Attachment 4. Overall Goal Calculation for Other than Car Rental Concessions

Transcription

1 Attachment 4 Overall Goal Calculation for Other than Car Rental Concessions

2 Attachment 4 Section 23.45: Overall Goal Calculation for Concessions Other Than Car Rentals I. Amount of Goal The Philadelphia International Airport s overall goal for concessions other than car rental (i.e. non-car rental) during the period beginning October 1, 2014 and ending September 30, 2017 is the following: 16.45% of the total gross receipts for concessions at the Airport. The following are not included in the total gross receipts for concessions: (a) The gross receipts of car rental operations (b) The dollar amount of a management contract or subcontract with a non-acdbe (c) The gross receipts of business activities to which a management contract or subcontract with a non-acdbe pertains, and (d) Any portion of a firm s estimated gross receipts that will not be generated from a concession. When new concession opportunities arise prior to the end of this goal period and the estimated average of annual gross revenues are anticipated to be $200,000 or greater, the Airport will submit an appropriate adjustment to the overall goal. This will be submitted to FAA for approval at least 90 days before executing the new concession agreement (23.45(i)). The Airport has determined that its market area is regional (see Table 1 below). This is the geographical area in which the substantial majority of firms which seek to do concessions business with the airport are located and the geographical area in which the firms receive a substantial majority of concessions-related revenues are located. Though there are a number of firms in various concession types who have local operations but are based outof-state, the majority of concessionaires come from the counties listed below in Table 1. Table 1: Market Area for Non-Car Rental Concessions at PHL COUNTIES Bucks PA Delaware PA Burlington NJ Montgomery PA Camden NJ Philadelphia PA Chester PA A. Projected Concessions Opportunities: October 1, 2014 September 30, 2017 Concessions revenue opportunity for the three-year period is based upon the gross receipts for the preceding three years. The table below describes the gross receipts of non-car rental concessions for that period.

3 Table 2: Gross Receipts for All Other (Non-Car Rental Concessions) for FY Fiscal Year All Concessions (excluding car rentals) FY 2011 $234,518,702 FY 2012 $225,021,391 FY 2013 $235,712,050 TOTAL $695,252,143 Source: Airport; compiled by KWA Based on the information provided in the table above, the total gross receipts for the preceding three (3) year period for all other (non-car rental) concessions is $695,252,143. The total gross receipts from the previous three years was multiplied by % expected growth in non-car rental concessions revenue at the airport over the next three (3) years, as provided by the Airport s Properties division. The total noncar rental concessions base is $745,850,119. The base figure was calculated using the table below: FY 2011-FY 2013 REVENUE ACTIVITY PROJECTED GROWTH RATE OVER 3 YEARS PROJECTED REVENUE OVER FY 2015-FY 2017 $8,635,907 Advertising % $11,100,000 $112,645 Cable Television 0.0% $112,645 $334,395,398 Food & Beverage % $361,164,079 $84,804,990 Hotel 0.0% $84,804,990 $83,389,507 Passenger services % $90,064,919 $183,505,428 Retail & RMUs % $198,195,218 $408,268 Rooftop Antenna 0.0% $408,268 $695,252,143 $745,850,119 ($745,850,119-$695,252,143)/$695,252,143 = % II. Methodology used to Calculate Overall Goal A. Goods and Services The Airport can meet the percentage goal by counting the purchase from ACDBEs of goods and services used in non-car rental concessions business conducted at the airport. The Airport, and the non-car rental concessionaires at the airport, should make good faith efforts to explore all available options to achieve, to the maximum extent practicable, compliance with the goal through direct ownership arrangements, including joint ventures and franchises. The dollar value from purchases of goods and services from ACDBEs may be added to the numerator, and the dollar value from purchases of 2

