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1    Travel Acquisition Support Division (QMAD)

2           Pre-Solicitation Conference
             for the City Pair Program
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6                                            February 3, 2009

7                           2200 Crystal Drive, Room 300
                              Arlington, Virginia 22202
8                                             11:00 a.m.

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                FREE STATE REPORTING, INC.
             Court Reporting Transcription
                  D.C. Area 301-261-1902
               Balt. & Annap. 410-974-0947
                                                                      2

1                      P R O C E E D I N G S

2                                       (Time Noted:     11:00 a.m.)

3              MR. BRISTOW:   Okay.   Good morning everyone.

4    Again, once again, welcome to the Pre-Solicitation

5    Conference for the City Pair Program.     We appreciate your

6    time to attend this morning, and we want to be able to

7    move this along pretty good, real quick.        For those that

8    may need to take a break, men’s room is out to the left,

9    ladies’ room is out to the right.    If we get rolling

10   along and see that possibly we, we need to take a break

11   along the way, we’ll be glad to do so.     We’ll, we’ll take

12   a look at that and reach a concurrence with, with

13   everyone, maybe midpoint or whatever, that we’ll be able

14   to coordinate that for you.

15             But we did want to welcome you this morning.

16   We have a strong agenda this morning to cover.       It’s

17   going to flow into the afternoon, but we think that as we

18   move this along, we’ll be able to bring about the

19   outcomes that we’re desiring not only for our industry

20   partners, but to our customers and for the program.         So

21   thanks again and welcome.

22             First, Kenneth Olson, phone, hear people who

23   dialed in, are you hearing okay?

24             MR. OLSON:   Yes.

25             UNIDENTIFIED SPEAKER:     Fantastic.     Thank you.

                        FREE STATE REPORTING, INC.
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                          D.C. Area 301-261-1902
                       Balt. & Annap. 410-974-0947
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1               First, for those of you who were expecting to

2    see Tim Burke, I’m not Tim Burke.     I’m Frank Robinson.

3    I’m the Acting Director for the Center for Travel

4    Management, City Pair Program, lodging and some others

5    are accountable for those.    So Tim will though, he’s out

6    of the office at the moment, but he’ll      be coming down

7    here in the course of the day to say hi to those who

8    would really like to see him.

9               First, I want to echo what Jerry said.

10   Welcome.   All right, airline industry friends and

11   customer agencies to the 2010 City Pair Program Bidders

12   Conference.   One thing that ’08 and ’09 Calendar Years

13   and Fiscal Years have proven is, is that we do have a

14   really great partnership between our customers and the

15   airlines that participate in the program. Certainly this

16   was tested in FY ’08 and ’09.     The extreme fluctuations

17   in fuel was the first time that fuel surcharges were used

18   extensively and applied extensively in the City Pair

19   Program.   It’s something that our customers, I think,

20   took a bit to adjust to because in some cases the impacts

21   were very significant.    Was the first time that fuel

22   surcharges had a significant cost impact on the

23   government’s travel.    So I think everybody learned to

24   adjust with that.      The unbundling of seat fees and

25   baggage fees and other fees, the airlines again applied

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1    their commercial practices to our, our government

2    market, and were, you know, looking forward to work with

3    the viability and the flexibility as these commercial

4    practices emerge.       And then we really appreciate the

5    flexibility of our customers in the industry as we dealt

6    with the capacity reductions.         We had probably 500

7    markets.   They were smaller markets.         The F Markets,

8    principally where moreover we had to -- airline capacity

9    adjustments were made, and we had to reevaluate and in

10   many cases make re-award under the FY ’09 solicitation.

11   So very interesting, very challenging past year or so,

12   and one in which I think again there was exceptional

13   cooperation between the industry and the government.               So

14   thank you everyone for that.

15                I think that’s it for my opening remarks.         I

16   guess we will begin the official portion of the Bidders

17   Conference.    But, again, thank you very much to

18   everybody.

19                Okay.   Thanks, Frank.

20   I’d like to run through real quick though the particular

21   people that are here involved in the procurement process.

22   We have Kwanita Brown from the Contracting Office;

23   Kristen Jaremback as the Contracting Officer; Anna Brown

24   is the Director of Travel Acquisitions.          We have a new

25   person for as the Deputy Director for Travel and

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1    Transportation Acquisitions.      I’m sorry.       Damon McClure?

2    Is that a name from the past?       Damon is back with us at

3    GSA.   We have Annie Scott from -- back there with us.

4    Jerry Ellis from the Contracting/PMO area; Vince Aquilino

5    from Program Management Office; and, of course, I’m your

6    facilitator for today. I’m Jerry Bristow.

7               So along the way, if we have questions, please

8    raise your hand.      We have to bring the mic to you so we

9    get this properly recorded into the record and move this

10   along.

11              Thank you so much and welcome.

12              MS. SCOTT:    I just wanted to say good morning

13   and welcome.   I’m very happy to be here.          I’m new to this

14   position, and I’m excited to work with all of you.

15              UNIDENTIFIED SPEAKER:      Before we start with the

16   official part of it, I’m going to be passing the

17   microphone around so each one of you can identify

18   yourself and the agency that you work for or airline that

19   you represent.     I’ll start up here in the front row.

20              MR. SCHNEIDER:     Gary Schneider, Continental

21   Airlines, Houston, Texas.

22              MR. IVESTER:    Ron, Ron Ivester, CWT, SATO

23   Travel Group Sales and Marketing.

24              MR. MCMAHON:    Kevin McMahon, AirTran Airways.

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1                UNIDENTIFIED SPEAKER:     Josh Junk -- AirTran

2    Airways.

3                MR. WALKER:    Herbert Walker for the Department

4    of Transportation.

5                MR. COYLE:    George Coyle, American Airlines.

6                MR. FAUTS:    Bill Fauts, DHS, Customs Border

7    Protection.

8                MR. MILLER:    Rick Miller with Travel Policy

9    with GSA.

10               MR. CALLAHAN:    John Callahan with Virgin

11   America.

12               MR. KINDER:    Larry Kinder with Department of

13   State, Public Transportation.

14               MR. GALLUZZO:    Frank Galluzzo, OSD

15   Transportation Policy.

16               MR. FLYNN:    David Flynn, Director of Travel for

17   HHS.

18               MS. CARLOCK:    Andrea Carlock, Defense Travel

19   Management Office.

20               MS.   HALL:    Shirley Hall, Defense Travel

21   Management Office.

22               MR. HICKS:    Howard Hicks, Defense Travel

23   Management Office.

24               MS. SIZEMORE:    Patti Sizemore, DOD,

25   Headquarters, Air Mobility Command.

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1                 MR. SHANNON:     Bob Shannon, DOD, U.S. TransCom.

2                 MS. SISSON:      Sara Sisson, Northwest, now a

3    part of Delta Airlines.

4                 MR. CLIFFORD:       Denny Clifford, Delta Airlines,

5    now a part of Northwest.

6                 MR. CLIFFORD:      -- apparently new to that whole

7    thing so, I think that’s what it is.

8                 MR. KESSI:     Matthew Kessi, Alaska Airlines.

9                 MR. FANNING:     Fred Fanning, Department of

10   Commerce.

11                MS. CLAYTON:       Whitney Clayton, Headquarters

12   Army.

13                MS. MONTANEZ:      Carmen Montanez, Army, G-4.

14                MS. FLOYD:     Sara Floyd, EPA.

15                MR. DERAWIN:     Kevin Derawin, Department of

16   Justice, Travel Policy.

17                MR. EDWARDS:     Mark Edwards, Passenger Policy,

18   Headquarters,    Marine Corps.

19                MR. MCCLURE:     Damon McClure, Office of

20   Acquisition, Travel, Motor Vehicles.

21                MS. SCOTT:      Annie Scott, GSA, Audit Division.

22                MS. MOHAMMED:      Levette Mohammed, GSA.

23                MS. HARRISON:       Kimberly Harrison, GSA,

24           Automotive.

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1                 MS. SCHNOLL:     Janetta Scheinall, GSA,

2         Automotive.

3                 MS. HARRIS:    Cheryl Harris, GSA, Automotive.

4                 MS. CALLOWAY:    Carmen Calloway, GSA,

5         Automotive.

6                 MR. BILLONE:    Tom Billone, United Airlines.

7                 MS. STONER:     Debbie Stoner, NSI, DOD.

8                 MR. BRISTOW:    Just so you know, people that are

9    on the telephone, and if you’re on the phone and I don’t

10   mention your name, please speak up so I can identify you.

11   We have Carolyn Watt with NASA; we have Greg Royal with

12   Virgin America; John Lease (ph.), Navy, Norfolk; Angie

13   Williamson, Treasury; Charlie Conners, FTC; Debbie

14   Vanglue (ph.), EPA; Chris Gamman, US Airways; Denise

15   Stokes, HUD; Shirley Smoke, SBA; Donna Cavos, Frontier;

16   Tony Goodman, Virgin America; Maryann Hubbard, Alaska

17   Airlines; Elizabeth Rodriguez, VA, Josheua Orlick, SSA;

18   David Carr, SSA; Steven Romano, SSA; Kasha Dean, Customs

19   Border Control; Mike O’Brien, United; and Miko Schneider,

20   Jet Blue.

21                MR. ELLIS:    Is there anyone that’s on the phone

22   that I didn’t mention?

23                Thank you.

24                MS. BROWN:     Good morning, ladies and

25   gentlemen.    Again, I’m Kwanita Brown., and I’m going to

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1    take us in to this Pre-Solicitation Meeting.         So the

2    first slide.

3                UNIDENTIFIED SPEAKER:     Here you go.

4                MS. BROWN:   All right.    The first slide we have

5    here is going to review the general requirements.        The

6    first item deals with the Attachment 1, Proposal

7    Checklist, that’s what -- which is in the RFP.         And this

8    checklist basically highlights all of the items in the FY

9    10 RFP that must be submitted with the offeror’s

10   proposal.   There have been no changes in the content of

11   the proposal checklist, but we do want to reiterate that

12   when you are submitting your items that they must be

13   completely filled out, signed and dated.

14               The second item pertains to the City Pair Offer

15   Preparation System, also known as COPS.       And for those

16   who are unfamiliar with the system, it is our Internet-

17   based system that we use to -- that offerors will use to

18   submit their technical and price proposals.       There is

19   also a handbook that has been included in the FY ‘10 RFP.

20   There’s been no changes to content of that handbook, but

21   offerors should use that as a tool for them when they are

22   submitting their technical and pricing proposals.        And

23   then also please note that offerors must receive a user

24   ID and password to gain access into COPS, and the e-mail

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1    will be sent out by the contracting team with further

2    instructions on how to do that.

3              The last item that I want to touch on with this

4    slide is a subcontracting plan.     I will be the point of

5    contract, point of contact for the subcontracting plans.

6    One note in terms of a change with this plan is that the

7    Alaska Native Corporation, also known as ANC, and the

8    Indian tribes have been included in the small business

9    categories and the small disadvantaged business

10   categories.   So basically what that means is that as

11   you’re developing your goals for the small business

12   categories and the small disadvantaged business

13   categories, you can take into consideration any

14   subcontractors that you use that would fall under the ANC

15   or Indian tribes.

16             Another thing that I want to point out is that

17   as you’re submitting your proposals for the FY ’10

18   solicitation, you are required to submit a subcontracting

19   plan, and there is a template that has been provided for

20   all offerors in the FY’10 RFP under Attachment 6, and you

21   can use it as a guide as you’re putting together your

22   plans.

23             And the last thing is that if I have not

24   already contacted any of the carriers regarding the

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                         FREE STATE REPORTING, INC.
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                           D.C. Area 301-261-1902
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1    submission of your subcontracting plans, I will be

2    doing so in the next month or so.

