Guidebook for Developing and Managing Airport Contracts (2010)

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TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2011 www.TRB.org A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 33 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation • Finance • Law • Terminals and Facilities Guidebook for Developing and Managing Airport Contracts Kent Vanden Oever AIRPROJECTS, INC. Alexandria, VA Angela Gittens HNTB CORPORATION Miami, FL Susan Warner-Dooley HNTB CORPORATION New York, NY Alexander Zaslov HNTB CORPORATION Arlington, VA Helen Tremont TO THE MAX CONSULTING, LLC McLean, VA Tess Snipes ABOVE & BEYOND CONSULTING, LLC Atlanta, GA Sam Hoerter SAM HOERTER, LLC Mt. Pleasant, SC

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and inter- national commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal respon- sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera- tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera- tive Highway Research Program and Transit Cooperative Research Pro- gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte- nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera- tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100-Century of Aviation Reauthorization Act. The primary partici- pants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport oper- ating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Association of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), and the Air Transport Association (ATA) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga- nizations. Each of these participants has different interests and respon- sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden- tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro- fessionals, the intended users of the research products. The panels pre- pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper- ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended end-users of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work- shops, training aids, field visits, and other activities to ensure that results are implemented by airport-industry practitioners. ACRP REPORT 33 Project 01-02 ISSN 1935-9802 ISBN 978-0-309-15532-8 Library of Congress Control Number 2010943404 © 2011 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national-academies.org/trb/bookstore Printed in the United States of America

CRP STAFF FOR ACRP REPORT 33 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Theresia H. Schatz, Senior Program Officer Joseph J. Brown-Snell, Senior Program Assistant Eileen P. Delaney, Director of Publications Hilary Freer, Senior Editor ACRP PROJECT 01-02 PANEL Field of Administration Shirley J. Ybarra, Reason Foundation, Washington, DC (Chair) Kathey Boze, Fort Smith Regional Airport, Fort Smith, AR Mahi Chambers, Memphis–Shelby County Airport Authority, Memphis, TN James F. Hayes, Satterwhite Law Firm, Goochland, VA Alex M. Kashani, Metropolitan Washington Airports Authority, Washington, DC Hana Rocek, Airport Consulting, Inc./McCarran Airport, Henderson, NV Kevin C. Willis, FAA Liaison James I. Briggs, Jr., Airports Council International–North America Liaison Christine Gerencher, TRB Liaison C O O P E R A T I V E R E S E A R C H P R O G R A M S

ACRP Report 33: Guidebook for Developing and Managing Airport Contracts provides an intuitive, easy-to-use guidebook of best practices for developing, soliciting, and manag- ing airport agreements and contracts for use by a variety of airports. This report responds to the need for a single resource for examples of current airport best practices in preparing and administering agreements. The agreements referenced in this guidebook range from airline-related agreements to communication and utility service as well as common-use, ground transportation, and concessions agreements for a variety of passenger services. An accompanying CD-ROM provides sample agreements in each of these areas. This report will be useful for administrators; finance, properties and contract services staff at airports of all sizes; and other stakeholders involved in dealing with a variety of airport agreements and contracts. Airport operators are responsible for developing and managing a wide variety of aero- nautical and non-aeronautical agreements. These include, but are not limited to, agreements for airport use (both airline and non-airline), design and construction, commercial devel- opment, commercial operations, management, intergovernmental relations, real estate, maintenance and operations of buildings and grounds, utilities, administrative services, military use, airport “through-the-fence” operations, common-use facilities, ground trans- portation, and concessions for a variety of passenger services (i.e., rental car, parking, and retail/food/beverage). In addition, with the constantly changing environment in the airline industry, airports are becoming more responsible for services and programs that were traditionally the responsibility of the airlines. While large airports typically have full-time professional property- or business-management offices to oversee the development, solicitation, award, administration, and overall management of these contracts, many medium and small air carrier airports as well as many general aviation airports do not. At these airports, the staff responsible for contracts may have other responsibilities in addition to administering these airport agreements and are often not aware of evolving trends or best practices for airports. It is difficult to obtain templates for specific kinds of agreements and time-consuming to learn proven techniques for administering airport agreements. However, within the airport industry, several airports have developed and implemented creative programs. Other airports can benefit from their experience and example. In addition, the operators of overseas airports have developed and implemented contract procedures that are not widely known in the United States. To obtain copies of agreements that represent “best practices,” airport operators were required to contact their peers individually, as there was no clearinghouse or easily accessible source for these documents. This report provides a consolidated location for such information. This research effort was conducted by HNTB under ACRP Project 01-02. F O R E W O R D By Theresia H. Schatz Staff Officer Transportation Research Board

