Myers-Lawson School of Construction

Bishop-Favrao Hall (0188)

College of Architecture and Urban Studies Blacksburg, Virginia 24061
540/231-3804 Fax: 540/231-7339
and the College of Engineering E-mail: mlsoc@vt.edu
www.mlsoc.vt.edu
MLSOC Case YY-H##

This case study was prepared by graduate assistants Doran Bosso and Martha Gross under
the supervision of Prof. Michael J. Garvin as the basis of discussion and not to illustrate either
effective or ineffective handling of infrastructure development, financing, or management.

JFK AIRTRAIN

“There were 21 prior proposals [for airport access]—20 of which had failed. We looked at
why they had failed and it came down to two things: community opposition or funding. So we
realized that if we came to the table with funding and could keep community opposition
under control, we could do something.” —Port Authority representative

“Everyone was motivated to make things work. No one wanted to be the bad guy in terms of
stopping the project.” —New York State DOT representative

FROM GOLF COURSE TO INTERNATIONAL GATEWAY

John F. Kennedy International Airport (JFK) is one of the premier international and
domestic airports in the United States. Almost 100 airlines from 50 countries operate
regularly-scheduled flights out of this transportation hub on the southeastern edge of New
York City (see Figure 1). In 2009, about 46 million travelers passed through this airport.
However, the facility was not originally designed to handle this volume of passengers.
When it opened in 1948 on the site of a former golf course named Idlewild, it consisted of a
“ragtag collection of Quonset huts that the New York Times called ‘one of the worst
terminal buildings in the world.’ Passengers at Idlewild suffered ‘physical, mental, and
emotional indignities which were barely acceptable in the days of the covered wagon.’”
Lacking the finances to develop the airfield, the city of New York leased the ramshackle
facility to the regional Port Authority in hopes of improvements (Dunlap 1997).

Invent the Future

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 2

Figure 1: Location of John F. Kennedy Airport

(www.visitingdc.com/images/jfk-airport-map.jpg)

These improvements soon followed: the flagship International Arrivals building was
added in 1957, and Terminals 3 and 5 opened in 1962. A year later, the facility was
renamed the John F. Kennedy International Airport in memory of the former President.
Terminal 6 soon opened for business in 1970. Although JFK had surpassed Newark Inter-
national by the mid-1980’s as New York City’s leading airport, competition was increasing:
airline deregulation in 1978 had allowed other airports to claim destinations which
previously belonged only to JFK. Further, the facility was beginning to show its age: utility
systems and roadways designed to handle 15 million passengers per year were straining
under the 1990 demands of 31 million annual passengers (Dunlap 1997)—and this growth
was poised to continue at a rapid rate.
The airport’s reputation as overcrowded, uncomfortable, and inaccessible grew, and
passengers fretted about the inconvenience of transferring between the airport’s far-flung
terminals (see Figure 2). “I figured Kennedy Airport would have had more prestige, more

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 3

class,” complained one international traveler after a long outdoor walk between Terminals
4 and 5 (Steinberg 1991). Other passengers hearkened back to airport’s earlier days: “I
remember as a youngster in the 1950’s and 60’s, it was sparkling and it was clean,” said
Richard T. Anderson, president of the Regional Plan Association. “You were entering New
York’s best and most modern facility. It’s certainly not that now” (Dunlap 1997).

Figure 2: Location of JFK Terminals

(www.carhire4lower.com/usa/location_images/New_york_jfk_airport_terminal_map.jpg)

Not only were the airport’s terminal facilities inadequate for the rapidly increasing
volume of passengers, but the transportation infrastructure for reaching JFK presented
challenges as well. Frequent traffic congestion on Van Wyck Expressway, the primary
access road, created a nightmare for many travelers: rush-hour trips to the airport from
Manhattan often took up to two hours.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 4

To address JFK’s site constraints and revive its ability to compete as an international
gateway, the Port Authority conceived an ambitious plan of upgrades, including a gigantic
central terminal linked to outlying terminals by a monorail. But the airlines balked at the
$1 billion price tag for “JFK 2000,” and the plan was shelved in 1990. Instead, the airlines
carried out extensive improvements to their own terminals, and other expansions were
added to increase airside capacity and provide new taxiways. Terminal 1 reconstruction
was completed in 1998, and Terminal 4 opened in 2001 to replace the tired 1957 Inter-
national Arrivals Building. Other terminals were similarly upgraded as well.
Although these improvements increased JFK’s passenger capacity, they did little to
address the difficulties of reaching the airport by ground transport from surrounding areas.
A new road, the JFK Expressway, was built to help relieve the Van Wyck traffic congestion,
and in 1992 the Port Authority introduced shuttle buses to speed passengers’ trips
between terminals. Still, it was widely believed the airport’s traffic problems would persist
until it was connected by rail to mass transit. Plans for such a link had been proposed as
early as the 1960’s, and a comprehensive 1972 plan supported by New York Governor
Nelson Rockefeller anticipated connecting both the JFK and Newark airports to the city’s
rail lines (Hughes 1974). In September 1991, Governor Mario Cuomo promoted a $1.6
billion light-rail initiative linking the JFK and LaGuardia airports with the subway and the
Long Island Rail Road in Queens (Steinberg 1991). Despite these decades of effort, none of
these plans came to fruition.
In 1996, the governors of New York and New Jersey enacted a mandate to accelerate
development of a project to address this issue. The resulting concept was the AirTrain JFK,
an 8.1 mile rapid-transit system which would not only connect the distant terminals and
parking areas at the JFK airport, but also link the facility to two existing stations, Jamaica
and Howard Beach, which serviced different lines of the Queens rail and subway network.
Although the planners’ original goal had been to achieve a “one-seat ride” from Manhattan
to the airport, they recognized the “two-seat” transfer from the subway to the AirTrain
would provide a feasible and fundable intermediate solution. With the AirTrain, travelers
from all over New York City would finally be able to reach JFK without driving. Figure 3
maps this rail link and its connections.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 5

