A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities (2015)

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22 C H A P T E R 4 This chapter discusses the roles and responsibilities of governing bodies (e.g., the airport authority, airport department of a municipality, or airport division of a port authority), chief executives, and other airport personnel engaged in setting policies and implementing business diversity programs. The importance of DBELOs engaging in all aspects of the procurement pro- cess also is discussed, as is the role of the airport in disputes between primes and their diverse business partners. The research for ACRP Project 01-25 found that diversity programs are a shared responsibil- ity best executed when fully supported (by culture, staff, and resources) and implemented as a collaborative effort. Airports that are committed to the ideals of business diversity programs and that have dedicated staff to diversity programs are more successful. Practice Tip: Airports perceived as doing a good job of increasing diversity in their contracts tend to have diversity ingrained in every aspect of the culture and business practices of the airport. Four important contributors to these successful programs are: • Commitment. The governing body and top management are committed, provide direction, and monitor success. • Shared Responsibility. Diversity programs are viewed as a shared responsibility among gov- erning bodies and staff, and there are collaborative, cooperative efforts and full engagement of the DBELO. • Diverse Team. A diverse governing body and senior management team is beneficial, especially when combined with overall and executive-level diversity goals. The philosophy that airport staff should mirror the diversity of the community is important. • Collaborative Efforts. Ongoing and routine updates to the governing body (e.g., monthly, quarterly) and frequent collaboration among staff helps measure internal and external per- formance such as program effectiveness, reasons for changes in participation, program weak- nesses, and policy modifications that may be needed. The research demonstrates that business diversity programs need to be embraced from the top down, be “part of the fiber or DNA of the airport,” have high visibility, and be part of every- day business in order to be most successful. A culture that supports community outreach and engagement, staff accountability, a system in place to track solicitations, and a small business department that is engaged prior to advertising solicitations all contribute to increasing business diversity. Policy and Implementation Roles and Responsibilities

Policy and Implementation Roles and Responsibilities 23 Practice Tip: Everyone in an airport’s organization who is involved in policies, prac- tices, and procedures for business diversity programs needs to be trained and held accountable for ensuring inclusion and diversity in the solicitation and execution of contracts. The research identified several practices that have aided in promoting diverse business participation: • Diversity initiatives are generated and/or directed by the governing body. • Federal DBE/ACDBE requirements are viewed as a floor and not as the ceiling for increasing diverse business participation. • The business diversity program is an integral component of the airport’s strategic plan. • Aggressive policies and practices are adopted to achieve business diversity. • The governing body is actively involved in oversight of the airport’s procurement system. • There is true commitment from top airport management. • Relationships with all types of businesses, including small businesses, are promoted to build trust in the community. • Governing bodies and senior management routinely receive reports on business diversity efforts and achievements. • Business diversity is discussed and viewed in terms of investments in the airport and the community. • Staff are held accountable for and evaluated on their execution of business diversity responsibilities. 4.1 Governing Body Diversity initiatives generated or directed by the governing body of an airport or its local or state airport sponsor can incentivize airport personnel to be attentive to maximizing diverse business participation in airport contracts. The more a city or state legislative body and airport boards or commissions afford visibility to business diversity topics or emphasize their importance in procure- ment and contracting, the higher is the likelihood that line staff will make strong efforts to outreach to small, minority-owned, and woman-owned firms. When that does not happen, there is not a high regard for business diversity programs and many in management view them as an impediment. Practice Tip: It is important for the governing body to be actively involved to ensure that business diversity is a priority to airport management. Illustrations of governing bodies’ involvement in business diversity policies and activities pro- grams include: • Jackson Municipal Airport Authority (JMAA). JMAA’s business diversity program is an integral component of the airport’s strategic plan for Jackson-Evers International Airport (JAN) and Hawkins Field Airport (HKS), its general aviation facility. JMAA’s core values are: “Accountability; Continuous Learning & Improvement; Teamwork; Integrity; and Openness & Trust.” The JMAA Board of Commissioners undertakes its DBE/ACDBE policymaking and management oversight responsibly, whereas it views federal regulatory requirements as only a starting point for promoting and achieving diverse business participation.

