REQUEST FOR PROPOSALS FOR THE MARKETING, LEASING, AND MANAGEMENT

REQUEST FOR PROPOSALS

FOR THE

MARKETING, LEASING, AND MANAGEMENT OF THEFOOD SERVICE AND RETAIL CONCESSIONS

AT

RONALD REAGAN WASHINGTON NATIONAL AIRPORT AND

WASHINGTON DULLES INTERNATIONAL AIRPORT

RFP NO. MWAA-4-12-C002

2012

Request for Proposals MWAA-4-12-C002Page i of iii

Table of Contents

SECTION I. PURPOSE .................................................................................................. 1�

SECTION II. RESPONSIBILITIES ................................................................................. 4�

A.� Scope of Operations ............................................................................................................. 4�

B.� Contract Objectives ............................................................................................................. 4�

C.� Existing Premises ................................................................................................................. 5�

D.� Management ......................................................................................................................... 6�

E.� Staffing .................................................................................................................................. 7�

SECTION III. GENERAL INFORMATION ...................................................................... 7�

A.� Exhibits ................................................................................................................................. 7�

B.� RFP Schedule ....................................................................................................................... 8�

C.� Proposal Guarantee ............................................................................................................. 8�

D.� Insurance and Indemnification Requirements .................................................................. 9�

E.� LDBE and ACDBE Participation ....................................................................................... 9�

F.� Capital Investment ............................................................................................................. 11�

G.� Historical Pass-Through Charges .................................................................................... 11�

H.� Current Storage Rates ....................................................................................................... 11�

SECTION IV. PRE-PROPOSAL CONFERENCE ........................................................ 12�

A.� Pre-Proposal Conference .................................................................................................. 12�

B.� Questions ............................................................................................................................. 12�

C.� Amendments ....................................................................................................................... 13�

SECTION V. PROPOSAL SUBMISSION .................................................................... 13�

A.� Number of Proposals ......................................................................................................... 13�

Request for Proposals MWAA-4-12-C002Page ii of iii

B.� Address................................................................................................................................ 13�

C.� Late Submission, Modifications, and Withdrawals of Offers ........................................ 14�

D.� Proprietary Data ................................................................................................................ 15�

E.� RFP Requirements ............................................................................................................. 16�

F.� Communications with the Airports Authority Prohibited ............................................. 16�

G.� Rights of the Airports Authority ...................................................................................... 16�

H.� Proposal Costs .................................................................................................................... 17�

I.� Proposal Acceptance Period ............................................................................................. 18�

J.� Debriefings .......................................................................................................................... 18�

K.� Protests ................................................................................................................................ 18�

L.� Proposal Format ................................................................................................................ 19�

M.� Proposal Content Requirements ....................................................................................... 20�

SECTION VI. PROPOSAL GUARANTEE ................................................................... 34�

A.� Proposal Guarantee ........................................................................................................... 34�

B.� Acceptable Forms of Proposal Guarantee ....................................................................... 34�

C.� Return of Proposal Guarantee .......................................................................................... 35�

SECTION VII. EVALUATION OF PROPOSALS ......................................................... 35�

A.� Proposal Evaluation Criteria ............................................................................................ 35�

SECTION VIII. DISCLAIMER ....................................................................................... 36�

SECTION IX. AMENDMENTS TO THIS REQUEST FOR PROPOSALS .................... 36�

ATTACHMENTS

ATTACHMENT 1 DRAFT MANAGEMENT CONTRACT

ATTACHMENT 2 STANDARD PROVISIONS FOR CONCESSION CONTRACTS, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

Request for Proposals MWAA-4-12-C002Page iii of iii

ATTACHMENT 3 FINANCIAL OFFER

ATTACHMENT 4 REPRESENTATIONS AND CERTIFICATIONS

ATTACHMENT 5 PROFORMA STATEMENT

ATTACHMENT 6 PRE-PROPOSAL CONFERENCE NOTICE

EXHIBITS

EXHIBIT A HISTORICAL CONCESSION SALES, RENTAL TERMS, STORAGE SCHEDULE, AND ENPLANEMENTS, RONALD REAGAN WASHINGTON NATIONAL AIRPORT, 2009-2011

EXHIBIT B HISTORICAL CONCESSION SALES, RENTAL TERMS, STORAGE SCHEDULE, AND ENPLANEMENTS, DULLES INTERNATIONAL AIRPORT, 2009-2011

EXHIBIT C CONCESSION FLOORPLAN, RONALD REAGAN WASHINGTON NATIONAL AIRPORT

EXHIBIT D CONCESSION FLOORPLAN, WASHINGTON DULLES INTERNATIONAL AIRPORT

EXHIBIT E CERTIFIED STATEMENT FORM, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

EXHIBIT F 2010 PASSENGER SURVEY RESULTS, METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

EXHIBIT G EXISTING CONCESSION TENANT MINIMUM QUALIFICATIONS

EXHIBIT H REQUEST FOR LDBE WAIVER

EXHIBIT I ACDBE JOINT VENTURE APPLICATION

Request for Proposals MWAA-4-12-C002Page 1 of 36

REQUEST FOR PROPOSALS FOR THE MARKETING, LEASING, AND MANAGEMENT OF THE

FOOD SERVICE AND RETAIL CONCESSIONS AT RONALD REAGAN WASHINGTON NATIONAL AIRPORT AND


RFP NO. MWAA-4-12-C002

SECTION I. PURPOSE

The Metropolitan Washington Airports Authority (hereinafter referred to as the “Airports Authority”) is seeking Proposals from all interested and qualified Offeror’s desiring to market, lease, and manage the food service and retail concessions at Ronald Reagan Washington National Airport (hereinafter referred to as “Reagan National”) and Washington Dulles International Airport (hereinafter referred to as “Dulles International” or collectively with Reagan National as “the Airports”). It is the goal of the Airports Authority to select the Offeror that will provide the best marketing and leasing strategies and ongoing management of a balanced mix of food service and retail concessions to serve the passengers at the Airports during the term of the Contract to be awarded. It is the Airports Authority’s intention to award one (1) contract for both Airports. The passengers at the Airports must be provided quality, street-priced food service with trained and courteous service personnel in restaurants offering a wide variety of food service items, including national and local brands, sit-down restaurants, quick-service restaurants, fast food, snack food, and bars. Passengers shall also be provided with a good mix of quality retail shops, including, but not limited to newsstands and convenience shops, shops selling local or locally-themed merchandise, and regional and national-branded concepts. A number of the facilities have leases that expire beyond 2012 as shown in Exhibit A and Exhibit B. This solicitation is designed to encourage Proposals that are committed to these objectives.

The marketing, leasing, and management of the food service and retail concessions shall be in accordance with the Management Contract (hereinafter referred to as “Contract”) included in Attachment 1 of this Request for Proposals (hereinafter referred to as “RFP”).

These definitions apply to this RFP:

A. Airport Concessions Disadvantaged Business Enterprise (ACDBE): This term refers to a Concession Operator that is a for-profit small business concern that has been certified by the Virginia Unified Certification Program as an airport concession disadvantaged business enterprise as defined in 49 CFR Part 23.

B. Airports: Collectively refers to Ronald Reagan Washington National and Washington Dulles International Airports.

C. The Airports Authority: This term refers to the Metropolitan Washington Airports Authority, which is a body corporate and politic created by an interstate compact between the Commonwealth of Virginia and the District of Columbia. The Airports Authority was created for the purpose of operating, maintaining, and improving the


Airports. The Airports Authority enters into management contracts for services to be provided at the Airports.

D. Comparable Facilities: This refers to a minimum of two facilities with combined sales for five (5) continuous calendar years over the last ten (10) years of at least $145 million per year that must be submitted by an Offeror to demonstrate the Offeror’s ability to meet the Minimum Qualifications described in Section V., M., 2 of this RFP.

E. Concession Operator: Refers to individuals and business entities to which the Contractor leases space for the purpose of providing food or retail services at Reagan National and/or Dulles International Airports.

F. Contractor: This term refers to the Selected Offeror after it has executed the Management Contract with the Airports Authority.

G. Contract Term: The Management Contract will have a term of five (5) years. The Airports Authority shall also have the right, at its sole discretion, to extend the term by exercising one or both two-year extension options to the Contract. The effective date of the Contract shall be negotiated between the Airports Authority and the Selected Offeror, but is expected to be January 1, 2013.

H. Due Date: The deadline for the submittal of Proposals for this RFP is June 18, 2012, at 2:00 p.m., local time.

I. Dulles: Washington Dulles International Airport.

J. Local Disadvantaged Business Enterprise (“LDBE”): For the purposes of this Proposal, this is a business concern which is organized for profit and located within a 100-mile radius of Washington, DC's zero mile marker, which has been certified by the Airports Authority as a Local Disadvantaged Business Enterprise.

K. Management Contract (“Management Contract” or “Contract”): This refers to the document set forth in Attachment 1. The Contractor shall meet the requirements set forth in the Management Contract (Attachment 1). Portions of the Contract shall incorporate language and provisions directly from the Selected Offeror’s Proposal.

L. Management Fee: This term refers to the amount that the Contractor shall be entitled to retain as a percent of the Total Gross Rental Payment due to the Airports Authority by each of the Concession Operators.

M. National: Ronald Reagan Washington National Airport.

N. Offeror: Any individual or entity submitting a proposal to this RFP to market, lease, and manage space in the Airports for the operation of food service and retail concessions.


O. Pre-Proposal Conference: A meeting that will be held on April 24, 2012 in Conference Room 1C on the 1st Floor of the Airports Authority’s headquarters at Ronald Reagan Washington National Airport, 1 Aviation Circle, Washington, D.C., 20001-6000, for the purpose of presenting the solicitation and receiving Offeror’s questions.

P. Proposal: The documents submitted by each Offeror pursuant to the terms of this RFP.

Q. Proposal Guarantee: An amount specified in Section VI of this RFP that shall be forfeited to the Airports Authority in the event the Selected Offeror fails to execute the Contract offered by the Airports Authority.

R. Retail Merchandising Unit (RMU): A portable cart utilized in the concession program specifically for the sale of retail merchandise.

S. Selected Offeror: The Offeror chosen by the Airports Authority for award of the Contract.

T. Street Pricing: Prices charged for food and retail merchandise at the Airports shall not exceed the range of prices charged by comparable non-airport food service vendors and retailers offering similar type and quality products within the Washington Metropolitan Area or the prices charged by other outlets of the same brand in the Washington Metropolitan Area. This pricing policy is intended to make the food and beverage facilities and the retail shops at the Airports competitive with similar food and retail outlets in the Washington Metropolitan Area. No allowance for increasing prices above this level (e.g., “street plus ten percent”) will be permitted for any food service or retail concept at the Airports.

U. Tenant Design Standards: Design standards as set forth in the Airports Authority’s Design Manual 2010 provided on the Airports Authority’s website. Should the Design Manual be updated during the Contract Term, facilities constructed after such update will adhere to the revised requirements.

V. Total Gross Rental Payment: The amount due to the Airports Authority from the Contractor, defined as the Minimum Annual Guarantee, Percentage Rent, and Liquidated Damages payments due from the Concession Operators, whether collected or uncollected. Total Gross Rental Payment does not include Concession Operator payments for marketing, logistical support, common area maintenance, or utilities due and payable as defined in each lease. Total Gross Rental Payment also does not include rent that is payable for storage in the terminal buildings.

W. Virginia Unified Certification Program (“VAUCP”) – US Department of Transportation (USDOT) regulations for the ACDBE Program, requiring that all USDOT grant recipients participate in a unified certification program. The Airports Authority and the Virginia Department of Minority Business Enterprise (DMBE) are the certifying bodies for the Virginia UCP. The Virginia UCP provides “one stop shopping” to applicants seeking ACDBE certification in Virginia, such that an ACDBE applicant is


required to apply either to the Airports Authority or the DMBE for certification that, if granted, will be honored by all USDOT recipients in the Commonwealth of Virginia.

SECTION II. RESPONSIBILITIES

A. Scope of Operations

The Selected Offeror shall enter into the Management Contract to market, lease, and manage all of the food service and retail concessions at both Airports in accordance with the Contract terms and detailed scope of operations set forth in the Management Contract (included as Attachment 1 to this RFP). The Contractor shall lease only those food service and retail facilities located within the premises assigned to the Contractor, as described in section II.C.

B. Contract Objectives

The Contractor shall meet or exceed the following goals and objectives of the Airports Authority throughout the Contract Term:

� Provide a variety of food service and retail options that meet the needs of the customers of the Airports, and provide quality products, outstanding customer service, value for money, and menu choices that vary with changing trends and customer wants and needs

� Maximize financial return to the parties by developing food service and retail concepts matching the customers’ wants and needs, tailoring those concepts to the airport market and working with the Airports Authority and the Concession Operators to develop marketing and joint promotions of the concessions

� Work with the Airports Authority and with Concession Operators to provide attractive, well designed facilities that provide an excellent variety of contemporary food service and retail choices for users of the Airports and are inviting to potential customers

� Continually update the food service and retail concepts operating in the Airports to ensure that they meet the expectations of the airport passengers and reflect current market trends in food service and retail operations

� Ensure that food service and retail Concession Operators provide quality customer service to all patrons of the Airports

� Ensure that Concession Operators are open for business during the hours prescribed in the leases, and that Concession Operators extend operating hours during weather events and other disruptions to normal flight schedules

� Ensure that all food service and retail premises have strong visual appeal and are inviting to customers


� Ensure that all food service and retail premises are compliant with the Americans with Disabilities Act of 1990, as amended (ADA), and also accommodate customers with luggage, luggage carts, and strollers, as well as wheelchair-bound customers

� Continually measure, improve, and analyze the productivity of the food service and retail operations at the Airports

� Continually evaluate and improve the customer perception, impression, and acceptance of the food service and retail concepts and facilities at the Airports

C. Existing Premises

1. Ronald Reagan Washington National Airport

The Contractor shall market, lease, and manage approximately 66,400 square feet of food service and retail concession locations (in-line units and kiosks) and multiple retail merchandising units (RMUs) at Reagan National. Careful consideration shall be given to the existing use of each concession location and each Offeror shall make recommendations in its proposal regarding changing a location’s use from food service to retail or vice versa. The expiration dates for the concession leases at Reagan National are found in Exhibit A. The Contractor shall be required to develop a phasing plan for the concession program outlining the existing Concession Operators whose leases shall be extended and the duration of such extensions, and outlining the leases that shall be terminated and released in the short-term.

The Contractor shall be required to replace the RMUs at Reagan National within the first 12 months of the Contract Term. Fifteen (15) RMUs must be included in the future concession program at Reagan National. The locations of the RMUs will be determined by the Airports Authority. The cost of designing, constructing, installing, and maintaining the RMUs shall be the sole responsibility of the Contractor and shall be no less than $20,000 dollars per RMU. In its proposal, each Offeror shall state how the investment in the RMUs will be financed. This investment must be fully depreciated on a straight-line basis over the initial term of the Contract to be awarded so that they have no book value at the end of the initial Contract Term. Upon the expiration or earlier termination of the Contract, title to the RMUs shall revert to the Airports Authority. In the event of an early termination through no fault of the Contractor, the Airports Authority shall reimburse the Contractor for the unamortized capital investment for the RMUs in use at Reagan National as of the effective date of termination based on the straight-line depreciation calculation. If the Contract is terminated or the Contract Term shall end due to the Contractor’s default, then the Contractor shall not be entitled to reimbursement of any of its unamortized capital investment. The Contractor shall design the RMU in accordance with the Tenant Design Standards, and submit such design to the Authority for approval.


Space diagrams for the existing food service and retail concessions and related support spaces at Reagan National are incorporated in Exhibit C of this RFP.

2. Washington Dulles International Airport

The Contractor shall market, lease, and manage approximately 91,400 square feet of food service and retail concession locations (in-line units and permanent kiosks) and RMUs at Dulles International. Careful consideration shall be given to the existing use of each concession location and each Offeror shall make recommendations in its proposal regarding changing a location’s use from food service to retail or vice versa. The expiration dates for the concession leases at Dulles International are included in Exhibit B. The Contractor shall be required to develop a phasing plan for the concession program, outlining the existing Concession Operators whose leases shall be extended and the duration of such extensions, and outlining the leases that shall be terminated and released in the short-term.

The Contractor shall be required to replace the RMUs at Dulles International within the first 12 months of the Contract Term. Fifteen (15) RMUs must be included in the future concession program at Dulles International. The locations of the RMUs will be determined by the Airports Authority. The cost of designing, constructing, installing, and maintaining the RMUs shall be the sole responsibility of the Contractor and shall be no less than $20,000 dollars per RMU. Each Offeror shall state in its proposal how the investment in the RMUs will be financed. This investment must be fully depreciated on a straight-line basis over the initial term of the Contract to be awarded so that they have no book value at the end of the initial Contract Term. Upon the expiration or earlier termination of the Contract, title to the RMUs shall revert to the Airports Authority. In the event of an early termination through no fault of the Contractor, the Airports Authority shall reimburse the Contractor for the unamortized Capital investment for the RMUs in use at Dulles International as of the effective date of termination based on the straight-line depreciation calculation. If the Contract is terminated or the Contract Term shall end due to the Contractor’s default, then the Contractor shall not be entitled to reimbursement of any of its unamortized capital investment. The Contractor shall design the RMU in accordance with the Tenant Design Standards and shall submit such design to the Airports Authority for approval.

Space diagrams for the existing food service and retail concessions and related support spaces at Dulles International are incorporated in Exhibit D of this RFP.

D. Management

The Contractor will be responsible for the leasing, marketing, and management of the food service and retail concession spaces located at both Airports. However, ownership and responsibility for infrastructure (terminal buildings) remains with the Airports Authority. The Contractor will be expected to evaluate, select, and enter into leases with Concession Operators that will operate food service and retail concessions from individual spaces


within the premises granted to Contractor. The Contractor will be responsible for presenting concept proposals to the appropriate Airports Authority representatives for approval, selecting Concession Operators, negotiating lease terms, and executing each Concession Operator lease agreement upon receipt of lease approval from the Airports Authority. The following individual or their designee will serve as the Airports Authority’s representative and main point of contact for both Airports during the Contract term:

Airports Authority Point of Contact for Reagan National and Dulles International Airports:

Kathleen T. Verret, Manager - Revenue Development Metropolitan Washington Airports Authority

1 Aviation Circle, Suite 158 Washington, DC 20001-6000 (703) 417-8755 [email protected]

E. Staffing

The Contractor will be required to comply with the staffing requirements set forth in the Management Contract.

SECTION III. GENERAL INFORMATION

A. Exhibits

The Exhibits are furnished for information purposes only and shall not be construed as a guarantee of business to be generated. Data provided to prospective Offeror’s shall in no way relieve an Offeror from the responsibility of determining for itself the business potential of the proposed food service and retail concession program.

1. Exhibit A provides historical concession sales, rental terms, storage schedule, and enplanements for Reagan National from 2009 through 2011.

2. Exhibit B provides historical concession sales, rental terms, storage schedule, and enplanements for Dulles International from 2009 through 2011.

3. Exhibit C provides a space diagram of the concession program at Reagan National, noting the food service and retail concession locations to be leased and managed by the Selected Offeror.

4. Exhibit D provides a space diagram of the concession program at Dulles International, noting the food service and retail concession locations to be leased and managed by the Selected Offeror.

5. Exhibit E is the Monthly Certified Statement Form.


6. Exhibit F provides summarized results of the 2010 Passenger Survey conducted by the Airports Authority.

7. Exhibit G provides the minimum qualifications currently in use for Concession Operators.

8. Exhibit H provides the Request for LDBE Waiver.

9. Exhibit I provides the ACDBE Joint Venture Application.

B. RFP Schedule

The Airports Authority intends to generally follow the Proposal and award schedule shown below. The Airports Authority reserves the right to extend or change any of the dates shown at its sole discretion.

Task Prospective Date(s) RFP Issued April 6 Tour at Washington Dulles International Airport April 23 from 1:30 p.m. - 4:00 p.m.

Tour at Ronald Reagan Washington Airport April 24 from 9:00 a.m. - 11:00 a.m.

Pre-Proposal Conference at Ronald Reagan National Airport April 24 at 1:30 p.m.

Final Questions Due May 1 Responses to Questions Completed May 11 Proposal Due Date June 18 by 2:00 p.m. Proposal Review and Initial Evaluation June 18 – July 13

Proposer Interviews (if necessary) July 16 – July 18 Final Evaluation July 20 Board Paper Completed July 27 Recommendation to Business Administration Committee August 15

Board Approval September 19

C. Proposal Guarantee

The Proposal Guarantee required hereunder shall warrant that the Offeror’s Proposal will not be withdrawn prior to the Proposal expiration date, except as provided herein, and that, if the Offeror is selected, Offeror shall within fifteen (15) days of written notice of such selection:

1. Execute and deliver to the Airports Authority a Management Contract in substantially the form included herein subject only to minor changes agreed to by the Airports Authority and the Selected Offeror


2. Provide the proof of insurance and performance guarantee required under the Management Contract.

In the event Offeror fails to meet these requirements, Offeror shall forfeit its Proposal Guarantee.

D. Insurance and Indemnification Requirements

The Selected Offeror shall comply with the insurance and indemnification requirements specified in the Management Contract (Attachment 1) and submit evidence of insurance at the time the executed Management Contract is delivered to the Airports Authority.

E. LDBE and ACDBE Participation

The Airports Authority’s contracting policy is to aggressively seek participation by minority and/or women-owned firms in its contracting opportunities through all lawful means. The Airports Authority has two programs for achieving this policy objective – 1) a LDBE program for Airports Authority contracts that do not include federal funds, and 2) the federal ACDBE program for airport concession opportunities.

1. LDBE

A LDBE participation requirement of 10% has been established for this Management Contract. The Airports Authority requires active LDBE participation in the management of the concession program, through subcontracts, joint ventures, partnerships, or other legal arrangement between the Contractor and firms that have been certified by the Airports Authority as LDBE. The Contractor shall demonstrate each year that at least 10% of its Management Fee is paid to LDBE firm(s) for its services under the Management Contract.

By signing the offer, Offeror commits itself to achievement of the LDBE participation requirement listed above. To be in conformance with this solicitation, the Offeror is required to commit to meeting the LDBE participation requirement above. The Offeror’s signature on the offer signifies the Offeror’s commitment. If the Offeror is unable to commit to the LDBE requirement, it must submit a Request for Waiver (Exhibit H) in accordance with the requirements of the Airports Authority’s Contracting Manual.

Offeror’s shall submit in their proposals the following information concerning the LDBE firm(s) that will actively participate under this Management Contract, including:

� Name and address of each firm

� Name(s) of the firm’s principal owner(s)


� Annual estimated fees to be earned by each named firm, along with the percentage of the total Management Fee that each firm’s fees represents

� Description of the legal arrangement(s) underlying each LDBE firm(s) participation

� Detail description of the role each LDBE firm(s) will have in carrying out the Management Contract and how the work performed by the LDBE firm(s) is commensurate to the compensation received.

� Documentation showing that the LDBE firm(s) participation will meet the LDBE requirement.

It is the Airports Authority’s intention to have LDBE firm(s) performing meaningful roles and participating as active partners in the management of the concession programs at the Airports. While the use of LDBE firm(s) for the performance of services related to common tenant services and/or charges is encouraged, such participation will not be counted as LDBE participation. The fees earned by LDBE firm(s) under this Management Contract shall not be passed through to the Concession Operators or paid by the Airports Authority. In order to count as LDBE participation, the fees earned by LDBE firm(s) must come out of the Contractor’s Management Fee.

LDBE firm(s) that are not already certified by the Airports Authority prior to the Proposal Due Date must be certified by the Airports Authority no later than the date of Management Contract execution.

Firms interested in applying for LDBE or ACDBE certification should contact:

Ms. Betty Toulson Metropolitan Washington Airports Authority Equal Opportunity Programs Department 1 Aviation Circle, Suite 144 Washington, DC 20001-6000 (703) 417-8625

[email protected]

2. ACDBE

The Contractor will be required to make good faith efforts to achieve an Airport Concessions Disadvantaged Business Enterprise (ACDBE) goal of thirty-five percent (35%) of the projected total gross receipts from the food service premises and twenty-five percent (25%) of the projected total gross receipts from the retail premises available for lease by the Contractor under the Management Contract. The Contractor will be responsible for ensuring that each ACDBE firm is certified prior to the execution of a lease by the Contractor with that firm. The Contractor shall be responsible for ensuring that the Airports Authority receives all information needed to determine whether a firm qualifies as an ACDBE. During the term of the


Management Contract the Airports Authority reserves the right to revise ACDBE participation percentages to comply with U.S. Department of Transportation (DOT) requirements.

ACDBE firms must be certified by the Virginia Unified Certification Program (VAUCP) prior to execution of a lease between the Contractor and the ACDBE. Leases involving 100 percent ACDBE participation must be executed in the name of the ACDBE. Leases involving joint ventures where an ACDBE is part of the joint venture, must be executed in the name of the joint venture.

F. Capital Investment

For purposes of this RFP, Offeror’s shall assume that the Contractor will only make a capital investment in the RMUs and any other capital investment required to execute their proposed development and implementation plans will be made by the Concession Operators. There is no planned investment to be made by the Airports Authority.

G. Historical Pass-Through Charges

Concession Operators paid the following direct pass-through charges in 2011.

Type of Fee Dulles (CY2011) National (CY2011) Marketing Fund $471,825 $357,237 Common Area Maintenance $446,223 $858,661 Logistical Support 1 $787,960 $380,441

1 At Dulles International Airport, only food service concession operators pay logistical support costs. At Reagan National Airport, only retail operators pay logistical support costs.

H. Current Storage Rates

The Airports Authority currently charges rent for Concession Operator storage space. Exhibit C and Exhibit D provide the schedule of storage space for the Airports. The current rates at each Airport are as follows.

Reagan National

Storage Space Located in Terminal A - $51.91 per square foot Storage Space Located in Terminal B/C - $43.18 per square foot

Dulles International

Storage Space Located in Concourse B-12 Extension - $49.56 per square foot

Currently, only Concession Operators at Dulles International that have storage space in Concourse B Extension pay for storage. In the future, there will be a rental charge for all storage space located in Concourse A and Concourse B. The future rental rate for storage


space located in Concourse A will be the same as for that for storage space located in Concourse B (currently $49.56). Rates will be adjusted annually.

SECTION IV. PRE-PROPOSAL CONFERENCE

A. Pre-Proposal Conference

The Airports Authority has scheduled a Pre-Proposal Conference on April 24, 2012, at 1:30 p.m. The Conference will be held in Conference Room 1C on the 1st Floor of the Airports Authority’s headquarters at Ronald Reagan Washington National Airport, 1 Aviation Circle, Washington, D.C. The purpose of this Conference will be to discuss the requirements and objectives of this RFP; answer questions; provide an opportunity for networking with other firms, interested local businesses, and potential ACDBE and LDBE participants; and conduct a tour of the Reagan National food service and retail concessions (the tour will occur in the morning). The tour of Dulles International will take place on April 23, 2012 from 1:30 p.m. – 4:00 p.m., Conference Room B, Main Terminal Dulles International Airport. Please note that these will be the only scheduled tours of the facilities and that individual tours will not be offered. Tours shall be limited to three (3) persons per entity that will submit a proposal so that the group is not too large. It is necessary that tour participants have a driver’s license, passport, or other government-issued identification in order to be permitted to visit the secure (airside) locations of the Airports. Each Offeror is encouraged to attend the Pre-Proposal Conference and both Airports tours.

Prospective Offeror’s should return a completed Pre-Proposal Conference Noticeattached to this RFP as Attachment 6 by email to Richard Myrah at [email protected] by April 16, 2012.

B. Questions

The Airports Authority encourages all potential Offeror’s to review the RFP and Management Contract in the time period between the issuance of the RFP and the Pre-Proposal Conference. Offeror’s that have questions concerning the RFP and/or Management Contract, or that wish to propose material changes to the Contract terms, shall electronically submit these questions and proposed changes to Contract terms no later than May 1, 2012, at 3:00 pm local time using the form on the Airports Authority’s website at: http://www.mwaa.com/4809.htm. Material changes to Contract terms, if included with the Offeror’s proposal, may lead to rejection of the proposal as non-conforming. During the Pre-Proposal Conference, the Airports Authority shall attempt to answer all questions received prior to and during the conference. A written summary of the questions and answers, as well as a list of attendees, shall be posted on the Airports Authority’s website. Responses to questions are not official until they are confirmed in the written summary.


C. Amendments

Any changes in the requirements of this RFP or any of the attachments or exhibits thereto shall be made by amendment to this RFP. Questions will be answered in writing and will be posted on the Airports Authority’s website. Offeror’s shall not rely upon any oral instructions given by the Airports Authority. If there is a conflict between oral statements or responses made by the Airports Authority and written statements or responses, the written statements or responses shall control. All amendments must be acknowledged by the Offeror in its Proposal.

SECTION V. PROPOSAL SUBMISSION

A. Number of Proposals

One original and ten (10) copies of the Proposal (for a total of eleven (11) complete sets), including Attachment 3 - Financial Offer, must be prepared in the manner and detail specified in this RFP, signed by an authorized official, enclosed in a sealed envelope or package, and mailed or hand delivered so as to be received no later than June 18, 2012 by 2:00 p.m. local time at the address shown below. The original must be designated as such. Proposals or modifications received subsequent to the above date and time shall be considered “late Proposals” and will be handled according to paragraph C below. Additionally, a complete, reproducible, electronic copy of the Proposal in portable document format (.pdf) must be submitted on either a CD or a memory stick. The CD or memory stick must be labeled with, at minimum, the Offeror’s name and the RFP number.

B. Address

Proposals and modifications thereof shall be submitted in sealed envelopes or packages:

1. Addressed as specified below 2. Displaying the date and time specified above for receipt 3. Including the RFP number 4. Displaying the name, address, and phone number of the Offeror

The Proposal envelope or package must be clearly marked as follows:

Proposal: To: Proposal for the Marketing, Leasing, andManagement of the Food Service andRetail Concessions at Ronald Reagan Washington National Airport and Dulles International Airport RFP No.: MWAA-4-12-C002

Mr. Richard Myrah Metropolitan Washington Airports Authority Procurement and Contracts Department 1 Aviation Circle, Suite 154 Washington, D.C. 20001-6000 Phone: (703) 417-8660

From:(Name)________________________


(Address)______________________

(Phone)_______________________

C. Late Submission, Modifications, and Withdrawals of Offers

1. Any proposal received at the office designated in the solicitation after the exact time specified for receipt will not be considered unless it is received before award is made and:

a. Was sent by registered or certified mail not later than the fifth calendar day before the date specified for receipt of offers (e.g., an offer submitted in response to a solicitation requiring receipt of offers by the 20th of the month must have been mailed by the 15th); or

b. Was sent by overnight express delivery service (i.e. FedEx, UPS, Airborne Express, U.S. Postal Service Express Mail, or other similar guaranteed delivery service) in time to have arrived prior to the date and time specified for receipt of offers; or

c. Was sent by mail or by overnight express delivery service and it is determined that the late receipt was due solely to mishandling by the Airports Authority after receipt at the Airports Authority's offices; or

d. Any of the circumstances in Section 6.2.11(4), (5) and (6) of the Airports Authority’s Contracting Manual are applicable.

2. Any modification or withdrawal of a proposal, including a response to the Contracting Officer's request for "best and final" offer, is subject to the same conditions as in paragraph 1.a through 1.d. above.

3. The only acceptable evidence to establish the date of mailing of a late offer, modification, or withdrawal sent either by registered or certified mail is the U.S. or Canadian Postal Service postmark on the wrapper or on the original receipt from the U.S. or Canadian Postal Service. If neither postmark shows a legible date, the offer, modification, or withdrawal shall be processed as if mailed late. "Postmark" means a printed, stamped, or otherwise placed impression (exclusive of a postage meter machine impression) that is readily identifiable without further action as having been supplied and affixed by employees of the U.S. or Canadian Postal Service on the date of mailing. Therefore, Offeror’s should request the postal clerks to place a hand cancellation bull's-eye postmark on both the receipt and the envelope or wrapper.

