Guidebook for Developing and Managing Airport Contracts (2010)

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57 Airport sponsors select business partners through various solicitation processes (see Figure 8-1). Some processes are well-suited to a bid process, where the product desired can be specified so well that the only differentiating factor is price. Others require an evaluation of much more than price and are better suited to a request for proposal (RFP). In some cases, price is not considered as part of the selection process and a request for qualifications (RFQ) is used. Finally, in some instances, as a preliminary measure, a request for letter of interest (RFI) process will be used to determine the universe of potential proposers without requiring the submission of a full-blown proposal. The research for this chapter of the Guidebook revealed some common themes. First, airport managers often feel torn between the desire to make proposal instruction documents as com- plete as possible and keeping the documents brief and manageable. Second, airport managers are often frustrated by respondents, and occasionally governing bodies (e.g., boards of directors, city councils, and county commissions), that overrule staff decisions or otherwise undermine the integrity of the process. Finally, airport managers often find timing and schedule to be big challenges in the process. These themes are evident in the discussion of critical issues below. 8.1 Best Practices in Bid/RFP/RFQ Process Airports are going to greater lengths to ensure that processes do not stall because of manage- able factors. Instructions and requirements are explicit in many of today’s solicitations to ensure potential respondents understand what is asked of them. C H A P T E R 8 Proposal and Bid Documents Figure 8-1. Types of solicitation processes.

8.1.1 Dates, Times & Schedules Solicitation documents should include the specifics of proposal submittal deadlines, including date, time, and location. Some RFPs also specify how the official time will be determined. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from solicitations from AUS and FLL. 58 Guidebook for Developing and Managing Airport Contracts RFP Contents Best Practices Explicit instructions and requirements to ensure potential respondents understand what is asked of them. • Proposal Due Dates and Times • Selection Schedule • Schedule for Commencing and Performing the Services • Required Information and Format • Background Information • Proposal Evaluation • Minimum Qualifications • Operational Issues • ACDBE Requirements • Scope of Services and Major Requirements Best Practices in Structuring Bid/Proposal Process Explicit instructions and requirements to ensure potential respondents understand what is asked of them. • Timing – Specify due date, time and location – Designate official time keeper – Provide steps and expected dates for selection process – Identify expected dates to commence work, major milestones, and completion • Pre-Bid/Proposal Conferences • Sponsor Contact • Information to Respondents – Background Information – Public/Confidential Information – Operational Information • ACDBE Requirements • Proposal/Bid Affidavits • Addenda • Airport Sponsor Protections – Contract Exceptions and Consistency with contract terms – Right to Interpret – Validity Period – Disqualification and Protests

It is also critical to provide a schedule governing the process so that potential respondents will know not just when proposals are due, but also the speed with which they will be expected to perform contracting and construction activities. Many sponsors include schedules in RFPs that detail activities up to and including the proposal due date. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from a sample retail RFP from PHX for details regarding pre-proposal due date activities. It is preferable, however to include activities beyond the approval and execution of a lease. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from a sample RFP from AUS. In addition to these specifics, airport sponsors should also consider adding specific dates for board meetings, council meetings, or other meetings regularly scheduled far in advance. Being able to tell prospective respondents the schedule for board meetings can help them keep dates clear for possible attendance at those meetings. 8.1.2 Pre-Bid/Proposal Conferences A pre-bid or proposal conference provides an opportunity for an airport sponsor to provide additional information to prospective respondents. This is especially helpful if the conference includes a guided tour of the facility or facilities related to the opportunity offered. Prospective respondents, in turn, are given the opportunity to ask questions of staff. Staff should ensure that attendees understand that verbal responses to questions posed at a pre-bid/proposal conference are not binding—binding answers will be provided in a writ- ten addendum issued after the conclusion of the pre-proposal conference. Many airports believe that pre-bid/proposal conferences are more efficient if the RFP or bid documents expressly invite written questions in advance of the pre-proposal conference. Some airports also use attendance at a pre-bid/proposal conference to establish the list of recipients for addenda. Airports should consider logistics when planning a pre-bid/proposal conference. The room should be large enough to hold as many participants as expected comfortably. If no such venue exists, participation should be limited to a set number of participants per firm. Airports might also consider adding a provision that allows them more flexibility in interpreting proposals from entities that do not attend a pre-bid/proposal conference. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the RDU and PHX RFPs for good examples of RFP language describing the process for pre-proposal conferences. 8.1.3 Objectivity/Sponsor Contact Part of an airport’s effort to ensure objective and unbiased selection processes depends on its position regarding contact by prospective respondents during the proposal/bid preparation period. Airport sponsors are encouraged to explicitly state the circumstances under which a prospective respondent can contact the sponsor, the individual staff members who may be contacted, and at what times contact may take place. It is especially helpful to acknowledge the ways in which contact may occur for matters outside the solicitation in question, to help respon- dents avoid additional confusion. Proposal and Bid Documents 59

