Exhibit B
PORTLAND OFFICE OF TRANSPORTATION
MARQUAM HILL AERIAL TRAM PROJECT
TRAM EQUIPMENT SUPPLIER
PROPOSED EXEMPTION FROM COMPETITIVE BIDDING
DRAFT FINDINGS
The City Engineer and the Office of Transportation concurs with the recommendation of Portland Aerial Transportation, Inc. (“PATI”) that the Portland City Council adopt the following findings and take other necessary action to exempt the selection of a Tram Equipment Supplier (“TES”) from competitive bidding as provided in ORS Chapter 279:
A. Operational, budget and financial data.
1. Overall Project Description. The Marquam Hill Aerial Tram Project (“Project”) involves the construction of an aerial tramway between the South Waterfront District and Oregon Health and Science University (OHSU). The Project includes a base terminal station in South Waterfront, an intermediate support tower east of SW Macadam Avenue and upper terminal tower adjacent the proposed new Patient Care Facility at OHSU. The suspended cable transportation system is a bi-cable reversible aerial tramway consisting of two passenger carriers operating in opposite directions. The Project will be built under a $15.5 million budget. Of the total budget, approximately $8.3 million is budgeted for general construction work.
The contract to which these findings are directed concerns a portion of the overall project, the tram equipment. A majority of the funds on this contract will be directed toward the acquisition of the equipment, but the TES will also be responsible for installing the towers. Therefore, a smaller portion of the contract will require construction.
2. Selection Process.
a. Special Project Requirements. The Project involves technical complexity and requires specialized expertise in the supply and installation of tramway equipment. The extreme schedule, budget and financial limitations of the project can best be met through an alternative contracting process that will enable an extended period for cost negotiation, constructability review and value engineering carried out concurrently with project design and the completion of final engineering documents. Because the project is dependent upon highly specialized tramway equipment the construction of which will be impacted by the design, significant cost savings will be achieved if the equipment supplier is acquired through an alternative bid process. By using an alternative process, the TES can participate in the design of the tram and ensure that the designs and resultant specifications are appropriate for the project from the earliest stages of design. In contrast, the traditional “low bid’ method of acquisition would require the design to be completed before the supplier could provide a bid. That would mean that the supplier could not participate in the design process and the City would be without benefit of the supplier’s expertise, which would probably result in additional costs, particularly if the design proved troublesome. There is less likelihood of a troublesome design if the TES works with the designer through the process. , In addition, the design for the project would have to anticipate two potential equipment providers, with subsequent design alterations taking place after the project has gone to construction and the potential for incompatibility of design elements. This risk and inefficiency will be eliminated through early procurement of a manufacturer/supplier. The alternative acquisition process will be more appropriate than the standard competitive bidding process in carrying out the acquisition of tramway equipment, because of the operational, budget and financial considerations, the specialized nature of this equipment and a constrained delivery schedule.
b. Tramway Equipment Supplier. A Tramway Equipment Supplier (TES) will be selected through an alternative contracting process. There appear to be only two suppliers of tram equipment in the world, as noted in paragraph F below. Therefore, there is little or no likelihood that the alternative contracting process will reduce or substantially diminish competition. The selection process will include the development and issuance of a Request for Proposals (RFP) which will be broadly advertised at least four weeks in advance of the deadline set for submitting responses to the RFP. The Commissioner-in-charge will appoint a Selection Committee with City, PATI, and neighborhood representation. The proposals will be evaluated based on criteria including experience and qualifications, key personnel, proposed management approaches, and fee proposals. The Committee will review and rank the written proposals, interview the highest ranking respondents, and recommend a TES to the City Council for award. Therefore the RFP process can take many different considerations into account through the use of evaluation criteria, whereas the traditional “low bid” method focuses mainly on price. As a result of the competitive RFP process outlined above, the use of an alternative contracting method will be unlikely to encourage favoritism in the awarding of public contracts or substantially diminish competition for public contracts.
B. Public Benefits. Public Benefits. The alternate acquisition process will result in reduced Project cost and will foster better competition between qualified manufacturers. The savings will be realized in the reduction in professional services to prepare detailed specifications and to administer the bidding and approval process. The alternate acquisition process will also attract interest from all of the qualified manufacturers. Moreover, in a traditional low-bid setting, a TES would not be able to participate in value engineering, constructability review, public meetings, and other design phase activities that result in increased public involvement and decreased public costs. Therefore, an alternative contracting method will result in the least overall cost for construction and the maximum possible public involvement in the design and construction process.
