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Federal Aviation Administration Airport Concession DBE Rule Goal-Setting Presented to: So Reg Transp Civil Rights Trng By: External Program Manager FAA.

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Presentation on theme: "Federal Aviation Administration Airport Concession DBE Rule Goal-Setting Presented to: So Reg Transp Civil Rights Trng By: External Program Manager FAA."— Presentation transcript:

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2 Federal Aviation Administration Airport Concession DBE Rule Goal-Setting Presented to: So Reg Transp Civil Rights Trng By: External Program Manager FAA Office of Civil Rights Southern Region Date: August 3, 2005

3 Concessions Goal-Setting 2 Federal Aviation Administration August 3, 2005 Part 23 revises and updates the Department’s regulation concerning participation by airport concessionaire disadvantaged business enterprises (ACDBEs) in the concessions activities of primary airports.

4 Concessions Goal-Setting 3 Federal Aviation Administration August 3, 2005 You are not required to submit goals if: (1) Average car rental revenue <$200k (2) Non-car rental average revenue<$200k

5 Concessions Goal-Setting 4 Federal Aviation Administration August 3, 2005 If you have an existing ACDBE program, it must remain in effect and you must seek to continue to fulfill the objectives outlined in section 23.1

6 Concessions Goal-Setting 5 Federal Aviation Administration August 3, 2005 Part 23 is parallel in many important respects to the Department’s DBE regulation for Federally-assisted contracts, Part 26.

7 Concessions Goal-Setting 6 Federal Aviation Administration August 3, 2005 Courts have found that Part 26, including its goal-setting mechanism, meets the narrow tailoring requirements.

8 Concessions Goal-Setting 7 Federal Aviation Administration August 3, 2005 Under Part 26, many airports have had to continue race-conscious methods to achieve their goals. There is no information to suggest that airport- concession programs are exempt from the effects of discrimination to which other public-sector business activities are subject.

9 Concessions Goal-Setting 8 Federal Aviation Administration August 3, 2005  DOT believes it essential to conform the Part 23 goal-setting provisions as closely as possible to those of Part 26.  Both 23 and 26 require the maximum use of race-neutral measures; and,  Race-conscious methods continue to be a necessary part of a narrowly tailored strategy to ensure nondiscrimination.

10 Concessions Goal-Setting 9 Federal Aviation Administration August 3, 2005 You must establish two separate percentage overall ACDBE goals: 1. Concessions (other than car rentals) 2. Car Rentals.

11 Concessions Goal-Setting 10 Federal Aviation Administration August 3, 2005 Each overall goal must cover a three-year period. You must review your goals annually to make sure they continue to fit your circumstances. You must report to the FAA any significant adjustments that you make to your goal in the time before your next scheduled submission.

12 Concessions Goal-Setting 11 Federal Aviation Administration August 3, 2005 Base of Goal To calculate the base for the goal, project potential concession revenue three years into the future. Take into account preceding 3 years of gross concession receipts and upcoming new opportunities. Actual dollar amount will vary by airport and by year, and will be a “best estimate” of potential concession revenue.

13 Concessions Goal-Setting 12 Federal Aviation Administration August 3, 2005 EXAMPLE 1 Average concession receipts over past three years is $1 million. Airport expects this level of revenue to continue through next three years. Airport estimates that revenues to existing concessions will grow by 5% over the next three years (e.g., inflation + increased passenger traffic).

14 Concessions Goal-Setting 13 Federal Aviation Administration August 3, 2005 EXAMPLE 1 - Continued Airport does not anticipate any major changes that would markedly increase or decrease concession revenues over next three years. Base for goal is $1, 050, 000.

15 Concessions Goal-Setting 14 Federal Aviation Administration August 3, 2005 EXAMPLE 2 Preceding 3-year average concession revenues are $1m, as in Example 1. 5% growth estimate same as in Example 1. Airport is opening a new terminal, which is projected to bring in an additional $3m in concession revenues over the next 3 years. Apply growth percentage to total of projected continuing and new revenues.

16 Concessions Goal-Setting 15 Federal Aviation Administration August 3, 2005 EXAMPLE 2 - continued So, $1m + $3m = $4m 5% of $4m = $200, 000 Total base is $4,200,000

17 Concessions Goal-Setting 16 Federal Aviation Administration August 3, 2005 EXAMPLE 3 Preceding 3-year average concession revenue is $3m. In Year 2 of the period to be covered by the goal, Useless Airlines plans to abandon its hub at the airport. This is projected to reduce concession revenues by $1m per year.

18 Concessions Goal-Setting 17 Federal Aviation Administration August 3, 2005 EXAMPLE 3 - Continued So projected continuing revenues for Year 1 are $3m; for Years 2 and 3 corresponding figure is $2m. Three-year total is $7m. Airport estimates a 3% increase in remaining revenues due to inflation (3% of $7m = $210,000) Total base is $7,210,000.

19 Concessions Goal-Setting 18 Federal Aviation Administration August 3, 2005 You must submit your ACDBE goals to the FAA Regional Civil Rights Office for approval. The first goals are due on the following schedule: Large or Medium Hub – January 1, 2006 (next submission 10/1/2008); Small Hub – October 1, 2006; Non-hub Primary – October 1, 2007

20 Concessions Goal-Setting 19 Federal Aviation Administration August 3, 2005 You must then submit new goals every three years after the date that applies to your Airport. Timely submission of goals is a condition of eligibility for grants.

21 Concessions Goal-Setting 20 Federal Aviation Administration August 3, 2005 Your goals established under this part must provide for participation by all certified ACDBEs and may not be subdivided into group-specific goals.

