Travis County Commissioners Court
August 31, 2004
Item 15.b
B is proposal to purchase two new helicopters. This is not in the revenue
category. This is more in the potential expenditure category. We did have
a work session on this and we discussed it in some detail, but it is a big
item. I guess what we need to decide if anything is whether we -- we view
all or part of this as being a '05 budget issue or '06. Right?
>> right. I知 danny hobby, emergency services services and
with me is -- on my right willie who is the aviation director. So we're here
to discuss with you strategy in regards to new aircraft. Judge, as you mentioned,
we were here on the 18th, August the 18th, and we went over in pretty good
detail all the different aspects of current aircraft versus new aircraft.
And so I think today what we want to do is just simply let you know timing-wise
where we may want to filth with this. And i'll let casey speak on that regarding
some information he has on possible solutions, realizing we would go out on
an r.f.p. So this wouldn't be something where we would just automatically
select a particular manufacturer. This would be something where we would in
the past have gone out, we'll go out again this time.
>> about how long does that r.f.p. Process take?
>> six months.
>> it's about a six-month process.
>> actually most of the time [inaudible] to the day we're
doing a contract, it's been about a yearment and the reason it's a year is
because it takes that long for the department to really research everything
they want to have included in the specifics of the description and then it
goes to purchasing for the usual amount of time there, and then it seems like
there's a prolonged period of negotiation after the fact with most helicopter
situations. But --
>> [inaudible].
>> you are going to need to get on the microphone.
>> my estimate was based on the fact we had been doing this
process, five, six, seven years ago, and so hopefully -- that's why I said
six months.
>> and I was thinking more in terms of the amount of time
that -- your office isn't even aware when they start their research and if
they've already done a lot that cuts down on that.
>> I bet they have.
>> in talking with the various manufacturers, they only manufacture
so many aircraft per year and it would be, number one, deciding what aircraft
we wanted, negotiating the contract, and then actually getting the frame that
could go to completion. I think the -- anywhere from 12 to 18 months is probably
a reasonable figure to figure that by the time we took and you made the decision
and we got an aircraft here and we're actually in service would be anywhere
from 12 to 18 months.
>> remind me of this. If we said in March or April we want
two helicopters and we want these two right here, when would we be expected
to pay some amount toward the purchase price?
>> [inaudible].
>> I would say that's all negotiable, judge.
>> what happened last time? Do I recall that we had about
half of it up front and the other front on delivery?
>> I don't remember that we did pay anything up front, but
my -- perhaps my memory -- I don't believe we did pay anything up front.
>> that certainly is not reasonable. I mean with something
this expensive. I mean they make this few of them, I would think somebody
is going to say just in the event you might change your mind -- I think you
want to be prudent to budget money, I mean, that would be crazy even if it
weren't the case.
>> if that's a crucial fact to, I can check our fail and
see what it says about payment terms. I didn't do it so I don't remember it.
But i'll be glad --
>> for us to know the answer sometime today.
>> I was meaning I would go up over lunch. If you want to
call it back up after lunch i'll tell you or i'll either pass you an e-mail
in court so will you have the information.
>> the only thing that I would ask, I guess this comes out
of p.b.o., But I guess this is alan's area. Would you alter your opinion,
recommendation-wise, alan, if -- I don't know what you predicated your recommendation
on with regards to what kind of a pay plan or was this assuming that this
year you would pay $8 million?
>> what we did was a financial analysis of whether it would
be cheaper to replace the helicopters or -- and pay the capital cost of the
new helicopters and the cost of providing maintenance on the existing helicopters
and additional equipment through 2012. Our determination was based on a f.y.
2005 would be when the process was started, the helicopters would be acquired
in f.y. '06. The analysis that we determined was that if you wanted to continue
the starflight program as is with the existing helicopters which would continue
to provide the same excellent service that it has in the past, that there
is not a financial incentive to purchase new helicopters. If you want to purchase
new helicopters and expand the programs, be able to carry more patients or
the benefits that the department is saying to expand the operation for the
starflight program, then it would behoove the court to consider purchasing
them now because you have large maintenance items coming up on the existing
helicopters that you don't necessarily --
>> coming up in fiscal '05 or '06?
>> '06. I believe it's a transition overhaul.
>> what I was trying to get to was do we need to spend '05
really looking at the issue and landing somewhere in preparation for making
a decision at such a time that the fiscal impact would be '06? You see what
I知 saying in that's what I was trying to get to. If a '05 budget issue or
'06 budget issue, and my hope is it's a '06 issue but we need to do a lot
of work in '05.
