Resource Manual for Airport In-Terminal Concessions (2011) / Chapter Skim
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10 Procurement
10 Procurement
Pages 155-172
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From page 155... ...
Following sound procurement practices can also help avoid protests and challenges to the procurement process. This chapter covers the following: • Concession procurement approaches • Requests for proposals -- the standard practice • Minimum qualifications • Typical elements required in proposals • Evaluation criteria • Financial evaluation • Advertising the RFP • Issuing the RFP • The preproposal conference • The evaluation process • Converting the proposal to a concession agreement • Streamlining the RFP • Concession workforce issues • Strategies for increasing local participation • Using technology to streamline the solicitation process • International concession contracting practices 10.1 Concession Procurement Approaches U.S.
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From page 156... ...
However, bidding to specifications is still used for some services, such as baggage carts and foreign currency exchange, and often for duty free privileges, where the airport operator's goals may be largely financial and service levels are customarily high. 10.1.2 Requests for Proposals Over time, as dissatisfaction with concession programs grew, airport operators shifted to the RFP process.
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From page 157... ...
10.1.3 Statements of Qualifications In some instances, a two-phased competitive selection process is used, in which a formal request for a Statement of Qualifications (SOQ) is issued to solicit information from potential proposers or bidders that will allow the airport operator to narrow the field of potential proposers or to ensure that only qualified firms compete in a competitive proposal process.
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From page 158... ...
The RFP process has, at most airports, replaced the two-envelope approach. 10.2 Requests for Proposals -- the Standard Practice The RFP is the standard practice for selecting concessionaires at airports worldwide.
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From page 159... ...
In the case of airports operated as a department of city, county, or state government, or by appointed dependent authorities of a larger unit of government, the airport operator's concession procurement policy is shaped by local and/or state law or ordinance. The typical sections of an RFP are shown in Table 10-1.
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From page 160... ...
Minimum qualifications can be helpful to potential proposers by discouraging unqualified proposers from spending time and money unnecessarily. 10.4 Typical Elements Required in Proposals Table 10-2 lists the typical elements required in proposals, which are discussed below.
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From page 161... ...
The design submittal typically includes the proposed layout of the space(s) with dimensions based on lease outline drawings included with the RFP; renderings of the concession exterior front; a narrative description of the design and how it meets the airport operator's design guidelines and supports the overall goals for the concession program; and, in some cases, printed versions of material boards for each unit.
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From page 162... ...
Table 10-3 shows the percentage of airports where weighted evaluation criteria are used, based on the surveys conducted for this research. Some airport operators use unweighted criteria, leaving it to the evaluation panel to select the best proposal based on its understanding of the needs of the airport operator and the contents of the RFP.
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From page 163... ...
Typically, proposers will make a financial offer based on a minimum annual guarantee, percentage rent, or a combination of the two. Some airport operators set the MAG and percentage rent and select the concessionaire based on other criteria.
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From page 164... ...
10.6.1 The "85% Rule" The risk of foregoing revenue from a MAG-based proposal is reduced when a MAG-adjustment provision is included in the concession agreement. A common practice used throughout the airport industry is to reset the MAG each year based on 85% of the prior year's total payments to the airport enterprise (MAG, percentage rent, or both)
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From page 165... ...
have websites and newsletters where airports can list their business opportunities and solicitations. Some airport operators also publish notices in Airport Revenue News and other industry publications.
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From page 166... ...
10.9 The Preproposal Conference Preproposal conferences provide airport staff with the opportunity to explain the RFP, the form of concession agreement, the design guidelines, airport operating characteristics, and current performance, as well as provide other information that a proposer will need to submit a fully responsive proposal. Even if most participants are familiar with this information, it is important that all potential proposers fully understand the nature of the concession opportunity.
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From page 167... ...
Therefore, members of evaluation panels should be appointed based on their ability to devote the time necessary for a fair evaluation. Given the extensive time and cost requirements borne by proposers, airport operators owe them a fair and comprehensive evaluation.
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From page 168... ...
Proposers will want clarity on the RFP and concession agreement. Not all airport operators use the same practices and language in their documents, so proposers will ask for clarification if they are unsure about the meaning.
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From page 169... ...
Interviews can be kept simple and focused on the essential questions and clarifications arising from review of the written proposals. 10.13 Concession Workforce Issues Current concession employees can be an influential stakeholder group in the concession procurement process.
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From page 170... ...
Airport concession managers should understand how living wage policies and other local conditions, when combined with percentage rents, minimum annual guarantees, and other occupancy costs, affect concessionaires. High labor costs may be a factor that discourages companies from submitting concession proposals or reduces financial offers in proposals; concepts that have higher labor cost requirements may not be practical or feasible as an in-terminal concession.
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From page 171... ...
It can also be useful to hold a networking session in conjunction with the outreach meeting, as this allows local businesses to meet potential business partners, current concessionaires, and others with an interest in the concession program. 10.15 Using Technology to Streamline the Solicitation Process Technology has the potential to make the procurement process easier for all concerned.
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From page 172... ...
10.16 International Concession Contracting Practices The operators of airports outside the United States face issues similar to those of their U.S. counterparts in the solicitation and award of concession agreements.
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