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

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48 C H A P T E R 7 7.1 Planning for Diverse Business Participation The first step in planning for diverse business participation is to look at the big picture and determine (1) what the airport is really trying to achieve and (2) what the airport wants to accom- plish by taking specific actions. Begin with a Business Diversity Plan. Assess it. Refine it. Document it. Distribute the plan to everyone at the airport who is engaged in business diversity functions. Diverse business participation should not be an afterthought. Greater participation can occur when planning starts at the early stage of the contract process. Practice Tip: Include the Business Diversity Plan in the airport’s overall Strategic Plan. The strategic direction, mission, and goals of the airport, as well as any upcoming projects, should be openly communicated to all stakeholders, internally and externally. Forums and other methods airports are utilizing for this purpose include: • Community outreach meetings. • Technology (e.g., website postings and email subscriptions). • Public meetings of governing bodies. • Public documents of an airport (e.g., annual reports). • Staff meetings. 7.2 The Role of Disparity Studies An economic analysis known as a “disparity” study or an “availability and utilization” study is a powerful tool for airports to ascertain whether minority-owned and women-owned firms in their market area(s) are enjoying equal access to and participation in airport contracts. Practice Tip: Disparity studies can play an important role in determining an air- port’s business diversity needs. In approximately 2012, the Burbank–Glendale–Pasadena Airport Authority (BGPAA) elected to undertake a disparity study to approach the implementation of its DBE program. Strategies and Partnerships to Enhance Diverse Business Participation

Strategies and Partnerships to Enhance Diverse Business Participation 49 Among the many questions to which BGPAA sought answers were some that are evident in most disparity studies: • How can [the airport] use study results when setting an overall goal for DBE participation? • How can [the airport] use study results to project the portion of its overall DBE goal to be met through neutral means? • Can [the airport] consider use of race- and gender-conscious measures as DBE contract goals? The results of a detailed, independent disparity study also can provide statistically significant evidence needed to constitutionally justify the use of race-conscious program measures in imple- menting the federally mandated DBE and ACDBE Programs. (For more information, see the discussion of constitutional concerns regarding the federal programs in Chapter 2.) Disparity studies can—but do not always—require a labor-intensive, lengthy, and expen- sive process. Airport operators often employ availability and utilization studies to comply with 49 CFR Parts 23 and 26. As its name suggests, an availability and utilization study (1) ascertains the readiness and willingness of contractors or concessionaires, of all ethnicities and genders, to participate in the airport’s contract opportunities, and (2) measures the actual, dollar-value utilization of disadvantaged businesses. Like a disparity study, an availability and utilization study examines whether and to what extent a statistically significant disparity exists between availability and utilization of business firms and, if there are disparities, what are the likely underlying causes. Neither a disparity study nor an availability and utilization study can be considered complete without the examination of anecdotal evidence and stakeholder engagement. This component of the study is critical to understanding the statistical evidence as well as the underlying rea- sons for minority- and women-owned business (MBE/WBE) participation (or the lack of it) in an agency’s contract opportunities. Several court cases have identified what constitutes compelling anecdotal evidence in the context of disparity and related studies. Some example situations are (440): • A city employee influences a member of a public contract selection panel to ensure that a MBE/WBE would receive a low score and thus be removed from consideration for the con- tract award. • A city employee changes the required scope and rules for subcontracting on project to ensure exclusion of MBEs/WBEs from some projects. • A city employee places such high minimum requirements on minority contractors—such as requiring $1,000,000 of insurance to qualify for a contract for delivery of $2,500 worth of goods—that most MBEs/WBEs are precluded from participation. • A city employee extends an existing contract to eliminate the need for bidding on a new con- tract and the concomitant need for MBE/WBE subcontracting. • A city employee harasses minority contractors with offensive comments. Relevant anecdotal evidence offered by contractors in the Ninth Circuit’s Coral Construction Co. v. King County record included: • “I believe the refusal of prime contractors, developers, and architects to award contracts to my business for private sector work is due to discrimination against minority persons and minority-owned businesses generally.” • “I have tried repeatedly in the past to obtain contracts and subcontracts on private construc- tion contracts and have been unsuccessful. I know from my 11 years of experience in the construction industry that my business’s prices are competitive with non-minority business

