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ACCEPTING THE BID FROM HANGAR ONE AVIONICS, INC., AUTHORIZING THE CITY MANAGER TO TAKE ALL NECESSARY ACTIONS TO USE THE RECENTLY ACCEPTED $3 MILLION AWARD FROM THE STATE OF CALIFORNIA FOR THE PURCHASE A NEW POLICE HELICOPTER IN THE AMOUNT OF $2,767,415.49, AND PURCHASE ADDITIONAL ANCILLARY ITEMS NEEDED FOR AIR SUPPORT SERVICE AS INTENDED BY THE STATE AWARD
recommended action
RECOMMENDATION
It is recommended City Council approve a motion to:
1. Accept the bid from Hangar One Avionics, Inc. and authorize the purchase of a new helicopter in the amount of $2,767,415.49;
2. Authorize the purchase of additional ancillary items needed for air support program; and
3. Authorize the City Manager to take all necessary and appropriate actions to carry out the purpose and intent of the motion.
body
Summary
On August 23, 2018, a Request for Bid (PUR 18-019) was published for a “New Helicopter.” Bids were due September 13, 2018, and staff is recommending acceptance of the lowest bid from Hangar One Avionics, Inc. for purchase of a Bell 505 helicopter for the amount of $2,767,415.49. To be prepared for the new aircraft once delivered, several ancillary items need to be procured, including a public-address system, flight suits, and a camera, among others. Since the State funding had not yet been secured at the time the current budget was adopted, the Air Support Program was not included in the current FY 2018-19 Budget. Related expenditures will be absorbed within the existing General Fund Police Department’s operating budget.
DISCUSSION
Background
The Stockton Police Department has employed a wide range of crime fighting tools in an effort to reduce crime and increase public safety. As noted by several external evaluators of our crime fighting capabilities, the absence of air support to deter crime, apprehend fleeing suspects, locate missing persons, reduce risks during vehicle pursuits, increase police visibility, and respond to natural disasters falls short of industry best practices. In October 2018, the City Council accepted an award of $3,000,000 from the State of California for the purchase of a helicopter to begin the Police Department’s Air Support Program.
Present Situation
On August 23, 2018, a Request for Bid (PUR 18-019) was published for a new helicopter. The following bids were received on September 13, 2018:
|
Proponent |
Bid |
Notes |
Revised Bid (Tax at 9%) |
|
Airbus |
$5,115,375.72 |
Tax at 8% |
$5,162,740.31 |
|
Bell Helicopter* |
$2,651,528.00 |
No tax included |
$2,890,165.52 |
|
Hangar One Avionics |
$2,742,026.35 |
Tax at 8% |
$2,767,415.49 |
Procurement determined the bid from Bell Helicopter to be non-responsive and revised the costs to reflect the proper rate of Sales Tax at 9%, making the low bid Hangar One Avionics at $2,767,415.49.
Most of the other items required to sufficiently operate the Air Support Unit will fall under the City Council’s Administrative Authority and follow normal City procurement procedures. Staff has conducted significant research on these items and where possible has requested assistance from the Federal Defense Reutilization and Marketing Office (DRMO) program for surplus items.
Ongoing costs related to the Air Support program include both fixed and variable costs. Fixed costs such as insurance, lease of hangar space, aircraft maintenance, etc. Variable costs, primarily related to labor and fuel, are directly correlated to the amount of use. With a fixed level of usage or flight time, those costs would be relatively stable and predictable. Unfortunately, the preferred level of usage (850 annual flight hours or roughly 16 hours per week) results in a total cost that would exceed our ability to pay. Consequently, the actual number of flight hours will vary based on available funding rather than the traditional model where it is the costs that vary.
The estimated costs for operating an Air Support Program at the preferred level are summarized as follows:
|
|
FY 2018-19* |
FY 2019-20 |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
|
Staffing |
$151,114 |
$497,463 |
$727,295 |
$763,899 |
$828,092 |
|
Subtotal |
$151,114 |
$497,463 |
$727,295 |
$763,899 |
$828,092 |
|
|
|
|
|
|
|
|
Hangar |
$18,667 |
$28,000 |
$28,533 |
$29,067 |
$29,867 |
|
Maintenance |
$62,200 |
$264,350 |
$270,959 |
$277,733 |
$284,676 |
|
Fuel |
$50,400 |
$214,200 |
$219,555 |
$225,044 |
$230,670 |
|
Insurance |
$25,000 |
$42,200 |
$42,200 |
$43,255 |
$44,336 |
|
Equipment |
$0 |
$7,652 |
$7,718 |
$7,786 |
$7,856 |
|
Training |
$10,000 |
$25,000 |
$25,000 |
$25,000 |
$25,000 |
|
Subtotal |
$166,267 |
$581,402 |
$593,965 |
$607,885 |
$622,405 |
|
|
|
|
|
|
|
|
Total |
$317,380 |
$1,078,865 |
$1,321,260 |
$1,371,783 |
$1,420,814 |
*FY 2018-19 is a partial year
FINANCIAL SUMMARY
The $3,000,000 allocation of State funds available in Police Grants & Special Programs Account No. 025-6451 is sufficient to procure a new Bell 505 helicopter from Hangar One Avionics in the amount of $2,767,415.49. The remaining State funds will be used to purchase the necessary equipment to properly outfit and operate the Air Support Unit. It is expected that the entire State allocation will be used by the end of FY 2018-19.
The Helicopter will be operational for a short time in FY 2018-19, costs such as fuel and maintenance as well as the hangar lease, insurance, and training for the Pilot and Tactical Flight Officer will be absorbed within the Police Department’s operational budget. The Air Support Unit costs for the subsequent years will be budgeted in the General Fund Police Department Field Services division and will be subject to Council approval during the annual budget process.
Once the Air Support Unit is fully functional, the average annual program cost will be dependent on the level of usage for the helicopter and will vary according to the availability of funds. At the preferred, and currently unaffordable level of usage, the costs would be approximately $1.4 million with an average increase of 3% each year. Staff for the Air Support Unit will be reassigned from existing authorized Police Department staff positions with no increase in the total number of positions or added costs. Staffing costs are approximately $780,000 of the $1.4 million, and the remaining $615,000 is for operational costs.
Because there is no new source of revenue for the estimated $615,000 of additional ongoing annual costs for an Air Support Unit, the preferred level of usage cannot be guaranteed. The added cost would cause the General Fund available balance to go below the 5% warning level beginning in FY 2025-26 in the City’s Long-Range Financial Plan (LRFP). After twelve years, at the lowest point for the General Fund available balance, the additional cost for the preferred level of usage for the Air Support Program would reduce the available balance by $8.3 million. To afford the ongoing cost of an Air Support Unit at the preferred level, other service levels would need to be reduced.