>> I think the policy question before the court is consider
whether or not they want to replace the helicopters or not.
>> and I say a whole lot of work, that's what I mean. We
will decide whether we want to replace the helicopters and if we do we still
will have planning time to get this done this fiscal year and make a decision
what the financial impact would be basically '06. I知 not presuming we will
do it I知 assuming the physical impact would be '06 and not '05.
>> what we used for assumptions of the cost of the helicopter
program would be a level of equipment that we're not actually recommending
be added to the helicopter, but the department has requested a total of about
600,000 worth of improvements on existing helicopters if the court isn't considering
replacing them. That is a f.y. '05 issue the court will need to consider.
>> if we consider it, we can put aside that need for 2005.
>> that's correct. If the court determines that they don't
wish to -- they wish to purchase new helicopters, then there are costs that
can be deferred from the existing helicopters such as the night vision goggles
that are currently recommended in the budget.
>> right.
>> however, if the question really before the court is whether
they want to continue the program at current level or enhance the program
with helicopters that are capable of doing more.
>> what I was hoping to do was delay serious consideration
after October October 1, but to jump on it and start the consideration process.
See what I知 saying? When I say consideration, I知 not saying let's decide
when to place the order. I知 saying basically let's address the issue and
make a decision about whether to replace -- whether to plan repair, maintain,
et cetera, or what.
>> and the primary planning component I think that the department
would need to tell is in twao eu '06 they need to have new helicopters in
place to avoid diagnose the overhauls.
>> see and that alone tells me that we probably need to --
it's based on do we approve the improvements that are needed for the old ones
plus the maintenance or move we want to use replace them. And maybe the decision
we need to make is let's look at the possibility of replacing after October
1.
>> if we do it after October 1, we have basically said we
are not going to do all of those things represented to safety of not only
our pilots but everybody on board. You would have to, I would hope, presume
the answer is and we'll get serious and actually place an order because otherwise
these folks have lost yet one more year on safety-related equipment that if
we were to say, you know what, we're going to keep the old helicopters, there
are things that they need right now to get ordered, and that decision needs
to be made right now for '05.
>> and too we have a new hospital district, you know, coming
on where there might be some need there as well.
>> all I wanted to mention was that the safety-related items
are a very, very small amount of money in comparison to the investment in
two new helicopters. So --
>> I understand that. I understand that.
>> it's all money.
>> so you could still ensure the safety.
>> what were you talking about?
>> night vision goggles. We estimated -- I believe it's about
680,000. I would need to give you the exact figure. It's on your budget preference
work sheet for cost of considering the -- but even if -- and the financial
analysis that we gave you assumed, which we aren't actually recommending,
but assumed even at the worst case or the most expensive case, sorry, that
you all did the satellite radio that they are requesting, if you all included
additional map function that they've requested, that are enhancements to the
existing helicopter, p.b.o. Has already recommended the night vision goggles.
But even if you include those items in the existing helicopters' plan, when
you cost it out through 2012, it is still less expensive to build all the
improvements into the existing helicopter than it is to purchase a new helicopter.
>> let me ask some questions of staff. Can you possibly tell
me at what time are you supposed to enter into, I guess, agreements to service
other hospitals in the area? I know you brought that point up and you did
mention other hospitals you were looking to serve. The reason I知 asking this
question is because I need to know if some of these things that you are requesting
outside of replacement cost is something that will be contingent on entering
into agreements with other service -- with other persons, entities.
>> Commissioner, I知 glad you brought that up because we've
been dwelling, which we need to, on the financial, which you all want to discuss
today, but if we're going to get back into the presentation, we've got to
bring in this other element. That is our presentation the other day was letting
the court know we're at a crossroads for new aircraft for several reasons.
One is financial, as they recommended from a financial point of view. If you
just look at the numbers, then it is going to be cheaper to keep your current
aircraft. However, when you bring in the operational aspects, the enhancement
that can be brought about the new aircraft, then that does enter into what
you are bringing up now which is things such as entering into other relationships
with hospitals, et cetera. And it does play a role, Commissioner, and i'll
let casey or willie since they've been actually working with that because
it will have an impact. And I think that's what we're trying to decide today
is do you want starflight to go into a new arena in regards to providing services
for Travis County as well as maintaining their current focus which is medical
emergency, medical, and I think the new and old aircraft have an impact on
that. Even though we've gotten into the start of some of the relationships,
I think what you are going to see is a heavier impact based upon the new aircraft.
