Port, LAX weigh decisions on terminating AZ contracts

May 13, 2010
Some $26 million in deals at risk


May 13--Although the Los Angeles City Council agreed Wednesday to boycott the state of Arizona over a controversial immigration bill, the panel punted a decision on whether to terminate several contracts held by the harbor and airport departments.

The civilian panels overseeing Los Angeles International Airport and the Port of Los Angeles must now consider whether to cancel nearly $26 million worth of deals with companies based in Arizona, which officials said could be difficult to do.

Harbor Department officials fear that rescinding contracts with three Arizona-based freight haulers would severely impact significant gains made over the last two years with the Clean Trucks Program, which requires all big rigs to meet 2007 federal emissions standards by 2012.

Swift Transportation Corp., Knight Transportation and Duncan and Son Lines have already received more than $16.4 million worth of incentives for purchasing a total of 423 new big rigs that serve the nation's busiest port.

"These incentives were paid out last year so if we sever the agreement, then these companies may not be obligated to continue drayage in the port," said Arley Baker, the port's senior director of communications.

"This isn't a typical contract where we're making ongoing payments for services," Baker said. "These agreements ensure that these companies will live up to their commitment to operating at this port for five years."

Swift, Knight and Duncan

stand to receive an additional $9 million worth of so-called efficiency bonuses if each of their trucks make at least 600 trips to the Port of Los Angeles by July. That additional payout is not likely, Baker said, due to the decline in cargo shipments at the port over the last two years.

The port and LAX must also consider whether to cancel separate contracts totaling $55,000 for street sweeper equipment purchased from West Coast Equipment Inc., based in Glendale, Ariz. If that's approved, then the agencies would likely seek out other companies that are not based in Arizona.

Airport officials also will consider whether to terminate a $20,000 contract with Phoenix-based Diversified Inspections for the purchase of mechanical materials and another $7,000 contract with Scottsdale, Ariz.-based Taser International for the repair of Taser guns carried by airport police officers.

"We will comply with the council request and take a close look at each of these contracts to determine their continued relationship with us," said Michael Molina, deputy executive director of external affairs at LAX.

However, airport officials do not plan to scrub any flights operated by Arizona-based air carriers US Airways and Mesa Air because the airline industry is regulated by the federal government, Molina said.

Additionally, LAX receives $22 million worth of revenue through landing fees paid by US Airways and Mesa Air, airport officials said.

"It is important to note that our relationship with these airlines actually generates funds for the airport," Molina said. "We don't see those relationships ending any time soon."

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