Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8b
ACTION ITEM
Date of Meeting
January 24, 2023
DATE: January 17, 2023
TO: Stephen P. Metruck, Executive Director
FROM: Eileen Francisco, Interim Chief Development Officer
Wendy Reiter, Aviation Director of Security
Janice Zahn, Director of Engineering
SUBJECT: Baggage Optimization Program Transportation Security Administration (TSA) Other
Transaction Agreement (OTA) Time Extension and Change Order
Amount of this request:
$0
Total estimated project cost:
$955,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to: 1) execute an OTA with TSA for
a 24-month time extension for the period of performance on the Baggage Optimization Program,
2) execute future Change Orders on the Baggage Optimization Project Phase 2 and Phase 3
construction contracts (C800612) up to the executed Commission authorization amount that
exceed $300,000 and/or exceed 60 calendar days’ time extensions, and 3) include a Project Labor
Agreement (PLA) for Phase 3.
EXECUTIVE SUMMARY
The Port of Seattle and TSA entered an OTA in 2013 to reconfigure the baggage system to meet
both the TSA’s and Airport’s needs. The TSA benefits by making its portion of the baggage system
more efficient, reducing maintenance costs, and improving working conditions (safety and
comfort) for federal employees. In the long-term, the Airport benefits by creating a vision of how
the overall baggage system could flexibly grow to meet the long-range capacity of the Airport.
The Baggage Optimization Program is being delivered in three phases. Phase 1 has completed
construction, Phase 2 is under construction, and Phase 3 pre-design has started. The overall
program is anticipated to be complete in 2027. Phase 2 is approximately 45% complete with an
expected completion date of August 2024. Due to the lack of interconnectivity until the project
is complete, near continuous operation, and a fixed footprint, this project is complex and has
various constructions requiring detailed construction sequencing plans. As part of this request,
Phase 3 would benefit from entering into a project labor agreement.
COMMISSION AGENDA – Action Item No. 8b Page 2 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
OTA Time Extension:
The current OTA commits $94,043,296 toward the program and is currently scheduled to end in
March 2023. This OTA would not increase TSA contributions. However, it would extend the
duration by 24 months to March 30, 2025, when the funds are anticipated to have been spent.
Approximately $3.3M would be returned and de-obligated from the Port of Seattle Baggage
Optimization Program if this OTA is not extended.
Change Orders:
Phase 2 is currently under construction and Phase 3 procurement for a General Contractor and
Construction Management contract (GC/CM) is being developed. Commission action is required
under the General Delegation of Authority if the value of the change order is over $300,000 or
the additional time is over 60 calendar days. The Baggage Program is requesting authorization
for the Executive Director to execute any future change orders, so long as the change orders are
within the approved budget. Phase 2 is a $293M project and Phase 3 is expected to be similar in
magnitude. Projects of this size and complexity would typically anticipate several change orders
that exceed $300k or 60 calendar days of time extension. Therefore, it is more expedient to grant
the Executive Director authorization to execute these change orders.
Project Labor Agreement (PLA):
A project labor agreement will be used for these projects based on the importance of labor
continuity and the need to minimize any risk of impact to operations during construction.
Diversity in Contracting
Phase 2 is projected to meet our 2% Women and Minority Owned Business Enterprise (WMBE)
goal. The project team will work with Diversity and Contracting team to conduct outreach and
setting an aspirational WMBE goal for Phase 3.
DETAILS
Scope of Work
Phase 2 is currently under construction and scheduled to be complete Q3 2024. This work will
expand the centralized baggage screening area in the airport’s Central Terminal. This phase will
also replace conveyor systems to the north portion of the bagwell, construct the final baggage
sortation matrix, and add more capacity to the South Satellite baggage system. Concession
storage and the conveyance maintenance shop will be relocated to their final locations.
COMMISSION AGENDA – Action Item No. 8b Page 3 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Phase 3 concludes the Baggage Optimization Program allowing for complete baggage flexibility
to check in any bag into any ticket counter and be delivered to any airplane. It also
accommodates passenger volume growth and meets TSA safety mandates. This phase will tie-in
all the south end systems to centralized screening, including the International Arrivals Facility
(IAF), and finalize the sortation and ticket counter connections.
Schedule
Phase 1 was completed in Q2 2020. Phase 2 Is currently under construction and scheduled to be
completed in Q3 2024. Phase 3 design has started in Q3 2022 and is scheduled to be constructed
Q2 2027.
