28th Annual Airport Business Diversity Conference
Thank you, Mamie (Mallory) for that kind introduction. It’s an honor to join you today to talk about the importance of diversity and the importance of making sure that business opportunities at our airports are open to everyone.
I have a very personal understanding and a great appreciation for the initiative that entrepreneurs take. I also understand the challenges that small businesses face.
My dad ran a small business in Riverside, California – my hometown. He refinished furniture and restored antiques.
Prior to this, he had worked at a furniture store, repairing nicks and dings on the merchandise. He knew how to clean things up and make them shine.
After several years, he made the decision to leave and go into business for himself. It was a big deal in our family when he quit the job at the store.
There is inherent risk in opportunity, but he made the move. And although he faced many challenges as a small business owner, it was worth it. He put my three sisters and me through college with this business.
So, by watching my dad run a small business, I have a good feel for the difficulties that small businesses face and the rewards that come with entrepreneurship.
In the aviation industry, small businesses and new businesses must compete against large and established companies.
The Disadvantaged Business Enterprise program is designed to make sure there is equal access to the business opportunities at all of America’s airports.
The FAA distributes more than $3 billion in grants each year for airport improvements. This money is used for runway and taxiway improvements, terminals and roads, and environmental work and noise mitigation.
The FAA is responsible for making sure that airports follow certain rules that ensure that all types of firms have the chance to work in airports across the country.
We applaud the success of the many hundreds of airports that have received these grants and the positive impact their contracts have on small and disadvantaged businesses. Many of these businesses are thriving and that is encouraging news. As you know, small businesses are engines that drive the economy and create jobs.
Nearly a quarter of the revenue generated by the food, beverage, news and gift concessions in airports comes from businesses owned by women and minorities. These businesses generated more than $1.5 billion in sales last year. That’s a great accomplishment.
Disadvantaged businesses also generated $168 million in airport car rental concessions last year.
And nearly 2,000 DBE companies worked on airport construction projects across the country last year. Their contracts totaled $424 million.
These numbers show that minority and women-owned businesses are gaining access to all parts of the airport and the many business opportunities in the terminals and on the tarmac. We recognize that there is room for improvement and that more opportunities need to be opened to more businesses.
We are working on proposed changes to the Disadvantaged Business Enterprise program to continue to foster the participation of small businesses in airports and to ensure a fair and level playing field for everyone.
We want to make the rules for airport concessions parallel with rules for airport construction contracts where appropriate.
To that end, I am happy to share that Secretary LaHood has signed a final rule increasing the cap on personal net worth for airport concession DBEs. We are increasing the limit for the owners of airport concessions from $750,000 to $1.32 million. As you know, this increase is already effective for the contracting program.
This cap for concessionaires has not been changed in more than 20 years, so we recognize the importance of this change to the DBE community.
Another important item for the DBE community is FAA’s reauthorization bill. As you know,Congress has passed, and the President has signed, a long-term FAA reauthorization that has put an end to four-and-half-years of stop-gap extensions. This allows for much better long range planning.
The reauthorization specifically states that there is a compelling need for the continuation of the Airport Disadvantaged Business Enterprise program. We still have work to do in leveling the playing field for women and minority owned businesses in aviation. That’s why thework that AMAC does along with the Department of Transportation and the FAA’s legal and civil rights offices is so very important.
The reauthorization includes a mandatory training requirement for people involved in the certification of DBE businesses. We agree that this effort will certainly enhance the current program, and we’re working hard to achieve thisobjective.
We’re coordinating with our sister agencies at DOT – the Federal Transit Administration and the Federal Highway Administration –because this certification training requirement affects all three agencies. While there were no resources included in the reauthorization to create this training program, we are working to adhere to the deadline of early next year for curriculum development and a training schedule.
The reauthorization also calls for a yearly report over the next three years on the number of new DBE businesses that participate in the program. We encourage small businesses to become certified, and for airports to remove barriers so that new businesses and under-utilized businesses can compete.
The FAA looks forward to continuing to work with AMAC and other stakeholders, not only on the items in the reauthorization, but to improve all aspects of the airport DBE program.
In fact, the FAA and AMAC have a strong partnership and history of working together. We listened to your concerns over the content of the forms for various aspects of the DBE program. We are proposing some improvements to clarify guidance and make the forms easier to understand.
In the last few years, we have seen tremendous activity in terms of regulations, guidance, and new program areas related to DBE.
We are certainly happy to see growth and progress in our DBE programs, but let me acknowledge that it also brings new challenges.
Growth in the program brings increased oversight and monitoring requirements and responsibilities in the areas of airport accountability, training, and the prevention of fraud, waste, and abuse.
We conduct compliance reviews, of course. And we’re also developing a best practices tool to help airports implement better monitoring practices in their own DBE programs.
Let me stress that the FAA takes these responsibilities very seriously. We have demonstrated our commitment in the actions we are taking to address allegations of fraud.
In one particularly notable case this year, the Department of Justice alleged that a contractor used materials and services from a company that was supposed to be part of the DBE program. But the company was nothing more than a pass-through.
The firm in question agreed to pay $500,000 to resolve allegations that it knowingly submitted false claims related to the DBE program.
As part of the settlement, the contractor entered into a separate agreement with the FAA to use a contractor for DBE monitoring services to ensure future compliance with the program.
We are accountable to the nation’s taxpayers, and the success and viability of the program depends on both its integrity and its credibility.
The FAA works very hard each and every day so that each of you – whether you are doing business at an airport or with the FAA – does not experience discrimination.
It is our policy and, more importantly, our practice, to find and take actions that create an environment in which everyone can make a meaningful contribution to the aviation industry and experience safe travel.
At the FAA, respect for diversity and civil rights is part of our Standard Operating Procedure. While we understand it is our legal responsibility, more fundamentally, it is the right thing to do – for individuals, for the agency, and for our country. We can’t afford to overlook the talents of even a single individual or the rights of those doing business at our airports or with the federal government. Thank you for your hard work in helping us meet our common goals. I wish you a very successful conference.