24 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities • Metropolitan Washington Airports Authority (MWAA). MWAA has policy and oversight jurisdiction of DCA and IAD. The Business Administration Committee of the MWAA Board is actively involved in overseeing the procurement system and has a high interest in ensuring a fair and inclusive contract award process for all airport contracts. As a result of the Business Administration Committee’s keen focus on the implementation of diversity initiatives, staff prepares regular briefings to the MWAA Board on these matters. A DBE firm that provides a variety of consulting services for airports and larger firms doing business with airports commented that diversity is a high priority for the MWAA Board of Direc- tors, and she gave kudos to several airports for their business diversity efforts, including San Diego International Airport (SAN), Dallas/Fort Worth International Airport (DFW), Richmond Inter national Airport (RIC), Memphis International Airport (MEM), and Birmingham- Shuttlesworth International Airport (BHM). Port of Seattle commissioners also go out into the community and discuss the importance of minority- and woman-owned business inclusion. An airport board member explained, “My level of involvement is pretty active primarily because I choose to be active. It’s routine. I get briefings before every board meeting on our local and disadvantaged business programs’ activity. Beyond that . . . other issues may come up on spe- cific procurements that I’ll make a further inquiry about how we’re going to procure a particular product or service. . . .” Another airport board member pointed out that in their contract processes staff knows that “if they don’t bring [business] diversity to the table, they are going to get asked why. I’m the only minority on our small business committee, and the other seven act in a way that folks know diversity is a business practice.” A CEO from a small airport explained that “having significant diversity on the board and on the senior management team is a big benefit . . . if there isn’t a board adopting DBE policy and buy-in from the staff, DBEs don’t get many opportunities. That’s an impediment to DBE success.” Practice Tip: When the governing body has adopted aggressive policies and objec- tives, and is actively engaged in their implementation, opportunities for diverse business participation increase. 4.2 Chief Executive Numerous stakeholders cited true commitment from top airport management among best practices that are most beneficial for increasing diverse business participation. Support from the executive level is critical for diversity policies and practices to work. Top-level support is demonstrated through executives’ overall involvement, which has a major impact on the buy-in, support, credibility, and accountability for business diversity programs throughout an airport organization. One executive explained, “We don’t set diversity as a goal; it’s just a part of what we do.” Another executive shared the same sentiment, stating that “our efforts are because it’s the right thing to do. No law or anything is telling us it’s something we have to do.” Another execu- tive’s philosophy is that “everybody in the organization is responsible for small business develop- ment, being inclusive, and ensuring diversity in the execution of our contracts.” Practice Tip: When top management is personally committed to diversity and inclusion, promoting opportunities for diverse business participation in airport contracts is a priority and routine part of doing business.