22 Concessions Goal-Setting 21 Federal Aviation Administration August 3, 2005 §23.51 talks about how to calculate and express the goals. It applies to both the overall goal for car rentals and the overall goal for concession activities. It is designed to parallel the goal-setting mechanism of Part 26.

23 Concessions Goal-Setting 22 Federal Aviation Administration August 3, 2005 You must complete the goal-setting process separately for concessions and car rentals. Each overall concessions goal must be based on demonstrable evidence of ready, willing, and able ACDBEs. You cannot simply rely on the 10% national aspirational goal.

24 Concessions Goal-Setting 23 Federal Aviation Administration August 3, 2005 Your market area is defined by the geographical area in which the substantial majority of firms that seek to do concessions business with the Airport are located, and, The geographical area in which the firms which receive the substantial majority of concession-related revenue are located.

25 Concessions Goal-Setting 24 Federal Aviation Administration August 3, 2005 Part 23 – Goal Setting Subpart D applies to the goal-setting process.

26 Concessions Goal-Setting 25 Federal Aviation Administration August 3, 2005 If you need additional time to collect data or take other steps to develop an approach to setting overall goals, you may request approval for an interim goal and/or goal-setting mechanism. Such steps must reflect the relative availability of ready, willing, and able ACDBEs. Must avoid imposing burdens on non- ACDBEs.

27 Concessions Goal-Setting 26 Federal Aviation Administration August 3, 2005 Goal-Setting – Non-Car Rental The base of your goal includes the total gross receipts of concessions including goods and services. This base does not include the gross receipts of car rental operations or management contracts/subcontracts with non-ACDBE firms

28 Concessions Goal-Setting 27 Federal Aviation Administration August 3, 2005 Goal-Setting-Car Rentals The base for this goal is the total gross receipts of car rental operations at your airport. Do not include gross receipts of other concessions in this base.

29 Concessions Goal-Setting 28 Federal Aviation Administration August 3, 2005 Goal Setting-Procedure Your submission must include a description of the method used to calculate your goals and the data you relied on. Show your work - provide FAA the data, calculations, assumptions, and reasoning used.

30 Concessions Goal-Setting 29 Federal Aviation Administration August 3, 2005 Goal Setting-Procedure Your submission must include your projection of the portions of your overall goals you propose to meet through use of race-neutral and race-conscious means.

31 Concessions Goal-Setting 30 Federal Aviation Administration August 3, 2005 Public Participation – You must provide for public participation by taking at least the steps listed in (b): These steps are identical to the public participation section at 26.45(g)(1) regarding consultation. Publication of the goal is not required.

32 Concessions Goal-Setting 31 Federal Aviation Administration August 3, 2005 New Opportunities If a new concession opportunity arises that offers an estimated average annual gross revenue of $200k or greater, even at a time between normal submission dates, you must submit an appropriate adjustment to your overall goal at least six months in advance of ratifying any new concessions agreement.

33 Concessions Goal-Setting 32 Federal Aviation Administration August 3, 2005 Exemptions You may apply for an exemptions from any provision of this part by writing to the Office of the Secretary or the FAA. The Secretary will make final decision. You must document special or exceptional circumstances not likely to be generally applicable; You must agree steps specified by the DOT or FAA.

34 Concessions Goal-Setting 33 Federal Aviation Administration August 3, 2005 Waivers You can apply for a waiver of any provision of subpart B or D. The FAA Administrator has the authority to approve your application. Program waivers are for the purpose of operating an ACDBE program that achieves the objectives of Part 23. See (d) (1).

35 Concessions Goal-Setting 34 Federal Aviation Administration August 3, 2005 Counting ACDBE Car Rentals You may count the value of purchases or leases from any ACDBE vendor. You may count the purchases from ACDBE providers of goods and services. You may count fees and commissions charged by an ACDBE to manage a car rental concession.

36 Concessions Goal-Setting 35 Federal Aviation Administration August 3, 2005 Counting ACDBE Non-Car Rental Participation You may count ACDBE participation that results from a commercially-useful function. Count the total dollar value of gross receipts an ACDBE earns under a concession agreement or sub-agreement and count the total dollar value of an ACDBE management contract or subcontract.

37 Concessions Goal-Setting 36 Federal Aviation Administration August 3, 2005 Counting ACDBE Non-Car Rental Participation Count the portion of the gross receipts earned by an ACDBE under a sub- agreement. Count the portion of the gross receipts equal to the distinct, clearly defined portion of the work an ACDBE performs with its own forces under a joint venture agreement. You may count fees and commissions charged by an ACDBE firm.

38 Concessions Goal-Setting 37 Federal Aviation Administration August 3, 2005 Terminal Leases You must pass through applicable requirements of this part to the private terminal operator or lessee via your agreement with the owner or lessee. You must ensure that the terminal owner or lessee complies with the requirements of this part.

39 Concessions Goal-Setting 38 Federal Aviation Administration August 3, 2005 Terminal Leases Primary airports must obtain from the terminal owner or lessee the goals and other elements of the ACDBE program required under Part 23. If the terminal building is at a non-primary commercial service airport or general aviation or reliever airport, you must ensure that the owner complies with 23.21(e)

40 Concessions Goal-Setting 39 Federal Aviation Administration August 3, 2005 Long-Term Exclusive Agreements A long-term, exclusive agreement is one having a term of longer than five years. Is a five year lease with a five year extension controlled solely by the airport long-term exclusive? It depends… FAA’s Regional Offices can grant approval for a long-term lease if deemed acceptable.

41 Concessions Goal-Setting 40 Federal Aviation Administration August 3, 2005


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