Attachment K-1 - ACDBE Program Overview.docx

SECTION 8 – AIRPORT CONCESSION DISADVANTAGED BUSINESS ENTERPRISE (ACDBE)

A. Definitions In accordance with definitions listed in 49 CFR Part 23, for purposes of this section, the following definitions apply:

1) Airport Concession Disadvantaged Business Enterprise (ACDBE): A concession certified by the Michigan Unified Certification Program (MUCP) as a for-profit small business concern –

a) That is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged or, in the case of a corporation, in which 51 percent of the stock is owned by one or more such individuals; and

b) Whose management and daily business operations are controlled by one or more of the socially and economically disadvantaged individuals who own it.

2) ACDBE Contract Goal: The percentage of total concessions gross receipts which would be performed by an ACDBE on a contract absent the effects of discrimination.

3) ACDBE Contract Commitment: Actual percentage of ACDBE participation anticipated to achieve on a contract.

4) ACDBE Liaison Officer (ACDBELO): Airport Authority representative who has direct, independent access to the Chief Executive Officer concerning DBE program matters and is responsible for implementing all aspects of the ACDBE Program.

5) ACDBE Participation: Work performed by an ACDBE that results in a CUF, and of a type that falls under the North American Industry Classification System (NAICS) Codes the ACDBE is certified under. The value of work is represented as a percentage of total gross receipts earned under a concession agreement. Additional guidance concerning ACDBE Participation counting is provided in 49 CFR Part 23.55.

6) ACDBE Program: Program required to be written and followed by primary service airports that receive Airport Improvement Program funding and that have concession revenues of $200,000 or more for either car rental or non-car rental concessions. The program provides the Department of Transportation with an outline of how the airport intents to ensure nondiscriminatory participation of ACDBEs in concessions opportunities.

7) Commercially Useful Function (CUF): When an ACDBE is responsible for execution of the work of the contract and carries out its responsibilities by actually performing, managing and supervising the work involved. To perform a Commercially Useful Function, the ACDBE must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material and installing (where applicable) and paying for the material itself. An ACDBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of ACDBE participation.

8) Direct Ownership Arrangement: A joint venture, partnership, sublease, licensee, franchise, or other arrangement in which a firm owns and controls a concession.

9) Good Faith Efforts (GFE): As determined by the ACDBELO or designee, using fair and reasonable judgment, the necessary and reasonable steps to achieve an ACDBE Contract Goal or other requirement of 49 CFR 23 that, by their scope, intensity, and appropriateness to the objective, can reasonably be expected to obtain sufficient ACDBE participation and/or meet the program requirement. Additional guidance concerning GFE is provided in Appendix A, 49 CFR Part 26.

10) Supplier: A firm which provides materials or supplies as a manufacturer, regular dealer or other persons who assist in the procurement or delivery of goods:

a) Manufacturer – a firm that operates or maintains a factory or establishment that produces, on the premises, the materials, supplies, articles or equipment required under the contract.

a) Regular Dealer – a firm that owns, operates or maintains store, warehouse, or other establishment in which the materials, supplies, articles or equipment are bought, kept in stock and regularly sold or leased to the public in the usual course of business.

B. Program Overview The Airport Authority is a recipient of airport planning and development federal grants which are used to enhance airport safety, capacity, security, and environmental concerns. As a recipient of these funds, the Airport Authority must maintain an Airport Concession Disadvantaged Business Enterprise (ACDBE) Program. The rules and regulations governing the ACDBE Program are found in Title 49 of the Code of Federal Regulations (CFR), Part 23.

The Airport Authority’s Deputy Director of Business Diversity has been delegated as the ACDBE Liaison Officer (ACDBELO). In that capacity, the Deputy Director is responsible for compliance with all aspects of the ACDBE program. The ACDBELO has established a triennial ACDBE Program goal for the Airport and contract-specific goal for this solicitation. The ACDBELO, with the assistance of the Authority’s Business Diversity Unit (BDU), serves as an advocate and information disseminator for small and disadvantaged businesses, and initiates policies and activities to maximize their participation in airport opportunities. It is the Airport Authority’s policy that ACDBEs shall have the maximum opportunity to participate in the performance of concession and management services contracts. Furthermore, the Airport Authority is committed to creating a level playing field that fosters and promotes the participation of disadvantaged businesses in contracts needed to support and achieve the goals and objectives of the Airport Authority. The goal is oriented toward maximizing the exposure of qualifying businesses to a variety of contract opportunities that encourage growth, diversity in contract services, and the successful completion of all contracts.