4 goods and services from all firms (ACDBEs and non-acdbes) may be added to the denominator. B. Management Contract or Subcontract The Airport can meet the percentage goal by counting any non-car rental concessions operated through a management contract or subcontract with an ACDBE. The Airport, and the concessionaires at the airport, will add the dollar amount of a management contract or subcontract with an ACDBE to the total participation by ACDBEs in airport concessions (both the numerator AND the denominator) and to the base from which the airport s percentage goal is calculated. However, the dollar amount of a management contract or subcontract with a non-acdbe and the gross revenue of concession activities to which the management contract or subcontract pertains will not be added to this base in either the numerator or denominator. While the Airport realizes that this appears to go against the normal rules and rationale for goal-setting, the Airport understands that this method is nevertheless required by statute. C. Step 1: (c) The Airport determined the base figure for the relative availability of ACDBEs other than car rentals. The base figure was calculated as follows: The Step 1 DBE Base Figure was determined by dividing the number of ACDBE firms available by the total number of firms available to determine the relative availability of ACDBEs for each concession type. That relative availability was multiplied by the percentage of total estimated revenue to determine the weighted availability of ACDBEs in the Airport s market area for each concession type as indicated in Table 3 below. 3

5 Table 3: Determination of Relative Availability of ACDBEs (Non-Car Rental) Concession activity NAICS codes ACDBE firms All firms Relative Availability Ratio of Estimated Gross Receipts Weighted Availability Advertising / % x 0.01 = 0.6% Cable Television / 5 0.0% x 0.00 = 0.0% Food & Beverage , / % x 0.48 = 2.0% Hotel / % x 0.12 = 0.0% Passenger services (vending machines, prepaid phone cards, spa services, shoe shine, luggage carts, payphones) Retail & RMUs , , , , , , , , , , , , / % x 0.12 = 0.3% 20 / % x 0.26 = 0.1% Rooftop Antenna / % x 0.00 = 0.0% Source: County Business Patterns, U.S. Census Bureau, May City of Philadelphia Office of Economic Opportunity Registry, September Commonwealth of Pennsylvania Department of General Services MBE/WBE Database, July Pennsylvania UCP Directory, July Southeastern Pennsylvania Transportation Authority (SEPTA) BizNet vendor database, July State of New Jersey Unified Certification Program Business Directory, July WEIGHTED STEP 1 BASE FIGURE = 3.0% The Step 1 base goal for all other (i.e. non-car rental) ACDBEs is 3.0%. D. Step 2: 23.51(d) After calculating a base figure of the relative availability of ACDBEs, the Airport examined evidence to determine whether or not the base figure needs to be adjusted in order to arrive at the overall goal. The data used to determine the adjustment to the base figure were: 1. Past participation The Airport evaluated the current capacity of ACDBEs to perform work in the concessions program by measuring the volume of work ACDBEs have performed in the past. 4

6 The historical ACDBE accomplishments at the Airports in recent years were examined relative to the above consideration (i). Specifically, the annual Uniform Report of ACDBE Participation for each of the reporting periods listed below was assessed. Notice the annual ACDBE percent accomplishment for each year reported, and the total amount of ACDBE participation for the three-year period. Table 4: Philadelphia International Airport ACDBE Accomplishments for FY 2011 FY 2013 FISCAL YEAR ACDBE goal ACDBE achievement Over/under FY % 27.76% 21.46% FY % 29.90% 23.60% FY % 31.67% 25.37% MEDIAN 29.90% 23.60% Source: Uniform Report of ACDBE Participation, Philadelphia International Airport (FY ) The ACDBE accomplishment for the previous three-year reporting period as shown above is 29.90%, compared to the Step 1 DBE base figure for the airport of 3.0%. The Airport will adjust the Step 1 ACDBE base figure of 3.0% by adding it to the ACDBE participation noted in Table 4 above (29.90%) for a total of 32.9% and averaging this total, for a final adjusted overall goal of 16.45%. 2. Disparity Study The City of Philadelphia commissioned a disparity study in 2013 for city and Metroarea contracts. The disparity study looked at availability versus utilization of DBEs in the Philadelphia Metropolitan Statistical Area (MSA) for public works contracts; personal and professional services contracts; and services, supplies, and equipment contracts. The study determined that DBEs for services, supplies and equipment contracts were under-utilized. However, the study did not address concessions specifically, so the data in the study were not used to make an adjustment to the base figure. E. Adjustment of the Step 1 Goal The reason the Airport chose to adjust the base figure using these data was because past participation by ACDBEs indicated that the step 1 goal underestimates ACDBE capacity at the Airport. In order to reflect as accurately as possible the ACDBE participation the Airport would expect in the absence of discrimination, the Airport has adjusted the base figure of 3.0%. The overall goal for non-car rental concessions is 16.45%. Since the projected amount of non-car rental concession gross receipts over the next three years is approximately $745,850,119, this means that the Airport proposes to achieve approximately $122,692,345 in ACDBE gross receipts over the next three years. 5

