The Burbank Airport Authority on Monday awarded Lockheed Air Terminal, the company that manages the airport, a preliminary contract for engineering work on a new terminal, signaling that Lockheed will probably win the estimated $100-million job to develop the terminal.
The award prompted one airport commissioner, Burbank City Councilwoman Mary Lou Howard, to question whether Lockheed should be both manager of the airport and its developer.
"I've been a little concerned--a nagging doubt--that there may be a conflict of interest," said Howard, who nonetheless voted to give Lockheed the contract.
"They did have an inside track," she said.
By a unanimous voice vote, the Burbank-Glendale-Pasadena Airport commissioners gave Lockheed a contract for $197,200 to study terminal designs.
Lockheed Owned Airport
The company is a wholly owned subsidiary of Lockheed Corp., the aerospace giant based at Burbank Airport that owned the airport until 1978.
The engineering study is the first step in a plan to build over five years a terminal farther from airport runways than the present one. The 55-year-old terminal is only 313 feet from a runway at some points, less than half the safety zone of 750 feet mandated by safety regulations.
The Federal Aviation Administration has pressed the airport to end the safety hazard.
In June, airport commissioners tentatively approved a Lockheed design concept that calls for splitting the terminal in two, with parking and check-in facilities south of the airport's east-west runway and boarding areas north of it.
Passengers would travel between them on a people mover in a 1,500-foot tunnel under the runway.
The study will project passenger and aircraft traffic through the year 2005 and collect information needed to launch environmental-impact reports required by the state and federal governments.
Only one other company--the architectural and engineering firm of Howard, Needles, Tammen and Bergendoff--submitted a proposal to the authority, offering to do the study for $261,000. Airport administrators said formal, open bidding was not needed because the contract calls only for Lockheed to supply services, not build the terminal.
However, commissioners confirmed that the agreement paves the way for awarding Lockheed the larger contract for overseeing the design and building of the terminal, a job estimated by the commissioners and airport staff to be worth about $100 million.
Howard said Lockheed was selected because its bid was lower and it has more experience in airport management.
But she expressed concern that giving Lockheed responsibility for airport development would dilute the power of the authority's three member cities to control the airport's transformation.
Howard said she delivered a copy of the contract to the Burbank city attorney Monday for review.
"If Lockheed Air Terminal is going to take over . . . the development of the new terminal, are we, the City of Burbank, giving up any of our rights?" she asked.
Panel Liked Plan
Authority President Robert W. Garcin said Lockheed was chosen because the company presented commissioners with a workable terminal plan that would relieve the intensifying pressure from the FAA.
He argued that Lockheed's contract presented no conflict of interest between the authority and Lockheed.
"They sought us out," Garcin said of Lockheed. "We have not yet decided on the final project manager," he said, but the Lockheed proposal to build the two-part terminal "sounds pretty good.
"I perceive that Lockheed Air Terminal will have the function of completing the entire project."
Garcin predicted that Lockheed, with its financial resources, will be able to shorten development time by a year because it can finance early construction with short-term borrowing instead of waiting for proceeds from bond sales. He said Lockheed's financing package also could shave $10 million to $20 million from the final cost.
Under its existing $3.2-million annual contract to manage the airport, Lockheed supplies 105 airport employees, ranging from police officers and parking attendants to top airport administrators.
The administrators, customarily responsible for evaluating contracts with the authority, removed themselves from consideration of the engineering contract to avoid a conflict of interest, said Richard Vacar, manager of airport affairs and a Lockheed employee.
"We do not evaluate our own company's proposal to our client," he said. "Ethically, it's not desirable."
Vacar said Lockheed officials presented their plans directly to the airport commission without staff participation.
In seeking the contract, Lockheed has promoted the idea of making the terminal's development a turnkey operation: The authority could rely on Lockheed to manage everything from the project's design and financing to hiring construction contractors.
In a letter to the authority, Lockheed President Viggo M. Butler also touted the firm as the only independent airport management firm operating part or all of six air terminals in the United States, including those at San Francisco International, Atlanta International and Los Angeles International airports. He also recommended Lockheed on the basis of its knowledge of Burbank Airport.