Figure 3: JFK AirTrain Route and Subway Connections

(www.visitingdc.com/images/jfk-airport-parking.jpg)

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 6

The system was to incorporate three separate routes: the Jamaica line, the Howard
Beach line, and the Central Terminal Area (CTA) loop. The first two, providing connections
to New York’s subway system, would circulate around the airport’s terminals counter-
clockwise, while the CTA train ran clockwise on a separate inner-loop track. At peak
periods, trains would depart the Jamaica and Howard Beach stations every four minutes,
resulting in a maximum two-minute wait time for passengers traveling between terminals.
The AirTrain was to be free for travelers within the airport grounds, and a $5 charge would
be levied for passengers exiting the system at Jamaica or Howard Beach for transit
connections there.

PRE-PROCUREMENT ISSUES
Having decided on the AirTrain as the solution for JFK’s ground-transportation
challenges, the Port Authority prepared to issue a request for proposals (RFP) for the
project. But as illustrated in the opening quote, the two primary issues which had stymied
previous efforts to develop a rail link to the JFK airport were community opposition and a
lack of funding (de Cerreño 2008). To ensure a successful procurement, the Port Authority
gave careful attention to both these challenges.

Community Coordination
Initial opposition arose from communities bordering the AirTrain’s proposed route
to the Jamaica station along two miles of the Van Wyck Expressway. Residents along this
thoroughfare were particularly concerned about the aesthetic and noise impacts of an
elevated train system in the road’s median. In consideration of these needs, the Port
Authority incorporated mitigating elements in the design and provided for additional
beautification along Van Wyck Expressway. Further, a regional economic development
package was offered to help offset the unavoidable nuisances during construction, and the
AirTrain contract included provisions stipulating the use of local businesses for a portion of
the work. These efforts were linked to obtaining the necessary approvals for the project’s
impacts to the natural as well as the built environment, with a draft Environmental Impact
Statement (EIS) released in July 1994 and a final EIS issued in May 1997.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 7

Another significant element in community coordination was the city’s Uniform Land
Use Review Procedure (ULURP), a process established in 1990 to govern site selection for
large capital projects, authorization of real-property improvements, and zoning issues.
This approval was necessary before design and construction could begin on AirTrain
segments outside Port Authority property. The ULURP required separate reviews and
approvals (with public hearings at various stages) by the Department of City Planning,
Community Board, City Planning Commission, Borough President, City Council, and finally
the Mayor. Although the AirTrain concept eventually navigated its way successfully
through these checkpoints, the time-consuming process resulted in overall schedule delays.
A project of the AirTrain’s magnitude required not only sensitivity to community
and city needs, but also coordination with numerous state and local agencies. The Port
Authority negotiated memoranda of understanding with a wide range of entities including
New York City Transit, Long Island Rail Road (LIRR) , New York State DOT, New York City
DOT, and area utility companies. One example of these agreements was the Port
Authority’s arrangement with the New York State DOT to align schedules and share costs
for construction along the Van Wyck corridor, since construction of the AirTrain’s
guideway in the ten-foot-wide median could be coordinated with the DOT’s planned
roadway improvements to decrease the impact on the traveling public. Another agreement
involved the Port Authority’s provision of a new European-style train shed for the LIRR at
its Jamaica station (de Cerreño 2008).

Project Funding
Even with the community’s support, the Port Authority was also faced with the
decades-old question of how to fund the project, whose cost was estimated at $1.9 billion.
One attractive option was to use revenues from the Passenger Facility Charge (PFC), a
$3.00 fee added to the ticket price for every outgoing passenger from New York’s airports.
Although the PFC’s purpose was to support projects enhancing safety, security, and
capacity, it had never previously been used for access improvements.
In 1998, the Air Transportation Association filed a lawsuit to block the project,
contending the PFC monies could be applied only to airport and terminal improvements.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 8

After a lengthy review, the Federal Aviation Administration (FAA) concluded mass transit
was eligible for PFC funding, but only if the system was physically on airport property.
Hence the Port Authority subsequently acquired the right-of-way along the Van Wyck
Expressway median all the way to the Jamaica station, so that the AirTrain would indeed be
constructed on airport grounds. Even so, the FAA also determined some elements of the
proposed project were not eligible for PFC funding, such as those enabling the system’s
future compatibility with the adjoining subway and commuter-rail networks (TSTC 1999).
This Air Transportation Association lawsuit, although won by the Port Authority,
interrupted the ULURP process, delaying the start of major design and construction by
about six months. Ultimately, $1.2 billion of the project’s cost was funded through PFC
revenues, while the remaining $0.7 billion was raised by revenue bonds issued by the Port
Authority. These bonds covered, among other outlays, the “ineligible costs” flagged by the
FAA. No federal or state subsidies were provided for the system’s operating expenses.