I'll let casey kind of speak to that where you are now and where you are wanting
to go.
>> okay, and before casey goes there, is there any possible
way you could interject if you -- if we decide to enter into a relationship
with interlocal member tpheufpls with the other -- mechanisms with the other
entities that would be served by starflight, is there any projection as far
as revenue anticipation or projected revenue that will be gained from this
relationship, if you can possibly tie those in together. Because I知 looking
at debt service and a whole bunch of other things that may come into play.
>> yes, sir. As we've had discussions with those other hospitals
and looking at services that they want to expand, we have gotten some preliminary
numbers from them.
>> okay.
>> those are in your -- in the packet, and if you look at
issue 135 versus 145, I think that's in version -- behind tab -- behind tab
2. And off to the side we did -- there's a column that says increased revenue
that are potential with new aircraft or partnerships and I think there's anywhere
from 10 to 15 flights per month those hospitals are looking at in those other
missions. Those are typically neonatal, high risk o.b. And the pediatric specialty
teams we're targeting as building increased opportunities with. So all of
those would be 15 additional patient flights per month that could result in
-- or should result in increased revenue.
>> seems to me it's impossible to make a decision about the
purchase now. That the reality is we must make the decision, i'd say, between
October 1 and December. If that is the case, what do we need to put in the
'05 budget to cover necessary repairs? And safety stuff?
>> currently everything needed to continue the helicopters
flying safely and p.b.o.'s recommendation is included in the preliminary budget.
We did not recommend all the enhancements the department requested, the additional
satellite equipment that the department requested; however we did include
the night vision and the maintenance costs of the helicopter for f.y. '05.
>> the budget p.b.o. Didn't think was necessary but starflight
staff.
>> we do appreciate you asking that question. [laughter]
[inaudible].
>> one of the items that you have to understand I want to
clarify, on the night vision goinges, for example, it's not just a matter
of purchasing the night vision goggles. The night vision goggles require a
modification to the aircraft and there's an expense associated with that modification.
So that is also the way I see it a very important part of the decision process.
Do we do this modification which is -- I don't have the exact figures.
>> I believe it was $50,000 to modify the aircraft.
>> which will result in some unveil built of the aircraft
during the time they are being modified, as well as some more costs associated
with additional training in this budget item for this aircraft. If a decision
was made to get another aircraft, they could come with night vision goggles,
but it would require additional training for that. This is why the decision
period now. And it's not a decision I would want to make right now either
on what do I want to give up at this moment here because it would require
a lot more thought than I can put into it in a few minutes.
>> what safety-related equipment, training, et cetera, is
needed if '05 but not in the preliminary budget at this time? And I guess
instead of the items, what's the amount? You see what I知 saying? Because
if we need to make a decision on purchas or not, we can do it if we give ourselves
a couple weeks, it's just we need to set aside some time, right?
>> yes.
>> I was hoping to delay that decision until after the first
of October when hopefully it would be clearer and we would not have as many
budget issues on our plate as we do right now. So what's that number? Is that
a big number or a pretty small one?
>> I知 adding it up right now. About 600,000. 600,000 is
related to the equipment that they've requested, in addition to on modify
the current helicopters. Whether awful it is enhancements that are -- all
of it is he knows chancements or improvements they would like to see in the
helicopter is a session I think you need to have with individual members.
We were confident and they were able to convince us the night vision goggles
were critical to the operations of the Travis County e.m.s. Program and that's
why we are recommending it. I think many of the other items can easily be
deferred if there were budget constraints affecting it. So i'll let the department
speak --
>> you would prefer if we would get new helicopters. Preferred
forever.
>> preferred forever. -- deferred forever. Because you are
getting a new vehicle.
>> the enhancements if Travis County was going to keep these
aircraft, if you buy engines and buy transmissions and do that kind of maintenance,
it's our expectation we're going to keep these aircraft for the next foreseeable
five, six, seven years. So in that we would want these other mission enhancements.
If you choose to buy new helicopters, those are already built in to-would
be built into the speck of a new aircraft. We didn't feel that it made fiscal
sense -- if you are drive -- you stop by and put four new tires and fix the
transmission and then go trade it off, you might get increased value, but
it's not dollar for dollar and so it didn't make sense to spend $50,000 modifying
the aircraft if your ultimate direction was going to be change aircraft.
