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The ACDBE Program 105 to administer an ACDBE program in compliance with 49 CFR Part 23 and all other applicable federal laws, regulations, executive orders, policies, guidelines, and requirements as they relate to the acceptance and use of federal funds (49 CFR Part 23, §23.5). References: 49 CFR Part 23, Section 23.5 and FAA Airport Sponsor Assurances, 3/2011 The ACDBE Program regulations require the operators of primary airports to develop and implement an FAA-approved ACDBE program participation plan with the following objectives: (1) ensure nondiscrimination in the award and administration of concession opportunities, (2) create a level playing field to enable ACDBEs to compete fairly for concession opportuni- ties, (3) ensure that their ACDBE program is narrowly tailored in accordance with applicable laws, (4) ensure that only firms that fully meet 49 CFR Part 23 eligibility standards are permit- ted to participate as ACDBEs, and (5) help remove barriers to ACDBE participation in conces- sions. 49 CFR Part 23 also provides airport operators flexibility in establishing and providing opportunities for ACDBEs. 49 CFR Part 23 defines a primary airport as a commercial airport that the Secretary of Transportation or his/her designee determines to have more than 10,000 enplaned passengers annually (49 CFR Part 23, §23.1). Verbatim assurances set forth in 49 CFR Part 23, §23.9, must be included in all concession agreements (including management contracts subject to 49 CFR Part 23 requirements) executed with any firm after April 21, 2005, as follows (49 CFR Part 23, §23.9): This agreement is subject to the requirements of the U.S. Department of Transportation’s regulations, 49 CFR Part 23. The concessionaire or contractor agrees that it will not dis- criminate against any business owner because of the owner’s race, color, national origin, or sex in connection with the award or performance of any concession agreement, man- agement contract, or subcontract, purchase or lease agreement, or other agreement covered by 49 CFR Part 23. The concessionaire or contractor agrees to include the above statements in any subsequent concession agreement or contract covered by 49 CFR Part 23, that it enters and cause those businesses to similarly include the statements in further agreements. If an airport operator fails to comply with any requirement of 49 CFR Part 23, it may be sub- ject to formal enforcement action under 49 CFR Part 26, §26.103, or 49 CFR 26, §26.105, or to appropriate program sanctions, such as the suspension or termination of federal funds or refusal to approve projects, grants, or contracts until deficiencies are remedied. Program sanc- tions may include actions consistent with 49 U.S.C. 47106(d), 47111(d), and 47122 (49 CFR Part 23, §23.101). An airport operator’s ACDBE program must incorporate the procedures and standards of 49 CFR Part 26, §§26.61–26.91 for certification of ACDBE participants in its concessions program. The program must also provide that certification decisions for ACDBEs will be made by the Uni- fied Certification Program (UCP) in the state where the airport is located. UCP entities may be airports, state departments of transportation, and/or other entities acceptable to the recipients of federal funds, subject to approval by the Secretary of Transportation (49 CFR Part 23, §23.31; 49 CFR Part 26, §26.81). Applicants for ACDBE certification must meet eligibility requirements. To participate as an ACDBE in an airport concession, a business owner must demonstrate social and economic disadvantage. The business owner must also apply to and receive ACDBE certification from a state’s UCP. To be eligible, an owner’s personal net worth cannot exceed the dollar amount established in 49 CFR Part 23, §23.35, excluding the individual’s ownership interest in an ACDBE or a firm that