PROCUREMENT STRUCTURE

Selection of DBOM Delivery Method

The customary method of procurement for such infrastructure projects involved
negotiating separate contracts with a designer, civil contractor, equipment supplier, and
system operator. Yet the AirTrain’s massive scale led the Port Authority to consider an
integrated delivery approach which would not only combine design and construction
responsibilities in one entity, but also allow the supplier of complex train components to
work together with the designer to develop an efficient and easy-to-operate rail system.
To bring together its numerous departments which would be involved in delivering
this project, the Port Authority created a Priority Capital Programs Office to manage the
AirTrain initiative and develop the procurement approach. Its director, Anthony Cracchiolo,
recognized the effort was particularly ambitious due to its broad scope, construction in a
congested area, and aggressive schedule: the entire undertaking was originally slated for
completion 55 months after the notice to proceed. Hence he felt it was well suited to the
design-build-operate-maintain (DBOM) delivery method:

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 9

For a project of the scope and magnitude of the AirTrain, the Port Authority decided
that the DBOM process was the most effective way to implement the project. The
key reasons behind this decision were the project implementation schedule and
reduced risks to the Port Authority by having a single contractor entity responsible
for delivering and operating and maintaining the system. (Cracchiolo 2001)

In particular, a requirement for the contractor to operate the AirTrain for at least
five years would help achieve the Port Authority’s parallel goal of obtaining a user-friendly
and easy-to-maintain design. Cracchiolo noted several other potential advantages of DBOM
delivery which appealed to the Port Authority:
– A single point of responsibility, from the owner's perspective
– Elimination of gaps in coordination/responsibility, from the owner’s perspective
– Theoretically greater simplicity in contract form, terms, schedule, and price
– Alignment of designers’ and constructors’ interests by avoiding separate contracts,
thus reducing conflicts and claims
– Streamlined procurement, design, and construction, which enabled the following:
• Significant time savings due to fast-tracked contract
• Overall reduction in project costs due to shortened project schedule

Request for Proposals

On September 12, 1996, the Port Authority issued a Request for Proposals (RFP)
based on the DBOM approach. The AirTrain RFP contained five sections:
a) Proposal Requirements
b) Proposal Requirements – Attachment A
c) Form of Contract & General Provisions
d) Management Provisions
e) Conceptual Information Drawings
The Proposal Requirements contained the formal invitation to bid and outlined the
scope of work, instructions on bidding, evaluation methodology, technical proposal,
operations and maintenance (O&M) proposal, contract award process, and a brief overview
of the other documents. Also detailed was the required composition of the lengthy
proposal, which was to be submitted as five separate packages (Table 1).

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 10

1. Proposal Forms 4. Technical Proposal

• Team Experience • System & Vehicle Characteristics
• System Capacity Charts o Vehicle Performance
• Price Forms o Passenger Comfort
• Operations & Maintenance Charts & Forms o System Performance
• Bonding Forms o System Capacity

2. Management Proposal • System & Subsystem Design

• Financial & Legal Information o Proven Technologies
• Organizational Structure & Resources o Facility Infrastructure Design
• Proposer’s Approach o Station Requirements – Architecture
• Proposer’s Experience o Constructability
o Safety & Site Security
3. Price Proposal o Interface Management
o Scale Model, Renderings & Slides
• Overall Price Summary
• Fixed Price, Phase I – Preliminary Eng.
5. Operations & Maintenance Proposal
• Fixed Price, Phase II – Final Design &
• General Operations
Construction
• Maintenance Plan
• Yearly Fixed Prices – O & M
• Organization & Staffing
• Fixed Prices for Bonding & Insurance
• Fixed Prices for Options

Table 1: JFK AirTrain Proposal Packages & Contents

Scope of Work
The scope of work to be addressed in bidders’ RFP responses included the design,
construction, procurement, installation, testing, commissioning, operations, and
maintenance of the rail system, as well as the light-rail vehicles, control systems, and
associated storage and service facilities. Ten stations were included in the contract: six at
the airport’s central terminal area, and one each at Federal Circle (the rental-car area),
Lefferts Blvd. (the employee/long-term parking lot), Howard Beach, and Jamaica. Because
all the stations would be elevated and thus highly visible, their aesthetic form was
important to the Port Authority, as was the design of the concrete aerial guideway
structures which carried the majority of the system’s tracks. The contractual documents
for the AirTrain JFK procurement relied heavily upon performance criteria (for instance, all
infrastructure was to have a 50-year service life), rather than descriptions to define the
work necessary.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 11

Because it was hoped a “one-seat ride” to Manhattan could still be realized in the
future, the AirTrain was designed to run on standard-gauge track, powered by a 750-volt
third rail, to match the surrounding systems. Even so, some aspects of the AirTrain would
have to be modified to accommodate this expansion: unlike the subway and the Long Island
Rail Road, the AirTrain cars were fully automated, with no drivers, and were propelled by
linear induction motors instead of typical rotary motors.
The project was scheduled in three phases: Phase I entailed the preliminary design
work, which would be reviewed when completed at a reasonable level of detail. Phase II
involved the final design and construction of the system, with design reviews by the Port
Authority at the 30%, 65%, 80%, and 100% completion levels. The Port Authority had 21
days from design submission to return these documents to the contractor with approval or
changes. Phase III was the operations and maintenance stage of the agreement.
The construction schedule was prescribed in some detail due to the necessity of
maintaining airport access, as well as accommodating the availability of different
properties involved in construction. The contract set strict scheduling requirements, with
liquidated damages for late completion of the rail lines to Jamaica and Howard Beach. If a
substantial delay in service occurred, the Port Authority retained the right to cancel the
remainder of the contract.