4. The only acceptable evidence to establish the time of receipt at the Airports Authority installation is the time/date stamp of that installation on the offer wrapper or other documentary evidence of receipt maintained by the installation.


5. The only acceptable evidence to establish the date of mailing of a late offer, modification, or withdrawal sent by U.S. Postal Service Express Mail Next Day Service - Post Office to Addressee is the date entered by the post office receiving clerk on the "Express Mail Next Day Service - Post Office to Addressee" label and the postmark on the envelope or wrapper and on the original receipt from the U.S. Postal Service.

6. Notwithstanding Paragraph 1. above, a late modification of an otherwise successful offer that makes its terms more favorable to the Airports Authority will be considered at any time it is received and may be accepted.

7. Offers may be withdrawn in person by an Offeror or its authorized representative if, before the exact time set for receipt of offers, the identity of the person requesting withdrawal is established and that person signs a receipt for the offer.

D. Proprietary Data

Prior to award of the Contract, all Proposals will remain confidential and no portion of the Proposal will be disclosed outside the Airports Authority; provided, however, general, non-proprietary, information about a Proposal that is included in Airports Authority reports to its Board of Directors, or any Committee thereof, may be disclosed in accordance with Board of Directors policies.

Except as noted above, the Airports Authority Freedom of Information Policy (FOIP) will apply to this RFP. All records in possession of the Airports Authority are available to the public upon reasonable request, except those identified as “not required to be disclosed” in this Policy, which can be viewed on the Airports Authority’s website, www.mwaa.com,under, “News and Publications,” select, “Publication.”

Proposals that include confidential business information of the Offeror’s, such as commercial or financial information, that Offeror’s do not want disclosed outside the Airports Authority must be marked with a legend that states:

“This response includes data that shall not be disclosed outside the Airports Authority without the permission of [insert firm’s name] and shall not be duplicated, used, or disclosed – in whole or in part – for any purpose other than to evaluate this response. This restriction does not limit the Airports Authority’s right to use information contained in this data if it can be obtained from another source without restriction. The data subject to this restriction are contained in pages [insert numbers or other identification of pages]”

Offeror’s shall mark only those pages containing restricted data with the following legend:

“Use or disclosure of data contained on this page is subject to the restriction on the title page of this Proposal.”


A blanket restriction applicable to the entire Proposal is not acceptable. Moreover, the inclusion of this provision regarding the restriction on disclosure and use of data should not be construed to protect against the Airports Authority’s disclosure of generic concepts or information that has already been made public. In addition, the Airports Authority may, after discussion with the Offeror, determine that some or all of the information encompassed by the restriction is not appropriately included within the restriction and that such information may be released outside the Airports Authority.

Proposals and copies of Proposals (including the electronic copy or any duplicates made) shall not be returned to the unsuccessful Offeror’s. The Airports Authority shall have no liability for inadvertent or mandated disclosure of information submitted with a Proposal.

E. RFP Requirements

It is essential that the information and requirements of this RFP be carefully studied and adhered to in the preparation and submission of Proposals. All Offeror’s must submit written Proposals in accordance with the instructions contained in this RFP. Failure to comply with the instructions of the RFP may be cause for rejection of an Offeror’s Proposal.

All Offeror’s are advised that substantial deviations from the requirements of this RFP shall not be accepted. “Substantial deviations” are Proposal terms that materially alter the management fee; Management Contract; Contract Term; and quantity, quality, delivery, liability, and performance requirements of the RFP. Further, the Airports Authority reserves the right to reject any Proposal that does not provide the information requested in the RFP. The quality of the Proposal is indicative of the capabilities of the Offeror and may be

considered when evaluating Proposals.

F. Communications with the Airports Authority Prohibited

From the date this RFP is issued, until the date the Contract is awarded, Offeror’s, or anyone representing the Offeror’s, shall not communicate with any Airport Authority representative, other than the persons who are designated in this RFP or in the Airports Authority’s Contracting Manual to receive communications regarding the RFP, the Management Contract, or related issues. The exception to this Communication Prohibition is communication with Airport Authority staff during the Pre-Proposal Conference and Airport tours offered in association with this RFP and any interviews conducted as a part of this solicitation process. All forms of communication (outside of the Pre-Proposal Conference, Airport tours and interviews) are prohibited, including, but not limited to: verbal, written, and electronic forms of communication.

G. Rights of the Airports Authority

1. The Airports Authority reserves the right to accept the Proposal from a responsible Offeror that in the Airports Authority’s sole judgment best meets the Airports Authority’s requirements. This may not be the Proposal that includes the lowest proposed Management Fee. The Airports Authority further reserves the right to


reject any and all Proposals, to waive irregularities and technicalities in the Proposals, to re-advertise, or to proceed to provide the service otherwise when it judges it to be in the best interest of the Airports Authority.

2. The Airports Authority reserves the right to amend any provision of the RFP including, without limitation, the Management Contract.

3. An Offeror may not be a prime contractor on more than one Proposal under this solicitation. An Offeror may be 1) a subcontractor on more than one Proposal, or 2) a prime contractor on one Proposal and a subcontractor on other Proposals. An Offeror may be an individual, partnership, corporation, joint venture or other type of business association. Joint venture partners of a joint venture Offeror are considered to be prime contractors regardless of the level of participation or ownership. Therefore, a joint venture partner cannot participate in any other Proposal except as a subcontractor.

4. The Proposal of an Offeror may be rejected if the Offeror (or any member of a partnership, joint venture or other business arrangement submitting the Proposal) is in default or arrearage under any previous or existing agreement with the Airports Authority, or if there exists any unresolved monetary claims by the Airports Authority against the Offeror.

5. The Airports Authority may conduct announced or unannounced site visits and/or contact customers/landlords/tenants of Offeror’s to elicit further information relevant to the Proposals submitted, regardless of whether or not such entities are named in the Proposal. The Airports Authority may also hold oral interviews or discussions with any Offeror or with any Offeror judged to be within a competitive range, concerning its Proposal. The Airports Authority reserves the right to use the findings of the visits, interviews, discussions and any other available information in its evaluation of the Proposal submitted, in accordance with the evaluation criteria established in this RFP. The Airports Authority also reserves the right to make an award without conducting site visits, interviews, holding discussions, or contacting customers/landlords/tenants.

6. The Airports Authority may, in its sole discretion, require the submittal of best and final offers by all Offeror’s, or by those Offeror’s judged to be within a competitive range.

H. Proposal Costs

Any costs or expenses incurred in responding to this RFP, including, but not limited to, the development of a Proposal, the development of best and final offers, or the preparation and execution of an oral interview/presentation with/to the Airports Authority, shall be borne entirely by the Offeror.


I. Proposal Acceptance Period

Submission of a Proposal shall constitute a valid offer that may be accepted by the Airports Authority for a period of one hundred eighty (180) days following the date specified for the submission of Proposals.

J. Debriefings

Unsuccessful Offeror’s may request a debriefing in writing within fifteen (15) days from the date the firm receives written notice from the Airports Authority that it has been unsuccessful. Debriefings will address the strengths and weaknesses of the Proposal submitted by the firm being debriefed. Information concerning other Offeror’s and Proposals shall not be provided.

K. Protests

If a potential Offeror believes it has grounds to protest any terms or conditions contained in or omitted from a solicitation or a solicitation amendment issued by the Airports Authority, the potential Offeror must file its protest with the Manager, Procurement and Contracts Department. The protest must be received by the Manager, Procurement and Contracts Department by the earlier of the following two dates: (1) fourteen (14) calendar days after the issuance date of the solicitation or the date of the solicitation amendment containing the terms or conditions that are the subject of the protest, or (2) the Due Date for bids or Proposals.

If an unsuccessful Offeror on an Airports Authority solicitation believes it has grounds to protest the rejection of its bid or Proposal, or the award of a contract, other than grounds relating to the terms or conditions contained in or omitted from a solicitation or solicitation amendment, that Offeror must file its protest with the Manager, Procurement and Contracts Department. The Manager, Procurement and Contracts Department must receive the protest within seven (7) calendar days after the date of the Airports Authority’s letter notifying the unsuccessful Offeror that its bid or Proposal was unsuccessful or not accepted.

The Manager, Procurement and Contracts Department shall attempt to respond to a protest within seven (7) calendar days from receipt of the protest. If the Manager, Procurement and Contracts Department, determines that additional time shall be required to respond to the protest, the Manager, Procurement and Contracts Department shall, within seven (7) calendar days, notify the protestor of the time period within which a response shall be made.

If a protestor is not satisfied with the Manager, Procurement and Contracts Department's response, the protestor may ask the President and Chief Executive Officer (CEO) of the Airports Authority to review the matter. This request must be received by the President and Chief Executive Officer within seven (7) calendar days after the protestor's receipt of the Manager, Procurement and Contracts Department's decision. If resolution cannot be achieved at that level and the contract is or was subject to the approval of the Board of


Directors or by a Standing Committee of the Board, then the protestor may request that the protest be reviewed by the Board of Directors or a Committee of the Board. Such request must be filed with the Secretary of the Board within seven (7) calendar days following the protestor's receipt of the President and Chief Executive Officer’s decision. The decision of the Board of Directors or the Committee of the Board designated to consider the protest shall be final. For contracts not requiring approval of the Board of Directors or a Committee of the Board, the decision of the President and Chief Executive Officer shall be final. Points of contact for requesting reviews can be found in Appendix B of the Airports Authority’s Contracting Manual, dated December 3, 2008, which is available on the Airports Authority’s website, www.mwaa.com.

The President and Chief Executive Officer may proceed with award of the contract and notice to proceed while a protest is pending if he/she determines it to be in the Airports Authority's best interest to do so.

L. Proposal Format

1. Proposal Text Format

Each Proposal shall be typewritten using a 12-point font on a standard 8 ½” x 11" format paper and accompanied by a cover letter on the Offeror’s letterhead. Drawings in an 11’’x17” format may be included in the Proposal. The body of the Proposal shall be no more than one hundred (100) one-sided pages in length, excluding exhibits, and shall provide all information requested herein. Offeror’s must organize their Proposals so that they address each of the elements stated in Section V.(M) of this RFP in the same order as they are listed. Offeror’s shall mark each page with the appropriate page number.

Additionally, Offeror’s are required to provide reproducible electronic versions of their Proposals and all attachments on either a CD or a memory stick.

2. Offeror Structure and Ownership

The Proposal shall include a statement containing the full legal name of Offeror and its address(es), the names and addresses of all principal owners of the Offeror (whether an individual or business entity), their respective percentages of ownership or interest in the Offeror, and whether the Offeror is a corporation, partnership, sole proprietorship or other type of entity. If the Offeror is a corporation, its date and state of incorporation must be declared. If a teaming arrangement, joint venture, or other business combination is proposed, the information required above will also be required for each prime participant in the Proposal.

The Offeror must include a certified statement of the names of the officers of the organization formed or to be formed, the principal occupation of all members of the corporation’s Board, and certified statements of the net worth of the organization. If a teaming arrangement, joint venture, or other business combination is proposed, the information required above shall also be required for each prime participant in


the Proposal. If the Offeror is not a Virginia corporation, advise whether or not the Offeror is registered with the Virginia Corporation Commission to do business in the Commonwealth of Virginia.

3. Noncompliance

If an Offeror’s Proposal is in material noncompliance with the requirements of the RFP, it may be considered non-conforming by the Airports Authority and may be rejected without further consideration. These restrictions are intended to provide uniformity in the Offeror’s’ response formats.

4. Guarantees, Representations and Certifications

Each Offeror shall submit a Proposal Guarantee as described in Section VI, and complete and submit the representations and certifications required in Attachment 4 of this RFP. Offeror’s’ Proposals must also acknowledge receipt of any solicitation amendments.

M. Proposal Content Requirements

Each Proposal shall include complete and detailed written responses to the following items in the order in which they are listed below. A set of tabs to identify each part of the Proposal shall be inserted to facilitate quick reference. Each section of the Proposal shall be clearly labeled as set forth below and shall be presented in the order presented in this RFP.

Each Offeror’s response to these items will be evaluated in accordance with the evaluation criteria stated in Section VII herein.

1. Cover Letter and Covenant to Execute Lease

Offeror shall submit a cover letter of no more than two pages stating the following:

� Name under which the Offeror would enter into the Management Contract � Identification of the Airports that are the subject of the Proposal and the

Management Contract� Offeror’s contact person and his or her telephone number, facsimile number, and

email address � Statement that the Offeror shall execute a Management Contract in substantially

the same form as that included with the RFP � Other general information that the Offeror desires to include as an introduction to

the Proposal


2. Minimum Qualifications

In order to be considered for the Management Contract to be awarded, the Offeror must demonstrate that it meets the following minimum qualifications:

a. Background and Experience Requirements

i. All Offeror’s must demonstrate having a minimum of five (5) years of continuous prior experience, within the last ten (10) years, in the marketing, leasing, and management of food service and retail concessions.

ii. All Offeror’s must have experience directly marketing, leasing, and managing food service and retail concessions at a minimum of two facilities simultaneously (hereafter “Comparable Facilities”). The comparable facilities must have combined annual sales of at least $145 million each year for five (5) continuous calendar years.

iii. The facility programs included as Comparable Facilities (listed in response to item ii. above) must have a combined minimum of 120,000 square feet of food service and retail concessions that are leased and managed by the Offeror, and a combined total of at least 130 stores.

iv. For all of the Comparable Facilities, submit the following descriptive information:� Location name and address; � If an airport location, note primary markets and airlines served; � If an airport location, the annual number of enplaned passengers for the

continuous five years referenced; if a non-airport location, the annual number of visitors to location for the past continuous five years;

� Annual volume of sales and annual rent for the continuous five years, separating the sales volumes between food service and retail;

� Number of food service and retail locations managed, and the square footage and number of leases/tenants of each type;

� Name of General Manager at the property and the company for which the General Manager was employed during the management of the facility;

� Name(s) of individual(s) and company(ies) that performed the leasing of each property and the company for which they were employed during the leasing of the facility;

� Dollar amount of the leasing, management, and any other fees collected by Offeror for the leasing and management of each of these locations, separated out by type of fee, for the continuous five years;

� State the established ACDBE goal for each facility and the actual percentage of ACDBE participation achieved (based on gross sales) if applicable, by type of tenant (food service and retail) for each of the continuous five years referenced.


v. Provide the name, location, and date of any of the Offeror’s contracts or leases that have been terminated, either voluntarily or involuntarily, prior to the expiration of their terms. Include in this list, any leases or contracts that were awarded, but never executed by the Offeror and explain the reasons for which the contract or lease was not executed. For the same period of time, list any judgments or lawsuits that involved a tenant managed by the Offeror’s organization or a directly-related affiliate or requested the termination of any of Offeror’s leases or contracts or applied any fines or penalties on the Offeror or the Offeror’s affiliate. For the purposes of this paragraph, disclosure of any of the events described must be made for any entity or individual that has, directly or indirectly, a controlling interest in the Offeror, any subsidiary entity or individual, or other entity in which the Offeror has a controlling interest, or any other affiliate of Offeror.

vi. Provide a statement advising whether or not the Offeror, or any entity or individual that has, directly or indirectly, a controlling interest in the Offeror, any subsidiary entity or individual, or other entity in which the Offeror has a controlling interest, or any other affiliate of Offeror, has been involved in any bankruptcy proceedings in the past seven (7) years.

vii. Provide a statement that the Offeror does not invest in, or partner in any way, or represent in any way, or have any financial agreement with any food service or retail operations doing business at the Airports or any food service or retail Concession Operator that might be considered in the future as a Concession Operator at the Airports.

viii. Provide a statement advising whether or not Offeror or any of its principals, officers, directors, any corporation or other entity that has, directly or indirectly, a controlling interest in the Offeror; and subsidiary corporation or other entity in which the Offeror has a controlling interest; or any other affiliate of the Offeror have ever been barred from proposing or bidding on government contracts (federal, state, or local), and if so, explain the current status of said debarment proceeding(s).

ix. Provide a statement advising whether a federal or state lien has ever been placed upon the Offeror, or any of its principals, officers, or directors.

b. Financial Capability Requirements

i. Offeror shall provide a letter from a bank that states that should the Offeror be awarded the Management Contract as a result of this RFP; the bank will issue an Irrevocable Letter of Credit (ILOC) in the amount of $2.5 million to the Offeror and renew such ILOC over the Contract Term to the annually-adjusted amount.

ii. The Offeror shall also provide two other bank references, including addresses, telephone numbers, and names of bank officers familiar with the


Offeror’s account as well as one landlord reference and two vendor references.

3. Development and Implementation Plan

The Offeror shall begin this section with a concise paragraph of no more than one-half of one page that describes why the Offeror believes that the plan proposed by the Offeror in this section would be the best plan for the Airports Authority and the Airports’ customers.

The Offeror shall include a complete and detailed narrative description of its proposed development and implementation plan for the Airports. Such narrative shall include statements that will clearly establish the policies and business practices to be employed and observed. Areas to be addressed shall include the following required elements.

a. Market Understanding

i. Provide complete and detailed descriptions of the demographic characteristics of the customers at Dulles International and Reagan National Airports (a separate description for each Airport). The descriptions shall demonstrate the Offeror’s thorough understanding of passenger profiles and behavioral patterns of the various consumers (i.e., business, tourist, international, domestic, connecting or originating and destination travelers) at each Airport,especially as they apply to food service and retail wants and needs. Include in this analysis other types of customers Offeror would anticipate to patronize the food service and retail concessions at Dulles International and Reagan National and to what extent Offeror believes they will contribute to sales volume.

ii. Offeror should describe retail and airport industry trends as they relate to the proposed concession program, including the strengths and weaknesses of airport food service and retail concessions today. Include opportunities and challenges to providing food service and retail at airports.

iii. Offeror should describe what conclusions have been drawn for each Airport from these consumer characteristics and trends and how the Offeror, as the Fee Manager, would convey these into airport-wide food service and retail concepts and plans specific to Dulles International and Reagan National Airports.

iv. Describe for each Airport the different operational opportunities and challenges unique to the Dulles International and Reagan National food service and retail operations that will need to be addressed with the Concession Operators in terms of hours of operation, staffing, storage, delivery of goods, and trash removal.


b. Food Service and Retail Concepts and Plan

i. Floorplan. Based on the Offeror’s understanding of the market, the Offeror shall prepare a floorplan for each Airport illustrating the proposed preliminary concepts by location for the food service and retail programs at the Airports. (The floorplans of the existing concession programs have been provided in Exhibits C and D. The new floorplan shall identify the proposed food service and retail concepts. For the food service concessions, include the type of service and type of cuisine for each location, such as “quick service/Italian”, that would be assigned to each of the numbered units (or portions of or combinations of units) listed in Exhibits C and D and whether the concept to be leased would be locally or nationally branded or themed. Use the following types of food service designations when identifying the concept for each food service unit in the proposed program:

� Quick service � Snack food � Gourmet coffee � Table-service restaurant � Fast casual restaurant � Bar with food

For the retail concessions, include the type of retail unit to be developed, the concept/type of merchandise that would be offered, such as “specialty retail/bath and body products,” that would be assigned to each of the numbered units (or portions of or combinations of units) listed in Exhibits C and D and whether the concept to be leased would be locally or nationally branded or themed. For the retail locations, use the following retail designations:

� Specialty retail � Convenience retail or newsstand � Consumer service

The following concession types are excluded from the Management Contract:

� Advertising � Duty Free and duty paid � ATMs � Pay telephones � Luggage carts � Banking services � Currency exchange


� Internet access (Any internet services provided must be conducted through the Authority’s designated wireless provider and a separate fee cannot be charged to the customer)

ii. RMUs. The Contractor shall be required to replace the RMUs at the Airports within the first 12 months of the Management Contract according to the terms provided in Section II., C. of this RFP. Offeror’s shall identify in their Proposals the concepts that would be located within the RMUs at the Airports, along with the role the RMUs would fulfill in the overall program.

iii. Roster. The Offeror shall prepare a unit roster for each Airport that corresponds to the floorplans and lists each unit by number and location, and identifies the type of concession, proposed concept (i.e., “food service-gourmet coffee”), size (in square feet), potential tenant (i.e., local brand/national brand name), ACDBE participation, projected sales, projected rent, effective rental rate, projected sales per square foot, and projected sales per enplanement. A distinction shall be made between leasing phases of the plan. The type of unit shall also be noted, differentiating between in-line stores, kiosks, and RMUs.

Accompanying the roster shall be a narrative that describes the rationale for the proposed food service and retail concession mix, especially as it relates to the market; justification of any increases or decreases from existing sales and rent for each unit; adjacencies; allocation between landside and airside; and the intent, if any, to combine, subdivide, or re-concept any of the units, especially where the use is being changed from food service to retail or vice versa. Indicate the challenges your organization might expect to encounter and how your organization proposes to overcome those challenges to maximize the productivity of the concession space.

c. Proforma

Each Offeror shall provide a proforma income statement in the format presented in Attachment 5 (using the excel template provided) that provides the Offeror’s projected Concession Operator sales volume, rental income, Offeror’s expenses, management fee, and rent to the Airports Authority for each contract year. The proforma income statements shall be evaluated in terms of their reasonableness and completeness.

In addition to submitting a completed Attachment 5, Offeror’s shall also include the following information to support their projections:

i. Complete set of detailed assumptions for each line item of the proforma.ii. Explanation justifying any and all changes in sales and rent projections from

the existing program performance. This narrative should correlate the proposed concept floorplans and proposed roster to the proforma.


iii. Identification of Offeror’s working capital required for the proposed leasing, marketing, and management operations and source of cash to provide for the payment of the Offeror’s fixed expenses and working capital.

d. Leasing Philosophy and Strategy

It is the Airports Authority’s intent to include representation from the retailers and restaurateurs in the Washington, D.C. metropolitan region in the concession programs at Dulles International and Reagan National Airports. It is also the Airports Authority’s intent to ensure nondiscrimination in the award and administration of opportunities for concessions at Dulles International and Reagan National Airports and create a level playing field on which qualified firms can compete fairly for opportunities for concessions. The minimum standards that are currently used to assess potential Concession Operators at the Airports are included as Exhibit J. The following elements shall be addressed in the Offeror’s proposal.

i. Offeror should provide a sample leasing package that would be used to market the concession opportunities to potential Concession Operators.

ii. Briefly describe how the organization would access the national, regional, and local markets without using the services of commercial real estate brokers. Include past projects, their dates, and leasing personnel; the amount of time given to complete the leasing at each project; and a list of executed leases (including square footages) with national, regional, and local tenants (specify category) that were non-broker related deals.

iii. Offeror must submit, as an attachment to the Proposal, letters of interest from all food service and retail operators that the Offeror has approached regarding the upcoming opportunities at Dulles International and Reagan National Airports. All letters of interest from potential Concession Operators shall be on the operators’ corporate letterhead, dated, and specifically reference the Dulles International and/or Reagan National opportunity.

iv. Offeror should briefly describe its philosophy and past practices regarding the negotiation of lease terms, including the establishment of minimum annual guarantees (MAGs) versus percentage rent, establishment of breakpoints for percentage rent, etc.

v. Briefly describe how your organization would present information in monthly operational meetings and ongoing leasing meetings with the Airports Authority. Provide sample reports, organizing data that would be given to the Airports Authority at these meetings.

vi. Briefly address how your organization would obtain full and open competition with respect to opportunities for Concession Operators.


e. Implementation, Construction Management, and Transition Plan

Offeror shall describe how the future concession program would be implemented and constructed by addressing the following elements.

i. Describe your process for managing the Concession Operators throughout the Concession Operator construction fit-out and, in turn, describe your method of facilitating the process with the Airports Authority. Also, explain the way in which your organization would assist the Concession Operators in working with the Airports Authority.

ii. Describe how your organization proposes to work with the Concession Operators in facilitating the Tenant Design Standards process and ensuring that each Concession Operator complies with the Tenant Design Standards Manual for Reagan National and/or Dulles International Airports. Provide two (2) examples from the Offeror’s current Concession Operator leases in which the enforcement of design issues has been incorporated into tenant lease language and demonstrate its utility.

iii. Provide a draft transition and construction-phasing plan for each of the Airports describing the order in which the Concession Operator locations would be retenanted and redeveloped, as appropriate, at Reagan National and Dulles International. Describe the rationale for such ordering, the effects on customer service and rental revenue during the transition, and proposed locations and concepts for temporary units that would be used during the transition. Also describe how vacant units or units under construction would be handled.

ii. Provide a detailed estimate of any investment (over and above the cost of concession space build-out) that would need to be made by the Concession Operators to accommodate the proposed concession plan to provide the necessary level of service. Offeror’s should also provide a schedule of when these investments would be required based on the proposed phasing of redevelopment and the mechanism that would be used to accomplish this.

f. ACDBE Plan

The Contractor will be required to make good faith efforts to achieve a goal that a minimum of thirty-five percent (35%) of the projected total gross receipts from the food service premises and a minimum of twenty-five percent (25%) of the projected total gross receipts from the retail premises (hereafter referred to as “the Airports Authority’s ACDBE Goals”) available for lease by the Contractor under the Management Contract are generated by ACDBE Concession Operators. The Airports Authority’s ACDBE Goals may be achieved through leases of retail and food service spaces to VAUCP certified ACDBEs, joint ventures, or other legal arrangements meeting the ACDBE participation standards of 49 CFR Parts 23 and 26 as revised. Direct leases to ACDBE


Concession Operators are the Airports Authority’s preferred method for meeting the ACDBE goals.

Only ACDBE participation that results from performing a commercially-useful function can be counted toward the Airports Authority’s ACDBE Goal. A commercially-useful function is performed by the ACDBE when it is independently responsible for the execution of a distinct element of the work and carries out its responsibilities by actually performing, managing, and supervising the work required (commercially-useful functions are defined in 49 CFR Parts 23 and 26 as revised). Unacceptable forms of ACDBE participation for meeting the Airports Authority’s ACDBE Goals include contracts for services provided by an ACDBE to a prime (e.g., janitorial, advertising, consulting, etc.), employment arrangements, purchases of equipment or supplies, or other arrangements that lack meaningful participation and control by the ACDBE in the operation of the concession.

A written and signed agreement specifying the work to be done by an ACDBE must be submitted to the Airports Authority for review and approval before the participation can be counted toward the ACDBE goal. The total dollar value of gross receipts earned by an ACDBE under a direct ownership arrangement counts toward the Authority’s ACDBE Goals. When an ACDBE performs as a participant in a joint venture, a portion of the gross receipts that is equal to the distinct, clearly-defined portion of the work of the concession operation that the ACDBE performs with its own forces, can be counted toward the Airports Authority’s ACDBE Goals.

The Airports Authority will rely upon the guidance set forth in the U.S. Department of Transportation’s ACDBE regulations 49 CFR Parts 23 and 26 as revised and the “Airport Concessions Disadvantaged Business Enterprise Joint Venture Guidance” document released on July 17, 2008 in the oversight of its ACDBE Program. All joint ventures with an ACDBE partner will be required to submit a completed “ACDBE Joint Venture Application” form (see Exhibit I hereto), along with all supporting documents required by the application form, for the Airports Authority’s review and approval. No credit toward the Airports Authority’s ACDBE Goals will be counted until the joint venture agreement is reviewed and approved by the Airports Authority.

The Airports Authority will conduct post-award compliance reviews of the ACDBE participation counted under the Management Contract.

To this end, the Offeror’s Proposal must address the following:

i. Each Offeror must describe how it will meet the Airports Authority’s ACDBE Goals.

ii. Describe strategies being used by the Offeror at other airports and identify specific ACDBE goals achieved.


iii. Provide a strategy for identifying a diverse base of ACDBEs at Dulles International and Reagan National Airports, including sources and specific events and activities designed to reach ACDBEs who may be interested in food service and retail locations.

iv. Describe specific methods that Offeror will employ to foster the success of each ACDBE Concession Operator as an integral part of the concession program.

v. In the event that an ACDBE firm is not performing, Offeror should describe the approach it would employ to help improve performance, and in the event that approach fails, the approach employed to replace that Concession Operator with another ACDBE business.

g. Delivery Management Plan

The Contractor is required to work closely with the Concession Operators to develop procedures for delivery of product to both landside and airside food service and retail facilities at Reagan National and Dulles International Airports. The Contractor will contract with a logistical support provider to meet the reasonable common logistical and storage requirements of the Concession Operators at the Airports. The logistical support provider can be the same one or different at each Airport. The current delivery provider at Dulles is ALM Services. The current delivery provider at National is Genco. All Concession Operators must use and share in the prorated costs of the common logistical support provider and the Contractor may not charge the Concession Operators additional administrative or overhead fees for this service.

The Airports Authority will provide the Contractor with space for the operation of a central commissary at each Airport. All product deliveries must be made via designated doors or airside gates accessed only by employees using airport-issued identification cards that allow airside access. The Selected Offeror must agree to adhere to Transportation Security Administration (TSA) or Airports Authority directives and policies regarding access to airside facilities.

The Offeror’s Proposal must address the following elements pertaining to delivery management.

i. Offeror shall describe any fees proposed to be charged to the Concession Operators for delivery management services and how those fees were derived.

ii. Offeror shall propose a plan to allocate and manage the storage facilities to be assigned to the Management Contract to be awarded for the use of the retail and food service Concession Operators. Offeror shall include detail regarding any fees that would be charged to the Concession Operators for any support space, delivery management, or delivery services. Offeror shall


pass through the direct costs of these support services to the Concession Operators without any additional mark-up.

h. Case Study

Offeror’s shall submit a case study illustrating success achieved by the Offeror in directly marketing, leasing, and managing food service and retail concessions. For this case study, Offeror shall provide a narrative addressing the following key elements:

i. Description of airport/facility and location. ii. Discussion of key users of airport/facility. iii. List of annual sales volume, separating the sales between food service and

retail. iv. Identification of the number of food service and retail locations managed, and

the square footage and number of leases/tenants of each type. v. List of tenants at the airport/facility. vi. Vacancy rate for the airport/facility for the last three years. vii. Identification of the percent of ACDBE participation, based on gross sales, by

type of tenant. viii. Description of the opportunities and challenges that the Offeror’s organization

has encountered in leasing and managing the airport/facility and the way in which the Offeror’s organization has contributed to the success of the airport/facility’s management.

ix. Photographs of the airport/facility.

4. Property Management, Marketing, Advertising, and Promotion

The Offeror shall begin this section with a concise paragraph of no more than one-half of one page that describes why the Offeror believes that the solutions proposed by the Offeror in this section would be the best plan for the Airports Authority and the Airport customers.

In addition, the Offeror’s Proposal must specifically address the following:

a. Property Management

i. Offeror should describe, in detail, how it will work with the Airports Authority concession management staff to monitor the performance of each retail and food service Concession Operator in terms of revenue productivity, adherence to the Airports Authority’s Tenant Design Standards on an ongoing basis, enforcement of street pricing and operating hours, evaluation of product mix in response to passengers' desires, and review of inventory,


menus, signage, graphics, seating, facility cleanliness and maintenance, compliance with Federal security requirements, and other operational standards. Offeror should also provide a proposed schedule and sample evaluation form that would be used to document each Concession Operator’s performance.

ii. Please describe the specific criteria that Offeror would employ to evaluate performance by a Concession Operator. Include the manner by which the Concession Operator would be notified of poor performance and detail how Offeror would work with such a Concession Operator to improve performance. Define the amount of time Offeror’s organization proposes to allow a Concession Operator to improve performance before imposing penalties. Describe the successes achieved by employing a system of penalties before resorting to lease termination. Provide three (3) project examples that illustrate specific ways in which Offeror’s organization directly worked with a Concession Operator that resulted in improved performance.

iii. Describe any incentive programs developed by Offeror that reward good performance by its staff or Concession Operators. Please describe the type of incentives and method used for monitoring and identifying these individuals/Concession Operators.

iv. Offeror should detail how it created and implemented employee training and customer service programs at two (2) other facilities that resulted in increased revenue and customer satisfaction.

v. Offeror should describe the method it would use to analyze and communicate all information to the Airports Authority as it relates to Concession Operator performance, including sales, rent collection, ACDBE participation, adherence to Tenant Design Standards, and customer service issues. Include a sample schedule that outlines proposed reporting both pre- and post- tenant openings. Offeror should provide, as an example, a copy of a Concession Operator performance report that it has provided in the past to a facility client. The Concession Operator’s identity may be deleted from the sample report for the purpose of preserving Concession Operator confidentiality. Offeror should also provide a draft reporting document showing the format and detail of rental information that would be collected and submitted to the Airports Authority on a monthly basis.

vi. Describe the methods through which the Offeror would foster and promote a positive Concession Operator-manager relationship. Offeror should describe programs or initiatives used at other projects that helped establish positive Concession Operator relations and improved performance.

vii. Offeror shall propose a plan to handle any common area maintenance (CAM) that may apply to the concession programs at Dulles International and Reagan National Airports as well as a method to charge Concession


Operators for the CAM costs. CAM should include food court maintenance, trash collection and removal, grease collection and removal/recycling, roof exhaust maintenance, grease trap and drain cleaning, and pest control. The Offeror shall only pass through the direct costs of CAM to the Concession Operators without any additional management fees or mark-ups applied by Offeror.

viii. The Selected Offeror’s will be responsible for producing and keeping current floor plans for all concession units and storage areas, including the square footage of each unit and the locations of utility points to lease lines. Please describe the capabilities of your firm to create and maintain such floor plans and indicate how often the plans would be updated.

c. LDBE Plan

An LDBE participation requirement of 10% has been established for this Management Contract. The Airports Authority requires LDBE participation in the management of the concession program in the form of subcontracting, joint venture, partnership, or other legal arrangement between the Selected Offeror and one or more LDBE firms meeting the Airports Authority’s LDBE eligibility standards. Such proposed participation shall be based on the percentage of the annual Management Fee to be collected by the Selected Offeror to carry out the services required under the Management Contract, which would be allocated to Airports Authority-certified LDBE firm(s).