1 Chapter 1 Airline Agreements 1 1.1 Length of Term 2 1.2 Control of Space 3 1.3 Loading Bridge Ownership and Maintenance 3 1.4 Ability to Accommodate New Entrants and Growing Incumbents 4 1.5 Affiliate Definition and Treatment 4 1.6 Treatment of Alliances 5 1.7 Vacancy Risk 5 1.8 Privileges Granted 6 1.9 Defined Obligations 6 1.10 Maintenance, Repair, and Janitorial 6 1.11 Reporting of Activity 7 1.12 Form and Amount of Payment Security 8 1.13 Insurance 9 1.14 Assignments and Subletting 10 1.15 Handling Agreements 10 1.16 Rate Making 11 1.17 Billing, Payments and Adjustments 12 1.18 Aviation Security 12 1.19 MII Approval for Capital Projects; Formula for MII Calculation 14 1.20 Bankruptcy Provisions 15 Chapter 2 Concession Agreements 15 2.1 Financial Terms 19 2.2 Service and Operational Terms 20 2.3 Food and Beverage Concessions 24 2.4 Specialty Retail/News and Gifts 24 2.5 Passenger Services 24 2.6 Parking 25 2.7 Rental Cars 30 Chapter 3 Communication and Utility Services 30 3.1 Critical Issues—Fiber, Cable, and Internet 31 3.2 Critical Issues—Distributed Antenna Systems 33 3.3 Critical Issues—Telephone Service to Airport Sponsor 36 3.4 Critical Issues—Utility Leases or Easements 38 Chapter 4 General Aviation 38 4.1 Minimum Standards 39 4.2 Critical Issues—Fixed-Base Operators 42 4.3 Critical Issues—Hangar Leases 43 4.4 Through-the-Fence Arrangements C O N T E N T S

44 Chapter 5 Ground Transportation Agreements 44 5.1 Trends in Ground Transportation Agreements 46 5.2 Definitions 46 5.3 Critical Issues in Ground Transportation 49 Chapter 6 Contract Services 49 6.1 Characteristics of Contract Services 49 6.2 Deciding to Contract Services 49 6.3 Critical Issues in Contracting Services 53 Chapter 7 Professional Services 53 7.1 Critical Issues in Professional Services Agreements 56 7.2 Selection Process 57 Chapter 8 Proposal and Bid Documents 57 8.1 Best Practices in Bid/RFP/RFQ Process 63 8.2 Proposal Evaluations 64 8.3 Best Practices Specific to Bid Processes 66 Chapter 9 Non-Aviation Development 66 9.1 Key Factors for Success in Airport Commercial Land Development 69 9.2 M/W/D/BE Participation 69 9.3 FAA Compliance 71 Chapter 10 Multiple-Use Facilities 71 10.1 Parties to Contract 71 10.2 Term 72 10.3 Scope of Services 72 10.4 Indemnity Issues 72 10.5 Ownership Issues 72 10.6 Resolution of Disputes 72 10.7 Compensation 73 10.8 Rights and Responsibilities of the Parties 73 10.9 Reporting 74 Chapter 11 Agreements with Public Agencies and Not-For-Profit Organizations 74 11.1 Agreements with Sister Organizations 74 11.2 Public Art