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Guidance for Diversity in Airport Business Contracting and Workforce Programs (2020)

Chapter: Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting

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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
×
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
×
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
×
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Suggested Citation:"Chapter 4 - Proactive Practices: Diverse Business Participation in Airport Contracting." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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25 Airport operators routinely contract with businesses to undertake improvement projects that maintain or expand infrastructure or help implement activities for airport administration, operation, and mainte- nance. Airport tenants also provide business opportunities that support the goods and services they provide to airport customers. Airport operators have undertaken a variety of policies and initiatives to encourage and increase diverse business participation in federally assisted contracts, in concessions, and in other contracts and procure- ments that support airports’ daily activities. The intent of this chapter is to offer guidance and share strategies for increasing diverse business participation beyond minimum require- ments and participation goals. It provides real-world examples of the value of diverse business participation to airports and effective policies to promote this diversity. As noted earlier, diverse businesses are DBEs as defined in 49 CFR Part 26, Airport Concession Disadvantaged Busi- ness Enterprises (ACDBEs) as defined in 49 CFR Part 23, other small businesses, minority-owned businesses (MBEs), and woman-owned businesses (WBEs). Importance of Diversity in Contracting A common misconception is that diversity is a quota system or social program designed to benefit selected groups while adding little or no value to the bottom line. As centers of employ- ment and generators of significant economic activity, airports and their tenants and contrac- tors, including diverse businesses, are important sources of jobs, personal income, and other economic activity beneficial to all airport stakeholders. Economic Benefits Airports realize that diverse businesses are significant contributors to the economic sustain- ability of their communities, and some airports have conducted economic studies that dem- onstrate the value of these businesses. Dallas/Fort Worth International Airport (DFW), for example, creates and sustains a business environment that enables disadvantaged, small, and minority- and woman-owned business enterprises (D/S/M/WBEs) to compete equitably for business opportunities and achieve economic success, contributing to DFW’s overall mission of expanding economic benefits (DFW n.d.). According to a 2016 study conducted by The C H A P T E R 4 Proactive Practices: Diverse Business Participation in Airport Contracting For Those Who Award Contracts and Those Who Seek Them This chapter discusses the role of strong leadership and airports’ effective poli- cies and practices in enhancing diverse business participation. Airport policy makers, employees engaged in writing and awarding contracts, and those who execute federal and local business diversity programs will find information on the economic benefits of including diverse businesses in airport contracts. Businesses engaged in or seeking airport contracts will find this chapter useful concerning approaches airports use to engage diverse businesses.

26 Guidance for Diversity in Airport Business Contracting and Workforce Programs Perryman Group (TPG) to examine the role of DFW in the regional economy, D/S/M/WBEs participating in DFW’s businesses diversity programs contributed $1.2 billion to the North Texas economy. Their participation in DFW’s D/S/M/WBE programs accounted for 7,500 jobs and $366 million in associated payroll. TPG’s 2016 study also shows a nearly 9 percent increase in the total economic impact associated with firms participating in DFW’s diversity and devel- opment program since 2013. By collaborating with business partners and other champions of diversity in the community, DFW is fostering an environment that is both diverse and economi- cally prosperous (DFW 2016). The over $2.3 billion-dollar Philadelphia International Airport (PHL) Capital Development Program (CDP) at PHL and Northeast Philadelphia Airport (PNE), its general aviation reliever airport, will be executed over decades and includes airfield and terminal projects that will make critical improvements and develop new infrastructure at PHL and PNE. This ongoing airport development will ensure a stabilizing stream of investments for the construction industry and has spillover impacts for suppliers and service industries, which will help strengthen PHL’s $15.4 billion annual regional economic impact. The benefits of PHL’s economic activity, including the CDP, support a significant volume of economic output, employment, and earnings in each of the 11 counties and four states that make up the Philadelphia metropolitan statistical area (MSA). The benefits of this significant center of economic activity are shared equitably by local residents and firms, and by employees of color and DBEs. Data on the nearly 20,000 badged employees working at PHL (across a variety of public- and private-sector employers) indicates that the majority are members of minority groups, including 42 percent who identify as Black, 6 percent as Hispanic, and 5 percent as Asian. Eighty-four percent are residents of the Phila- delphia region, including 44 percent (more than 8,500) who live within the city of Philadelphia (Econsult Solutions, Inc. 2017). More broadly, employing more diverse businesses may help reduce socioeconomic gaps that have historically been to the disadvantage of minorities and women. As articulated in the city of Philadelphia’s Economic Opportunity Strategic Plan, “Economic inequities can only be over- come when historically disadvantaged groups have avenues for wealth creation; and building a business to scale in order to either sell it or pass it on to one’s successors is one of the main ways wealth creation happens in the US” (City of Philadelphia 2010). Beyond economic justice, diver- sifying business contracts can make an organization more nimble, adaptable, and competitive in today’s accelerating global economy (City of Philadelphia 2010). Employment opportunities represent direct economic benefits in the form of compensation, new work with airports, and competition. Small businesses that pair with large, incumbent firms may also find work in new sectors by developing strategic long-term business relationships with those firms outside of airport contracts. Airports can play a role in this, for example, by building strong relationships with larger contractors who can help grow smaller, diverse businesses to position themselves for work outside the airport and outside the local area. The benefits of steady employment extend to contractors’ families and the individuals they employ. For example, Sky Blue Builders, a DBE that participated in Denver International Airport’s (DEN) mentor-protégé program that began in January 2016, received a contract with DEN. Because of the company’s interest in obtaining contracts in the health care field, its mentor, the large general contractor and construction manager Hensel Phelps, assisted Sky Blue Builders by including the company on a contract with a major health care provider. There are many compliance require- ments on health care construction contracts, and Hensel Phelps provided the necessary guidance to help Sky Blue Builders understand those requirements and, consequently, build the confidence to bid as a prime contractor for future opportunities (Denver Office of Economic Development 2016). Tampa International Airport (TPA) has also seen subcontractors get selected and taken along for work outside of the region after starting on small projects with primes at TPA.

Proactive Practices: Diverse Business Participation in Airport Contracting 27 Both the scale and dispersion of contracts are considered highly beneficial for the community. Small, diverse contractors who can fill small contracts can get their foot in the door to a larger pipeline of projects and gain contacts within the industry. This has the effect of both increas- ing the pool of contractors who can take contracts appropriate to their size, and spreading the income generated from projects more equitably within the community. When diverse businesses win contracts, members of historically economically disadvantaged groups are likely to benefit through increased income for owners and employees, an expanded network of opportunities through their airport contacts, and greater visibility in their communi- ties that may encourage other diverse businesses to pursue similar opportunities. Contract wins can also help create more local job opportunities. Raleigh-Durham International Airport (RDU) has observed a multiplier effect of contracting to small businesses; the smaller the business, the more likely it is to hire from the community. Increased Competition One of the goals of the DBE program is to assist DBE firms in competing outside the DBE program. Utilizing diverse businesses in airport contracts can help create more competition and opportunities for these businesses at airports and in the private sector. For example, Charlotte-Douglas International Airport (CLT) is growing so rapidly, and there is such high demand for work in the public and private sectors, that the airport has difficulty obtaining and retaining qualified contractors. The airport alone has so much work that it finds itself competing against its own projects for contractors. Work in the private sector is abundant, and CLT often finds that contractors prefer to work in the private sector and overlook jobs at the airport. McCarran International Airport (LAS) is experiencing the same situation. Competition is so high for workers that, in some cases, McCarran has lost subcontractors mid-project. Increasing competition among businesses can result in higher quality products and services, lower price points, and enhanced outcomes through the inclusion of fresh perspectives as each business seeks a competitive edge to win contracts. In an interview Michele Torres, Charlotte-Douglas Inter- national Airport’s business diversity programs manager, noted that one benefit of generating competition among diverse businesses is the potential to bring in new ideas from different firms. As explained further in this chapter, Richmond International Airport was able to achieve better pricing by breaking down large contracts into smaller contracts through the process known as unbundling. Social Benefits In addition to economic benefits, airports may receive intangible but important social ben- efits for their diversity efforts. These include improved community relationships, higher morale among contractors and airport staff, and positive recognition from peers. For example, since 2013, the ACI–NA has granted annual Inclusion Champions Awards to large, medium, and small/non-hub airports and to companies and organizations that provide products and services to its airport members. These awards recognize proactive and innovative practices at airports and businesses serving airports showing leadership in workforce diversity, supplier diversity, outreach, and advocacy. Building goodwill in the community, outside of contracting, can be beneficial when the airport is seeking stakeholder advocacy and public support on matters such as expansions or improvements to the airport. Small Businesses Compete at PHX Phoenix Sky Harbor International Airport carves out some of its concession oppor- tunities for small businesses and has adjusted contractual requirements for some contract opportunities, to help increase diverse business participation. Read more in Appendix A—Case Studies.