Policy and Implementation Roles and Responsibilities 25 Business diversity achievements are most successful when the chief executive provides clear direction; monitors performance; dedicates adequate staff, funding, and other resources; and is actively engaged in the community. Organization-wide encouragement from the chief executive and commitment from the senior management team also contribute to the success of business diversity programs. Direct involvement of the CEO in business outreach and community out- reach also signals to the organization the importance and visibility of diversity program matters. At one airport, members of the staff have individual performance goals and must complete specific activities related to business community outreach and engagement. At small and general aviation airports, outreach efforts tend to be more limited. These efforts might include publish- ing airport contract opportunities in nationwide diversity-oriented publications, using local diversity resources, and posting opportunities on the airport website. Ongoing efforts to ensure transparency in the contracting process, employing well-qualified, trained individuals who understand and consider the needs of diverse businesses in executing their duties, and requiring good faith efforts from contractors are among key roles of chief executives. An airport executive from a small airport expressed that “promoting and achieving diversity is about setting priorities.” The airport had been achieving roughly 10 percent in participation, but the airport executive challenged all the departments to look at where and with whom the airport was spending its contracting dollars. Staff were then asked to identify additional small and minority businesses to compete for that work, including day-to-day purchases. One goal was for staff to “get out of their comfort zone” when selecting firms. The airport is now up to 40 percent in some areas of spending. Another factor that made a difference was turnover on the airport’s executive team, which resulted in minority females being selected for two of the three positions on the executive team. The position of an airport executive at general aviation airports is often described as a “jack- of-all-trades.” These airport executives are responsible for a wide range of activities that include financial management, oversight of contracts and leases, safety and security, noise control, com- munity relations, compliance with federal grant conditions, facility maintenance, and capital improvements. FAA personnel recommend that these executives provide more oversight of prime contractors and/or consultants who assist them with administering diversity programs in order to enforce the airport’s program goals. 4.3 Liaison Officer (DBELO) Unlike any other airport employee, the position of a DBELO, who must have direct, indepen- dent access to the chief executive concerning DBE and ACDBE Program matters, and who must implement all aspects of the airport’s DBE and ACDBE programs, is mandated by 49 CFR Part 26. Among other essential functions, DBELOs: • Develop, manage, and implement business diversity programs on a day-to-day basis. • Work to set diverse business participation goals. • Explain diversity program requirements internally and externally. • Disseminate information on available business opportunities. • Ensure solicitations contain required clauses and participation goals. • Plan and conduct outreach initiatives. • Participate in pre-bid meetings. • Evaluate proposals to assess proposers’ good faith efforts to meet goals. • Provide recommendations on contract awards. • Conduct compliance monitoring and enforcement. • Gather and report statistical data and other information.

26 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities • Remain current on ACDBE and DBE Program regulations. • Analyze progress toward attainment of goals and identify improvements needed. Some general aviation airports may have only one full-time employee, who is both the airport manager and the DBELO. In addition to diversity program responsibilities, these individuals develop the budget, develop and manage the capital development plan, and deal with airfield maintenance and other day-to-day matters. Attracting businesses to the airport is also among their responsibilities. U.S. DOT encourages airport operators to include language such as the following in their ACDBE and DBE Program policy statements: “Implementation of the [ACDBE and/or DBE] program is accorded the same priority as compliance with all other legal obligations incurred by the [name of grant recipient] in its financial assistance agreements with the Department of Transportation” (89, 90). Although there are commonalities and differences in the priority of diversity programs in terms of where a DBELO is positioned in the organizational hierarchy, few DBELOs hold senior-level management positions or report directly to the chief executive. Some DBELOs hold additional titles and perform other duties. Other DBELOs may have direct independent access to the mayor and city manager concerning DBE program matters. A DBELO’s clout, where he or she is positioned in the organization, to whom the DBELO reports, and the DBELO’s level of involvement in the planning, development, and implemen- tation of contracting policies and practices are indicators of the priority an airport places on business diversity programs. The way these programs are executed and how they are viewed internally and externally also indicate a DBELO’s standing. Throughout this research, numerous individuals expressed the need for the diversity program office to have clout, power, and cred- ibility, and for DBELOs to have true, independent access to the chief executive. Most technical decisions concerning the selection of service providers and during the planning and implementation of concession and construction programs are determined by the airport’s concession managers, construction managers, and procurement managers. DBELOs expressed frustration that they are often an afterthought in the contracting process. They also expressed that their efforts at true capacity building often are not welcomed, and they are not empowered. Practice Tip: DBELOs must be fully engaged in the procurement process. Areas of involvement where DBELOs’ input is critical include: • Reviewing scopes of work for contracts to help determine whether qualifications criteria cre- ate any barriers to diverse business participation. • Offering guidance on whether contracts can be smaller-sized to allow diverse businesses to participate as primes. • Advising chief executives and management staff on ways to promote and enhance business diversity programs. • Identifying potential impediments that technical decisions may cause (e.g., a requirement for experience building a parking garage on an airport). • Offering recommendations on how to alleviate impediments to diverse business participation. Practice Tip: DBELOs are in the best position to offer guidance concerning the inclusion of diverse businesses in airport contracts.

