Welcome ACDBE Disparity Study Meeting
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- Linda Adelia West
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1 Welcome ACDBE Disparity Study Meeting This meeting will only address Airport Concessions For SBE program information, contact the Equal Opportunity Department at Review ACDBE Disparity Study: and business/disparitystudy.html
2 ACDBE Meeting Agenda Exstare Federal Sevices, LLC Nancy West, Managing Member Phoenix Sky Harbor International Airport Paul Blue, Assistant Aviation Director City of Phoenix Equal Opportunity Department Lionel Lyons, Equal Opportunity Director Questions will be taken following all presentations
3 Study Results, Findings and Recommendations Presented by Exstare Federal Services Group, LLC June 2010
4 Disparity Study Team Exstare Federal Services Group, LLC Alexandria, Virginia based Disadvantaged Business Enterprise specializing in Federal ACDBE/DBE plans, analytical studies and program analysis Over 25 years of hands on experience in disadvantaged business enterprise regulatory policy and analysis Nancy K. West, Managing Member Overall study development Renne Sloan Holtzman Sakai LLP and Rosales Law Partners LLP; HNTB Corporation Mara E. Rosales, Special Counsel at Renne Sloan/General Partner at Rosales Legal, regulatory and constitutional analysis Aviation financial, economic, and statistical expertise
5 Purpose of the Disparity Study Determine if Airport Concession Disadvantaged Business Enterprises (ACDBEs) have equal business opportunities at Sky Harbor Determine concessionaire market area(s) and availability of ready, willing and able firms Determine race neutral and/or race conscious measures for the City s ACDBE program Make recommendations to the City for administering its ACDBE program
6 Scope of the Study Retail Concessions Study Period: FFYs Food Service Concessions Study Period: FFYs All Other Concessions Study Period: FFYs
7 Study Approach Policy Analyses Statistical Analyses Anecdotal Analyses Economic Analyses Legal Analyses Analyses of Other Relevant Evidence
8 Overview of Study Results The City has done a good job implementing its concessions procurement and ACDBE program policies The City has not received formal complaints of discrimination The City s ACDBE participation goals were met and/or exceeded at Sky Harbor throughout the Study Period
9 Overview of Study Results (cont.) Some City policies and business practices also common at other airports are creating unintentional barriers for ACDBEs and other small businesses City outreach and advertising efforts are commendable, and need enhancements to reach the national concessionaire markets and the lending community Anecdotal data described various concern about: Discrimination The proposal evaluation process Outreach efforts Proposal costs Perceived barriers to competing, winning or participating in Sky Harbor concession opportunities
10 Study Results Food Service Concessions FFY
11 ACDBE Utilization Food Service Concessions Sky Harbor met and/or exceeded its race conscious ACDBE participation goals for food service concessions in every year during the Study Period with ACDBE participation as subconcessionaires (except for one ACDBE prime).
12 ACDBE Utilization Food Service Concessions FFYs Total Gross Sales for All Food and Beverage Concessionaires FFY Total Sales Non-ACDBE Total Sales Non-ACDBE % of Total Sales (rounded) ACDBE Total Sales ACDBE % of Total Sales (rounded) ACDBE Goal 2003 $74,803,675 $64,784,386 87% $10,019,289 13% 10% 2004 $82,466,402 $71,933,701 87% $10,532,701 13% 10% 2005 $87,952,708 $75,209,033 86% $12,743,675 14% 10% 2006 $94,909,437 $79,919,965 84% $14,989,472 16% 15% 2007 $105,864,558 $90,438,054 85% $15,426,505 15% 15% 2008 $108,370,726 $88,441,176 82% $19,929,550 18% 15% TOTALS $554,367,506 $470,726,315 85% $83,641,192 15%
13 Utilization Analysis Food Service Concessions Food service concessionaire market area: Maricopa County FFYs National FFYs , and currently The majority of ACDBE subconcessionaires utilized by prime concessionaires for new opportunities were located in Maricopa County when a national market area had been established ACDBEs could not operate as prime concessionaires at Sky Harbor during the Study Period
14 Study Results Retail Concessions FFYs
15 ACDBE Utilization Retail Concessions Sky Harbor consistently met and exceeded its raceconscious ACDBE participation goals for retail concessions in every year during the Study Period with ACDBE participation as prime concessionaires and subconcessionaires.