3              The next slide that I’m going to touch on deals

4    with Section B of the RFP.   The first item is Section B-

5    4, which deals with the scope of the contract.        Under

6    this, there has been a change to one of the users of the

7    City Pair Program; that is DOD recruits.        So those DOD

8    recruits that are traveling from Military Entrance

9    Processing Stations, also known as MEPS, they have been

10   changed from non-mandatory users to mandatory users.

11   This is a change that has already been put into effect on

12   the FY ’09 contract via a mod, and is also now going to

13   be a part of the FY ’10 solicitation.

14             The second item is B-27, which deals with the

15   audit of contract fares.   We didn’t really have a change

16   of the section, but we did get a question about it.       The

17   question was basically why is this section still included

18   in the solicitation?   And the answer to that question is

19   that when all of the airline ticket transactions are

20   reviewed by the Audit Division, it is, it is not always

21   apparent how the travel arrangements were made, if a

22   quality control review was requested and paid for.       So,

23   hopefully, that answers the question for the person who

24   did, did pose that.

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                          D.C. Area 301-261-1902
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1                 The last item that I’m going to address is B-

2    36, which deals with the City Pair Program activity

3    reporting.    And basically the change that was made was to

4    the language of Subsection C, and it was changed as

5    follows: data may reflect either ticketed transactions or

6    flown transactions.      And the new language that you will

7    now see in the FY ’10 solicitation is, data shall reflect

8    flown transactions by passenger count, not revenue count.

9    And we did receive a question about this section as well.

10   The question was basically, why has passenger count now

11   been added to this provision?        We have been using the

12   same format for almost 10 years without this requirement.

13   And the answer to that question is basically some

14   carriers were -- were submitting passenger and a revenue

15   data, while others were submitting just revenue data.

16   And what we wanted to do with this change was to tighten

17   up the language and allow us to receive more accurate

18   data, since ticketed or revenue data is not a true

19   representation of City Pair usage.          And an example, an

20   example of that would be is if a traveler did purchase a

21   ticket but never took the flight. So we’re looking to get

22   more accurate data by changing that language.

23                The last slide that I’m going to cover deals

24   with Section C of the RFP, which deals with the contract

25   clauses.   There have been two new clauses that have been

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1    incorporated under Section 3, Section C-3.        The first

2    is 52.239-1 (is actually a typo there), privacy or

3    security safeguards.    The second one is 52.203-13, which

4    is the contractor code of business ethics and conduct.        I

5    would just suggest for all offerors to please visit the

6    Federal Acquisition Regulation website.       Please review

7    those two clauses. If you have any questions after you

8    review those clauses, please reference the e-mail or call

9    the Contracting Team, and we’ll be able to address those

10   questions for you.

11              Now the next slide deals with the fuel

12   surcharge, and I’m going to turn it over to Kristen

13   Jaremback, who will take it from here.

14              MS. JAREMBACK:    I’m Kristen Jaremback, the

15   Contracting Officer, in case I haven’t met any of you

16   before.   And -- make sure everyone on the phone can still

17   hear.   Okay?   Anybody have any problem?     Okay.

18              The first slide I’ll talk about are fuel

19   surcharges, and the, the sections in the solicitation are

20   Sections B-19, C-4, and C-13, all deal with fuel

21   surcharges.

22              Section B-19, which is taxes, fees and fuel

23   surcharges, has changed this year.      Specifically Section

24   B for international markets.     Fuel, fuel surcharges are

25   now to be included in all fares offered in international

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1    market.    The changes made provide greater consistency

2    between domestic and international fares offered at time

3    of offer submission and to reduce any confusion on the

4    applicability of fuel surcharges at time of offeror

5    submission, and after contract award and the -- of

6    contract all fuel, fuel surcharges can be applied.     There

7    were several questions on this, on this issue here, and I

8    tried to group them all together.      I’m going to try and

9    address them.    If I don’t address your exact question,

10   feel free to raise your hand, and hopefully I can, I can

11   answer it then.

12               I hope that some of what I have just mentioned

13   did answer some of your questions, but just to reiterate

14   the point we’re making the change only to international

15   markets.    Domestic markets continue to be handled the

16   same way as they were previously.      The difference between

17   domestic and international fares at the of offeror

18   submission has caused confusion, and this change will

19   provide the consistency in how fares are submitted and

20   the application of fuel surcharges after contract award

21   and throughout the contract period.

22               At the time of offeror submission, any

23   anticipated fuel surcharges should be included as part of

24   the fare offered.    And I’m, I’m stressing the word

25   anticipated, because that’s what, that’s what we’re

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1    looking for, any fuel surcharges that are commercially

2    applied at the time of offeror submission should be

3    included in the fare.      And then any unanticipated fuel

4    surcharges proposed commercially after the time of

5    offeror submission may be applied to awarded contractors

6    in accordance with Section C-13 of the RFP.

7                Do you have any questions?

8                Tom.   Wait.   Tom, hang on one second.

9                UNIDENTIFIED SPEAKER:     -- the microphone.

10               MR. BILLONE:    Can you hear me?

11               UNIDENTIFIED SPEAKER:     Let’s just -- no.     Let’s

12   just set up the rules now.      If you’re asking a question,

13   you must have the microphone in your hand.

14               MR. BILLONE:    Tom Billone, United Airlines.

15   For years international fuel surcharges were not part of

16   the fare.   One year they became part of the fare when we

17   were allowed to implement fuel charges on the domestic

18   market.   But then last year we went back to the old way

19   of keeping fuel surcharges out of the international

20   fares.    Now we’re going back to this.      This causes some

21   real problems with us as far as coding goes, because each

22   country is different.      So when we file the fares, we have

23   issue with the fuel surcharges.       I don’t know why we

24   can’t go back to what worked for the 30 something years,

25   to something that’s -- was gotten rid of last year.         And

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1    this is in light of our request to move forward with

2    this contract rather than backwards, and this seems to be

3    a backwards step in the contract.      The international fuel

4    surcharges for a long time were never included in the

5    fares. One year they were included in the fares, then

6    they were taken out again.     Now we want to go back.   It

7    just doesn’t make sense.

8                That’s all I have to say.

9                UNIDENTIFIED SPEAKER:    You want to answer that

10   first?

11               MR. CLIFFORD:   Denny Clifford, Delta Airlines.

12   I’ve got to ask this question.      We, we have been at this

13   stuff for a year now, and not once has this issue come up

14   with respect to putting fuel surcharges into the fare.

15   We’ve had numerous meetings, both one-on-one and publicly

16   as recently as December, as recently as our one-on-one

17   three days ago.   It was never brought up, and we want to

18   know why.   What is the catalyst and why has this never

19   been brought up and all of a sudden at the 12th hour plus

20   we get this dropped on us?     And I have follow-up

21   questions as well.

22               MR. BRISTOW:    The change in the language was

23   actually done back in September as an amendment to FY

24   ’09.   It was also discussed at the partnership meeting in

25   October what that change would be.      Because it was made

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1    in ’09, we’re now crafting the language in ’10 to make

2    sure that we continue that process of what was reviewed

3    at the amendment for ’09 and at the partnership meeting

4    in October.    We didn’t feel that there was any other

5    discussions to be -- had to be made in December nor in

6    our three-day-ago meeting.       Unfortunately, maybe we

7    should have brought that to the table.        We thought it had

8    already been confirmed through the amendment and also in

9    our, in our previous discussions.

10                MR. BILLONE:     Could you please cite the

11   amendment that was sent to all of us via e-mail?

12                MR. BRISTOW:   Sure.

13                MR. BILLONE:     I don’t remember seeing anything

14   like that.

15                MR. BRISTOW:   September 30, 2008.

16                MR. BILLONE:     What is the mod number?

17                MS. JAREMBACK:    It’s actually not an amendment.

18   I sent out a contracting officer’s interpretation letter.

19   What Jerry is referring to is some time last year before

20   contract award, I don’t, I don’t know the exact date off

21   the top of my head, I did issue an amendment to the FY

22   ’09 RFP.   It was more of a clarification on how to handle

23   international fuel surcharges, because we did have -- we

24   had quite a few problems with it last year as far as

25   consistency went.     So we are tightening up the language

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1    here.   And I have to stress that anticipated fuel

2    surcharges that we’re looking for.     We’re not looking for

3    -- we understand that you can’t anticipate those

4    surcharges six, eight months out.     So what we’re looking

5    for is to include in your fares offer for both domestic

6    and international, we’re asking that you include the fuel

7    surcharges that are anticipated at the time of offeror

8    submission.   It doesn’t change -- domestic has always

9    been handled this way.     It’s always been handled -- it

10   was handled this way last year.     We’re just making

11   international the same for consistency.

12              MR. CLIFFORD:    I think you underestimated our

13   concern about this issue.    It should have been addressed.

14   It wasn’t, in specific terms.     Maybe that’s water under

15   the bridge, but I guess that’s why we’re here today.

16              Kristen, you mentioned that we, we should put

17   into a bid fare what we anticipate fuel to be.     Let me

18   give you some stats, because I pulled this off just this

19   morning.   There are experts in this industry of oil and

20   gas that have predicted the following, okay.     In 2009,

21   $43 a barrel; in 2010, $55.    That’s just one company.     As

22   a matter of fact, it’s the U.S. Government that predicted

23   that.   Barkley’s Capital 2009, $75; 2010, $104.      Nimesma

24   (ph.) Energy, 2009, $37.20.     Roaker (ph.) Credit

25   Services, $55 in ’09, $77 in 2010.     What’s the trend

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1    here?   There is no trend.     It’s inconsistent.   This is

2    the most volatile commodity on the planet right now and

3    will continue to be so for the next 2, 3, 4 years.      How

4    can we possibly anticipate fuel when not even the experts

5    in this industry know what in the world it’s going to be?

6    And I think it’s ludicrous.      I think it’s, it’s

7    impractical.    There’s no reality to what you’re

8    suggesting.    And Tom’s right, United Airlines, hit it on

9    the head.    We need to have it like it was in prior years.

10   It makes absolutely no sense to put this in the fare.

11   And, and I don’t understand why you have both the option

12   -- not an option -- you put -- one part says put it in

13   the fare, but then you also allow us to add it in later

14   for surcharges.    I don’t understand that at all.

15                MS. JAREMBACK:    What we’re looking for here is

16   not anticipated in the sense that you’re predicting out

17   in the future. That’s why we have the Economic Price

18   Adjustment clause in -- at C-13.       We have that in there

19   for after the time of bid submission if a fuel surcharge

20   has been imposed commercially, we allow you to add that

21   on to your City Pair contract fares.

22                MR. CLIFFORD:    Why not do it from the very

23   beginning?     Why even put that clause in there for the

24   original fare?

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1               MS. JAREMBACK:    See, I, I think we’re, we’re

2    missing the point here.     What we’re doing -- how domestic

3    fares are handled right now or, or last year, let’s take

4    FY ’09, if you had a fuel surcharge in place commercially

5    at the time of bid submission, you were, you were

6    supposed to have included that into your fare at that

7    time of bid submission.     If there were unanticipated fuel

8    surcharges imposed commercially after the time of bid

9    submission, we allowed you to send us a written

10   notification of that, and we added onto your contract

11   fares.   That’s how domestic markets were handled.

12   International were not handled that way.         Fuel surcharges

13   were not included in the fare.       What we’re doing now is

14   trying to make them both consistent that fuel surcharges

15   will be, will be in the fare when at time of bid

16   submission.   We still will allow additional fuel

17   surcharges if they’re imposed commercially after the time

18   of bid submission.