7 III. Consultation with Stakeholders (23.43) Prior to submitting this goal to the FAA Civil Rights office, the Airport conducted a stakeholders meeting on July 22, 2014 at the Philadelphia Airport Marriott. Questions and answers are provided as an attachment to this document. Breakout of Estimated Race-Neutral & Race-Conscious Participation Section The Airport will meet the maximum feasible portion of its overall goal by using race-neutral means of facilitating ACDBE participation. The Airport uses the race-neutral measures below to increase ACDBE participation. The Airport understands that it will be expected to actually take these steps, and this is not merely a paper exercise. 1. Locating and identifying ACDBEs and other small businesses who may be interested in participating as concessionaires under 49 CFR Part 23; 2. Notifying ACDBEs of concession opportunities and encouraging them to compete, when appropriate; 3. When practical, structuring concession activities so as to encourage and facilitate the participation of ACDBEs; 4. Providing technical assistance to ACDBEs in overcoming limitations, such as inability to obtain bonding or financing; 5. Ensuring that competitors for concession opportunities are informed during pre-solicitation meetings about how the sponsor s ACDBE program will affect the procurement process; 6. Providing information concerning the availability of ACDBE firms to competitors to assist them in obtaining ACDBE participation; and 7. Establishing a business development program (see 49 CFR Part 26:35); technical assistance program or taking other steps to foster ACDBE participation in concessions. The Airport estimates that, in meeting the overall goal of 16.45%, the Airport will obtain 3.88% from race-neutral participation and 12.57% through race-conscious measures. The reason for this projected split is that the airport exceeded its overall DBE goal in FY 2011, FY 2012 and FY 2013 (see Table 4). In FY 2011, the goal was exceeded by points; in FY 2012, the goal was exceeded by percentage points; and in FY 2013, the goal was exceeded by percentage points. The goal was 6.3% for the previous three fiscal years. The median achievement for the three previous fiscal years is 29.90%. The difference is percentage points. 49 CFR Part 26.51(f)(4) allows for an adjustment of race-neutral/race-conscious attainment if contract goals are exceeded in consecutive years. Notice the excerpt below from the regulations: 6

8 If you obtain DBE participation that exceeds your overall goal in two consecutive years through the use of contract goals (i.e., not through the use of race-neutral means alone), you must reduce your use of contract goals proportionately in the following year. In following the guideline from 49 CFR Part 26.51(f)(4), the airport will reduce the percentage of contract goals by points. The overall goal is 16.45% *.2360 = 3.88%. The raceneutral portion of the goal is 3.88%. The remainder (12.57%) is projected to be met using raceconscious means. In order to ensure that the ACDBE program will be narrowly tailored to overcome the effects of discrimination, if the Airport uses concession-specific goals, it will adjust the estimated breakout of race-neutral and race-conscious participation as needed to reflect actual ACDBE participation (see 26.51(f)) and will track and report race-neutral and race conscious participation separately. For reporting purposes, race-neutral ACDBE participation includes, but is not necessarily limited to the following: ACDBE participation through a prime contract that an ACDBE obtains through customary competitive procurement procedures ACDBE participation through a subcontract on a prime contract that does not carry ACDBE goal ACDBE participation on a prime contract exceeding a concession specific goal ACDBE participation through a subcontract from a prime contractor that did not consider a firm s ACDBE in making the award. The Airport will maintain data separately on ACDBE achievements in those contracts with and without concession specific goals, respectively. 7