28 Guidance for Diversity in Airport Business Contracting and Workforce Programs Importance of Leadership Commitment to Diversity and Inclusion Airports have identified many successful approaches for promoting diverse business partici- pation in airport contracts and concessions. These policies and procedures depend on strong leadership for their success. Airport and consultant interviewees, as well as literature reviewed as part of this research, identified strong commitment, support for diversity initiatives, and a high level of engagement from airport policy makers and chief executives as the most common keys to successful business diversity programs. These attributes result in diversity programs receiving the same priority as other routine airport operations, as well as support and advocacy for meaningful policies and resources that help propel diversity initiatives. When leadership emphasizes and influences the importance of diversity, embracing diversity seems to be a prior- ity for everyone at the airport and a point of pride for some airports. Metropolitan Washington Airports Authority chairman Warner Session attributes his success at MWAA to being both a practical leader and a change agent when it comes to diversity and inclusion leadership. “We have created transparency and clarity in our process, which allows ACDBEs and DBEs to get involved in our opportunities,” he said. “We also have the policy, lead- ership, and enforcement in place. We have moved past inclusion being a compliance issue to it being a commerce issue” (American DBE Magazine 2018). In 2016, MWAA hired Wande Diakite Leintu to lead its Department of Supplier Diversity in a newly created position of deputy vice president for supplier diversity. Through her leadership, MWAA has implemented several initia- tives to increase contracting opportunities for diverse businesses, including enhanced outreach, publishing a Quarterly Procurement Forecast that details upcoming contracting opportunities, and assisting in matchmaking to help small businesses pair with primes. These initiatives are explained further in Appendix A. DFW positions diversity programs prominently within the airport organizational structure, which is a best practice for the following reasons (DFW 2009): • Demonstrates organizational commitment to supplier diversity and conveys importance of supplier diversity commitment; • Provides the Supplier Diversity Program with authority needed to implement; • Provides the Supplier Diversity Program administrator with executive-level status and authority; • Facilitates inclusion of supplier diversity issues within the strategic planning of the organization; • Covers all airport expenditures and revenue streams; and • Reinforces the concept that supplier diversity programs are compo- nents of broader economic development initiatives. Engagement with leadership is also critical for smaller airports. Lee County Port Authority’s DBE manager, Julio Rodriguez, encourages DBE liaison officers at small airports seeking to improve their program to be consistent in engaging with their immediate boss or supervisor. Ensuring that supervisors understand the details of the work involved in managing diverse business programs can allow them to see the value in investing in process improvements, such as a data management system to track compliance and to be more efficient with record-keeping. Cindy Olivares, principal with ACC Consulting LLC, who was among the interviewees for this research, has more than 25 years of experience in the airport industry, including analyzing and monitoring airport diversity programs. She has observed that the most effective business DFW Contracts Reflect the Diverse Community “As careful stewards of [Dallas-Fort Worth] Airport we recognize the role we play in developing business and capacity for many small, minority, and women- owned businesses in our community. This is possible because of the talent and enthusiasm of our workforce. Our employees reflect our community and contribute their uniqueness, diverse expe- rience and perspectives to enhance our ability to become a global super hub.” Sean Donohue, CEO DFW, 2015

Proactive Practices: Diverse Business Participation in Airport Contracting 29 diversity programs involve the board of directors. When board members are knowledgeable and understand the importance of diversity programs, how these programs work, and the benefits of the programs, they are able to provide clear direction to airport management and staff, which in turn improves the efficacy of these programs. Ms. Olivares shared that the priority of these programs is more important than the structure used to implement them. Scott A. Brockman A.A.E., president and CEO of the Memphis-Shelby County Airport Authority (MSCAA) gives speeches and presentations around the community, including to groups such as the Black Contractors Association and the Black Business Association. “While I do this, I’m really more interested in the Q&A part of the program rather than me just talking,” he said. “I want businesses to get to know the person behind the process and create relationships. If you make them comfortable, they’re more apt to trust you and are willing to stay engaged for a longer period of time and hopefully through the whole process” (Wilson 2017). Holli Harrington, director of supplier diversity for the Indianapolis Airport Authority (IAA), said that: “In [IAA’s] view, diverse business ownership brings myriad expertise and experiences that help us provide exceptional customer service to more than 8.5 million travelers each year, people who represent a range of ages, economic backgrounds, leisure interests, cultural and ethnic communities and business sectors. We leverage business diversity across capital projects with engineering, design and construction, and in other areas across our operations. It takes an ecosystem of business relationships to run an inter- national airport operation like ours.” She noted, “Terminal operations require a variety of qualified vendors related to the continuous maintenance, preservation and safety of the entire airport campus. This provides an opportunity for diverse businesses to support our focus of excellent customer service with work that touches the passenger experience” (Wilson 2017). Leadership and culture are also cited as key components of diversity program success outside of the aviation industry. As part of a review of state DOT DBE program performance, FHWA and AASHTO created a list of promising practices that have been demonstrated to contribute to a successful program. FHWA and AASHTO found that “[s]tates with successful programs have a mandate from the top and a culture of high standards requiring that a diversity of firms be used on public contracts” (Cummings 2016). Actions that can support this culture include elected officials speaking publicly to the importance of utilizing DBE firms, leadership supporting the use of available levers to keep prime contractors accountable for utilizing DBE firms, setting DBE utilization goals regardless of funding source, and providing sufficient personnel to administer the DBE program (Cummings 2016). The transformation of Ohio Department of Transportation’s (ODOT) DBE program provides another example of the importance of leadership. In 2014, after ODOT’s DBE program was reviewed by FHWA and found to have major deficiencies and be noncompliant, the leadership of ODOT’s former transportation director Jerry Wray transformed the program. He took an active role in communicating the importance of diversity and inclusion in the agency and approved restructuring of ODOT’s civil rights programs for better efficiency, including the hiring of additional staff for the DBE program. The program transformation resulted in a significant increase in the number of firms certified as DBEs, increased opportunities for firms seeking contracting opportunities in the state and helped ODOT meet its higher DBE goal (American DBE Staff 2018). Leadership Yields Results Multiple mechanisms translate leader- ship into results in an airport’s diverse business programs. At Charleston Inter- national Airport, a discussion between a South Carolina state senator and the Charleston County Aviation Authority board led to the board’s launch of new programs. Columbus Regional Airport Authority’s CEO’s commitment to diver- sity led him to expedite the acquisition of procurement tracking software. Read more about these examples in Appendix A—Case Studies.