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The ACDBE Program 107 • Selecting portions of the work to be performed by ACDBEs in order to increase the likelihood that the ACDBE goals will be achieved. This includes, where appropriate, breaking out contract work items into economically feasible units to facilitate ACDBE participation, even when a prime concessionaire might otherwise prefer to perform these work items with its own forces. • Documenting how direct contracting portions of the concession contract or partnering or joint venture opportunities were selected to solicit ACDBE participation and how the selec- tion was made in order to increase the likelihood of meeting an airport’s ACDBE goals. • Providing information to ACDBEs to solicit their bids in a timely manner, such as adequate information about the concession concept, space allocation being considered for ACDBE agreements, and general requirements of the contract to enable the ACDBE to supply a com- plete and competitive bid. • Negotiating in good faith with interested ACDBEs. Evidence of such negotiation includes the names, addresses, and telephone numbers of ACDBEs that were considered; a description of the information provided regarding the plans and specifications for the work selected for ACDBE participation; and evidence as to why additional agreements could not be reached for ACDBEs to perform the work. • Making efforts to assist interested ACDBEs in obtaining necessary equipment, supplies, materials, or related assistance or services. • Making efforts to assist ACDBEs in obtaining independent lines of credit, financing, bonding, or other assistance that would make them a viable candidate for participation in a concession opportunity. • Not rejecting ACDBEs as being unqualified without sound reasons based on a thorough inves- tigation of their capabilities. • Replacing an ACDBE that is terminated or has otherwise failed to complete its concession agreement, lease, or subcontract with another certified ACDBE. 7.2 Determining Concessionaire Market Area(s) One element of the ACDBE goal setting process is determining the geographic area where all ready, willing, and able businesses seeking an airport’s concession privileges and receiving most of the airport’s concession revenue are located. 49 CFR Part 23 §23.45 defines the concession market area as . . . the geographical area in which the substantial majority of firms which seek to do concessions business with the airport are located and the geographical area in which the firms which receive the substantial majority of concessions-related revenues are located. Market areas may be different for different types of concessions, as illustrated in Table 7-1. 7.3 Determining Availability of Ready, Willing, and Able Participants Establishing and maintaining records of companies interested and/or participating in conces- sion opportunities at the airport is necessary in order to identify ready, willing, and able partic- ipants in the jurisdiction’s market area(s). These records are often created from pre-proposal meeting attendance lists, public inquiries, outreach attendee lists, utilization reports, active par- ticipants’ lists (i.e., current concessionaires), and the annual ACDBE participation achievement reports to the FAA. A list of former concessionaires and unsuccessful proposers for concession opportunities will also be useful in determining availability, as well as information from other airports on compa-

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112 Resource Manual for Airport In-Terminal Concessions A well thought out and transparent contracting process, including selection criteria and con- tract award, are also important elements in achieving ACDBE participation. A transparent con- tracting process is one that is documented, open to public scrutiny, and applied consistently for each contract opportunity. The contracting process should be audited on a regular basis to ensure consistent application at each stage of the process. Along with assessing the process, it is imperative that contracting staff receive continuous training to ensure competency. Transparency does not ensure that the contracting process is free of barriers. A transparent process allows for process review by stakeholders who may have different perspectives or who may offer alternatives to the existing process and raise questions that evoke fresh thinking about ways to level the playing field for businesses interested in airport concession opportunities. While the ACDBE plan may or may not be adjusted, awareness and informed flexibility ensure that the commitment to the objectives of the ACDBE Program and a competitive process is more likely. ACDBE participation in airport concession programs is usually accomplished through direct leases, subleases, and joint ventures. ACDBE participation can also be accomplished through procurement and/or leasing of goods and contracting for services that concessionaires use in their operations and in management contracts and subcontracts subject to 49 CFR Part 23 requirements. Some examples are the following: • Direct leases. Some airport concession programs use a model that includes smaller sized con- cession packages. ACDBEs and other ready, willing, and able firms pursue these opportuni- ties as prime concessionaires and/or joint venture partners. If successful, airport operators enter into direct leases with these firms. • Subleases. A prime concessionaire or developer subleases one or more concession locations to ACDBEs. • Joint ventures. These frequently used arrangements in airport concession programs are defined in 49 CFR Part 23 as an association of an ACDBE firm and one or more other firms to carry out a single, for- profit business enterprise, for which the parties combine their property, capital, efforts, skills, and knowledge, and in which the ACDBE is responsible for a distinct, clearly defined portion of the work of the contract and whose shares in the capital contribu- tion, control, management, risks, and profits of the joint venture are commensurate with its ownership interest. Joint venture entities are not certified as ACDBEs. • Purchase of goods and services. While 49 CFR Part 23 requires airport operators and conces- sionaires to make good faith efforts to explore all available options to achieve compliance with ACDBE goals through direct ownership arrangements, the purchase of goods and services by the airport operator or concessionaires and management contractors from certified ACDBEs can count toward participation goals. • Management contracts/subcontracts. These are agreements with the airport operator or with another management contractor under which a firm directs or operates one or more business activities, the assets of which are owned, leased, or otherwise controlled by the airport opera- tor. The managing agent generally receives, as compensation, a flat fee or a percentage of the gross receipts or profits from the business activity (other than an aeronautical activity), which must be located at an airport (which is subject to 49 CFR Part 23) and engaged in the sale of consumer goods or provision of services to the public. Success in designing, establishing, and administering a best-in-class airport concession pro- gram requires approaches that clearly identify the goals of the concession program, including its goal for ACDBE participation. Airport operators that begin with the end in mind tend to be the most successful in developing programs that meet the test of a dynamic airport environment.