C. Value Engineering. The alternative purchasing process will allow value engineering in the negotiations for variations from the standard “off-the-shelf” designs. For example, it is anticipated that a unique passenger carrier will be designed rather than using standard equipment common to tramways operated in ski areas. Under the alternative purchasing process there will be an opportunity to maximize the advantages of the unique design, while also achieving the least cost configuration by using the maximum in “off-the-shelf” components and standard manufacturing techniques. In contrast, the traditional “low-bid” method requires completions of design and engineering prior to bidding, thereby precluding contractor participation in cost negotiations, constructability review, and value engineering, and preventing actual manufacturer specifications from being utilized in the design of the project.
D. Specialized Expertise Required. The tramway passenger carriers are contemplated in the Project vision to require a combination of standard and unique design elements. In addition, all mechanical, electrical and safety related equipment is complex and designed for specialized application in the tramway system. The alternative purchasing process will afford more opportunity to ensure that the manufacturer selected possesses the necessary expertise to design and fabricate these specialized systems. Because there are two main tram companies, it is likely that both the traditional “low bid” selection process, and the alternative selection process, will be able to tap into the manufacturer’s expertise. . However, use of the alternative process will allow the City to evaluate the competitor’s expertise in coming up with proposals for a tram in a Portland setting. In contrast the low bid method would require completion of a design and not allow the competitors to provide any specialized expertise, particularly during the design process. Selection of a highly qualified, as opposed to minimally qualified, TES is likely to generate cost savings to the City and ensure a safer and more efficient construction process on such a technically complex project.
E. Public Safety. The alternative purchasing process will allow more opportunity to ensure that the tramway equipment procured will incorporate the safety, evacuation and access features required under federal, state and local laws and by good practice. Under the alternative purchasing process, the project can be designed from the outset with the specific design requirements of a specific tramway system, ensuring that the highest safety standards are provided and achieved. Although tram equipment would be safe if purchased through a low bid process, that process could not allow the TES to provide input into the design and would not permit additional safety measures to be adopted in a cost effective manner. In fact, the traditional method often does not contemplate safety in the selection process as it is a price driven process.
F. Market Conditions. Currently there are only two major suppliers of tramway equipment worldwide. An alternative purchasing process will afford more flexibility in acquiring the equipment at least cost and with the greatest degree of certainty of on-time performance, delivery and installation. In contrast, the traditional low bid method of contractor selection means that subcontractors are not usually selected until the contractor puts together a bid for the project, which usually occurs immediately prior to the bid submittal. This means a traditional bidder has a much shorter time frame to acquire subcontractors than a contractor selected much earlier in the design process. As a result, this should give the TES selected through the alternative process additional time to put together the most qualified, and most economic, project team.
G. Technical Complexity. Aerial tramways are mechanically and electronically complex. The equipment purchased must meet specialized international safety and technical requirements. The alternate acquisition process will insure that a manufacturer is selected from among the limited number of manufacturers world-wide technically capable of fabricating and supplying this type of equipment with the least initial cost and the lowest long-term operating and maintenance cost. In contrast, the traditional “low bid” method of supplier selection utilizes a prequalification process where contractors must meet a minimum standard of qualification. However, in this approach, no weight is given in the selection process to one of the two TES’s who may have built trams in environments similar to what will be encountered here. Selection of a highly qualified TES who can respond to the complex considerations of this project is more likely to result from an alternative process and is likely to generate cost savings to the City and ensure a safer and more efficient construction process on such a technically complex project.
H. Funding Sources. The $15.5 million Project will be funded by a combination of public and private funds. The public funds may include, but are not limited to, tax increment funds from the Portland Development Commission, City transportation funds, and LID financing. The private funds may be procured through a Local Improvement District (LID), which would assess property owners along the alignment based on benefit and through separate funding agreements. The LID will be a fixed price LID, which will require a high degree of construction efficiency as a means for reducing interest costs for the project. The alternative selection process will ensure that the TES selected is experienced in working with complex local administrative and funding requirements. This experience will assist the City in the development of a realistic cash flow strategy during the Final Engineering phase of the Project to minimize interest expense.
In summary, for all the reasons listed above, an alternative contracting process, using a Request for Proposals, to acquire a supplier to provide and install tramway equipment, is likely to generate substantial cost savings and is unlikely to encourage favoritism in the awarding of a public contract or substantially diminish competition for public contracts.