System Operations and Maintenance

The operating period, Phase III of the project, comprised the first five years of
operations and maintenance of the railway system. The Port Authority subsequently had
the option to renew the operations and maintenance service contract for up to two
additional five-year periods, a total of up to fifteen years.
The contractor’s performance during this period was to be evaluated in terms of
Daily Service Availability (DSA), a score based on three daily metrics for each route:


 
  
 



1) On-Time Performance (OTP) = 
  
 


 



  

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 12


 
  

 



2) Fleet Availability (FA) =

  

 




 
  
  


3) Station Availability (SA) =


  
  



The Route Daily Availability (RDA) was then computed by multiplying the OTP, FA,
and SA results for that route. For example, if a route’s daily OTP was 98.0%, FA was 99.0%,
and SA was 100%, the RDA for this route would be 97.0%. The Daily Service Availability
for all three routes—the Jamaica line, Howard Beach line, and Central Terminal Area
loop—was calculated according to the following weighted average:
 
DSA =  RDA 


+  RDA 
 

 +  RDA !"#

The serviceability requirements for the contract’s performance criteria were quite
stringent. The contractor would be awarded a 5% bonus for each month that the DSA was
at least 99.7%. For any monthly DSA between 99.30% and 99.69%, the contractor would
receive the full amount of the operations and maintenance fee. In any calendar month in
which the Service Availability was less than 99.30%, the contractor fee would be reduced
by a pre-determined percentage. For instance, a service level of 97.50% would correspond
to a 47.5% deduction in the contractor’s monthly fee.

Payment Mechanism
The contract’s payment mechanism incorporated both progress payments and
milestone payments. For the infrastructure portions of the work, the contractor was paid
on a percentage-complete basis of its progress. For the systems elements, such as controls
development and train testing, progress percentages would be more difficult to measure;
instead, these portions of the work were reimbursed through lump-sum payments when
certain milestones, which were mutually established by the owner and contractor, were
achieved (Cracchiolo 2001).
For compensation during the system’s operating period, the contract documents
asked bidders to specify a separate lump-sum bid for each year. These amounts were
divided by twelve and paid by the Port Authority in the form of monthly installments

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 13

throughout each year of operations. Although a pre-procurement industry review had

explored the alternate possibility of granting farebox receipts to the contractor as sole
compensation for operations-period costs, no proposers were interested in assuming the
revenue risk for the system. Hence all operating revenues were to be returned to the Port
Authority, and the compensation during the operations phase was structured as
performance-linked availability payments instead, as noted above (Cracchiolo 2001).

PROPOSAL EVALUATION AND AWARD

With the governors of New York and New Jersey having jointly mandated this
project following decades of previous failures, there was now especially close attention
focused on the AirTrain procurement. The significance of the endeavor was reflected in the
DOT representative’s opening quote above, “Everyone was motivated to make things work.
No one wanted to be the bad guy in terms of stopping the project” (de Cerreño 2008). In an
effort to “make things work” and ensure the final system would indeed deliver what
everyone hoped, the Port Authority developed a detailed evaluation process (see Exhibit 1
for excerpt) which jointly considered proposals’ cost and technical aspects in selecting a
contractor to make this project a reality.

Selection Criteria
This process involved three phases, conducted by an evaluation team (consisting of
Port Authority employees and consultants from Parsons Brinckerhoff and Booz-Allen) and
a selection committee (Port Authority personnel):

1) Initial screening and establishment of the competitive range;

2) Competitive negotiations and a call for best and final offers; and
3) BAFO evaluation and contract award.

Following a preliminary review of the proposals to establish their responsiveness,

the first phase developed two evaluation criteria: a weighted score based on proposal
quality, and a net-present-value amount based on proposal price.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 14

GROUP CRITERIA SUB-GROUP CRITERIA

1. Management Financial and Legal Information

Proposer’s Organizational Structure and Resources
Proposer’s Approach
Proposer’s Experience
2. Price Lump-Sum Price – Phase I Preliminary Engineering
Lump-Sum Price – Phase II Final Design & Construction
Lump-Sum Price – Phase III Contractor O&M
Fixed Prices for Options
3. Technical System and Vehicle Performance Characteristics
System and Subsystem Design (and other features)
4. Operations and Technical Adequacy
Maintenance

Table 3: JFK AirTrain Selection Criteria for Weighted Scores

For the weighted score, the selection committee assigned percentage values totaling
100% to four group criteria, listed in Table 3. Each sub-group criterion also received a
further weighting, summing to 100% within each group; but none of these weights were
divulged to the proposers. Although the RFP did note that the order of the group criteria
signified their relative importance (with Management receiving the most consideration,
and Operations/Maintenance the least), the prioritization of the sub-group criteria was not
indicated. Based on input from the evaluation team, the selection committee then assigned
numerical scores from 1 to 100 to each sub-group item. Multiplying the item scores by
their respective percentages yielded an overall weighted score for each proposal.
For the second evaluation factor, a total net present value (NPVT) amount based on
proposal price was calculated from two sub-components: NPV1 + NPV2 = NPVT. NPV1
represented the Port Authority’s payments to the proposer throughout the span of the
contract; this included amounts for the base light-rail system, payments for O&M services,
and the additional cost of any requested options. NPV2 represented Port Authority
expenses for obtaining any items which a proposer excluded from its scope of work, the
value of which would be established by the Port Authority. The sum of these two figures
yielded each proposer’s total equivalent price, or NPVT. Any financial impacts resulting
from a proposer’s deviations from the stated scope would also be included in the NPVT.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 15

Upon considering all proposers’ weighted scores and NPVT prices, the selection
committee then established a competitive range of price/score combinations from which it
could either select a winner or negotiate further with selected proposers. Even proposers
whose price/score combination fell outside this range were not necessarily dismissed from
the procurement: the Port Authority could request they modify their proposals to bring
them into this range, or it could also initiate negotiations with teams considered capable of
eventually being included in the competitive range.
The second step in the selection process involved competitive negotiations and a
call for best and final offers (BAFOs). Each proposer was invited for a private meeting with
the selection committee and/or evaluation team to discuss the proposal and answer
questions. Based on these discussions, the Port Authority could revise any elements it
chose in the RFP or contract documents, then call for BAFOs based on the modified
procurement terms.
The third and final step of the selection process was the BAFO evaluation and
contract award. After assessment of the revised offers and calculation of new weighted
scores and NPVT prices, the findings were presented to the Port Authority commissioners
for their consideration. The commissioners would then award the contract to the proposer
who, in their opinion, could perform the work in the best interests of the Port Authority.