30 Guidance for Diversity in Airport Business Contracting and Workforce Programs Contracting Policies and Practices This section provides practical guidance on the policies and practices that have been dem- onstrated to increase diverse business participation. Because each airport’s diversity efforts are at a different level of maturity, users of this guidance are encouraged to peruse the policies and practices documented here and consider whether they can be used to make enhancements to their airport’s current policies and practices. Some of the most innovative contracting policies and practices that emerged from the inter- views and literature were the unbundling approach, project-specific targets, and set-asides for small businesses regardless of their race or gender. Unbundling Contracts Unbundling refers to breaking up large contracts into smaller components. Unbundling strategies airports are using to foster small business participation include the following, some of which can be found in 49 CFR Part 26 Section 26.39: • During the project planning stages, review each large contract or concession opportunity to determine whether portions can be unbundled or bid separately. • Document the factors used to determine whether an FAA-assisted contract will be unbundled or bid separately. • Establish a race-neutral small business set-aside for prime contracts under a stated amount (e.g., $1 million). • Ensure that solicitation language is stated so that consortia or joint ventures consisting of small businesses, including DBEs and/or ACDBEs, are encouraged to compete for contracts and perform as primes. • In multiyear design-build contracts or other large contracts (e.g., “megaprojects”), encourage bidders on the prime contract to specify elements of the contract or specific subcontracts that small businesses, including DBEs, could reasonably perform. • On contracts that don’t have DBE goals, ask the prime contractor to identify business oppor- tunities in the contract of a size that small businesses, including DBEs, could reasonably perform. • Assist prime contractors or prime consultants in identifying portions of work that may be unbundled and performed by small businesses. • Shorten the length of contracts, including extension options, to allow for more opportunities more frequently for smaller firms. • In the solicitation process, ask bidders to identify voluntary actions they will take to assist small businesses with issues such as obtaining performance guarantees, lines of credit, and insurance, with the goal of lowering or eliminating barriers to small business participation in the contract. Smaller companies typically do not have the resources or size to bid on large construction projects and concessions opportunities. Airport contracting processes that unbundle major contracts and leases into smaller components enable DBEs, ACDBEs, and other small businesses to seek and enter into direct contracts or leases as prime contractors or prime concessionaires. Many major contracts previously held by a single prime contractor or concessionaire have been unbundled so that multiple companies, including diverse businesses, can bid on them. As a result of unbundling, some airports may also receive better pricing. For example, Milwaukee’s General Mitchell International Airport unbundled a large residential soundproofing contract to create several individual contracts, 48 of which were awarded to DBE firms (including three new DBEs) in fiscal year 2012 (Office of the Inspector General 2014).

Proactive Practices: Diverse Business Participation in Airport Contracting 31 Likewise, when Tampa International Airport (TPA) redeveloped its concessions program in 2015, the redevelopment involved unbund ling its original master concessionaire contract into 11 packages (five food and beverage, six retail). The original contract was with a single conces- sionaire who subleased portions of it to between three to five ACDBEs. With the redevelopment, there are now 15 ACDBE companies parti- cipating in TPA’s concessions, of which 11 or 12 are prime conces- sionaires. As a result of unbundling these concession opportunities, TPA anticipated annual gross sales for ACDBE businesses to rise from $12 million to $50 million. In its 2017–2019 DBE Program Plan, the Johnstown-Cambria County Airport Authority, owner of John Murtha Johnstown-Cambria County Airport, states that where feasible, it may unbundle projects or separate large contracts into smaller contracts which may be more suitable for small business participation. The authority will conduct contract reviews on each FAA-assisted contract to determine whether portions of the project could be unbundled or bid separately. This determination will be made based on the estimated availability of small businesses able to provide specific scopes of work and will consider any economic or administrative burdens that may be associated with unbundling. Small-Business Set-Asides Establishing contracts that include opportunities dedicated for small businesses helps level the playing field so these businesses can compete. The New River Valley Airport Commission owns and operates the New River Valley Airport general aviation airport in Pulaski County, Virginia. As part of the small business element of its FY 2017–2019 DBE Program Plan the commission proposed a requirement for prime contractors to provide subcontracting opportuni- ties to qualified small business concerns (as defined in 49 CFR 26.5) on certain prime contracts that do not have a DBE contract goal, when feasible. Verified business size and subcontracting opportunities would be the basis of this subcontracting goal, without regard to race or gender of the business owner. The opportunities had to be of a size that these small businesses, including DBEs, could reasonably perform. The airport would assist the potential primes by reviewing the projects in advance of the solicitation and by suggesting potential subcon- tracting opportunities in the solicitation documents (New River Valley Airport 2019). In 2016, the Hillsborough County Aviation Authority Board, which oversees TPA, voted to implement more initiatives targeted at increasing small, woman, and minority business participation, including sheltering bids for federal projects under $1 million for competition by small businesses, including DBEs. The board also voted to approve other updates to its DBE and WMBE policies. Elita McMillon, TPA’s director of ethics, diversity, and administration stated that “[by] constantly updating our policies and adding staff to handle more outreach and implement more programs, we hope to include more and more woman and minority business owners, which in turn benefits this community” (TPA, n.d.). A number of airports lease concession space to multiple concessionaires. Depending on the sizes of the concession packages, this methodology can lead to competition between vendors Better Pricing Through Unbundling Richmond International Airport has unbundled some contracts and short- ened their contract term, with good results. Paper products and chemicals for the terminal building were high-cost items. Once the contract was unbundled, the airport found small companies near the airport that could provide these goods at lower prices. Read more in the Appendix A case studies. Steps for Establishing Small Business Set-Asides • Determine if there are sufficient small businesses to compete for the oppor- tunity, for instance, through a market survey. • Structure solicitation documentation to allow only small businesses to compete, or require participation from small businesses through the prime. • Conduct extensive outreach to the small business community about the opportunity.

32 Guidance for Diversity in Airport Business Contracting and Workforce Programs and can provide direct leasing opportunities for ACDBEs. For exam- ple, when the Port of Oakland re-bid its food and beverage concessions opportunities at Oakland International Airport in 2018, its solicita- tion included four separate packages. Two of the four awards were intentionally set aside for small businesses, with one award going to a small minority-owned ACDBE and one to a woman-owned ACDBE. Notably, the Port did not establish a contract-specific ACDBE goal for these concession opportunities. Other airports that use direct leasing models include SFO, DFW, DEN, and Portland International Airport (PDX). For example, SFO’s concession program to create pathways to entry for small businesses includes direct leasing opportunities as a sole proprietor, in joint ventures, operating pop-up shops, and six- month pilot projects. Project-Specific Goals Staff from multiple airports reported that project-specific goals were one of the keys to success for their diversity programs. Rather than a uniform participation goal across all projects, contract-specific goals are determined based on factors such as the type of work involved in a project and the availability of diverse businesses to perform the work. For example, there may be a larger pool of DBEs in construc- tion compared to those engaged in airport master plan studies. While many airports establish project-specific goals for their federally assisted contracts, some also set project-specific goals for contracts included in their local programs. Memphis International Airport (MEM) is one example of an airport that has taken this approach. The airport’s team that manages its federal and local business diversity programs calculates a specific goal for each project in the pipeline, rather than an overarching, program-wide target. This allows each project to “stand on its own” and be ranked on its own ability rather than adhere to a strict guideline. TPA also sets contracting goals for its projects based on a structured methodology that considers the availability of DBE-certified companies, the trade components of each project, and the overall cost. When the goals are shared with the planning and development/engineering team, the diversity department can address any concerns about the goal by referring to the methodology. The TPA diversity department also uses its data to compare similar projects—department staff can see what target they met in the past and benchmark that for the current project. Strategic Planning An airport’s strategic plan focuses on the long-term development of the airport and sets the tone for the airport’s priorities. Inclusion of diversity initiatives in the airport’s overall strategic planning demonstrates the high value leadership places on diverse business participation and can incentivize airport personnel and contractors to be attentive to maximizing opportunities for diverse firms to participate in contract opportunities. For Jackson Municipal Airport Authority (JMAA), creating opportunities for DBEs was a central component of its 5-year strategic plan for Jackson-Medgar Wiley Evers International Air- port and Hawkins Field Airport, its general aviation airport. JMAA’s Strategic Plan 2021 states Enhancing Small Business Opportunities at Oakland International Airport In addition to parceling out large projects into smaller opportunities, Oakland Inter- national Airport established its Non- Discrimination and Small Local Business Utilization Policy to help small and very small businesses attain opportunities at the airport. Read more in Appendix A— Case Studies. Set Project-Specific Goals • Consider factors such as project scope and businesses available to do the work. • Establish a methodology to calculate project-specific goals based on the considerations. • Convey the project-specific goals in all solicitation documents and outreach.