In accordance with the CFR and Airport Authority policies, the Airport Authority’s 3-Year Overall ACDBE Program Goal must be achieved through ACDBE participation in concession and management services contracts. To achieve ACDBE participation on contracts, the Airport Authority sets ACDBE contract goals based upon the required types of concessions, related services and the availability of “ready, willing and able” ACDBEs to perform the required services. Each contract goal is set to cumulatively result in meeting the portion of the Airport Authority’s overall goal that the Airport Authority projects it will not be able to meet through the use of “race-neutral” (non-goal efforts) ACDBE participation. In alignment with the Federal Regulations and efforts to remove of barriers to participation for disadvantaged enterprises, the Airport Authority also requires that all contractors performing work for the Airport Authority not discriminate on the basis of race, color, national origin, or sex.

The proposer is responsible for understanding and abiding by all laws, regulations, ordinances and policies associated with ACDBE participation for this opportunity. Proposer further acknowledges that if awarded a contract, its failure to comply with these requirements may be a material breach of the agreement, and could result in suspension of the right to operate, termination, or such other remedy, as the Airport Authority deems appropriate.

C. ACDBE Certification Under 49 CFR Part 23, in order to count towards meeting an ACDBE Contract Goal set by the Airport Authority, as a minimum threshold, a firm must be ACDBE certified by an agency participating in the Michigan Unified Certification Program (MUCP). This is required even if a firm is already certified as an ACDBE in another state, or if a firm is certified as a DBE (rather than an ACDBE) in Michigan or any other state.

Proof of ACDBE certification in the State of Michigan must be submitted by the deadline for submission of a Proposal.

MUCP Directory: The MUCP directory, which is a list of ACDBEs certified by MUCP certifying agencies, is available at www.michigan.gov/mucp.

D. ACDBE Contract Goal The ACDBE contract goal for this opportunity is outlined below and set as a percentage of the estimated total dollar gross receipts to be earned in the performance of the contract opportunity.

Package

a. National Brand Coffee and

b. Local or National Branded Quick Service Restaurant Location 2:

a. National Brand Coffee 24%

To be eligible for award of a concession contract, the proposer meet the ACDBE Goal through Actual Participation and/or make Good Faith Efforts (GFE) to explore all available options to meet the applicable ACDBE contract goal through ACDBE Participation. The proposer may meet its ACDBE Goal utilizing any combination of options listed below, all of which require verification of ACDBE certification and operational reasonableness by the Airport Authority’s Business Diversity Unit. The options for meeting the ACDBE Contract Goal are:

1) 100% ACDBE Participation: For this option, the proposer is solely owned and operated as a certified ACDBE firm.

2) Percentage Participation: For this option, a percentage of the business is designated to be owned, operated and/or maintained by a certified ACDBE through a sub-lease, management, operating, and/or franchise agreement. If the proposer plans to participate in a partnership with a certified ACDBE firm, the proposer must submit a Draft Partnership Agreement at the time the proposal is submitted.

3) Percentage Participation through Joint Venture Agreement: For this option, a proposer enters into a joint venture agreement with a certified ACDBE partner, in which the ACDBE partner has financial risk and reward commensurate with the ACDBE participation goal on a particular concession contract. For example if the ACDBE goal is 35%, then the ACDBE concessionaire’s risk in terms of investment in the operation and anticipated upside (reward) must be no less than 35%. If the proposer plans to participate in a joint venture with a certified ACDBE firm, the proposer must submit a Draft Joint Venture Agreement at the time the proposal is submitted.

