PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      7b 
STAFF BRIEFING 
Date of Meeting      June 23, 2016 
DATE:    May 18, 2015 
TO:     Ted Fick, Chief Executive Officer 
FROM:    Deanna Zachrisson, Business Leader, Airport Dining and Retail 
Luis Navarro, Director, Office of Social Responsibility 
SUBJECT:  Port of Seattle Airport Concessions Disadvantaged Business Enterprise
(ACDBE) and Disadvantaged Business Enterprise (DBE) Program FAA
Compliance Review Update 

SYNOPSIS 
This briefing will summarize the recent favorable outcome of a compliance review by
the Federal Aviation Administration (FAA) of the ACDBE and DBE programs. 
Under the United States Department of Transportation (US DOT) 49 CFR (Code of
Federal Regulations) Part 23 and Part 26, the FAA Office of Civil Rights is responsible
for ensuring compliance by grant recipients, such as the Port, with both the ACDBE
and DBE programs, and the programs are subject to regularly scheduled as well as
random audits.  The ACDBE program is specific to concession contracts in airport
commercial businesses such as food service and retail, and the DBE program
specifically concerns federally assisted airport projects in construction and consulting
services. While the two programs are very different due to the nature of the businesses
they encompass, they share many of the same regulatory requirements. 
In the final audit summary, the FAA found that both the ACDBE and DBE programs
are managed in accordance with the spirit and intent of the program and compliant with
federal regulations. In particular, the FAA auditors commended the Port for having
"with innovation restructured its (airport) concessions program overall and its unit
spaces to be more attractive to small business firms, including ACDBEs." The ACDBE
program has been subject to examination and audit on numerous occasions in the last
decade, and in each instance has been praised for its efforts of inclusion and attention to
compliance. 
BACKGROUND 
In January 2015, the FAA notified the Port of its intent to conduct a regular compliance
review of the ACDBE and DBE programs.  For the ACDBE program, FAA staff
required the Port to provide advance copies of a variety of documents such as leases,
sales reports, site visit reports, certification documents and participation reporting. For
the DBE program, FAA auditors also required supporting documentation, including the 

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 2 of 5 
Port's approved three-year DBE program plan and contract-related forms.  For both
programs, the FAA required the completion of a comprehensive questionnaire about
contracting and management practices by Port staff. In the case of the DBE portion,
OSR worked closely with the Central Procurement Office (CPO) to ensure full
responses to the FAA. In mid-March, three FAA auditors devoted a week to onsite
review, including two full days at the Airport. Port staff also participated with the FAA
auditors in a visit to Washington State's certifying entity, the Olympia Office of
Minority and Women Owned Business Enterprises (OMWBE) to examine DBE and
ACDBE certification practices. The results of the review were received on April 24,
2015 and are detailed separately below for the respective programs. The results of the
review were presented to the Port Audit Committee on May 7, 2015. 
ACDBE Program 
Currently, gross sales generated by ACDBE businesses is 22% of total program gross
sales for fiscal year 2013-14, slightly above its 2014-2017 goal of 21.2%. The statute 
authorizing the ACDBE program established a national aspirational goal of 10% for
airport concessions. ACDBE programs are required to use race-neutral measures in the
first instance to achieve its goal participation. 
In addition to reviews of documentation prior to arrival, Port staff met with the
auditors, responded to their questions and provided other supporting documents. The
auditors visited ACDBE businesses throughout the airport and interviewed managers
and employees.  The auditors also met with groups of ACDBE and non-ACDBE
operators. 
In the final compliance report (Exhibit A), the auditors noted that ACDBEs "are happy
to be doing business at Sea-Tac and appreciate the support provided to small businesses 
and the spirit of customer service it promotes." 
The audit offered technical assistance in three areas: 
1.  The FAA requested that the Port's new CEO Ted Fick replace Tay Yoshitani as
the signatory on the program documents. This task has been completed and
updated with the FAA. 
2.  The two exclusive contracts for Airport advertising and luggage carts should
have waivers on-file for ACDBE participation. The Port submitted a waiver
request and the FAA notified the Port of its approval. 
3.  There is currently no ACDBE participation in the rental car business at the
Airport. This is a common occurrence at airports, and in the case of Sea-Tac, is
a result of a lack of certified ACDBEs able to participate.  Auditors suggested
that the Port should work with OMWBE to encourage certification among firms
that could serve the rental car business.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 3 of 5 
The new leadership at OMWBE already has improved the collaboration with the Port in
the last three years and they have participated in numerous joint meetings and events to
provide  information about their certification process.  Knowledge and resource
constraints still limit their ability to significantly increase certifications. 
The FAA noted the recent written complaints they have received about the Airport's
ACDBE program, but did not find this to be a compliance concern. The FAA
representatives indicated a willingness to return to Seattle in the future to meet with
Port Commission and staff to provide an overview of the ACDBE program and its
goals. 
ACDBE Program Objectives 
Historically, airport concessions in U.S. airports have been dominated by a few large
companies operating under monopoly or near-monopoly contracts.  As a result, the
FAA enacted the ACDBE program in March 1987 in order to help small, minorityowned
businesses gain access to opportunities in airports. One of the key objectives of
the program is: "to create a level playing field on which ACDBEs can compete fairly
for opportunities for concessions."  The program is designed to mitigate the effects of
discrimination, and at the same time is intended to promote  the ideals of 
entrepreneurship and open competition.  The intent of the program is to provide the
opportunity for ACDBEs to become successful and grow to be able to compete
successfully against larger companies and ultimately graduate from the program to
make way for new ACDBE companies. 
In the era when the program first began, most airport contracts were still controlled by
large companies. S o, the most common opportunities for ACDBEs were created by 
large companies  that were required  by airports  to create ACDBE  opportunities.
Typically, a large prime concessionaire company would award non-competitive
opportunities to minority-owned businesses under the condition that they could become
ACDBE-certified.  Participation also could be achieved similarly in a joint venture
arrangement. Large prime concessionaires that operate multiple units would only offer
these opportunities to those able to be certified as ACDBEs as a means of meeting a
contractual obligation. 
For this reason, it is not uncommon that there are few certified ACDBEs beyond those
actually already operating in airports. Of the 25 firms currently certified in Washington
as ACDBEs in food service, retail and passenger services, 15 already operate at Sea-
Tac.  There are only 38 certified ACDBEs of any kind in the State of Washington
(Exhibit B). In the last year, as a result of increased outreach and partnership with 
OMWBE, the number of certified ACDBEs within food service, retail and passenger
services has increased slightly.  Efforts continue to broaden the pool of available
ACDBE operators as both potential lessees and also as suppliers to other businesses. 
In recent years, the trend in ACDBE participation has gone from subleasing
opportunities to joint ventures and direct participation where the airport engages in