Proactive Practices: Diverse Business Participation in Airport Contracting 33 goals to engage, encourage, and support DBEs and small businesses. These goals include creating a robust outreach program to provide the community with information on opportunities to work with and for JMAA; to participate in community- and government-based education and mentoring programs; and to serve as a technical resource for small, minority, woman-owned, and disadvantaged businesses (JMAA 2017). In 2014, Columbia Metropolitan Airport (CAE) developed a Diver- sity & Cultural Master Plan that addresses the airport’s contracting and workforce diversity initiatives. When CAE began implementing the plan, every area in which the airport spends money was reviewed. A determina- tion was then made about the types of purchases that had opportunities for diverse business participation. The airport then put together a vendor outreach list that has been instrumental in helping to increase diverse business participation in CAE’s goods and services contracts. The IAA incorporates the value of diverse businesses into its strategic plan through the “economic development” pillar included in the plan. The authority underscores its efforts to showcase disadvantaged, small, and diverse businesses when selecting vendors and partners in order to continue bringing jobs to the local community and enhancing economic impact. DFW’s 2016–2020 strategic plan includes goals to continue to encourage and foster the develop- ment of disadvantaged, small, minority- and woman-owned businesses. The plan states, “We seek to increase their capacity by establishing specific programs to foster full and fair opportuni- ties in all areas of the Airport’s business. This will be accomplished through our various supplier diversity programs.” Effectively Communicating Goals and Objectives Articulating and conveying the overall objectives of an airport’s diverse business programs is critical for demonstrating the value the programs bring and committing the airport to take steps to achieve those objectives. Under the umbrella of the objectives, airports establish policies, develop programs, and set goals to increase opportunities for diverse businesses. Goals for federal contracts and any communication around those goals may be subject to the legal FAA process outlined in Chapter 2 of this Guide- book. For other types of contracts, airport staff may have more flex- ibility in terms of communicating the airport’s priorities with staff and contractors. Airports can use several avenues for conveying goals and objectives, including: • Conveying program goals and objectives on the airport’s website and associated materials. • Incorporating program goals and objectives in airport planning and reporting documents, such as sustainability reports and strategic plans. • Including program goals and objectives in the airport’s diverse busi- ness policies and programs documents. • Clearly conveying diverse business goals in solicitation documents such as requests for proposals (RFPs) and bid documents. The way in which goals are presented in RFPs is critical to receiving respon- sive proposals. Diverse business requirements may be confusing for those not used to them. Therefore, RFPs and bid documents should use as much detail as possible to convey the goals of the airport, the Considerations in Strategic Planning • Establish the value proposition for diverse business programs and how they are tied to your airport’s specific vision and objectives. • Work with airport leadership to inte- grate diverse business initiatives into strategic planning efforts. Effectively Communicate Goals and Objectives • Using an objective statement, articulate the benefits and value that your airport’s diversity initiatives are intended to bring. • Clearly delineate diverse business goals in solicitation documents. • Emphasize value and priority of goals, and importance of good faith efforts throughout the selection process. • Communicate goals and objectives through internal airport communica- tion channels and throughout the business community.

34 Guidance for Diversity in Airport Business Contracting and Workforce Programs requirements for qualification, the consequences for failure to meet the goals, and the docu- mentation that must accompany the proposal (Oever et al. 2011). • Including program goals and objectives in all outreach to the business community. • Circulating memorandums throughout the airport or the local business community, expressing commitment to contracting diversely. • Presenting program goals and objectives at airport executive meetings. • Including program goals and objectives in discussions at local chamber of commerce meetings. An airport’s objectives for its diverse business programs should encapsulate the benefits the airport hopes to realize and set the tone for the initiatives the airport will pursue. For example, MWAA describes the mission of its Department of Supplier Diversity as “to promote regional economic development through the maximum utilization of small, local, minority and woman- owned businesses in the contracting opportunities of [MWAA]” (MWAA n.d.a). Columbus Regional Airport Authority conveys the intent of its diverse business programs in the following way: “We recognize the value of working with a diverse group of local business partners. Not only is this a better way to do business, but when we create strategic opportunities for small, minority and woman-owned businesses, the result is a stronger Columbus Region” (Columbus Regional Airport Authority n.d.). Setting clear objective statements can also help clarify the differences between various diverse business programs. MEM indicates that both its DBE Program and Business Diversity Develop- ment (BDD) Program are “designed to encourage disadvantaged minority or woman-owned businesses to participate in request for bids from MEM” and that its Small Business Participation Program is “designed to encourage small businesses, without regard to race or gender of the busi- ness owner, to participate in request for bids from MEM” (MEM n.d.). MEM’s website clarifies that its DBE and BDD programs are essentially the same from a bidder/vendor perspective and are differentiated based on the source of funds. While airports can use objectives to set the tone for diverse business initiatives, they need goals to translate those objectives into tangible targets. Requiring firms to demonstrate how they would achieve diversity goals early in the bid helps make diversity a priority throughout the selection process. Kevin Weeden, senior vice president for the ACDBE/DBE consulting firm Ken Weeden & Associates, suggested two key procedures that airports could adopt to encourage diverse business participation. The first is to emphasize the importance of the DBE program in pre-bid meetings. During a pre-bid meeting, some airports speak specifically to their DBE goals and explain their expectation for proposers to make a “good faith effort” to meet those goals. The second is to require bidders to be responsive and submit all materials, including details on DBE inclusion and utilization, no later than the date the bid is due. Similar to airports, other public agencies’ effective communication of diversity goals and objectives has resulted in significant participation of small businesses and DBEs. For example, as of 2017, the Regional Transportation District (RTD) in Denver had paid more than $1 billion out of the $5.6 billion dedicated to the FasTracks program—a voter initiative to building out the Denver metro region’s transit infrastructure—to small businesses and DBEs. When FasTracks launched, RTD proactively reached out to the small business community and clearly conveyed its diversity goals. The RTD has translated its commitment to business diversity to tangible results, in part through its consistent commitment to goals throughout the solicitation process. RTD met or exceeded its 19 percent DBE program goal for federally funded projects for a 3-year period, prompting the agency to set a more aggressive goal of 24 percent for fiscal years 2017 through 2019. When interviewing prime contractors, RTD inquires about their approach to Small Business Enterprise (SBE) and DBE involvement and works to keep them accountable (Taylor 2018).

Proactive Practices: Diverse Business Participation in Airport Contracting 35 Outreach Initiatives Engaging the public, businesses, and other airport stakeholders, and visibility in the community, help build relationships and give an airport the ability to share information about business opportunities and identify companies that can potentially engage in airport contracts. As airports become more familiar with the small business owners in the area and business owners are able to develop relationships with airport contracting departments, small businesses become more aware of opportunities and resources available to them. Outreach events are effective at introducing firms to one another and allowing them a space to find other firms to partner with that may add a winning element to future projects for bidding. Not only do these events present a great opportunity for businesses to network with each other, they also provide the businesses with more visibility in their communities. The initiatives mentioned by interviewees from airports ranged from targeted training events and information sessions for small businesses to youth outreach programs that introduce the idea of careers in aviation to elementary and high school students. Participation in business organizations (e.g., chamber of commerce meetings), and conducting business opportunity events with other airports, governmental agencies (e.g., Small Business Administration), and other entities (e.g., universities) were also among recommended best practices. Examples of outreach activities airports should consider undertaking include the following (Cummings 2016; St. Louis Lambert International Airport 2016; Carol 2016). The list also includes activities performed by airports interviewed for this Guidebook. • Dedicating a web page with clear information on how to do business with the airport. • Maintaining a vendor outreach list to businesses with contract opportunities and other important information. • Developing a visually engaging quarterly newsletter for the DBE community containing useful tips, informational articles, program updates, and training and bid opportunities. • Dedicating staff time to recruit new businesses into the DBE program and contacting businesses that let their DBE certification expire. • Including requirements in contracts with DBE Support Service Providers to help prime contractors identify ready, willing, and able DBEs to participate on contracts and recruit new businesses into the DBE Program. • Sending DBE Participation letters to all prime contractors, signed by executive leadership, assigning participation level with a letter grade (A–F) and corresponding message based on the grade. • Ensuring that staff attend and present at contractor meetings emphasizing the importance of using DBEs and small businesses as subcontractors. • Engaging with state aviation associations and other civic associations. • Coordinating with other airports in the state on outreach events. Columbia Metropolitan Airport, Greenville-Spartanburg Interna- tional, Charleston International, and Myrtle Beach International, known as the South Carolina Airports Coalition, partner to hold “DBE Fly-Ins” to expand vendor lists and increase DBE participation. • Coordinating with other entities on outreach events, such as universi- ties, large businesses, and small business training organizations. Considerations for Outreach • Determine who your target audience is and how they get information. • Disseminate information through existing outreach channels, and explore whether additional channels are needed. • Evaluate existing outreach strategies and determine if adjustments are needed. Outreach Events at Indianapolis International Airport Indianapolis International Airport typi- cally hosts two major outreach events per year, one for construction and one for professional services. The airport posts information about these events on its website, including presentations, project lists, and attendee sign-in sheets. Posting these materials publicly allows businesses to learn about opportunities and connect with potential partners even if they did not attend. The airport’s planning and development staff, leader- ship team, and board members attend the event so potential vendors can meet everyone involved in the projects.