For purposes of ACDBE participation, joint venture entities are not certified as ACDBEs. If forming a Joint Venture, the proposer has the option to submit a Draft Joint Venture Agreement to the Airport Authority no later than 20 days prior to the proposal due date stated in the RFP for evaluation and feedback.

4) Percentage of Goods/Services towards Vendor Purchases: For this option, the proposer designates a percentage of the gross revenue that will be committed to the purchase of goods and services from ACDBE certified vendors.

5) Other Legal Arrangement: For this option, the proposer may propose some other legal arrangement so long as it meets the eligibility standards in 49 CFR Part 23.

Options 2-5 will require Airport Authority review and approval by the ACDBELO.

Note: All firms upon which ACDBE certification is being relied, whether as proposer, JV partner, goods and services provider, sub concessionaire, subcontractor or any other arrangement, must be certified as an ACDBE at the time the proposal is submitted. The amount and type of ACDBE participation proposed will become a firm commitment upon execution of the Agreement and will be monitored by the Business Diversity Unit (BDU).

In the event that GFE does not result in a proposed ACDBE Contract Commitment which meets or exceeds the contract goal by way of the 5 options listed above, the difference between the commitment and goal may be met with a submittal of sufficient written documentation of the “good faith efforts” the proposer made prior to the Proposal Deadline to meet the goal. GFE made after the Proposal Deadline will not be considered. Failure to submit an ACDBE Contract Commitment which complies with the ACDBE Contract Goal requirements will result in the Proposal being deemed non-responsive and rejected without any further evaluation.

E. Evaluation of Good Faith Efforts The Airport Authority exercises its due diligence in setting both its overall ACDBE goals and its contract-specific ACDBE goals. Nonetheless, there may be instances in which meeting the ACDBE goal with ACDBE participation on a particular contract may not be achievable under the unique circumstances of that contract. In those instances, in order to comply with the proposal requirements of Part 23, a proposer must demonstrate that it has made sufficient good faith efforts to meet the goal in accordance with the good faith effort provisions of Part 23.

GFE documentation must include, but not be limited to, the following:

1) The method, means, and date(s) by which the proposer notified ACDBEs of the potential for bidding on the subject contract, such as:

· E-mail or fax communication with a specific list of ACDBE potential subcontractors;

· Documentation of advertising in general circulation trade publications and other media whose target audience is ACDBE potential subcontractors such as women or minority trade publications; and/or

· Highlighting the potential proposal opportunity on the proposer’s website or other proposer originated or controlled communications.

All such notification efforts should be active, timely, and thorough.

2) Identification of all the ACDBEs the proposer specifically notified. This information shall include:

· Name, address and number of the ACDBE(s);

· ACDBE principal(s);

· Date(s) of contact;

· Method of contact;

· Description of the information provided regarding the plans and specifications of the opportunity;

· Meeting notes; and

· Evidence as to why agreements could not be reached with contacted ACDBE(s).

Mere pro forma efforts are not good faith efforts to meet the ACDBE contract goal.

Providing documentation of the above factors is not a guarantee that the proposer’s purported GFE will be deemed adequate. A proposer may include any additional information with the proposal it believes to be relevant to support a finding by the Airport Authority ACDBELO that the efforts made could have reasonably been expected to obtain sufficient ACDBE participation to meet the ACDBE goal.

Submitted GFEs will be evaluated as a whole through an assessment of the following items:

· Adequacy of information provided to ACDBEs;

· Use of all reasonable and available means of solicitation (e.g., attendance at pre-proposal meetings, advertising and/or written notices);

· Extent of any follow-up done with the ACDBEs;

· Good faith negotiation tactics and use of industry standards when making a determination of whether to reject an ACDBE on the basis of qualifications;

· Efforts to assist interested ACDBEs in obtaining bonding, lines of credit, insurance, equipment, supplies, materials, or other related assistance or services as needed/appropriate; and

· Consideration given to make available to ACDBEs other aspects of the scope of services of the contract that would otherwise have been Ppoposer-performed or gone to non-ACDBEs in order to obtain the ACDBE participation goals.