It is the Airports Authority’s intention to have LDBE firm(s) performing meaningful roles in the management of the concession programs at the Airports. While the use of LDBE firms for the performance of services related to common tenant services is encouraged, such participation will not be counted as LDBE participation. The fees earned by LDBE firms(s) should not be fees that are directly passed onto Concession Operators or paid by the Airports Authority. In order to count as LDBE participation, the fees earned by LDBE firm(s) must come out of the Management Fee collected by the Selected Offeror.

The Offeror’s Proposal must address the following:

i. Name and address of proposed LDBE firm(s). ii. Annual estimated fees to be earned by each named LDBE firm, along with

the percentage of the total Management Fee that each LDBE firm(s) fees represents. Provide LDBE participation figures individually for each proposed LDBE and cumulatively for all proposed LDBE firm(s) for the Management Contract.

iii. Description of the legal arrangement(s) underlying each LDBE firm(s) participation.


iv. Description of the role each LDBE will have in carrying out the Management Contract, along with the previous experience each LDBE has in providing such goods or services.

v. In the event that an LDBE firm is not performing, Offeror should describe the approach it would employ to help improve performance, and in the event that approach fails, the approach it would employ to replace that LDBE firm with another LDBE business partner.

d. Marketing, Advertising, and Promotion

i. Describe how the marketing challenges specific to the retail and food service environment at Dulles International and Reagan National Airports, independently, differ from other projects, and in particular, from other airports. Provide a strategy for each Airport that details how your organization would meet those challenges. Using information developed for Offeror’s proforma income statement for this section; detail the type of marketing initiatives that could be implemented using money from the marketing fund that would be collected from Concession Operators. Offeror’s should note that the Contractor will be responsible for producing, updating, and installing the concession maps for the directories, which are provided by the advertising concessionaire at the Airports.

ii. Offeror should describe the type of research it would employ, if any, to assist in formulating marketing strategies. Please describe the research objectives and methodology to be used as well as examples of proposed questions. If specific data sources or vendors are contemplated, please identify them.

iii. Provide a quarterly timeline, beginning January 2013 and ending December 2013, indicating marketing challenges, anticipated target audiences, advertising messages, and advertising media to be employed to reach those audiences for each of the Airports. The timeline should specifically describe the methods to be used to reach those audiences during potential transition phases. The timeline should include a narrative that describes the market Offeror intends to attract and the reasons for choosing a particular medium. Also, describe how the marketing and advertising campaign would reach potential national, regional, and local customers at Dulles International and Reagan National Airports and provide a list of anticipated target audiences.

iv. Please provide two (2) case histories of projects in which Offeror’s organization has successfully designed and implemented a marketing and promotion campaign that was similar in scope to those proposed for the Dulles International and Reagan National Airports concession programs. Describe the methods Offeror’s organization employed to solve the unique marketing and advertising challenges presented that relate directly to those that may exist at Dulles International and Reagan National Airports.


v. Please describe any navigational technology or applications (“apps”), if any, that the Offeror would implement at the Airports. Describe any previous experience the Offeror has in using such technology.

5. Financial Offer

Each Offeror shall provide a financial offer to the Airports Authority in the form of a percent of the Total Gross Rental Payment (also known as Management Fee) to be retained by the Offeror. This Management Fee shall be the Offeror’s total compensation for the services to be provided during the Contract Term of the Management Contract to be awarded for marketing, leasing, and managing the food service and retail concession programs at Dulles International and Reagan National Airports.

A financial offer form is shown in Attachment 3 of this RFP. Attachment 3 shall not be modified. The percentage of the Total Gross Rental Payment shall be based on Offeror’s best estimate of the likely rents that would be negotiated with the future Concession Operators. This percentage of Total Gross Rental Payment fee to be retained by the Contractor shall be the Contractor’s only form of compensation under the terms of the Management Contract to be awarded. The balance of the Total Gross Rental Payment owed by the Concession Operators shall be paid to the Airports Authority. There shall be no additional leasing or property management fees. The Contractor will not be paid for any expenses or costs associated with their operations at Dulles International and Reagan National Airports. The financial offer shall be compared mathematically to the other financial offers submitted in response to this RFP.

SECTION VI. PROPOSAL GUARANTEE

A. Proposal Guarantee

A Proposal Guarantee of fifty thousand dollars ($50,000) shall be submitted by each Offeror with its Proposal. The Proposal Guarantee serves to guarantee execution of the Management Contract on the basis of the Proposal submitted. In the event the Selected Offeror fails to execute the Management Contract offered by the Airports Authority on the basis of such Proposal, the Proposal Guarantee shall be forfeited.

B. Acceptable Forms of Proposal Guarantee

The Proposal Guarantee, at the option of the Offeror, may be in the form of a certified check, cashier's check, money order or an irrevocable letter of credit (by a bank rated "B" or better by Sheshunoff Information Service) made payable to the Metropolitan Washington Airports Authority. The checks or money orders will be deposited into an Airports Authority bank account designated for this purpose. While the checks/money orders are on deposit, the Offeror shall not earn interest on these funds.


C. Return of Proposal Guarantee

The Proposal Guarantee will be returned without interest to the unsuccessful Offeror’s immediately following execution of a Management Contract between the Airports Authority and the Selected Offeror. The Proposal Guarantee of the Selected Offeror shall not be released until after the Management Contract has been fully executed and the Management Contract performance guarantee has been received by the Airports Authority.

SECTION VII. EVALUATION OF PROPOSALS

A. Proposal Evaluation Criteria

Proposals received will be evaluated in detail in accordance with the evaluation criteria listed below. The listed evaluation criteria are not of equal weight and are listed in descending order of importance, with each factor having less weight than the one above it. Prior to beginning the evaluation, each Offeror’s Background, Experience and Financial Capability will be considered on a pass/fail basis. Any Offeror that does not pass will have its Proposal deemed non-conforming and dropped from further consideration. Offeror’s that pass will have their Proposals evaluated under the following criteria:

1. Financial Offer

The evaluation of the Financial Offer will consist of mathematical calculations using the percentage of Total Gross Rental Payment to be retained by the Offeror’s. The Offeror proposing the lowest percentage of Total Gross Rental Payment to be retained as their Management Fee will receive the maximum number of points for this criterion. All other Offeror scores will be calculated as a fraction of the maximum points based on a mathematical comparison of their proposed percentage of Total Gross Rental Payment versus the lowest proposed percentage of Total Gross Rental Payment. Offeror’s proposing the same percentage of Total Gross Rental Payment to be retained as their Management Fee will receive the same score.

2. Development and Implementation Plan

The evaluation of the development and implementation plan will be based on the quality, variety, innovative and leasing strategy of the Contractor’s concession program development plan, including ACDBE participation plans. The feasibility of the transition and implementation plan and its impact on the overall concession program will be evaluated. Finally, the validity and reasonableness of the Contractor’s sales and rental income projections and how they correlate to the proposed development plan will also be evaluated. Section V.,M,3 of this RFP fully describes what will be evaluated for this criterion.


3. Property Management, Marketing, Advertising, and Promotion

The evaluation of the property management, marketing, advertising, and promotion plan will be based on the thoroughness of the information described in Section V.,M.,4 of this RFP. Additionally, the Contractor’s plan for managing tenant relations, performance monitoring methods, concession operations monitoring, customer service initiatives and employee training, common area maintenance plan, LDBE participation plans, and reporting of tenant operating performance the Airports Authority will be evaluated. Also evaluated will be the proposed marketing efforts as well as the proposed advertising and promotion plans for the concession program at the Airports.

SECTION VIII. DISCLAIMER

The passenger enplanement data, gross receipts, and other information provided by the Airports Authority in connection with this RFP are furnished for informational purposes only. Such data shall in no way relieve Offeror from the responsibility of determining for itself the business potential of the proposed management opportunity.

SECTION IX. AMENDMENTS TO THIS REQUEST FOR PROPOSALS

The Airports Authority shall not be responsible for any oral instructions with regard to this RFP or to the completion and submission of any Proposal. Said RFP and any pertinent information relative to this RFP developed by the Airports Authority subsequent to the issue thereof, and prior to the established date for receipt of Proposals may only be changed by a formal, written Amendment to the RFP, which, if issued by the Airports Authority, will be posted on the Airports Authority website with an e-mail notice to all prospective Offeror’s of record. Offeror’s shall acknowledge receipt of any amendment to this RFP by signing and returning the amendment as instructed on the Amendment form.

INTENTIONALLY LEFT BLANK

Request for Proposals MWAA-4-12-C002

ATTACHMENT 1

Draft Management Contract

CONCESSION MANAGEMENT CONTRACT

BETWEEN

METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

AND

____________________________________________________________

FOR THE MARKETING, LEASING, AND MANAGEMENT OF THE FOOD SERVICE AND RETAIL CONCESSIONS

AT WASHINGTON DULLES INTERNATIONAL AIRPORT

ANDRONALD REAGAN WASHINGTON NATIONAL AIRPORT

CONTRACT NO. MWAA-4-12-C002

TABLE OF CONTENTS

ARTICLE 1. OPERATING PERIOD ................................................................................ 2�Section 1.1. Initial Operating Period ............................................................................ 2�Section 1.2 Extension Option ...................................................................................... 2�Section 1.3 Contract Year ............................................................................................ 2�

ARTICLE 2. INCORPORATION OF PROPOSAL ........................................................... 2�ARTICLE 3. PREMISES .................................................................................................. 2�

Section 3.1 Assignment of Premises ........................................................................... 2�Section 3.2 Retail Merchandising Units (RMUs) .......................................................... 4�Section 3.3 Office Space ............................................................................................. 5�

ARTICLE 4. SCOPE OF OPERATIONS ......................................................................... 5�Section 4.1 Rights of the Contractor ............................................................................ 5�Section 4.2 Prohibited Activities .................................................................................. 6�Section 4.3 Scope of Operations ................................................................................. 6�

ARTICLE 5. FINANCIAL CONSIDERATION ................................................................. 33�Section 5.1 Management Fees .................................................................................. 33�Section 5.2 Payment to the Authority ......................................................................... 33�Section 5.3 Withheld and Late Payments to the Authority ......................................... 33�Section 5.4 Payment for Vacant Premises ................................................................ 33�Section 5.5 Financial Reporting Requirements .......................................................... 34�Section 5.6 Annual Reconciliation ............................................................................. 34�

ARTICLE 6. PERFORMANCE GUARANTEE ............................................................... 34�Section 6.1 Performance Guarantee ......................................................................... 34�

ARTICLE 7. FIXED IMPROVEMENTS .......................................................................... 35�Section 7.1 Initial Fixed Improvements ...................................................................... 35�Section 7.2 Additional Improvements ........................................................................ 35�

ARTICLE 8. BUYOUT, TITLE, AND AMORTIZATION .................................................. 40�Section 8.1 Title ......................................................................................................... 40�Section 8.2 Amortization ............................................................................................ 41�

ARTICLE 9. DISADVANTAGED BUSINESS ENTERPRISE PARTICIPATION ............ 41�Section 9.1 Local Disadvantaged Business Enterprise (LDBE) Participation ............ 41�Section 9.2 Airport Concession Disadvantaged Business Enterprise (ACDBE) Participation ............................................................................................................... 42�Section 9.3 Identification and Certification of ACDBE Concession Operators and Business Partners ...................................................................................................... 42�Section 9.4 Good Faith Efforts Waiver ....................................................................... 44�Section 9.5 LDBE and ACDBE Compliance .............................................................. 45�

ARTICLE 10. QUALITY OF PERFORMANCE AND LIQUIDATED DAMAGES ............ 46�ARTICLE 11. INSURANCE REQUIREMENTS ............................................................. 47�

Section 11.1 Notice to the Contractor, Types of Insurance Coverage Required. ....... 47�Section 11.2 Commercial Automobile Liability ........................................................... 47�Section 11.3 Commercial General Liability ................................................................ 47�Section 11.4 Professional Liability ............................................................................. 47�Section 11.5 “All Risk” Property-Contractor’s Property .............................................. 48�Section 11.6 Workers’ Compensation and Employer’s Liability ................................. 48�

ARTICLE 12. RECORDS AND BOOKS; INSPECTIONS; AUDITS ............................... 48�Section 12.1 Contractor to Maintain Certain Books and Records .............................. 48�Section 12.2 Location of Books and Records ............................................................ 49�Section 12.3 Books, Records and Information ........................................................... 49�Section 12.4 Controls ................................................................................................ 49�Section 12.5 Authority’s Right to Inspect and Audit ................................................... 49�

ARTICLE 13. MISCELLANEOUS PROVISIONS .......................................................... 50�Section 13.1 Advertising and Public Displays ............................................................ 50�Section 13.2 Inconveniences During Construction .................................................... 51�Section 13.3 Incorporation of Standard Provisions .................................................... 51�Section 13.4 Notices .................................................................................................. 52�

Exhibits Exhibit 1 – Contractor’s Proposal Exhibit 2 – Premises Drawings Exhibit 3 – Phasing Plan Exhibit 4 – Concession Operator Extension Agreements Exhibit 5 – Monthly Certified Statement Exhibit 6 – Standard Provisions for Concession Contracts Exhibit 7 – Good Faith Effort Form Exhibit 8 – Office Space

Concession Management Contract Contract No. MWAA-4-12-C002 Page 1 of 53

CONCESSION MANAGEMENT CONTRACT NO. MWAA-4-12-C002 FOR THE MARKETING, LEASING, AND MANAGEMENT OF

FOOD SERVICE AND RETAIL CONCESSIONS AT

WASHINGTON DULLES INTERNATIONAL AIRPORT AND

RONALD REAGAN WASHINGTON NATIONAL AIRPORT

THIS CONCESSION MANAGEMENT CONTRACT AND LEASE (hereinafter referred to as “Contract”) is by and between the Metropolitan Washington Airports Authority, 1 Aviation Circle, Washington, DC 20001-6000, (hereafter referred to as the "Authority"), and __________________________ (hereafter referred to as the “Contractor”). The Authority and the Contractor are collectively referred to as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Authority operates Washington Dulles International Airport (hereinafter referred to as “Dulles”) and Ronald Reagan Washington National Airport (hereinafter referred to as “National”) and/or collectively (“the Airports”) under the Metropolitan Washington Airports Act of 1986; and,

WHEREAS, the Authority has determined that the marketing, leasing, and management of food service and retail concessions is an essential and appropriate service for passengers and other patrons using the Airports; and,

WHEREAS, the Contractor has submitted a proposal in response to the Authority's public solicitation, Request for Proposals No. MWAA-4-12-C002 for the marketing, leasing, and management of the food service and retail concessions at the Airports, and the Authority wishes to enter into a Contract with the Contractor on the terms and conditions herein set forth;

NOW, THEREFORE, the Parties hereto, for and in consideration of the terms, covenants, and agreements contained herein, agree as follows:


ARTICLE 1. OPERATING PERIOD

Section 1.1. Initial Operating Period

The Initial Operating Period of this Contract shall commence as of 12:01 AM on January 1, 2013, and end at 12:00 Midnight on December 31, 2017, subject to earlier termination as provided for herein.

Section 1.2 Extension Option

The Authority may exercise up to two (2) two-year extension options. These options may be exercised at the sole discretion of the Authority. Should the Authority decide that it is in its best interest to exercise one or more of these options to extend the Operating Period of the Contract, the Contractor will be notified by the Authority in writing not less than six (6) months prior to the end of the Contract or any extension thereof. The terms and conditions of the Contract during the option period shall be those stated herein.

Section 1.3 Contract Year

For the purposes of this Contract, "Contract Year" shall mean the period of time beginning on January 1 and extending through December 31 of the same year.

ARTICLE 2. INCORPORATION OF PROPOSAL

The Contractor’s original proposal and Best and Final Offer (if any) are hereby incorporated into and made part of this Contract as Exhibit 1. Disclosure of the Contract, proposal and Best and Final Offer, and information contained therein to third parties shall be subject to Article 2 of the Standard Provisions attached hereto as Exhibit 6, the Authority’s Freedom of Information Policy, and the Authority’s Contracting Manual.

ARTICLE 3. PREMISES

Section 3.1 Assignment of Premises

A. Except as limited in Article 4 of this Contract, the Contractor is hereby granted and assigned the privilege and obligation to lease, market, and manage the food service and retail locations, as defined herein, and hereinafter referred to as “Premises,” as defined in Exhibit 2, located in the Airports’ terminals and midfield concourse buildings. The Contractor agrees to lease, market, and manage the food service and retail concession locations (in-line units and permanent kiosks) and multiple retail merchandising units at the Airports as shown in Exhibit 2. The assigned Premises are comprised of approximately 175 operating locations containing approximately 157,800square feet. The Authority may adjust these Premises, adding or removing locations, as the Authority’s


needs change. Any adjustment to the Premises shall be formally made by written amendment to the Contract.

B. As of the effective date of January 1, 2013, the existing leases for the Premises identified herein shall be assigned to the Contractor and the Authority shall require the Concession Operators to make their rental payments to Contractor and accept Contractor as their landlord. The Contractor shall permit the current Concession Operators occupying these Premises to continue operating under the terms and conditions of those existing concession leases until the expiration date, or other termination of said concession leases. The term “Concession Operators” has the same meaning as the entities identified as “Tenants” in these concession leases. The Contractor shall be bound by the terms and conditions of these existing concession leases until the expiration date or termination of those leases. Beginning on the date upon which said concession leases for the Premises are assigned to the Contractor, the Contractor shall be entitled to retain the Management Fee, as described in Article 5, and shall provide those services identified in Article 4, herein.

C. In addition to the privilege to use the above Premises, the Contractor and its Concession Operators shall have the privilege, in common with others so authorized by the Authority, to use the loading docks and freight elevators for the purpose of receiving goods and other supplies in support of its business operations; PROVIDED, HOWEVER, that the Contractor's use of the loading docks and elevators, shall, at all times, conform to any and all regulations promulgated by the Authority covering the use of these facilities. There shall be no additional charge to either Contractor or its Concession Operators for the use of such loading docks and freight elevators.

D. The Contractor and Concession Operators shall have the privilege for their employees to use, in common with other employees and users of the Airports, employee parking facilities provided by the Authority, at such fees as the Authority may, from time to time, charge all employees using these parking facilities.

E. From time to time during the Operating Period of this Contract, it may be necessary for the Authority to require the Contractor to relocate or reduce the Premises. The Contractor shall accomplish any such relocation or reduction of the Premises as expeditiously as is reasonable under the circumstances. Any adjustment to the Premises shall be formally made by amendment to the Contract. The Authority will, to the extent reasonably possible, attempt to provide the Contractor with Premises that are comparable to those that are being vacated.


The Contractor shall ensure that leases with Concession Operators provide that:

1. Any such relocation or reduction of the Premises shall be accomplished by the Concession Operators as expeditiously as is reasonable under the circumstances.

2. In the event that the Authority determines it is necessary to relocate or reduce, all or a portion of the assigned Premises, the Authority agrees to: a) notify the Contractor at least ninety (90) days in advance of the relocation or reduction of the assigned Premises; b) buy out the Concession Operator’s undepreciated capital investment on a straight line basis in accordance with the provisions of Article 8 herein.

3. In the event that the Authority requires the reduction, relocation or discontinuance of any assigned Premises during the Operating Period, the Authority shall be responsible for all reasonable moving costs incurred in any relocation.

F. The Authority, throughout this Contract, may, at its sole discretion, assign to the Contractor additional areas at the Airports not now covered by this Contract, such as any existing, expanded, or new areas of the Airports’ terminal buildings in which the Contractor shall lease, market, and manage appropriate concession facilities, subject to the prior written approval of the Authority as to location, size, design, décor and types of concession products and services to be provided. The Authority shall make reasonable efforts to provide the Contractor with locations and facility sizes that shall maximize concession availability to the traveling public.

Section 3.2 Retail Merchandising Units (RMUs)

The Contractor is required to replace the existing RMUs at the Airports within the first twelve (12) months of the Operating Period. The design of the replacement RMUs must be in accordance with the Authority’s Tenant Design Standards and approved in writing by the Authority and must be of brand new construction. The RMUs cannot be refurbished, previously used or otherwise made to look new. A minimum of thirty (30) RMUs must be included in the concession programs at the Airports, fifteen (15) at Dulles and fifteen (15) at National. The cost of designing, constructing, installing, and maintaining the RMUs shall be the sole responsibility of the Contractor shall be no less than $20,000 dollars per RMU, and must be fully depreciated on a straight-line basis over the initial term of the Operating Period so that they have no book value at the end of the initial Operating Period. Upon the expiration or earlier termination of this Contract, title to the RMUs shall revert to the Authority. In the event of an early termination of this Contract through no fault of the Contractor, the Authority shall reimburse the Contractor for the unamortized capital investment for the RMUs in use at the Airports as of the effective date of Contract termination based on the straight-line depreciation calculation. Title to the RMUs shall pass to the Authority on the date payment is made by the


Authority. If the Contract is terminated due to the Contractor’s default, then the Contractor shall not be entitled to reimbursement of any of its unamortized capital investment, and title to the RMUs shall pass to the Authority immediately upon termination. The locations of the existing RMUs at the Airports is shown on Exhibit C and D of the RFP document.

Subject to the prior written approval of the Authority, the Contractor may provide and lease additional RMUs to provide temporary food service and retail concessions at the Airports. The Authority will review their size, design, style, and proposed locations prior to granting approval. The Authority, at its sole discretion, and upon thirty (30) days notice to the Contractor, may require the relocation or removal from service of any RMUs. Such removal by the Contractor shall be at the Contractor's sole expense. The Authority shall have no obligation to provide alternative space for any cart(s) or RMUs removed from service.

Section 3.3 Office Space

Contractor shall use and occupy office space at each Airport provided by the Authority solely to conduct the business authorized by this Contract and for no other business or purpose whatsoever. The space will be provided without charge for rent or utilities. The Authority reserves the right to require the Contractor to relocate from time to time to office space of a similar size with thirty (30) days advance written notice. In the event the Contractor relocates at the Authority’s request, the Authority will bear the relocation costs. Relocation costs shall include the provision of a new location and the start up of any reasonable and customary utilities, but shall not include the cost of moving or replacing Contractor’s office equipment.

ARTICLE 4. SCOPE OF OPERATIONS

Section 4.1 Rights of the Contractor

A. The Authority hereby grants to the Contractor, subject to all terms, conditions and covenants of this Contract, the privilege and obligation to lease, market, and manage leases for the Airports’ terminal concession facilities that offer, sell, and promote food, beverages, and retail merchandise on the Premises as defined herein. These privileges are subject to the following limitations, among others:

1. Any airline operating at the Airports may provide, without charge, coffee to its passengers within its leased premises. The Authority may require that such airline purchase coffee from one or more of the food service Concession Operators at the Airports, subject to any other legal commitments between the Authority and the airlines that would prohibit the Authority from requiring such purchase from the Airports’ food service Concession Operators.

2. Any airline operating a private club at the Airports may provide food and beverage service to its patrons in their club without charge and without


obligation to purchase such food and beverages from an Airport food service Concession Operator.

3. Any airline or other airport tenant or the Authority may choose to provide food and beverages at private meetings, parties and receptions on the Airports using caterers other than the Airports’ food service Concession Operators.

4. Nothing in this Contract shall prevent other tenants at the Airports from installing vending machines provided by subcontractors of their choice in their nonpublic leased premises.

5. The privileges granted under this Contract and under the leases to individual food service Concession Operators do not include the preparation or sale of in-flight meals to airlines operating from the Airports. The foregoing prohibition shall not preclude the preparation and sale of carry-on meals to passengers in the Airports by the Airports’ food service Concession Operators.

6. The privileges granted under this Contract and under the leases to individual Concession Operators do not include the sale of duty free and duty paid merchandise, advertising, ATMs, pay telephones, luggage carts, banking services, currency exchange, and internet access (any internet services provided must be conducted through the Authority’s designated wireless provider and a separate fee cannot be charged to the customer).

Section 4.2 Prohibited Activities

A. The following activities are expressly prohibited under this Contract.

1. Operation of any food service or retail concession facilities at either Airport by the Contractor.

2. The Contractor cannot invest in, or partner in any way, or represent in any way, or enter into any financial agreement with any food service or retail Concession Operator doing business at Dulles or National Airports.

3. The sale of any goods or services not authorized under this Contract.

Section 4.3 Scope of Operations

A. Objectives. The Authority expects that the Contractor shall:

1. Provide a variety of food service and retail options that meet the needs of the customers of the Airports, and provide quality products, outstanding


customer service, value for money, and menu choices that vary with changing trends and customer wants and needs.

2. Maximize financial return to the parties by developing food service and retail concepts that match the customers’ wants and needs, tailoring those concepts to the Airports’ markets and working with the Authority and the Concession Operators to develop marketing and joint promotions of the concessions.

3. Work with the Authority and Concession Operators to provide attractive, well-designed facilities that provide an excellent variety of contemporary food service and retail choices that are inviting to users of the Airports.

4. Continually update the food service and retail concepts operating in the Airports to ensure that they meet the expectations of the Airports’ passengers and reflect current market trends in food service and retail operations.

5. Ensure that food service and retail Concession Operators provide quality customer service to all of the patrons of the Airports.

6. Ensure that Concession Operators are open for business during the hours prescribed in their leases, and that Concession Operators extend operating hours during weather events and other disruptions to normal flight schedules.

7. Ensure that all food service and retail Premises have strong visual appeal and are inviting to customers.

8. Ensure that all food service and retail Premises are compliant with the Americans with Disabilities Act of 1990, as amended (ADA), and also accommodate customers with luggage, luggage carts, and strollers, as well as wheelchair-bound customers.

9. Continually measure, improve, and analyze the productivity of the food service and retail operations at the Airports.

10. Continually evaluate and improve the customer perception, impression, and acceptance of the food service and retail concepts and facilities at the Airport s.

B. Emergency Preparedness Plan. Within sixty (60) days of the commencement of the Contract, the Contractor will submit an Emergency Preparedness Plan


describing how the Contractor would interface with the Concession Operators in the event of any service interruption.

C. Staffing. The Contractor shall at all times maintain the following minimum staffing positions as described in Sections 4.3.B.1 through 4.3.B.4:

1. General Manager. The Contractor shall retain two (2) on-site, experienced, full-time General Managers, (one (1) for each Airport) who have been approved in writing by the Authority. The General Managers shall be fully authorized to represent and act for the Contractor in all matters pertaining to its operations under this Contract. The General Managers shall be dedicated exclusively to the management, leasing, and marketing of the concession program at each of the Airports and may not have any responsibilities at other airports. At a minimum, each General Manager must have five (5) years experience managing multiple stores, units or properties of a size, complexity, and sales volume similar to that of the Airport to which the General Manager is assigned in either airport concession management or property management environments. The annual salary for each General Manager shall be a minimum of $80,000.

The General Manager must be accessible to the Authority via portable email device or cellular phone at all times. At each Airport, a reference copy of the Contract shall be kept in the Contractor’s local office at all times.

2. Assistant General Manager. The Contractor shall retain a minimum of one (1) on-site, experienced, full-time Assistant General Manager at each of the Airports who has been approved in writing by the Authority. At least one Assistant General Manager at each of the Airports must possess a minimum of five (5) years operational food service experience if the General Manager does not have a minimum five (5) years operational food service experience. The annual salary for each Assistant General Manager shall be a minimum of $55,000. At times when the General Managers are not present at the Airports, the Contractor shall assign, or cause to be assigned, an Assistant General Manager to act for their General Manager and be in charge of all locations, services, and facilities.

When an Assistant General Manager is acting for the General Manager, the Assistant General Manager must be accessible to the Authority via portable email device or cellular phone at all times.

3. Staffing Plan. Prior to commencement of the Operating Period of the Contract, the Contractor shall propose a written staffing plan to the Authority and shall receive written approval from the Authority for other staff to perform in accordance with the Contract requirements. The minimum staff positions to be included in the staffing plan are:


a. Leasing Representative. A minimum of one (1) specific, dedicated full-time individual assigned to the Airports whose primary responsibilities are leasing the concession program at each of the Airports and who has been approved in writing by the Authority.

b. Marketing Representative. A minimum of one (1) specific, dedicated full-time individual assigned to each of the Airports whose sole responsibilities are managing the concession marketing program at each of the Airports.

c. Construction Management/Tenant Coordinator. A minimum of one (1) specific individual assigned to the Airports during all times when Concession Operator construction is taking place whose primary responsibilities are coordination of all Concession Operator construction and who has been approved in writing by the Authority.

d. ACDBE Coordinator. A minimum of one (1) individual assigned to the Airports whose primary responsibilities are coordination with current and prospective ACDBE Concession Operators at each of the Airports.

e. Administration. A minimum of one (1) individual assigned to each of the Airports whose primary responsibilities are administrative, reporting, and record-keeping.

f. Accounting and Financial Reporting. A minimum of one (1) individual assigned to the Airports whose primary responsibilities are concession program accounting, financial reporting, and financial record-keeping.

4. Corporate. As part of a staffing plan, the Contractor shall assign a single point-of-contact at the Contractor’s corporate level of management to supervise the General Managers at both Airports and be available to the Authority’s management during business hours.

D. Negotiation and Administration of Leases

1. General. The Contractor is expected to evaluate, select, and enter into leases with Concession Operators that will operate food service and retail concessions from individual spaces within the Premises granted to Contractor. The Contractor shall be responsible for presenting concept proposals to the Authority for approval, negotiating lease terms, and executing each Concession Operator lease upon receipt of written lease approval from the Authority. From the commencement of the Operating Period, the Authority and the Contractor acknowledge and agree that the Contractor shall enter into temporary revocable license agreements (in lieu of a longer-term permanent lease) with all of the Authority’s existing


food service and retail Concession Operators with lease expiration dates within 180 days (6 months) of the commencement of the Operating Period of this Contract until such time as the applicable individual spaces are redeveloped with a food service or retail concept under a longer-term lease. The length of the terms of these temporary revocable license agreements shall vary and be subject to the prior written approval of the Authority.

2. Standard Lease. Within thirty (30) days following the effective date of this Contract, the Contractor shall finalize its proposed standard master form of combined food service and retail lease, incorporating comments from the Authority, and submit it to the Authority for final approval. The standard master form lease shall be simple and straightforward, and tailored to the airport industry. Following approval of the standard master form of lease by the Authority, the Contractor shall use the approved lease form as the basis for the negotiation of leases with all Concession Operators. All leases must be fully assignable to the Authority in the event of the termination or expiration of this Contract.