36 Guidance for Diversity in Airport Business Contracting and Workforce Programs • Creating a podcast discussing business diversity programs, which can help small business owners who are unable to attend events. • Hosting a business diversity forum with the DBE community and presenting the airport’s strategic plan. • Implementing youth outreach programs that bring local students into the airport to help them envision careers in aviation. Las Vegas McCarran International Airport (LAS) exemplifies several outreach best practices. LAS makes outreach in the community a priority, provides extensive technical assistance, and meets with every company applying for certification in advance of that company submitting its certification application. The airport also assists DBE companies in developing their statements of qualifications, which LAS distributes to every company that does business with the airport. Another outreach example is the Houston Airport System’s Runway to Business program, which includes 8–12 full-day airport industry events per year focused on capital improvement projects or other project-specific items, intended to facilitate networking. Lee County Port Authority also participates in “reverse” trade shows, which allow suppliers and contractors to meet with procurement officials from various area agencies. Participating at local events and forums such as those hosted by business councils and taking the time to prepare for presentations at these types of events are important and effective because they provide visibility to the airport and a space for businesses and community members to network with airport staff. Columbia Metropolitan Airport mentioned that maintaining rela- tionships with these sorts of groups through attendance at events was important for keeping businesses aware of opportunities and maintaining community relationships with local firms or entrepreneurs, partners, and airport groups. Some airport staff reported that developing personal relationships with local small business owners was critical to the success of their diversity programs. Richmond International Airport prides itself on providing businesses with accessibility to airport staff. When business owners call about opportunities, their calls are returned in a timely fashion, they are invited to the airport to learn about opportunities, and they are educated on how the airport does business. The airport considers this accessibility of airport personnel to the local community to be one of the greatest benefits of its business diversity programs. When businesses contact the airport making inquiries, they can speak with program staff immediately and will know that their message is received and considered. Personal relationships with vendors can also allow contractors to feel more comfortable reaching out to airport staff to report issues or prob- lems as they come up, which helps the airport tailor its outreach. After one-on-one discussions with the airport’s ACDBE operators, staff at Detroit Metropolitan Wayne County Airport (DTW) organized an out- reach event specifically designed to assist those firms with funding. The event included participation from nine financial institutions speaking to the ACDBEs about their business needs (Tellijohn 2018). For very large projects, airports should consider increasing media engagement to publicize the opportunity to a wide audience. Methods include publicizing through minority-focused radio and television shows; conducting legislative visits; participating in forums attended by diverse businesses; translating all public information pieces into other languages; and living up to the motto: “We will meet with anyone, anywhere, anytime” (Cummings 2016). Vendor Outreach at Columbia Metropolitan Airport Columbia Metropolitan Airport has developed a vendor outreach list used to notify small, minority-owned, and woman-owned businesses of contract opportunities; seek quotes from these businesses; and notify them of pre-bid meetings, outreach events, and other airport events and opportunities. Department heads are required to reach out to firms on the vendor list, and to document reasons why a firm on that list was not used for a specific business opportunity. Read more in Appendix A— Case Studies.

Proactive Practices: Diverse Business Participation in Airport Contracting 37 As part of its 20-year, $6 billion ATL Next capital development program, Hartsfield-Jackson Atlanta International Airport conducted outreach about DBE opportunities at the National Association of Minority Contractors Conference, through the airport’s annual Supplier Diver- sity Conference, and through a dedicated webpage on the ATL Next website (American DBE Staff 2016). A large number of airports of all sizes use vendor outreach lists to connect diverse businesses with opportunities at the airport. Building a list can help airports easily identify businesses that could provide services to the airport and help connect firms with other businesses or other airports. By increasing communication and outreach efforts about project needs, airports can contract with diverse businesses that are more appropriately aligned with the necessary work. This may help overcome a challenge expressed by some airports in interviews that they can only find one contractor with the necessary qualifications for certain tasks or that there are several diverse businesses with the same expertise (e.g., paving). Gauging success of outreach initiatives can be challenging, but airports have seen tangible results from their efforts. The Maryland Aviation Administration (MAA), which owns and operates Baltimore/Washington International Thurgood Marshall Airport and Martin State Airport, conducts several outreach events to the minority business community to inform them of upcoming contracting and procurement opportunities, helpful information about bonding and financing, and certification for the different programs the office implements. MAA has seen an increase in attendance at the events, which suggests a sustained interest in doing business with the airport. Tampa International Airport (TPA) held a project-specific outreach event for its Phase 1 Master Plan projects which involved four design-build firms, with approximately 400 attendees. According to TPA’s business diversity manager, this event was successful because multiple busi- nesses followed up with the four primes and received work. After the event, one prime held multiple outreach events on its own to attract more minority- and woman-owned businesses to its project. TPA believes that outreach and networking events are imperative to the success of businesses and for projects to meet their goals. Building networks through these events is important for new companies; when bids come out, most primes already know which DBE they would like to partner with beforehand, so having their name out there is critical. Another initiative, the Quarterly Procurement Forecast, has enhanced MWAA’s outreach strategy by assigning detailed North American Industry Classification System (NAICS) codes to each MWAA procurement request, matching those codes with diverse vendors in MWAA’s supplier database and notifying companies by direct email when opportunities matching their NAICS code become available. MWAA also seeks out ways to include diverse businesses in non- traditional contracting opportunities. MWAA is working to include small and minority-owned financial, legal, and securities firms in airport revenue bond financing activities and has incor- porated language in its contracts with major financial institutions to encourage local minority- owned financial institutions to participate in raising capital and other financial services. These and other efforts to enhance the business diversity program have led to increased spending with small and disadvantaged businesses and an increase in the number of contract awards to Local Disadvantaged Business Enterprises (LDBEs) and DBE firms (American DBE Staff 2017). Training Programs Training programs and outreach initiatives go hand in hand. Outreach can often identify the type of training that could help diverse businesses succeed and fulfill airport needs. A strong mentorship or training program can be critical for building a diverse pipeline of qualified contractors. Some businesses may not be able to navigate the process for becoming qualified airport contractors without a training or mentorship program due to the lengthy list of security

38 Guidance for Diversity in Airport Business Contracting and Workforce Programs and legal requirements most airports have. Airports with the resources to conduct in-house training can use several avenues to help diverse businesses gain the knowledge and expertise necessary to succeed. Training programs can include one-on-one mentorship for new diverse businesses to help guide them through the legal requirements of becoming qualified airport contractors; pairing small businesses with larger, experienced companies already well suited to perform the work; and establishing a mentor-protégé program that pairs DBEs with larger businesses that can provide mentorship and help the DBE grow into a more stable enterprise. Several airports develop and provide training for diverse businesses to enhance their capacity and help them over- come challenges they experience. Training topics can include bidding protocols, best practices for successful proposals, certification processes, compliance monitoring, and bonding and financing. Airports can also consider programs that reward larger firms that commit to helping DBEs grow with extra points in solicitations (Cornelio n.d.). As part of a business development program or separately, airports may establish a mentor-protégé program, in which another DBE or non-DBE firm is the principal source of business development assis- tance to a DBE firm. Business Training Program Initiatives • Conduct community and business outreach to determine training needs of diverse businesses. • Identify internal resources and oppor- tunities to conduct in-house training. • Consider establishing a mentor-protégé program to help develop the ability of diverse businesses to compete successfully. • For training needs beyond the airport’s capacity, connect businesses with local, state, and federal partners that provide relevant training. FHWA and AASHTO’s Best Practices for Mentor/Protégé Programs (Cummings 2016) • Design the program to enhance the business capabilities of the DBE firm; this is not an apprenticeship program. • Conduct a needs assessment for both firms before establishing the relationship. A successful match occurs when both entities can benefit from the partnership. • Establish a contract between the two firms clearly outlining each firm’s responsibilities. • Ensure the program is backed by contractors’ associations and staffed by a support services consultant. • Support services consultants provide expertise in business management, financial administration, insurance and bond readiness, website development, business development, and marketing. These duties should not fall entirely to the mentor. • Compensation can be provided to the mentor for direct and indirect costs for services provided by the mentor for the protégé training and assistance. • Leverage technology to increase efficiency and success. • Regularly set and reassess goals and set milestones for success. Hold both firms accountable for meeting their goals and milestones. • Utilize former DBE firms when possible as the mentoring firm; those firms are uniquely qualified to appreciate the perspective and needs of both a prime and DBE firm. • Divide DBE firms into tiers based on their Capability Maturity Model, deter- mined by utilizing publicly available research-based tools, and utilize tools that help a firm grow to the next level. Setting unattainable one-size-fits-all goals for firms will create frustration for all involved. • Engage a university or college as a partner in administering the program. Research staff at colleges and universities are familiar with the Capability Maturity Model.