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116 Resource Manual for Airport In-Terminal Concessions • Are we performing our responsibilities consistent with 49 CFR Part 23? • Have there been any complaints about ACDBE policies and administration of the ACDBE plan? • What do the bidders or proposers say about their experience with the process? • What do interested parties that did not bid or propose on the opportunity say about their impression of the process? • Are there any barriers? • What have we learned? • What needs to be changed? • What actions need to be taken based on our findings? Measuring performance not only is a mechanism for airport staff to be responsive to stake- holders, it helps the airport execute a successful, compliant ACDBE Program. 7.11 Reporting Achievements The purpose and objectives of the airport operator’s ACDBE plan and the intended achieve- ments should be communicated during the airport operator’s outreach efforts, in solicitation documents, and in contract documents to achieve the levels of ACDBE participation that the air- port operator expects. • What are achievements? – Achievements are expressed by the dollar value of the participation in concession contracts generated by ACDBEs, which are reported to the FAA annually. Attaining or exceeding ACDBE participation goals is an achievement. • How are achievements tracked? – Achievements are tracked routinely (e.g., monthly, quarterly) by collecting and verifying ACDBE sales reports from concessionaires, as well as collecting and verifying the amounts that concessionaires pay to ACDBEs under contract with them to provide goods and/or services to the airport concession operation. • Send achievement reports to the FAA – The sales generated from the commercially useful functions performed by ACDBEs on a fiscal year basis, as included in concession contracts, are reported to the FAA by March 1 each year via its web-based DBE Office Online Reporting System (DOORS). If the airport operator errs in reporting achievements, DOORS permits the airport operator to edit its report. If the report is late, the FAA will contact the airport operator. If achievements are not reported at all, the FAA may find that the airport operator failed to administer its ACDBE program in good faith. • Tell stakeholders – Inform internal and external stakeholders of the airport’s ACDBE achievements and suc- cesses via annual reports, on the airport’s website, and through other means. Figure 7-2 shows the FAA’s Uniform Report of ACDBE Participation form. 7.12 Barriers to ACDBE Participation Airport in-terminal concession programs have evolved from generic offerings in the early days to today’s national and regional brands and business and personal services that rival those in some of the most upscale malls. Since the 1970s, as airport concession programs have evolved and become more sophisticated, the number, size, and types of ACDBE Program participants (e.g. concession operators, goods and services providers, and management contractors and sub- contractors) have increased.

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The ACDBE Program 117 Figure 7-2. Uniform report of ACDBE participation.

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120 Resource Manual for Airport In-Terminal Concessions the economic contribution of minority-owned and woman-owned businesses have been con- ducted, a study commissioned by the Dallas/Fort Worth International Airport Board found that 51% of retail sales at the airport from September 2002 through September 2005 occurred at minority-owned and woman-owned businesses. Those firms recorded $287 million in sales, cre- ating $431 million in economic activity, adding $157 million to regional labor income. One difficulty that has been experienced in mentor/protégé relationships is creating a way for an ACDBE protégé to maintain independence that does not deter its ability to maintain its DBE/ACDBE certification eligibility. Another challenge that often arises is how to count the participation by the ACDBE protégé towards ACDBE goals. There continues to be an opportunity to address these issues so that capac- ity building of ACDBEs, maintaining ACDBE certification, and counting participation of ACDBEs in mentor/protégé relationships can be achieved. Airport operators seeking to implement business development programs or mentor/protégé programs in their ACDBE programs must use the U.S. DOT’s business development program guidelines (Appendix C of 49 CFR Part 26) and/or its mentor/protégé program guidelines (Appendix D of 49 CFR Part 26). Both sets of guidelines offer a full discussion of the requirements, objectives, and roles and responsibilities of participants in these programs.