3. Standard Competitive Process. Within thirty (30) days following the effective date of this Contract, the Contractor shall submit to the Authority for approval its written plan to achieve competition for each new retail or food service concession lease. Said plan shall include issuance of notice of the concession opportunity to a minimum of three (3) potential Concession Operators that may be appropriate for the lease concept, issuance of a request for proposals stating the basic proposal requirements, as well as the criteria upon which the Offerors will be evaluated, and the process that will be used to consider the Offerors and their proposals.

4. Concept Development and Concession Operator Mix. The Contractor shall propose a variety of quality food service and retail concepts, and shall lease to a mix of national, regional, local, and Airport Concession Disadvantaged Business Enterprise (ACDBE) Concession Operators that best meets the needs of the Airports’ users and reflects the Washington D.C. Metropolitan Area. Within thirty (30) days of the commencement of the Operating Period of the Contract, the Contractor shall submit to the Authority a date and plan for an outreach seminar, designed specifically to recruit local ACDBE Concession Operators. In addition, the Contractor is expected to participate in the annual Business Opportunities Seminar offered by the Authority to meet and recruit local Concession Operators. The final selection of concepts and Concession Operators to become Contractor’s subtenants shall be subject to Authority approval.

a. Competitive Market. The Contractor shall strive to maximize the benefits derived from creating and maintaining a "free market," competitive environment. Therefore, to the extent possible, the


Contractor shall optimize opportunities to cluster multiple Concession Operators in groups to stimulate a competitive environment, especially with regard to food service.

b. Airport Concession Disadvantaged Business Enterprise (ACDBE) Goal. The Contractor shall make good faith efforts to ensure that thirty-five percent (35%) of the projected total Gross Receipts from food service concessions and twenty-five percent (25%) of the projected total Gross Receipts from retail concessions leased by the Contractor under this Contract are generated by ACDBE Concession Operators. Each ACDBE firm must be certified by the Authority prior to the execution of a lease by the Contractor with that firm, in accordance with the terms of Article 9 herein. The Contractor shall be responsible for ensuring that the Authority receives all reasonable information needed to determine whether a firm qualifies as an ACDBE.

5. Concept Development Meetings. The Contractor shall meet with the Authority as needed, but not less than once per quarter, to review its progress with concept development plans and lease negotiations. In addition, the Contractor shall meet with the Authority annually to review its comprehensive concession plan and identify emerging trends in airport food service and retail. The Contractor shall submit an annual Master Plan for the merchandising, marketing, leasing, and development of the food service and retail concession programs at the Airports, including temporary services and the phasing of new concession openings and closures

6. Concept Proposal. The Contractor shall present concept proposals to the Authority for approval regarding the retail or food service concession location it plans to lease. The concept proposal to be developed by the Contractor for each facility is intended to serve as a planning tool that will allow the Contractor and the Authority to consider food service and retail opportunities at each of the Airports. Each concept proposal should provide a brief narrative description of the food service or retail concept, including the location, information about potential Concession Operator(s), potential for ACDBE participation, anticipated financial performance and return to the Authority, service and facility issues, examples of the proposed facility and/or Concession Operator(s) at other venues (e.g., photos or drawings of other locations), and other issues that should be considered early in the planning process. The Authority may request modifications to the proposal prior to Authority approval and prior to the Contractor commencing any detailed lease negotiations with proposed Concession Operators.

7. Concession Operator Selection and Preliminary Deal Sheet. Following approval by the Authority of the concept proposal and the Contractor’s


completion of the competitive process outlined in Section 4.3, the Contractor shall recommend to the Authority a proposed Concession Operator and shall submit to the Authority a written summary of the proposed lease terms, or a “Deal Sheet.” The Authority may request additional information regarding the other operators that were considered for the lease that were not recommended by the Contractor. The Deal Sheet shall include, at a minimum, concept type and use clause, proposed Concession Operator, term length, Minimum Annual Guarantee, Percentage of Gross Receipts, proposed menu and/or merchandise mix, projected first year Gross Receipts, and whether or not the proposed Concession Operator is an ACDBE. At the Authority’s request, proforma for the proposed Concession Operator shall also be provided. Contractor shall verify that the proposed lease with each Concession Operator is fully independent from any other lease or contract that the Contractor has with a Concession Operator or Affiliates at any other locations leased and/or managed by the Contractor or any of its Affiliates. For purposes of this Contract, “Affiliate” means, with respect to any person or entity, any other person or entity that directly or indirectly controls, is controlled by, or is under common control with such first person or entity. As used in this definition, the term “control” (including the terms controlled, controlled by, and under common control with) shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the person, whether through the ownership of voting securities, by contract, or otherwise. The Contractor must obtain the Authority’s written approval of the Deal Sheet and complete any requested modifications to the Deal Sheet prior to proceeding with any lease negotiations.

8. Lease Negotiation. The Contractor shall proceed with lease negotiations with the prospective Concession Operator following the Authority’s written approval of the Deal Sheet, including any modifications required by the Authority. The Contractor may modify portions of the approved standard master lease form during negotiations with a Concession Operator provided, however, that any such changes do not materially modify the requirements of this Contract or materially alter the rights, obligations, and duties of the Contractor under this Contract without the prior written approval of the Authority. Further, the Contractor shall provide a detailed list of all changes proposed and made to the standard master lease form for a particular lease when it submits the lease to the Authority for approval. The list may be in the form of an electronically-prepared redlined draft showing all of such proposed changes compared to the standard master lease form, which shall be emailed by the Contractor to the Authority’s designated representative(s).

a. Lease Term. The Contractor shall ensure that the lease term for each Concession Operator is as short as possible, while at the


same time being commensurate with the Concession Operator’s investment in the leased Premises. The Contractor, in determining the lengths of the leases, shall attempt to preserve space flexibility, the ability to replace less successful concepts with more productive operations, the ability to keep the Premises fresh and refurbished, and such other relevant factors as may be appropriate.

b. Lease Use Clause. The Contractor shall define, in each lease, a specific food service and/or retail concept, and establish the initial menu and pricing for food service concessions, and a specific product list with initial pricing for retail concessions. The Authority must grant written approval for any variations from the Authority-approved concept, menu, and pricing for food service, and/or merchandise categories and pricing for retail prior to such changes being made.

c. Lease Assignment. The Contractor shall establish leases that are fully assignable to the Authority or the Authority’s designee upon the expiration or termination of this Contract as provided for herein.

d. Investment Requirements. The Contractor shall define, in each lease, a specific minimum investment requirement for each concession location, as well as remedies the Contractor will exercise if the minimum investment requirement is not met by the Concession Operator.

D. Facility Development

Following approval of a lease, the Contractor shall use all reasonable efforts to cause the Concession Operator to proceed promptly with design development and construction of facilities. All measurements should be field-verified. The Contractor and the Concession Operators shall comply with the following procedures for the development of facilities and services at the Airport.

1. Presentation of Initial Concept Plan. The Contractor shall work with the Concession Operators and use all reasonable efforts to cause the Concession Operators to develop and submit for Authority approval concept and design plans for each facility within sixty (60) days after the lease is signed. The Contractor shall be responsible for presenting all facility designs to the Authority and obtaining all necessary Authority approvals for the design and construction of all facilities at the Premises. The Authority shall have the right to require modifications to the initial concept plan and any approval granted by the Authority is subject to the Contractor’s


incorporation of the required modifications into the final permit plans. The initial concept plans shall include, at a minimum, the following:

a. Plan Views. Plan view layouts of the proposed space in eighth of an inch equals one-foot scale.

b. Concept Sketches. Conceptual sketches shall be supplied to the Authority for each proposed space. The conceptual sketches should have sufficient detail to indicate the design approach, communicated through colored floor plans, and interior vignettes that also describe the signage and graphics for the proposed space. Also required will be broad-brush palettes of the colors and materials to be used, intended furnishings, store fixtures, and types of light fixtures.

c. Elevations. Drawings of all interior and exterior elevations visible to the public, detailing storefronts and the architectural compatibility with surrounding areas.

d. Material Boards. Material boards for the proposed space.

e. Project Schedule. A preliminary project schedule describing the actions necessary to implement the project, the sequence of actions, and the schedule of actions.

2. Subsequent Plan Submittals. Following Authority approval of the initial concept plan, the Contractor shall proceed to coordinate with the Concession Operators for continued design development, application for construction permits, and facility construction in accordance with Article 7 of this Contract.

3. Lease/Tenant Criteria and Enforcement. The Contractor shall ensure, through the lease and through its own management efforts that Concession Operators comply with the Authority’s Design Manual and the Tenant Submission Requirement Manual.

4. Construction Coordination. The Contractor shall use all reasonable efforts to ensure that the Concession Operators’ general contractors meet all Authority guidelines to construct facilities on the Airports, and shall provide such coordination between the Concession Operators and the Authority to ensure that construction is completed on schedule and in accordance with Authority standards and security requirements. The Authority’s construction requirements and guidelines are detailed in Article 7 of this Contract. In addition, the Contractor shall ensure that the Concession Operators construct and maintain, at their own cost, all construction walls, dust walls, and any


dust containment covers used during the construction of any concession locations.

E. Operational Management

1. Lease Administration. Following execution of a lease between the Contractor and a Concession Operator and beneficial occupancy of the Premises subleased to the Concession Operator, the Contractor will be responsible for the following elements of the administration of the lease.

a. Collection of all rent, fees, fund contributions, reimbursements, and any liquidated damages due under the lease. All monies due will be properly accounted for and reported; and monies shall be forwarded to the Authority as provided for herein.

b. Ensuring that Concession Operators meet the insurance requirements contained in Exhibit 6, Standard Provisions.

c. Analysis of Concession Operators’ financial performance and prompt identification to the Authority of any potential problems. The Contractor shall inform the Authority if a Concession Operator is in default and what action, formal or informal, against the Concession Operator is contemplated. Copies of all correspondence relating to the default and any legal actions filed by the Contractor relating to the default shall be provided to the Authority as these events occur.

d. Coordination with the Authority on concession advertising and promotions.

e. Promptly providing for the temporary and/or permanent re-leasing of any Premises that become vacant.

f. Ensuring that Concession Operators are compliant with lease terms.

2. Construction Coordination. The Contractor will coordinate with the Authority’s designated contacts at the Airports on a regular basis. The Contractor will be the principal contact point with the Concession Operators on the areas identified below. The Contractor and the Authority will work together to establish a meeting schedule and procedures necessary to accomplish the continued evaluation of the food service and retail operations as contemplated in this Article.

3. Evaluation and Oversight. The Contractor shall be responsible for establishing and conducting a program for the continuing evaluation of the


food service and retail operations conducted under this Contract. The purpose of this program shall be to identify any area where the Concession Operators may be able to improve the customer service and productivity of the operations. The Contractor shall initiate notification to the Concession Operators of any recommended actions to improve performance, and shall subsequently document whether such recommended actions were taken. The Contractor shall also provide analysis and services as described more fully below in support of the Authority’s food service and retail operations. In performing the continuing evaluation of the Airports’ food service and retail operations, the Contractor shall provide the following on a regular basis:

a. Property Inspections. Perform regular physical inspections of the Premises, on at least a monthly basis, or more often as a particular problem or issue arises, to determine the effectiveness and potential for improvement in the following:

i. Product displays and inventory;

ii. Menu boards and signage;

iii. Staffing, including ensuring that Concession Operators’ staff are wearing, at all times, prominent and easily readable name tags and Authority-issued security badges

iv. Operating hours;

v. Facility appearance and maintenance, including layout, color, materials and lighting; accessibility; cleanliness and safety issues, such as floors, stability of tables and chairs, etc.

The Contractor also agrees to comply with all applicable federal, state and local requirements and to allow duly authorized representatives of the Authority and governmental entities reasonable access to all concession Premises for inspection purposes, with prior notification, when possible, and in the presence of the Contractor’s General Manager. Best efforts will be made to minimize the impact of the inspections upon the Contractor’s business operations.

b. Mystery Shopper Program. The Contractor shall conduct a mystery shopper program to evaluate Concession Operator customer service levels and develop improvement recommendations in the following areas. The direct costs of conducting the mystery shopper program (excluding the cost of Contractor employees) may be charged against the Marketing Fund.


i. Sales techniques ii. Customer service iii. Product presentation iv. Cash control v. General knowledge of airport terminals, services and

featuresvi. General conditions of store or restaurant

c. Compliance with Street Pricing. The Contractor shall monitor and ensure that all Concession Operators remain in compliance with the street pricing provisions of their leases. The Contractor shall conduct, at its own cost, or require the Concession Operators to conduct at their own cost, an annual survey of prices charged by comparable local food service and retail operators to verify that Concession Operator pricing is in compliance with lease pricing provisions. The Contractor shall provide the Authority with the results of the annual pricing survey(s), and shall take whatever steps are necessary to resolve any discrepancies between the prices charged by the Concession Operators and the surveyed prices, including assessing the Concession Operator liquidated damages at a rate of up to a maximum of Two Hundred Fifty Dollars ($250.00) per occurrence after providing a written warning to the Concession Operator the first time a discrepancy is discovered. The street prices for any product sold by any food service or retail Concession Operator shall be determined as follows: (i) If a Concession Operator does business in non-airport locations in the greater Washington, D.C. metropolitan area, the street price is the price charged for the same product at the nearest non-airport location in the greater Washington, D.C. metropolitan area, excluding short-term promotional prices; and (ii) If a Concession Operator does not operate in non-airport locations in the greater Washington, D.C. metropolitan area, the street price for all such products is the average price charged for such products by at least three comparable businesses in the greater Washington, D.C. metropolitan area approved by the Contractor and the Authority where comparable products are sold (e.g., in major regional malls, shopping centers, downtown locations, or other appropriate retail complexes located in the greater Washington, D.C. metropolitan area). For purposes of establishing the street price of an item, any difference in the size or quality of an item or the quality or brand recognition of the concept shall constitute a price differential. The Contractor’s costs for the annual street pricing survey (excluding the costs for Contractor employees) may be charged against the Marketing Fund, subject to the Authority’s prior written approval.


d. Communications. The Contractor shall create and distribute to all Concession Operators a newsletter on a quarterly basis. Such newsletter should include pertinent airport news and development announcements along with any administrative issues that are applicable to all Concession Operators. The Contractor is expected to continually communicate with the Concession Operators on a daily, weekly and monthly or as-needed basis, on subjects of immediate concern, such as delays or disruptions to airline service and operational matters.

e. Concession Operator Training. The Contractor shall make available to the Concession Operators the following training programs for local management and staff.

i. Sales and service training ii. Merchandising, display, and marketing forums

The Contractor’s costs for Concession Operator training programs (excluding costs of Contractor employees) may be charged against the Marketing Fund.

f. Concession Program Floor Plans. The Contractor will be responsible for producing and maintaining current floor plans for all concession units and storage areas located within the Premises that shall include the square footage of each unit, the locations of utility points to lease lines, and the current Concession Operator in each unit. Such floor plans shall be updated at least once every quarter and shall be provided to the Authority as needed in an agreed upon electronic format.

g. Customer Service Feedback. The Contractor will be responsible for establishing a customer service hotline and/or website to be used for reporting customer complaints and comments. The Contractor will be responsible for responding to all customer complaints and comments received within three-business days and updating the Authority staff as needed regarding critical areas of concern. The Contractor shall provide to Authority staff at its quarterly meetings a list of all complaints and comments received during that quarter.

F. Marketing and Promotion

The Contractor agrees to establish, implement, and monitor the following marketing and promotion plans and funds.


1. Annual Marketing Plan. The Contractor agrees to submit to the Authority a comprehensive annual marketing and promotion plan for the concession program at each of the Airports.

a. Development of Marketing Plan. The annual marketing plan, which shall describe the marketing and promotion budget and marketing strategy and tactics for the Contract Year, shall be completed and presented to the Authority within thirty days following the commencement of the first Contract Year. For all subsequent years, the Contractor shall provide a comprehensive marketing plan sixty (60) days prior to the end of the previous Contract Year. The plan and any proposed changes shall be subject to the final written approval of the Authority. The Marketing Plan shall address, at minimum, the following elements:

i. Internal Promotion Efforts. The Contractor shall coordinate with the various promotion opportunities associated with the Authority including, but not limited to, the Authority’s printed magazine, in-terminal flight information display monitors, and any other viable promotion opportunities that become available throughout the term of this Contract, to promote and advertise the concession programs at the Airports.

ii. External Promotion Efforts. The Contractor shall also coordinate with the local hospitality, transportation, retail, and restaurant industries, along with any applicable local government agencies, to market the Airports. Contractor shall develop promotional campaigns and/or events that partner with the local industries and allow for the potential for cross-promotion. The Contractor shall also coordinate with various travel publications to advertise and promote the concession programs at the Airports.

iii. Events. The Contractor shall plan, schedule, and execute various promotional events at the Airports such as product samplings, book signings, demonstrations, fashion shows, and store-opening celebrations.

iv. Programs. The Contractor shall create, establish, implement, and monitor an affinity program/frequent shopper program at the Airports.

b. Implementation of Marketing Plan. The Contractor agrees to implement the plan approved by the Authority. The Contractor shall provide a status report on the Marketing Plan to the Concession Operators at least once per quarter. The Contractor shall provide reasonable marketing assistance and advice to the Concession Operators as needed, (for example, preparation of operating hours


signs, free-standing signs, table top messages, and other marketing efforts that apply to Concession Operators individually). The direct costs of the implementation of the Marketing Plan (excluding the cost of the Contractor’s own employees) may be charged against the Marketing Fund.

2. Establishment and Use of the Marketing Fund. The lease shall require that all Concession Operators be required to contribute a marketing fee equal to one-half of one percent (1/2%) of total Gross Receipts from each Concession Operator (up to a maximum of $10,000 annually per concession facility) to implement the marketing and promotions plan (“Marketing Fund”). The Contractor shall expend the marketing fees collected from Concession Operators by the end of each Contract Year, with a carry-over amount of no more than five percent (5%) of the total of the Marketing Funds collected for that Contract Year. Collected marketing funds that are not spent by the end of each Contract Year shall be carried over to the next Contract Year. Any interest earned by the Marketing Fund shall be applied to Marketing Fund uses. Any unspent funds at the termination of this Contract shall be turned over to the Authority. The Contractor shall maintain the Marketing Fund in a separate account established solely for the purpose of implementing the food service and retail Marketing Plan. Only direct marketing and promotion costs incurred by the Contractor, or Concession Operators, shall be allowed to be charged against the Marketing Fund. Menus, menu boards, fixed storefront signs, and similar operational items do not qualify as Marketing Fund expenses. The Contractor may not charge to the Marketing Fund any costs associated with the use of its own internal staff to manage the Marketing Plan.

a. Documentation of Marketing Expenses. Prior to the end of each month, during each Contract Year the Contractor shall submit to the Manager of Concessions and Services at each of the Airports an electronic copy of the monthly bank statement for the Marketing Fund. The Contractor shall submit, within sixty (60) days after the end of each Contract Year, an accounting of all marketing funds collected and spent, with detailed documentation of actual expenditures (including invoices, cancelled checks, or other detailed documentation). The Authority may, from time to time, audit these marketing expenditures.

G. Meetings

The Contractor shall establish and conduct the following periodic meetings.

1. Meetings with the Authority at least quarterly to review Concession Operator sales and discuss operational issues, facility appearance and maintenance,


development and construction updates, ACDBE and LDBE participation, and other issues, as necessary.

2. Meetings with each Concession Operator owner/manager not less than once each quarter to discuss the operation, marketing, and productivity of the Concession Operator’s facilities.

3. Quarterly meetings of all Concession Operators to review airport news and developments, ongoing operational issues and concerns, and marketing and promotional activities.

4. Annual planning meeting with Authority staff to review marketing plan, identify emerging trends in airport food service and retail, and conduct a comprehensive concession plan review.

H. Business Analysis and Reporting

The Contractor shall evaluate on an ongoing basis and report to the Authority by the 20th calendar day of each month, in an electronic format and a file type as designated by Authority staff, the following Concession Operator performance data:

For the entire concession program: 1. Certified Monthly Statement (refer to Exhibit 5) 2. Current month’s sales vs. historical sales from the prior year and month

for each of the Airports, with subtotals by major terminal location and a total for each of the Airports

3. Current revenue vs. historical revenue numbers from the prior year and month for each of the Airports, with subtotals by major terminal location and a total for each of the Airports.

4. Year-to-date, rolling monthly sales and revenue numbers vs. rolling historical sales and revenue numbers for each of the Airports, with subtotals by major terminal location and a total for each of the Airports

5. ACDBE sales vs. sales from the prior year for each of the Airports 6. Percentage of sales generated by ACDBE Concession Operators at each

of the Airports

7. Fees paid to Contractor’s LDBE firm(s) for the month and year-to-date periods.

For each concession location: 1. Sales by individual Concession Operator locations for each of the Airports

with subtotals by type of concession (food service, specialty retail,


services, RMUs, kiosks) by major terminal location and concourse and a total for each of the Airports

2. Rent paid and owed by each Concession Operators by concession location for each of the Airports with subtotals by type of concession (food service, specialty retail, newsstands, services, RMUs, kiosks) by major terminal location and concourse and a total for each of the Airports

3. Sales per square foot and per enplaned passenger for each concession location at the Airports with subtotals by type of concession (food service, specialty retail, newsstands, services, RMUs, kiosks) by major terminal location and concourse and a total for each of the Airports

4. Revenue per square foot and per enplaned passenger for each concession location at the Airports with subtotals by type of concession (food service, specialty retail, newsstands, services, RMUs, kiosks) by major terminal location and concourse and a total for each of the Airports

I. Rental Collection and Payment of Fees

In consideration of the rights and privileges to be granted to the Concession Operators, the Contractor shall ensure that each Concession Operator lease contains provisions consistent with the following payment requirements. In addition, the Contractor shall collect such fees from the Concession Operators on behalf of the Authority.

1. Minimum Annual Guarantee. Payment of a Minimum Annual Guarantee (“MAG”) of a fixed dollar amount by each Concession Operator. Such MAG shall be established for each year of the lease. One-twelfth (1/12) of the MAG shall be paid in advance and without demand on the first day of each calendar month. For any period less than a full calendar month, the MAG shall be prorated over the number of days in the period. The MAG shall be deemed delinquent if the Contractor does not receive payment by the tenth (10th) calendar day of the month.

2. Percentage of Gross Receipts. Payment of a percentage of gross receipts (“Percentage Rent”) in excess of the MAG generated by each Concession Operator as established during negotiation of the lease. By no later than the fifteenth (15th) day after the end of each calendar month during the lease period, the Concession Operators shall pay to the Contractor without demand or invoice by the Contractor, a sum of money equal to either: (i) the amount by which the Percentage Rent exceeds the MAG paid for the previous month (if the rent under the lease is structured as the greater of the MAG or Percentage Rent); or (ii) the Percentage Rent for the amount of the monthly sales exceeding the breakpoint(s) negotiated in the leases. In the event that (i) the Percentage Rent for the month does not exceed the monthly installment of the MAG paid for


that month; or (ii) the monthly sales do not exceed the breakpoint(s), then no Percentage Rent shall be due for that month. Percentage Rent payments, if due, shall be deemed delinquent if not received by the Contractor by the fifteenth (15th) calendar day after the end of each calendar month.

3. Monthly Sales Report. Each month, the Contractor shall obtain from each Concession Operator a detailed Certified Monthly Statement of Gross Receipts (see Exhibit 5). This statement shall be reviewed by the Contractor for sales trends and to verify that the correct Percentage Rent payment has been made. After it has been reviewed by the Contractor, Contractor shall compile the information from the individual Certified Monthly Statements of Gross Receipts collected from the Concession Operators into one document to be forwarded to the Authority by the twentieth (20th) calendar day of the month, in an electronic format and file type as designated by Authority staff (as described herein). In the event of any rent discrepancies, the Contractor shall notify the Authority, in writing, within thirty (30) days of detection of such discrepancies and detail the steps that are being taken to remedy each discrepancy.

4. Annual Statement. There shall be an annual reconciliation conducted by each Concession Operator of the Minimum Annual Guarantee and Percentage Rent payments and the preparation of an Annual Statement, as defined in Exhibit 6, Standard Provisions. The Contractor shall collect such certified Annual Statements within sixty (60) days following the end of the Calendar Year from the Concession Operators and prepare one comprehensive certified Annual Statement for the entire concession program for the Calendar Year just ended to be submitted to the Authority on March 15 (or the closest business day following March 15, if that date should occur on a Saturday or Sunday). An independent certified public accountant (CPA) shall prepare said Annual Statement for the Contractor. The Annual Statement shall also include a statement by the independent CPA that in its opinion such Gross Receipts and fees paid have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and in accordance with the terms and conditions of this Contract, including the definition of Gross Receipts set forth herein. Such Annual Statement shall also contain a list of the Gross Receipts, by month, as shown on the books and records of the Contractor that were used to compute the fees paid to the Authority during the period covered by the Annual Statement. The Authority reserves the right to reject the Contractor’s choice of independent CPA if said independent CPA does not, in the Authority’s view, have the appropriate standing and reputation.

5. Utility Charges. Concession Operators shall be responsible for payment of all utilities (including electric, gas and water/sewer, where appropriate) used or


consumed on the Premises. Concession Operators shall install meters as required by the Authority, at their sole cost and expense, in accordance with the Authority Design Manual, at each of the concession locations leased to them. Charges for such utility consumption shall be at rates established by the Authority for both Airports and shall be on a non-discriminatory basis. Payment from the Concession Operators shall be due upon receipt of a bill from the Authority.

6. Telephone Service. Telephone service must be separately contracted and paid by the Contractor and its Concession Operators. All Concession Operators, including those operating RMUs, are required to have telephone service. A mobile or cellular telephone is acceptable solely for RMU operators.

J. Hours of Operation

The Contractor shall monitor and ensure that Concession Operators shall be open for business daily a minimum of one hour before the first scheduled departing flight from the terminal or concourse in which the Concession Operator’s Premises are located, and shall remain open for business until the last departure from the terminal or concourse in which the Concession Operator’s Premises are located, unless otherwise specifically directed by the Authority. If the Concession Operator’s Premises are located in a main terminal portion of the Airports, the concessions shall be open for business daily a minimum of one hour before the first scheduled departing flight from any concourse or terminal and shall remain open for business until the last departure.. The Contractor shall procure a professionally-made sign for each concession location in accordance with a design and format approved by the Authority, that clearly display the hours of operation. The costs associated with the production of these signsis the responsibility of the Concession Operator. Authority’s Terminal Concessions and Services Manager must approve in advance any changes or modifications to the required minimum hours of operation. The Authority reserves the right to require the Concession Operators to increase the hours of operation if airline schedules and passenger demand for food service and retail dictates. Should the Concession Operators fail to maintain the designated operating hours and fail to obtain Authority permission to alter their operating hours, the Contractor shall assess liquidated damages against the Concession Operators. If a concession location is found closed at anytime it is required to be open, the Contractor shall provide the Concession Operator with a reasonable opportunity (not more than four hours) to correct the discrepancy. Should the discrepancy continue, the Contractor shall assess the Concession Operator liquidated damages at a rate of up to a maximum of Two Hundred Dollars ($200.00) per hour of non-operation, or any fraction thereof, until corrected. The Contractor shall require that Concession Operators comply to the fullest extent possible with Authority


requests to remain open beyond established operating hours in the event of weather delays or flight schedule disruptions.

K. Staffing

During the hours of operation required herein, the Contractor shall use all reasonable efforts to ensure that all Concession Operators provide personnel in sufficient number and with such qualifications necessary to provide efficient service to the public. The minimum number of staff for each location shall be stated in the lease with the Concession Operator for that location. Personnelshall be trained in the business to be provided, so as to be courteous, conversant in English (and other languages as necessary), informative, and helpful to the public. The attire of such personnel shall be in keeping with that required in similar food service and retail businesses in the Washington D.C. metropolitan area. The Contractor agrees to require the Concession Operators to maintain the required minimum staffing at all times during which a facility is open for business unless otherwise modified in writing by the Authority. Should the Concession Operators fail to maintain the required minimum staffing levels and fail to obtain Authority permission to alter the minimum staffing levels, the Contractor shall assess liquidated damages against the Concession Operators. If a food service or retail facility is found not to have the minimum staffing levels required to provide efficient service, the Contractor will provide the Concession Operator with a reasonable opportunity to correct the deficiency. Should the deficiency continue, the Contractor shall assess the Concession Operator liquidated damages at a rate of Fifty Dollars ($50.00) for each hour or fraction thereof that a Concession Operator does not maintain the required minimum staffing level in a facility until corrected.

At least one food service concession location and one newsstand/sundries concession location must remain open twenty-four (24) hours each day at Dulles in each of the following locations:

1. Main Terminal, Dulles Airport 2. Concourse A, Gates 1 – 6, Dulles Airport 3. Concourse B, Gate 37, Dulles Airport 4. Concourse B, 12-Gate Extension, Dulles Airport 5. Concourse C, Gate 16 6. Concourse D, Gate 7

At least one food service concession location and one newsstand/sundries concession location must remain open twenty-four (24) hours each day at National in the following location:

1. National Hall, Terminal B


Exceptions to the above locations may be otherwise approved in writing by the Authority. The twenty-four hour concession locations shall be subject to Authority approval.

L. Service

The Contractor shall use its best efforts to ensure the highest standards of public service from all Concession Operators. All Concession Operators shall accept at least two nationally-recognized credit cards (e.g., American Express, Master Card, VISA) for payment of purchases made in the Premises. The Contractor shall ensure that all food service Concession Operators can properly package food to be conveniently transported as carry-out food and beverages. As appropriate, retail Concession Operators shall offer their customers shipping and gift-wrapping services at their cost or less.

M. Cash Control and Accounting

The Contractor shall require Concession Operators to maintain total control of all Gross Receipts with cash registers capable of providing customer receipts indicating the date and time of purchase. The Contractor shall require Concession Operators to maintain an accounting system in sufficient detail and in accordance with Generally Accepted Accounting Principles (GAAP) to permit audits by the Contractor and the Authority periodically during the Operating Period and/or during the term of the lease. The Contractor shall also require Concession Operators to conduct a continuing education program to ensure that all employees are adequately trained in cash handling procedures and provide the results of this program to the Authority upon reasonable request.

N. Contractor and Concession Operator Audits

The Contractor shall adhere to the provisions and requirements of Article 14 of the Standard Provisions for Concession Contracts (Exhibit 6) and shall apply the same to Concession Operators. Concession Operators shall be audited by the Contractor at least once during the term of their lease and at least once every three (3) years.

O. Licensing and Regulations

All concession facilities shall be licensed and maintained in compliance with all applicable local, state, and federal rules, Airports’ regulations and standards. Food service operations at the Airports are subject to periodic inspections by the Loudoun and Arlington County Health Departments, the Environmental Health Bureau, and the Commonwealth of Virginia's Alcoholic Beverage Control Department. The Contractor shall require the Concession Operators to promptly correct or cause to be corrected any deficiencies reported by these


agencies or any other government agency having jurisdiction. All licenses and fees necessary for the development and operation of the food service and retail concessions at the Airports shall be the sole responsibility of the Concession Operators. If a Concession Operator does not correct the deficiencies within a reasonable time after written notice thereof, the Contractor shall assess the Concession Operator liquidated damages at a rate of up to a maximum of Two Hundred Fifty Dollars ($250.00) for each day or part thereof until the deficiencies are corrected.

