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$1B MO Airport Terminal Deal in Jeopardy

Wednesday, December 20, 2017

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A $1 billion project at Missouri’s Kansas City International Airport is now up in the air after City Council tossed out an agreement with Bethesda, Maryland-based Edgemoor Infrastructure and Real Estate, the firm that was awarded the bid earlier this year.

Some Background

A contentious bidding process ended when Edgemoor nudged out firms AECOM, Jones Lang LaSalle and Burns & McDonnell for a new terminal at KCI.

Pacman5, CC-SA-BY 3.0, via Wikimedia Commons

A $1 billion project at Missouri’s Kansas City International Airport is now up in the air after City Council tossed out an agreement with Bethesda, Maryland-based Edgemoor Infrastructure and Real Estate, the firm that was awarded the bid earlier this year.

The problem, for some, was that the project was proposed as a no-bid contract by Burns & McDonnell, a local firm, leading to a public outcry when the bidding was opened up. In addition, several airlines that fly out of the airport came out in support of local Burns & McDonnell (though they did add that they’d be willing to work with any of the four teams that had bid on the project).

The process was handled differently by each company, with some releasing financial information and design renderings publicly. Others also publicly criticized the process.

According to the Kansas City Star, Karl Reichelt, an AECOM Capital senior manager, had said that the committee’s follow-up questions to bidders were “moving the goalposts” and allowing other competitors to alter proposals.

Burns & McDonnell held rallies and alleged conflict of interest, going so far as to say within recent weeks that the process should start over.

In the end, the selection committee said it recommended Edgemoor because of terminal project experience and finances, but also because the company kept a low profile.

“They were the only proposer to bring forward that idea saying we might do a 100 percent debt option, which was an intriguing idea as we try to make sure we maximize value and minimize cost,” City Manager Troy Schulte told The Star.

The Council eventually approved the pick as well and voters approved the construction during this year’s election.

So, What Happened?

Late last week (Dec. 14), a super-majority of the Kansas City Council rejected a memorandum of understanding that had been reached by Edgemoor and the council’s legal team.

The Star reported that members of the Council who posed concern cited the agreement’s vague terms, insufficient community benefits and a questionable provision that puts the city on the hook for up to $30 million, even if the deal never closes.

“There’s a reimbursement agreement that obligates the city to potentially millions of dollars, a number of those costs incurred before the election,” said council member Quinton Lucas. “There was absolutely no detail on financing. I know we want flexibility, but we also want to know what we are binding the city to, potentially for years to come.”

The Council made it clear, however, that the project isn’t scrapped and neither is Edgemoor as the chosen firm—for now.

What Happens Next?

Further negotiations are slated for this week and on Monday, two of the firms that had battled for the bid, AECOM and Burns & McDonnell, announced that they have teamed up and are waiting to step in if the council does sever ties with Edgemoor.

   

Tagged categories: Bidding; Business matters; Good Technical Practice; Government; North America; Project Management; Terminals

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