50 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities prices and that my business performs high quality work. . . .Nonetheless . . . I have been refused the right to participate in the projects.” • An individual declared that he heard comments like: “[t]here is no minority requirement on this project, so we are going to use someone else” (441). Based on the evidentiary findings of a disparity study or availability and utilization study, the airport operator can fashion appropriate remedies or strategies for the inclusion or diver- sification of the airport’s contractor pool. For example, the Metropolitan Nashville Airport Authority endorsed the recommendations of its 2007 disparity study effort, which was aimed at “broadening opportunities for business partnerships with small minority women’s business enterprises (SMWBE).” By 2011, “[e]xpenditures to SMWBEs increased by 1,508 percent for non-federal construction and professional projects” (229). Similarly, the Jackson Municipal Airport Authority (JMAA) is currently implementing its disparity study and finding that more staff are necessary to implement the study’s findings and recommendations. The study also recommended increasing the threshold amount for a perfor- mance bond from $25,000 to $50,000. The airport is working with the legislature to effectuate this increase. 7.3 Bilingual Translation English may be a second language for immigrant small business owners who are a significant and growing part of the U.S. economy. There are more immigrant business owners in profes- sional and business services than in any other sector. Translating information about airport contracts and business diversity programs for multi- ethnic communities is an outreach tool utilized by Nashville International Airport (BNA). The airport offers a brochure in Spanish concerning certification requirements, technical assistance, and other matters relative to its business diversity programs. 7.4 Utilizing Technology Avenues for finding businesses and promoting contract opportunities using technology have evolved tremendously. The use of technology can increase the visibility of business opportuni- ties and help identify potential businesses to perform airport contracts. Utilizing technology also can be cost-saving for both airports and businesses, and can enable airports to advertise their contract opportunities to a larger pool of firms. Examples of available technology include: • Mobile technology like business opportunity applications (apps) and online procurement advertising, notification, and end-to-end procurement services. • eVA, the Commonwealth of Virginia’s web-based vendor registration and purchasing system, which allows public agencies, state agencies, local governments, and others to conduct all pur- chasing and sourcing activities for goods and services (personal interview and 419). • FAA dbE-Connect, which enables users to search for DBE/ACDBE firms and view bid oppor- tunities, DBE appeal decisions, DBE program training conferences, airport manager contact information, and relevant news articles. DBE/ACDBE directories from nearly all 50 states are currently accessible. Authorized FAA, airport, and consultant users also use dbE-Connect to provide and manage DBE and ACDBE data. The Michigan Department of Transportation (Michigan DOT) Office of Business Develop- ment also has focused on technology initiatives such as utilizing iPads during onsite reviews for

Strategies and Partnerships to Enhance Diverse Business Participation 51 efficiency and “e-Contracting”which, among other areas, will allow DBEs to make electronic bid and payroll submissions. 7.5 Measuring Internal Performance Numerical business diversity goals provide only one measure of internal performance. It is also important to know where there are strengths and weaknesses (e.g., staff, resources, prob- lems) and to track progress against the airport’s policies, goals, and objectives for business diver- sity programs. Periodic assessment of an airport’s solicitation requirements enables airport management to determine whether the requirements are relevant and necessary for specific airport contracts. A thoughtful and thorough analysis of business diversity objectives and accomplishments also is a necessary measure of internal performance. Airport operators should also document and periodically review the solicitation process. Use of a checklist helps ensure that administration of the process is consistent, and changes and improve- ments can be made when deemed necessary. Debriefing participants after each solicitation process is completed can allow for continuous evaluation by asking questions similar to the following: • Are we achieving diversity program objectives? • Are there any impediments? • What’s working? • What’s not working? • What needs to be changed? • Are we implementing the DBE/ACDBE Programs according to our plan? • What feedback have we received from businesses on our practices? • Is outreach effective? • Are participation goals being met? • Are smaller firms performing a commercially useful function? • Can we do more to help diverse businesses be more successful? • Do we have adequate resources and expertise? • Does staff understand why diverse business participation is important? • Is staff implementing responsibilities to ensure achievement of diversity objectives? • Are we making the most effective use of technology? • What actions will be taken based on our findings? Measuring performance is not only a mechanism for responsiveness to stakeholders; it also helps the airport execute successful and compliant diversity programs. As discussed in Chapter 4, responsibility for the business diversity program is shared by the CEO, board, senior manage- ment, city and airport staffs and is best executed when fully supported and implemented as a collaborative effort. Airports dutifully craft and implement DBE and ACDBE Plans, generally following the regulatory requirements of 49 CFR Parts 23 and 26. DBE and ACDBE Plans, there- fore, set forth an airport’s business diversity goals and serve as a baseline “report card” against which to assess staff performance in satisfying numerical business diversity objectives. At Long Beach Airport (LGB), for instance, the airport director evaluates the entire project team, inclusive of in-house staff and contractors (DBE and non-DBE alike). However, achieve- ment of numerical business diversity goals is only one measure of internal performance and of a program’s success. It is also important to know programmatic strengths and weaknesses (e.g., allocation of or lack of available resources) and to track progress towards airports’ public poli- cies, goals, and objectives for their business diversity programs.