9 APPENDIX: STAKEHOLDERS SESSION July 22, 2014 The ACDBE stakeholders session was held at the Philadelphia Airport Marriott from 9 am 10:30 pm on July 22, Below is the transcript from the question and answer session after the presentation of the ACDBE goal methodology: AUDIENCE MEMBER: I have a question. When you were looking --when you were doing your calculation of the non-rental cars and you were looking at only the companies certified in Philadelphia, why didn't you open your range to the seven counties in looking for those who are certified in those counties when you did your calculation? MR. KEVIN WEEDEN: I did. AUDIENCE MEMBER: Oh, you did? MR. KEVIN WEEDEN: It's called the PAUCP Directory. It has firms certified statewide and outside the state. So when I'm looking at the directory, I'm looking at firms that are --whether they're in Montgomery County --I don t know all the cities. Whether they are located in Montgomery County or Bucks County or if they're located --I actually listed on there (the) New Jersey UCP Directory as well for Burlington and Camden. Those numbers include those firms, as well. MR. KEN WEEDEN: This is a draft, first draft. It's pretty good, but the following numbers may actually change as we go back and look at it. The state total concessions for consultation purposes--oh, I'm Ken Weeden, by the way. MR. KEN WEEDEN: So, we look at all those things (in the) market area. We look at the final numbers. The numbers change three or four times even this morning earlier. So, we look at the final numbers. The numbers may actually change because there is some logic to it, as well. If you notice, the median was 29 percent, and the subsequent goal was half of that. So, we go back and look at that and see what factors may make sense. There is a good chance probably be higher than the actual final goal we have right here. The folks who are stakeholders look at it and react to it. We work for our bosses, too, and they are here, the Airport Administration. This is not the final. What comes to our final data it will be a little different number. I suspect it's probably a little higher than the 16.5 percent. AUDIENCE MEMBER: Will they be published somewhere? Will the numbers, the goals be announced and published somewhere? MR. KEVIN WEEDEN: Oh, yes, on the Airport's website. MS. CAMERON: I was going to say the same thing. It will be on the Airport's website once we do the final calculations. AUDIENCE MEMBER: There are a lot of slides in here. Is it possible we can get a printout and look at them? There are a lot of numbers to think about, all the work, whatever you presented?

10 MR. KEVIN WEEDEN: Yes. I will talk to the Airport folks. We actually work for them. It's a matter of them getting some numbers to you. MR. KEN WEEDEN: At this point, if I may, it will change. If you get a copy, then six months it will be different. Maybe the Airport (can get a copy to you) later on. MR. KEVIN WEEDEN: It's just a draft, you know. Like I said, it's subject to change. If there are specific questions you have about the numbers, certainly I can discuss that now or discuss it after the presentation. But yeah, I understand what you're saying. AUDIENCE MEMBER: First time I have seen these numbers. So (for) me (this is) all completely something new. That is the reason I am asking for, that way I can contribute towards what (the goal) should be. MR. KEVIN WEEDEN: Sure. MS. CAMERON: I can answer your question. If you would give one of the staff members your card, what we can do is send you a pdf after the presentation. There are couple things we want to go back and check. But we can easily send you the presentation so that you can see what the calculation methodology is. I think that is what you're looking for. AUDIENCE MEMBER: That's exactly what I'm looking for. Thank you. MS. CAMERON: Sure. AUDIENCE MEMBER: How does this compare to other airports? Have you looked at that, as well and how does this compare to other airport concessions and their goals. MR. KEVIN WEEDEN: In terms of the number, you mean? AUDIENCE MEMBER: Yes. MR. KEVIN WEEDEN: For car rental concessions, I mentioned before, we looked at information, I think, from about 15 or 18 different large hub and medium hub airports. Large hub airports usually have, I think, (over one) million, I think, in enplanements. Very large like JFK, Houston- Bush, LAX, those types of airports are really, really large airports. Very few of them have goals for car rentals above 5 percent. Most of them are around 1 or 2 percent. For the non-car rental goals, those vary according to size of the airport, (and) according to the number of folks or firms that are certified in ACDBE and different services. Some airports that could be say, you know, a small hub airport or non-hub airport maybe have a higher percentage goal because they have ACDBEs that are certified in certain areas. A lot of firms --a lot of airports have ACDBEs that are certified, say, for news and gifts but not have a lot certified for food and beverage. That generates the majority of gross revenue at airports. Number one thing people do when they go to the airport is eat and drink. That generates, you know, the most revenue. It varies. I would ii