Phase  Design  Construction 
Phase 1  Q3 2015  Q1 2016 - Q2 2020 
Phase 2  Q1 2020  Q3 2020 – Q3 2024 
Phase 3  Q3 2022 – Q1 2024  Q4 2024 – Q2 2027 
Activity
Commission Design Authorization
Design start – Phase 3
Commission Construction
Authorization
Construction Start
Substantial Completion
Cost Breakdown
This Request
Total Project
Design
$0
$80,731,152
Construction
$0
$874,268,848
Total
$0
$955,000,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not proceed with the request to execute an OTA with TSA for a 24-month time
extension for the period of performance on the Baggage Optimization Program and future
Amendments and Change Orders on the Baggage Optimization Program up to the executed
COMMISSION AGENDA – Action Item No. 8b Page 4 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Commission authorization amount for additional design, project and construction management
services that exceed $300,000.00, and/or exceed 60 calendar daytime extensions.
Cost Implications: $3.3M
Pros:
(1) None.
Cons:
(1) Allocated TSA funds may not be fully utilized and returned to TSA; the Port would have
to fund the money that was returned to TSA to complete the project.
(2) If the change order execution request by the Executive Director is not granted, the
project will have to repeatedly go back to Commission although the project budget has
already been approved.
This is not the recommended alternative.
Alternative 2 – Approve the request to proceed with the execution of the OTA time extension
with TSA, allow the Executive Director to execute change orders within the approved budget, and
allow for PLA to be used on Phase 3.
Cost Implications: $0
Pros:
(1) All allocated funds from TSA will be used on Baggage Optimization.
(2) Change order execution within the approved budget by the Executive Director allows
for the project team to move forward without continuously returning to Commission
for approval.
(3) PLA will help to minimize risk to operations during Phase 3 construction.
Cons:
(1) None.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Phase 1 was completed at $101,275,000. Phase 2 has a budget of $415,675,000 with a
substantial completion date of Q3 2024. However, now that we are anticipating about a $20M
savings, barring any major issues, that amount can be rolled into Phase 3. The team has been
projecting a range of $400-$500M for Phase 3, with a likely cost of $432,450,000.
COMMISSION AGENDA – Action Item No. 8b Page 5 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Budget
Current
Authorization
Estimate At
Completion
Budget Delta Notes
Phase 1 $101,375,000 $101,375,000 $101,375,000
$ -
Phase 2 $415,675,000 $415,675,000 $395,675,000 $(20,000,000)
• Savings of $20M as
of June 2022
• Substantial
Completion Q3
2024
Phase 3 $313,000,000 $13,000,000 $432,450,000 $119,430,000
• Commission Range
presented April
2022 is $400M -
$500M
• MII anticipated Q3
2024
• Additional budget
request assumes a
$20M unspent
from Ph2 will be
transferred
Executive
Management
Reserve
$10,000,000 $10,000,000 $10,000,000 $ -
Transfer $15,500,000 $15,500,000 $15,500,000 $ -
• Commission
approval April
2022
TOTAL $855,550,000 $555,550,000 $955,000,000 $99,430,000
Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$317,000,000
$150,000
$317,150,000
Previous changes – net
$637,134,000
$716,000
$637,850,000
Current change
$0
$0
$0
Revised estimate
$954,134,000
$866,000
$955,000,000
AUTHORIZATION
Previous authorizations
$589,299,000
$466,000
$589,765,000
Current request for authorization
$0
$0
$0
Total authorizations, including this request
$589,299,000
$466,000
$589,765,000
Remaining amount to be authorized
$364,835,000
$400,000
$365,235,000
COMMISSION AGENDA – Action Item No. 8b Page 6 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
Annual Budget Status and Source of Funds
This project, C800612, was included in the 2023-2027 capital budget and plan of finance with a
budget of $954,134,000. This project has prior Majority In Interest (MII) airlines approval for
Phase 1 and 2. The Phase 3 MII ballot is anticipated in 2024. The funding sources would be airport
development fund and revenue bonds.