See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the PHX RFP regarding contracting policy and parameters for discussions with staff and board members during a solicitation process. 8.1.4 Scopes of Service Solicitation documents geared for consultant selection require a well-defined scope of serv- ices in order to help potential respondents understand what is being asked of them and the effort required to perform the work or deliver the service. Accordingly, these scopes of service should have as much detail as possible, allowing for the fact that some detail might be withheld in order to receive different descriptions of approaches to the work. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the PHX Air Service Consultant Agreement providing a detailed scope of services. 8.1.5 Background Information In solicitation documents, airports have always done a relatively good job of providing the necessary background information to prospective respondents. This information is usually tailored to the type of solicitation and assists any respondents who may not have regular access to it. Over time, companies doing business at airports have become more sophisticated in their approaches and have expressed a desire to receive more detailed information in solicitation documents. Some airport sponsors provide information about historical enplanement activity, nature of airline service, airline market shares, gate assignments, passenger profiles, the socio-economics of the air service catchment area, and other concessions at the airport. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for a sample of detailed background information in a 2010 solicitation by SFO for a bookstore operator. 8.1.6 Public/Confidential Information In order to receive enough information to evaluate proposals or bids, airports often ask for detailed financial information that often would be considered proprietary by the respondent. Given that, it is critical that the sponsor be clear in describing how confidential information will be handled. Although some airports believe that all information in proposals or bids is public information and should not be protected, most airports make an effort to protect such information because it is believed that doing so will result in a higher number of quality responses. However, the airport should also disclose the possibility of required disclosure and disclaim any liability for inadvertent or mandated disclosure. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the RDU RFP regarding the public record nature of proposals and authorities’ willingness to take reasonable efforts to protect information marked confidential. 60 Guidebook for Developing and Managing Airport Contracts Background Information Best Practices • Historical enplanement activity • Nature of airline service, market shares and gate assignments • Passenger profiles – Demographics – Travel profile – Purchasing patterns & preferences • Socio-economic characteristics for air service catchment area • Other concessions