11 say some airports may have goals around 8 or 9 percent. Some airports may have goals around 40 percent. AUDIENCE MEMBER: But I want to know if you narrowed it down to another large airport like Philadelphia Airport, and did you narrow that to kind of have a benchmark to look at? I'm just talking specifically about another large airport, and did you use any of them as benchmarks? MR. KEVIN WEEDEN: No. Because the reason why we do that, you know, I talked about establishing the market area. Because of the fact the goal has to be narrowly tailored, we look at the specific market area. The market area for New York for JFK would be different than, say, for Philadelphia or for Newark or for, you know, Baltimore or Washington. You do it based on that market area. If you were making the market area say the entire Northeast, maybe we have a different picture or different goal. The goal is narrowly tailored specifically to Philadelphia's market versus New York or Newark and the others. MS. CAMERON: Just one other comment to your question. That's one of the reasons why when we do outreach events, we tell folks it s very important to get certified and registered. So, you know, that we do an accurate count of how many firms that are in the area that really are ACDBEs. That is one of the things that we are very acutely aware of. There may be a lot more companies out there that are capable of doing this work and being certified, but they haven't gone through the process. That actually --I know that they would be competitors potentially of yours, but that really does help us in the goal-setting process to set a number that is realistic and makes sense. AUDIENCE MEMBER: I am wondering, is there any conversation or thought about changing the net worth that the company can have or a vendor can have? It's been so, you know, sometimes kind of low for some of the vendors. MS. OLIVER: That's normally dictated by the Federal Government. We don't actually set the personal net worth. AUDIENCE MEMBER: I thought I heard probably about a month ago that the Federal Government was possibly considering increasing the net worth that a DBE vendor needed to have. Is there any truth to that? MS. OLIVER: I haven't heard anything. MS. GIBSON: There have been conversation and then --to speak to you specifically, because I know you're speaking of car rentals. There has also been a lot of conversation in that area because of the way, as Kevin has already said, their goal is very low. But then even in certain things in car rental areas with people purchasing vehicles and things of that nature, it is very hard for people to get certified in that area. We understand your pain. There is a lot of national conversation. AMAC has taken lead. And they are in deep conversation with the FAA on trying to do something about that. But in the interim, nothing has been done. So, we just kind of have iii