>> I guess the number what really we need is to get that
-- what was the up front money that we needed. Because that could be a fiscal
'05 issue. But if we decide we need to place a number, what might be the upfront
number?
>> the contract was brought down to me. The contract says
that the contractor will be paid only after the county has inspected the aircraft
and notified the contractor of acceptance. The contract provided for 15 days
after delivery for inspection for initial notice to be sent of acceptance.
And then the usual term is that 30 days after invoice or acceptance, we pay.
So -- or we have 30 days and we try and do it less than the 30 so we don't
end up making the 31 and incurring the 1% especially on the size of that bill.
>> that could be in '06, absolutely.
>> it's consistent with my member we pay with these with
five-year c.o.s. We will need to size the c.o. Package in the October-november
time frame. That money would be available in spring time. The decision, I
think, could be easily made as to whether to add -- make a $13 million commitment
for new helicopters with a $5 million trade-in, which would make it $8 million
expenditure. That would be available in spring time, or a much smaller expenditure
out of c.o.s anywhere from zero to the 600,000 of enhancements if the decision
was we keep these two helicopters for a longer -- some foreseeable future.
So I think you have the ability to make those decisions after act 1 and still
not -- October 1 and still not eliminate an option that you have.
>> if we do the c.o.?
>> I think if you buy new helicopters you are going to do
it out of c.o.s.
>> I wouldn't think making repairs [indiscernible].
>> purchase a six digit -- most of the equipment purchases
are large, $100,000 items, so those would likely be at least c.o. Eligible.
>> we would just use general funds.
>> what we can do is we can pay for things that we thought
were going to be c.o. Out of general fund and do a switch.
>> let's target c.o.s and address this issue after October
and [indiscernible]. Looks like even if we don't buy new ones we still can
-- even if we go the maintenance, et cetera, if we're going to see all them,
we can make the decision after October 1.
>> I just had someone whisper into my ear that within moments
after October 1, we actually appropriate dollars that are the c.a.r. Dollars
to the departments with the adopted budget. So you may want a strategy of
holding back some of those resources to allow money to be paid for out of
one bucket versus another bucket. So that is a strategy that you may wish
to do and not automatically have 8-point $8 million be appropriated to the
department.
>> the nice thing is this department reports to the Commissioners
court. It's not an independent elected official. So we do have a little bit
of influence with these folks in terms of getting the money back or being
able to reduce things.
>> I知 thinking of other departments. I知 not worried about
--
>> I知 not worried --
>> to my left. I知 just worried about the other 40 or so
odd departments.
>> yeah.
>> judge, if there's -- I mean this is the reason you have
these recommendations from p.b.o. If you just strictly look at what this paragraph
is, now, if alan needs to sit down with danny and the starflight people, it
is very easy to read. For -- through 2012, there is a savings of -- the difference
between four million 699 and 9,000,640, plus the 640,000 if you were to add
it to the four six. There's a difference of $5 million there. Bottom line.
Because I知 assuming if we put all these things on the helicopters, what we've
got in the budget with night goggles and spend $640,000 on the helicopters,
then you all would assume that the helicopters would give you all the capabilities
of what you want the helicopters to have?
>> no, sir.
>> so you are -- what you really want are new helicopters.
Let's cut to the chase. What we really want is new helicopters. Now what we're
talking about is it worth the county spending an additional $5 million, because
that's really what it's going to be to 2012, even if you add the 640 to the
4,699,000. That's where we have to come down on it. I know you can dump more
water and you can neonatal and all of the capabilities we don't have with
the present helicopters to do that.
>> yes, sir.
>> and -- and those are points that I would like to understand
and recognize the importance -- I mean, you know, hey, we can come up every
year, not just helicopters, but everything that we have from i.t. To whatever,
all the presentation that are made, everybody wants the new and latest thing
because the new and latest thing affords you things that you can't do with
the old stuff. You all's is a little more critical because it's life saving
and all the things in the community wants. But I think it comes down to do
we want to spend $5 million, because that's really is difference, I mean up
to 2012, given that we've got all the factors in there, alan, that I知 sure
do you. So I知 willing for you to look, but obviously I don't think we have
to make the call right now. We've got the budget to put the night goggles
and have the things that we know you all want to carry on the mission a little
more elaborately than what you do right now. But I think we're on the right
road to looking at this thing between October and December.