The above list is not intended to be exhaustive, exclusive or a checklist. In addition, the Airport Authority specifically reserves the right to seek additional or different information in evaluating a proposer’s Good Faith Efforts to meet the particular ACDBE Contract Goal.

Notwithstanding the foregoing, if the proposer fails to include an ACDBE Contract Commitment sufficient to meet the ACDBE Contract Goal, and:

· Provides no evidence of adequate Good Faith Efforts; or

· Provides only conclusory statements of Good Faith Efforts;

Then, the Airport Authority has the right to reject the proposer’s proposal in its entirety as non-responsive.

F. Evaluation of ACDBE Commitment (ACDBE Plan)

1) General Information In order for the Airport Authority to fully and fairly evaluate the proposed ACDBE Commitment and Participation on an opportunity, the proposal shall include information outlining the proposer’s ACDBE Plan and complete and accurate information about all joint venture partners, goods suppliers and services subcontractors that will participate in the contract, as requested on the Vendor Information Form. The Vendor Information Form must be completed for all ACDBEs and Non-ACDBEs and the ACDBE Plan, at a minimum, must include the following information:

a) Amount and Name of ACDBE Participants

· Copies of current MUCP ACDBE certificates (ACDBEs must be currently certified with the appropriate NAICS codes at the time the proposal is submitted. Expired ACDBE certifications or certifications from other federal, state, county or local agencies are unacceptable)

· Business experience of each ACDBE

· List of DTW contracts the proposed ACDBEs are currently participating on, the description of work, and contract commitment percentage

b) Description of the Legal Relationship(s) to be Utilized (e.g., sublease, joint venture, partnership)

· Draft copies of the legal document(s) to be executed between the proposer and each named ACDBE

c) Proposed ACDBE Participation Commitment Percentage and Dollar Values

· Total financial value of ACDBE management or service subcontract(s) for each year of the first ten (10) years of the Contract after the Date of Beneficial Occupancy; and/or projected gross revenues for ACDBEs (e.g., franchisees, joint venture partners)

d) Nature of the Proposed ACDBE Participation (CUF)

· Identify items being purchased or services to be provided by each participating ACDBE

e) ACDBE Participation Contingency Plan

· Explain the approach the proposer shall employ to help improve performance in the event that an ACDBE is unable or unwilling to perform during the Contract term. In the event that approach fails, describe the methods by which proposer shall replace that ACDBE with another ACDBE The ACDBE Commitment is a commitment to use the proposed ACDBEs to meet the proposed percentage of participation. Joint venture partners, goods suppliers, and services subcontractors cannot be added or replaced after submittal of the proposal without the prior written approval of the ACDBELO or designee.

The Airport Authority will review the proposed ACDBE Plan and Contract Commitment to ensure that the commitment percentage is reasonable based on the ACDBE(s) ability to provide a CUF and succeed within the program. This review will include an analysis of the feasibility of the plan, taking into consideration work proposed to be completed by the ACDBE, past and current performance on other contracts at DTW, and ACDBE experience. Each joint venture agreement will be reviewed (as detailed in the following section) to ensure that the ACDBE joint venture partner demonstrates that it is independently responsible for their percentage of ACDBE Participation and will be completing a clearly defined portion of the work and shares in the ownership, control, management responsibilities, risks and profits of the joint venture. If deemed necessary, the ACDBE Plan review may be supplemented with interviews of the parties prior to contract award.

2) Joint Venture Review & Guidance Joint ventures are intended to have a business structure set forth in a signed written agreement that clearly and specifically defines the participation of each party in the contribution of property, capital, efforts, skills and knowledge.

An ACDBE is to be responsible for a distinct, clearly defined portion of the work of the contract. In this context,

a) “Distinct” means separate and distinguishable from the work of the non-ACDBE.

b) “Clearly defined” means that there is no guesswork involved in determining the nature of the work assigned to the ACDBE.

