Federal requirements make fees associated with airport projects higher than the fees paid for similar private-sector and nonairport public projects, a member of the Little Rock Municipal Airport Commission says.
But Bob East said staff members at Bill and Hillary Clinton National Airport/Adams Field still managed to negotiate a "good deal" in which the airport will pay $1.2 million for architectural, engineering, design and construction services associated with the planned $17.6 million renovation of the airport's concourse.
"I'm fine with it," he said before the commission's lease committee voted earlier this week to recommend the new fees to the full commission to consider at Tuesday's meeting. "I think you've done a good job, and I'm ready to move forward."
The work, described by airport officials as the most significant renovation of the concourse since it opened in 1972, will include new boarding bridges and gate furniture, more power outlets for passengers' personal electronics, and improved Wi-Fi. The concourse also will get a new floor and roof.
The project team is led by Architectural Alliance International of Minneapolis, which holds the long-term architectural services contract with the airport. The project is scheduled to begin in March and take about a year to complete.
Architectural Alliance will be paid a lump sum not to exceed $857,339 for basic architectural and engineering services. Fees associated with special or additional services that include an information-technology consultant, sign consultant, cost-estimate consultant, structural testing and inspections, resident project representative and a passenger boarding bridge consultant are not to exceed $303,420.
The fee amendment also includes reimbursable expenses budget line items not to exceed $72,757. That figure mainly covers travel.
East, who is a contractor, and Tom Schueck, another commission member who runs a steel company, have long voiced concern over the high fees associated with airport projects, which must comply with Federal Aviation Administration rules. The companies of both commissioners routinely bid on big-ticket projects. They do not compete for work at the airport.
East even took documents from several private-sector projects to a meeting with Tom Clarke, the airport's property, planning and development director, to go over the fee issue. After the meeting, East concluded that airport staff members were negotiating the best possible fees under the circumstances.
"It's just done differently at airports by law," East said at a meeting of the commission's lease committee earlier this week. "It's not practice, it's law, that the fees have to be calculated by the hour. You have to have certain inspectors on the job that private sector doesn't always have."
Fees for private projects are typically paid as a percentage of the total cost of the project and fall in the range of 6 percent to 7 percent for standard projects and 8 percent to 9 percent for more complex projects.
The basic services fee of $857,339 represents 7.3 percent of the total estimated construction budget of $11,747,000. The total fee, minus the reimbursable expenses, represents 9.88 percent of the estimated construction budget.
"So in light of that and after reading the regulations, I've come away convinced we're getting a good deal out of these fees from Tom's ability to negotiate even though I still think they are relatively high compared to the private sector," East added. "But we really don't have a choice about how we do it."
"If you're fine with it, I'm fine with it," Schueck said. "Again, my thought is the fees are extremely high."
In response to a question from another commissioner, Virgil Miller, Clarke said the airport must always obtain an independent fee analysis anytime fees will exceed $100,000.
It is a "blind" process in which the airport solicits services from another firm that can provide similar architectural and engineering services. In this case, Clarke said, airport staff members sought the independent fee analysis from a firm that did similar concourse renovation work at Hartsfield-Jackson Atlanta International Airport. The firm was paid $12,000.
"We worked with them intensively to make sure both parties were pricing the same scope of work," Clarke said. "We received that independent fee estimate and compared that to the fees that Architectural Alliance proposes.
"For an FAA project, they allow a 10 percent variance between the two estimates. In this situation, after negotiations, we were able to get AA below the independent fee estimate. So we're pretty comfortable."
The independent fee estimate totaled $1,230,402.
The negotiations between the airport and Architectural Alliance took place before the independent fee was reviewed, said Ron Mathieu, the commission's executive director.
"I think the key there is that we negotiate our fee before we look at the independent fee analysis," he said. "It has to be a blind process. After we negotiate our fee, we look at the independent analysis. If we're below the independent fee analysis, all is right with the world. If we are above the independent fee analysis, we look at what's the differences. In this case, Architectural Alliance was below the independent fee analysis."
Metro on 12/13/2014