Minutes of the Annual Meeting of the Power - New York Power ...

April 24, 2007
11. Disposal via Sale of Beechcraft King Air B-350 Aircraft
SUMMARY
The President and Chief Executive Officer submitted the following report:
“The Trustees are requested to delegate authority to the President and Chief Executive Officer to approve
the disposal via sale of the Authority’s Beechcraft King Air B-350 aircraft, S/N FL-283, Registration Number
N4083L (the ‘Plane’).
BACKGROUND
“In June 2000, the Authority purchased the Plane for use by the Authority primarily to transport employees
to and from Authority facilities throughout New York State, for the purchase price of $5,582,350.
“At their meeting of December 19, 2006, the Trustees delegated authority to the President and Chief
Executive Officer to approve the purchase of a new King Air aircraft. The schedule for fabrication and delivery of
the new plane is outlined in Exhibit ‘11-A.’ The contract with Hawker Beechcraft (formerly Raytheon Aircraft
Company) for such purchase includes an option for the Authority to trade in the current King Air 350 for a trade-in
allowance of $2,650,000. However, based on the current fair market value of the Plane (estimated between $2.6 and
$3.2 million), staff recommended that competitive bids be sought in an attempt to maximize the Authority’s returnon-investment.
“In addition, the Public Authorities Accountability Act of 2005 (‘PAAA’) and the Authority’s Guidelines
for the Disposal of Personal Property (the ‘Guidelines’) require the Authority, with the approval of the Trustees, to
dispose of Authority property through solicitation of competitive proposals with public advertising for disposal of
personal property over $15,000 in value. To this end, staff prepared a Request for Proposals (‘RFP’; Q02-3998),
which was posted on the Authority’s Procurement website. Notices of the availability of the RFP were included in
the New York State Contract Reporter and on various industry internet services.
DISCUSSION
“As a result of this competitive solicitation, 31 potential bidders downloaded the RFP from the Authority’s
Procurement website. Six proposals to purchase were received ranging in price from $2.5 to $2.7 million, as
summarized in Exhibit ‘11-B.’ Authority staff is currently in the process of evaluating these proposals from the
standpoint of pricing, overall background, qualifications and financial condition of the bidders. Due to the need to
finalize the transaction as soon as possible in order to lock in the sale of the Plane on the most advantageous terms to
the Authority, an award to the successful bidder is expected in the first half of May 2007. In order to support this
schedule, staff recommends that the Trustees authorize the President and Chief Executive Officer to approve the sale
of the Plane to the bidder that provides the most advantageous value to the Authority. A separate report will be sent
to the Trustees documenting this decision.
“Three of the proposal prices received are higher than the aforementioned trade-in allowance proffered by
Raytheon, and staff expects to recommend an award to the successful bidder at an amount greater than such
allowance. Therefore, the Authority will not be exercising the option in the Raytheon purchase contract.
FISCAL INFORMATION
“The disposal will be conditioned on the execution of an agreement between the successful bidder and the
Authority, with a 10% deposit required on execution.
“Prior to the closing, the buyer will be allowed to conduct a detailed inspection of the aircraft and, if any
reasonable deficiencies are noted, the Authority and the buyer will negotiate an adjustment to the purchase price,
reflecting the cost of such corrections. The agreement will provide that once the inspection and negotiation is
completed, the sale of the aircraft will be ‘as is,’ with no warranty of any kind from the Authority, along with such
additional protections that reasonably safeguard the Authority from future responsibility.
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