P. Concession Operator Deliveries

The Contractor shall work closely with the Concession Operators to develop procedures and usage guidelines, and collect fees for all deliveries to both landside and airside food service and retail concession locations. The Contractor may contract with a common logistical support provider (hereinafter referred to as the “Distributor”) to meet the reasonable logistical and storage requirements of the Concession Operators. All Concession Operators may use and share in the prorated costs of the Distributor and the Contractor may not mark up the costs or charge the Concession Operators additional administrative or overhead fees for this service. The Contractor’s plans and procedures for managing product deliveries and any fees proposed to be charged to the Concession Operators are subject to the prior written approval of the Authority. The Authority shall use all reasonable efforts to provide the Contractor with space for the operation of a central commissary of an appropriate size in order to provide common logistical support and storage for the Concession Operators, such space to be provided without charge (no fees for rent or utilities) to the Contractor, its Distributor, and the Concession Operators. Product deliveries to Concession Operator locations airside must be made via designated doors or airside gates accessed only by employees using Authority-issued security badges that allow airside access. The Contractor agrees to adhere to Transportation Security Administration (“TSA”) and Authority directives and policies regarding access to airside facilities for its own employees and to require Concession Operators to adhere to TSA and Authority directives and policies regarding access to airside facilities for their respective employees. The Contractor shall provide assistance to the Concession Operators by providing appropriate applications and other information and documentation supplied by the Authority for submission to the appropriate officials. Notwithstanding the foregoing, the Contractor shall not have any other liability with respect to security issues relating to such Concession Operator employee badging and security clearance requirements and the screening of such Concession Operator goods, products, equipment, materials, or supplies brought to the Airport by or on behalf of Concession Operators. In the event any such screening or inspection becomes required as a result of laws, regulations, or security measures instituted by the TSA or the Authority, the responsibility and cost therefore shall be the sole responsibility of the Concession Operators. The Contractor shall also work with the Authority to


develop elevator and loading dock usage guidelines and procedures for Concession Operators. In the event that the Authority provides additional storage areas, the Contractor will be expected to manage, develop procedures, usage guidelines, and collect fees for the additional storage areas.

Q. Commissary Operation

The Distributor(s) shall be responsible for the operation of the commissaries and for the receipt, storage, control, delivery, and accounting of all supplies, materials, and merchandise delivered to support the Concession Operator operations contemplated under this Contract. The Distributor(s) shall be required to staff the commissaries with sufficiently-trained personnel to ensure the highest level of service and support to the Concession Operators. The commissaries and other storage areas controlled by the Distributor(s) shall be secure areas. All access doors shall be on a security system with the Distributor’(s) employees having the only access to those areas. Visitors may enter the commissaries if they are signed in by Distributor employees. The Distributor(s) shall establish procedures for the receipt, storage, Concession Operator delivery, and returns of supplies, materials, and merchandise and coordinate these procedures with the Contractor.

R. Facility Maintenance

The Contractor shall obligate all Concession Operators to repair and maintain all Fixed Improvements and Operating Equipment on the Premises in good, safe condition throughout the term of their leases, reasonable wear and tear excepted. During the Operating Period of this Contract, the Concession Operators shall provide for continuing facility maintenance in accordance with the following.

1. Premises Maintenance. The Concession Operators, at all times and at their own cost and expense, shall use the Premises with care and be responsible for maintaining, repairing, and replacing, as necessary, all Fixed Improvements and Operating Equipment. Maintenance, repairs, and replacements shall be as necessary to maintain the Fixed Improvements and Operating Equipment in good condition. The Concession Operators shall repaint or otherwise renovate the interior of the Premises as necessary. High traffic areas subject to greater wear and tear shall be repainted, re-tiled, and re-carpeted on a regular basis as may be necessary to maintain a high-quality appearance and safe operating conditions. All furniture and furnishings that become worn, torn, or damaged shall be replaced as necessary. All such maintenance, repairs, and replacements shall be of a quality equal to the original in materials and workmanship, and, if changed from the original, shall be subject to the prior written approval of the Authority. The Authority shall have the right to


disapprove any improvements, replacements, or alterations, which, in its judgment, are of a design, quality, condition or color deemed to be inconsistent with the established tenant design standards of the Airports.

2. Custodial Service. The Contractor shall furnish custodial services that shall provide routine cleaning for all common food court public seating areas and the complete and adequate sanitary handling of all trash, garbage, and other refuse generated in connection with those public seating areas. Food court public seating areas shall be cleaned with sufficient frequency that they remain clean and readily available for public use at all times. At National, the custodial service shall also pick up and dispose of trash from individual food service Concession Operator location. When possible, trash shall be picked up and disposed during inactive hours of the Airports’ operations to minimize interference with the Airports’ passengers. The custodial service shall use its own trash receptacles or those provided by the Authority in locations designated by the Authority. Piling of boxes, cartons, barrels, crates, or other similar items in a public area shall not be permitted. If Concession Operators fail to remove and dispose of trash in a timely or appropriate manner, the Contractor may direct the custodial service to pick up and dispose of trash from the Concession Operator’s location(s) at that Concession Operator’s expense and provide written notice to the Concession Operator of such action. In order to recover the direct costs of such custodial service, the Contractor shall assess reasonable fees to each food service Concession Operator for Common Area Maintenance charges (“CAM”) as well as charges to each food service Concession Operator for trash removal from individual concession locations at National. The Contractor’s fees for such services shall be subject to the Authority’s prior written approval. The Contractor shall assess liquidated damages of One Hundred Dollars ($100.00) per day or portion thereof against a Concession Operator for each day that a Concession Operator fails to maintain the cleanliness of its concession locations and does not cure the failure within one hour of written notification of the problem.

3. Grease Traps. The Contractor shall ensure that all food service Concession Operators’ grease traps are inspected and cleaned at least once per month by the Concession Operators. Specific exceptions to this requirement on a case-by-case basis may be approved in writing by the Authority. The Contractor shall have the authority to hire an independent contractor to conduct grease trap inspections and cleaning and charge the Concession Operators a fee for the direct costs associated with this service, subject to the prior written approval of the Authority. The Contractor shall assess liquidated damages against the food service Concession Operator(s) of One Hundred Dollars ($100.00) per day or portion thereof for each day that a food service Concession Operator(s) fails to cure the failure within twenty-four (24) hours of Contractor or


Authority notification to the food service Concession Operator of the problem.

4. Maintenance of Plumbing/Sewer Lines. The Contractor shall prohibit the disposal of grease or solid materials by the food service Concession Operators into the drainage system, and shall require all Concession Operators to snake drains and conduct any other necessary drain maintenance at least monthly. The Contractor shall have the authority to hire an independent contractor to snake drains and conduct any necessary drain maintenance, and charge the relevant Concession Operators a fee for the direct costs associated with this service, subject to the prior written approval of the Authority. The Contractor shall assess liquidated damages against any Concession Operator(s) that fails to properly maintain plumbing and/or sewer lines serving their Premises. The Contractor shall assess liquidated damages of One Hundred Dollars ($100.00) per day or portion thereof against a Concession Operator for each day that a Concession Operator fails to cure the failure within 24 hours of Contractor or Authority notification of the problem.

5. Maintenance of Cooking Exhaust Systems. The Contractor shall require that all food service Concession Operators with rooftop exhaust units conduct inspections, cleaning, and maintenance of all elements of cooking exhaust systems at least once per quarter. The Contractor may have an independent third-party contractor perform this function for all food service Concession Operators and charge the food service Concession Operators a pro rata share of the direct costs of such maintenance, subject to prior Authority approval. The Contractor and/or the food service Concession Operators shall coordinate all rooftop exhaust work through Authority staff prior to accessing the roof for any work to be conducted. The Contractor shall assess liquidated damages against the Concession Operator(s) for failure to properly maintain rooftop exhaust systems serving their portion of the Premises. The Contractor shall assess liquidated damages of One Hundred Dollars ($100.00) per day or portion thereof for each day that a food service Concession Operator fails to cure the failure within 24 hours of Contractor or Authority notification to the food service Concession Operator of the problem.

6. Maintenance of Utility Systems Serving the Premises.

a. In areas where the utility lines, including gas, electrical, telephone, hot and cold water, heating and ventilation ductwork, fire sprinkler, steam, condensate, roof drainage, and sanitary and domestic waste, serve other areas in addition to the Premises, the Contractor shall require that Concession Operators will be responsible for the maintenance, repair and replacement of the utility branch lines that are located within the Premises. In the event, however, that blockages or damage to sewer and/or plumbing lines occur


downstream of the Premises and such blockages or damage are reasonably determined by the Authority to be due to the negligence of the Concession Operator(s) or failure of the Concession Operator(s) to properly maintain their portion of the Premises, then the Authority may request that the Contractor assess liquidated damages against the Concession Operator(s). For the first such incident, the Contractor shall assess the Concession Operator(s) for any costs associated with investigating, cleaning, and repairing such blockages or damage. The Authority shall identify and report to the Contractor any costs associated with such Concession Operator negligence. In the event of subsequent similar incidents caused by the same Concession Operator, the Contractor shall assess liquidated damages against the Concession Operator in the amount of Two Hundred Dollars ($200.00) per day or portion thereof until the problem is corrected, in addition to the costs of investigating, cleaning, and repairing such blockages or damage. The Contractor shall be responsible for ensuring that the Concession Operator takes corrective action immediately upon notification by the Authority, and shall assist the Authority in collecting any costs or liquidated damages levied against the Concession Operator(s).

b. In areas where the utility lines are solely for the use of a Concession Operator, the Contractor shall require that the Concession Operator shall be solely responsible for the maintenance, repair, and replacement of such utility lines from the Concession Operator’s portion of the Premises up to the Authority-maintained main utility system or to the shut-off valves in the Airports’ machine room(s), as appropriate.

c. The Contractor shall require in the leases that the Concession Operators shall have the responsibility for the maintenance, repair and replacement, as necessary, of all electrical cables, conduits, wiring, fire alarm systems and wiring panels and associated equipment located within and serving the Premises. The Authority will be responsible for the main distribution panels located in the Airports’ utility room(s) and the KWH meter and all other above-mentioned items not serving the Premises.

d. The Contractor shall require in the leases that the Concession Operators prepare and maintain, on a current basis, preventive maintenance schedules on all mechanical, electrical, steam and plumbing equipment and lines that they are responsible for maintaining and provide copies of such schedules to the Authority upon request. The Authority may make inspections as often as it considers necessary to determine that the Contractor, its


Concession Operators, or their subcontractor(s) are performing proper maintenance of the Premises.

e. The Authority reserves the right to interrupt temporarily the heating, air conditioning, plumbing, and electrical services to make repairs, alterations, replacements, or improvements in said systems. The Authority shall have no responsibility or liability for failure to supply heat, air-conditioning, plumbing, and electrical service or when prevented from doing so by laws, orders, or regulations of any federal, State, or local agency as a result of strikes, accidents, or by any other cause whatsoever beyond the Authority's control. During periods of Authority construction, unforeseen interruptions in utility services may occur. The Authority shall have no liability for such interruptions; however the Authority shall provide the Concession Operators with as much advance notice as possible and shall use its best efforts to avoid interrupting the Concession Operators’ operations except as necessary. Notwithstanding the foregoing, if any utility to the Premises is supplied by the Authority and, due to the sole negligence of the Authority (including its agents and employees), such utility to the Premises is interrupted, forcing a Concession Operator to close its business within the Premises for more than two (2) complete and consecutive days, then the Concession Operator’s MAG may abate for the period commencing on the third (3rd) day after the Concession Operator closes its business within the Premises and shall continue until the earlier of: (i) the date such utility is restored to the Premises, or (ii) the date the Concession Operator reopens its business in the Premises.

f. The Contractor shall require that Concession Operators report all malfunctions of the drainage and sewage systems, fire protection system, sprinkler system, alarm system, fire hydrants and hoses, heat and air-conditioning systems, electrical systems, and plumbing, installed or located on or within the Premises to the Authority in accordance with the Airports’ regulations and immediately after discovery.

g. The Contractor shall require that food service Concession Operators install and maintain utility meters, as specified by the Authority, at the Concession Operators’ own cost and expense, except food service Concession Operators shall not be required to install meters in those portions of the Premises where meters were previously installed, and meet the Authority’s Design Manual requirements.

h. All repair, maintenance, replacement, construction and installation work shall be done by the Concession Operators or their licensed contractors in accordance with Authority regulations, all applicable


building and safety codes, and only after obtaining all necessary licenses and permits.

ARTICLE 5. FINANCIAL CONSIDERATION

Section 5.1 Management Fees

In consideration of the services provided under this Contract, the Contractor shall be entitled to retain a Management Fee of ( %) percent of the Total Gross Rental Payments due to the Authority by each of the Contractor’s Concession Operators (“Management Fee”). “Total Gross Rental Payments” shall be defined as the minimum annual guarantee, percentage rent, and liquidated damages payments due from the Concession Operators, whether collected or uncollected. Total Gross Rental Payment does not include Concession Operator payments for marketing, logistical support, common area maintenance, or utilities due and payable as defined in each lease, such amounts that may not be marked up by the Contractor. Total Gross Rental Payment does include rent that is payable for storage units in the terminal buildings. .

Section 5.2 Payment to the Authority

By no later than the twentieth (20th) day of each month during the term of this Contract, the Contractor shall pay to the Authority, the Total Gross Rental Payments due the Contractor from the Concession Operators, less the Management Fee due the Contractor. The Total Gross Rental Payments are due to the Authority for all Concession Operators in possession and operating from the Premises even if the Contractor is not paid by the Concession Operators. Collection of unpaid Total Gross Rental Payments from Concession Operators is solely the Contractor’s responsibility; the Contractor shall not be entitled to relief under this Contract in the event of any such unpaid Total Gross Rental Payments.

Section 5.3 Withheld and Late Payments to the Authority

Any and all funds due to the Authority from the Contractor that are due the Contractor from any Concession Operator under this Contract, and not paid to the Authority by the Contractor, may result in the Contractor’s default, subject to applicable notice and cure periods. The Contractor shall not have the right to withhold any funds due to the Authority against any claims the Contractor may bring against the Authority. Any funds received late by the Authority shall be subject to the fees and late charges set forth in the Standard Provisions for Concession Contracts herein attached as Exhibit 6.

Section 5.4 Payment for Vacant Premises

The Contractor shall make reasonable efforts to replace in a timely manner any vacant or abandoned concession Premises. The Contractor is not responsible for concession Rent payments for portions of the Premises that are vacant or have been


abandoned for any reason for the first 150 consecutive days of the vacancy or abandonment (“Initial Vacancy Period”). After the Initial Vacancy Period, the Contractor shall be assessed liquidated damages at a rate of 25 percent (25%) of the vacant Premises’ most recent Concession Operators’ monthly MAG for the first consecutive 30-day period or portion thereof, that the Premises remain vacant after the Initial Vacancy Period; 50 percent (50%) of the vacated Premises’ most recent Concession Operators’ monthly MAG for the second consecutive 30-day period or portion thereof, that the Premises remain vacant after the Initial Vacancy Period; 75 percent (75%) of the vacated Premises’ most recent Concession Operators’ monthly MAG for the third consecutive 30-day period or portion thereof, that the Premises remain vacant after the Initial Vacancy Period; and 100 percent (100%) of the vacated Premises’ most recent Concession Operators’ monthly MAG for the each consecutive 30-day period or portion thereof that the Premises remain vacant thereafter. Storage Premises are excluded from this condition.

Section 5.5 Financial Reporting Requirements

The Contractor shall be required to meet the financial reporting requirements as set forth in the Standard Provisions for Concession Contracts herein attached as Exhibit 6.

Section 5.6 Annual Reconciliation

There shall be an Annual Reconciliation of the Management Fee conducted by the Contractor based on the Certified Annual Statements from the Concession Operators due on March 15 (or the closest business day following March 15, if that date should occur on a Saturday or Sunday) of the Calendar Year. Such reconciliation shall calculate any necessary adjustments to the Management Fee and the Total Gross Rental Payments to the Authority for the Calendar Year based on the actual Total Gross Rental Payments due from each Concession Operator, whether paid to Contractor or not. Any amounts due to the Authority shall be paid along with the submission of the Annual Reconciliation. Any additional Management Fee due to the Contractor shall be paid by the Authority within 30 days of receipt of the Annual Reconciliation.

ARTICLE 6. PERFORMANCE GUARANTEE

Section 6.1 Performance Guarantee

A. The Contractor shall deliver to the Authority upon the execution of this Contract a Performance Guarantee in the amount of Two Million, Five Hundred Thousand, Dollars ($2,500,000).

B. This Performance Guarantee is required in order to guarantee performance of the Contract by the Contractor and shall be subject to claim in full or part by the Authority in the event of default by the Contractor or failure to fully perform the Contract. The Contractor shall ensure that the performance guarantee is


maintained at all times in the proper amount throughout the full term of the Contract.

C. The amount of said performance guarantee shall be subject to adjustment at the end of each Contract Year, to an amount equal to fifty (50%) percent of the Total Gross Rental Payments for the subsequent year based on the MAG rent in the Concession Operator leases, but never less than Two Million, Five Hundred Thousand Dollars ($2,500,000); provided, however, if the Contractor has not been in monetary default following applicable notice and cure periods during the first and second Contract Years, the performance guarantee shall be reduced to an amount equal to twenty percent (20%) of the Total Gross Rental Payments for the third Contract Year and if the Contractor has not been in monetary default following applicable notice and cure periods during the third Contract Year, the performance guarantee shall thereafter be reduced to an amount equal to twenty-five percent (25%) of the Total Gross Rental Payments for the fourth and each subsequent Contract Year.

D. The performance guarantee, at the option of the Contractor, may be in the form of an irrevocable letter of credit issued by a bank (with a bank rating "B" or better by Sheshunoff Information Services), a certified check, cashiers’ check or bank guarantee, or money order acceptable to the Authority and made payable to the Authority.

E. If the Contractor fails to provide or maintain the performance guarantee in effect at any time during the Operating Period of this Contract, the Contractor shall be in default under the Contract. The Contractor will have a period of sixty (60) days to cure the default upon receipt of written notice by the Authority.

ARTICLE 7. FIXED IMPROVEMENTS

Section 7.1 Initial Fixed Improvements

The Contractor shall commence operations under this Contract using the existing Premises as described in Article 3.

Section 7.2 Additional Improvements

The Contractor shall require the Concession Operators to renovate the existing Premises in accordance with their leases approved by the Authority as well as in accordance with the tenant design standards for the Airports. The Contractor shall also be obligated to have Concession Operators build out new food service and retail facilities at the Airports should the Authority, in its sole discretion determine that growth at the Airports requires such facilities, and shall conduct food service and retail operations in said facilities, upon the same terms and conditions as specified herein. Such new concession premises will be added by amendment to the Contract. If such


additional facilities are required, the Contractor shall be assigned Premises for the purpose of leasing such facilities for the Concession Operator’s construction and operation of additional food service and retail facilities. The Contractor acknowledges that the Authority shall determine the location and size of the Premises, and work with the Contractor to determine the nature and extent of the improvements to be installed by Concession Operator(s) therein.

A. Concept Master Plan. Prior to the construction and installation of any new facilities or renovation of any existing Premises, the Contractor shall first prepare an overall concept master plan for the facilities, including a proposed time schedule, date of construction completion, and budget, which shall be subject to the approval of the Authority, prior to the issuance of an Authority Building Permit. Such data must be in a form consistent with that cited under Article 4, Section 4.3.D of this Contract. Thereafter the Contractor (or its designated Concession Operators) shall, at its/their sole cost and expense, employ competent architects and engineers, licensed by the State of Virginia, who will prepare detailed plans, specifications, interior designs and decorations and cost estimates, for all facility construction. All such plans, specifications, equipment, cost estimates, and modifications shall be first submitted to the Authority for approval. Construction shall not commence until the Authority has issued a building permit.

B. Building Codes. The most current editions of the following codes are to be utilized in the preparation of the designs and specifications of improvements undertaken herein. Where a conflict exists in requirements, the Concession Operators shall comply with the strictest requirements.

1. International Building Code. This code incorporates all general building, mechanical, electrical, and plumbing codes in accordance with Virginia State regulations.

2. National Electrical Code (NEC). This code covers the safeguarding of persons and property from hazards arising from the use of electricity, which includes wiring, loading, grounding communications systems, and hazardous locations.

3. Virginia Department of Health Regulations 4. Loudoun County Health Department Regulations 5. Arlington County Health Department Regulations 6. Authority Design Manuals 7. Americans with Disabilities Act (ADA) Codes and Guidelines


C. Certificates of Insurance. The Contractor shall ensure that the contractor(s) performing construction, maintenance or repair work for the Premises, and any of their subcontractors, provide the Authority with valid certificate(s) of insurance with a minimum of One Million Dollars ($1,000,000) of commercial general liability insurance, in advance of the performance of any work. The Certificates of Insurance shall be provided on the Industry Standard Form (Accord 25). Construction contractors shall provide property all risk coverage. Replacement Cost Insurance under Builder's Risk (100% Completed Value) and an Installation Floater (100% Installed) for Real and Personal Property shall also be provided to the Authority within ten (10) days of execution of a contract. The Metropolitan Washington Airports Authority shall be identified as an additional insured on all policies. The policy must provide for thirty (30) days’ advance notice to the Authority of cancellation of the coverage or any material change in the policy.

D. Construction Management. The Contractor shall, during facility planning and development at the Airports, employ or procure the services of a construction manager and/or tenant construction coordinator to supervise the Concession Operators’ construction contractors and to monitor and enforce compliance with project requirements and applicable codes and regulations. The commitment of the construction manager and/or tenant construction coordinator shall be determined by the Contractor to ensure the accurate, ongoing, and thorough monitoring of all Concession Operator construction.

E. Project Costs. The term "Project Costs" or "Construction Costs" shall include the following:

1. Amounts paid by the Contractor or Concession Operators for the construction of Fixed Improvements on the Premises.

2. Amounts paid by the Contractor or Concession Operators to provide all utility lines and connections or equipment required to connect Premises to the Authority's utility distribution system.

3. Sums paid by the Contractor or Concession Operators to architects, designers, engineers, surveyors, construction managers, attorneys, accountants, appraisers and other professionals and consultants directly connected with the design, development and construction of the fixed improvements. In-house expenses for such personnel shall not be considered construction costs unless such work was performed and managed in-house and documented by the Contractor or Concession Operators. Such in-house billing shall be invoiced without mark-up.


4. Premiums paid by the Contractor or Concession Operators for all permits and insurance required during construction, including, without limitation, commercial general liability, builder's risk and extended coverage endorsements, workers' compensation insurance, and premiums paid for performance bond and labor and material payment bonds during construction.

5. Fees, including customary and reasonable bank administration costs, and interest paid by the Contractor or Concession Operator to the construction lender during the period of construction, excluding late fees and penalties.

F. Documentation of Construction Costs and Costs of Fixed Improvementsand Operating Equipment.

1. The Contractor shall require that all Concession Operators make available to the Authority a complete schedule detailing the final costs of construction and modifications, invoices, cancelled checks and such other documents as the Authority may reasonably require to verify expenses for such Fixed Improvements, including architectural and engineering fees, fixtures, and signage within ninety (90) days of the date of completion of construction. In addition, within ninety (90) days after completion of construction, the Contractor shall require that all Concession Operators, at their own expense, provide the Authority with two (2) complete sets of record drawings showing the "as built" condition of all Fixed Improvements constructed by the Concession Operators on the Premises. The record drawings should incorporate actual installation information where build-out varies from that shown on original, permitted construction plans. They should include information on the concealed elements that would be difficult to identify or measure and record later. Any necessary mark-ups to the drawings should be in red, with areas of change “clouded” to highlight. The changes should be legible, understandable, and reproducible. The Contractor agrees, upon request, to inspect the Premises jointly with the Authority to verify said record drawings. The leases shall require that all Concession Operators pay within ten (10) days of demand by the Authority liquidated damages of Fifty Dollars ($50.00) per day or part thereof for each day past the required due date that such documents are not delivered.

2. The Authority reserves the right to audit all documentation of all construction costs and costs for Fixed Improvements and Operating Equipment provided under this Contract. The Contractor shall cooperate and cause its Concession Operators to cooperate in such an audit and provide supporting cost documentation upon


request from the Authority and the Authority shall establish a reasonable schedule for such audits

3. If the Authority disagrees with the Contractor's or the Concession Operators’ determination of 1) the categorization of ownership of an item as a Fixed Improvement or Operating Equipment, 2) with the reasonableness of the cost of the item, or, 3) if supporting cost documentation is not sufficient, it shall notify the Contractor in writing. The Contractor or the Concession Operator(s), as applicable, shall have sixty (60) days following receipt of the Authority's notice to respond or provide any additional information. Within thirty (30) days after receipt of any response or additional information provided by the Contractor or the Concession Operator(s), as applicable, the Authority will make a determination as to whether or not the cost or ownership of the Fixed Improvement or Operating Equipment shall be allowed. All Concession Operator leases shall state that professional fees and other costs related to the design and engineering of Concession Operator’s leased Premises in excess of twelve percent (12%) of the Concession Operator’s required minimum investment in the concession Premises, and professional fees and other costs related to the design and engineering of the Concession Operator’s required mid-term refurbishment investment in excess of twelve percent (12%) shall not be allowed in the assessment of whether the Concession Operator has met the required minimum investment amounts. Such restrictions on professional fees and other costs related to the design and engineering of the RMUs shall also apply to the Authority’s assessment of the Contractor’s required minimum investment in the RMUs.

G. Plan Submittal. Full and complete plans with the professional seal of an architect or engineer licensed in the Commonwealth of Virginia and specifications for all work, including cost estimates, facilities and improvements, and the time required to complete same, shall be submitted to and receive the written approval of the Authority before work or construction is commenced. First-class standards of design and construction will be required in connection with all such work, facilities, and improvements; and all construction shall conform to the general requirements of the Authority. Eight (8) sets of plans for all improvements or subsequent changes thereto or alterations thereof shall be given to the Authority for review at the following stages of design.

1. 35% completion of schematic design 2. 60% completion of schematic design 3. 90% completion of schematic design 4. Final design


The Concession Operators must receive a building permit from the Authority for each location prior to commencement of construction. Upon receiving the building permit, the Contractor shall submit to the Authority, the approved construction plans in digital format (CADD) in accordance with the Authority’s Design Manual, Appendix 3, CADD Design Standards.

H. Modifications. In the event of disapproval by the Authority of any portion of the plans and specifications, the Contractor shall require the applicable Concession Operator to promptly submit necessary modifications and revisions thereof. No changes or alterations shall be made to the plans and specifications by the Contractor or the Concession Operators after initial approval by the Authority, and no alterations or improvements shall be made to or upon the concession facilities without the prior written approval of the Authority except minor changes or alterations due to existing field conditions. The Authority agrees to act within a reasonable time period on such plans and specifications upon requests for approval of changes or alterations to said plans or specifications.

I. Annual Report. The Contractor shall require the Concession Operators to provide, within sixty (60) days after the end of each Contract Year, an annual report of Fixed Improvements and Operating Equipment installed and completed by the Concession Operators during the prior Calendar Year. A report must be submitted even if the Concession Operators have not implemented any Fixed Improvements or changes during the Contract Year The Contractor shall require the Concession Operators to pay within ten (10) days of demand by the Authority liquidated damages of One Hundred Fifty Dollars ($150.00) per day for each day beyond the sixty (60) day deadline that the Annual Report is not submitted.

ARTICLE 8. BUYOUT, TITLE, AND AMORTIZATION

Section 8.1 Title

During the term of the Contract, title to Fixed Improvements made by the Contractor or the Concession Operators shall remain with the Contractor or the Concession Operators unless otherwise specified by the Parties. At the expiration of any lease, title to the Fixed Improvements shall vest in the Authority. Title to all Fixed Improvements for which there is no approved amortization schedule shall, at the expiration or termination of the Contract or any individual lease, at the discretion of the Authority, vest either in the Authority or its designee at no charge to either the Authority or its designee. The Contractor, at its expense, agrees to execute and have the Concession Operators execute, at their expense, all documents reasonably requested and deemed reasonably necessary by the Authority as evidence of said transfer of title. Neither the Contractor nor the Concession Operators shall have the right during the term of the Contract, to


demolish, in whole or in part, any building, structure or other fixed improvement on the Airport except with the prior written consent of the Authority, which may, at the discretion of the Authority, be conditioned on the obligation of the Contractor or the Concession Operators to replace the same by a building, structure or improvement acceptable to the Authority or to repair any damage caused by such removal. At the expiration of the Contract, all Fixed Improvements made by the Contractor or the Concession Operators shall be left in place, and shall be subject to inspection by the Authority.

Section 8.2 Amortization

The commencement date for the amortization of the cost of Fixed Improvements approved by the Authority under the Contract shall be the date of beneficial occupancy of the Concession Operator in the improved facility or in the case of an RMU, the date the RMU is ready for occupancy by a Concession Operator. The cost of Fixed Improvements for each facility shall be amortized on a straight-line basis over the initial term of the lease for the facility or in the case of RMUs, over the initial Operating Period of this Contract, as appropriate, with a zero balance at the end of the amortization period. Allowable costs to be amortized shall include those items listed in Article 7, Section 7.2.E. Operating Equipment, moveable fixtures, and professional fees and other costs related to the design and engineering of Concession Operators’ leased Premises or RMUs in excess of twelve percent (12%) of the Concession Operators’ or Contractor’s required minimum investment in the concession Premises or RMUs, respectively,, and professional fees and other costs related to the design and engineering of the Concession Operators’ required mid-term refurbishment investment in excess of twelve percent (12%) shall not be included in allowable costs for purposes of amortization and buyout.

The Contractor or the Concession Operators shall submit a certified statement of costs with sufficiently detailed documentation to show the actual sum expended in the creation of the facilities within ninety (90) days after completion of construction, as explained in Article 7, Section 7.2.F. The Authority shall have the right to examine the Contractor's or the Concession Operators’ records concerning such costs of construction and to audit such records following completion of construction.

ARTICLE 9. DISADVANTAGED BUSINESS ENTERPRISE PARTICIPATION

Section 9.1 Local Disadvantaged Business Enterprise (LDBE) Participation

During the Operating Period of this Contract, the Contractor shall maintain a ten percent (10%) LDBE participation through the management functions of the concession program. The percentage of LDBE participation shall be calculated as a percentage of the Management Fee paid to the LDBE for performing a clearly-defined portion or all of the Scope of Operations as described in Article 4.


An LDBE is defined as a disadvantaged business concern that is organized for profit and located within a 100-mile radius of Washington, DC's zero mile marker, which has been certified by the Authority as a local disadvantaged business enterprise.

Failure to meet the LDBE requirement shall constitute a default as defined in Exhibit 6, Standard Provisions for Concessions Contracts. Additionally, the Authority, at its option may retain ten-percent (10%) of the annual Management Fee for failure to comply with the LDBE requirement of this Contract.

Section 9.2 Airport Concession Disadvantaged Business Enterprise (ACDBE) Participation

During the Operating Period of this Contract, the Contractor shall make a good faith effort to achieve a goal that a minimum of thirty-five percent (35%) of the projected total gross receipts from the food service premises and a minimum of twenty-five percent (25%) of the projected total gross receipts from the retail premises (hereafter referred to as “the Authority’s ACDBE Goals”) available for lease by the Contractor under this Contract are generated by ACDBE Concession Operators. ACDBE participation shall be generated by Authority-certified ACDBE Concession Operators.

If the Contractor is unable to achieve the ACDBE goal, it must demonstrate that it made good faith efforts to do so. Failure to demonstrate good faith efforts may result in a determination that the Contractor is in breach of its obligations under this Contract.

Section 9.3 Identification and Certification of ACDBE Concession Operators and Business Partners

The Contractor shall identify potential ACDBE Concession Operators prior to finalization of leases, and work closely with the proposed ACDBEs to submit their applications for ACDBE certification. The Authority's Equal Opportunity Programs Department will assist the Contractor in identifying current Authority-certified ACDBE firms and other potential ACDBE firms upon request.

A. To qualify as an ACDBE, the firm must meet the definition as set forth below and the applicable size standard, defined in terms of the firm's average annual receipts for the preceding three (3) fiscal years. The current applicable size standard for food service and retail concessions is $52.47 million, which means the ACDBEs average annual Gross Receipts for the last three (3) years (including Gross Receipts of all affiliates) cannot exceed $52.47 million. The receipts of affiliate companies are included in determining size. In general, business concerns are affiliates of each other when either directly or indirectly: 1. One concern controls or has the power to control the other, or 2. A third-party (or parties) has the power to control both.


When determining if affiliation exists, consideration is given to such factors as common ownership, common management, contractual relationships, and overlapping authority. Any questions related to ACDBE certification may be directed to Ms Betty Toulson, Equal Opportunity Programs Department at (703) 417-8360.