19              Is that clear?

20              MR. BILLONE:     It -- again -- the whole issue

21   was domestic and international.

22              MS. JAREMBACK:    Excuse me, excuse me.

23              Can you hear that?

24              UNIDENTIFIED SPEAKER:      Got to record that.

25              MS. JAREMBACK:    Yeah.    Need you to --

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1              MR. BILLONE:     Okay.   The whole thing is that

2    there is a difference between domestic fuel surcharges

3    and international fuel surcharges, because prior to two

4    years ago, we were not allowed to take fuel surcharges on

5    domestic routes, because all fares included all fees and

6    taxes and surcharges.    Now this has changed because of

7    the way the market was going and we were complaining

8    that, you know, fuel was going out of sight and we

9    couldn’t do anything about it.     Never up until that

10   point, never was fuel included in our contract price on

11   the international side, because the rules for

12   international didn’t -- excuse me -- said that it

13   excluded all fees and surcharges.     Okay.     So right now

14   you’re making a major change in this contract, and in the

15   way that it has been held for -- how long has this

16   contract been in effect?    30 some years?      Okay, 30 years,

17   and except for one year.    So for 29 years, this is the

18   way the contract has read.    And now you want to take what

19   happened one year and make it permanent.        We’re having a

20   real hard time with this.     Like I said, we have coding

21   problems. This is massive work for us to differentiate

22   the YQ which we call is our fuel surcharge on the

23   commercial side and on the government side.       Specifically

24   when it relates to different markets.     Because the fuel

25   surcharge in domestic is generally the same across the

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1    board.   But when you go into the international markets,

2    depending on the market you’re doing, that fuel surcharge

3    is going to be different, okay.       And it’s really a lot of

4    work and money that we invest in having to change that.

5    And to be quite honest with you, when this first

6    happened, we didn’t make any changes in, in the

7    international fuel surcharges on, on the contract because

8    of the coding issues and until the new contract came out

9    and said we could do it differently.          But this -- now

10   it’s, it’s a problem for United Airlines.

11                MR. CLIFFORD:   This is a huge issue for Delta,

12   absolutely huge.     The argument that it’s to -- it’s done

13   to avoid confusion is very weak.       Why?    Tom just said it.

14   We’ve done this for 29 years.       There’s obviously no

15   confusion if it’s been done for that long.          So I think

16   that that argument is, is without merit.           You really need

17   to take a very, very serious look at this issue.          And I

18   just don’t think it has any foundation.         There is nothing

19   wrong with the way it’s been done before.          There’s

20   nothing wrong with applying the fare and having fuel

21   surcharges added later.      This is too volatile a market,

22   and, and I don’t know what purpose it serves the GSA.            I

23   don’t know what purpose it serves the airlines.

24                MR. BRISTOW:    Fuel surcharges were a big issue

25   this year.    The administrative burden for the carriers

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1    and for the government was tremendous.      Make your

2    reservations today.   This is what the fuel surcharge was.

3    Go to ticket tomorrow, the new fuel charge is in effect.

4    We allowed the fuel surcharges to be able to escalate

5    according to the volatility of the market.       Most of those

6    domestically have, have disappeared.      Internationally

7    though, they’re still in place.     We feel that the

8    airlines do know how much that fuel is going to cost

9    them.   They do know how far out they have hedged their

10   fuel requirements, and that it would assist you to put

11   that into the fare today.    It still allows you to

12   increase your fuel surcharges at time of contract

13   implementation on October 1st as to what today’s rate is.

14   It was to help streamline the process for you and ensure

15   that, number one, you’re able to anticipate that; and,

16   number two, you just weren’t all of a sudden hit with a

17   fuel surcharge that may be $300 -- each way to a ticket

18   that was 400 bucks.   It is important that we’re able to

19   look at and review these types of fees along the way in

20   our evaluation process to make a proper award.      Some

21   airlines charge this rate, other airlines charge this

22   rate.   It would be incumbent upon us to know what that

23   would be today or when you submit your bid with a lookout

24   of how you purchased your fuel, what today’s current fuel

25   surcharges are and be able to provide a price

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1    accordingly.   It was to assist you.       And then the door

2    is still open at the end on implementation October 1st for

3    you to implement your fuel surcharges that are

4    appropriate for that day.

5                MR. CLIFFORD:    Jerry, I think you need

6    clarification on how fuel hedging works with the

7    airlines.   There seems to be the supposition that we are

8    six months out and hedging and it’s pretty much locked

9    in, and that that’s the way it goes.        You know, that may

10   have been the case some time ago when, when fuel was less

11   volatile.   It was more straight, straight across the

12   board.   It ain’t that way now.      And I can tell you, every

13   day we are looking at our hedgings.        And frequently, we

14   re-negotiate on a very frequent basis hedging.       You don’t

15   go out six months.     You can’t. It’s too volatile.    We

16   have fuel experts that look at this every single day, and

17   there’s collars.     There are what they call collars.      It’s

18   all sophisticated fuel and oil -- or oil and gas stuff.

19   The bottom line is we have ceilings, we have floors, we

20   have everything in between.      And if you think that we can

21   predict where this is going to be, you’re wrong.       It

22   doesn’t work that way.      Every day we’re changing the, the

23   situation with respect to our fuel costs and

24   renegotiating those things depending on where we think it

25   might be.   But we’re not always right, so you have to go

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1    back and re-negotiate.      So it’s not, it’s not that

2    easy.    It’s very complicated, and it changes all the

3    time, which is why I’m underscoring the fact that we need

4    to have the ability not to put it in the fare, but to put

5    it on later when we have a little bit better idea after

6    the fact.

7                MR. BRISTOW: One other thing.       And you’re right

8    about the hedging, because we don’t know either.         Today’s

9    fuel price today at $43, we’re not getting the same

10   benefit on the fuel surcharge today because of how they

11   were hedged out before.       You still have not received the

12   same drawback in your pricing because of how you

13   purchased your fuel 3, 4, 6 months ago.         So the

14   government doesn’t get that benefit until your part

15   reduces that process.      And we allow it to continue to be

16   implemented in your fuel surcharges.         So I do agree with

17   that.    But I think we’d like to take this back, take a

18   look at it.    We understand your issues for reporting

19   these.   We can go back and take a look at this and, and

20   re-read this to see what we should be doing.         This is

21   what the Pre-Solicitation Conference is about, to have

22   these open-floor discussions, and in a practical manner

23   to understand what the problems are and which way we can

24   proceed.    Okay.   So we’ve got fuel surcharge on these

25

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1    references the way they are internationally.        We’ll

2    make sure that we address that.        Okay.

3                 Any other questions on that?

4                 MS. JAREMBACK:    I just want to make one quick

5    comment about what you said, Denny.        After bid submission

6    on international markets, if you are awarded a contract,

7    you can still add fuel surcharges.        You can still

8    implement them as long as all the requirements in

9    Sections C-13 are met.       We’re not taking that away.

10                MR. CLIFFORD:    I understand that.

11                MS. JAREMBACK:    Okay.

12                MR. CLIFFORD:    But you’re not giving us, you’re

13   not, you’re not -- it’s not, it’s a consistent practice.

14   You can’t just say okay well you can put it in your fares

15   and some airlines do and some airlines don’t.        You can’t

16   leave it that way.     It’s, it’s got to be more pristine

17   than that.    I just don’t, I still don’t understand why

18   you, why you want to put it into the fare basis instead

19   of just keeping that alone by itself the fare based on

20   its own merits and the fuel surcharge is tacked on later,

21   if we want it to be separately, rather than keep dumping

22   thing into the fare such as and we’re -- talk about this,

23   bags.

24                MS. JAREMBACK:    As Jerry said, we’ll table this

25   for discussion.    This is why we have the pre-solicitation

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1    meetings to discuss these issues, but we’ll take it

2    back internally.     But how you just described it, Denny,

3    the fuel surcharges should be included in domestic bids

4    as it is now.    So I’m not quite seeing how you’re, you’re

5    saying that it’s not consistent.       It might not be how the

6    airlines do it right now or how you’ve been bidding or,

7    you know, you as the airline community, but what we’re

8    looking at is when you, you place your bid is that you

9    include everything that is happening commercially at that

10   time, and then we still allow you to add any fuel

11   surcharges on after that, if they’re imposed

12   commercially, like I said, following the rule for 14-day

13   consecutive minimum.     So we are allowing for the

14   additional, but we’re just saying up front, if you know

15   that there’s a fuel surcharge in a certain market at the

16   time of bid submission, we want that, we want to include

17   it in the fare.    We don’t want you to go back, you know,

18   years to add fuel surcharges on that -- back before you

19   submitted your bid.

20             MR. CLIFFORD:      In practice, there’s a huge

21   difference between domestic --

22             MS. JAREMBACK:      Okay.

23             MR. CLIFFORD:      -- fuel surcharge and

24   international.

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1              MR. BRISTOW:     Have to clear a path over here

2    Tom or we’re going to have to move you up to the front,

3    okay.

4              MR. BILLONE:     To go to Denny’s point, there is

5    a huge difference between domestic and international.

6    Domestic fuel surcharges we’re dealing with one

7    government.   In essence it’s the United States

8    Government.   There’s no additional fees or any kind of

9    things that go into the application of a fuel surcharge.

10   When we’re dealing with different countries, we have

11   different issues that we have to deal with when we apply

12   fuel surcharges.     So in previous years, we did not really

13   apply any fuel surcharges to the international because of

14   the difficulty it was to try to split out what it would

15   be for government versus commercial.        We didn’t want to

16   hit the government with these real high fees.       But

17   unfortunately, there’s just no way to split it out.       So

18   if we include it in the fare, it makes it very difficult

19   for us going forward to take a portion of the fuel

20   surcharge and now add to the government fare as a YQ --

21   so I don’t know if anybody else is in pricing or revenue

22   management here that works with this stuff, but we have

23   some major issues.     Because as it was presented to me in

24   the past is that the way we did fuel surcharges it makes

25   it very difficult to split out the commercial fuel

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1    surcharges from what we would charge, charge the

2    government.   So when we were allowed to at the end of the

3    last contract when we bid for FY ’09 to take the -- to

4    not put the fuel surcharge in the fare and just take the

5    commercial fuel surcharge made it a lot cleaner for us

6    and a lot easier and less costly.     So this is the point I

7    think we’re trying to get at.     There’s got to be a way if

8    you, if you’re going to continue this, maybe when we

9    present the bids, we present the fare and maybe what the

10   fuel surcharge is at that time commercially.       So it will

11   come up when you do a fare quote as a fare, and then what

12   the fuel surcharge is, but that would have been

13   identified at the time of bid.     And you follow where,

14   where I’m coming from on that?     So you’ll know ahead of

15   time what portion of the fare is the fuel surcharge,

16   rather than lumping it in the fare.      And that allows us

17   to continue the way we’re doing it.

18             MR. BRISTOW:     Don’t think we didn’t have that

19   discussion.   But what that does do then is make fuel

20   surcharge an evaluation process, correct?        Because if you

21   have Airline A providing a fare for $300 --

22             MR.   BILLONE:    We have that problem now.

23             MR. BRISTOW:     You have a fuel surcharge of 150.

24   You have $450 fare.   Airline 2 has 310 but only has a

25

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1    fuel surcharge of 100.     You want me to evaluate this as

2    410 and do it to number 2 and award it?

3              MR. BILLONE:     Let the chips fall where they

4    may.

5              MR. BRISTOW:     There we go.

6              MR. BILLONE:     I mean, you know, this is a

7    difficult issue.