52 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities 7.6 Sharing Accomplishments Share business diversity accomplishments internally and externally. An airport’s annual report or economic impact reports are excellent mechanisms to share diversity accomplishments. Rec- ognition increases interest and inclusion in airport contracts, and demonstrates the value of the airport to the community. Each year, SFO’s airport director provides an extensive report to the San Francisco Airport Commission (Airport Commission) on the results of “Airport Contract Awards to Local and Disadvantaged Business Enterprises” for the preceding fiscal year. This report provides the Com- mission with information on (1) total contract awards to prime contractors and subcontractors, identifying contract awards, contract dollars awarded, and the percentages of contract dollars performed by LBEs and DBEs; (2) a status update on local ordinance and federal regulatory LBE/DBE participation mandates; and (3) upcoming staff activities. Through this organized and interactive process, the Airport Commission’s public policy and small business agenda maintains a high profile among its staff. Not surprisingly, SFO’s LBE, DBE and ACDBE achievements are consistently noteworthy. Airports also can share information about the benefits of business diversity programs in a broader perspective, going beyond achievement of numerical goals. Firms performing contracts at the airport can be showcased in newsletters and press releases, on websites, at public meetings, and in other forums. Providing this kind of recognition gives encouragement to others. 7.7 Industry Associations Among other organizations, AAAE, ACI–NA, AMAC, and the Council of Minority Transpor- tation Officials (COMTO) play vital roles and offer valuable forums for learning what others are doing to promote business diversity. These organizations offer educational programs; provide access to technical experts from U.S. DOT and FAA, the legal community, and the financial community; and provide outstanding opportunities to network with airport officials and all sizes and types of businesses. They are engaged in regulatory, legislative, and legal advocacy, and work on a range of issues concerning businesses diversity matters. 7.7.1 AAAE The world’s largest professional organization for airport executives, AAAE represents airport management personnel at both public-use commercial and general aviation airports. AAAE has an active business diversity committee. AAAE members include both airports and companies and organizations that support airports. AAAE services to members include professional devel- opment opportunities, training, meetings, and conferences. AAAE also has an active business diversity committee. 7.7.2 ACI–NA ACI–NA represents local, regional, and state governing bodies that own and operate com- mercial airports in the United States and Canada, one of the five regions of Airports Council International (ACI). Nearly 400 aviation-related businesses that provide goods and services to airports also are members of ACI–NA. ACI–NA members enplane nearly all of the domestic and international—airline passenger and cargo traffic in North America.

Strategies and Partnerships to Enhance Diverse Business Participation 53 ACI–NA advocates policies and provides services that strengthen commercial airports’ ability to serve their passengers, customers, and communities. As part of its mission, ACI-NA: • “Promotes cooperation with all elements of the commercial civil aviation industry; • Exchanges ideas, information and experiences on common airport issues; • Identifies, interprets and disseminates information to its members on current industry trends and prac- tices; and • Creates forums of common interest, builds professional relationships and interprets key airport policy and business issues to the ACI-NA membership” (420). ACI–NA Business Diversity Committee, composed of airport personnel and representatives of businesses, is dedicated to developing proactive outreach and educational programs to assure a vital industry forum on diversity issues and in promoting best practices. 7.7.3 AMAC A national, non-profit trade association dedicated to promoting participation by MBEs, WBEs and DBEs in airport contracting and to the inclusion of minorities and women in employment, AMAC works with Congress, the federal government, aviation trade associations, and others to provide information, education, and guidance on business diversity. AMAC’s Bylaws state the organization’s purposes: • “To promote diversity and economic opportunity in the airport industry by participating in the develop- ment of laws, rules, policies and procedures to support and promote the refinement and continuation of Federal Disadvantaged Business Enterprise Programs and other business diversity programs at airports. • To promote business diversity in the airport industry and to stimulate local economic development, particularly through the identification, inclusion and participation of qualified minority, women and Disadvantaged Business Enterprises (“DBEs”) that have the capacity to compete for and perform air- port procurement, professional services, construction and concession contracts” (421). 7.7.4 COMTO COMTO’s mission is “to ensure a level playing field and maximum participation in the trans- portation industry for minority individuals, businesses, and communities of color through advocacy, information sharing, training, education, and professional development” (75). Founded in 1971 the organization has 39 chapters, with a membership that includes “indi- viduals, transportation agencies, academic institutions, industry non-profits and Historically Under utilized Businesses (HUBs).” COMTO’s website describes its members as representing “every sector of the transportation industry” and “every level of the transportation indus- try, from presidents and chief executive officers, through midlevel officials, to engineers and mechanics and operators” (75). 7.8 Other Partnerships Beyond traditional methods, airport operators can also utilize other tools and external resources to enhance their efforts to promote diverse business participation. For example, the Port of Seattle/Seattle-Tacoma International Airport (SEA-TAC) has moved away from using RFPs as the only tool to engage the business community in concession opportu- nities. SEA-TAC uses a leasing agent/broker to assist in conducting outreach to specifically targeted diverse businesses for particular opportunities. The private leasing agent/broker also evaluates the proposals and prepares a short list of the firms. The customary RFP process is streamlined, and minimum annual guarantees are not required. This helps SEA-TAC achieve a fair amount of local participation, and this abbreviated process has drawn interest from non-local ACDBEs.