Responses to the RFP

Responses to the September 12, 1996 RFP were initially due on January 10, 1997,
but the proposal deadline was delayed by numerous addenda clarifying the procurement,
with the eleventh and final addendum eventually issued on September 11, 1997. Even
then, the technical provisions and contract drawings were developed only to the 5-10%
level of design (Cracchiolo 2001). The preliminary nature of the project’s scope left
substantial uncertainties which made lump-sum contract pricing very difficult. As a result,
the five teams which submitted proposals for the AirTrain (Table 2) included large
contingencies in their bids to cover the many risks and unknowns.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 16

CONSORTIUM NAME CONSORTIUM MEMBERS

AirRail Transit Consortium Slattery Skanska, Koch Skanska, Perini, STV, Bombardier
JFK Link Fluor Daniel, GEC-Alstom, Morse Diesel
JFK Express Transit (JET) Schiavone, Defoe, Halmar, Parsons, Siemens, Matra
Raytheon-Ansaldo Raytheon, Ansaldo
Sky Rail Systems Yonkers, Granite, Turner, ICF-Kaiser, ABB Daimler-Benz

Table 2: Proposer Teams for JFK Airtrain

The Port Authority felt these prices were unreasonably high and rejected all five
proposals. Two teams, JFK Link and Air Rail Transit Consortium, were nevertheless
shortlisted and invited to prepare new offers. The resulting bids were much closer to the
Port Authority’s desired range, and following competitive negotiations, the contract was
awarded to Air Rail in May 1998.
Recognizing the impossibility of substantially defining the project’s risks in the
limited procurement time available, the Port Authority instead established a $129 million
contingency fund to cover several of the largest unknowns (Cracchiolo 2001):
– Contaminated and hazardous material disposal
– Changed subsurface conditions
– Maintenance and protection of traffic
– Utility relocation
– Idle salaried workers and equipment
– Various delay events not due to contractor (up to one year)
– Conditions and precautions for construction work on railroad property
Not only would the Port Authority cover all costs related to these items, but to
incentivize the winning proposer to manage these risks efficiently, the Port Authority also
agreed to allot the contractor 40% of the amount remaining in the contingency fund at the
end of the project.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 17

CONTRACT EXECUTION
Construction of the AirTrain began in May 1998 but encountered numerous delays,
the largest of which occurred in September 2002 after the fatal derailment of a test train.
Following the investigation of this accident, whose financial impact eventually totaled
$7.65 million (NTSB 2003), testing resumed in April 2003. The delays combined to push
the opening of the JFK AirTrain back to December 17, 2003, about a year behind schedule.

Figure 4: Daily Service Availability – First Two Months of Operation

(Plate 2005)

When the system opened, its initial service performance fell short of contract
specifications (see Figure 4). Many of these service interruptions were due to issues with
the vehicle on-board computer, which were quickly resolved with software upgrades. By
May 2004, the system’s daily availability averaged near the contractual requirements. The

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 18

Port Authority was satisfied with the operator’s overall performance level and eventually
exercised its option to extend the Phase III contract another five years when the initial five-
year operations term expired in 2008 (CBC 2008).

Additional Lessons Learned

Although some transferable concepts from the AirTrain procurement are illustrated
above, additional guidance for structuring future DBOM contracts can also be highlighted.
One of these lessons involves the schedule impact of the project’s design review and
approval process. The AirTrain contract required Port Authority reviews at the 30%, 65%,
80%, and 100% levels of design, an approach perhaps suitable for customary public-works
projects but an impediment to fast-tracked construction such as the AirTrain. To maintain
the project’s aggressive schedule, the contractor sometimes resorted to “build-design,”
seeking design approvals after the fact, due to the lengthy review and approval periods.
One recommendation for future DBOM projects was a modified and accelerated design-
submittal process (Cracchiolo 2001; Englot and Bakas 2002).
Another lesson stemmed from the contract’s vague aesthetic-design requirements
for the AirTrain’s ten stations: “...the Contractor shall address these aesthetic issues with
the same degree of care that will be given to the more easily evaluated technical aspects of
the System. This means including good architects, signage and graphic designers, site
planners and others on the design-construct team that will contribute to the aesthetic
quality of the end result.” The Port Authority was dissatisfied with the contractor’s station
designs, yet Air Rail claimed it had indeed followed the contract’s stipulations. Roughly
$40 million of changes and claims resulted, which were eventually resolved only after
extensive negotiations and schedule delays. In retrospect, the Port Authority’s program
director underscored the necessity of carefully matching scope definition to the design
products involved. He recommended developing performance specifications for system
components and functional specifications for infrastructure components, with elements
such as aesthetics defined to the full extent possible (Cracchiolo 2001).