>> if I can, I would like -- I promise I知 not going the
preach here about it. There's one thing I have to say. I知 kind of a neutral
player in that I just started working with starflight. What's interesting
about emergency services, your job and my job is to look at the dollars because
that's what answers really to the taxpayer today is what they are having to
face as their budget. But on the other hand, I have to look at the citizen
in another way and that is how can I best protect the Travis County citizen
in today's world, in today's market. And as I知 now looking at this situation
-- i've gone back and forth on this. As I知 looking at this situation, the
thing that keeps drawing me back to where the new helicopter or the new aircraft
is a reasonable thing to do is that the decision that we're making in records
to the current versus the new aircraft is a decision we are going to have
to live with until 2012. Now, what we're assuming is what is happening today
and what we're providing today, I mean I think we all agree the latest surveys
tell us that that the citizens of Travis County are very pleased with the
service that starflight is providing. And in fact, I think we can say -- and
I知 proud to sit next to these two gentlemen here to dedicate their lives
24 hours a day to providing that service, and I think it's proved to be beneficial.
However, can we assume that what we're doing today in the conditions today
are going to be the same in the next five to ten years. And so the decision
that we're having to make is a very serious one that I think impacts the Travis
County citizen. And so to stay with existing helicopters, yes, we can upgrade
those helicopters. The technology is changing rapidly and that's one of the
things we're finding in emergency services as well as all technologies is
there are better tools we can utilize that can better serve the mission of
starflight. And even though they sound like they are starflight or "star wars"
or they are kind of -- these are the things which now are being utilized and
needed in order to carry out the mission. And so I知 just going to lay that
out for you that I haven't played that card. I haven't played all my security
card. I haven't played the fact we are in a different world and in Austin,
Texas and Austin, Texas is among the top cities that if you look at when you
look at homeland security, we're up there. And what would happen in that event
and what is Travis County prepared to do in regards to that. Well, we need
to be prepared with the best technology and best resources and best professionals
we can possibly have. But the day-to-day mission also, Commissioner, is one
that is it going to be the same today three years from now and then we're
going to be having those same helicopters, yes, they are going to be efficient,
our people are going to work as best they can, but are they going to have
-- is it going to be the proper aircraft. The other element, remember with
the current aircraft that we have air filter problem. So they told you and
explained to you that even though they are going to try to find a fix for
that, that when that fix is made, then they are anticipating it will take
down some of the quality of that aircraft, meaning they may have to reduce
fuel. It's not just a question of, you know, just dollars, yet I know that
is very, very important, and I know that that is something we need to be discussing
and that has to be one of the primary things ago well.
>> I知 going to be here in 2009 and I bet you if we buy new
helicopters next year, before 2009, we will be having a discussion about you
know what's wrong with these helicopters? Now, let me tell you the newest
helicopter that comes out. I mean -- because that happens. I mean there will
be new things that will come out. I知 not trying to put you in, you know,
deficient aircraft. I think if anybody thought that the aircraft, you know,
wasn't safe and couldn't basically deliver the mission, but I mean just look
at -- go back 10, 12 years ago. I mean this -- you know, I guess what is it?
2004? I mean we haven't had starflight, you know, all of those 2000 years.
We have grown this system. And I mean I may come down, danny, on it's the
right thing to do. I知 not -- I知 not against the helicopters. I知 just trying
to make an educated decision on dollars. Because I don't think that $5 million
is -- or $8 million is insignificant given that I think there are probably
going to be some more c.o.s that's going to need to be looked at. But I知
still open. I知 not -- all of this needs to be factored in though.
>> let's all keep an open mind until October. This is a major
decision. We have a whole lot of information already. Let's have a work session
mid-october, couple weeks after the beginning of the fiscal year. Where we
have this item alone and we look at basically pros and cons in this and land
one way or the other.
>> you have a tentative proposal that -- to have a work session
on October 14th when there are two topics already on October 14th, elective
and the proposal from the judges on one or more courts of the it would be
a very easy thing to add this because you have an afternoon that might have
some time in it. And I believe at least four, maybe five of you will be available
on that day. We've checked your calendars and there's a question on the 5th.
>> the 14th is good for me.
>> my idea was to give this more than an hour, but -- we
have plenty of time to decide what's on the October 14th agenda. To effectively
delay on decision on this until after October 1.
>> because whether this is -- either way it's a c.o. Decision
and we do not have to make the c.o. Decision.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified: Thursday, October 27, 2005 11:05 AM