8.1.7 Operational Issues Solicitation documents should, to the extent possible, detail all operational issues and require- ments that are of importance to the airport. For example, when considering terminal concessions, the following operational issues typically are important to the airport and can affect the potential respondent’s evaluation of the opportunity. • Hours of operation must be clearly outlined and should be consistent with the anticipated airline schedules affecting the concessions. Sponsors should consider the needs of passengers, meeters/greeters, other tenants, and employees in determining operating hours. • Advanced point-of-sale (POS) systems to be used by all tenants should be described. RFPs should mandate their use whenever possible to ensure accurate reporting by tenants to the sponsor. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the MSP Concessions General Terms and Conditions and SFO Retail Lease Agreement regarding minimum requirements for cash handling and point-of-sale systems. • Responsibilities for the payment and installation of utilities and the method for allocation of utility costs (if spaces will be metered individually or utility costs allocated according to the utility loads of a tenant’s equipment, or one that allocates according to sales levels). • In addition to utilities, a sponsor should be very clear in describing the communication systems to be provided. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the AUS RFP for food/beverage concessions regarding Shared Tenant Service (STS) telephone system and communication services through a Premises Distribution System (PDS). • The sponsor should also clearly describe the responsibilities for maintenance. In particular, the responsibilities for janitorial services in tenant spaces and common area spaces should be clearly delineated. • If street pricing is a policy for a particular airport, a separate policy statement and monitoring process should be expressly spelled out. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the RDU Concessions Pricing Policy. 8.1.8 ACDBE Considerations In any process for which solicitation documents are used, the presentation of the Airport Concession Disadvantaged Business Enterprise (ACDBE) goals are critical to ensuring respon- sive proposals. ACDBE requirements can be confusing to readers not accustomed to them. RFPs and bid documents should use as much detail as possible to convey the goals of the airport, the requirements for qualification, the consequences for failure to meet the goals, and the documen- tation that must accompany the proposal. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for the MSP Concessions General Terms and Conditions and SFO Retail Lease Agreement for language regarding ABCDE requirements and the RDU RFP which provides more expansive language. 8.1.9 Addenda The consistent flow of information from approved sponsor sources to prospective respon- dents is another key to ensuring a high response rate. Even well-written RFPs require addenda to clarify information or to answer questions posed in the pre-proposal conference. To ensure Proposal and Bid Documents 61

all prospective respondents receive the necessary information, solicitation documents should detail the procedure for issuing addenda, including any requirement for being on the distribu- tion list, the methods for transmittal (e.g., online, fax, and e-mail), and the use of an affidavit acknowledging receipt, which can be required as part of the proposal. 8.1.10 Proposal Affidavits The use of affidavits to establish, in writing, that respondents have received all of the informa- tion available and required to submit a proposal are becoming more popular. Airports have grown tired of receiving complaints after a selection is made that, for example, “Company X had no knowledge of this requirement.” Affidavits eliminate the possibility that a respondent can make such a claim. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for affidavit forms from the PHX RFP. 8.1.11 Consistency with Contract Documents Solicitation processes are typically accompanied by a draft contract, which includes an exten- sive list of definitions governing that document. Often, an RFP or RFQ uses language similar to that in a draft contract, but with a different connotation. Sponsors should take great care to ensure that definitions in the two documents do not create confusion. If necessary, a separate set of definitions for the solicitation document may be included, provided there is accompanying language that explicitly states that any definition in the contract will take precedence should there ever be confusion over the use of a term in both documents. The concept of defining contract exceptions is also important here. By inviting respondents to provide exceptions to the draft contract in their proposals or bids, the sponsor can ensure that only those exceptions are subject to negotiation. 8.1.12 Right to Interpret The right to interpret proposals and certain elements of bids and to waive irregularities in the same is essential for airports. Not reserving this right can expose an airport selection com- mittee to protests from unsuccessful respondents. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for the RDU RFP with language to reserve these rights. 8.1.13 Validity Period and Proposal Bonds Respondents to RFPs or bid requests are typically businesses that, all else being equal, would prefer to adapt their bids or proposals as market conditions change. Because there is a minimum amount of time required for a selection committee to evaluate bids/proposals and make a rec- ommendation, it is not possible to permit respondents to alter the contents of a submittal. It is therefore necessary to include a period of validity in the solicitation document. This period should include, at a minimum, all of the days between and including the delivery of the submittal and the execution of a contract resulting from the solicitation process. Airports typically use periods of 60, 90, or 120 days. 8.1.14 Disqualifications and Protests Disqualifications of proposals and protests of selections are not common, but must be taken very seriously should they occur. The reasons given by an entity for either can vary greatly. 62 Guidebook for Developing and Managing Airport Contracts