B. An ACDBE, as defined by 49 CFR Parts 23 and 26, is a business concern that meets the applicable size standard and is a small business (as defined by the Small Business Administration), which is: a) at least fifty-one percent (51%) owned and controlled by one (1) or more socially and economically disadvantaged individuals, or in the case of any publicly owned business, at least fifty-one percent (51%) of the stock is owned by one (1) or more socially and economically disadvantaged individuals; and b) whose management and daily business operations are controlled by one (1) or more of the socially and economically disadvantaged individuals who own it. "Socially and economically disadvantaged individuals" include: 1. Women; 2. Black Americans, which includes a person having origins in any of the

Black racial groups of Africa; 3. Hispanic Americans, which includes persons of Mexican, Puerto Rican,

Cuban, Central, or South American, or other Spanish or Portuguese culture or origin, regardless of race;

4. Native Americans, which includes persons who are American Indians, Eskimos, Aleuts, and Native Hawaiians;

5. Asian-Pacific Americans, which includes persons whose origins are from Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, Taiwan, Korea, Vietnam, Laos, Cambodia (Kampuchea), the Philippines, Samoa, Guam, the U.S. Trust Territories of the Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated States of Micronesia, or the Commonwealth of the Northern Mariana Islands, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru; and

6. Asian-Indian Americans, which includes persons whose origins, are from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands, or Nepal.

7. The Authority will generally assume that business owners who fall into one of these groups are socially and economically disadvantaged. Their disadvantaged status will not generally be investigated, unless a third-party challenge is made.

C. Other individuals may be found to be socially and economically disadvantaged on a case-by-case basis. For example, a disabled Vietnam veteran, an Appalachian white male or another person may claim to be disadvantaged. If


such individual requests that his or her firm be certified as an ACDBE, the Authority, as part of the certification process, will determine whether the individual is socially and economically disadvantaged under the criteria in Appendix C of Subpart D of 49 CFR Part 23. These owners must demonstrate that their disadvantaged status arose from individual circumstances, rather than by virtue of membership in a group.

Section 9.4 Good Faith Efforts Waiver

Efforts that are merely pro forma are not good faith efforts to meet the goal. Efforts to obtain ACDBE participation are considered pro forma, even if they are sincerely motivated, if, given all relevant circumstances, they could not reasonably be expected to produce a level of ACDBE participation to meet the ACDBE goal participation requirement. For example, advertising or bulk mailings, alone or together are considered pro forma unless fol lowed up with telephone calls and/or correspondence consistent with normal business practice. If the ACDBE firm provides a reasonable and/or legitimate offer, a reasonable effort to evaluate the participant and work towards a good business arrangement for both parties must be demonstrated.

A. Request for Waiver. To be deemed compliant with this Contract, the Contractor must commit to the ten percent (10%) LDBE requirement for the Management Fee; the minimum of a thirty-five percent (35%) ACDBE goal for food service Concession Operators; and the minimum of a twenty-five percent (25%) ACDBE goal for retail Concession Operators. If the Contractor is unable to commit to all or any part of the LDBE participation requirement or ACDBE goals, it must submit the attached Request for Waiver of the LDBE participation requirement or ACDBE goal. The Contractor must demonstrate that it made good faith efforts to achieve the goals. The Waiver request must include a report of the efforts made by the Contractor sufficient to satisfy the Authority that a waiver of the goal(s) or portion thereof is justified. Activities constituting “good faith efforts” are outlined below.

1. Elements of the Waiver Report. The report supporting the waiver request shall include documentation to substantiate the good faith efforts made. The following examples are possible efforts demonstrating good faith, however, this list is not inclusive or exhaustive:

a. Attend informational meetings that are scheduled by the Authority regarding LDBEs and/or ACDBEs;

b. Advertise in major circulation newspapers, such as the Washington Post, trade association newsletters, and minority and/or women oriented media concerning the LDBE and ACDBE participation opportunities;


c. Provide written notice to a reasonable number of specific LDBEs and ACDBEs regarding the concession lease being solicited, in sufficient time to allow LDBEs and ACDBEs to participate;

d. Follow up initial solicitations of interested LDBEs and ACDBEs to determine their level of interest;

e. Provide interested LDBEs and ACDBEs with adequate information about the leasing opportunities, the certification process, and other elements of the concession programs at the Airports;

f. Negotiate in good faith with interested LDBEs and ACDBEs and not reject LDBEs or ACDBEs as unqualified without sound reasons, based upon thorough investigation of their capabilities;

g. Make efforts to assist interested LDBEs and ACDBEs in obtaining financing or insurance (if applicable).

B. Evaluation of Good Faith Efforts. Good faith efforts of the Contractor shall be evaluated by the Authority to determine whether the efforts to obtain LDBE and ACDBE participation were those that a firm aggressively seeking partners or subcontractors would take in the normal course of doing business; whether the steps taken had a reasonable probability of success; and whether based upon the size, scope and complexity of the project, there were qualified LDBE and ACDBE firms available and willing to participate in a reasonable manner (e.g., financing, staff, and/or experience, etc.).

Section 9.5 LDBE and ACDBE Compliance

Throughout the term of this Contract, the Contractor shall monitor the certification status of any and all LDBE and ACDBE firms included in this Contract to ensure that their status as certified LDBEs and ACDBEs remains current (an Annual Statement of No Change In Status shall be required from LDBE and ACDBE firms). Within sixty (60) days following the end of the Contract Year, the Contractor shall submit these compliance reports to the Authority, including those that indicate “no change in status.”

A. Contractor LBDE and ACDBE Compliance. If during the term of this Contract, an LDBE or ACDBE Concession Operator and/or business partner ceases to do business or ceases to exist, whichever occurs earlier, the Contractor may replace such LDBE and ACDBE Concession Operator/business partner with another LDBE or ACDBE that have been reviewed, certified, and approved by the Equal Opportunity Programs Department of the Authority. The LDBE and ACDBE Concession Operator/business partner replacement shall occur within ninety (90) days of


the date on which the previous LDBE and ACDBE Concession Operator/business partner ceased to do business or ceased to exist, whichever was earlier. The replacement LDBE and ACDBE may not begin operating until the substitution has been approved by the Authority’s Equal Opportunity Programs and Concessions and Property Development departments.

B. Authority LDBE and ACDBE Compliance. The Authority will conduct compliancemonitoring on the LDBE and ACDBE participation in this Contract. The Contractor shall use all efforts to assist the Authority in obtaining access to the Concession Operators’/business partners’ records relating to LDBE and ACDBE certification and ongoing certification status, including, but not limited to, payroll records, tax information, and accounting records, for the purpose of ascertaining whether the LDBE(s) and ACDBEs are performing the designated work and the LDBE and ACDBE Concession Operators/business partners are otherwise carrying out the LDBE and ACDBE participation requirements of the Contract. The Contractor shall provide true and monthly reports of the LDBE and ACDBE participation (including gross sales achieved by LDBE(s) and ACDBE Concession Operators under this Contract. The LDBE and ACDBE Contract Activity report will be included with the Contractor’s Certified Monthly Statement (as described in Article 4, Section 4.3,E.3.d by the 20th calendar day each month with a separate copy to the Authority’s Equal Opportunity Programs Department. The LDBE and ACDBE monthly report will include any supporting documentation reasonably required by the Authority. The Contractor shall pay within ten (10) days of demand by the Authority liquidated damages of One Hundred Dollars ($100.00) per day for each day past the due date as defined in this Article 9 that the monthly LDBE and ACDBE Contract Activity Report is not submitted. The Contractor shall be found to be in non-compliance if the Contractor fails to comply with the LDBE and ACDBE provisions of this Contract.

ARTICLE 10. QUALITY OF PERFORMANCE AND LIQUIDATED DAMAGES

The liquidated damages provisions in the Contract relate to the quality of the Contractor’s Concession Operators’ performance or the quality of service that the Authority expects to be provided to the public under the Contract. The Contractor agrees that nonperformance denigrates the quality of the service, and therefore, is in violation of this Contract. The actual amount of damages sustained by the Authority for these violations cannot readily be determined, however. The Contractor agrees that the liquidated damages stated in the Contract are fair and reasonable and do not constitute a penalty. Failure to impose liquidated damages for a particular violation shall not bar the Authority from imposing liquidated damages for subsequent violations of the same nature. The Authority will notify the Contractor within five (5) days of a violation’s occurrence if it intends to assess liquidated damages. The Contractor agrees to assess the liquidated damages to the Concession Operator(s) and to pay the same promptly to the Authority.


ARTICLE 11. INSURANCE REQUIREMENTS

Section 11.1 Notice to the Contractor, Types of Insurance Coverage Required.

Notwithstanding the above indemnification, the Contractor shall give the Authority notice of any matter that may be covered by the indemnification and shall forward to the Authority every demand, notice, summons, or other process received in any claim or legal proceeding covered thereby. Further, the Contractor shall procure and maintain at its sole expense during the Contract period the following insurance coverage from an insurance company or companies possessing a rating of A VII or higher from the A.M. Best Company or an equivalent rating service. THE METROPOLITAN WASHINGTON AIRPORTS AUTHORITY SHALL BE NAMED AS AN ADDITIONAL INSURED ON ALL POLICIES, except Workers’ Compensation and Employer’s Liability, and, if such a policy is required, Professional Liability. Contractor waives all rights of recovery under subrogation under all policies enumerated herein and will obtain a waiver of subrogation endorsement on its workers compensation policy. The following policies must provide for thirty (30) days advance notice to the Authority of cancellation, non-renewal of the coverage, or any material change in the policy. All Contractor’s policies shall be primary and Contractor agrees that any insurance maintained by the Authority shall be in excess of and non-contributing with respect to the Contractor’s insurance. The Authority reserves the right to waive or modify selected insurance requirements for the Contractor for good cause.

Section 11.2 Commercial Automobile Liability

$1,000,000 Combined Single Limit for Bodily Injury and Property Damage per occurrence for owned, non-owned and hired vehicles; however, if any of the Contractor’s vehicles operate on the Airport Operations Area (AOA), the required limit shall be $2,000,000. The AOA is defined as that area of the Airport that is located inside the perimeter security fence surrounding the airside portion of the Airport.

Section 11.3 Commercial General Liability

$10,000,000 Combined Single Limit for Bodily Injury and Property Damage per occurrence for the Contractor. Coverage must include Broad Form Contractual, Property Damage, Products-Completed Operations, Personal Injury, Advertising Injury, Premises-Operations, Independent Contractors and Subcontractors, Host Liquor Legal Liability and Fire Legal Liability.

Section 11.4 Professional Liability

$3,000,000 per claim with a $3,000,000 aggregate for all employees.


Section 11.5 “All Risk” Property-Contractor’s Property

Replacement cost coverage under an “All Risk” policy for any of the Contractor’s real or personal property and improvements and betterments used or situated on Authority property. Concession Operators shall be required by the lease to carry such replacement cost coverage under an “All Risk” policy for any of the Concession Operators’ real or personal property used or situated on Authority property.

Section 11.6 Workers’ Compensation and Employer’s Liability

Virginia Statutory Limits with an All States Endorsement for Workers’ Compensation and $1,000,000 for Employer’s Liability.

The failure of the Authority to enforce the insurance provisions or to identify a deficiency from evidence that is provided shall not constitute a waiver of those provisions nor in any respect reduce the obligations of the Contractor to maintain such insurance or to defend and hold the Authority harmless with respect to any injury or damage covered by this Contract.

The Contractor shall provide the Contracting Officer with a valid Certificate of Insurance, in advance of the performance of any work, exhibiting coverage as required by the Authority’s contract terms and conditions. The Contractor shall require by the lease that all Concession Operators independently carry the minimum insurance requirements satisfactory to the Contractor or as otherwise required by the lease. The Certificate of Insurance shall be provided on the industry standard form (ACORD 25-S), and thecontract number shall be listed on the Certificate of Insurance and issued to:

Metropolitan Washington Airports Authority Procurement and Contracts Department

1 Aviation Circle Washington, DC 20001-6000

ARTICLE 12. RECORDS AND BOOKS; INSPECTIONS; AUDITS

Section 12.1 Contractor to Maintain Certain Books and Records

Contractor shall maintain in a true and accurate manner and in accordance with Generally Accepted Accounting Principles (GAAP), such accounts, books, records and data as would reasonably be expected to be examined by an independent certified public accountant in performing an audit or examination of Contractor’s revenues and expenses in accordance with GAAP and when applying Generally Accepted Auditing Standards (GAAS).


Section 12.2 Location of Books and Records

The Contractor may keep the books and records it is required to maintain under Section 12.1 at its corporate office, or available for inspection under the provisions of Section 12.5 herein. Such books and records shall be kept segregated from the Contractor's books and records relating to operations other than pursuant to this Contract.

Section 12.3 Books, Records and Information

Books and records as used in this clause include budget reports, schedules, invoices, receipts, source documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. Contractor, at a minimum, shall maintain, as an integrated part of its general ledger system, a revenue and expense sub-ledger, and shall identify and itemize all revenue and expense categories. Contractor shall make available all items stated and any related information sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of the Contract.

Section 12.4 Controls

In addition to maintaining the books and records required by Article 12 herein, Contractor shall ensure that Concession Operators install on the Premises, and shall at all times use, cash registers, invoicing machines, sales slips and other accounting equipment, devices and forms necessary to record properly, accurately and completely all sales of goods and services under any part of this Contract on or from the Premises.

Section 12.5 Authority’s Right to Inspect and Audit

A. Books and Records Available for Inspection

Contractor shall make such books and records required by Article 12 herein available to the Authority or its designee within seven (7) business days of receiving said request from the Authority. Should Contractor not wish to make the corporate books and records available in the Washington, D.C. area, then the Contractor shall pay reasonable travel and accommodation expenses for the Authority or the Authority’s authorized representatives to travel to the Contractor’s office to conduct the audit.

B. Authority's Right to Audit

The Authority shall have the right, upon reasonable notice to Contractor to audit the corporate books and records relating to the operation of the Contractor in order to determine the correctness of the fees paid to the Authority for any Contract Year. The Authority’s right to


inspect and audit extends to the books and records of all subcontractors and/or partners under this Contract as they relate to this Contract. If the audit discloses intentional inaccuracies, this Contract, at the option of the Authority, may be terminated.

C. Fees and Interest if Underpayment Discovered by Audit

If, as a result of the audit performed under Article 12 herein, additional fees are due from the Contractor to the Authority, the Contractor shall immediately pay to the Authority such additional fees, together with interest on the amount of such additional fees at the rate specified herein from the date such additional fees should have been paid. Further, if the audit establishes that the Contractor has understated and underpaid any fees and Rent payable to the Authority by three percent (3%) or more for any Contract year, then the entire expense of such audit, whether internal or external, shall be paid by the Contractor.

D. Delinquent FeesIn the event that it is established through an audit conducted by the Authority that fees or charges otherwise due to the Authority under this Contract have not been paid to the Authority as a result of the Contractor’s improper recording of its Gross Receipts, the Contractor shall pay to the Authority as delinquent fees and charges (with interest and charges in accordance with Section 12.5 herein) an amount equal to the amount of fees or charges reasonably estimated to have been lost to the Authority.

E. Inspection and Audit Rights Survive Expiration

The Authority’s rights under Article 12 to inspect and audit the books and records of the Contractor shall survive the expiration or earlier termination of this Contract. The Contractor shall retain and keep available all documents and records relating to this Contract for not less than three (3) years after the expiration or termination date of the Contract term or any extension, or in the event of litigation or claims relating to this Contract until such litigation or claims are completely disposed of and all time limits for appeal have expired.

ARTICLE 13. MISCELLANEOUS PROVISIONS

Section 13.1 Advertising and Public Displays

The Contractor shall not install or have installed or allow to be installed upon the Premises under this Contract any lighted or unlighted sign, poster or other display of advertising media, including material or display racks supplied by manufacturers of merchandise offered for sale, as well as other types of display, without the written approval of the Authority. Permission will not be granted for such advertising


material, or any portion of the fixtures or equipment used in connection with the operations hereunder, to extend beyond the areas shown on the attached Exhibit 2, and to be occupied by the Contractor’s Concession Operators.

Section 13.2 Inconveniences During Construction

The Contractor recognizes that from time to time during the term of this Contract, it will be necessary for the Authority to initiate and carry forward programs of construction, reconstruction, expansion, relocation, maintenance and repair in order that the Airport and its facilities may be suitable for the volume and character of air traffic and flight activity that will require accommodation, and that such construction, reconstruction, expansion, relocation, maintenance and repair may inconvenience the Contractor or the Concession Operators in their operations at the Airport. The Contractor agrees and shall require that the Concession Operators agree that no liability shall attach to the Authority, its officers, agents, employees, contractors, lessors and representatives by way of such inconveniences, and for and in further consideration of the Premises, the Contractor waives any right to claim damages or other consideration therefore. The Authority agrees to keep the Contractor informed of planned changes that may materially affect or inconvenience the Contractor or the Concession Operators, and further agrees to use its best efforts to minimize the disruption and inconvenience whenever possible. Notwithstanding the foregoing, all work carried on by the Authority with respect thereto within the Premises, if any, shall be done during hours when the Premises are not open for business (except in the case of emergencies) and otherwise shall be carried out in such a manner as not to unreasonably interfere with Concession Operator’s operations in the Premises. The Authority, at its expenses, shall repair all damage to the Premises resulting from such work.

Section 13.3 Incorporation of Standard Provisions

A. Except as provided herein, the Standard Provisions attached hereto as Exhibit 6 are hereby incorporated into and made a part of this Contract and shall be part of all leases with Concession Operators. The Contractor shall be obligated to meet where applicable to the Contractor and enforce on the Concession Operators where applicable, all specifications described in the Standard Provisions, PROVIDED, HOWEVER, that where an express provision of this Contract is in conflict with any provisions of the Standard Provisions, this Contract shall control.

B. The following provisions of the Standard Provisions do not apply to the Contractor: Article 3, Sections 4.02, 4.03, 4.04, 4.05, 4.06, Article 5, and Article 6. All sections of the Standard Provisions shall apply to Concession Operators.


Section 13.4 Notices

All notices, consents, and approvals required under the terms of this Contract shall be given by a designated representative of the Authority and the Contractor and delivered either by hand or certified mail, postage prepaid, return receipt requested, or by prepaid nationally recognized overnight courier service providing evidence of delivery and addressed as follows or to such other address as may be designated by the party following the procedure set forth herein:

To the Authority: Kathleen T. Verret Manager Revenue Development Metropolitan Washington Airports Authority 1 Aviation Circle, Suite 158 Washington, DC 20001

To the Contractor:

__________________________________________________________________________________________________________________________________________________________________________


IN WITNESS WHEREOF, the Parties hereto have executed this Contract as of the dates shown below.

METROPOLITAN WASHINGTON AIRPORTS AUTHORITY

By: ______________________

Kathleen T. Verret, Manager Revenue Development

Date: ________________________

CONTRACTOR

By:

Name:

Title:

Date:

Concession Management Contract Contract No. MWAA-4-12-C002

Exhibit 1

Contractor’s Proposal


Exhibit 2

Premises Drawings


Exhibit 3

Phasing Plan


Exhibit 4

Concession Operator Extension Agreements


Exhibit 5

Monthly Certified Statement


Exhibit 6

Standard Provisions for Concession Contracts


Exhibit 7

Good Faith Effort Form


Exhibit 8

Office Space


ATTACHMENT 2

Standard Provisions for Concession Contracts Metropolitan Washington Airports Authority

Standard Provisions for Concession Contracts __________________________________________________________________________________________

__________________________________________________________________________________________

Standard Provisions

for

Concession Contracts

April 30, 2008


__________________________________________________________________________________________Page i

Table of Contents Page

Article 1 Definitions and Interpretation ........................................................................................ 1

Article 2 Incorporation of Proposal and Rights in Data ............................................................... 3

Article 3 Use of Premises and Operation of Concession ............................................................ 3

Article 4 Condition of Premises, Alterations, Discharge of Liens .............................................. 5

Article 5 Maintenance and Utilities .............................................................................................. 6

Article 6 Fixed Improvements and Operating Equipment ........................................................... 7

Article 7 Authority Performance of Contractor Obligations ......................................................... 7

Article 8 Defaults; Termination by the Authority .......................................................................... 8

Article 9 Laws, Regulations and Compliance ........................................................................... 10

Article 10 Damage or Destruction of the Premises ..................................................................... 10

Article 11 Additional Bond Security ............................................................................................. 11

Article 12 Damage and Injury; Indemnification and Insurance ................................................... 11

Article 13 Method of Payment; Late Charges; Gross Receipts Reports ..................................... 13

Article 14 Records and Books; Inspections; Audits .................................................................... 14

Article 15 Applicability of Contract Terms to Subcontractors ...................................................... 16

Article 16 Surrender of Occupancy; Abandonment .................................................................... 16

Article 17 Impact of Construction Activities ................................................................................. 16

Article 18 Assignment ................................................................................................................. 16

Article 19 Federal Regulation ..................................................................................................... 17

Article 20 Nondiscrimination, DBE Participation ......................................................................... 17

Article 21 Strikes or Picketing Affecting Access to Airport .......................................................... 18

Article 22 Disputes ..................................................................................................................... 18

Article 23 Miscellaneous ............................................................................................................. 20


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Article 1. Definitions and Interpretation

1.01 Definitions. Except as otherwise clearly indicated by the context, the following words, terms and phrases wherever used in this Contract shall for the purpose of this Contract have the following meanings:

"Airport" or "Airports" means either or both Ronald Reagan Washington National Airport (DCA) or Washington Dulles International Airport (IAD) as the context of this Contract shall indicate.

"Airline" shall mean a company operating scheduled air transportation services that has entered into a standard airline use and lease agreement with the Authority.

"Authority" means the Metropolitan Washington Airports Authority, the entity that operates and controls Washington National and Washington Dulles International Airports, or its successor.

"Contracting Officer" means the Manager, Concessions and Property Development for the Airports Authority, or, for the ground transportation, rental car, Fixed Base Operator or parking concession contracts, the Manager of Airport Administration for the Airport at which the contract will be performed. The Manager is authorized to change any of the terms and conditions of the Contract and is also the party responsible for the on-site administration and enforcement of the terms and conditions of this concession Contract in all areas.

"Contractor" means the person or entity that has been awarded the right to establish and operate the Airport concession activity that is authorized by this Contract.

"Day" means business day unless otherwise specified.

"Expiration Date" means the scheduled last day of the period of this Contract. If the period of this Contract is extended, the Expiration Date shall be the scheduled last day of the period so extended. If the Contract is canceled or terminated, prior to the originally fixed Expiration Date, then the Expiration Date shall be the effective date on which this Contract is canceled or terminated, as established by the Authority; provided, that if this Contract is canceled or terminated prior to the originally fixed Expiration Date for default by the Contractor, this definition shall not be construed to preclude the Contractor's liability to the Authority for the period beyond the effective date of the termination or cancellation.

"Fixed Improvement" means any alteration, addition, annexation or improvement to the Premises or a portion thereof that cannot be removed or changed without material damage to, or destruction of, either itself or the Premises or a portion thereof.

"Gross Receipts" means the total amount received or realized by, or accruing to the Contractor from all cash or credit sales at the Airport of services, materials, or other merchandise made pursuant to the privileges authorized by this Contract. Losses due to "bad" checks or credit cards are the responsibility of the Contractor and shall not be deducted from gross receipts. A sale shall be deemed made at the Airport if: (1) the merchandise or services are ordered at the Airport and filled at the Airport or elsewhere; or (2) if the merchandise or services are ordered elsewhere, but the order is filled at the Airport or the merchandise or services are delivered from the Airport. All revenue shall be deemed to be received at the time of determination of the amount due the Contractor for each transaction, whether for cash or credit, and not at the time of billing or payment, unless otherwise specifically stated in this Contract; PROVIDED, HOWEVER, Gross Receipts exclude (1) refunds made by the Contractor to its customers for merchandise returned to the Contractor and (2) any taxes imposed by law which are separately stated and paid by the customer, and directly payable to the taxing authority by the Contractor.


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"Interior Maintenance" means the maintenance and keeping in good repair of the assigned Premises. This includes, but is not limited to, janitorial services, removal of trash, pest control, painting and maintenance of wall coverings, relamping and maintenance of light fixtures, interior and exterior washing of windows, repainting of Premises, and replacement of floor covering. It does not include maintenance and repairs required because of structural defects.

"Operating Equipment" means furniture, furnishings, special lighting fixtures, carpeting, draperies, decorations or other special finishing work, signs, appliances and trade fixtures and equipment that is furnished, installed or used by the Contractor in its operations on the Airport. It does not include Fixed Improvements, or repair or maintenance of Operating Equipment or Fixed Improvements or displays or decorations that are of a seasonal or temporary promotional nature.

"Premises" includes the areas at the Airports that the Contractor is authorized to use under this Contract, including any alterations, additions, repairs or Fixed Improvements made thereto.

"President" means the President and Chief Executive Officer, Metropolitan Washington Airports Authority, or such person or persons as may from time to time be authorized by the President to act for the President on matters pertaining to this Contract.

1.02 Interpretation. In this Contract, unless the context otherwise requires:

1. The terms "hereby," "herein," "hereof," "hereto," and "hereunder" and any similar terms used in this Contract refer to this Contract.

2. Words importing persons shall include firms, associations, partnerships, trusts, corporations, and other legal entities, including public bodies as well as natural persons.

3. Any headings preceding the text of the Articles and Sections of this Contract, and any table of contents, shall be solely for convenience of reference and shall not constitute a part of this Contract, nor shall they affect its meaning, construction or effect.

4. Words importing the male gender shall include the female gender and vice versa.

5. Words importing the singular shall include the plural and vice versa, unless the context clearly indicates otherwise.

6. A provision of this Contract that prohibits a party from performing an action shall be construed so as to prohibit the party from performing the action or permitting others to perform the action.

7. A provision of this Contract that requires a party to perform an action shall be construed so as to require the party to perform the action or cause the action to be performed.

8. "Including" means "including but not limited to."

9. The parties agree that this Contract sets forth the entire Contract between the parties, and that there are no promises or understandings other than those stated herein. Except as otherwise provided in this Contract, none of the provisions, terms, and conditions contained in this Contract may be added to, modified, superseded, or otherwise altered, except by written instrument executed by the parties hereto.

10. All attachments to this Contract shall be deemed to be a part of this Contract.


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11. In the event of a conflict between the body of the Contract and these Standard Provisions, the Contract shall take precedence.

Article 2. Incorporation of Proposal and Rights In Data

2.01 Incorporation of Proposal. Unless otherwise provided in this Contract, the Contractor's proposal is hereby made a part of the Contract. The Contractor's proposal may be subject to public disclosure in accordance with the Authority's Freedom of Information Policy. Notwithstanding the foregoing, however, the Authority will not publicly disclose commercial or financial information contained in the proposal which the Contractor specifically designates as confidential and provides the Authority with specific reasons protection is necessary.

2.02 Rights in Data. If the Contractor is required during the period of the Contract to submit data regarding revenue generated under the Contract, the Authority has the right to use such data in contract solicitations and the data may also be subject to public disclosure pursuant to the Authority's Freedom of Information Policy.

Article 3. Use of Premises and Operation of Concession

3.01 Use of Premises. The Contractor shall use the Premises only to operate the concession specified herein. No other uses are permitted unless previously authorized by the Authority in writing, which authorization may be withheld in the Authority's sole discretion.

3.02 Operation of Concession. Except as otherwise authorized by the Authority in writing, the Contractor shall:

1. Operate this business during such hours as may be deemed reasonably necessary by the Authority, or as specifically stated elsewhere herein.

2. Keep its Premises used for retail business fully staffed with knowledgeable, helpful, courteous, considerate and efficient employees. The Contractor shall require its employees to observe a strict impartiality as to services. The Contractor shall prohibit and restrain its agents, servants, and employees from loud, noisy and/or persistent announcement of its services on or about the Premises or the Airport.

3. Make every reasonable and lawful effort to maintain, develop and increase the business conducted by it under this Contract. The Contractor shall use its best efforts to achieve a maximum sales volume for the concession. It further agrees not to divert, or cause or allow to be diverted, any business from the Airport.

4. Use for office, clerical, storage or other non-selling purposes only such space in the Premises as is reasonably necessary for Contractor's business therein, and shall not perform any office, clerical, storage or other functions in the Premises for any other concession, business or store.

5. Not use the space outside or adjacent to the Premises for displays, sales or any other similar undertaking.

6. Not place any load on any floor in the Premises that exceeds the floor load per square foot that such floor was designed to carry.

7. Not use any roof over the Premises for any purpose. Contractor shall not use exterior walls of the Premises except that the Contractor may use any display windows that are part of the Premises and except that the Contractor may erect signs approved by the Contracting Officer.


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8. Not use the Premises for any illegal trade or business, or for any other illegal purpose.

9. The Contractor shall not employ or retain in its service, or permit to remain upon the Premises, any person reasonably found by the Contracting Officer to be objectionable or unfit for such employment.

10. Not install or have installed or allow to be installed upon the Premises any sign, either lighted or unlighted, display, video, poster, magazine or other printed materials containing advertising. The Contractor expressly acknowledges that the Authority maintains separate exclusive advertising concessions at the Airport for the dissemination of local and national advertising and the distribution of a complimentary magazine relating to the Airports. The Contractor warrants that it shall not engage in any conduct which conflicts with such other concessions. Any sign, video, poster, magazine or printed material containing advertising, or other displays not approved by the Authority shall be removed from the Premises by the Contractor within one (1) day after notice from the Authority. The Authority may enter the Premises and remove the unapproved item(s) if the Contractor does not remove the item(s) itself.

11. Not install vending machines, public telephones and other similar coin-operated equipment on the Premises unless authorized by the Contracting Officer.

3.03 Merchandise; Prices to be charged. The Contractor shall keep the concession continuously stocked with high quality, saleable merchandise and establish reasonable prices to be charged for the products and services to be sold or exchanged that are consistent with the pricing set forth in its proposal. The Contractor may, subject to the written consent of the Contracting Officer, grant complimentary or reduced rates to certain persons as are customary in businesses of similar character.

1. Reasonableness of prices shall be judged by comparison with the Contractor’s pricing contained in its proposal and by comparison to prices currently charged for comparable goods or services furnished or sold outside the Airport in the Washington, DC Metropolitan Area under similar conditions with due allowance for accessibility, availability, cost of labor and materials, type of patronage and other conditions customarily considered in determining charges. However, consideration may also be given to such other factors as the Contracting Officer may reasonably deem significant. The Contractor shall within forty-eight (48) hours after notice from the Contracting Officer, reduce any prices judged by the Contracting Officer to be unreasonable under this Section 3.03.

2. The Contractor shall sell only the merchandise and services specifically authorized herein and provide the Operating Equipment, Fixed Improvements, management, personnel, goods and commodities necessary therefor. The Authority reserves the right to determine the nature and type of merchandise and services that may be sold or furnished by the Contractor. The Contractor shall, within forty-eight (48) hours after receipt of written notice from the Contracting Officer, discontinue the sale of any product or service that the Contracting Officer reasonably determines to be in violation of the rights granted hereunder.

3.04 Insurance Rate. The Contractor shall comply with all insurance requirements relating to or affecting the Premises. If insurance premiums payable by the Authority for the Premises or the Airport exceed the rate that would have been applicable, because of a failure by the Contractor to comply with insurance requirements, or as a result of or in connection with the use to which the Premises are put by the Contractor (if such use is other than a use authorized under this Contract), Contractor shall, upon demand by the Authority, immediately reimburse the Authority for the excess insurance premiums paid by the Authority.


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3.05 Hazardous Materials. Any Hazardous Materials shall be handled, stored, transported and disposed of in accordance with all applicable Federal, state and local statutes, ordinances, and regulations. The term "Hazardous Materials" shall mean any substance, chemical, or waste which at any time shall be defined as hazardous, toxic, or dangerous under applicable federal, state or local laws or regulations that govern (1) the existence, cleanup, or remedy of contamination on property; (2) the protection of the environment from spilled, deposited or otherwise emplaced contamination; (3) control of hazardous wastes; or (4) the use, generation, transport, treatment, removal or recovery of hazardous substances, including building materials.

Article 4. Condition of Premises, Alterations, Discharge of Liens

4.01 No Representations or Warranties. The Authority makes no representations, covenants or warranties with respect to the Premises except as expressly set forth in this Contract.