54 A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities Because business markets have become more national and international in scale, airports are increasingly viewed as catalysts for local economic development. Every state and many local governments have community and economic development agencies dedicated to helping new businesses start and helping established businesses to grow and succeed. Working closely with these agencies to help identify diverse businesses, to promote and offer educational services, and to offer networking opportunities is another way airports can promote their desire to increase opportunities for diverse businesses. These agencies also can help (1) broaden outreach to busi- nesses that may not know about or think of opportunities to do business at an airport and (2) provide information on how to obtain certification. 7.9 Training Programs According to the Inspector General’s April 23, 2013, audit report to the U.S. DOT Office of the Secretary, the “Department has not issued comprehensive, standardized DBE guidance or provided sufficient training to recipients responsible for implementing the nationwide DBE pro- gram” (91). According to DBELOs, airport executives and other airport personnel, some airports do not offer training programs to businesses or formal training to their staff. Many DBELOs and other airport personnel participate in AMAC and FAA training seminars, and numerous airports conduct “How-to” training workshops. At other airports, consultants provide training and presentations to the staff and board members on DBE, ACDBE, and related diversity pro- gram matters. Consultants and DBELOs also meet with concessionaires and contractors when necessary to help them understand an airport’s diversity program requirements. Larger businesses offer training on operations and budgeting, inventory control, human resources, risk management, and compliance with airport and regulatory requirements. These training opportunities can be invaluable when learning business skills, such as understand- ing how to run projects, decision-making processes, and quality control and quality assurance measures. Some airports might require consultants or their prime contractors (e.g., a construction com- pany or maintenance company) to provide support services to small businesses, such as skill train- ing, how to work within the airport’s financial systems, how to network and make connections, and how to fill out required forms. As one airport board member explained, “technical training on airport pavement, for example, is best accomplished by primes or by departments of transporta- tion. On airport and off airport paving is very different, and primes companies can do that type of training better than airports.” Birmingham-Shuttlesworth International Airport (BHM) offers training to businesses on how to operate on airport versus streetside so firms can understand the distinction in operating in these different environments. Dallas/Fort Worth International Airport (DFW) offers training and technical assistance through a variety of programs such as “How to Do Business at DFW Airport,” its Capital Assis- tance and Bonding Program, and its Capacity Building Alliance Program (a volunteer mentor- protégé program). DFW’s Small Contractors Development Training Workshop, an 8-week course, is designed to provide technical training for minority- and women-owned businesses. The curriculum includes workshops on a variety of topics that include business development, financial management, insurance and bonding. The Business Outreach Unit (BOW) of the Los Angeles World Airports (LAWA) conducts a monthly workshop titled “How to Do Business with Los Angeles World Airports” in collabora- tion with its Procurement Services Division. This free workshop provides business owners an

Strategies and Partnerships to Enhance Diverse Business Participation 55 opportunity to learn about the procurement processes and services available to them. LAWA presenters are drawn from • Purchasing. • Public works/certification. • Bond assistance program/Merriwether & Williams Insurance services. • Contract services/administrative requirements. • Business and job resources/business assistance. Business owners attending the workshop are given the opportunity to introduce their com- panies so that the presenters know who is in the audience and can direct information regarding particular products or services.