In order to be considered a distinct, clearly defined portion of the work, it is necessary to fully understand exactly what the work will entail, including an estimate of the time and resource requirements for each major task. For example, if the ACDBE’s portion of the work is only described as “advise about ” or “participate in” a portion of the work, the work would likely not be considered distinct or clearly defined because it is not clear what work the ACDBE will accomplish. Much more detail would be necessary in order to determine the portion of the work to be attributed to the ACDBE. The work of the contract may also include the role of the ACDBE in the overall management of the business (e.g., as a participant on a management committee or some other governing board) as well as participation in the day-to-day management of the business. The FAA has outlined the following areas for review when substantiating the level of ACDBE participation on an agreement.

c) Capital Contribution – The capital to be contributed by each party should be clearly specified in the joint venture agreement. The agreement should specify the initial capital contributions to be made by each party and how future capital contributions will be allocated. The ACDBE’s portion of the initial and future capital contributions should be equal to its ownership percentage.

d) Control – The ACDBE participant(s) in the joint venture should have control in proportion to their ownership interest and proportionate control of the governance of the joint venture. Each joint venture partner should assume full responsibility for executing each element of the work assigned to it. The agreement should provide for control by the ACDBE of the activities for which it is responsible. This can be accomplished through direct control of their assigned role or establishment of a separate management committee or subcommittee in which the ACDBE has majority vote for issues involving facilities or responsibilities which it controls. In addition, there should be some major decisions requiring a unanimous vote to substantiate some level of control attributable to the ACDBE (e.g., items related to expansion, borrowing, lending money, etc.).

e) Management – The ACDBE participant must share in the management of the joint venture. The agreement should address the issue of the overall management, or governance, of the business of the joint venture and the day-to-day management of the joint venture’s operation. The ACDBE participant should participate in the overall management, decision making, and day-to-day operations, including decisions on the hiring and firing of management personnel (and if appropriate non-management personnel) for the joint venture to be eligible for ACDBE credit. This can be accomplished through a “Management Committee,” as described under “control,” though this is not the only acceptable mechanism. Under a management committee structure, the committee is responsible for managing and directing the business of the joint venture. Each participant is represented on the management committee and votes according to its ownership interest in the venture. Each participant on the management committee not only has a right, but an obligation to receive and consider the views of the ACDBE participant. The agreement should specify the frequency of the management committee meetings, and formal agendas and meeting minutes should be prepared. In addition, the agreement should provide for the day-to-day management of the joint venture and specify the roles and responsibilities of each participant.

f) Risks – Each of the participants in the joint venture must share in the risks of the business in proportion to their ownership interest. These risks include financial, legal, operational, etc. The agreement should include provisions for proportional sharing in profits as well as losses. However, a monthly distribution of actual profits or monthly payment of a management fee, as defined in the agreement, consistent with industry standards, is permissible.

g) Profits – Each of the participants must also share in the profits and losses in proportion to the ownership interest. Accounting methods and the timing of distribution should be included in the agreement and will be reviewed for reasonableness by the Airport Authority. There should be no provisions in the agreement which have the effect of creating separate profit centers to siphon profits before each participant’s share is calculated. For example, requirements to purchase goods and/or services from one of the participants that results in controlling profits remaining for distribution to the joint venture participants are not acceptable. However, purchasing goods and/or services from one of the participants may be acceptable if the terms are spelled out and the cost of the goods reflects the actual cost of the product plus any processing/handling costs and reasonable overhead expenses.

A link to the FAA’s Joint Venture guidance can be found in Attachment K to this RFP.

G. Monthly Reporting of ACDBE Participation The successful proposer will be required to submit to the Airport Authority a monthly report to monitor and track the ACDBE Participation towards the attainment of the ACDBE Contract Commitment. The monthly report is due by the fifteenth (15th) day of each month and must cover all concessions operations within a contract for the previous month of concessions operations and included the following:

1. Commercially Useful Function(s) performed by each ACDBE;

2. Dollar value of ACDBE participation;

3. ACDBE gross receipts;

4. Total concessions gross receipts.

The amount reported as ACDBE participation must be directly related to work performed on the contract resulting in a CUF within the certified NAICS Codes.

Monthly reports are due to the Airport Authority even if there is no ACDBE participation to report for the month. If a monthly reporting is received thirty (30) or more days late the proposer will be “non-compliant”.