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 19

CONCLUSION
Although the number of fare-paying AirTrain passengers at startup was less than a
quarter of initial estimates of 34,000 per day, ridership increased steadily. By 2006,
around 11,300 daily paying passengers used the system, plus four times as many patrons
riding the free AirTrain shuttle service between terminals—a total of eleven percent of the
airport’s travelers. By mid-2008, the AirTrain carried around 14,000 revenue-paying
passengers daily. Even though the AirTrain’s fare receipts have not come close to covering
operating costs, with initial losses averaging around $30 million per year, the Port
Authority considers the AirTrain primarily a service for airport passengers rather than a
profit-generating venture.
Development of the “one-seat ride” from Manhattan to JFK is under consideration
again, with a scoping document having been published by the New York’s Metropolitan
Transportation Authority in 2005. Other enhancements are also underway for making
AirTrain travel more attractive. Through an extension of the Long Island Rail Road,
AirTrain passengers connecting at the Jamaica station will soon have direct access to the
Grand Central Terminal in Manhattan; this “East Side Access” project is slated for
completion in 2016.
Despite the complexity of its procurement, the AirTrain has successfully provided
many benefits to New York travelers. The uncertain-duration, up-to-two-hour ride from
Manhattan to the airport has dropped to 45 reliable minutes, and the circuit around the
airport’s terminals has decreased from 30 minutes to eight minutes. Even with a few
dollars’ additional subway fare, the AirTrain’s $5 rate provides a welcome alternative to
the $50+ taxi charge for traveling between Manhattan and JFK. With the AirTrain, New
York finally solved the decades-long challenge of achieving direct rail access to JFK, a long-
awaited benefit for countless travelers each year.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 20

REFERENCES
de Cerreño, A. L. C. (2008). “AirTrain JFK.” Integrated transportation and land use planning:
facilitating coordination across and among jurisdictions. Rudin Center for Transpor-
tation Policy and Management, NYU Wagner School of Public Service, New York.

Cracchiolo, A., and Simuoli, V. (2001). “JFK AirTrain: project management issues on a large
DBOM project.” Proc., ASCE 8th Annual Conference on Automated People Movers,
San Francisco, CA.

Citizens Budget Commission (2008). “How public-private partnerships can help New York
address its infrastructure needs.” Report, November 2008, New York.

Dunlap, D. A. (1997). “A ‘new’ Kennedy airport takes wing.” New York Times, October 26.

Englot, J. M., and Bakas, P. T. (2002). “Performance/design criteria for the AirTrain JFK
guideway.” Proc., AREMA Annual Conference & Exposition, Washington, DC.

Hughes, J. W. (1974). “Realtors, bankers and politicians in the New York/New Jersey Port
Authority.” Society, 11(4), 63-70.

National Transportation Safety Board. (2003). Railroad Accident Brief #DCA-02-FR-014,

describing September 27, 2002 incident on AirTrain-JFK in Jamaica, New York.

Metropolitan Transportation Authority (MTA). (2005). “Lower Manhattan-Jamaica/JFK

Transportation Project: Scoping Document,” June 2005. <www.mta.info/mta/
planning/lmlink/documents/scoping.pdf> (June 15, 2010).

Plate, S. (2005). “AirTrain JFK: the first nine months of operations.” Proc., ASCE 10th
Annual Conference on Automated People Movers, Orlando, FL.

Port Authority of New York and New Jersey. (1996). “Request for proposals: design, build,
operate and maintain Jamaica-JFK with Howard Beach Light Rail System (LRS),”
Contract No. LRS-100.001, September 12, 1996.

Rodriguez, J. M., Hedayati, M., Taddeo, A., and Parks, J. K. (2004). “Precast concrete light rail
system provides mass transit solution for JFK International Airport.” PCI Journal,
Jan.-Feb. 2004, 32-44.

Tri-State Transportation Campaign (1999). “FAA decision: some AirTrain funds blocked,
continues history of bad planning.” Mobilizing the Region, Issue 240, October 8.

Steinberg, J. (1991). “Port Authority plans changes at Kennedy.” New York Times,
December 28.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 21

Exhibit 1: Excerpt from RFP Proposal Requirements (pp. 13-17)

PART 2: PROPOSAL EVALUATION METHODOLOGY

2.1 GENERAL

The Port Authority intends to evaluate Proposals received in response to this RFP through a
multiple-step competitive negotiation procurement process.

2.1.1 Initial Screening and Establishment of the Competitive Range

The first step will involve the review of Proposals to establish if they are responsive submittals.
Each Proposal will be reviewed by the Evaluation Team to determine conformance with the
instructions and requirements of the RFP and Contract Documents. The Evaluation Team will
report its findings to the Selection Committee. In its sole discretion, the Port Authority’s
Selection Committee may direct that additional information or clarification be sought from any
Proposer whose submittal appears to be unresponsive, in order to make that submittal responsive.
After obtaining such additional information and/or clarifications, the Port Authority’s Selection
Committee shall make the final and binding determination of which Proposals are deemed
responsive. Proposals deemed non-responsive by the Selection Committee will be returned to
their respective Proposers.

Submittal of a Proposal will signify that the proposer has accepted the whole of the Contract
Documents. Conditional Proposals, or those which are not consistent with or which take
exceptions to the Contract requirements, are strongly discouraged; such Proposals might be
determined by the Selection Committee to be: (1) unacceptable from the very outset and
therefore non-responsive; or (2) capable of being deemed responsive subject to the
correction/modification of the conditions stated and/or exceptions made. The former will be
returned to the respective Proposers while, for the latter, the Port Authority’s Selection
Committee shall make the final and binding determination of which Proposals are deemed
responsive after obtaining such additional information and/or clarifications.

