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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: September 8, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Transportation; Participation by Disadvantaged Business Enterprises in Department of Transportation Programs -- Airport Concessions

SOURCE: Federal Register, September 8, 2000, Vol. 65, No. 175, page 54454

AGENCIES: Department of Transportation (DOT)

ACTION: Supplemental Notice of Proposed Rulemaking (SNPRM)

SYNOPSIS: The DOT is seeking additional comments on revisions to its May 1997 proposal to revise the airport concessions portion of its disadvantaged business enterprises (DBE) program regulations.

EDITOR'S NOTE: Guidance on the DBE program, including application procedures, is at http://osdbuweb.dot.gov/business/dbe/index.html.

Recently, DOT and the Small Business Administration (SBA) created a reciprocal certification process in which DOT recognizes SBA-certified small disadvantaged businesses as eligible for its DBE program, and vice versa. For more on the process, see the May 3, 2000, FEDERAL CONTRACTS DISPATCH "Department of Transportation and Small Business Administration; Update on Reciprocal Disadvantaged Business Certifications."

DATES: Comments on the SNPRM should be submitted no later than October 23, 2000.

ADDRESSES: Send comments (in triplicate) to the Docket Clerk, Attn: Docket No. OST-97-2550, Department of Transportation, 400 7th Street, SW, Room PL401, Washington DC, 20590. Commenters may also submit their comments electronically. Instructions for electronic submission may be found at http://dms.dot.gov/submit/.

FOR MORE INFORMATION CONTACT: Laura Aguilar, Office of the Assistant General Counsel for Environmental, Civil Rights, and General Law, Department of Transportation, 400 Seventh Street, SW, Room 10102, Washington, DC 20590, 202-366-0365.

SUPPLEMENTAL INFORMATION: The DBE program is intended to provide contracting opportunities for small disadvantaged concerns in DOT's highway, mass transit, and airport financial assistance programs. The program was instituted in 1980 with the publication of Title 49 of the Code of Federal Regulations (CFR), Part 23, Participation by Minority Business Enterprises in Department of Transportation Programs.

Since 1980, many changes have been made to the DBE regulations, most of which were required by statute. As a result, the regulations became a patchwork, so a notice of proposed rulemaking (NPRM) was published in December 1992, and an SNPRM was published in October 1993.

In June 1995, the Supreme Court issued its Adarand Constructors, Inc. v. Pena decision, in which the court determined that race-conscious affirmative action programs are subject to strict judicial scrutiny. Therefore, DOT published another SNPRM in May 1997, and based on those comments issued a final rule on February 2, 1999, which removed all the regulations pertaining to the DOT-assisted contracting portion of the DBE program from 49 CFR Part 23 and placed them in a new Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs. The remaining portion of Part 23 consisted of the rules pertaining to the separate DBE program for airport concessions, so Part 23 was retitled "Participation by Disadvantaged Business Enterprises in Airport Concessions". This separation was performed because the airport concessions industry differs in a number of respects from the industries involved in DOT-assisted contracting, whether in airports, transit, or highways.

Concession agreements generally involve high rent payments to the airport, often computed as a percentage of the concessionaire's annual gross receipts or a fixed amount, whichever is greater. Larger concessionaires are often required to make a substantial investment in a leased facility, which may be amortized over a period exceeding five years. In some instances, airports grant a firm the exclusive privilege to provide a particular type of concession, such as food and beverage services, to the entire airport. However, many provisions of the DBE program apply equally to airport concessions and the DOT-assisted contracting program currently in 49 CFR Part 26. Therefore, because three years have elapsed since the 1997 SNPRM and DOT has decided to revise the remainder of 49 CFR Part 23 and transfer it to 49 CFR Part 26 as Subpart G, DBE Participation in Airport Concessions, DOT is seeking additional comments.

The most significant changes in this SNPRM are:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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