Proactive Practices: Diverse Business Participation in Airport Contracting 39 Port of Portland started its mentor-protégé program in 1995 and has seen more than 120 firms graduate. One of the businesses that graduated the program is now a prime contractor on several projects with the Port of Portland. The port considers its mentor-protégé program a significant driver of success for its DBE program, which has recently seen an increase in partici- pation from 8 percent to 26 percent over the course of a few years. Metropolitan Nashville Airport Authority (MNAA) provides a two-track training program, which includes a mentor-protégé program handled by the airport rather than by mentor busi- nesses, and an emerging contractors program. The mentor-protégé program is administered through the Nashville Business Incubation Center. This is a 10-month program that includes classroom-style training once a month for 8 hours, and it teaches mentees contracting basics and how to produce estimates, and provides information on bonding. The training is catered to individuals’ needs and interests based on an initial assessment. After the mentee finishes this first process, another assessment is conducted to determine whether the mentee is ready for the second level of training. This second level is conducted on a one-on-one basis by consultants who are paid by the airport to help mentees with any deficiencies they may have. This training program helps to build business capacity and prepares businesses for future work at the airport. MNAA places high importance on training potential airport contractors and conducts signifi- cant community and business outreach, including a How to Do Business with the Airport series that offers resources and training on bidding protocols, security requirements at the airport, Evaluating Capacity of Businesses and Providing Training for Business Diversity Success at Clark Construction Company Clark Construction Company, one of the most experienced building and civil construction firms in the United States, is an industry leader in creating and implementing small, minority/woman-owned contractor participation policies. As noted by Clark’s director of community relations and small business develop- ment for its Western Pacific region, an important first step to maximizing small/ diverse business participation is to determine the capacity of the businesses in the market. Clark has taken several steps to bolster its resources for determining capacity, including sending out questionnaires and conducting surveys. The company’s key tool for both confirming and building the capacity of small/diverse businesses, however, is its Strategic Partnership Program (SPP). The SPP has been in place since 2007 and forms the cornerstone of Clark’s commitment to S/DBEs. Clark actively recruits participants for that program by partnering with key community and civic agencies that provide technical assis- tance to small contractors, agencies that enforce S/DBE programs, and agencies that require or have goals for diverse businesses participation. Clark typically matriculates anywhere from 12 to 20 businesses into a robust training program that includes courses on blueprint reading, estimating, purchasing, and project management. These courses help position the small business to engage success- fully in construction contracts for Clark and other large contractors. Training these small businesses also gives Clark unique insight into whether the business might be a good fit for any of the company’s projects and enhances the pool of small businesses the company has in its database. Once the S/DBEs graduate from the SPP, Clark often carves out opportunities for them, something that is crucial to the success of small business growth.

40 Guidance for Diversity in Airport Business Contracting and Workforce Programs expectations for working at the airport, and more. This series includes a Proposals 101 component that walks businesses through examples of good and bad proposals to give them a better under- standing of expectations and the types of information they should produce in their proposals. Airports that may not have the capacity or resources to provide significant direct support can connect diverse businesses with external programs established to help small businesses compete for contracts, such as U.S.DOT’s Office of Small and Disadvantaged Business Utilization (OSDBU). OSDBU suite of programs and resources includes (U.S.DOT n.d.): • Small Business Transportation Resource Centers. These nationwide centers help small busi- nesses become more competitive in the market and ultimately acquire contracting opportu- nities within the transportation industry. Services include business analyses, market research and procurement assistance, general management and technical assistance, business coun- seling and coaching, regional planning committees, liaison between prime contractors and subcontractors, outreach/conference participation, capital access and surety bond assistance, and the Women and Girls in Transportation Initiative. • Bonding Education Program. This program helps small, emerging, and minority contrac- tors work one-on-one with bond producers, underwriters, and other surety professionals. The program begins with a stakeholders meeting to review the local market, determine resource requirements, and delegate roles. It also includes a set of workshops with business- specific training, one-on-one interactions with local surety bond producers, and follow-up assistance. • Mentor-Protégé Program. This program helps build private-sector relationships between primes and subcontractors. Mentor and protégé firms select their counterparts and estab- lish a formal relationship with written documentation. OSDBU evaluates the extent of technical and managerial support within the arrangement to provide assistance to both parties. Benefits to the mentor include goodwill and corporate responsibility, long-term relation- ship with a potential subcontractor, and the potential to develop innovative approaches and technology. Protégé benefits include gaining expertise in business and/or financial management, business planning, and business development; forging a long-term relationship with a potential prime contractor; and developing capabilities to compete for government contracts. Airports with limited resources for training should also explore partnership opportuni- ties with local organizations that provide services to diverse businesses and can allow airports to leverage these services without having to recreate them themselves. For example, the IAA partners with its local transit agency, IndyGo, and the Indiana Department of Transportation because both entities have education programs for disadvantaged businesses, both potential and newly certified. Often these businesses are also certified through the city of Indianapolis, state of Indiana, or the Mid-States Minority Supplier Development Council. The IAA also partners with its local chamber of commerce, Indy Chamber, and local Procurement Technical Assistance Center to provide support services for diverse businesses. In addition to providing training for diverse businesses, airports can take advantage of external training opportunities to assist internal airport staff working on diverse business programs. Providing regular instruction and refresher training on the requirements of DBE certification to all staff engaged in an airport’s certification program can help ensure consistency in program implementation and communication. Several industry associations provide periodic training through in-person meetings, webinars, and other events to keep staff up to date on requirements and best practices related to diverse business contracting. Examples include the FAA National Civil Rights Training Conference for Airports; the AMAC Airport Business Diversity Confer- ence of the Airport Minority Advisory Council (AMAC), and ACI-NA Business of Airports Conference.

Proactive Practices: Diverse Business Participation in Airport Contracting 41 Monitoring and Evaluating Performance Monitoring and evaluating contracting diversity performance allows airports to gauge progress toward goals and identify areas of improvement needed (Figure 3). Measuring program effectiveness also provides the means to validate the program; reinforces the concept that diversity programs are components of broader economic development initiatives; establishes the direct, indirect, and related impacts of the program; and provides a basis for comparison with other programs (DFW 2009). Several of the interviewed airports reported that routine monitoring and evaluation programs were critical to the success of their diver- sity programs. The Benefit-Cost Tool accompanying the Guidebook captures project-specific data beyond goals. As part of monitoring, a good tracking system allows airport staff to assess how many DBEs and ACDBEs are bidding on contracts or concession agreements and, of those, how many are winning work. It can also help staff compare their airport’s performance in diverse business participation in contracts and concessions compared to its diversity goals. The tool provides additional insights by comparing contract and concession participation across contract type (e.g., construction, construction-related professional services), sub versus prime contracts, and diversity status (MBE participation compared to WBE participation, for example). Beyond these project-specific comparisons, the tool integrates an input-output model to calculate the broader economic impact of an airport’s diversity programs. Numerous airports that participated in the interviews and focus groups for this research specifically mentioned the B2Gnow software system as a way to track performance. Steps for Monitoring and Evaluating Performance • Ensure robust program enforcement protocols are in place and executed consistently. • Determine available data to calculate program performance metrics and develop mechanisms for collecting additional data as needed. • Establish metrics and time frames for tracking. • Consistently track metrics and examine if trends demonstrate program improvement. Figure 3. St. Louis Lambert International Airport uses engaging visuals in its business diversity annual reports to track program progress.