8              MR. BRISTOW:     It’s very difficult.

9              MR. BILLONE:     Okay, and you can go through

10   everything that’s charged now in all of our charges and

11   say -- when we get into the facts, how, how do you

12   evaluate the true value of what you’re paying.

13             MR. BRISTOW:     Tom, we can’t hear you.

14             MR. BILLONE:     Oh, please.

15             MR. BRISTOW:     The transcriber can’t hear you.

16             MR. BILLONE:     You guys have microphones in your

17   2009 budget?

18             MR. BRISTOW:     We actually asked for three.

19             MR. BILLONE:     Okay.    Taking that example, why

20   don’t you just take all the fees that – á la carte that

21   the airlines charge in evaluating -- that was one of my

22   questions that I threw out to you.        Why are you just

23   taking on certain fees that you’re going to include in an

24   evaluation such as the bag fees, which is a big issue

25   that’s coming up here?     Now, I mean why don’t you take

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1    into consideration the airlines should allow more

2    legroom at a fee, you know?      Like United Airlines there’s

3    more legroom in certain portions of the cabin.       Or change

4    your reimbursement to allow your passengers to take

5    advantage of that extra legroom.       Now the fare is the

6    fare.    That’s what the general -- you always want to be

7    treated like the general public, that’s the way the

8    general -- this is the fare.       This is all the fees on top

9    of it.

10                MR. FLYNN:    This is David with HHS.   From a

11   agency perspective, we’re looking at more planning and

12   budgeting.    When we can’t get the fuel surcharge included

13   into the price, it’s harder for us to plan and budget for

14   international, even domestic travel.        When I send off for

15   travel going international and it’s costing we are

16   estimating, you know, $1,000 for the trip, and then it

17   comes back at $1400 as when it gets close to the trip,

18   then we have to go through the whole approval stage again

19   on having that traveler -- on the international trip.

20                MR. CLIFFORD:    And we appreciate that, but

21   welcome to America.       Because every corporation in America

22   has to do the same thing.

23                UNIDENTIFIED SPEAKER:    Is this how you cut me

24   off?

25                (Simultaneous comments.)

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1              MR. CLIFFORD:      Anyway, my point is you’re

2    letting the tail wag the dog here, you know.       I realize

3    and understand you’ve got issues with respect to your

4    budget and how you do things internally, but every

5    corporation in America does the exact thing, you know.

6    We put a clear only fare out there, not with all these

7    ancillary costs involved and, and people just have to

8    deal with that.    Why?    Because we don’t know what those

9    costs are going to be either, okay.        To Tom’s point and

10   everybody else’s point, you know, you’re adding things

11   into a fare, bags, whatever, is muddying up the what I

12   call the pristine comparison of an evaluation process.

13   And Tom’s exactly right, you know, why don’t you include

14   everything else?     You know, whether you have smoking or

15   nonsmoking.   Some international carriers still have

16   smoking today. I mean you can put all sorts of things

17   into the fare.    As soon as you begin that process, you’re

18   on a slippery slope.      You start moving away from a clear

19   evaluation process that’s black and white compared to

20   other airlines, and that’s the problem that we’ve got

21   with putting anything, whether it be fuel surcharges.        I

22   realize in domestic that that’s different than

23   international.    But you’re still muddying up the works

24   even there.   You’re just not getting a comparative

25   analysis of apples to apples.       You’ve got apples and

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1    grapefruit running out there.     And it’s only going to

2    exacerbate the problem when you start putting bags and

3    everything else in there.    Where do you stop the process?

4               MR. BRISTOW:   Thank you.

5               MS. JAREMBACK:   Okay.   We’ll move on from that

6    discussion on the B-19, Section B -- international -- I

7    think we have a, a few issues that we are taking away and

8    we will discuss. I will, I’ll quickly go over the GSA’s

9    interpretation of fuel surcharges and how they are

10   handled just so that we’re all on the same page.        This --

11   okay. This one might be a little easier.         Just so that

12   we’re all on the same page and that everyone is clear

13   about how fuel surcharges work and how they are applied.

14   They’ll be handled as they currently are in accordance

15   with Section C-13, which includes written notification of

16   the commercial fuel surcharge imposed, the affected

17   booking inventories -- the YCA, dash CA and dash CB, the

18   amount of the fuel surcharge, the market to which the

19   fuel surcharge is applicable, and a 14 consecutive day

20   minimum before implementing them on City Pair contract

21   fares.   For any fuel surcharge that was initiated after

22   the date of submission of offers but before contract

23   effective date, a submission of a written representation

24   of the original offer price did not include any amount of

25   anticipated fuel surcharges needed. If the date when the

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1    fuel surcharge is imposed commercially is after

2    contract award but prior to the start of the FY ’10

3    contract period and the fuel surcharge is in place by at

4    least 14 consecutive days commercially, the fuel

5    surcharge will be effective no earlier than October 1,

6    2009, which is the effective date of the F10 contract.

7    And I think that would have handled all of the questions

8    related -- there was a question regarding just to talk

9    generally about how fuel surcharges are applied.        And Tom

10   has a question.

11              MR. BILLONE:   I have a suggestion on the

12   notification of reducing fuel surcharges.         We’re getting

13   like maybe 5, 6, 7 things a day that are reducing fuel

14   surcharges, and the issue we have is when we -- if we, if

15   we submit -- figure out the time to fill out the

16   spreadsheet, having to put the date that it was in effect

17   commercially originally doesn’t make sense because it’s

18   being reduced, not increased.      So I’m making a suggestion

19   that when we have a reduction in the fuel surcharge,

20   which is the same day as the commercial fuel surcharge

21   reduces, that we just put the date that it’s effective in

22   and not have when it originally went into effect.        Does

23   that make -- doesn’t even make sense because it’s going

24   down.   So then that date now that went down becomes the

25   effective date of the fuel surcharge.       Makes it a lot

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1    cleaner, a lot easier.    Because I mean if you’re

2    getting 5, 6, 7, 8 -- a day, I mean it’s not the only

3    thing you have to do, you know, and it’s really difficult

4    to keep on top of it.     So if you make that change in the

5    process, I personally would say thank you very much.

6               MS. JAREMBACK:    We can certainly take a look at

7    that.   The -- our only issue is for all the FY ’09

8    contract holders, there was the contract --

9    interpretation letter sent out last September that

10   addressed the format that the, that the fuel surcharges

11   need to be submitted in.    And as long as that’s followed,

12   I don’t see why that’s a problem.     We just need to

13   maintain the actual, the format.     So we’ll take it back

14   and review it, but it doesn’t, it doesn’t appear to be a

15   problem.

16              MR. COYLE:    George with American.   Just a quick

17   question for clarification.    If at the time of bid

18   submission you calculate in the fuel surcharge but the

19   fuel surcharge goes up $5 or something, will you be able

20   to apply the difference, the increased amount, just the

21   $5 additional?   Did that make sense?

22              MS. JAREMBACK:    So at time of bid submission

23   you, you -- you, you offer a fare.      And then after that

24   time, you -- that the fuel surcharge has gone up by $1,

25   $2, $5, after contract award, and you have to, you know,

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1    to be awarded that contract, City Pair market, you can

2    ask for an increase in fuel surcharges, but the effective

3    date will be no earlier than October 1, ’09. That’s the

4    effective date of the contract.       So, yes, you can

5    increase the fuel surcharge as long as all of the, the

6    regulations in C-13 apply, all of those, those rules.

7    So, yes, you can.   It, it -- I don’t think I’m making

8    myself clear, but --

9              MR. COYLE:    Just the difference?

10             MS. JAREMBACK:      Just the difference.   So if it

11   was a $50 fuel surcharge and it has increased in that

12   market to 55, it would just be the difference.

13             MR. COYLE:    $5?

14             MS. JAREMBACK:      Yes.   You would not add the 55

15   on top of the 50 in that case.

16             Any other questions on fuel surcharges?

17             Moving on, Section D-1, Subsection C, period of

18   acceptance of offers.   Last year Section D-2 was included

19   in the solicitation, which held prices in the offer firm

20   for 880 days.   This was incorrectly incorporated last

21   year, and it was changed via a modification to all FY ’09

22   contract holders.   So we’re just changing it back to for

23   F ’10 as it’s been in every year past on the program

24   where D-1 will read that offerors agree to hold the price

25   in its offer firm for the length of the contract period.

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1               Any questions?

2               Next section is D-5, Method of Evaluation and

3    Award for Group 1.   The maximum points under Sub-factor 1

4    for international markets will be 40 for nonstop service

5    and 20 for direct connect service.      The reason for this

6    change is that distribution points are scored both on

7    outbound and inbound flights.      And this was not

8    previously reflected in the distribution table.       That, so

9    that’s why the -- that’s why it was changed.       There was a

10   question on it, and I hope I answered it.        If I didn’t,

11   are there any further questions?

12              MR. CLIFFORD:    The max before, Kristen, was 60,

13   is that right?   Or no?

14              MS. JAREMBACK:   20 and 10.

15              MR. CLIFFORD:    Okay, but it’s 20 and 10 before.

16   So has this gone up?

17              MS. JAREMBACK:   It’s --

18              MR. CLIFFORD:    Or down from their prior -- it’s

19   gone up?

20              MS. JAREMBACK:   Yes.

21              MR. CLIFFORD:    We’ve had that for years, right,

22   with the other point system, right?

23              MS. JAREMBACK:   The other point system only

24   counted for one way.   It didn’t count for inbound and

25   outbound flights, and Bissell (ph.) Station reads that we

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1    should be counting inbound and outbound flights.     So

2    it, it was never previously recorded that way.     So it,

3    it’s a, it’s a change, but -- any other questions?

4              MR. BRISTOW:   Same factor.     It’s just double.

5              MS. JAREMBACK:    Any other questions?

6              Jerry Ellis will talk about the City Pair

7    Market System.

8              MR. ELLIS:   Good morning.     Afternoon, ladies

9    and gentlemen.   I just want to talk about how we came

10   about and talked a little bit about the markets.      First

11   we survey our agencies through a program called FARMS.

12   It’s Federal Agency Requirements Market System.

13   Basically it outlines what they feel going forward what

14   their markets they would -- their requirements are, and

15   we ask for estimated passengers.     We also take into

16   consideration ARC and smart pay data or historical data.

17   So we look at all the areas before selecting markets.

18   Just to let you know, for FY ’10, again we received over

19   35,000 market request requirements, if you will, from the

20   various agencies, and we understand both from our

21   standpoint and your standpoint that this is a number that

22   we cannot deal within this contract.      So we pair it down

23   based on passenger usage down to a workable number for us

24   and for you, and we try to keep that number somewhere

25   between 6 and 7 thousand markets.     And, again, we did a

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1    great deal of extra analyization this year to look at

2    those markets that were requestered [sic] and to try to

3    ensure that at least one carrier met the minimum service

4    criteria in each one of the markets for solicitation so

5    we don’t end up with a lot of markets which no carrier

6    will qualify for and is what we call wasted markets.

7                 So here’s what we ended up with.      A total of

8    6,891 total markets.     There are -- 2,590 Group 1 domestic

9    markets; 6,068 Group 1 international markets; and, again,

10   we have extended more markets into the extended

11   connection marketplace to again meet our customer use

12   requests and to ensure that at least one carrier meets

13   the minimum criteria.     So we try to get bids in those far

14   away markets in the Middle East and Africa and places

15   like that.    So we now have 84 Group 1 extended connection

16   domestic markets, and many of those are in and out of

17   Hawaii or Alaska.     And we have 187 extended connection

18   international markets, and then a total of 3,529 group --

19   total of group 1 markets and 2,487 Group 2 domestic

20   markets, 875 Group 2 international markets, and that

21   brings us to the final total.