Policy and Implementation Roles and Responsibilities 27 Major policy decisions by top management and airport board members during the develop- ment cycle (e.g., whether making compliance with ACDBE/DBE requirements a part of the evaluation criteria and assigning scoring points) should also include guidance from DBELOs on ways to maximize diverse business participation on airport contracts and leases, while accom- modating the airport’s other needs and goals. DBELOs also need a diverse knowledge base in order to understand what businesses do, recog- nize how their participation fits into the overall project, and give advice throughout the procure- ment process on the best methods for achieving diversity and eliminating barriers. At MWAA for example, the DBELO’s office has the authority to assign goals on all projects/ solicitations of $50,000 or above, and to make the final decision on whether a contract in the LDBE program will be set aside for small businesses. At Baltimore/Washington International Thurgood Marshall Airport (BWI), the Office of Fair Practices (OFP) is responsible for the airport’s business diversity programs, and the chief executive makes sure that OFP is involved in all aspects of airport contracting processes. BWI also has a Procurement Review Group that meets monthly to discuss any and all upcoming procurements that will be advertised the following month. Required participants in these meet- ing include a representative from OFP and others who have a role in the project (e.g., project manager, design architect). Long Beach Airport (LGB), a small airport owned and operated by the City of Long Beach, California, coordinates with a city DBE officer who is responsible for goal-setting, reporting, monitoring, and compliance functions. Three members of the LGB airport staff handle ACDBE and DBE contracts, and they report to LGB’s executive director. As airport business diversity programs have begun to shift from compliance-focused to com- prehensive business development models, hiring requirements for DBELOs increasingly include degrees or a background in business, finance, supplier diversity, engineering, and/or construc- tion, with employment experience managing business diversity programs. Knowledge of con- tracting principles, administration, and project management is advantageous, and a master’s degree in business administration or law is also desirable. 4.4 Other Offices and Departments Practice Tip: Bring together different expertise and perspectives to allow for a broader and more comprehensive view of needs and concerns while opening the door to more creative and strategic solutions (16). Several other airport offices and other departments (e.g., economic development departments) have roles and responsibilities essential to the development and implementation of business diversity programs. Such offices and departments include, but are not limited to: • Legal offices. • Concessions development offices. • Engineering, planning, and construction offices. • Procurement and purchasing offices. • Public relations/community relations offices. This list is not intended to be exhaustive; rather, it illustrates and suggests the kinds of inter- office and interdepartmental roles and relationships that affect the development and implemen- tation of business diversity programs.