42 Guidance for Diversity in Airport Business Contracting and Workforce Programs Whereas an overarching program target will simply measure whether or not the airport met the goals for the year, project-specific data can show exact areas where the airport may be improving or backsliding in diversity. This type of data can help staff develop approaches to reach more diverse businesses within certain sectors or support the growth of businesses within sectors with noticeably less diversity. In addition, disparity studies can provide important data to evaluate an airport’s business diversity program. The results of a disparity study can enable an airport to make adjustments to strengthen its diversity program. Some of the performance indicators airports could use to track progress on business diversity efforts include (Hazel et al. 2011): • Dollar amount of work performed by M/W/DBE firms in relation to goals set. Airports can track this indicator against an overarching goal or customized goals created for different categories, such as profes- sional services, construction, and concessions. • The percent of airport projects that meet M/W/DBE requirements without waivers. This indicator is useful for self-benchmarking, but not well suited for peer benchmarking, since airports set varying goals. • DBE Contractor Fees as Percentage of Total Contractor Fees. This indicator focuses on the proportion of DBE contractor fees out of total contractor fees. • Number of DBE Contractors Working at Airport on Annual Basis. This indicator focuses on the absolute number of DBE contractors working at an airport year to year. • DBE/MBE Contracts as a Percentage of Total Contracts. This indi- cator focuses on the proportion of DBE/MBE contracts out of total contracts. • DBE/MBE Participation Rate on Specific Projects. As noted, project- specific targets can optimize contracting diversity. Airports can also use more qualitative ways to track performance by engaging in conversa- tions with diverse businesses interested in or already working at the airport. Business diversity program staff should familiarize themselves with the capacity, challenges, and opportunities available for these firms. Through personal relationships and conversations, program staff can evaluate whether the airport’s processes are well aligned to identify opportunities that match the capacity of diverse businesses. They can ensure that the airport’s services and assistance provide these businesses with the right technical assistance and support to truly meet their needs. Airports should work to ensure that diverse businesses understand precisely what it will take for them to perform and be successful (Cornelio n.d.). Interviewed airports posed the following questions for themselves to gauge qualitatively how well small businesses are doing, both at the airport and in other sectors: 1. Are airport diversity offices communicating with new potential contractors? 2. Are businesses being mentored? 3. Are businesses expanding, retaining working partnerships with primes and subs, and getting business outside of the airport? 4. Have qualified, diverse candidates and businesses been identified as a result of the diversity program (e.g., outreach)? 5. Has there been a change in the hiring process at an airport so that the employees on the candidate selection committee bring a variety of perspectives and backgrounds? Amy Shaw, McCarran International Airport’s manager of commercial and business devel- opment, identified another important component of success that is impossible to measure: Innovative Success Metrics at Charlotte- Douglas International Airport Charlotte-Douglas International Airport tracks the number of new firms doing work at the airport for the first time, as well as the number of disadvantaged firms already finding work consistently at the airport.

Proactive Practices: Diverse Business Participation in Airport Contracting 43 an unknown factor of businesses that attend trainings or workshops hosted by the airport that are not quite ready to place bids on contracts but are emerging and working to secure funding so that they can bid in the future. Some businesses are actively working with agencies to establish themselves as viable but are not quite there yet, and it will be interesting to see how many of those emerge over time. Ms. Shaw’s remarks highlight positive consequences of an airport’s diverse busi- ness program that may not be possible to assess quantitatively or quali- tatively, especially in the short term, but can still provide benefits both for the airport and the businesses. A critical component of monitoring the program is enforcement. Airports should establish verification protocols for conducting onsite inspections of the equipment used and work performed by DBEs, which also detail when enforcement activities will take place. Airports are encouraged to conduct all compliance reviews in person and docu- ment reviews in written reports. Using a checklist can be helpful to ensure consistency and thoroughness. The list should include all the required elements and “red flags” that could indicate practices that are not in line with requirements (Cummings 2016). At the 9th Annual FAA National Civil Rights Training Conference for Airports, the FAA presented on best practices in DBE and ACDBE contract monitoring. The presentation is available online at https:// www.faa.gov/about/office_org/headquarters_offices/acr/eeo_training/past_conferences/ airport_civil_rights_training_ninth_national_2018_conference/ and includes details about the following (FAA 2018): • Regulatory monitoring requirements for DBEs and ACDBEs; • Ensuring work is performed via written certification; • Ensuring DBE contracts are compliant, and verifying contract structures; • Ensuring prompt payment; • Termination rules and compliance mechanisms; • Monitoring for the DBE/ACDBE performing a commercially useful function; • Ensuring DBE performance on worksite; and • Red flag indicators of DBE/ACDBE fraud. Communicating Accomplishments Communicating accomplishments of an airport’s diverse business contracting initiatives can serve to maintain momentum and inspire further progress. Communicating accomplishments can take the form of demonstrating quantitative improvements in a diverse business program as well as conveying personal, qualitative stories of the impacts a program has had. Both ways are valuable. Quantitative ways to communicate accomplishments include showing the quantity of funds being provided to diverse businesses, how goals were achieved or exceeded, and the number of new diverse businesses working with the airport. Qualitative ways include highlighting the personal impact that diverse business programs have had on people’s livelihoods, careers, and opportunities for advancement. For example, San Diego International Airport highlights the value of its Small Business Devel- opment Program through stories such as one about a business owner named Marlon Blue. After Monitoring Joint Ventures FAA’s Joint Venture Guidance specifies that a formal monitoring program for airport concession joint ventures should include (FAA 2008): • Annual verification of the status of the ACDBE’s certification eligibility; • Periodic (not less than annual) review of the managing entity’s meeting minutes and reports; • On-site visits to the operation; • Periodic interviews with the joint venture participants, managers, and employees; and • Review of any documentation, including financial reports and agreements, necessary to ensure compliance with the agreement.

44 Guidance for Diversity in Airport Business Contracting and Workforce Programs serving 20 years in the U.S. Navy, Mr. Blue returned to San Diego to find an extremely tough job market. He decided to start his own secu- rity company to help veterans and women attain jobs. Then he came across San Diego International Airport’s bid opportunity for security for the Terminal 2 Parking Plaza construction site. Mr. Blue credits the airport authority’s Small Business Development Department for help- ing him successfully complete the very detailed application, and ultimately winning a 2-year contract. With this experience under his belt, Mr. Blue has been successful in competing for other public agency contracts. Through relationships like this, SAN hopes to inspire others like Mr. Blue and continue to provide opportunities for the region’s small and underrepresented businesses. Process Improvements and Flexibility Airports can leverage flexibility within their contracting processes and implement process improvements to open more opportunities for small businesses. For example, the amount of liability insurance required for some projects is prohibitive for smaller businesses because they are set at the same level for any company, no matter the size. Many small subcontractors struggle to meet liability insurance requirements, which can be as high as $10 million. Small businesses may also take on a large amount of risk to comply with “hold harmless” clauses found in some contracts. Bonding is also difficult for small or minority busi- nesses for the same reason. Airports should consider adjusting lia bi l- ity and other requirements for smaller projects that have less risk. Lee County Port Authority has worked to alleviate these challenges for small businesses by periodically working with primes to have them shoulder a higher share of these costs, so that the proportions of the cost to both parties are in line with what they can afford. Small businesses are burdened if they receive payments late from primes or airports. How- ever, if the small business is part of the DBE Program it benefits from the required “prompt payment” clause in all federally funded contracts. This clause requires contractors to pay their subcontractors within 30 days of receipt of prime contract payments. In addition, this clause must establish enforcement mechanisms to guarantee prompt payments to subcontractors (Section 26.29(a)–(d).) Yet some airports do not have well-defined policies about paying sub- contractors in a timely fashion, and sometimes the approval process is delayed if the documents need to be signed by several staff members. Additionally, sometimes airports return invoices without payment because the company has unknowingly made rounding errors, which further delays the process of receiving payment. Tracking software such as B2Gnow can help airports monitor contract compliance in real time and see when payments are being made to subcontractors. If timely payments are not being made to small businesses, the airport can know immediately and intervene to resolve the issue. U.S.DOT guidance on prompt payment can be accessed at https://www.transportation.gov/ civil-rights/civil-rights-learning-center/prompt-payment-guidance. Additional process improvements that airports could implement include creating lists of qualified contractors so that airport staff could easily reference them, and including a requirement that contractors Practices for Communicating Accomplishments • Showcase diverse businesses in newsletters and press releases, on websites, at outreach events, and in other forums, such as airport board meetings and trade organization meetings. • Host celebratory events and awards ceremonies to recognize staff members for contributions that have advanced business diversity initiatives. • Produce an annual report or economic impact report to highlight areas such as diversity program goals and objec- tives, accomplishments, economic impact of diverse businesses, and outreach initiatives. • Industry reports offer airports an opportunity to highlight their commitment to diversity and share their recent accomplishments. Process Improvements and Flexibility • Engage with the business community to understand where procedures and processes are causing roadblocks and delays. • Engage with internal airport stake- holders to evaluate where exceptions can be made and flexibilities intro- duced to allow for greater participa- tion from diverse businesses.