22                Do we have any questions on how we arrived at

23   those markets or on those markets?

24                We had a couple of questions on, on the

25   markets, and let me get those.

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1               MR. CLIFFORD:    Could you just state how many

2    markets by comparison you have in FY ’09?

3               MR. ELLIS:    Yeah.   FY ’09 we solicited 6,808

4    markets.   Actually -- let me get my, my notes here.         We

5    have 83 more line items than we did last year, and

6    actually we saw a great deal more usage.          We have 61 A

7    markets.   Those are 20,000 or more passengers per year.

8    That increased by 26 over FY ’09.      We have 48 B markets.

9    That’s 15,000 to 20,000.     That increased by 23 over last

10   year.   92 C markets, which increased by 41 over last

11   year.   That’s 1,000 -- that’s 10,000 to 15,000

12   passengers.   283 D markets.     74 more than last year.      And

13   1,496 E markets, which increased 58 over last year.         So

14   what you see from this is unlike maybe some of your other

15   business units, government travel is not decreasing.          In

16   fact, it’s increasing.     So we feel at GSA that this makes

17   us a very valuable customer because our passengers are

18   steady and in fact increasing over some of your other

19   business units.   The questions that we received regarding

20   markets, one of them was Alaska and Hawaii markets with

21   two connect points, extending connection markets.         That

22   was not a full sentence.     It was basically we were just

23   trying to draw your attention to there are more Alaska

24   and Hawaii markets that are in the extended connection

25   4,000 series that you’ll see on the domestic side. And

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1    all the extended connection markets, be they domestic

2    or international, have a one flight minimum criteria.             So

3    one flight in and out that meet the qualifications will

4    suffice for bid purposes.

5               Any other questions on -- excuse me -- on, on

6    the markets?

7               I thank you very much.

8               Kristen, are you going to take on the baggage

9    fees?   Oh, good.

10              MS. JAREMBACK:      Okay.    I’m going to talk

11   briefly about where GSA is coming from as far as baggage

12   fees, and I will address all of the questions that have

13   come in.   There are quite a few, and, again, I tried to

14   lump them all together to address them in one.            So let me

15   get through both of my, you know, areas I’m going to talk

16   about, and then I’ll open up the floor for discussion.

17              Okay.    So the changes for baggage fees are made

18   in Section B-19, D-7 and D-8.          The baggage fee is for

19   evaluation purposes only.       The proposed YCA and dash CA

20   fares will be the awarded contract fare.            The baggage

21   fees will not become part of either of those fares.            For

22   Group 1 markets, proposed baggage fees will be added to

23   the composite fare and factored into the overall cost

24   benefit tradeoff.      For Group 2, the proposed baggage fees

25   will be added to the composite fare for price evaluation.

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1    As you know, Group 2 is evaluated on lowest price

2    technically acceptable.

3    So there’s no other cost benefit trade-off.      The

4    questions that came in, I’m going to try and address

5    right now.   The baggage fee is for the first bag only,

6    and does not include additional charges for overweight

7    and oversized bags.   That would still be considered an

8    extra fee at the time of travel, and is not considered in

9    the evaluation process.    A question came in on how will -

10   - identify which passengers will, will not be charged at

11   the airport for baggage fees.     In answer, if you, if you

12   are awarded, if carrier is awarded the City Pair Market,

13   which included a baggage fee for evaluation purposes,

14   then you may charge a passenger that amount at the time

15   of travel for the first checked bag.      Standard commercial

16   practices for second, third, overweight, oversize bags

17   can be applied as necessary according to airline policy.

18   B-13 -- here’s another question.     B-13, Subsection 3,

19   states all fares shall include the cost of meals and

20   baggage handling services normally and customarily

21   provided by scheduled carriers to the same class of

22   commercial passengers.    Which baggage handling services

23   do you mean?   We’re talking about the first baggage, the

24   first bag fee only.   And this section is basically

25   stating that the same -- for the same class of commercial

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1    passengers fares for government travel should include

2    the same type of fees.   GSA does not know -- we were

3    asked if we had the percentage of travelers who are

4    affected by baggage fees.    We do not have a hard

5    percentage of travelers that are affected by baggage

6    fees, but we do know that the average trip of a

7    government traveler is about three and a half days, and

8    GSA estimates that at least one bag will be necessary to

9    perform that travel.   So with one checked bag at just a

10   $15 baggage fee for the first bag with one million

11   passengers, that’s 15 million right there.      And we know

12   that we have at least 8 million passengers a year.       So

13   it’s quite a big, quite a big amount.

14             MR. BILLONE:     You’re assuming everybody

15   that --

16             MS. JAREMBACK:    Can we wait until I’m done

17   before we -- let me just go through a couple more bullet

18   points, Tom, and then I’ll get your question.      Okay?

19             A question came in about why the baggage fee

20   was the only fee selected, and that is because it’s the

21   only fee that’s not optional.    Passengers cannot choose

22   to use that service or not.    Like we said, there’s -- for

23   a typical traveler a three and a half day business trip

24   will require a bag.    So that’s why we’re saying that it’s

25   not an option will be to have to take a bag to perform

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1    their mission -- them to take at least one bag to

2    perform their mission.    And unlike other ancillary fees

3    like seat selection for premium class seating or other

4    such fees where a traveler has a choice to pay for those

5    extra services.   With the baggage, the first baggage fee,

6    they don’t typically have a choice.       GSA does understand

7    that active duty military are not charged with baggage

8    duty -- excuse me -- for baggage by most carriers.

9    However, for evaluation purposes, this is not taken into

10   account, and GSA is using the baggage fees for evaluation

11   for City Pair Market, not by government passenger type.

12              And then a question came in regarding the COPS

13   system.   And in COPS there will be a separate column for

14   baggage fee -- submitted.

15              And that wraps up the questions.       So I’ll take

16   questions from the audience.

17              Tom.

18              MR. BILLONE:   Tom Billone, United Airlines.      We

19   had this discussion, I think it was in October, about

20   question as to why we didn’t include the bag fees in, in

21   the pricing -- pricing, and the issue became why should

22   we penalize the person who doesn’t bring a bag or just

23   brings carryon to pay more for the travel?        I am having a

24   hard time --

25

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1                 UNIDENTIFIED SPEAKER:    -- we can’t hear him

2    on the phone.

3                 MR. BILLONE:   The question was -- or the answer

4    to the question I have is back in October, we had a

5    meeting, and one of the issues that came up was why don’t

6    we just include the bag fee in the price, the GSA price?

7    And my response at that time was well then you’re

8    penalizing every traveler, whether they have a bag or

9    not, they’re going to pay a higher fare, all right.        Now

10   I don’t know how often you all have been on a plane, but

11   I would say the majority of people do not check their

12   bags.    You can put three and a half days of clothing in

13   the overhead quite easily with, you know, and overhead

14   bag.    So you’re having us apply this rule to everybody

15   who may not use it.     And your, your figures are assuming

16   everybody’s going -- that’s going three and a half days

17   is bringing a bag.     Well, you can’t make an assumption

18   like that.    That is why I asked the question what

19   percentage of people carry bags?       And I’ll bet you it’s

20   less than 5 percent of all your travelers.         But you don’t

21   have the data.    You’re shaking your head no, but you

22   don’t have the data.     You’re not telling us, okay.     The

23   issue is you’re making everybody penalized, you’re

24   penalizing everybody for something that not everybody is

25   using.   And it’s an optional thing.       You can put three

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1    and a half days for clothing and change of clothing in

2    a bag that will fit in the overhead, if that’s your

3    criteria.   I think this is, this is bogus.

4                MR. CLIFFORD:    Denny Clifford, Delta.       Tom’s

5    100 percent right on every single point.           Your strongest

6    argument that this is designed -- it was put in because

7    it’s not optional is false.      He’s absolutely right.

8    Three and a half days, most people go to carry-on.           How

9    many people -- go for a three and a half day trip and

10   carry something -- how, how many people want to wait at

11   the carousel, pick it up at the end of the day?          Except

12   for you, Andrea.     But the point is it is optional, and

13   what you’ve done here is you’re not evaluating the fares,

14   one fare against another with 14 different airlines or

15   whoever is bidding on the market.       You’re evaluating our

16   baggage policy, and that’s just plain wrong.

17               MR. BRISTOW:    Our hopes under this is to

18   evaluate the cost of the trip and the cost of the travel,

19   which includes all these other ancillary type fees.          The

20   other ones like we said are choices, premium class

21   travel, larger seats, fuel surcharge, we left that as it

22   is, so that you would have an economic price adjustment.

23   We have no economic price adjustment for this.          Each of

24   the carriers charge a different rate.        Some exempt our

25   active duty military.      Some don’t charge for the federal

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1    government or the City Pair Government any fares.         We

2    trying to standardize the process for evaluation purposes

3    only, but still allows you the flexibility to charge your

4    rates for those that check the bag and not charge those

5    who don’t.    For evaluating purposes, you want me to take

6    your baggage fees today and apply them to the fare that

7    you put in, because that is the total cost of the travel.

8    Some charge $10, some charge $15, some charge $25.            We

9    only say we’re going to evaluate it off of the first bag.

10   We allow you that difference on the second bags because

11   some charge $25, $40, $50 for the second bag.         We felt

12   that it was inappropriate.      One bag would do it.     We

13   would be able to evaluate the fares and the fee applied

14   to it to make the best conscious decision.         If you want

15   to say no fees on this City Pair Market, no baggage fee,

16   then the composite rate will be your fare.         You still

17   have the flexibility to charge later.        But for evaluation

18   purposes, you said that you would not charge the

19   government a fee for bags, and some carriers don’t. The

20   confusion out there this year in the baggage fees, who is

21   going to be charged, who is not, how much is it going to

22   be charged?   That’s where the voice of our customer, in

23   talking to them, came back to us and said, we need some

24   assistance here.     The initial discussion back in October

25   was to put the bags in the fee, and we agreed, putting it

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1    into the fare, putting the baggage fee into the fare

2    compounds your issue, and you want to be able to bid

3    appropriately just on the fare.     But what we need to do

4    is properly evaluate the services that we’re receiving.

5    And if Carrier A says I’m not going to charge the

6    government on City Pair fares for bags, then so be it.

7    And that fare wins as part of the evaluation process.

8    Very similar to here.     The fare could be $300. This could

9    be $15.   The fare could be $310.    This could be $10.   Who

10   gets awarded that market?    And based on our analysis and

11   the amount of travelers that we have, the cost impact is

12   tremendous to our travelers, and we don’t believe that

13   people just stick all the bags up into the overhead.

14   They have to have the option to get what they need to do

15   or get where they need to go and perform their mission

16   appropriately.

17              MR. BILLONE:    You just said something, which is

18   quite interesting, and I’m going to throw a hypothetical

19   out to you, okay.   I’m Carrier A, and I look at your

20   method of, of evaluating the fares, and I go, gee, you

21   know, if I tell the government I’m not going to charge

22   the bag fee just for this evaluation purposes, I will say

23   no, I’m not going to charge it.     But two months down the

24   road when the contract is effective, I charge $25 or $30

25   dollars for the first bag.    I’ve got that City Pair, but

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1    now my evaluation is all skewed because I’m charging

2    $25, $30 dollars for a bag that you didn’t include in

3    your evaluation.     I can game the system.        I mean not that

4    I’m going to, but I wouldn’t put it past some people that

5    might want to do that, and they’ll get the City Pair and

6    then you’ll be paying more.

7               MR. AQUILINO:      Let’s be a little clear.      Look,

8    we’re not asking you to declare whether you’re going to

9    charge a baggage fee or not.      That’s not what the purpose

10   of this thing is.     All we’re saying is that when you do,

11   you include it in a number, the composite number there.

