 3% LSBE (as a subset to LBE goal), and 3% DVBE for the Design Phase of the project. LINXS will comply with the SBE/LBE/LSBE/DVBE requirements. 6. LINXS will comply with the provisions of the Affirmative Action Program. 7. LINXS must obtain a Business Tax Registration Certificate number prior to submission of first invoice. 8. LINXS will comply with the provisions of the Child Support Obligations Ordinance. 9. LINXS will have approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports prior to issuance of a Notice to Proceed. 10. Pursuant to Charter Section 1022, staff determined the work specified on the proposed contract can be performed more feasibly or economically by an Independent Contractor than by City employees. 11. LINXS has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. LINXS must be determined by Public Works, Office of Contract Compliance to be in full compliance with the provisions of the Equal Benefits Ordinance prior to execution of the contract. Page 17 APM,EARLY.WORKS FINAL _raj clm.a

18 13. LINXS is required to comply with the provisions of the First Source Hiring Program for all non-trade Airport jobs. 14. LINXS has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions Page 18 APM.EARLYWORKS FINAL _raj clm.a