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Getting Served: Legalities and Risks of Airport Contractual Agreements
Tuesday, March 12, 20192:00-3:30 PM ET
TRANSPORTATION RESEARCH BOARD
Purpose Discuss research from the Airport Cooperative Research Program (ACRP) Legal Research Digest 30: Contract Risk Management for Airport Agreements and Legal Research Digest 31: Preemption of Worker Retention and Labor Peace Agreements at Airports.
Learning ObjectivesAt the end of this webinar, you will be able to:
• Identify primary risks associated with common contracts used by airports of all sizes
• Identify key issues to consider when drafting or reviewing contractual provisions related to such risks
• Discuss the issues related to labor-harmony or labor-peace agreements• Describe labor laws and preemption relevant to airports and how to
identify and minimize risks
ACRP WebinarGetting Served — Legalities and Risks of Airport
Contractual Agreements
March 12, 2019
Assistant City Attorney, Aviation Department8 years of practice at CLT including 2 years as a legal intern Serves as a member of ACRP’s legal panel Oversees various contract agreements including goods and services, technology, concession agreements and leases.
Elizabeth SmithersCity of Charlotte/Charlotte Douglas International Airport
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Deadline!
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Lacey D. Corona, Nelson Mullins Broad and CasselPresenting
ACRP Legal Research Digest 30
Contract Risk Management for Airport Agreements
andEric T. Smith, Kaplan Kirsch Rockwell
Presenting ACRP Legal Research Digest 31
Preemption of Worker Retention and Labor Peace Agreements at Airports
Today’s Speakers
Airport Cooperative Legal Research Digest 30
CONTRACT RISK MANAGEMENT FOR AIRPORT AGREEMENTS
Lacey D. Corona, Esq.Nelson Mullins Broad and Cassel
Special Counsel to Orlando International Airport’s (OIA) on its $3.6 billion Capital Improvement Project (including new South Terminal)
General Construction Counsel to OIA, including day-to-day handling of construction, professional service, and maintenance and operational contracts
Peer Review Consultant for major U.S. airport related to $5 billion public-private partnership project
Airport Procurement Disputes and Litigation
Lacey D. CoronaTransportation & Infrastructure Specialist
2
8 TYPES OF CONTRACTS USED BY AIRPORTS OF ALL SIZES
RISKY BUSINESS
Professional Services
Construction
Repair/Maintenance
Tenant and User
Software/Information Technology
Airline Signatory
Ground Transportation
Vendor/Purchasing
3
PROFESSIONAL SERVICE AGREEMENTS
4
Risk: Indemnity
Methods to Mitigate Risk:
Broad indemnity and duty-to-defend language
X Avoid mutual indemnity
PROFESSIONAL SERVICE AGREEMENTS
5
Contractor AirportIndemnification
Sample Provision:A. Consultant hereby agrees to defend, indemnify, and hold
harmless City . . . against all liabilities, claims, judgments,suits, or demands for damages to persons or propertyarising out of, resulting from, or relating to the workperformed under this Agreement (“Claims”) . . . Thisindemnity shall be interpreted in the broadest possiblemanner to indemnify the City for any acts or omissions ofConsultant or its subcontractors.
. . .D. Insurance coverage requirements specified in this
Agreement shall in no way lessen or limit the liability ofthe Consultant under the terms of this indemnificationobligation.
PROFESSIONAL SERVICE AGREEMENTS
6
Risk: Termination
Methods to Mitigate Risk:
Owner right to terminate for cause and for convenience
Distinguish between all or part of the project
X Do not allow lost or anticipated profits on terminated work
PROFESSIONAL SERVICE AGREEMENTS
7
Sample Provision:
The Owner may terminate this Contract inwhole or in part at any time for itsconvenience.
. . .[T]he Contractor shall be compensated by theOwner for the Contractor's reasonable costsactually expended and profit earned on Workthat has been fully completed and acceptedby the Owner. There is no entitlement toanticipatory profits.
PROFESSIONAL SERVICE AGREEMENTS
8
CONSTRUCTION AGREEMENTS
9
Risk: Schedule ImpactsMethods to Mitigate Risk:
Liquidated damages for each day of delay
Limit contractor’s remedies
CONSTRUCTION AGREEMENTS
10
But Limit Indirect Impacts
Allow Relief from Schedule Impacts
Sample Provision:An extension of the Contract Time shall bethe Contractor’s sole and exclusive remedyfor any delay of any kind or nature, except tothe extent the delays were solely caused by(1) material acts or material omissions by theOwner . . . constituting active interference or(2) concealed or unknown conditions . . . Forthese delays, the Contractor is only entitledto the reasonable actual costs that arecaused directly and solely by the delay . . .
