To: HONORABLE MAYOR AND From: Katy Allen

CITY COUNCIL Ralph G. Tonseth

Subject: SEE BELOW Date: 11-24-03

Council District: Citywide

SUBJECT: NORMAN Y. MINETA SAN JOSE INTERNATIONAL AIRPORT RUNWAY 30L EXTENSION – 2004 PROJECT

RECOMMENDATION

Report on bids and take appropriate action based on the evaluation of the bids for the Norman Y. Mineta San José International Airport Runway 30L Extension – 2004 Project, and approval of a 15 percent contingency.

CEQA: Resolution Nos. 67380 and 71451, PP 03-10-344.

BACKGROUND

On June 10, 1997, Council approved the updated Master Plan for the Norman Y. Mineta San José International Airport. The Master Plan includes a project to reconstruct the existing Runway 12R/30L and to extend it from 10,200 to 11,000 feet. The project is being implemented in two phases. The first phase was completed in October 2002 and consisted of the strengthening of the existing Runway 12R/30L pavement and associated taxiway construction. The proposed project is the second phase of work and will lengthen the runway to 11,000 feet, construct adjacent intersecting taxiways, provide new aircraft navigational aid systems and construct new utility infrastructure.

Construction is scheduled to begin in March 2004 with completion in November 2004.

Project Labor Agreement

On June 25, 2002, Council approved a Project Labor Agreement (PLA) for all Phase 2 core projects of the Airport Master Plan. The Phase 2 core projects expressly made subject to the terms of the PLA were the planned Central Terminal, Public Parking Garages and the Employee Parking Garage. The PLA further provides that other Master Plan projects can be added to the list of projects subject to the PLA without further negotiations, with the mutual consent of both parties.

The benefits of a PLA, which include promotion of labor harmony, simplified supervision and superior training for labor, will apply to most Master Plan Projects at the Airport. Therefore, staff has typically recommended that Master Plan Projects not expressly covered in the PLA be added to the list of project subject to the PLA.

Pursuant to an Executive Order issued by President Bush on February 17, 2001, recipients of Federal grant funds are prohibited from requiring a PLA on any Federal grant-funded project. The project will be funded through the Airport Revenue Bond Improvement Fund. However, because the City will seek repayment of at least a portion of the bond funded project costs from Airport Improvement Program (AIP) Grand funds pursuant to a letter of intent with the Federal Aviation Administration, the Executive Order prohibits the City from requiring the PLA on this project.

ANALYSIS

A supplemental memo will be provided after bids are opened on December 4, 2003.

The project has been designed to be eligible for reimbursement from Passenger Facility Charges and Airport Improvement Program Funds. Therefore the Federal Disadvantaged Business Enterprise requirements are included.

Council Policy provides for a standard contingency of ten percent on public works projects involving utilities. However, a 15 percent contingency is being requested for this project. In addition to the work on existing and new underground utility infrastructure, the construction activity takes place in areas adjacent to operating aircraft and requires coordination with the Transportation Security Administration and the Federal Aviation Administration (FAA). Additional unforeseen work may be necessary to address security concerns or to meet FAA requirements during construction. Also, the majority of the work on the project will be performed during a complete closure of Runway 12R/30L. Delay in re-opening the runway has the potential to be very costly to the Airport and airlines. Therefore, expedient resolution of problems and changes will be required to meet the project schedule. For these reasons, it is requested that a 15 percent contingency be approved.

Labor Harmony Provisions

Because the majority of the work on the project will be performed during a complete closure of Runway 12R/30L, it is of utmost importance to the City and all Airport users that no interruption occur in the progress of the construction work for the project. In the City’s experience, a labor dispute involving one contractor and its employees can cause work stoppages or delays which detrimentally affect an entire project, including the work of contractors not involved in the labor dispute. Therefore, as a condition of performing work on this project, the contractor will be required pursuant to the terms of the contract to do each of the following: (1) use its best efforts to prevent any strikes, picketing, slowdowns or other forms of labor disputes (collectively “Labor Dispute”) on, or near or directed at the premises of the project, irrespective of the reason for any such Labor Dispute, and (2) include in each of its subcontractor contracts a provision requiring the subcontractor to use its best efforts to prevent any Labor Dispute on the premises of the project, irrespective of the reason for any such Labor Dispute.