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 4 of 5 
leases directly with the disadvantaged businesses. When the Port executed its last
generation of leases with large operators in 2003, the Airport's ACDBE participation,
like other airports, consisted of subtenants and joint venture partners with the large
prime concessionaires.  As the Airport has continued developing its hybrid leasing
model (a management model that combines large prime concessionaires with multiple
units with smaller operators of single or few units), the Port has added a number of 
ACDBEs holding leases directly with the Port.  Today, many more airports offer
contract packages for a small number of locations, termed unbundling, an approach
more suited for ACDBEs with limited capital capacity. 
Previous FAA Audits 
Since 2006, several examinations and audits have taken place, detailed below: 
2006-2008 Part 16 Discrimination Complaint 
Beginning in 2006, the FAA undertook a comprehensive examination of the Airport's
ACDBE program as the result of a Part 16 discrimination complaint by an ACDBE
subtenant to the Airport's largest food service operator. The tenant alleged racial
discrimination in the management of the concessions program, and in particular, the
leasing of units in the Central Terminal.  After investigation and evaluation, the FAA
dismissed the complaint in 2008. 
2010 Joint Venture Audit 
The FAA issued new guidance on joint ventures in 2009 and conducted nationwide
audits of ACDBE joint ventures in airports.  Sea-Tac was found to be compliant with
existing guidelines and provided technical assistance to the Airport Management
Services LLC (dba Hudson) joint venture to restate elements of their joint venture
agreement to align with new FAA guidance. 
2012 Title VI Audit 
The ACDBE program was one focus of a broad Title VI Non-Discrimination audit of
49 CFR Part 21 for federally assisted airports. The process consisted of a review of the
Port's overall Title VI program as well as requests for advance documentation and
responses to auditor questions. The FAA auditors interviewed concessionaires that
currently are in contractual relationships and found "the consensus was that business
relationships are strong and that the Airport does a good job of notifying the business
community of opportunities." Furthermore, the audit found that the Airport "handles
all bids in a fair and equitable manner." The elements of the ACDBE program were
found to be in compliance. In addition, auditors praised Sea-Tac's on-going outreach
efforts to promote new opportunities in the dining and retail program. 
2014 Office of Inspector General 
As part of a congressional reauthorization bill, the DOT Office of the Inspector General
was tasked with the study of major airports' ACDBE programs in order to understand
why so few companies fulfill the objective of graduating from the program and creating

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
May 18, 2015 
Page 5 of 5 
new entrance opportunities for new ACDBEs. The audit found that the underlying
conditions of limited opportunities and infrequent turnover, access to capital for
investment, and a lack of familiarity with public sector contracting processes as major
barriers, as well as a tendency to award to already existing ACDBEs. Sea-Tac was
noted specifically for its successful efforts of unbundling of leases and direct leasing
with ACDBEs in order create more small and minority-owned business opportunities. 
DBE Program 
The Port has a DBE Program as approved by the FAA in June 2012. The program has
a three-year overall DBE participation goal of 5.44 percent calculated based on a
formula provided by the FAA utilizing a combination of past utilization on projects and
available DBEs in the market place. The Port currently manages the DBE program as a
'race neutral' program that encourages, but does not require DBE participation in
eligible projects, which is a significant factor in the current low level of participation by
DBEs. A new three-year DBE goal must be submitted to the FAA by August 1, 2015. 
The DBE program audit provided recommendations in three areas: 
1.  As with the ACDBE program, the FAA requested that the Port's new CEO Ted
Fick replace Tay Yoshitani as the signatory on the program documents. This
task was completed. 
2.  In order to possibly increase DBE participation on federally funded projects it is
recommended that the PORT works closely with the FAA's Regional DBE
Compliance Specialist in establishing a race-conscious DBE Program.  This
recommendation is under consideration. 
ATTACHMENTS TO THIS BRIEFING 
Exhibit A: 2015 FAA Compliance Review Report 
Exhibit B: Current Certified ACDBEs 
Exhibit C: POS and ACDBEs Handout 
Exhibit D: DBE Compliance Review presentation. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
May 7, 2015  Audit Committee Briefing