CONSTRUCTION AGREEMENTS
11
REPAIR / MAINTENANCEAGREEMENTS
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Risk: Dispute Resolution
Methods to Mitigate Risk:
Consider mandatory arbitration with expert for highly technical services
Require ongoing performance while dispute is pending
REPAIR AND MAINTENANCE AGREEMENTS
13
Sample Provision:
Unless otherwise agreed in writing, theContractor shall carry on the Work andmaintain its progress during any courtproceedings or arbitration, and theAuthority shall continue to makeundisputed payments to the Contractorin accordance with the ContractDocuments.
REPAIR AND MAINTENANCE AGREEMENTS
14
TENANT AND USER AGREEMENTS
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Risk: Remedies for Default
TENANT AND USER AGREEMENTS
Methods to Mitigate Risk:
Include clear “non-wavier” language
Airport’s exercise of remedy should not be exclusive of other remedies
16
Sample Provision:
Any efforts by City to mitigatedamages caused by Tenant’s breach ofthis Lease shall not constitute a waiverof City’s right to recover damageshereunder and shall not affect theright of City to indemnification . . .
TENANT AND USER AGREEMENTS
17
SOFTWARE / INFORMATION TECHNOLOGYAGREEMENTS
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Risk: System Downtime
SOFTWARE / IT AGREEMENTS
Methods to Mitigate Risk:
Include up-time guarantees and downtime penalties
Negotiate source code escrows
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Sample Provision:
Consultant hereby grants to City a license to use allsource code for the entire Software Program(“Source Code”) for the purposes described in thisAgreement. This Source Code will be placed in anagreed to escrow account with the City identifiedas beneficiary and be accessible to the City on theterms and conditions set forth in the EscrowAgreement . . . The Source Code shall be keptcurrent with the latest release of the SoftwareProgram in use by the City . . .
SOFTWARE / IT AGREEMENTS
20
AIRLINE SIGNATORYAGREEMENTS
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Risk: Airline Bankruptcy
AIRLINE SIGNATORY AGREEMENTS
Methods to Mitigate Risk:
Ensure any benefits to airline do not apply while in default
Require deposit of at least 3 months rent
22
Sample Provision:AIRLINE shall provide Authority on theEffective Date of this Agreement with acontract bond, irrevocable letter of creditor other similar security acceptable toAuthority (“Performance Security”) in anamount equal to the estimate of three (3)months’ rentals, fees and charges payableby AIRLINE . . . to guarantee the faithfulperformance by AIRLINE of its obligationsunder this Agreement and the payment ofall rentals, fees and charges due hereunder.
AIRLINE SIGNATORY AGREEMENTS
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GROUND TRANSPORTATIONAGREEMENTS
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Risks: Property Damage and Personal Injury
Methods to Mitigate Risks:
Require appropriate insurance coverage
Name the airport as an additional insured
GROUND TRANSPORTATION AGREEMENTS
25
Sample Provision:
Company, at its own cost and expense,shall obtain and maintain . . . thefollowing types of insurance naming theAuthority, the City and the members(including, but without limitation, allmembers of the governing board of theAuthority, the Orlando City Council andthe advisory committees of each),officers, agents and employees of eachas additional insured's.
GROUND TRANSPORTAION AGREEMENTS
26
VENDOR / PURCHASINGAGREEMENTS
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Risk: Performance
VENDOR / PURCHASING AGREEMENTS
Methods to Mitigate Risk:
Require performance bond or letter of credit
Consider requiring a bid bond
28
Sample Provision:
Contractor shall furnish to Authority aPerformance Bond . . . completed on theAuthority’s forms . . . in a penal sum equal toSeven Hundred Fifty Thousand Dollars($750,000.00).
VENDOR / PURCHASING AGREEMENTS
29
RISK MANAGEMENT
30
Contract Language
BondsInsurance
QUESTIONS?
31
Preemption of Worker-Retention and Labor Peace Agreements At Airports
A Brief Summary Of Select Issues and Practical Approaches
Eric T. Smith, Esq.Partner, Kaplan Kirsch & Rockwell, LLP
Washington, D.C.