The labor harmony provisions in the contract provide that if a Labor Dispute occurs between: (a) the contractor and its employees or any union; (b) one of the contractor’s subcontractors and its employees or any union; or (c) one of the contractor’s suppliers and its employees or any union, the Director may determine, in the Director’s sole discretion, that the Labor Dispute will cause, or is likely to cause, unreasonable delay in the progress of construction of the project or operation of any business at the Airport. If the Director makes such a determination, then upon written notice from the Director, the contractor and the involved subcontractor(s) or supplier(s) shall be deemed in default of its contract. Upon such notice, the Director shall have the right to remove the contractor and/or the involved subcontractor(s) or supplier(s) and take such steps as are necessary to finish the uncompleted portion of the work. In the event a subcontractor causes the Labor Dispute, the contractor is required to cooperate fully with the City in the removal and replacement of the subcontractor.

The contract also requires that the contractor pay liquidated damages for each and every calendar day’s delay in finishing work in excess of the number of working days prescribed in this Construction Contract resulting from a Labor Dispute.

PUBLIC OUTREACH

To solicit contractors, this project was listed on the City’s Internet Bid Line and advertised in the San José Post Record. Bid packages for all Department of Public Works construction projects are provided to various contractor organizations and builder’s exchanges.

AIRPORT MASTER PLAN CONSISTENCY

The San José Municipal Code requires that capital projects at the Airport be consistent with the adopted Airport Master Plan. The Runway 30L Extension is explicitly identified as Projects A-14 (reconstruct and extend Runway 12R/30L) and A-15 and A-16 (construct associated cross taxiways) in the adopted Airport Master Plan, and is therefore consistent with the Master Plan under Municipal Code Section 25.04.210(B)(1).

COORDINATION

This project and memo have been coordinated with the City Manager’s Budget Office, the City Attorney’s Office, the Departments of Finance and Planning, Building, and Code Enforcement, the Federal Aviation Administration, and the Santa Clara and San Benito Counties Building and Construction Trades Council.

COST IMPLICATIONS

1.	AMOUNT OF RECOMMENDATION: (Engineer’s Estimate) $16,211,255
2.	COST OF PROJECT:
	Project Delivery	$ 3,964,211*
	Construction	17,276,284**
	Contingency	2,431,688
	TOTAL	$23,672,183
	* A total of $225,625 was expended in Fiscal Years 2000-2001 through 2002-2003 for project delivery costs. ** This amount includes costs for the construction contract, an agreement with the Federal Aviation Administration, and other construction related expenses.
3.	SOURCE OF FUNDING: 526 – Airport Revenue Bond Improvement Fund*
	*Funding of $20,970,000 is currently budgeted for this project in the FY 2003-2004 Adopted Capital Budget. Additional funding will be requested in the FY 2004-2005 Capital Budget for Project Delivery and Contingency to complete the project.
4.	FISCAL IMPACT: This project is consistent with the Council-approved Budget Strategy Economic Recovery section in that it will spur construction spending in our local economy. The project has been reviewed and was determined that it will have no significant adverse impact on the General Fund operating budget.

BUDGET REFERENCE

Fund #	Appn #	Appn. Name	RC #	Total Appn*	Amt. for Contract	Adopted Budget Page	Last Budget Action (Date, Ord. No.)
526 (546)	5426	Extend and Strengthen Runway 30L	11874X	$20,970,000		Page 36	10/14/03 Ord. No. 26997

CEQA

Resolution Nos. 67380 and 71451, PP 03-10-344.

KATY ALLEN RALPH G. TONSETH

Director, Public Works Department Director of Aviation