Responding to them can be difficult, and finding resolution sometimes requires the intervention of the Director or Board. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the PHX RFP outlining the procedure for appeals. 8.2 Proposal Evaluations 8.2.1 Minimum Qualifications Because of the unique nature of operations on airport property, solicitation documents must explicitly describe the minimum qualifications required of respondents. In some cases, solicita- tions should ensure that these qualifications include some history in an airport environment. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for examples that illustrate the varying degrees of qualification required by airport sponsors. See OAK’s RFP which mandates some airport experience as part of the overall minimum operational or developer experience and sales requirements. See PHX Wildlife Professional Services Agreement for professional qualifications. 8.2.2 Required Information The evaluation of proposals is simplified if the RFP or bid documents clearly lay out the format each response should take. Separating the response into distinct sections enhances readability and makes it possible to disassemble proposals for disbursement to individual members of the evaluation committee. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the RDU RFP which defines the submittal sections and submittal forms for the SFO Retail RFP. 8.2.3 Proposal Evaluation Evaluating proposals is often the most challenging part of the process. Transparency is key, and one of the primary goals should be to ensure that no protests are filed in response to the process. Proposal and Bid Documents 63 Submittal Format Typical Sections Included in Proposal • Cover Letter • Company Background and Management Experience • ACDBE Participation • Proposed Products and Services • Financial Projects • Financial Background • Management and Operations Plan • Exceptions to the Concession Agreement • Proposal Bond • Executed Proposal Forms and Appendixes

Maintaining transparency suggests that scoring should be purely objective in nature. In reality, some subjectivity may be required. The process used should be one that permits subjectivity without creating an appearance that the process is entirely so. Scoring criteria and flexibility in considering proposals can help limit the amount of subjectivity. This may be accomplished through the scoring criteria used or by reserving flexibility in how proposals are considered. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for an excerpt from the PHX Retail RFP. Airports will frequently reserve the right to develop a short list of proposers and interview proposers. 8.3 Best Practices Specific to Bid Processes In cases where an airport seeks a specified product or service that can be provided (identically) by more than one vendor or business, bid processes are often used instead of RFPs or RFQs. When using a bid process, some issues should be treated differently than they might in an RFP. 8.3.1 Specifications Bid requests must be accompanied by detailed specifications that ensure respondents are bid- ding on precisely the same product or service. In instances where some deviations are permitted or deemed necessary by a respondent, procedures for bidding with these changes need to exist. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the Dallas-Ft. Worth International Airport’s (DFW) Request for Bid template regarding language that presumes compliance with specifications and defines when substitutes are permitted. 8.3.2 Bid Opening and Evaluation Many bid openings are attended by respondents, some of whom pay very careful attention to the procedures followed to evaluate the bids. It is critical that an airport sponsor have detailed processes in place to ensure that in such situations, the same procedures are always followed. This will help minimize the number of protests or contested decisions that arise from a bid process. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the DFW’s Request for Bid template language regarding bid opening and evaluation process. 8.3.3 Non-Responsive Bids/Rejection of Bids As highlighted in other sections of this Guidebook, some of the toughest challenges an airport faces come in the form or protests or challenges. Bid processes, if not carefully structured, can 64 Guidebook for Developing and Managing Airport Contracts Typical Criteria for Evaluating Concession Proposals • Qualifications and Experience of the Proposer • Management and Operations Plan • Merchandise Plan • Marketing Plan • Capital Investment • Design and Quality of Improvements • Financial Returns to Airport

be targets for protests, particularly if the bid specifications are not specifically stated and likely to be misinterpreted. A complete, specific set of criteria to determine either a bid or bidder to be non-responsive is a critical component to a successful bid process. See CRP-CD-81 (enclosed herein), Appendix to Chapter 8, Proposal and Bid Documents, for excerpts from the DFW’s Request for Bid template language regarding determination of non-responsive bids. 8.3.4 Provisions Governing Successful Bidders By their nature, bid documents are often more straightforward and precise than RFPs and RFQs. As such, accompanying documents identifying all of the provisions that will govern a suc- cessful bidder are necessary. These provisions include all of the rules, regulations, and policies that govern airport users, tenants, and vendors in matters pertaining to environmental management, security, insurance requirements, and ACDBE processes, among others. Proposal and Bid Documents 65