4.02 Construction, Alterations or Repairs to Premises.

1. Contractor shall not make or permit anyone to undertake any construction or make any alterations, additions or improvements, structural or otherwise, or install any Fixed Improvements or Operating Equipment (hereinafter collectively referred to as "Alterations"), in or to the Premises without the prior written consent of the Contracting Officer. Prior to the commencement of work on any Alterations, the Contracting Officer's written approval must be obtained as to comprehensive plans and specifications showing all the proposed Alterations, including detailed descriptions of the effect of the proposed Alterations on the mechanical and electrical systems of the building in which the Premises are located and the compatibility of the Alterations with the design and general character of the Airport and the area in which the Premises are located. The Authority shall have the right to stop such work if the Authority or its designated agent determines that such work is not being done in a workmanlike manner or in accordance with the plans and specifications provided to the Authority. In such event, the Contractor shall promptly correct the problem that gave rise to the work stoppage. If the Contractor fails to do so within a time period determined by the Authority to be reasonable, then the Authority may, at its sole option, and at Contractor's expense, correct such problem(s), and complete the Alterations.

2. Said Alterations shall in all respects comply with the Virginia Uniform Statewide Building Code, the Authority's Design Manual; Authority regulations and directives; Federal Aviation Administration regulations, orders and advisory circulars; federal and state environmental regulations; the Authority's Construction Safety Manual; Authority insurance requirements; Virginia Occupational Safety and Health standards; applicable food and beverage codes and other health regulations (Arlington, Fairfax or Loudoun County, U.S. Public Health Service); and any other applicable federal, state and local laws and regulations. All construction, alterations or repairs to the Premises shall also be required to meet any other standards specifically referenced or stated elsewhere in this Contract.

3. Within a reasonable time after this Contract has been fully executed, the Contractor shall apply to the appropriate authorities for any permits that may be required in connection with the Alterations to be done by the Contractor pursuant to this Contract. The time in which the Contractor is required to comply with this subparagraph shall take into account the time needed to develop and obtain the Contracting Officer's approval of plans, drawings and specifications.

4.03 Discharge of Liens. If any mechanic's or materialman's lien is filed against the Premises as a result of any work or act of the Contractor, the Contractor shall discharge the lien within twenty (20) days after the filing of the lien. In addition to any other remedies available to the Authority, if the Contractor fails to discharge the lien, the


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Authority may bond or pay the lien or claim for the account of the Contractor without inquiring into the validity thereof. The Contractor is required to reimburse the Authority for any funds so spent by the Authority.

4.04 Incorporation of Plans, Drawings and Specifications. Upon approval, the final plans, drawings and specifications associated with any Alterations shall be deemed to be a part of this Contract. All Alterations done by the Contractor pursuant to this Contract shall be consistent with the plans, drawings and specifications approved by the Contracting Officer for this Contract.

4.05 Fire Extinguishers. The Contractor agrees to supply and maintain such adequate and readily accessible fire extinguishers, approved by fire underwriters for the protection of the Premises, it being understood and agreed that the Contractor shall not be required to maintain equipment necessary to fight successfully a fire of major proportions in the Premises.

4.06 Locks. The Contractor agrees to install a Best lock keying system compatible with the Authority's system on all entrances to the Premises and mechanical room entrances, for police, security, fire protection and maintenance reasons.

Article 5. Maintenance and Utilities

5.01 Maintenance by Contractor. Contractor shall keep the Premises (including but not limited to, surfaces of walls, windows and window casings and sills, both inside and outside, ceilings, floors, inside and outside doors and door jambs, and interior and exterior lighting) and Fixed Improvements and Operating Equipment located within the Premises in safe, neat, and clean condition and good order and repair, cause no waste or injury thereto, shall make any necessary repairs or replacements, and will, at the expiration or other termination of this Contract, surrender the same, broom clean, in the same order and condition in which they are on the commencement date of this Contract, ordinary wear and tear excepted. Maintenance, repair, and replacement of all Operating Equipment and/or Fixed Improvements within or for the exclusive benefit of the Premises, including but not limited to, air conditioning or heating equipment (except at Dulles Airport), bathroom fixtures, or any other type of equipment or improvements, shall be the sole responsibility of Contractor. The Contractor shall promptly undertake any maintenance, or replacement as may be considered necessary by the Authority and shall be done with material and personnel approved by the Contracting Officer. The Contractor shall also keep and maintain in good order any loading platform, truck dock and/or truck maneuvering space used by it.

5.02 Releases of Hazardous Materials. Promptly respond to and clean up any release or threatened release of any Hazardous Material (see definition in Article 3.05) into the drainage systems, soils, groundwater, waters or atmosphere, in a safe manner, in accordance with applicable federal, state, and local statutes, ordinances, and regulations, and as authorized or approved by all federal, state or local agencies having authority to regulate the permitting, handling and cleanup of Hazardous Materials. The Authority and the Airport Fire Department shall be notified immediately of any release or threatened release of any Hazardous Material.

5.03 Structural Maintenance by the Authority. The Authority shall maintain in good repair the foundation, sprinkler system, exterior structural walls excluding doors, windows, and interior surfaces of any walls, roof, utility distribution systems leading to the Premises, and the common areas adjacent to the Premises. Reasonable notice and opportunity to cure must be provided by the Contractor to the Authority in the event the Contractor believes that the Authority has failed to comply with this provision before the Authority may be considered in default. The Authority shall not be required to undertake any maintenance or repair required by reason of any act or omission of the Contractor, or caused by any alteration, addition, construction, or improvement by the Contractor.


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5.04 Facilities and Services to be provided by the Authority. The Authority shall:

1. Provide outlets as they presently exist, or which the Authority may approve in writing to be installed at the cost and expense of the Contractor, for public utility services, including light, electric power, gas, running water, heat, air conditioning, CATV, data lines and telephone for such area.

2. Provide reasonable and normal requirements of heat, air conditioning, electricity and water to the Premises through such utility distribution system as may exist in the building in which the Premises are located. The Authority shall not be liable for failure to furnish or for suspension or delay in furnishing any or all of such utilities or services for any cause whatsoever.

5.05 Contractor Undertakings; Utilities. The Contractor covenants and agrees that, at its own cost and expense, it will arrange for, and pay for, all utilities consumed by it during the period of the Contract except for those utilities specified by this Contract to be provided by the Airport at no additional cost to the Contractor. The Authority shall have the right to charge the Contractor, and all other users of public utilities systems (including sewerage systems) serving Airport users, a reasonably allocated share of any costs that the Authority incurs in providing these services. Such charges shall be apportioned among the Contractor and all other users of the Airport systems, in a manner reasonably calculated to distribute such cost fairly in proportion to the respective use of such systems.

Article 6. Fixed Improvements and Operating Equipment

6.01 General. The Contractor covenants and agrees that, at its own cost and expense, it will provide and install all Fixed Improvements and Operating Equipment required for proper and adequate furnishing and performance of the concession services and goods to be provided under the terms of this Contract. All such installations are subject to the Contracting Officer's approval as specified in Article 4.

6.02 Title. Except as otherwise specifically provided herein, title to any Fixed Improvements and Operating Equipment installed by or assigned to the Contractor under this Contract, shall rest with the Contractor during the period of the Contract. The Contractor shall be responsible for maintaining such Fixed Improvements and Operating Equipment in good condition, ordinary wear and tear excepted. The Contractor shall not demolish, replace or modify Fixed Improvements or Operating Equipment already in place or installed by it unless otherwise authorized by the Contract or by prior written permission from the Authority. At the expiration or termination of this Contract, title to all Fixed Improvements and Operating Equipment shall vest in the Authority or its designee, unless otherwise authorized by the Contract. The Contractor agrees to execute all documents requested and deemed necessary by the Authority as evidence of said transfer of title.

6.03 Certified Statement of Costs of Fixed Improvements and Operating Equipment. Except as otherwise provided herein, within ninety (90) days after the substantial completion of the Fixed Improvements and Operating Equipment, the Contractor shall furnish to the Contracting Officer a certified statement setting forth in detail the total cost of the Fixed Improvements and Operating Equipment. The total cost of Fixed Improvements and Operating Equipment to be included on the statement is limited to construction, equipment and material costs, architectural and engineering fees (for Fixed Improvements only), taxes, freight fees, and performance and payment bond premiums attributable to construction. Overhead, "in-house", or personnel costs of the Contractor or its affiliates are not allowable except as otherwise provided herein. The costs of Fixed Improvements and Operating Equipment are subject to Authority audit.

Article 7. Authority Performance of Contractor Obligations

The Authority reserves the option with regard to maintenance, alterations, repairs, or improvements, if any, to be made by the Contractor under this Contract, to perform, or have performed, such maintenance, alterations, repairs or improvements itself and charge the Contractor the cost and expense thereof, whenever:


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1. The Contractor has failed to take all practicable steps promptly to perform such maintenance, alterations, repairs, or improvements, after five (5) days written notice from the Authority requiring the same; or,

2. Performance of any such maintenance, alterations, repairs or improvements by other than the Authority is prohibited by law.

Article 8. Defaults; Termination by the Authority

8.01 General. Each of the following events shall constitute a Default:

1. The occurrence of an event of insolvency of the Contractor, including, but not limited to, an assignment for the benefit of creditors.

2. The occurrence of any act that operates to deprive the Contractor of the rights, powers and privileges necessary for the proper conduct of the concession.

3. Failure to operate the concession for a period of five consecutive days without prior written authorization from the Authority.

4. The assignment of the Contractor's interest in this Contract by operation of law.

5. The failure of the Contractor to perform, keep or observe any of the terms, covenants and obligations under the Contract and the failure continues for ten (10) days after written notice by the Authority of such failure.

8.02 Notices of Termination. This Contract is subject to the limitation that, if a Default occurs, the Authority may give to the Contractor a Notice of Termination of this Contract. The Notice shall specify the termination date. The termination date may occur no sooner than seven (7) calendar days from the date of the Notice. In the event the Default involves a failure to perform obligations and such failure occurs more than once in any twelve-month period, the Authority shall not be required during the remaining period of the Contract to provide any notice and opportunity to cure prior to issuing a Notice of Termination. At the termination date, the period of this Contract shall expire and all of the rights and interests of the Contractor under this Contract shall end. The Contractor shall then surrender the assigned Premises to the Authority. The Contractor's liability under all of the provisions of this Contract shall continue as though the termination had not occurred, however.

8.03 Re-entry by the Authority. If this Contract is terminated because of a Default, the Authority or its agents, employees or designee may immediately or at any time thereafter, re-enter the Premises and remove the Contractor, Contractor's agents, subcontractors, invites and property from the assigned premises. Re-entry and removal may be affected by summary dispossess proceedings, by any suitable action or proceeding at law, by force, or otherwise. The Authority shall be entitled to the benefits of all provisions of law respecting speedy recovery of the assigned Premises held over by the Contractor or the proceedings in forcible entry and retainer. Contractor waives any right to the service of any notice of the Authority's intention to re-enter provided for by any present or future law. The Authority shall not be liable in any way in connection with any action it takes pursuant to this subparagraph. The Contractor's liability shall survive the Authority's re-entry, the institution of summary proceedings, and the issuance of any warrants with respect thereto.

8.04 Contractor Remains Liable. If this Contract is terminated under this Article, the Contractor shall remain liable (in addition to accrued liabilities) to the extent legally permissible for the amounts that the Contractor would have been required to pay to the Authority under this Contract had the contract not been terminated. The Contractor


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shall pay, as damages, the difference between amounts obtained by adding the amounts owed to the Authority plus the Authority's expense in reentering or repossessing the Premises, putting the Premises in proper repair, altering the assigned Premises for a new contractor, protecting the Premises, and contracting expenses to obtain a new contractor, minus the revenue to be paid to the Authority by a new contractor occupying the Premises for the remaining contract period. In addition, the Contractor shall pay to the Authority such sums as the court which has jurisdiction there over may adjudge as reasonable attorney's fees with respect to any lawsuit or action instituted by the Authority to enforce the provisions of this Contract. If this Contract requires the payment of a percentage of gross receipts to the Authority, the percentage of gross receipts owed after a Default shall be based upon the average of the Contractor's gross receipts under this Contract during the last twelve months of the contract or during the period of the contract, whichever is shorter.

8.05 Replacement Contractor. The Authority may enter into a new contract with another contractor that will occupy the Premises for all or any part of the unexpired portion of the period of this Contract or for any longer period. The Authority has the sole and absolute discretion with respect to the selection of a new contractor and the use of the Premises. The Authority shall be under no obligation to enter into or attempt to enter into a new contract for the Premises.

8.06 Cure by Authority. If the Contractor is in Default under this Contract, the Authority may cure the Default at any time through any action deemed appropriate by the Authority for the account and at the expense of the Contractor. Contractor shall reimburse the Authority for any amounts expended by the Authority in connection with the cure. Such cure shall not constitute a waiver of the Authority's rights with respect to that or any other Default, unless otherwise expressly stated in writing by the Authority.

8.07 No Waiver by Authority. The Authority's rights and remedies set forth herein shall be in addition to any other right and remedy now and hereafter provided by law. All rights and remedies shall be cumulative and not exclusive of each other. No delay by the Authority in exercising a right or remedy shall constitute a waiver or acquiescence to the Default. No waiver of a Default shall be effective unless it is in writing. No waiver of a Default shall extend or affect any other Default, excuse future similar Defaults, or impair any right or remedy with respect thereto.

8.08 Right of Authority to Lien. The right to lien on the inventory and other property of the Contractor is expressly granted to the Authority in any case where the Contractor fails to pay amounts due to the Authority under this Contract.

8.09 No Authority Liability for Damage. The Authority shall not be liable for any damage, including, but not limited to, loss of profit, and the Contractor shall not make a claim of any kind whatsoever against the Authority, its agents or representatives, by reason of any action taken pursuant to this Article.

8.10 Bankruptcy or Reorganization of the Contractor. To the extent that the Authority's right to terminate this Contract in accordance with this Article is determined to be unenforceable under the Bankruptcy Code of 1978, as amended from time to time (the "Code"), or under any other statute, then Contractor and any trustee who may be appointed agree: (1) to perform promptly every obligation of Contractor under this Contract until this Contract is either rejected, assumed or deemed rejected under the Code; (2) to pay on a current basis, as set forth herein, the monthly payments; (3) to reject or assume this Contract within sixty (60) days of a filing of a petition under the Code; (4) to give the Authority at least forty-five (45) days prior written notice of any proceeding relating to assumption of this Contract; (5) to cure or provide adequate assurance of a prompt cure of any default of Contractor under this Contract; (6) to provide to the Authority adequate assurance of future performance under the Contract.


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Article 9. Laws, Regulations and Compliance

9.01 Laws and Regulations. The Contractor and the Authority shall each comply with all applicable Federal, state and local laws, codes, regulations, including regulations of the Authority, ordinances, rules and orders now or hereafter enacted.

9.02 Safety and Fire Regulations. The Contractor shall conduct its operations and activities under this Contract in compliance with all safety regulations and directives of the Authority and applicable Federal, state and local laws. The Contractor shall procure and maintain such fire prevention and extinguishing devices as required by the Authority and shall at all times be familiar with and comply with the fire regulations and orders of the Authority.

9.03 Airport Security. The Contractor shall be familiar with and conduct its operations in accordance with all regulations and directives of the Authority and the Transportation Security Administration, and any other federal, state or local government having jurisdiction over the airport, with respect to the maintenance of airport security.

9.04 Authority Issuance of Rules and Regulations. The Authority shall have the right to prescribe, in its sole discretion, such reasonable rules and regulations that in the Authority's reasonable judgment are necessary or appropriate for the general well-being, safety, security, care, and cleanliness of the Airport.

9.05 Compliance by Other Concessionaires and Tenants. The Authority shall, whenever possible, make reasonable efforts to obtain uniform compliance with the Authority's rules and regulations; however, the Authority shall not be liable to the Contractor for any violation or non-observance of such rules and regulations by any user, tenant, concessionaire, invitee, licensee, or trespasser at the Airports nor shall such violation or non-observance by a user, tenant, concessionaire, invitee, licensee, or trespasser at the Airports, constitute a waiver of the Contractor's obligation to comply with Authority rules and regulations.

9.06 Notification of Theft or Damage. The Contractor shall inform the Authority and the Airport Police Department, in writing, within twenty-four (24) hours after the Contractor becomes aware of any damage to or alleged theft of Authority or private property.

Article 10. Damage or Destruction of the Premises

10.01 Partial Damage. If all or a portion of the Premises are partially damaged by fire, explosion, the elements, the public enemy, or other casualty, but not rendered untenantable, the same will be repaired with due diligence by the Authority at its own cost and expense, and there will be no abatement of rent, subject to the limitations of Section 10.04; provided, however, that if the damage is caused by the act or omission of the Contractor, its sublessees, agents, or employees, to the extent that such damage is not covered by insurance, the Contractor shall be responsible for reimbursing the Authority for the cost and expense incurred in such repair.

10.02 Extensive Damage. If the damages referred to in Section 10.01 shall be so extensive as to render the Premises untenantable, but capable of being repaired in thirty (30) days, the same shall be repaired with due diligence by the Authority at its own cost and expense, subject to the limitations of Section 10.04. An appropriate portion of the concession fee shall abate unless the damage is caused by the act or omission of the Contractor, its subcontractors, agents or employees. If the damage is caused by the act or omission of the Contractor, its subcontractors, agents or employees, to the extent that such damage or destruction is not covered by insurance, the Contractor shall be responsible for reimbursing the Authority for the cost and expense incurred in such repair.

10.03 Complete Destruction.

1. Except as stated in Section 10.03(2), in the event the Premises are completely destroyed by fire, explosion, the elements, the public enemy, or other casualty or so damaged that they are


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untenantable and cannot be repaired or replaced except after more than thirty (30) days, the Authority shall undertake the repair, replacement, and reconstruction of the Premises. All or a portion of the concession fees shall abate as of the time or such damage or destruction until such time as said Premises are fully restored and certified by the Authority's Engineers as ready for occupancy, provided, however, if within twelve (12) months after the time or such damage or destruction said Premises shall not have been repaired or reconstructed, the Contractor may give the Authority written notice of its intention to cancel this Contract in its entirety.

2. Notwithstanding the foregoing, if said Premises are completely destroyed as a result of the act or omission of the Contractor, its subcontractors, agents or employees, rentals and fees shall not abate and the Authority may, at its discretion, require the Contractor to repair and reconstruct the Premises within twelve (12) months of such destruction and pay the costs therefor; or the Authority may repair and reconstruct the Premises within twelve (12) months of such destruction and the Contractor shall be responsible for reimbursing the Authority for the costs and expenses incurred in such repair to the extent such costs and expenses exceed the insurance proceeds.

10.04 Limits of the Authority's Obligations Defined. It is understood that, in the application of the foregoing Sections in this Article, the Authority's obligations shall be limited to repair and reconstruction of the terminal buildings, to, as nearly as possible, a condition and quality as existed at the commencement of their operations hereunder. Redecoration and replacement of furniture, fixtures, equipment and supplies shall be the responsibility of the Contractor and any such redecoration and refurnishing/re-equipping shall be of equivalent quality to that originally installed hereunder.

Article 11. Additional Bond Security

When the Contract requires the posting of a bond, guarantee or security, the Contractor shall promptly furnish additional security required to protect the Authority under this Contract when:

1. Any surety upon any bond required furnished with this Contract becomes unacceptable to the Authority;

2. Any surety fails to furnish reports on its financial condition as required by the Authority; or

3. The revenue payable to the Authority by the Contractor is increased so that the penal sum of any bond or guarantee as set forth in the contract becomes inadequate in the opinion of the Contracting Officer.

Article 12. Damage and Injury; Indemnification and Insurance

12.01 Damage Caused by the Contractor. All damage to the Premises or to the Airport in any way caused by the Contractor or its agents, employees, contractors, visitors, guests or invites, shall be repaired at the expense of the Contractor. In the event of such damage, the Authority shall have the option to make such repairs as are necessary, and any charge, costs, or damages so incurred by the Authority shall be paid by the Contractor.

12.02 Indemnification - General. The Contractor shall defend, indemnify, and hold the Authority and its agents, officers and employees completely harmless from and against any and all claims, suits, demands, actions, liabilities, losses, damages, judgments, or fines, including all reasonable costs for investigation and defense thereof (including, but not limited to, attorney fees, court costs and expert fees), of any nature whatsoever arising out of the Contractor's conduct of its business on the Airports, or in its use or occupancy of the Premises, except to the extent caused by the negligence of the Authority. The Authority shall give to the Contractor reasonable notice of, and an


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opportunity to defend against, any such claims or actions, and the Authority shall take reasonable actions to mitigate its damages.

12.03 Indemnification - Violation of Laws. The Contractor shall defend, indemnify, and hold the Authority, and its agents, officers, and employees, completely harmless from and against any claim, suit, demand, action, liability, loss, damage, judgment, fine, or civil penalty and all costs and expenses of whatever kind or nature (including, but not limited to, attorney fees, court costs and expert fees) associated therewith in any way arising from or based upon the violation of any Federal, state, or municipal laws, statutes, resolutions, or regulations by the Contractor, its agents, employees, subcontractors, or sublessees, in conjunction with the Contractor's use and/or occupancy of the Airport. The Authority shall give the Contractor reasonable notice of, and an opportunity to defend against, any such claims or actions, and the Authority shall take reasonable actions to mitigate its damages.

12.04 Indemnification - Airport Security. If the Authority is deemed to be in noncompliance with laws or regulations governing access to secure areas of the Airport and said non-compliance is the result of or due to the act or omission of the Contractor or of any of the Contractor's employees, agents, subcontractors or sublessees, and such breach results in an action against the Authority by the Transportation Security Administration or any other federal, state or local government with authority over security at the airport, the Contractor agrees to reimburse the Authority for all expenses, including reasonable attorney fees incurred by the Authority in defending against the action and for any fine, penalty or settlement amount paid by the Authority as a result of the action. The Authority shall give the Contractor reasonable notice of any allegation, investigation, or proposed or actual penalty that relates to acts or omissions of the Contractor.

12.05 Survival of Indemnification. The provisions of Sections 12.02, 12.03 and 12.04 shall survive the expiration, termination, or early cancellation of this Contract.

12.06 Notice by Contractor; Types of Insurance Coverage. Notwithstanding the above indemnification, the Contractor shall give the Authority notice of any matter that may be covered by the indemnification and shall forward to the Authority every demand, notice, summons, or other process received in any claim or legal proceeding covered thereby. Further, the Contractor, at its sole cost and expense, shall throughout the Period of this Contract, keep all of its operations on the Airports, and its obligation to indemnify the Authority pursuant to this Article, continuously and fully insured, and shall provide a certificate of insurance evidencing all required coverages are in effect, prior to the commencement of this Contract. The following types of insurance are required; the specific minimum amounts and limits of such insurance, as well as any additional types of required insurance, are specified elsewhere in this Contract. Said limits shall in no event be construed to limit or modify the Contractor's obligation to indemnify the Authority as set forth above.

1. Virginia Statutory limits with All States Endorsement for Workers' Compensation and Employer's Liability.

2. Commercial General Liability Insurance. Coverage must include Broad Form Contractual, Property Damage, Products-Completed Operations, Personal Injury, Premises-Operations, Independent Contractors and Subcontractors, Liquor Legal Liability and Fire Legal Liability. Such policy or policies shall be issued on an occurrence basis.

3. Comprehensive Automobile Liability Insurance. Coverage must include bodily injury and property damage per occurrence for owned, non-owned and hired vehicles.

4. Property coverage for the Contractor's personal property used on Authority property. Policy must provide replacement cost and contain a waiver of subrogation by the carrier for all claims and suits against the Authority, including recovery of any deductibles.


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12.07 Insurance Requirements.

1. All insurance maintained by the Contractor pursuant to this Contract shall be obtained from an insurance company or companies possessing a rating of A VII or higher from the A.M. Best Company or an equivalent rating.

2. Said policy or policies of insurance shall contain a provision that written notice of cancellation, alteration, or any material change thereof shall be delivered to the Authority not less than thirty (30) days in advance of the effective date of this Contract, and in no event shall such policies be canceled by the Contractor without the Authority's prior written consent unless equivalent replacement policies are then issued and available. All policies, except Workers' Compensation and Employer's Liability shall identify the Authority, its agents, employees, and representatives, if any, as additional insured in a manner satisfactory to the Authority. Said policy shall cover only claims arising from events addressed in the Contract.

3. If, in the Authority's opinion, the minimum limits of the insurance herein required have become inadequate during the period of the Contract, the Contractor shall increase such minimum limits by reasonable amounts on request of the Authority provided that said coverage is available at standard commercial rates.

4. The Contractor shall deliver each policy and certificate of required coverage to the Contracting Officer for approval upon the Contractor's execution of the Contract.

Article 13. Method of Payment; Late Charges; Gross Receipts Reports

13.01 Commencement of Payment Obligation. The Contractor's obligation to make payments to the Authority under this Contract shall commence on the effective date of the Contract, unless otherwise specified in the Contract. All payments shall be made in coin or currency of the United States of America, which at the time of payment is legal tender for public and private debts.

13.02 Payment by Checks. All checks shall be made payable to the "Metropolitan Washington Airports Authority" and forwarded to the address designated in this Contract for receipt of payment.

13.03 Payment by Other Methods. Payment may also be made by Automated Clearing House Debit or by bank wire transfer.

13.04 Late Charges. Without waiving any other right of action available to the Authority in the event of default in payment of charges and fees hereunder, if the Contractor fails to make a payment when due, late charges will be assessed from the date payment was due. Late charges may consist of interest and penalties.

13.05 Interest. The interest rate shall be at the rate per annum which is four percent (4%) higher than the "prime rate" published in The Wall Street Journal on the date such payment was due.

13.06 Charges. In addition to interest, monthly penalty charges at the rate of six percent (6%) per annum (or as established periodically) of the amount due will be assessed on the unpaid portion of accounts more than thirty (30) days past due.

13.07 Certified Statements.

1. Monthly Statement. Contractor shall submit to the Authority not later than the fifteen (15th) day of each calendar month during the period of this Contract, or at such other intervals as specified herein, a certified statement setting forth the Contractor’s Gross Receipts for the preceding


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calendar month. Said statement shall be in the format specified by the Authority, shall include all information required by the Authority and be certified as complete by the Contractor’s principal financial officer.

2. Annual Statement. Within ninety (90) days following the end of each Contract Year, the Contractor, at its own cost and expense, shall provide to the Authority an Annual Statement of Gross Receipts and concession fees paid to the Authority for the Contract Year just ended. . The Annual Statement shall also include a statement by the independent CPA that in its opinion such Gross Receipts and fees paid have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and in accordance with the terms and conditions of the Contract including the definition of Gross Receipts set forth herein. Such Annual Statement shall also contain a list of the Gross Receipts, by month, as shown on the books and records of the Contractor and which were used to compute the fees paid to the Authority during the period covered by the Annual Statement. The Authority reserves the right to reject the Contractor’s choice of independent CPA if said independent CPA does not, in the Authority’s view, have the appropriate standing and reputation.

3. Additional Payment if Fees Underpaid. If the Annual Statement provided by the Contractor to the Authority pursuant to Section 13.07 herein with respect to any Contract Year indicate that the amount of percentage and fixed concession fees, which the Contractor actually paid to the Authority with respect to such Contract Year was less than the amount of fees due and owing for such Contract Year under the terms of this Contract, then the Contractor shall pay the difference to the Authority at the same time it provides the Annual Statement to the Authority, together with interest on the amount of such difference at the rate specified in Section 13.05 and 13.06 herein.

4. Credit if Fees Overpaid. If the Annual Statement provided by the Contractor to the Authority pursuant to Section 13.07(b) with respect to any Contract Year indicate that the amount of concession fees which the Contractor actually paid to the Authority with respect to such Contract Year was greater than the amount of concession percentage fees due and owing for that Contract Year under the terms of this Contract, then the amount of such excess shall, at the option of the Authority, either be paid in lump sum within a thirty (30) day period or credited to the concession fees next due and owing from the Contractor to the Authority, unless the period of the Contract has expired, in which event such amount shall be promptly refunded by the Authority to the Contractor.

5. Proration for Portion of Contract Year. For the purposes of paying the concession fees due for any portion of a Contract Year, the fees shall be prorated on the basis of the actual number of days in such portion of such Contract Year.

Article 14. Records and Books; Inspections; Audits

14.01 Contractor to Maintain Certain Books and Records. Contractor shall maintain in a true and accurate manner and in accordance with GAAP, such accounts, books, records and data as would reasonably be expected to be examined by an independent certified public accountant in performing an audit or examination of Contractor’s revenue and expenses in accordance with GAAP and with generally accepted auditing standards.

14.02 Location of Books and Records. The Contractor may keep the books and records it is required to maintain under Section 14.01 at its corporate office, or available for inspection under the provisions of Section 14.05 herein. Such books and records shall be kept segregated from the Contractor's books and records relating to operations other than pursuant to this Contract.


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14.03 Books, Records and Information. Books, records, and information to be made available to the Authority shall include, but not be limited to all supporting documentation that is fundamental for the performance of an audit in accordance with Generally Accepted Auditing Standards.

14.04 Controls. In addition to maintaining the books and records required by Article 14 herein, Contractor shall install on the Premises, and shall at all times use, cash registers, invoicing machines, sales slips and other accounting equipment, devices and forms necessary to record properly, accurately and completely all sales of goods and services under any part of this Contract on or from the Premises.

14.05 Authority’s Right to Inspect and Audit

1. Books and Records Available for Inspection Contractor may keep the books and records required under Article 14 herein at the Contractor’s corporate office or elsewhere available for inspection. Such books and records shall be kept segregated from the Contractor’s books and records relating to other operations. Contractor shall make such books and records available to the Authority or its designee within seven (7) business days of receiving said request from the Authority. Should Contractor not wish to make the corporate books and records available in the Washington, D.C. area, then the Contractor shall pay reasonable travel and accommodation expenses for the Authority or the Authority’s authorized representatives to travel to the Contractor’s office to conduct the audit.

2. Authority's Right to Audit. The Authority shall have the right, upon reasonable notice to Contractor to audit the corporate books and records relating to the operation of the Contractor in order to determine the correctness of the fees paid to the Authority for any Contract Year. The Authority’s right to inspect and audit extends to the books and records of all subcontractors and/or partners under this Contract as they relate to this Contract. If the audit discloses intentional inaccuracies, this Contract, at the option of the Authority, may be terminated. The Authority reserves the right to require an agreed upon procedures audit and will provide the procedures for such audit.

3. Fees and Interest if Underpayment Discovered by Audit. If, as a result of the audit performed under Article 14 herein, additional fees are due from the Contractor to the Authority, the Contractor shall immediately pay to the Authority such additional fees, together with interest on the amount of such additional fees at the rate specified herein from the date such additional fees should have been paid. Further, if the audit establishes that the Contractor has understated and underpaid fees by three percent (3%) or more for any Contract year, then the entire expense of such audit, whether internal or external, shall be paid by the Contractor.

4. Delinquent Audit Fees. In the event that it is established through an audit conducted by the Authority that fees or charges otherwise due to the Authority under this Contract have not been paid to the Authority as a result of the Contractor’s improper recording of its Gross Receipts, the Contractor shall pay to the Authority as delinquent fees and charges (with interest and charges in accordance with Sections 13.05 and 13.06 herein) an amount equal to the amount of fees or charges reasonably estimated to have been lost to the Authority.

5. Inspection and Audit Rights Survive Expiration. The Authority’s rights under Article 14 to inspect and audit the books and records of the Contractor shall survive the expiration or earlier termination of this Contract. The Contractor shall retain and keep available all documents and records relating to this Contract for not less than three (3) years after the expiration or termination date of the Contract term or any extension, on in the event of litigation or claims relating to this Contract until such litigation or claims are completely disposed of and all time limits for appeal have expired.


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Article 15. Applicability of Contract Terms to Subcontractors

15.01 Inclusion of Contract Terms. Any restriction or requirement imposed upon the Contractor under this Contract shall be deemed to extend to Contractor's agents, employees, subcontractors, and guarantors. It shall be the Contractor's obligation to cause these persons to comply with the restrictions and requirements.

