4.25.17 2017 ACI-NA Business of Airports Conference Agenda Business Diversity Track Joint Ventures Ensuring Commercial and Regulatory Success 1
2 Tamela Lee Vice President Business Diversity and Development
Airport Concessions Enterprise Disadvantaged (ACDBE) Program Overview ACDBE Program required by Federal Regulation Objective: Ensure full and fair access to concession opportunities for all business and in particular for ACDBE business Valuable consideration in the awarding of a Concession Agreement ACDBE requirement is pass/fail and must be met for a proposal to be reviewed and considered by the selection committee Responsive Proposal compliant with requirements; further consideration by Selection Committee Non-Responsive Proposal fails to meet the requirements; no further consideration by the Selection Committee 3
Airport Concessions Disadvantaged Enterprise (ACDBE) Program The ACDBE goal is a percentage of total revenue or purchases for goods and services for this solicitation. Contract Specific Goal Separate goal for concessionaires and tenant finish out Option for typically meeting an ACDBE goal: 100% ACDBE owner-equity participation Percentage Owner-Equity Participation by way of a sublease, management, operating, franchise or joint venture agreement or partnerships Percentage of total purchases for all good and services awarded to ACDBE certified firms Other legal arrangement ACDBE Program Concessions Hotels Services Car Rentals Other Goods and Services Annual ACDBE goal is 34% 4
ACDBE Program Points Certification ACDBE certificates are due at time of proposal submission 5
What is reviewed Capital Spelled out in the joint venture agreement Specify initial and future contributions D/S/M/WBE contribution equal to it s ownership percentage Control Proportion to their ownership interest D/S/M/WBE less than 51% ownership Control of the activities for which it is responsible Direct control of their assigned role Separate Management Committee in which the ACDBE has the majority of the vote for responsibilities it controls Major decisions unanimous vote Management Overall Management Decision Making Day-to-Day Operations Hiring and firing 6
What is reviewed (cont d) Management Committee Frequency of meetings Formal Agendas Meeting Minutes Specify Roles and Responsibilities Clearly defined means that there is no guesswork involved in determining the nature of the work assigned to the ACDBE. Risk Financial Legal Operational Proportionally sharing in Profits as well as Losses 7
Reoccurring Concerns in JV Reviews May be a combination of cash and a loan but the loan term should not exceed the lease term Statement or documentation that the ACDBE could not obtain its own financing is not submitted Failure to include Who are the employees and who do they report to? Who is responsible for hiring/firing employees? Delineate reporting structure.. Not constituting a distinct, clearly-defined portion of the work for the ACDBE that would equate to approximate % of the work effort ACDBE has been assigned numerous minor or nonquantifiable roles, making it very difficult to evaluate the participation. Merely stating that an activity represents a certain percentage of the work is not sufficient to demonstrate that the activity is in fact significant, independent or should be valued at the stated percentage. 8
Reoccurring Concerns in JV Reviews The description of the work to be performed by the ACDBE should be clear. Descriptions that are vague are not acceptable. For example, phrases such as: Participate in the budgeting process Assist with hiring Work with managers to improve customer service Plan, manage and execute inventory for store Clearly defined means that there is no guesswork involved in determining the nature of the work assigned to the ACDBE. If the role assigned involves activities that occur on an ongoing basis, and with regard to a core function, crediting participation is easier. If the role of the ACDBE occurs on an as-needed basis and is a minor function, it is very difficult to predict. 50/50 split on roles and responsibilities on 35/65 JV 9
Reoccurring Concerns in JV Reviews Timely distribution of reports and documents Post-Award JVA Agreement, other documents Schedule of Charges (FY2017) will include penalty fees Subject to $500 noncompliance fee if not received by due date of first notification Subject to $ 1,000 noncompliance fee if not received within 10 business days from second notification Adhering to your Joint Venture Agreement Know your Roles and Responsibilities, including periodic meeting and reporting Know your ownership group, including ACDBE Partner(s) 10
ACDBE Compliance Post-Execution of Lease Once your location is open, submit. Documentation and/or proof of all capital contributions by the ACDBE joint venture partner(s) and non- ACDBE joint venture partner(s) including any promissory notes. Advance schedule of management committee meeting and minutes. Distribution statements of profits and losses. Joint venture activity reports by the ACDBE partner and acknowledged by the non-acdbe partner detailing the activity of the ACDBE partner in relation to its assigned role in the operation. Any proposed amendment(s) to the approved joint venture or operation agreement. Any proposed changes to roles and responsibilities of the joint venture partners. Annual submittal of reconciliation of Administrative or Management Fees by all parties and verification and documentation evidencing those fees represent a recovery of costs to the provider. Additional information as may be requested by the Airport in order to demonstrate compliance with 49 CFR Part 23 and the FAA s Joint Venture Guidance. 11
Joint Venture Compliance Reviews Third Party audits and site visits for compliance (FAA requirement) Not in compliance: a) Withholding funds payable under this agreement/contract, including, but not limited to, funds payable for work selfperformed by the Concessionaire/contractor or applicable retainage; b) Temporarily suspending, at no cost to DFW, Concessionaire performance under the Lease; c) Termination of this Lease; d) Suspensions/debarment, in accordance with applicable law, of Concessionaire/contractor from participating in any solicitations issued by DFW for severity of breach of contract; and With respect to ACDBE and DBE firms, a finding of noncompliance could result in a denial of certification or removal of eligibility and/or suspension and debarment. 12
Challenges JV reviews taking too long to finalize/execute Poor teaming choices Not adhering to roles and responsibilities per the JV Accountability in the operations Standard JV Agreements being used No dispute/mediation in place Not Fully Disclosing Financials from the Prime Concessionaire Mergers and acquisitions at the Prime level 13
Best Practices Pre-proposal meetings On Board meetings Concession Forums Recognition Awards Outreach Events Multi package concepts Smaller packages Contract specific goals Site Visits 14
Common Proposal Submission Errors Failure to respond to all RFP Evaluation Criteria questions. Failure to sign all required documents. Failure to submit required ACDBE certificates for all identified ACDBE firms. Failure to submit correct ACDBE certificates; instead submitted a HUB, WBE or MBE certificate. Providing certificates for firms that are not listed on the Schedule of Subcontractors or Not providing certificates for firms that are listed on the Schedule of Subcontractors Use of TBD on a Schedule of Subs instead of dollars & percentages Using the Good Faith Effort plan as a checklist and not submitting support documentation 15 PROOFREAD your proposal and ensure all required forms are complete. Not submitting the required forms will deem your proposal non-responsive and not move forward in the evaluation process!
4.25.17 2017 ACI-NA Business of Airports Conference Agenda Business Diversity Track Joint Ventures Ensuring Commercial and Regulatory Success 16