12 to operate at what we can. So, that s where you see the cleaning services and the things that you all have given us to use. MS. CAMERON: And Robin, just to translate, AMAC is Airport Minority Advisory Council? MS. GIBSON: Yes. MS. CAMERON: Okay. If any of you are interested in joining the conversation, if you think that the personal net worth standard is too low or too high, you know, there are industry groups out there like AMAC, the Airport Minority Advisory Council; there is ACI, Airport Council International; AAAE, Association of American Airport Executives. There are a number of industry groups out there that take positions that advocate different types of issues within the ACDBE and DBE communities. If that is something that you feel very strongly about and you would like a channel into those groups, you want to know how to get involved or something, let one of the Airport staff know and we can give you some contacts. They are always looking for folks, who are actual owners, operators, people who are involved in airports who really jump in and get involved in the conversation. And we'd be happy to facilitate that. MS. GIBSON: And even to add to that, the FAA has been holding public hearings, too. They want to hear from you. And that's part of the reason why we are here talking today because this is your opportunity to say what you like, what you don't like, what you think works better. And the FAA wants to hear from you because we have to work together to make it work. If you have comments, now is the time to share in this setting. But also as Chellie said, ACI has a business diversity group that is very active in addition to AMAC and AAAE. So, plug into all of those things to have your concerns heard. MR. KEVIN WEEDEN: I want to mention before you ask your question AUDIENCE MEMBER: I am an engineer. I may not be in the right part as far as this subject is concerned, might be separate seminar or lecture. As engineers, what happens to other services in the Airport like consulting, engineering and construction, anything, buildings? How does that work? Is that part of this? MS. CAMERON: Just kind of a brief overview of all of our diversity programs. We actually administer three programs at the Airport. There is the Airport Concession Disadvantaged Business Enterprise Program. That is what we are talking about today. It is mostly concessions. That's a federal program. We have a second federal program that we administer which is just plain DBE Program, Disadvantaged Business Enterprise program. That program applies --the Concession Program applies those goals and the counting and all of those rules apply just to concessions. The DBE Program applies to all contracts that the Airport lets that carry any federal, meaning FAA, grant money. So, we receive a lot of federal grant money for airfield work. You will generally see a lot of these federal DBE goals being carried and reflected on work for engineering services for the design of a runway extension, for taxiway work, for anything that we would receive federal grant money for. The third program that we administer, I m sorry, I know this is a little bit confusing --is for everything else. So if it's an engineering or construction iv

13 contract that doesn t have federal grant money and it's not a concession contract, it falls under the City s Diversity Program that is administered by the Office of Economic Opportunity. And they have a separate goal setting process where they set the goals. Actually, we do it with ours too. It ranges. But they set it contract by contract based on, again, their assessment of what the capacity is in the region and what the work is that s out there. So, really three different programs that we kind of --it depends on the contract and where the type of contract and where the funding comes from. But that's a very brief overview of the three programs that we administer in our office. Does that help? AUDIENCE MEMBER: Thank you. MS. CAMERON: If you want to talk more, talk to any of our staff. We can get into a lot of details with you if you'd like. MR. KEVIN WEEDEN: I want to go back to that question about personal net worth just for your information s sake. Personal net worth for an ACDBE is 1.3 million excluding the value of your primary residence and assets in the business that you are trying to get certified. Obviously, that actually was just changed a couple years ago. It used to be 750,000. Had been that way for, I don't know, 20 years. But that --you know, in terms of having that discussion with the different advocacy groups, if you feel that number was too low and you have input about that calculation, certainly give your input to the FAA. MS. CAMERON: Just a side note --Kevin, I m sorry. But any input that we receive here as part of this meeting today or anything that you send into us afterwards that has to do with this goalsetting process, we officially compile all those comments. And it gets submitted to the FAA as part of our package. Even if you don't want to get involved in the industry groups or anything like that, if you do have a formal comment, submit it to us. We got your stuff down today that you are saying. If you want to think about it, maybe form your thoughts and send something in, please, send it into us. We will incorporate that as part of the goal-setting process for this particular goal. MR. KEVIN WEEDEN: Any other questions? Thoughts? Comments? Frustrations? If there are none, I thank you for your time. Feel free to come talk to myself, my dad as the consultants for the Airport and talking to the Airport staff that are here. Other than that, I thank you. (Presentation ends.) (Applause) MS. CAMERON: We will all be here for a couple minutes if you want to hang out and have questions. Again, on behalf of our CEO Mark Gale, we're really happy that you're here as part of this program. The Diversity Programs at the Airport are very important. It's something that we focus on a lot of time and attention on. And we want to make sure we get it right. We really do appreciate your participation. So thank you. v