Proactive Practices: Diverse Business Participation in Airport Contracting 45 provide details early in the solicitation process of how they would meet diversity targets, to ensure that proposals include specific items to address diversity. Some airports always have subcontractor DBEs present when discussing a matter with the prime, so they get all informa- tion first-hand and are involved in decision-making (Carol 2011). Small business participation would also be streamlined if there was greater consistency by Unified Certification Program entities in sending notices when a company’s certification is about to expire. This would be useful, as it can be difficult for small companies to track expirations when they have 50 or more certifications across the country that all lapse at different times. Identifying and Overcoming Challenges Challenges in airport contracting can vary based on the size and type of airport and its location. Large airports in urban or suburban settings will likely have fewer challenges in terms of recruiting a diverse set of contractors than small airports or airports in rural areas. A lack of qual- ified contractors in the area may necessitate a training or mentorship program to guide interested small businesses through the certification process. The ownership structure of the airport may influence what types of challenges airports encounter. Commercial airports may have to get buy-in from the board of directors before funding for diversity initia- tives is authorized, whereas some municipal airports are required to meet citywide standards for diversity and are given sufficient resources from the local government to achieve those standards. To identify challenges associated with their diverse business programs, airports must stay in close communication with the business community and their internal stakeholders to understand the types of barriers that are prevent- ing further participation by diverse businesses. In addition to the policies and practices docu- mented here, diverse business program administrators should engage with their counterparts at other airports and through organizations such as the Airport Minority Advisory Council and ACI–NA to share best practices and lessons learned and continuously seek ways to improve their programs. Airports can also experience challenges within specific areas of business contracting. For example, for concessions, there are several types of models and agreements airports typically use, as well as hybrid combinations (ACI–NA 2016): • Direct leasing—The airport contracts directly with all concessionaires. • Master concessionaire—This model permits only one “master” operator to lease all airport food service concessions and/or retail. • Prime operators—The airport leases packages of locations to two or more operators, each of which has multiple locations (more than three) within the airport. • Developer/manager—The airport leases all the terminal locations to a commercial developer responsible for design and development of the concession program. These models can be leveraged in different ways to optimize business diversity efforts. For instance, one variation of the prime operator model would be to give several prime conces- sionaires control over a substantial portion of the concession space, but reserve some space for local, small, or ACDBE concessionaires that would be under direct control of the airport. This approach is in line with the practice of unbundling contracts and provides more businesses an opportunity to compete. As another example, Cleveland Hopkins International Airport nearly doubled the number of local operators while more than tripling its ACDBE program when it transitioned from a master concessionaire model to a developer model (Seaman 2011). Identifying and Overcoming Challenges • Engage with the business community and airport stakeholders to under- stand challenges. • Collaborate with counterparts at other airports and leverage existing organizations to enhance knowledge of how to overcome specific challenges.

46 Guidance for Diversity in Airport Business Contracting and Workforce Programs New DBEs New DBEs seeking to obtain work at airports face particularly challenging barriers to entry. These barriers include limited opportunities for, and infrequent turnover of, disadvantaged firms; limited access to capital and high entry costs; and the firms’ lack of experience with the airport bidding process (ACI–NA 2016). A U.S.DOT Office of Inspector General report intended to detail inclusion of new DBEs and ACDBEs at U.S. airports documented the following airport best practices (FAA 2015): • Unbundling large contracts; • Entering into direct contracts or leases with DBE/ACDBE firms; • Utilizing technology to facilitate concessions services’ access to passengers; • Promoting OSDBU’s short-term lending program and bonding education program; • Posting prime contractor payment information to airport databases; • Implementing mentor-protégé programs; • Posting bid information to airport databases; • Encouraging DBE and ACDBE firms to utilize services provided by the OSDBU-sponsored Small Business Transportation Resource Centers; • Conducting outreach; and • Providing financial assistance. In addition, FAA has observed the following best practices to help airports foster the use of DBEs and ACDBEs (FAA 2015): • Identifying unique concession concepts that reflect the flavor of the region when an airport is seeking something new and fresh; • Making a proactive effort to certify small firms that could likely do business at an airport, and in areas that traditionally have low participation of DBE and/or ACDBE firms; • Establishing small business goals and/or set-asides as race- and gender-neutral methods of obtaining DBE and ACDBE participation; and • Allowing concession primes to mentor new ACDBE firms without counting the ACDBE participation until such a time that the ACDBE firm can fully participate in a joint venture and be counted consistent with the regulations and joint venture guidance. When executives at DTW examined their contracting business model, they were not satisfied with the level of participation from local small businesses. The changes they implemented dramatically increased the number of certified SBEs working at DTW and increased opportuni- ties for DBEs. In 1 year, the number of certified SBEs at DTW increased from 80 to 364. The number of cross-certified DBEs increased from 0 to 110 in the same time period. DTW achieved this by (Martyka 2016): 1. Expanding the definition of SBE. DTW amended its procurement ordinance to adopt Small Business Administration guidelines for defining a small business instead of the previous guidelines the airports used, which were more restrictive and included specific size requirements. 2. Cross-certifying DBEs with SBEs. The cross-certification program makes it easier for DBEs to qualify as an SBE, making DBEs eligible for non-federally funded contracts they did not have access to before. 3. Hosting educational and relationship-building events. DTW held targeted outreach events to educate small local businesses on the new certification and qualification requirements, and link the businesses with airport operators, airline executives, government officials, prime developers, and more.

Proactive Practices: Diverse Business Participation in Airport Contracting 47 Takeaways for Airports Enhancing diversity within airport business contracting can generate substantial value, not only for the airport, but also for the local economy. Diverse businesses contribute to the economic sustainability of their communities by providing jobs, fostering economic activity, generating wealth among communities that have historically faced socioeconomic barriers, expanding business opportunities, and spurring increased competition. Establishing and improving diverse business programs can be challenging, especially for airports with limited resources. For all airport types and sizes, strong support from leadership is critical for program success. Prioritization from leadership helps funnel resources where they are needed, estab- lish directives for new initiatives, and foster an environment in which staff across the airport value the importance of diversifying business opportunities. The best practices and examples highlighted in this chapter demonstrate the wealth of information and resources available to airports to enhance their programs and overcome challenges. Through creative approaches, robust engagement, and sustained commitment, airports can help their diverse business programs advance and realize benefits for themselves and their communities.

Next: Chapter 5 - Proactive Practices: Workforce Diversity »
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Many airports are already taking active steps to address and unlock the benefits of a diverse and inclusive workforce. These programs provide benefits to the airport and surrounding communities, but there has not been a comprehensive benefit-cost analysis for diversity contracting programs and their impact on the workforce.

The TRB Airport Cooperative Research Program's ACRP Research Report 217: Guidance for Diversity in Airport Business Contracting and Workforce Programs provides guidelines to assist airport operators and various stakeholders at airports of all types and sizes to identify and quantify the benefits, costs, and regional economic impact of diversity contracting for airport businesses.

As recipients of federal funds, airports are required to administer a federal program that seeks to provide equal access for participation in airport-related business opportunities. Likewise, many airports are also obligated to do so under state and local programs.

The report includes additional materials: an Airport Diversity Contracting Tool and a Tool Users Guide.

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