12   That’s what we’re saying.      So you will be -- whatever

13   your fare is, your fare basis will be looked at against

14   everyone else.   It’s not declaring whether you’re going

15   to charge for bag or not.      You’ve already said whether

16   you’re going to do that.

17              MR. CLIFFORD:     But, Vince, Tom is right.      There

18   will be airlines that game the system just to get the

19   award.   You can’t do that.     That’s absolutely unfair, and

20   it’s apples and oranges.      You’ve got to evaluate this

21   contract based on fares and only fares.        That’s what it

22   was founded upon 30 years ago, that’s the way it should

23   be consistently.     When you start dumping, and you are

24   dumping these things in to this contract, you have

25   totally bastardized, and I use that from a technical

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1    standpoint, this contract.     There is no way that you

2    can equally represent and evaluate carriers when you’re

3    going to have carriers that do this. They’re going to

4    game the system, and they’re not going to be up front

5    with this thing at all.     You’ve got to base this thing on

6    fares and fares only, and baggage has got to have nothing

7    to do with it.    Otherwise, I’m telling you what, you’re

8    going to have -- there’s a reason that you have not had

9    participation in this contract from three major carriers,

10   okay.   If you want others pushed away, you can take the

11   risk, but you are pushing people away from this contract

12   with things like this.

13              MR. BRISTOW:   We are trying to even the playing

14   ground. We’re also trying to make sure that we properly

15   evaluate this for our customers and traveler

16   participation.    As I stated, the confusion out there in

17   the field, at the airport, of who is being charged, who

18   is not, who gets this award, who doesn’t, there are some

19   carriers that don’t charge for the bag and may return

20   back to the program.    Those are issues that we have to

21   take a look at.   Other carriers feel that they don’t

22   charge for a baggage fee and that they are

23   inappropriately not awarded a contract based simply on

24   the base fare when they offer other services that are

25   beneficial to the traveler on a daily basis.

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1               MS. CARLOCK:    Can I have a point of

2    clarification.    I’m a little confused.     And I need to

3    understand what they are saying, the airlines.       So am I

4    clear to understand then that if the fare is $300 and

5    then there’s a $10 fee for the bag, which would be 310,

6    right now at this point they would bid that, and the

7    evaluation would be on the 310?

8               MR. BRISTOW:    Correct.

9               MS. CARLOCK:    Correct?   Okay. But then there

10   could be a carrier that only bid the $300 and then state

11   that they are not going to charge a fare or a fee for the

12   bag, and then two months down the road come back and ask

13   for an equitable adjustment, if you will, to now charge

14   $10 or actually $20 for the bag.      So now their fee is

15   actually 320 versus the 315 or the 310. Is that what I’m

16   hearing?   Is that accurate statement?       And I’ve got one

17   more point.   The additional $20, is that then added to

18   the $300 or do we still have to pay the separate $25

19   separate when we get to the airport?

20              MR. BRISTOW:    Pay the $25 separate when you get

21   to the airport.

22              MS. CARLOCK:    So it’s not going to be included.

23   So we’re right back where we are right now?

24              MR. BRISTOW:    That’s correct.

25              MR. CLIFFORD:    Well, not exactly.

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1                 MS. ARLOCK:     Well, we are because --

2                 MR. CLIFFORD:    Well, yeah, right, you guys are.

3    The problem is you’ve got a partner who you’re dealing

4    with participating in this contract that’s giving you

5    deeply discounted fares.       What are the airlines getting

6    for this?    You’re going to have an airline out there that

7    gets awarded the market by not fessing up so to speak

8    with the bag fees.     They get awarded the market and then,

9    oh, okay, two months later they put in the bag charge,

10   okay.   That’s not right.      That is unfair, and you can’t

11   have a system that is designed that way, which evaluates

12   it without, without considering -- you’ve got to have

13   outside straight across the board just the fare

14   evaluation.    And, by the way, Jerry, just one last point

15   just for the record, your objectors are mutually

16   exclusive.    You said you have to accommodate your, your

17   passengers, your travelers, people are complaining about

18   this, as well as, as accommodate the airlines.         You can’t

19   do both.    Those are mutually exclusive objectives, and

20   you’ve got to decide one way or the other how this goes,

21   but it’s an unfair system the way you’ve got it designed.

22                UNIDENTIFIED SPEAKER:    I’m also concerned about

23   the fact of an airline saying they’re not going to charge

24   a bag fee, and then they at a later point put that bag

25   fee in.    Those markets really should -- the

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1    administrative nightmare of that, I don’t think you’d

2    want to go there.

3               MR. BRISTOW:    Okay.

4               MR. ELLIS:    If I may make a point.      This

5    polling the airlines here.    How do you feel that if we

6    put in the contract that if you put down that you are not

7    charging the government passengers a bag fee, then you

8    cannot do it for the life of that contract?        That would

9    take care of that problem about gaming.

10              UNIDENTIFIED SPEAKER:    Well, that would help,

11   but I still think you need to more clearly define in the

12   contract what you’re covering for bag fee, that it needs

13   specifically to spell out first bag fee.         It does not --

14   include second bag fee, overweight, excise or excess

15   baggage, any of those fees.    I mean this is very generic

16   and, and really open to interpretation.

17              MR. GAMMAN:    This is Chris Gamman from US

18   Airways.   I’d also like to add that the one bag fee added

19   -- the first bag fee added to the fare seems a little bit

20   more anecdotal than based on empirical evidence.

21              MR. BRISTOW:    Okay.   Different suggestions here

22   and that’s what we’re here for today, different

23   suggestions on how to get through this issue.        Should we

24   take the baggage fees that you’re charging currently

25   today as an evaluation factor and a past performance

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1    factor and add it into the fare?        Or should we give you

2    the flexibility to say, yes, I will charge a bag or no, I

3    won’t?   And in the fare, not in the fare, separate from

4    the fare but for the evaluation process.

5                 I’m sorry.   Tom.

6                 MR. BILLONE:   Just want to make sure I

7    understand the evaluation process here, because I think

8    it’s getting a little muddy.      You’re going to take what

9    we bid for the YCA and the dash CA fare and come up with

10   a composite and then add the fuel surcharge on that to

11   come up with the evaluation criteria.

12                MR. BRISTOW:   You mean the baggage.

13                UNIDENTIFIED SPEAKER:     Baggage fee.

14                MR. BILLONE:   Okay, the bag.    I’m sorry, the

15   bag fee.   And that’s how you’re going to do it.         You’re

16   not going to take the YCA and say, okay, it’s another $30

17   or $25, you’re going to take the composite.           It’s going

18   to -- I’ve heard several things around here, and I just

19   want to make sure that I was -- when I go to my people

20   for pricing, I need to tell them how that’s going to be

21   evaluated.

22                MR. BRISTOW:   The same composite --

23                MR. BILLONE:   It’s going to be the composite

24   fare and not on the individual fare?

25                MR. BRISTOW:   Correct.

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1              MR. BILLONE:     Okay.    Thank you.

2              MR. BRISTOW:     The same composite fare that you

3    -- just adds in the bag fee.

4              UNIDENTIFIED SPEAKER:       Do you have question,

5    Jerry Ellis?

6              MR. CLIFFORD:     No.    We don’t want that, and the

7    reason, this is the reason.       You don’t have across the

8    board, yes, we’re going to charge bag fees or, no, we

9    don’t charge bag fees.    There are segments within the

10   population -- there’s the DOD component.         Delta Airlines

11   offers free baggage to the DOD component, but they do not

12   for Embassy staff.   They do not for -- we do not for

13   civil service.   They -- we, Delta Airlines does not

14   charge for the DOD person on active duty, but it does for

15   civil servants of the government.

16             MR. ELLIS:     That was already covered.     We’re

17   not taking the military DOD passenger into consideration.

18   It’s just for the government --

19             MR. CLIFFORD:     But my, but my point is this.

20   We as the airline bidding this contract have to have the

21   flexibility.   When we look at a YCA fare or a blank CA

22   fare, we don’t want to be in a situation of thinking,

23   okay, do we need to -- is this a, a more of a civil

24   servant-type market or is this more of a DOD market and

25   having to go through gyrations of, okay, who is going to

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1    get charged a bag, who is not going to charge a bag?

2    What are should we consider with respect to all of those

3    different variables?      We can’t have that.      It’s just,

4    it’s a mess.    It’s a mess administratively.        It’s

5    impossible to administer and, and it just doesn’t work.

6    We’ve got to keep it clean.       And the way it’s been clean

7    is the way it’s been done in the past.        Keep it out of

8    the fare evaluation process.       I know it’s not in the

9    fare.   It’s in the evaluation process the way it stands

10   right now.    You can’t do it that way.

11                MR. BRISTOW:    Jerry, I just wanted to comment

12   on the -- on what you said.       I, I think if you’re going

13   to include bag fees or not include bag fees in the

14   evaluation, you know, that’s, that’s your decision, but,

15   you know, whatever, whatever carriers bid, that’s what

16   they, you know, and, and they win that award, that, that

17   needs to be a commitment.       So if they bid no bag fees,

18   then they need to be, you know, if they win an award

19   based on whatever fare and whatever bag fee, then, you

20   know, you obviously don’t allow us to, you know, once we

21   win an award today raise the fare or, or do whatever we

22   want with the fare.       So I think that the same needs to

23   apply to bag fees as well.

24                MR. ELLIS:     Denny, your point is well taken

25   about, you know, it’s always been this way, it’s always

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1    been this way.    Well, things changed this past year,

2    Denny.    The airlines are the ones that unbundled all

3    these fees, and we have to answer to our customers on the

4    impact of their operations and on their finances.         And

5    this is part of that.      I mean we allowed the fuel

6    surcharge to go forward, and that’s been a very big help

7    to a lot of airlines, and it’s been an administrative

8    problem for us, but we sucked it up, and we allowed that

9    to go forward, as you can see.      But now the unbundling of

10   all these fees is having another financial and

11   operational impact on our customers, and we at GSA, we

12   have a fiduciary responsibility to answer those types of

13   inquiries, and what are we as a government doing to

14   protect and help our passengers?

15               MR. BRISTOW:    Please state your name and --

16               MR. CLIFFORD:    Denny Clifford, Delta Airlines.

17   You know what?    Regarding fiduciary responsibilities, we

18   also have that to our stockholders and our, our owners of

19   our company, okay.    That being said, your point about

20   change is well taken.      Things do change.      We understand

21   that.    So why after fighting for two years for ticket

22   time limits, a major change of this industry, you have

23   decided not to accept this, and this is the first time

24   it’s been mentioned -- in meeting.      First time it’s been

25   -- it wasn’t even on the agenda.      I don’t know what in

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1    the world happened to that.      You presented your case in

2    December, but it still has not really been addressed why

3    that was rejected.     That’s a change we asked for.     We

4    didn’t get.    So the changes we would like, such as ticket

5    time limits and we asked for, we were faced in December

6    with what I call a quid pro quo.       There’s no other way to

7    define it.    You said okay, if we opt for putting bags in

8    the fare, the GSA will consider putting in TTL for the,

9    for the contract.     You know what? We got neither.     You

10   said no to the TTL, and you said okay we’re going to put

11   the stuff in the bag, in the fare anyways regarding bags.

12   And that is not a partnership.       Frank is still here.

13   Frank mentioned this is a excellent cooperation, a great

14   partnership.    You know what?    It’s not.    This is a one-

15   way deal, and I’ll just say that one point.        Because it

16   has been one way.     The airlines have fought very hard on

17   the TTL issue and on some other things.        We’ve not gotten

18   those.   That, ladies and gentlemen, is not a partnership.