Next, for each responsive submittal, the required forms, and the Management, Price, Technical
and Operations and Maintenance Proposals will be reviewed by the Evaluation Team who will
again report its findings to the Selection Committee. Numerical scores, based upon pre-
established criteria, will be qualitatively established by the Selection Committee, taking into

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 22

account the quality and completeness of the materials submitted as well as exceptions taken or
deviations made. Several sets of calculations will then be made and the results will be presented
to Selection Committee:

The first group of such calculations will be two net present value (NPV) computations, NPV1
and NPV2, that will be added together to produce a total NPV value, hereinafter termed “NPVT”.

• NPV1 will represent the stream of payments to be paid by the Port Authority to the
Proposer over the life of the Project. NPV1 will include payments for the base LRS
Project, the costs associated with the up to 15 years of operations and maintenance
services (including Capital Asset Replacements), and the costs of Port Authority
requested options.

• NPV2 will represent the stream of payments to be paid by the Port Authority to other
parties for scope items, if any, which a Proposer has elected to exclude from the
Contract’s Scope of Work. The estimated value of such payments shall be established at
the sole discretion of the Port Authority, shall not be disclosed to the Proposer, and shall
not be subject to challenge.

The second group of calculations will be the estimated financial impacts, if any, on the Port
Authority that are projected to result from Proposer exceptions and deviations. The cumulative
value of such exceptions and deviations shall be based on the Proposer’s estimated amounts
unless these figures, in the sole discretion of the Port Authority, are deemed unrealistic, e.g., they
are judged to be understated. Where these figures affect the value of NPV1 as computed above, a
revised NPV, will be computed and added to the NPV2 value to obtain the appropriate value for
NPVT.

The Selection Committee will then array both the weighted scores and the NPVT amounts for all
of the Proposals and, its sole and absolute discretion, establish a competitive range. Proposers
with low weighted scores and high NPVT values may be dropped from further consideration for a
Contract award. Alternatively, the Selection Committee could decide that such Proposers with
low weighted scores and high NPVT values could, with some modifications to or clarifications of
their Proposals, reasonably be found to fall within the competitive range. The Port Authority
Selection Committee reserves the right, in its sole and absolute discretion, to establish the criteria
for defining the competitive range and determining which Proposers, if any, will be excluded for
further consideration.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 23

At this point, one of three outcomes could be pursued:

a) All Proposals could be rejected and a new, revised RFP could be issued. In this event, a
new procurement schedule would be issued with the revised RFP;

b) The Port Authority could decide that it is in its best interest to make a Contract award
based upon the Proposals received. The Port Authority reserves the right, in its sole and
absolute discretion, to select any Proposer in the competitive range, regardless of that
Proposer’s overall score or ranking within the competitive range and/or the Proposer’s
NPVT value; or,

c) The Port Authority could decide to enter into competitive negotiations with the Proposers
within the competitive range and/or those deemed capable of being included in the
competitive range.

2.1.2 Competitive Negotiations and Call for Best and Final Offers (BAFOs)

The second step will start with competitive negotiations with each Proposer within the
competitive range and will conclude with a call for BAFO’s. The Proposers whose Proposals are
found by the Selection Committee to be within the competitive range, or may be reasonably
made to be within the competitive range, will be notified and any questions and/or clarifications
provided to them in writing. Each Proposer will be invited for a private interview and meeting
with the Selection Committee and/or the Evaluation Team to discuss any aspect of its Proposal
and to answer specific questions posed in advance in writing and/or orally. The purpose of each
meeting will be to clarify and assure understanding of the requirements of the Contract; improve
the technical aspects of the offer in an effort to better meet specifications and/or reduce the price;
question Price Data contained in the Price Proposal; and discuss details relevant only to each
Proposal separately that may improve the proposal both technically and economically to the Port
Authority. No information, price or otherwise, will be provided to any Proposer about any of the
other Proposals. Information regarding the number or identity of Proposers who are in the
competitive range and who are participating in the interviews will remain confidential until the
Contract is awarded and executed. After each interview/meeting, a memorandum will be written
which will include all of the major elements of said interview/meeting. This memo will become
part of the file.

The Port Authority reserves the right to conduct site visits to inspect the Proposer’s facilities
and/or other transit systems which the Proposer has built and/or supplied. The Proposer will
assist the Port Authority for any such site visits. Based on these discussions, the Port Authority
may revise, as appropriate and necessary, any and all of the RFP’s and/or Contract Documents’

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 24

terms, conditions, technical and other requirements. The Port Authority reserves the right, in its
sole discretion, to decide on the revisions it may or may not make to the RFP’s and/or Contract
Documents’ terms, conditions, technical and other requirements. The Port Authority will then
issue a call for the BAFO’s which shall require, among other things, the submission of a binding
statement that the Proposer accepts the RFP’s and Contract Documents’ revised terms,
conditions, technical and other requirements in the BAFO request.

The request for Best and Final offers shall include:

1. Notice that the discussions are concluded;

2. Notice that this is the opportunity for submission of a Best and Final Offer;

3. A date and time for submission of the Best and Final Offers, allowing a reasonable
opportunity for preparation of these offers;

4. Notice that if any modification to a Best and Final Offer is submitted, it must be received
by the date and time specified for the receipt of Best and Final Offers and is subject to the
late submissions, modifications, and withdrawal of Proposals provisions in the Request
for Proposals;

5. Notice that Proposers do not submit a Best and Final Offer or a Notice of Withdrawal or
another Best and Final Offer, their immediate previous offer will be construed as their
Best and Final Offer.

