Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8d
ACTION ITEM
Date of Meeting
March 26, 2024
DATE: March 18, 2024
TO: Stephen P. Metruck, Executive Director
FROM: Eileen Francisco, Director Aviation Project Management
Wendy Reiter, Director Airport Security
SUBJECT: Baggage Optimization Phase 3 Enabling Construction Work
Amount of this request:
$7,500,000
Total estimated project cost:
$955,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) authorize an early work
construction contract for Baggage Optimization Phase 3 including construction of D1 and C94
transfer lines, (2) procure long lead items, and (3) increase the project authorization by
$7,500,000.
EXECUTIVE SUMMARY
Baggage Optimization is an airport-wide public safety and security program that improves
customer service for both airlines and passengers. This is a long-term, three-phase program that
is anticipated to be completed in 2027. The program allows the flexibility for bags to be checked
in from any ticket counter and be conveyed to serve any gate. The project is being bid and
constructed in three separate phases. Phase 1 has been completed, Phase 2 is under
construction, and development of Phase 3 began in Q3 2022. Phase 2 is approximately 88%
complete and is expected to be substantially complete in Q3 2024. Due to the lack of
interconnectivity until the project is complete, near continuous operation, and a fixed footprint,
this project has various constraints requiring detailed construction sequencing plans. A General
Construction/Construction Manager (GC/CM) was selected for Phase 3. To leverage the benefits
during the preconstruction period, procuring long lead essential conveyor material as part of
enabling work will allow for construction to stay on schedule. This request is a limited initial
request to support the procurement of long lead items, and authorize the construction for two
key pieces of work that require early action. The project will return to Commission in Q4 to
request full authorization of the program.
COMMISSION AGENDA – Action Item No. __8d__ Page 2 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
JUSTIFICATION
Early Work Construction Contract:
The baggage handling system is a complicated system that requires detailed and methodical
sequencing plans for minimal disruptions to airline and airport operations. Enabling construction
work packages and construction of the D1 and C94 transfer lines will allow the project to perform
work that will prepare the construction groundwork for minimal disruptions. The project team
is working closely with the Contractor, Airline Technical Representative (ATR), and Port
stakeholders to develop the sequencing plans.
Procure Long Lead Items:
Procurement of essential long lead conveyor material as part of the enabling work package is
critical to the project’s schedule. Currently the lead time for the conveyor material is upwards of
40 weeks. In collaboration with the Contractor, the long lead essential conveyor material has
been identified for the initial steps in the sequencing plan and planned for an on-time material
delivery allowing for construction to start on time.
Project Authorization Increase:
The cost of the early work construction package including the purchase of conveyor material is
within our current budget and estimated at $7,500,000. We are requesting authorization for
this initial request to support the procurement of long lead items, authorize the construction for
two key pieces of work that require early action, and allow for the contracting of the special
inspection firm. The project will return to Commission in Q4 to request full authorization of the
program.
Diversity in Contracting
Baggage Optimization Phase 3 construction contracts have a 4% Women and Minority Business
Enterprises (WMBE) goal.
DETAILS
Scope of Work
Baggage Optimization Phase 3 will conclude 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 into the centralized screening, including the
International Arrivals Facility (IAF), and finalize the sortation and ticket counter connections.
Schedule
Phase 1 was completed in 2020. Phase 2 is currently under construction and scheduled to be
completed in Q3 2024. Phase 3 design is under way along with GC/CM preconstruction activities
and construction is scheduled to complete in Q2 2027.
COMMISSION AGENDA – Action Item No. __8d__ Page 3 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Phase
Construction
Phase 1
Q1 2016 – Q2 2020
Phase 2
Q3 2020 – Q3 2024
Phase 3
Q4 2024 – Q2 2027
Activity
Commission design authorization
2013 Q1
Design start
2022 Q3
Commission construction authorization
2024 Q4
Construction start
2024 Q4
In-use date
2027 Q2
Cost Breakdown
This Request
Total Project
Design
$0
$80,731,152
Construction
$7,500,000
$874,268,848
Total
$0
$955,000,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not proceed with approval of early work construction contract. Proceed with
approval of only the procurement of essential conveyor material that have long lead times.
Cost Implications: $4.3M for the initial purchase of long lead items.
Pros:
(1) Procurement of essential conveyor material with long lead times allows the Port to get
into the manufacturing queue in hopes of on time delivery for construction to start.
Cons:
(1) Early work construction contract not being approved could cause more construction
shutdowns to be more impactful to Airline and Airport operations.
This is not the recommended alternative.
Alternative 2 – Do not proceed with approval of purchasing of essential conveyor material with
long lead times.
Cost Implications: $4,500,000.
Pros:
(1) No further project budget would need to be approved at this time. Design would
continue until construction is ready to begin and full construction authorization is
needed.
COMMISSION AGENDA – Action Item No. __8d__ Page 4 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
Cons:
(1) A delay of 40 weeks or more waiting for essential conveyor material to arrive will delay
our construction schedule and have budget impacts.
This is not the recommended alternative.
Alternative 3 – Approve the request to proceed with the authorization of enabling construction
work and early work packages for Baggage Optimization Phase 3 including construction of D1 and
C94 transfer lines, procure long lead items, and increase the project authorization by $7,500,000.
Cost Implications: $7,500,000.
Pros:
(1) Authorizing the Contractor to perform enabling work allows for work to be performed in
a less impactful manner for airport and airline operations.
(2) Authorization for the Contractor to purchase long lead items aids in ensuring the
essential conveyor material is ordered and under production for on time delivery to start
construction.
Cons:
(1) If the project and General Contractor do not negotiate and come to terms with a
Maximum Allowable Construction Cost. The Port would have to warehouse and store the
pre-purchased material for an extended duration. The monthly charge for the warehouse
space is estimated at $30,000 per month.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Budget /
Estimated
Project Cost
Current
Authorization
Notes
Phase 1 $101,375,000 $101,375,000
•
Complete
Phase 2 $395,675,000 $415,675,000
•
Anticipated Savings of $20M (Reflected in Ph 3
Budget)
.
• Substantial Completion Q3 2024.
Phase 3 $432,450,000 $47,215,000
•
Commission Range presented April 2022 is
$400M
- $500M.
• MII anticipated Q3 2024.
Executive
Management
Reserve
$10,000,000 $10,000,000
CCE Transfer
$15,500,000
$15,500,000
•
Commission approval April 2022.
COMMISSION AGENDA – Action Item No. __8d__ Page 5 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
TOTAL
$955,000,000 $589,765,000
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
$7,500,000
$0
$7,500,000
Total authorizations, including this request
$596,799,000
$466,000
$597,265,000
Remaining amount to be authorized
$357,335,000
$400,000
$357,735,000
Annual Budget Status and Source of Funds
This project, C800612, was included in the 2024-2028 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 Q3 2024. The funding sources would be
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
$0.34 in 2020, $0.96 in 2024 and $2.73 in 2028
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• January 24, 2023 - 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
COMMISSION AGENDA – Action Item No. __8d__ Page 6 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
exceed 60 calendar days’ time extensions, and 3) include a Project Labor Agreement
(PLA) for Phase 3.
• 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.   
• 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.   
COMMISSION AGENDA – Action Item No. __8d__ Page 7 of 7
Meeting Date: March 26, 2024
Template revised June 27, 2019 (Diversity in Contracting).
• 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.