19                MR. BRISTOW:   Ticketing time limit was going to

20   be discussed, and I’ll, I’ll go ahead and take the

21   opportunity to discuss it now. We worked the entire year

22   to do our analysis on the ticketing time limit, through

23   time, effort and expense on behalf of the Government to

24   be able to provide an analysis of the issues.       We

25   listened to our customer groups.       We did a pilot test

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1    with our DOD affiliates to ensure what the impact might

2    be.    Today, the economic issues that face us as well are

3    astronomical. The amount of money it costs us to

4    implement ticketing time limits, to move in that

5    direction, would be too inappropriate for us to, to

6    advise ticketing time limits would proceed forward.         We

7    gave the, we gave the analysis to the carriers in

8    December.    We had one-on-one discussions with the

9    carriers.    Not all agree that ticketing time limit was

10   the number one priority.      May have been a nice to have,

11   but it wasn’t a deal breaker.       Some carriers specifically

12   stated that they needed the ticketing time limit.         All of

13   these considered comes up with the decision of what we

14   had to make today.     And it is a partnership thing.       We

15   didn’t let you down and not do the study.          If you want

16   the, the dollar amounts it cost us to do these studies

17   and the time it took, I’ll be glad to share them with

18   you.    We didn’t leave the plate out there and not, not

19   paid attention to -- specific time line -- did you get

20   it?    No.   But it wasn’t without a concerned effort on the

21   part of the Government and the partnership of the

22   carriers and with our customers to even consider it.          The

23   customer base came back and said possibly quid pro quo,

24   could we have the fees installed into the fare, and

25   they’ll be better suited to take on the ticketing time

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1    limit?    Carriers said, no, they didn’t want that to

2    happen.    We’re looking at baggage fees now outside of the

3    quid pro quo.    We’re trying to come up with effective

4    resolutions to these issues.      We have to restore the

5    confidence of the City Pair Program back to the travelers

6    issue.    That’s where we’re at today.      City Pair Program,

7    should I take it, not take it?       Should I go commercially,

8    not go commercially?     What’s the best fare?     What’s the

9    total cost of my travel?      Am I going to get reimbursed

10   for that or not?     Am I at the ticket counter, and I’m not

11   supposed to be able to have to pay for this bag, and I’m

12   getting charged?     Well, gosh, I heard they’re not getting

13   charged.    How come I’m getting charged?      Commercial

14   practices, we’re trying to get as close as possible to

15   that, but every time we do, it’s costing the Government

16   more money as well.     We’re looking at with a new

17   administration, the new economics, somebody to come out

18   and say cut travel 10 percent.       That economic activity

19   taken away from the carriers would be significant to you.

20   We’re looking at properly managing the process, properly

21   managing travel so that a straight across the board 10

22   percent reduction doesn’t come about.        We need to be able

23   to have these tools necessary to make the best evaluation

24   possible for our customers and for you the carriers.

25   Significant effort is put into the solicitation for you

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1    to get the awarded contracts and the compliance, that’s

2    what we’re working on today.     We’re going to be working

3    on compliance.    We’re going to be working on better

4    travel management.    We have a concurrent meeting going on

5    over at SGTP with the travel agencies to talk about debit

6    memos, talk about secure flight, talk about Fly America,

7    how they should be purchasing the City Pair fares and to

8    make sure that the awarded carriers get what they are

9    contracted for.   We still believe it’s a partnership, and

10   we hope you do too.

11               MR. CLIFFORD:    Thank you.    Just for the record,

12   and, and I did not say we were not appreciative of the

13   efforts and the time and the money it cost to do the TTL

14   study.   But a partnership is when you compromise.      And to

15   be honest, there has not been a whole lot of compromising

16   in the last few years.      I’ll give you the fact that you

17   gave us fuel surcharges.     Why?   You didn’t have a choice.

18   The world changed, and you had to change with it.       The --

19   you just mentioned you needed to restore -- how you need

20   to restore confidence in the travelers about this

21   contract.   What are you doing about restoring the

22   confidence of the airlines who participate in this

23   contract, three of whom have not bid either any of this

24   contract or a major portion of it?        Don’t you think you

25   have a confidence problem with your participating

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1    airlines?   When I say a, a partnership, I’m talking

2    about we give you input, and we hope that we get

3    something out of that in return.      For example, this whole

4    baggage issue.   I will be extremely disappointed. Delta

5    will be extremely disappointed, if this goes forward and

6    you continue to put bags into the fare in the evaluation

7    process.    That’s precisely what I’m talking about here.

8    Okay, we didn’t get the TTL.     We fought hard.      We did it

9    as best as we think -- I think we could have as an

10   airline industry.    We didn’t get it.     That was your

11   economic decision.    Fine.   But now you’ve got another

12   chance here.   You’ve got bag issues.      Are you going to be

13   so-called jamming that down our throats?          Or are we going

14   to have some compromise here, and you’re going to say,

15   okay, fine, the airlines may be right about this?         That’s

16   what I’m talking about as far as partnership.         Because

17   there have been a lot of things in the past we’ve asked

18   for, and, frankly, we are the gift that keeps giving time

19   and time again, and it’s got to stop sooner or later.

20   That’s where your restoring confidence comes in.

21               MR. BRISTOW:   But like other fees and the

22   baggage fees, were not our intent to change.         Airlines

23   changed this last year.     We’re trying to work this out

24   from that change that happened last year.         All these

25   different types of fees associated with that. Okay.           It

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1    says policy.   Can they travel this way?      Can they get

2    reimbursed for this?    How’s this going to occur?     Bags

3    came out to be not the choice aspect, and we are trying

4    to move our travelers for compliance under the City Pair

5    Contract.    Those carriers that didn’t participate before,

6    we hope that they see an advantage of coming back and

7    participating in a strong program that provides good

8    service to our customers and value to the industry.

9    That’s what we’re looking for, and it is a compromise on

10   our part.    It’s a balancing act to try and make sure that

11   our customers are well taken care of -- large amount of

12   customers.   It may be only 2 percent, but as we looked

13   through out evaluation and did our analysis, each of the

14   carriers that were awarded contracts in 2007, received

15   more dollar value that we awarded.      72 percent of all of

16   our travelers traveled on YCA-CA fares.       12 percent --

17   I’m sorry, 16 percent traveled on DG fares, and the other

18   12 percent purchase commercial fares.       This is a strong

19   program, and it does have compliance factors, and we’re

20   looking to tighten those up and ensure that the, that the

21   carriers that win the award get the benefit from that.

22   Baggage fees is one of them.     We’re not the ones that

23   broke out the fees.    We’re not the ones that unbundled

24   them. But we have to take care of our travelers.       We have

25   to work this out.

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1               MR. BILLONE:    I’m going to change the subject

2    here because you’re going to do what you’re going to do,

3    and each carrier is going to make a decision as to what

4    they’re going to do when it comes to bid.

5               UNIDENTIFIED SPEAKER:      Identify yourself,

6    please.

7               MR. BILLONE:    Tom Billone, United Airlines.

8               UNIDENTIFIED SPEAKER:      Thank you.

9               MR. BILLONE:    All right.    Earlier, and I’m

10   going to step back a bit because I wasn’t able to ask a

11   question on the point about the clause in the contract

12   about audits.   Okay.    And that kind of got short time on

13   that.   I can understand why you would audit fares when it

14   was the TMC making the decision where the traveler called

15   the TMC and the TMC put the fares together and issued the

16   ticket, and they may have made a mistake.          And so audits

17   looks at that mistake and says, gee, you know, United

18   Airlines, we had an overcharge.       Why?    I don’t know.

19   Talk to the TMC.     Well, we used to have meetings with

20   audits.   We don’t have them anymore.        Moving down the

21   line, it was always said, well, once ETS and DTS come

22   online, going back a few years, we’ll be able to identify

23   right to the traveler what the problem is.         That hasn’t

24   happened, okay.    Your traveler is making the decision to

25   pick whatever fare it is, and it’s being approved by the

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1    Government.    It’s being approved by the AO, which in

2    our belief is the Government.       So the Government has

3    approved this travel.       Whatever the fare is, the

4    Government has approved it.       Now, there’s an audit.

5    Okay?   You already approved the travel.       So why are you

6    auditing it?    The Government approved the travel.           Now

7    the Government’s come back and say, well, no, we don’t

8    want to approve that travel.       Now TMC didn’t do anything.

9    The airline didn’t do anything.       Is there a traveler that

10   made the decision? You need to go back to them.             I think

11   that whole clause needs to be taken out of the contract.

12   That’s my personal opinion.       Because it is a nightmare.

13   We had nothing to do with it.       The TMC 99 percent of the

14   time has nothing to do with it.       Travelers are making

15   that decision.    And even if it was the TMC, it’s already

16   been approved travel by the Government.        So it’s very

17   confusing.

18                MR. BRISTOW:    Notices of overcharges and debit

19   memos constant issue, and, and we also look at

20   contractual obligations, and we have the City Pair

21   Contract over here, under TSS we have the TMC contract.

22   But the airlines also are the ones that have the contract

23   with the TMC’s to issue that debit memo.           We are

24   approaching this in a strategic analysis of the debit

25   memo problem.    This week we are proposing a focus group

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1    that’s going to help assist with this.        Quality

2    controls and ETS, ETS systems are such that to be able to

3    monitor that overcharge of the City Pair fare.          Most

4    airlines agree they should not be charged more than the

5    City Pair fare, and the AO that possibly approves it does

6    not necessarily have the authority to override the City

7    Pair Contract. Under regulatory obligation audits is

8    charged with managing and auditing the transportation of

9    these contracts.     They only go after the City Pair fares.

10               MR. BILLONE:   That’s not true.        That is not

11   true.

12               MR. BRISTOW:   In the -- well, if it’s not, then

13   here’s what we’re proposing.      A focus group to be able to

14   discuss these with the carriers, the TMC’s, the

15   Government, and to be able to address these issues and to

16   make sure that we’re going to correct this.          This is one

17   of our objectives this year.      Because if we minimize the

18   amount of notices of overcharge, the amount of debit

19   memos, we feel we can pay attention to some of these

20   other things, help you control your cost, help you

21   administer your contract appropriately, and we can stay

22   focused and approached on the right issues.          We’re going

23   to try and minimize that this year.        That’s one -- number

24   one objective for the TMC’s and relationship with the

25   carriers.   I know it doesn’t satisfy the answer today,

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1    but we’re going to be working on this issue as one of

2    our objectives. Remember the plan we had last year to

3    make sure that we cover these issues?        Want to open the

4    floor for that later to make sure that we’re going to

5    cover those issues, and we’ll make sure that we’re

6    addressing those throughout the year.

7               Any other questions?

8               MR. AQUILINO:     Jerry, my point is, you know, if

9    we have any more items to discuss, because it is getting,

10   you know, towards lunchtime or even past, and we just

11   want to know if you all want to take a 15-minute break,

12   we come back, if there’s more to talk about, or if you

13   just wanted to finish up and call it a day.        We’ll leave

14   it up to --

15              Everybody wants to finish up, raise your hand.

16              Okay.    So we’ll just finish it up.

17              MR. BRISTOW:    Okay.    We’re going to continue on

18   and finish up.     To those on the phone, thank you very

19   much.

20              Next question, anything?      Look at my notes

21   here.   Because I want to talk about some other issues

22   here that we have outstanding for this year.

23              MR. ELLIS:    We would invite any of the agencies

24   that are either on the phone call or in the audience to

25   please formulate and express any of their views here, you

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1    know.   We’ve heard from GSA certainly.       We’ve heard

2    from our industry people. Are there any agencies that

3    have anything to bring to the table or, or discuss in

4    regards to the City Pair Contract?