2.1.3 BAFO Evaluation and Contract Award

The third step will include the final evaluation of the BAFO Proposals and another scoring. As in
Step 1, qualitative scores based upon pre-established criteria will be developed as will new NPVT
amounts. The total scores will be arrayed along with the new NPVT amounts and other
information relevant to the Proposers and their Proposals will then be presented to the Port
Authority’s Commissioners for their Contract award deliberations. These deliberations could
include presentations by some or all of the Proposers.

The Port Authority’s Commissioners shall have the right, in their sole and absolute discretion, to
award the Contract to the Proposer who, in their opinion, could perform the Work in the best
interests of the Port Authority.

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 25

2.2 SPECIFIC PROPOSAL EVALUATION PROCESS

2.2.1 Selection Committee and Proposal Evaluation Team

A Selection Committee composed of senior Port Authority staff will be established. This
Committee will make all decisions regarding: (a) the determination of each Proposal’s
responsiveness; (b) the evaluation of responsive Proposals; (c) the establishment of the
Competitive Range for the Initial and BAFO Proposals (if there is a call for BAFOs); (d)
negotiations with Proposers in the Competitive Range; (e) the evaluations of the BAFO
Proposals; and (f) the timing of when information about Proposers and the scores of their Initial
or BAFO Proposals shall be presented to the Port Authority’s Executive Director. The Selection
Committee will be assisted by an Evaluation Team which will include officers, employees and
agents of the Port Authority. The Evaluation Team will carry out the detailed reviews of the
Proposals and report its findings to the Selection Committee.

2.2.2 Evaluation Criteria – Relative Order of Importance

Four major criteria -- Management, Price, Technical and Operations and Maintenance --
hereinafter termed “Group Criteria”, shall be used to evaluate Proposals. In terms of relative
importance, Management will be the most important of the four Group Criteria, followed by
Price, Technical and Operations and Maintenance, The relative weight of importance of each of
these Group Criteria, expressed as a percentage with the sum totaling One Hundred Percent
(100%), will be established by the Selection Committee in its sole and absolute discretion prior
to the completion of the responsiveness determinations.

2.2.3 Proposal Evaluation Methodology

A Proposal Evaluation Methodology for the evaluation of responsive submittals has been
established that will produce a total weighted score for each such submittal. These total weighted
scores, developed by the Selection Committee, will be used to assist in the establishment of a
Competitive Range. The Selection Committee, in its sole and absolute discretion will decide,
based on the arrayed total weighted scores and the respective NPVT amounts, the Proposals
falling within the Competitive Range: Proposals not falling within this Competitive range will be
dropped from further consideration of a Contract award, The Selection Committee’s
determination of which Proposals will or will not be included within the Competitive Range shall
be final and irreversible.

A Proposal’s total weighted score will be computed as described in this paragraph 2.2.3. Each of
the evaluation criteria (hereinafter termed “Group Criteria”) cited in paragraph 2.2.4, below,

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution

JFK AirTrain Page 26

shall be assigned a group percentage value decided by the Selection Committee. The sum of the
group percentage values for all of the Group Criteria will total One Hundred Percent (100%).
Each Group Criterion will include one or more sub-criteria (hereinafter termed “Group Sub-
Criteria”) also cited in paragraph 2.2.5, below, which shall be assigned sub-group percentage
values, depending on their relative importance as decided by the Selection Committee in its sole
discretion. The sum of the sub-group percentage values for all of the Group Sub-Criteria will
total One Hundred Percent (100%).

The Evaluation Team will review each Proposal against all of the Group Sub-Criteria and report
its findings to the Selection Committee. Based on these findings, the Selection Committee will
agree on a numerical score, ranging between one and one hundred (1 and 100), to be assigned to
each Group Sub-Criterion for each Proposal. The product of this numerical score and the
assigned sub-group percentage value will produce a weighted value for each Group Sub-
Criterion. The product of the sum of the Group Sub-Criteria weighted values and the group
percentage value for the related Group Criterion will, in turn, result in an overall weighted score
for that Group Criterion. The overall weighted Group Criterion scores will then be summed to
obtain the grand total score.

2.2.4 Evaluation Criteria

There are four (4) Group Criteria each containing Sub-Group Criteria. The Group Criteria are:
Group I - Management; Group 2 - Price; Group 3 - Technical; and Group 4 - Operations and
Maintenance. Although prospective Proposers for this procurement were earlier pre-qualified,
based on, among other things, their qualifications in the area of managing large turnkey projects,
their management qualifications will be re-evaluated to reflect additional information provided
by the Proposers because of the breadth and scope of management requirements of this Project.
The Group Criteria and the Sub-Group Criteria therein, and only these Group Criteria, and the
Sub-Group Criteria, shall be applied to establish the grand total weighted scores of the Proposals.

The following Group Criteria and the Sub-Group Criteria will be used for the evaluation and
scoring of the responsive Proposals. The Group Criteria are listed in the order of their
importance. Note that the Sub-Group Criteria are designated with capital letters, e.g., A, B, C,
etc. and that there are two or more items, hereinafter termed “Subordinate Sub-Group Criteria”,
included under each Sub-Group Criterion. These Subordinate Sub-Group Criteria, which will not
be assigned any percentage values or weightings, will be reviewed and reported on by the
Evaluation Team in order to assist the Selection Committee in determining the numerical score
to be assigned to a Sub-Group Criteria. It should also be noted that the Subordinate Sub-Group
Criteria within each alpha-designated Sub-Group Criterion are not necessarily listed in any order
of importance. …

V I R G I N I A P O L Y T E C H N I C I N S T I T U T E A N D S T A T E U N I V E R S I T Y

An equal opportunity, affirmative action institution