16 ACDBE Utilization Retail Concessions FFYs Total Gross Sales for All Retail Concessionaires FFY Total Sales Non-ACDBE Total Sales Non-ACDBE % of Total Sales (rounded) ACDBE Total Sales ACDBE % of Total Sales (rounded) ACDBE Goal 2003 $46,519, 928 $17,623,850 38% $28,896,078 62% 10% 2004 $47,189,303 $17,892,388 38% $29,296,915 62% 10% 2005 $49,359,547 $19,818,817 40% $29,540,730 60% 10% 2006 $55,079,324 $23,627,341 43% $31,451,983 57% 27% 2007 $65,492,173 $30,309,548 46% $35,182,625 54% 27% TOTALS $263,640,275 $109,271,944 41% $154,368,331 59%
17 Utilization Analysis Retail Concessions Retail concessionaire market area: Maricopa County FFYs National FFYs , and currently The majority of ACDBE firms utilized by the City were located in Maricopa County, both when that was the market area and when the market area was national. ACDBEs could operate as prime retail concessionaires at Sky Harbor during the Study Period
18 Study Results
19 Market Area and Availability Analyses 351 seekers of food and beverage concessions business at Sky Harbor are located in 33 states 190 seekers of retail concessions business at Sky Harbor are located in 28 states Sky Harbor s food service and retail concessionaire markets are national
20 Study Results
21 Discrimination in the Marketplace Findings The City has made good faith attempts to remedy the effects of discrimination Congress found that discrimination continues to be a significant barrier for minority and woman owned businesses seeking to do business in the food service and retail concession markets An old boy network allows for large contractors with long standing relationships to airports to receive the financial benefit of most contracting opportunities Caucasian males comprise 72.7% of the prime food and beverage concessionaires and generated 100% of the prime food and beverage sales at Sky Harbor almost every year during the Study Period Sky Harbor s master concessionaire business model for food and beverage concessions, while common in the airport industry, presents barriers to ACDBE participation
22 Discrimination in the Marketplace Recommendations The City should concur with Congress s finding that discrimination continues to exist in the private sector against ACDBEs and DBEs Implement race neutral measures for future food and beverage concession opportunities to allow for participation of ACDBEs as prime food service concessionaires, either alone or in co ventures If the master concession business model for food service concessions can t be modified, adopt a small business enterprise component in the City s concessions contracting program
23 Discrimination in the Marketplace Recommendations (cont.) Include narrowly tailored and reasonably achievable race neutral measures for future retail concession opportunities in the City s ACDBE program Adopt provisions allowing the City to resort to race conscious remedial action if race neutral measures prove unsuccessful in providing ACDBEs equal opportunities
24 National Outreach Findings The City s national outreach and advertising efforts primarily yielded participation of minority and woman owned concessionaires locally based in Arizona. Numerous anecdotal accounts describe lack of awareness of opportunities as a serious barrier to ACDBE participation.
25 National Outreach Recommendations Educate the public on Sky Harbor s national concessionaire market Seek information from all firms in the market area to identify potential obstacles to ACDBE participation Develop and implement mandatory solicitation and contract provisions that incentivize large national operators to seek ACDBEs in the national concessionaire market Refine the City s ACDBE program to inform seekers of all types of concession opportunities Ensure that all small businesses are fully aware of their potential eligibility for ACDBE certification
26 Access to Capital Findings Discriminatory practices in the private sector have impacted aspects of the airport food service and retail concession industry, including the availability of credit and financing These aspects of discrimination pose serious barriers to ready, willing and able minority business owners and women business owners Businesses and community groups identified difficulty in obtaining capital as a primary obstacle Lenders often have limited knowledge of the terms and conditions a firm must meet to operate an airport concession
27 Access to Capital Recommendations Establish better communications with lenders Routinely invite lenders to participate in outreach events Engage the Community and Economic Development Department in outreach efforts, particularly to the lending community
28 National Brands and Franchises Findings National brands and franchisor/franchisee business relationships can present barriers to ACDBEs and other small businesses for various reasons: franchisors may have exclusive agreements with large prime operators; franchisors may not be equipped to support franchisees operating on airports; franchise fees, royalties and other requirements may be economically burdensome; and national brands in books and specialty retail may not franchise or be willing to partner with other businesses.
29 National Brands and Franchises Recommendation Monitor the effects of national brands and franchises on ACDBE and small business participation
30 Small Business Enterprise Findings Other small businesses share some of the obstacles faced by ACDBEs, such as access to prime concession opportunities Caucasian males represent 34.7% of the available subconcessionaires, but are not currently participating in Sky Harbor s food and beverage concessions
31 Small Business Enterprise Recommendations Develop and adopt small business enterprise policies, practices and procedures, a race neutral measure, for Sky Harbor s concession opportunities These policies could encourage or mandate that other small businesses may join certified ACDBEs in seeking prime concessionaire opportunities, resulting in ACDBEs having a more consistent and prominent presence in the prime concessionaire market
32 Goods and Services Findings The City does not appear to collect information about the types of goods and services non car rental concessionaires utilize. Every concessionaire at Sky Harbor knows the types of goods and services they need, the costs they incur, and the vendors from whom they procure goods and services Goods and services providers are viable candidates for ACDBE participation A number of City staff were not aware that goods and services that ACDBEs provide to airport concessionaires are subject to Part 23 requirements
33 Goods and Services Recommendations Obtain from Sky Harbor s current concessionaires information on their goods and services providers Utilize the City s existing database of ACDBEs, minority, women and other small goods and services providers as a source for potential vendors Develop and communicate the City s policies and procedures for concessionaires goods and services procurements City staff involved in the ACDBE program and in the solicitation and administration of concession agreements should, at a minimum, be made aware of Part 23 requirements
34 Goal Setting Findings We could not determine with certainty what percentage of the City s overall ACDBE race conscious goals were for food and beverage concessions and, separately, for retail concessions during the Study Period Goals for FFYs were primarily based on the USDOT s national 10% aspirational goal Goals for FFYs were based largely on new business opportunities
35 Goal Setting Recommendations Refine the City s approach to establishing ACDBE participation goals Continue to implement race neutral measures for ACDBE participation in Airport s Advertising, ATMs, Car Rental, Duty Free, Foreign Currency, Pay Phones, and Shoe Shine Concessions, and for Management Contracts until sufficient data can be accumulated and assessed
36 Questions and Answers Following All Presentations
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