City Council
Report
City Council Meeting: June 23, 2020
Agenda Item: 3.B
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Airport
Subject: Approval of Third Modification to Agreement #10071 with Vector Airport Systems for Operation of the City’s Landing Fee Program at the Santa Monica Airport
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a third modification to agreement #10071 (CCS) to extend the term to June 30, 2021 in the amount of $115,500, including a 10% contingency fee and four one-year options to renew in the amount of $115,500 per annum, with Vector Airport Systems for landing fee services for the Public Works Department. This will result in a 5-year amended agreement with a new total amount not to exceed $1,815,984, with future year funding contingent on Council budget approval.
Summary
Staff recommends that Council approve a third modification to the current Agreement with Vector Airport Systems (Vector) to extend Vector’s operation of the City’s landing fee program at the Santa Monica Airport (SMO). Vector currently provides the Airport with services related to the photo capture of aircraft operations, data, reports, and billings and collections. This is a sole source contract in an amount based on either 18% or 21% of gross monthly receipts depending on the gross revenue collected each month. The Third Modification: 1) extends the Agreement by one year with four oneyear options that are renewable at the City’s discretion to allow for uninterrupted services; 2) changes the terms of services to include consolidation of lockbox payment processes; and 3) eliminates annual equipment maintenance charges.
Discussion
Vector currently provides landing fee-related services to the Airport and is still the only vendor in the United States that provides a reliable solution to general aviation airports to photo capture, bill, and collect landing fees. Vector’s photo-capture system uses 2 of 4
three proprietary overlapping technologies to capture aircraft departing Santa Monica Airport, 24 hours per day, 7 days per week. The system includes solar-powered air traffic imaging systems (cameras); SCOUT transponder receiver (a second layer of information to identify aircraft in the air); and NextGen flight track data. Vector’s services include all necessary equipment including the maintenance of the onsite camera system, servers, transponders, and staffing to support the billing and collections associated with their service.
The City first engaged Vector for landing fee services in July 2015. They have provided this service since that time, requiring two contract modifications. Vector’s current agreement provides for a commission of either 18% or 21% of gross revenue receipts depending on the gross revenue realized each month in landing fees. Vector collects the landing fees and deposits the revenues, less the commission, into an established Airport Fund account. The commission percentage approach ensures the associated costs are proportional to the revenues generated by the program. It also ensures that unanticipated economic fluctuations in the aviation market do not obligate the City to extensive fixed costs.
For FY 2020-21, gross landing fees collections are estimated at $515,000, an amount that would generate approximately $410,000 in budgeted net landing fee revenues for the City and approximately $105,000 annually in commission to Vector for their services. It is anticipated that gross landing fee collections and commission payments to Vector will remain at these same levels through FY2023-24.
Vector uses a lockbox system to collect, track and make payments of landing fees to SMO. Effective July 1, 2020, Vector will implement an upgraded, more efficient, and transparent consolidated lockbox system. This change will require an adjustment to the terms of the current Agreement. Vector will continue to provide annual maintenance of its equipment at SMO but will no longer charge an annual fee for these services. 3 of 4
Vendor Selection
On June 9, 2015, Council approved a sole source for Vector as the sole company that can provide a total solution of all integrated parts associated with SMO’s landing fee program (Attachment B). Vector has installed and maintained proprietary software and equipment at SMO, which is currently used to provide landing fee services to the City.
Vector has proven critical to the City’s efforts to successfully capture and collect landing fees at the Santa Monica Airport. The system provided by Vector is unique in the industry as there is no other competitive offering from any company and, as such, Vector is the sole provider of automated aircraft identification and billing and collection systems. Vector has no authorized distributors, resellers, or service providers. All Vector equipment and software are sold, installed, and serviced by Vector.
Staff seeks authority to extend the term of Agreement 100071 (CCS) with Vector Airport Systems for landing fee services for a 5 year amended term, and to increase the compensation under the Agreement to a new total amount that does not exceed $1,815,984, with future year funding contingent on Council budget approval. Staff also seeks authority to amend the Agreement’s terms of service to allow for the consolidation of lockbox payment services and the elimination of annual fees for equipment maintenance.
Past Council Actions
Meeting Date Description
09/26/2017
(attachment A)
Second Modification to Agreement 10017 (CCS) with Vector Airport Systems
06/09/2015
(attachment B)
Approval of Sole Source Agreement with Vector Airport Systems Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Airport Fund to increase the amount of the Agreement with Vector Airport Systems to operate the Airport’s landing fee program. 4 of 4
Contract/Agreement/Purchase Order Modification Request
Agreement #
Current Authorized
Amount
Modified Request
Amount
FY 2020-21 Budget
Dept Account #
Total Revised
Contract Amount
10017 $1,240,484 $575,500 N/A $1,815,984
Prepared By: Kate Schlesinger, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. 09/26/2017 Staff Report Vector Mod 2 10017 CCS
B. 06/09/2015 SR_Approval of Vector Sole Source Agreement C. Vector 2019-20 OAKS INITIATIVE FORM