American DBE Magazine

The COVID-19 Pandemic’s Impact on the ACDBE Program – Moving from Surviving to Thriving

By Michael Freilich

This article will discuss the recent struggles in the Airport Concession Disadvantaged Business Enterprise (ACDBE) Program during the pandemic, tips for success, and next steps to take, moving forward.

Most readers of American DBE Magazine are familiar with the U.S. Department of Transportation’s (USDOT) DBE Program (which levels the playing field for federally assisted highway, transit and airport contracts), but how does the ACDBE program differ? The ACDBE Program applies only to airports and primarily affects businesses that operate in airport terminals, such as restaurants, shops and car rental agencies.

The ACDBE community has suffered great economic devastation, created by COVID-19. Air travel dropped dramatically, and consequently, airport concessions revenue dipped from 60% to 90%, forcing the closure of many locations. Nevertheless, in reaching out to representatives of various parties that comprise the ACDBE Program, some effective strategies and tips emerged.

Tip 1 Flexibility

Recent direction from the Federal Aviation Administration (FAA) Offices of Airports and Civil Rights provides pandemic related guidance. Former FAA Airports leadership stated at a May 2020 Airport Restaurant and Retail Association meeting that the clear intent of Congress was that CARES Act funds should free up cash for airports so that, at least in part, they can ensure that their various stakeholders are able to get through the current economic downturn.

Obtaining funding is often difficult for ACDBEs. Existing FAA Civil Rights leadership stated at a September 2020 Airports Council International (ACI) Business Diversity Subcommittee meeting that an airport sponsor may make a loan to a concessionaire (including an ACDBE) that is a tenant on the airport if they meet certain conditions. The FAA also has indicated flexibility in administering the DBE/ACDBE programs regarding termination and substitution.

Tip 2 Collaboration

Ricky D. Smith is the Executive Director of the Maryland Aviation Administration, including the leadership for Baltimore/ Washington International (BWI) Thurgood Marshall Airport. Smith’s view is that service providers need to be ready to provide services and the airport needs to be able to address its own finances, while at the same time helping concessionaires minimize their losses. This takes ongoing communication and honesty. One thing that worked at BWI was to work with concessionaires to allow enormous flexibility with their operating hours. Another general strategy has been to remind individuals that this bad situation is temporary, and to avoid making mistakes thinking that the downturn is permanent. Smith believes that as business returns to normal, the previous demand and workforce will be there.

Tip 3 Advocacy

Smith also serves as the Chair of the Airport Minority Advisory Council (AMAC), a trade association that, among other things, advances the full participation of minorities and women in contracting opportunities throughout the aviation industry. Helpful guidance was knowing that the federal government would provide relief; and also being able to draw on a vast pool of talent within AMAC’s membership. AMAC, in partnership with other trade associations, was able to influence policies to maximize benefits to ACDBEs in part by ensuring that the government understood the needs of the ACDBE community. Smith said, “You have to trust each other that everyone wants to do the right thing.” Airports, the FAA, concessionaires, ACDBEs and others are all a part of the same interrelated and interdependent ecosystem, and therefore, for one to do well, all must do well.

Tip 4 Dedication

Ronald Gomes is the Vice President of Strategic Alliances for HMSHost, a concessionaire that operates restaurants in over 120 airports worldwide. Gomes believes that the success of the ACDBE Program is closely tied to dedication by all the parties involved – the concessionaire and ACDBE partner, as well as the airport itself. He expressed that the airport “has a clear obligation to create a viable ACDBE marketplace.” So, in the COVID-19 environment, when airports are receiving substantial federal relief funds, they should offer financial solutions such as rent waivers where appropriate to at least partially offset concessionaires’ mounting operating losses.

Tip 5 Resilience

Chuck Covington is the CEO of People’s Transit, which provides ground transportation and paratransit services for airports, cities and counties across the country. Existing contract models did not anticipate reduced passenger contributions, or the associated additional costs for things such as required cleaning and disinfection protocols and resultant loss of productivity. Part of his success in weathering the economic downturn was a result of various types of contracts, as well as geographic diversity. Had he kept his original model of servicing one major client, he would have gone out of business. The variety of contracts also meant that some were considered essential (such as shuttle service to medical appointments), even during a pandemic. He recommends that those considering opening a business “like what you are doing, but don’t just do what you like” – because what worked yesterday or today may not work tomorrow.

Help is on the Way

Some good news is that Congress has been providing ongoing relief. In March 2020, the CARES ACT provided $10 billion in funds for airports, but it did not specify use for rent relief. A second relief bill in December 2020 provided $2 billion in funds for airports, including $200 million for use for rent relief. FAA guidance specified that airports must prioritize relief from rent to minority-owned businesses. The most recent $1.9 trillion American Rescue Plan Act, passed in March 2021, included $8 billion in assistance to airports. There is $800 million in rent relief for airport tenants: $160 million for large airport concessions and $640 million for small airport concessions (including joint ventures).

Much like there is hope with the ongoing COVID-19 vaccinations, the injection of funds from the most recent stimulus bill – along with the recovering economy in general – should facilitate a gradual healing of the ACDBE Program.

The ACDBE Program is more than just a set of requirements, it is also a community; and a community requires mutual trust. With flexibility, collaboration, advocacy, dedication and resilience, we can get through this together. Finally, don’t forget that professional networks can be a great resource, so it’s important to reach out for help from peers, the FAA, USDOT, trade associations and consultants.

Michael Freilich has 30 years of Federal civil rights experience, most recently as a senior national-level leader overseeing all matters of airport civil rights compliance. He is now the owner of Michael Freilich Consulting (MichaelFreilichConsulting.com), offering assistance to clients on DBE/ACDBE, disability, and other civil rights requirements. He can be reached at MichaelFreilichConsulting@gmail.com or (703) 501-2125.