ACRP Legal Research Digest 31
Partner, Kaplan Kirsch & Rockwell, LLP Practice 100% focused on airport law – narrow but very broad30+ Years in aviation 14 years labor attorneyAdvises airports on contracts ranging from concessions to airline use & lease agreements
Eric T. Smith, Esq.Principal Investigator
THOMAS W. ANDERSON, Metropolitan Airports Commission, Minneapolis, Minnesota;
DAVID BANNARD, Foley & Lardner LLP, Boston, Massachusetts;
JAY HINKEL, City of Wichita, Kansas;
MARCO B. KUNZ, Salt Lake City Department of Airports, Salt Lake City, Utah
ELAINE ROBERTS, Columbus Regional Airport Authority, Columbus, Ohio; and
E. LEE THOMSON, Clark County, Las Vegas, Nevada.
ACRP Project Committee 11-01 Members
11-01 CoverageIntroduction/OverviewFederal Labor Protection Laws, Preemption and Proprietary Rights ExceptionLabor Harmony Agreements and Worker Retention ProgramsApplicability to Airports. The Airport Sponsor – Sources of Risk and Potential ClaimsAppendix A, B and C
Preemption of Worker-Retention and Labor Peace Agreements At Airports
Cover all today??
Brief Overview of Topic and Coverage Of Session
Increase in initiatives to have airports require “labor peace” or “labor harmony” as part of contracts with on-airport businessesConcessions operations largest focusNational initiatives by SEIU and UNITE HereThings may not always be what they appear. The need for a well-informed senior staff, board, council, etc.Legal foundation Real-world examplesPractical implications
Preemption of Worker-Retention and Labor Peace Agreements At Airports
Going to move quickly
Why Is This An Issue ?
Push by multiple labor organizations to penetrate airports Certain tools used to expedite organization efforts Tools implemented via contractual provisions in agreements between businesses and airportAdvocacy/Pressure applied to elected officials and/or senior airport personnelFraught with legal and business risk
Who Should Be Concerned?Elected officials often do not fully appreciate legal and practical risksAirport executives face similar challenges but are also tasked with running airport, maintaining business relationships with on-airport businesses and airlines.
Why This Topic Is Relevant & To Whom This May Be Of Importance
Railway Labor Act (RLA)National Labor Relations Act (NLRA)
Obligatory Legal Baseline Coverage
Focus upon NLRAAppropriate Unit Showing of Interest Petition for ElectionElectionsIndividual Employee Rights
Union Organizing – The (Very) Basics
Card CheckNeutralityRelationship to Labor HarmonyShowing of Interest Petition for ElectionElections
Union Organizing – The (Very) Basics (continued)
Concessions ModelsChallenges FacedAirport ownership/operationUse of Contractual Provisions
How Airports Become A Focal Point
Labor Harmony Implementation – Practical Reality Employee Rights Conflict?
Does requirement have adverse impact upon federally-protected rights?Proprietor Rights & Its Limits
The Core Legal Issue – Preemption
Book vs. Practical Definition
Proactive EducationResponding to Inquiries Contractor ConcernsNegotiating ParametersImplementation Tricky, complex and an art
Handling Issues
Easy Reference Materials Within The Digest
What’s Allowed, What Should The Airport Do, What Can’t The Airport Do? Appendix A
Main headers
Item number one Item number two Item number three Item number four
Implementation of a Labor Harmony Provision –Appendix B
Potential Claims –Appendix C
Eric T. SmithKaplan Kirsch & Rockwell, LLP
FOR ADDITIONAL INFORMATION
ACRP is an Industry–Driven Program
Managed by TRB and sponsored by the Federal Aviation Administration (FAA).Seeks out the latest issues facing the airport industry.Conducts research to find solutions.Publishes and disseminates research results through free publications and webinars.
Other Ways to Participate
Become an Ambassador. Ambassadors represent ACRP at events and conferences across the country!
Sponsor or become an ACRP Champion. The champion program is designed to help early- to mid-career, young professionals grow and excel within the airport industry.
Visit ACRP’s Impacts on Practice webpage to submit leads on how ACRP’s research is being applied at any airport.
Report 33: Guidebook for Developing and Managing Airport Contracts
Report 36: Airport/Airline Agreements—Practices and Characteristics
Report 47: Guidebook for Developing and Leasing Airport Property
Report 54: Resource Manual for Airport In-Terminal Concessions
Report 87: Procuring and Managing Professional Services for Airports
Synthesis 30: Airport Insurance Coverage and Risk Management Practices
Additional ACRP Publications Available on Today’s Topic
March 20Energetic Value — The Design and Economics of
Microgrids at Airports
April 18Taking Preparedness Seriously — Emergency
Exercises for Any Airport
May 8Priming the Pump — Cleaner Approaches to
Airport Ground Transportation
Upcoming ACRP Webinars
Today’s Participants• Elizabeth Smithers, City of Charlotte – Charlotte Douglas
International Airport, [email protected]
• Lacey Corona, Nelson Mullins Broad and Cassel, [email protected]
• Eric Smith, Kaplan Kirsch & Rockwell LLP, [email protected]
Panelists Presentations
http://onlinepubs.trb.org/onlinepubs/webinars/190312.pdf
After the webinar, you will receive a follow-up email containing a link to the recording