5                 MS. SIZEMORE:   Patty Sizemore from the DOD.

6    Just in response to, you know, the partnership.        We

7    didn’t ask specifically for a criteria of the baggage to

8    be in the evaluation criteria.       We would prefer to have a

9    set number of bags free in the contract or included in

10   the fare, just like it has been in previous years.          As

11   much of a nightmare as it is for you to figure out, you

12   know, whether it’s a DOD traveler or a military traveler

13   or other Government employee, our travelers are traveling

14   on all of your airlines, and when you have a different

15   baggage requirement on each airline, it’s a nightmare for

16   the traveler as well.     That’s why we would like the

17   contract to say one set bag for every, every customer.

18                MR. ELLIS:   And Patty makes an excellent point.

19   And first of all, let me say this.       We applaud and thank

20   the industry for what they do for our uniformed military

21   personnel with the, the allowance of the two B-4 bags at

22   70 pounds.    That really helps our uniformed personnel.

23   But to Patty’s point, you have the uniformed military

24   people sometimes traveling with a DOD civilian

25   counterpart.    One is charged, one is not, and so on and

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1    so forth. So it, it does add to confusion and, you

2    know, the Government passengers being charged.      Again

3    this is a -- each individually airline decision on their

4    part, but there is confusion among the ranks, and that’s

5    why this came to the forefront in this, this year’s

6    contract is because we heard loud and long from our

7    customer base about the confusion and the problems that

8    the baggage fees were, were having with our customers.

9                Again, any other agency want to be heard from?

10   This is your chance.

11               MR. IVESTER:   Ron Ivester, CWT, SATO travel.      A

12   question.   In the GSA program, what percentages is your

13   DOD customers compared to the total amount of passengers?

14               MR. ELLIS:   A rough, thumbnail guesstimate is

15   DOD represents about 70 percent of our passenger usage.

16   That’s a rough thumbnail guesstimate.

17               MR. IVESTER:   Ron Ivester.    And so what I

18   understand is that you’re doing this baggage evaluation

19   on 30 percent of your customers?

20               MR. ELLIS:   No -- DOD.   You have uniformed

21   military members that are exempt.      You have DOD civilian

22   employees that are not exempt.      So I don’t have an exact

23   figure, you know.    Maybe Patty or Andrea or somebody

24   could tell me, you know, what the percentage is of

25

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1    uniformed military members as opposed to DOD civilians,

2    but I would assume that it’s substantial.

3              MR. BRISTOW:   And, thus, the confusion.       Really

4    is, especially when they get out at the airport.

5              We would like to ask everybody else who wants

6    to chime in about other issues that would like to be

7    addressed here this year, be glad to, to discuss those as

8    well.

9              MR. COYLE:   I’d like to add one to your list,

10   if I could. George with American Airlines.      On the

11   audits, we still get those via US mail, and the process

12   is often a year behind, and the airline receives an NOC.

13   If there is any way we can move into the electronic age

14   of doing those via electronic transfer, it will save our

15   folks from having this stack of paper and trying to Xerox

16   it and getting it to different departments.      You know,

17   the research process would be sped up.     There’s other

18   things that prohibit the airlines from collecting on --

19   Resolution 850, passed last year, which prevents us from

20   going back to an agency and debiting them, even if they

21   are at fault or even if they did something outside of

22   their booking procedures.   We still have to eat the loss.

23   So there’s some benefit if we could speed that process

24   up, and I’d like to talk about that --

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1              MR. BRISTOW:   The good part about it is that

2    the reporting process coming in is actually down to about

3    seven months rather than a year.    So we’re getting --

4    closing that gap.   That’s the good part.       The other part

5    is, like you said, how do we go electronically?       We’re

6    looking at some areas through our Management Information

7    Service to assist audits as well to move that through.

8    Debit memos, we -- reduce the amount of debit memos or

9    the notices of overcharge to the carriers, will actually

10   help out this bottom part down here.     Not encumber you

11   with administrative processes to be able to, you know, to

12   have to go back to the travel agencies and retrieve the

13   differences in the fare and like that, if the ticket is

14   actually issued correctly from the beginning, and then it

15   makes that process a lot less.

16             UNIDENTIFIED SPEAKER:    Jerry, I would ask, as

17   it relates to debit memos for DOD, what we have seen more

18   recently is that we’re not sure that the City Pair

19   Contract and the audit folks are all on the same sheet of

20   music as to when debit memos should be issued. So I would

21   ask that we look at and make sure that the -- contract is

22   in compliance with the way the City Pairs Program

23   Contract is written, because we do have some issues that

24   we’ve recently seen where we’re questioning whether a

25   debit memo should have been issued.

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1               MR. BRISTOW:     And that’s going to be part of

2    the process.      Please understand that the Audit Department

3    does not issue the debit memo.        The Audit Department

4    issues the notice of overcharge to the carrier, and the

5    carrier issues the debit memo back to the TMC.

6               UNIDENTIFIED SPEAKER:       But the, but the debit

7    memo is issued based on what the Audit Department has

8    provided to the carrier.

9               MR. BRISTOW:     Based on the criteria.     We

10   understand that.      We’re going to be working on that as

11   part of it, and I hope that DOD is going to be on this

12   focus group committee to assist us in that, in this

13   discussion.

14              Tom.

15              MR. BILLONE:     To that note, we would like a

16   definition of what the Government thinks is an

17   administrative fee versus a penalty.         Now to me, if

18   you’re using what may be the lowest logically local fare,

19   but there is a fee for a change and the Government agency

20   says, well, that’s a penalty, I’m going to go to the next

21   fare, we’re seeing things where that’s considered an

22   administrative fee, and a fare may be a couple of hundred

23   dollars higher that the Government went for.         So we’re

24   getting -- say no you should have went to this other

25   fare.   So if we can get a real definition of what is

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1    considered an administrative fee versus a penalty,

2    that, that would go a long way.      We have a lot of those

3    issues right now where it’s into the what is the lowest,

4    the logical local fare when complying with --

5                MR. BRISTOW:   Okay.

6                MR. SCHNEIDER:   Gary Schneider, Continental

7    Airlines.   You know, we, the airlines, are spending a lot

8    of money to try to help you out.      We really are.    Some of

9    the things we have you don’t even use.       We have on-line

10   check-in.   Why isn’t the military and government using

11   on-line check-in?    24 hours before departure, they can

12   get their, their boarding pass and avoid another problem

13   at the airport.   Internationally, all they have to do is

14   -- their passport through a special kiosk machine we

15   have.   Once you do it once, they can check in at their

16   home.   Why isn’t the Government promoting that, that the

17   airlines are spending so much money on right now?       That

18   would save the Government a lot of time and a lot of

19   frustration at the airport, online check-in 24 hours

20   before departure, get your boarding pass.

21               MR. BRISTOW:   Does that mean Continental is

22   going back on the program?

23               UNIDENTIFIED SPEAKER:    You can use PDA also.

24               MR. BRISTOW:   That’s a good question.     Yeah,

25   that is good, because we are looking at these different

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1    types of issues to be -- in fact, when you look at this

2    secure flight, passport going to be a big issue in the

3    passenger name records.      They’re going to have to have

4    passport number, name--

5               UNIDENTIFIED SPEAKER:      Gender.

6               MR. BRISTOW:    -- gender and birth date.      So we

7    are working on that with the carriers and with our

8    customer agencies, with the ETS, DTS systems, GDS’s, so

9    that we understand what specific information is necessary

10   to get into the record and move them along at the

11   airport.   That is correct.     So that’s one of the issues

12   that we want to approach this year.        It’s going to be a,

13   a roll-out to the carriers.      We don’t know how that’s

14   going to happen.     That’s a confidential application

15   between TSA and the, and the carriers.        Different

16   carriers are going to be rolled out at different times.

17   So we’re unable to find that, that part out. We are going

18   to work on secure flight.      The other one is CPR

19   participation.   Really important for compliance issues.

20   We’re going to be utilizing the Management Information

21   Services data that just has been cranked up at HHS.        Is

22   that correct?    Going to be able to monitor City Pair

23   usage on a monthly basis with downloads from our TMC’s.

24   Travel management is a huge application for us, and

25   making sure that the City Pair participation and

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1    enforcement of compliance under City Pair is taken care

2    of.   Fly America Act, we approach that because DOD

3    specific to their travel is that they use the Fly America

4    Act on U.S. carriers.    New things coming up here, open

5    skies, the EU open skies.     If there’s no contract there

6    bid in that marketplace, the new rule will be that

7    they’ll be able to travel on foreign flight carrier from

8    that origin to that destination, except DOD.      They’re

9    going to ensure that DOD employees fly Fly America.      So

10   we have to make sure that we have all these things in

11   motion for it. Of course we’ve got to take a look at the

12   audits, electronic version.     We are working in tandem

13   with each of these different areas to make sure that

14   we’re going to have a valuable program for our carriers

15   to participate in.    So we do have these issues open.      I

16   encourage more information to come back to us on the

17   baggage issue on what you think and how you think we

18   could/should do this.    We’ve taken into consideration a

19   number of avenues.    We have to protect the interest of

20   our travelers -- protect the interest of our airlines.

21   But at the same time, we can’t get gamed in some of these

22   areas as well.   So we’re looking for active participation

23   on your part.    And, please, if you have another thought

24   about how to do this, we’re not the only ones out here,

25   so please give us a call or send us an e-mail.

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1                You have contact information?

2                Real quick, I want to put this back up.

3    Because we thought this was effective last year.       I’m

4    sorry you can’t read this.     We tried to get a copy of it

5    at the last second, but we’ll have that on, on a readable

6    aspect.    What this states here is that we have our

7    planning meetings over here in January.       Pre-Solicitation

8    Conference is today.    Airline industry provide

9    documentation to support proposed requests, if you have

10   others additional to these that are up here.       Monitor the

11   impact of these changes monthly.      Review possible system

12   changes.   Review for possible TMC changes.       There’s a lot

13   of things that have to go in this application to make

14   sure that we end up at the end of the year, make sure

15   that we have from October 1st we’re ready to go, and then,

16   of course, we get right back into next year’s

17   solicitations.   So if we can work on some of these and

18   have these cleared up by October 1st, we’ll be rolling the

19   program.   We’ve opened the lines of communication.      We

20   exchanged the rolls and responsibilities of Program

21   Management Office to the Contracting Officers so that

22   they can properly evaluate the proposals that come in,

23   and the Program Management Office can continue to work on

24   these issues as they’re outstanding.       So the door is

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1    open.   We’ll be running these issues for the rest of

2    the year.

3                Any other comments?

4                Any other questions?     Going once --

5                Thank you all for participating.       Thank you.

6    Good to see you.     Have a good year.

7                I’m sorry.   Contact information is coming up.

8    There we go.   For the airlines, we’ve sent this out to

9    your home offices in e-mail format so that you have all

10   of these to work with.

11               (Whereupon, at 1:00 p.m., on February 3, 2009,

12   the Pre-Solicitation Conference was concluded.)

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1                     C E R T I F I C A T E

2              This is to certify that the attached

3    proceedings of the Pre-Solicitation Conference held on

4    February 3, 2009, were held as herein appears, and that

5    this is the original transcription thereof.

6

7

8                        ___________________________________
                         Dan Hawkins, Reporter
9                        FREE STATE REPORTING, INC.

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                        FREE STATE REPORTING, INC.
                     Court Reporting Transcription
                          D.C. Area 301-261-1902
                       Balt. & Annap. 410-974-0947

				
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