Financial Analysis and Summary
Project cost for analysis
$955,000,000
Business Unit (BU)
Baggage System
Effect on business performance
(NOI after depreciation)
NOI after depreciation will increase due to inclusion of
capital (and operating) costs in airline rate base
IRR/NPV (if relevant)
N/A
CPE Impact
$0.26 in 2020, $1.03 in 2024 and $2.75 in 2028
ATTACHMENTS TO THIS REQUEST
None
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• July 26, 2022 – Request Commission authorization for the Executive Director to: (1) execute
an agreement with the Transportation Security Administrative (TSA) to provide clear access to
screening equipment for Phase 2, (2) authorize $34,215,000 for Phase 3 to complete pre-
construction services, (3) utilize, advertise, and execute a General Contractor/Construction
Manager (GC/CM) for Phase 3, (4) advertise and execute a project specific Construction
Management (CM) and Airline Technical Representative (ATR) contract for Phase 3, (5) amend
Service Agreement (SA) P-00317641 to add $18,340,000 for a total contract value of
$49,500,000 to complete design services and provide construction support for Phase 3, and
(6) utilize Port crews for Phase 3 activities, for Baggage Optimization Project at Seattle-Tacoma
International Airport. The total amount of this request is $34,215,000.
• April 19, 2022 – Baggage Optimization Program Update – Quarter 2, 2022
• January 28, 2020 – Commission Authorization to: (1) execute a construction contract with the
low responsive and responsible bidder for the Baggage Optimization Phase 2 Project at
Seattle-Tacoma International Airport, notwithstanding the low bid exceeding the estimate at
time of bid by more than 10 percent, and (2) authorize an additional $190,737,800 for Phase
2 construction and Phase 3 design for a total program authorization of $540,050,000. 
• April 23, 2019 – Commission Authorization to: (1) advertise, award, and execute a construction
contract for the Baggage Optimization Phase 2 project at Seattle-Tacoma International
Airport; (2) employ a project labor agreement (PLA); and (3) utilize Port crews and small works
contracts to perform construction work.  
• February 26, 2019 – Baggage Optimization Quarter 4 Project Briefing  
• October 23, 2018 – Baggage Optimization Quarter 3 Project Briefing  
COMMISSION AGENDA – Action Item No. 8b Page 7 of 7
Meeting Date: January 24, 2023
Template revised June 27, 2019 (Diversity in Contracting).
•
June 12, 2018 – Baggage Optimization Quarter 2 Project Briefing  
• January 9, 2018 – Baggage Optimization Quarter 4 Project Briefing  
• September 26, 2017 – Baggage Optimization Quarter 3 Project Briefing  
• June 27, 2017 – Commission authorization to (1) authorize additional design and project
management funds to expand the capacity to 60 million annual passengers (MAP); (2) use Port
crews and small works contracts to perform additional construction work; and (3) amend
Service Agreement P-00317641 to add $10,160,000.  
• October 25, 2016 – Baggage Optimization Quarter 4 Project Briefing  
• July 12, 2016 – Commission authorization to advertise and execute a contract for construction
Phase 1.  
• June 28, 2016– Baggage Program Briefing  
• May 17, 2016 – Checked Baggage Optimization Project Briefing  
• March 8, 2016 – Commission authorization for the Chief Executive Officer to amend the
Baggage Optimization Design Services contract.  
• June 23, 2015 – Checked Baggage Optimization Project Briefing  
• September 10, 2013 – The Commission authorized the execution of an Other Transaction
Agreement (OTA) with TSA for reimbursable costs for design and construction, to authorize
$15 million to continue from 30% to 100% design and execute a consultant service agreement
for program management support services.  
• August 20, 2013 – Response to questions from Commissioners asked during the August 6, 2013
Commission Meeting.
• August 6, 2013 – The Commission was briefed on the near-term and long-term challenges
related to handling checked baggage at the Airport.
• January 22, 2013 – The Commission authorized $5 million for staff to begin design through
30%, and to enter into an agreement to allow reimbursement from the federal government to
the Port for eligible elements of the 30% design effort.
• January 8, 2013 – Baggage Systems Briefing  
• August 14, 2012 – Baggage system recapitalization/optimization was noted in the 2013
business plan and capital briefing as a significant capital project not included in 2013-17 capital
program.
• August 7, 2012 – Baggage system recapitalization/optimization was referenced as one of the
drivers for the need to develop an Airport Sustainability Master Plan  
• June 26, 2012 – The Airport’s baggage systems were discussed during a briefing on terminal
development challenges.
• May 10, 2012 – TSA’s interest in a national recapitalization/optimization plan for all baggage-
screening operations was referenced in a design authorization request for the C60-C61
Baggage Handling System Modifications Project.