28 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities 4.4.1 Legal Offices Attorneys representing airports have widely varying roles and responsibilities related to the implementation and enforcement of DBE/ACDBE or small or local programs. Attorneys are tasked with providing legal advice or opinions concerning a broad range of issues, ranging from contract or procurement process compliance to regulatory and constitutional law support for DBE/ACDBE policies and practices. Attorneys also are tasked to weigh in on bid protests, claims, and litigation related to DBE/ACDBE contract award issues. On the policymaking front, attorneys sometimes are called on to assist airport manage- ment and policymakers with creating contract conditions or policy measures in response to community concerns. For example, during the expansion facilities program at San Francisco International Airport (SFO) in 1997, San Francisco–based trucking companies, who are pre- dominantly African and Latino American, indicated to the airport director and San Francisco Airport Commission (Airport Commission) that they did not experience a level playing field when competing for trucking subcontracts on major airport construction contracts. The airport director requested assistance from the airport’s legal department to address the concerns. The legal department participated in a “town hall” meeting with airport managers and interested firms and, based on issues presented, prepared a “San Francisco Truckers First” policy. The policy was adopted by the Airport Commission and directed staff to include provisions in the airport’s major construction contracts requiring the general contractors bidding on airport work to agree to use San Francisco–based trucking companies first over non-local firms when awarding truck- ing subcontract opportunities on airport contracts. The airport director incorporated the policy and its requirements into bid specifications for large construction projects. As a result of this policy, small, local, and minority firms were able to compete and win trucking subcontracts and perform services to SFO. Another illustration of how attorneys help airport clients achieve community and social policy aims is the Los Angeles Airport Construction Project Labor Agreement, adopted in November 1999 in connection with the renovation and improvement of the Los Angeles International Air- port (LAX) Tom Bradley International Terminal. In the agreement’s non-discrimination clause, crafted by in-house airport counsel, the following provision safeguards LAX’s MBE, WBE, SBE, LBE, and DBE programs and laws: It is recognized that the City and federal government have certain policies and commitments for the utilization of business enterprises owned and/or controlled by minorities, women, the disadvantaged or others. The parties shall jointly endeavor to assure that these commitments are fully met and that any provisions of this Agreement which may appear to interfere with any minority, women, disadvantaged or other owned business enterprise successfully bidding for work within the scope of this Agreement shall be carefully reviewed, and adjustments made as may be appropriate and agreed upon among the parties, to assure full compliance with the spirit and letter of the governments’ policies and commitments in all applicable federal, state and local rules and regulations relating to employment and utilization of said business enterprises (208). 4.4.2 Concessions Development Offices Generally, concessions managers and their staff will administer day-to-day implementation of an airport’s concession program to, among other key duties: • Prepare lease documents for new leases, amendments, and extensions. • Evaluate proposals for concession and certain management contracts (e.g., parking, advertising). • Assure contract compliance for prime concessionaire unit locations, subtenant locations, and independent concession leases. • Address contractual issues.

Policy and Implementation Roles and Responsibilities 29 • Work to resolve disputes with tenants concerning lease obligations. • Recommend options for tenants to ensure their continued success by reviewing short and long-term plans. • Approve and monitor “street pricing” compliance for products and services sold airport-wide. At Seattle-Tacoma International Airport (SEA-TAC), a concession manager also is respon- sible for outreach to the small business and minority communities about potential opportuni- ties for short- and long-term tenancy at SEA-TAC, and for development of new concessions opportunities appropriate for small business, which require lower levels of capital investment than typical in-line store opportunities. Concessions Managers and DBELOs must work together to identify opportunities for ACDBE participation, to determine ACDBE participation goals, to eliminate requirements in solicita- tions that may cause barriers to ACDBE participation, and to monitor and enforce contract requirements. 4.4.3 Engineering, Planning, and Construction Offices Engineering, planning, and construction managers and their staff plan, design, and lay out airports and oversee airport construction programs, including construction inspections. Among other key functions, these offices: • Plan and oversee design and construction projects. • Provide administrative and technical support for multi-discipline contracts. • Manage and administer multiple, major projects concurrently. • Prepare and review project progress reports. • Coordinate project scopes, schedules, and budgets with other airport offices (e.g., procurement). • Monitor and maintain the accuracy and timeliness of a project. Engineering, planning, and construction managers should work hand-in-hand with DBELOs on matters such as planning for diverse business participation in the early phases of project plan- ning, and helping with monitoring and enforcement responsibilities after a project is underway. 4.4.4 Procurement and Purchasing Offices Procurement and purchasing managers and their staff help to increase business diversity efforts by working closely with DBELOs and other airport staff. At some small airports, the individual responsible for procurement and purchasing also might serve as the airport manager and be responsible for the business diversity program, facilities management, outreach, and other duties. Among other key functions, these offices: • Work alone or with the DBELO to determine diversity goals. • Develop the scope of services and other requirements for solicitations. • Prepare RFP, Request for Qualifications (RFQ), and other types of solicitation documents. • Evaluate proposals to ensure compliance with goals and minimum requirements. • Enforce policies, laws, and regulations related to procurement processes. • Plan procurement schedules for advertisement of contracts, pre-proposal conferences, and review and award of contracts. • Monitor pay requests and pay invoices. • Participate in outreach activities. • Assist the DBELO with internal complaints.

30 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities Practice Tip: Reaching out to counterparts at other airports for support, advice, and information is beneficial to general aviation airport personnel engaged in business diversity programs. At general aviation airports, the person(s) responsible for procurement and purchasing also might be the DBELO responsible for the DBE and ACDBE Programs, including contract compli- ance, outreach, policy development, and goal-setting. Ideally, procurement and purchasing managers work closely with the DBELO’s office to ensure that appropriate policies are in place for all solicitations. These departments make sure that all the proper forms are included in solicitations and also perform a midpoint check to determine how many people have downloaded solicitations and to see if outreach is needed. The procure- ment department must oversee activities, verification, and execution of contracts and/or bids. An airport procurement manager explained that a centralized procurement department at their airport results in everyone going through the same processes. Airport procurement and purchasing managers can increase diverse and small business par- ticipation through the language used in project contracts, RFQs, RFPs, and by working closely with other airport stakeholders and those responsible for diversity policies and procedures. They also can require DBE or small business participation on prospective contracts. Practice Tip: Business diversity programs are most effective when community out- reach is a core activity of the procurement department. 4.4.5 Public Relations/Community Relations Offices Public relations/community relations managers and their staff work with DBELOs and other airport staff to help promote business diversity primarily through sharing information, increasing awareness, and educating diverse businesses. Public relations/community rela- tions managers work with DBELOs on matters such as outreach, handling media inquiries, and publicizing business diversity initiatives. They also provide valuable strategic counsel, advice, and guidance on presentations and communications. Their roles and responsibilities may include: • Media relations. • Public affairs, public relations, and public information. • Community relations. • Government relations. • Internal and external communications. • Marketing, customer service, and promotion. • Message development, including flyers and brochures. • Electronic communications (in some instances replacing print communications) and online procurement systems to advertise opportunities and solicit proposals. • Social media, social networking, website, and interactive digital directories. • Serving as a liaison between interested persons and airport decisionmakers.

Policy and Implementation Roles and Responsibilities 31 4.5 The Role of the Airport in Disputes Between Primes and Diverse Businesses Federal regulations require airports to be involved in disputes arising from DBE and ACDBE matters and concerns. The role of the airport may differ depending on the type of dispute and whether the diversity program includes race-based goals. For example in a race-based program, if a prime contractor is attempting to terminate or substitute a DBE or ACDBE, the DBE or ACDBE can only be terminated or substituted if there is “good cause” as defined by 49 CFR Part 26. The prime must first give notice to the firm and obtain written consent from the airport. A good cause justification must be provided to the airport by the prime, and the airport needs to hear directly from the DBE or ACDBE proposed to be terminated or substituted to ensure that the firm does not have any objections. When a DBE or ACDBE is terminated, or fails to complete its work on the contract for any rea- son, airport operators must also require the prime contractor to make good faith efforts to find another firm to replace the original DBE or ACDBE. These good faith efforts must be directed at finding another DBE or ACDBE to perform at least the same amount of work under the contract as the DBE or ACDBE that was terminated, to the extent needed to meet the airport’s ACDBE or DBE participation goal for the procurement. Sometimes disputes arise between prime contractors and DBEs concerning retainage pay- ments. As part of their DBE programs, airports can establish a contract clause that requires prime contractors to include in their subcontracts language providing that prime contractors and subcontractors will use appropriate alternative dispute resolution mechanisms to resolve payment disputes. In other instances, however, the airport’s role is less clear, and airports may often express a reluctance to intercede.