15.02 Inclusion of Contract Terms in Contractor's Documents. The Contractor shall include all of the clauses and Standard Provisions of this Contract in all subcontracts it enters into pursuant to this Contract. The clauses and provisions shall be altered only as necessary to identify properly the contracting parties and the Contracting Officer under this Contract or as otherwise deemed necessary by the Authority. Notwithstanding anything to the contrary herein, the damage and indemnification provisions contained in Sections 12.01,12.02, 12.03 12.04, 12.05, and 12.06 herein, when incorporated into a subcontract, shall clearly state that the subcontractor's indemnification relates only to the subcontractor's activities on the Airport, not to all of the Contractor's activities on the Airport.

Article 16. Surrender of Occupancy; Abandonment

16.01 Surrender of Occupancy. Except as otherwise provided in this Contract, when this Contract expires or is terminated in whole or in part as provided for elsewhere in this Contract, the Contractor shall surrender its assigned Premises and all Fixed Improvements and Operating Equipment therein broom clean and in good condition and repair, with the exception of reasonable wear and tear and damage by loss or casualty not covered by insurance which the Contractor is required to maintain pursuant to this Contract and not otherwise attributable to the Contractor's fault or negligence.

16.02 Abandonment. The Contractor shall be deemed to have abandoned to the Authority any property that it has failed to remove from its assigned Premises within fifteen (15) calendar days after the end of the period of the Contract or the effective date of termination thereof, unless the Authority grants additional time for this purpose in writing. After the expiration of the fifteen-day period, or any extension thereof granted by the Authority, the Contracting Officer shall have the right to remove the property and restore the area to a satisfactory condition and hold the Contractor liable for all costs incident thereto. In the event it is necessary for the Authority to remove such property, the Authority shall not sustain or be charged with any liability by reason of the removal or custodial care of the same.

Article 17. Impact of Construction Activities

The Contractor recognizes that from time to time during the period of this Contract, it will be necessary for the Authority to initiate and carry forward extensive programs of construction, reconstruction, expansion, relocation, maintenance and repair on the Airport, and that such construction, reconstruction, expansion, relocation, maintenance and repair may inconvenience or impair the Contractor in its operation at the Airport. The Contractor agrees that no liability shall attach to the Authority, its officers, agents, employees, contractors, subcontractors and representatives by way of such inconveniences or impairment, and the Contractor waives any right to claim damages or other consideration for such inconveniences or impairment.

Article 18. Assignment

18.01. Prohibition. Contractor shall not transfer or assign this Contract or its interest in this Contract or subcontract its rights under this Contract without the express written consent of the Authority. Transfers or assignments occurring by operation of law are also prohibited. Any attempted transfer, assignment or subcontract shall be void and confer no rights upon any third person. No assignment or subcontract shall relieve Contractor of any obligations under this Contract. The consent by the Authority to any transfer, assignment or subcontract shall not be deemed to be a waiver on the part of the Authority to any prohibition against any future transfer, assignment or subcontract.


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18.02 Sale of Stock or Sale of Partnership Interest. Except as provided below, the sale of any of the stock of Contractor, or, if the Contractor is a partnership, sale of any partnership interest therein, shall constitute an assignment of the Contract in the context of this Section if, after giving effect to all previous transfers of the stock or partnership interests after the date of this Contract, more than fifty (50) percent of the stock of, or partnership interests in, the Contractor shall have been transferred. This clause shall not apply to the sale of stock or to a merger or consolidation of a public corporation; to the sale of a subsidiary of a public corporation to its parent or another subsidiary of the public corporation; to a merger or consolidation of a public corporation with one or more of its subsidiaries; or to a merger or consolidation of one or more subsidiaries of a public corporation with each other.

18.03 Transfers. The term "transfer" includes, but is not limited to, transactions in which the Contractor's interest in the Contract or Premises is mortgaged or otherwise encumbered, or in which the Contractor sublets, rents or otherwise permits occupancy or use of the Premises by a third party.

18.04 Consent. If the Authority consents to any transfer, assignment or subcontract, that consent shall not be effective unless and until Contractor gives notice of the transfer or assignment and a copy of the transfer, assignment or subcontract agreement to the Authority, and the transferee, assignee, or subcontractor assumes all of the obligations and liabilities of the Contractor under this Contract.

Article 19. Federal Regulations

19.01 Relationship to Federal Lease. The Contractor shall be and remain subordinate to the provisions of the Federal Lease dated March 2, 1987, between the United States Department of Transportation and the Authority, providing for the Authority's lease of the Airports effective June 7, 1987. The Authority will use its best efforts to notify the Contractor of any material amendments to the Federal Lease that would affect the Contractor.

19.02 Other Government Agreements. This Contract shall be and remain subordinate to the provisions of the Federal Lease and any other existing or future agreements between the Authority and the United States government or other governmental authority, relative to the operation or maintenance of the Airports, the execution of which has been or will be required as a condition precedent to the granting of Federal or other governmental funds for the development of the Airports, to the extent that the provisions of any such existing or future contracts are generally required by the United States or other governmental authority of other civil airports receiving such funds. The Authority agrees to use its best efforts to notify the Contractor of any provision of which the Authority becomes aware which would materially and adversely modify the material terms of this Contract.

19.03 Federal Government's Emergency Clause. All provisions of this Contract shall be subordinate to the rights of the United States of America to operate or close the Airports or any portion thereof during time of war or declared national emergency in accordance with established lawful procedures. Such rights shall supersede any provision of this Contract that is inconsistent with the operation of the Airports by the United States of America during time of war or national emergency.

Article 20. Non-discrimination, DBE Participation

20.01 Subject to 49 CFR Part 23. The following clauses are required to be included in this contract by the U.S. Department of Transportation, under 40 CFR Part 23: (1) The concessionaire or Contractor agrees that it will not discriminate against any business owner because of the owner's race, color, national origin, or sex in connection with the award or performance of any concession agreement, management Contract or subcontract, purchase or lease agreement, or other agreement covered by 49 CFR Part 23; (2) The Contractor agrees to include the above statement in any subsequent concession agreement or contract covered by 49 CFR Part 23 that it enters and cause those businesses to similarly include the statements in further agreements.


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20.03 Nondiscrimination. The Contractor himself, his personal representatives, successors in interest, and assigns, as part of the consideration hereof, does hereby covenant and agree that: (1) in the event facilities are constructed, maintained, or otherwise operated on the said property described in this contract for a purpose for which a DOT program or activity is extended or for another purpose involving the provision of similar services or benefits, the contractor shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended; (2) no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subject to discrimination in the use of or employment in said facilities; (3) that in the construction of any improvements on, over or under such land and the furnishing of services thereon, no person on the grounds of race, color or national origin shall be excluded from, denied the benefits of, or otherwise be subject to discrimination; and, (4) the Contractor shall use the premises in compliance with all other requirements imposed by or pursuant to 49 CFR Part 21, and as said Regulations may be amended.

20.04 General Civil Rights Provision. The Contractor assures that it will comply with pertinent statutes, Executive Orders and such rules as are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age, or handicap be excluded from participating in any activity conducted with or benefiting from Federal assistance. This provision obligates the Contractor or its transferee for the period during which Federal assistance is extended to the airport program, except where Federal assistance is to provide, or is in the form of personal property or real property or interest therein or the structures or improvements thereon. In these cases, this provision obligates the Contractor or any transferee for the longer of the following periods: (a) the period during which the property is used by the Authority or any transferee for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or (b) the period during which the Authority or any transferee retains ownership or possession of the property. In the case of contractors, this Provision binds the Contractor from the bid solicitation period through the completion of the Contract.

20.05 Compliance with DBE Requirements. Unless otherwise provided in the Contract, if this Contract has a Disadvantaged Business Enterprises (DBE) participation goal, the Contractor is obligated to implement DBE participation consistent with its proposal immediately upon the commencement of the contract and to maintain this participation throughout the period of this Contract unless otherwise approved by the Authority. Alteration of any aspect of the DBE participation shall not occur without the prior written consent of the Authority.

Article 21. Strikes or Picketing Affecting Access to Airport

If the Contracting Officer notifies the Contractor in writing that a strike or picketing: (1) is directed at the Contractor and/or subcontractor or any employee or either, and (2) impedes or threatens to impede access by any person to the facility or facilities where the site(s) of the work is (are) located, the Contractor shall take all appropriate action to end such strike or picketing, including, if necessary, the filing of a charge of unfair labor practice with the National Labor Relations Board or the utilization of any other available judicial or administrative remedies. In the event the Contractor's operations are curtailed, interrupted, or otherwise handicapped, in whole or in part, because of an employee strike against the Contractor, such condition shall not operate to relieve the Contractor of its obligation to pay charges and fees required under this Contract, except as otherwise specifically provided for elsewhere in this Contract.

Article 22. Disputes

22.01. It is the Authority’s policy to encourage resolution of disputes by mutual agreement between the Contracting Officer and the contractor. Consistent with this intent, the Authority requires, as a condition precedent to the initiation of litigation, the exhaustion of the administrative dispute procedure contained in the Contract. If the dispute is not resolved by the administrative disputes procedure, the Contractor may proceed to court litigation.


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22.02. The Contractor shall proceed diligently with performance of the Contract’s requirements, included the disputed portions, pending resolution of any dispute.

22.03. In order to initiate the administrative disputes procedure, the Contractor shall submit a written monetary or non-monetary claim, certified as true and accurate by a dully authorized officer of the Contractor. The written claim or statement shall at a minimum include a) a full explanation of the claim or reason why the Contractor believes the Authority has acted contrary to the Contract; b) the relief requested; c) a full explanation of the reason why the Contractor believes it is entitled to this relief or why the Authority is liable; c) the claim must state that it is made in good faith, that the supporting facts and data are current, accurate, and complete as of the date of certification, and that the relief requested by the Contractor reasonably reflects the damage the Contractor believes it has incurred; and c) the claim must include or specifically reference all records, data or facts that relate to the Contractor’s claim.

22.04. Monetary claims based on anticipatory profits are prohibited.

22.05. Discussions between the Contracting Officer and the Contractor concerning the claim presented shall occur within a reasonable time after submission of the claim and receipt by the Contracting Officer of sufficient information, including information resulting from an audit, if deemed necessary. Discussions shall be conducted in good faith for the resolution of the dispute, including the exchange of relevant information. The Contractor shall provide any additional information or audit access deemed necessary by the Contracting Officer. Failure to provide requested information or audit access shall be a bar to further consideration of the Contractor’s claim or issue.

22.06. The Contracting Officer and the Contractor may agree to engage in non-binding evaluative mediation or some other reasonable method of alternative disputes resolution before the Contractor may litigate the claim or issue. Such mediation or alternative dispute resolution shall be conducted in accordance with the Virginia Code. Each party shall bear its own costs of such alternative dispute resolution, and shall evenly split the costs of the mediation proceeding or other alternative dispute resolution proceeding.

22.07. If discussions with the Contracting Officer, or if required, alternative dispute resolution, do not result in an agreement, an impasse can be declared. Upon the declaration of an impasse, the Contractor shall request a written final decision by the Contracting Officer. The Contracting Officer shall issue a final decision within sixty (60) days following receipt of the request and adequate documentation, unless the dispute is determined to be complex in nature by the Contracting Officer in which case the Contracting Officer shall establish a reasonable deadline for the issuance of the final decision. The final decision of the Contracting Officer shall be final and conclusive unless within thirty (30) days from the receipt of the Contracting Officer’s final decision, the Contractor mails or otherwise furnishes a written notice of appeal to the Vice President of Business Administration or, if the contract is a ground transportation, rental car, fixed base operator or parking concession contract, to the appropriate Vice President and Airport Manager.

22.08. Following completion of the administrative process, including providing the notice of appeal, the dispute may be resolved by litigation without a jury before a court of competent jurisdiction within the Commonwealth of Virginia. To the extent allowed by law, the venue for any action arising from this Contract shall be Arlington County, Virginia, for National Airport and Loudoun County, Virginia, for Dulles Airport.

22.09. The Contractor hereby waives all right to trial by jury in any claim, action, proceeding or counterclaim by either the Contractor or the Authority against each other or any matters arising out of or in any way connected with this Contract.

22.10. In the event the Contractor makes a claim that is found by a court to be based upon any reckless statement contained in the certification of the claim or is found by a court to be of frivolous nature or materially overstated in amount, then the Contractor shall be liable to the Authority and shall pay to it a percentage of the costs incurred by the Authority in investigating, analyzing, negotiating, mediating and litigating (including attorney fees) the frivolous


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or overstated claim. The percentage of costs referenced shall be equal to the percentage of the Contractor’s total claim which is determined through litigation to be the result of a reckless statement or frivolous claim. “Frivolous” shall mean having no basis in law or in fact. This remedy is a contractual remedy and does not otherwise affect the other rights of the Authority in law or in equity.

22.11. Any claim by the Contractor that is based on false or misleading statements or material misrepresentations shall entitle the Authority to a full recovery of all costs incurred by the Authority in investigating, analyzing, negotiating, mediating and litigating (including attorney fees) the claim. This remedy is a contractual remedy and does not otherwise affect the other rights of the Authority in law or in equity.

Article 23. Miscellaneous

23.01 Rights Reserved to the Authority. All rights not specifically granted to the Contractor by this Contract are reserved to the Authority.

23.02 Authority Not Liable. Except as specifically provided for in this Contract, the Authority shall not be under any duty or obligation to the Contractor to repair or maintain the Premises, or any portion thereof, or any facilities or equipment constructed thereon. The Authority shall not be responsible or liable to the Contractor for any claims, losses, damages, or injury, including lost profits, sustained by the Contractor or any of its joint venturers or subcontractors, resulting from any failure of water supply, heat, air conditioning, electrical power, or sewer or drainage facility, or from natural physical conditions on the Airport, whether on the surface or underground, including stability, moving, shifting, settlement of ground, or displacement of materials by fire, water, windstorm, tornado or other physical event, or from any act of God, state of war, civilian commotion or riot, act of the Federal government or any other cause beyond the reasonable control of the Authority.

23.03 Security. The Contractor understands that the police security protection provided by the Authority is finite and limited to that generally provided to any other businesses on the Airports and expressly acknowledges that any special security measures deemed necessary or desirable for additional protection of the Premises, equipment, improvements, and the Contractor's personal property, and that of its employees and invitees shall be the sole responsibility of the Contractor and shall involve no cost to the Authority.

23.04 Inspection. The Contractor shall allow the Authority's authorized representatives entry to the Premises for the purpose of examining and inspecting said Premises, for purposes necessary, incidental to, or connected with the performance of the Authority's rights and obligations under this Contract or in the exercise of its governmental functions. Except in the case of an emergency, or except if a Default has occurred, the Authority shall conduct such inspections during reasonable business hours, and in the presence of the Contractor's representative.

23.05 Relationship of the Parties. The Contractor is and shall be deemed to be an independent contractor and operator responsible to all parties for its respective acts and omissions, and the Authority shall in no way be responsible therefor. Nothing in this Contract shall be construed as making the Contractor an agent or representative of the Authority for any purpose whatsoever. Further, nothing in this Contract is intended or shall be construed as in any way creating or establishing the relationship of copartners between the Parties hereto.

23.06 Ingress and Egress. For the purpose of Contract performance, the Contracting Officer will grant the Contractor without charge therefor, the right of ingress and egress from said Premises by the Contractor, its employees, contractors, suppliers, servicemen, licensees, guests, patrons, and invites. PROVIDED that such right of ingress and egress shall at all times be exercised in compliance with any and all regulations promulgated by lawful authority for the care, operation, maintenance, and protection of the Airport that apply to all users of the Airport. PROVIDED further, that such right of ingress and egress shall not be construed to prohibit the Airport Manager from establishing and assessing a fee or charge for the privilege of entry upon the Airport when such fee or charge is levied upon all users of the Airport, nor to prohibit the Airport Manager from assessing a fee or charge


__________________________________________________________________________________________Page 21

on the Contractor's employees for parking their personal vehicles in the employee parking areas or on persons conducting a business on the Airport. For purposes of this Article, a person shall be deemed to conduct business on the Airport if he occupies any space on the Airport or if he provides any services on the Airport, other than utilities, on a regular or continuing basis.

23.07 Waiver of Performance. The failure of the Authority or the Contractor, in any one or more instances, to invoke a provision, term, covenant, reservation, condition, or stipulation of this Contract, or to enforce or take action to enforce, or to demand performance by the other party hereto, or to insist upon a strict performance by the other of any of the provisions, terms, covenants, reservations, conditions or stipulations contained in this Contract shall not be considered a waiver or relinquishment of the rights to invoke enforce, demand, or insist thereon, but the same shall continue and remain in full force and effect, and no waiver by either party of any provision, term, covenant, reservation, condition, or stipulation hereof shall be deemed to have been made in any instance unless expressed in writing. In the event any provision contained in this Contract is breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to be a waiver of any other breach hereunder.

23.08 Force Majeure. Except as herein provided, neither the Authority nor the Contractor shall be deemed to be in default hereunder if either party is prevented from performing any of the obligations of this Contract, by reason of circumstances beyond the party’s reasonable control, such as strikes, boycotts, labor disputes, embargoes, shortages of energy or materials, acts of God, acts of the public enemy, acts of the federal government, riots, rebellion, or sabotage; provided, however, the Contractor shall pay all rentals, fees, and charges associated with performance prior to the force majeure event when due, even if such rentals, fees, and charges are not due and payable until after the occurrence of the force majeure event.

23.09 Severability. If any article, section, provision, term or condition of this Contract is held to be invalid by a court of competent jurisdiction, the remainder of this Agreement, including the remaining rights and obligations of the Authority and the Contractor, shall not be affected thereby.

23.10 Prohibition Against Exclusive Rights. It is hereby specifically understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right to provide aeronautical services to the public as prohibited by Section 308(a) of the Federal Aviation Act of 1958, as amended, and the Authority reserves the right to grant to others the privileges and right of conducting any or all activities of an aeronautical nature.

23.11 No Third Party Beneficiaries. This Contract is for the benefit of the parties hereto only and is not intended to and shall not create any rights in or confer any benefits upon any person or entity other that the parties hereto.

23.12 Covenant Against Contingent Fees. The Contractor warrants that no person or agency has been employed or retained to solicit or obtain this Contract upon an agreement or understanding for a contingent fee, except a bona fide employee or agency. For breach or violation of this warranty, the Authority shall have the right to annul this Contract without liability or, in its discretion, to deduct from the Contract price or consideration, or otherwise recover, the full amount of the contingent fee.

1. "Bona fide agency", as used in this clause, means an established commercial or selling agency, maintained by the Contractor for the purpose of securing business, that neither exerts nor proposed to exert improper influence to solicit or obtain Authority contracts nor holds itself out as being able to obtain any Authority contract or contracts through improper influence.

2. "Bona fide employee", as used in this clause, means a person, employed by the Contractor and subject to the Contractor's supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper influence to solicit or obtain Authority contracts


__________________________________________________________________________________________Page 22

nor holds himself out as being able to obtain any Authority contract or contracts through improper influence.

3. "Contingent fee", as used in this clause, means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing an Authority contract.

4. "Improper influence", as used in this clause, means any influence that induces or tends to induce an Authority employee or officer to give consideration or to act regarding an Authority contract on any basis other than the merits of the matter.

23.13 Prohibition Against Board Member Participation. No member of the Authority's Board of Directors shall be admitted to any share or part of this Contract or to any benefit that may arise therefrom.

23.14 Governing Law. This Contract shall be governed by and in accordance with the laws of the Commonwealth of Virginia.

23.17 Notices. All notices to be given to the Parties hereto shall be in writing unless otherwise stated and shall be properly given when personally delivered to the address specified in the Contract and left with a responsible person, or delivered by overnight service such as Federal Express, and, in both instances, an appropriate receipt is obtained, or when sent by facsimile to the facsimile numbers specified in the Contract and an appropriate receipt is obtained, or when sent by registered or certified mail addressed to the Parties at their respective addresses specified in the Contract. The Parties may change the below information upon ten (10) days written notice given as herein specified. The date of notice shall be deemed, when notice is mailed, to be the date of mailing so long as the Postal Service certified actual delivery. A refusal of overnight service or a registered or certified mail notice shall constitute actual delivery hereunder.

23.18 Effectiveness. The submission of an unsigned copy of this Contract to the Contractor for the Contractor's consideration does not constitute an offer to enter into a Contract. This Contract shall not be binding upon either party until executed by both parties.

23.19 Duplicate Counterpart Originals. This Contract may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

23.20 Capacity to Execute. The individuals executing this Contract warrant that they each have full authority to execute this Agreement on behalf of the Contractor or the Authority as the case may be.

23.21 Execution. The parties hereto acknowledge that they have thoroughly read this Contract, including any exhibits or attachments hereto and have sought and received whatever competent advice and counsel was necessary for them to form a full and complete understanding of all rights and obligations herein.

23.22 Clear Title. The Authority covenants that at the granting and delivery of this Contract, it has the right and authority to lease or assign the Premises to the Contractor as set forth in this Contract.

23.23 Binding Effect. The terms, conditions, and covenants of this Contract shall inure to the benefit of, and be binding upon, the parties hereto and upon their successors and assigns, if any. This provision shall not constitute a waiver of any conditions regarding assignments contained in this Contract. No party shall be bound by this Contract until it is executed by both parties.

23.24 Modifications. This Contract may be modified in writing by mutual agreement of the Contractor and the Authority. Modifications beyond the scope of the original Contract may require approval of the Authority’s Board of Directors.


ATTACHMENT 3

Financial Offer


FINANCIAL OFFERTO

MARKET, LEASE, AND MANAGE THE FOOD SERVICE AND RETAIL CONCESSIONSAT

RONALD REAGAN WASHINGTON NATIONAL AIRPORT AND


TO: Procurement and Contracts Department DATE: _______________ Metropolitan Washington Airports Authority 1 Aviation Circle Washington, D.C. 20001-6000

RE: Request for Proposals No. MWAA-4-12-C002

A. Pursuant to the Airports Authority’s Request for Proposals for the contract to market, lease, and manage the food service and retail concession programs at Ronald Reagan Washington National Airport and Washington Dulles International Airport, the undersigned hereby submits a proposal for such services based on and subject to the terms and provisions and conditions contained in the above referenced Request for Proposals, which document has been read by the undersigned and to which the undersigned agrees.

B. Based upon the terms, provisions and conditions of said Request for Proposals, the undersigned hereby agrees to accept the following proposed fees as full compensation from the Airports Authority for the services provided during Contract Years one through five for the marketing, leasing, and management of the food service and retail concession programs at the Airports.

Contract Years Percentage of Total Gross Rental Payment Accepted as Fee

Year 1 _______% (numerical) _________________________ (words)






FINANCIAL OFFER (continued)

C. Should the undersigned become the Selected Offeror and be awarded the right to market, lease, and manage the food service and retail concession programs at the Airports, as aforesaid, the undersigned will execute the required performance guarantee. Release of the proposal guarantee submitted by the Selected Offeror shall not be made until after execution of the Management Contract to be awarded and receipt of the required performance guarantee.

ATTEST:

(COMPANY NAME)

BY: (SIGNATURE AUTHORIZED OFFICIAL)

(TITLE)

(MAILING ADDRESS)

(CITY, STATE, POSTAL CODE)

(TELEPHONE NUMBER)

(EMAIL ADDRESS)


ATTACHMENT 4

Representations and Certifications

Page 1 of 4

REPRESENTATIONS AND CERTIFICATIONS

01 PARENT COMPANY AND IDENTIFYING DATA

A. A "parent" company, for the purpose of this provision, is one that owns or controls the activities and basic business policies of the offeror. To own the offeror's company means that the parent company must own at least 51% of the voting rights in that company. A company may control an offeror as a parent company even though not meeting the requirement for such ownership if the parent company is able to formulate, determine, or veto basic policy decisions of the offeror through the use of dominant minority voting rights, use of proxy voting, or otherwise.

B. The offeror [ ] is, [ ] is not (check applicable box) owned or controlled by a parent company.

C. If the offeror checked "is" in paragraph B. above, it shall provide the following information:

Name and Main Office Address of Parent Company's Employer's Parent Company (include zip code) Identification Number

___________________________ ___________________________ ___________________________ ___________________________ ___________________________

D. If the offeror checked "is not" in paragraph B. above, it shall insert its own Employer's Identification Number on the following line:

___________________________.

02 TYPE OF BUSINESS ORGANIZATION

The offeror, by checking the applicable box, represents that:

A. It operates as [ ] a corporation incorporated under the laws of the State of ______________________, [ ] an individual, [ ] a partnership, [ ] a nonprofit organization, or [ ] a joint venture.

B. If the offeror is a foreign entity, it operates as [ ] an individual, [ ] a partnership, [ ] a nonprofit organization, [ ] a joint venture, or [ ] a corporation, registered for business in ____________ (country).

03 AUTHORIZED NEGOTIATORS

The offeror represents that the following persons are authorized to negotiate on its behalf with the Authority in connection with this request for proposals or quotations: ___________________________________________________________________________________

___________________________________________________________________________________

04 LOCAL DISADVANTAGED BUSINESS ENTERPRISE REPRESENTATION

A. Representation The offeror represents and certifies as part of its offer that it [ ] is, [ ] is not a local disadvantaged business enterprise.

B. Definitions "Local Disadvantaged Business Enterprise" (LDBE) is defined as a disadvantaged business concern which is organized for profit and which is located within a 100-mile radius of Washington, DC's zero mile marker. Those business entities located within counties that fall partially within the

Page 2 of 4

aforementioned boundary would also be eligible to participate in the Authority's LDBE Program. "Located" means that, as of the date of the contract solicitation, a business entity has an established office or place of business within a city, county, town, or political jurisdiction within the 100-mile radius referenced above. Evidence of whether a business is "located" within the region includes, but is not limited to: an address that is not a Post Office Box; employees at that address; business license; payment of taxes; previous performance of work similar to work to be performed under contract, or related work; and other indicia. A "disadvantaged business" is defined as a firm which is not dominant in its field, and which meets the Authority's disadvantaged business size standard(s) for this solicitation.

C. Certification Proposed LDBEs must apply to the Authority's Equal Opportunity Programs Office for certification. For further instruction, see Section IX on Local Disadvantaged Business Enterprise Participation (LDBE) in this Solicitation.

05 MINORITY BUSINESS ENTERPRISE REPRESENTATION

A. Representation. The offeror represents that it [ ] is, [ ] is not a Minority Business Enterprise.

B. Definition. A Minority Business Enterprise is:

1. A firm of any size which is at least 51% owned by one or more minority persons or, in the case of a publicly-owned corporation, at least 51% of all stock must be owned by one or more minority persons; and whose management and daily business operations are controlled by such persons. A person is considered to be a minority if he or she is a citizen of lawful resident of the United States and is:

a. Black (a person having origins in any of the black racial groups in Africa);

b. Hispanic (a person of Mexican, Puerto Rican, Cuban, Central or South American, or other Spanish culture or origin, regardless of race);

c. Portuguese (a person of Portugal, Brazilian, or other Portuguese culture or origin, regardless of race);

d. Asian American (a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian subcontinent, or the Pacific Islands); or

e. American Indian and Alaskan Native (a person having origins in any of the original peoples of North America.)

C. Certification. As verification of this representation, the offeror is encouraged to attach a copy of a current MBE/WBE certification from any agency to be used for the Authority's monitoring of MBE/WBE participation in its program.

06 WOMEN BUSINESS ENTERPRISE REPRESENTATION

A. Representation. The offeror represents that it [ ] is, [ ] is not a Women Business Enterprise.

B. Definitions. A Women Business Enterprise is:

1. A firm of any size which is at least 51% owned by one or more women or, in the case of a publicly-owned corporation, at least 51% of stock must be owned by one or more such women; and

2. Whose management and daily business operations are controlled by such persons.

Page 3 of 4

C. Certification. As verification of this representation, the offeror is encouraged to attach a copy of a current MBE/WBE certification from any agency to be used for the Authority's monitoring of MBE/WBE participation in its program.

07 CONTRACTOR IDENTIFICATION

Each offeror is requested to fill in the appropriate information set forth below:

DUNS Identification Number __________________ (this number is assigned by Dun and Bradstreet, Inc., and is contained in that company's Data Universal Numbering System (DUNS). If the number is not known, it can be obtained from the local Dun & Bradstreet office. If no number has been assigned by Dun & Bradstreet, insert the word "none."

08 CERTIFICATE OF INDEPENDENT PRICE DETERMINATION

A. The offeror certifies that --

1. The prices in this offer have been arrived at independently, without, for the purpose of restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to (a) those prices, (b) the intention to submit a offer, or (c) the methods or factors used to calculate the prices offered;

2. The prices in this offer have not been and will not be knowingly disclosed by the offeror, directly or indirectly, to any other offeror or competitor before bid opening (in the case of a sealed bid solicitation) or contract award (in the case of a negotiated solicitation) unless otherwise required by law; and

3. No attempt has been made or will be made by the offeror to induce any other concern to submit or not to submit an offer for the purpose of restricting competition.

B. Each signature of the offeror is considered to be a certification by the signatory that the signatory:

1. Is the person in the offeror's organization responsible for determining the prices being offered in its offer, and that the signatory has not participated and will not participate in any action contrary to subparagraphs A.1. through A.3. above; or

2. a. Has been authorized, in writing, to act as agent for the following principals in certifying that those principals have not participated, and will not participate in any action contrary to subparagraphs A.1. through A.3. above

_________________________________________________________________ (Insert full name of person(s)in the offeror's organization responsible for determining the prices offered in this offer or proposal, and the title of his or her position in the offeror's organization);

b. As an authorized agent, does certify that the principals named in subdivision B.2.a. above have not participated, and will not participate, in any action contrary to subparagraphs A.1. through A.3. above.

c. As an agent, has not personally participated, and will not participate, in any action contrary to subparagraphs A.1. through A.3. above.

Page 4 of 4

C. If the offeror deletes or modifies subparagraph A.2. above, the offeror must furnish with its offer a signed statement setting forth in detail the circumstances of the disclosure.

09 CERTIFICATION OF COMPLIANCE WITH EMPLOYMENT ELIGIBILITY VERIFICATION, FORM I-9

The offeror certifies that it is in compliance with the Immigration Reform and Control Act of 1986, Pub. L. 99-603 (8 U.S.C. 1324a) and the regulations issued there under. The offeror also certifies that its subcontractors are in compliance with the Immigration Reform and Control Act of 1986, Pub. L. 99-603 (8 U.S.C. 1324a) and the regulations issued there under.

ATTEST:

______________________________ ________________________________ (Company name)

By: ________________________________ (Signature-authorized official)

________________________________ (Printed Name)

________________________________ (Title)

Address: ________________________________

________________________________

Telephone No.: ________________________________


ATTACHMENT 5

Proforma Statement


Directions for Completing Proforma Statement

A. The proforma includes cells that contain formulas that have already been programmed into the spreadsheet. Do not delete the pre-programmed formulas.

B. "Total Gross Rental Payment" shall not include direct pass-through charges to the Concession Operators such as those for common area maintenance, marketing fund, and logistical support. It shall include all other charges that are not directly passed through to Concession Operators, including any fees, penalties, and in-terminal storage rent. Please note that rent payable for storage units within the terminal buildings is considered part of the “Total Gross Rental Payment.” Storage areas included as part of the logistics program (i.e., located in the commissaries) are not included in the calculation of the “Total Gross Rental Payment” and should be included in the logistical costs in the pass-through charges line item.

C. "Pass-Through Charges to Concession Operators" shall include the direct pass-through charges anticipated for Concession Operators such as common area maintenance, marketing fund, and logistical support.

D. "Management Fee to Manager as a % of Total Gross Rental Payment" shall be calculated based on the "Total Gross Rental Payment" definition described above, which does not include direct pass-through charges to Concession Operators.

E. Offeror’s shall use the square footage figures from the development and implementation plans included in their proposals to calculate the “Total Square Footage of Concession Program” column.

F. “Marketing and Promotional Expenses” shall not include amounts expended from the marketing fund contributions collected from the Concession Operators.

G. All proformas shall assume no capital investment is made by the Airports Authority.

H. The enplanement forecasts that have been inserted into the template (taken from the Airports Authority’s Bond Issue Prospectus Series 2011C-D) shall be used when calculating “Sales per Enplanement.” It is important to note that the enplanement forecasts have been provided for calculation purposes only. The stated enplanements are not a guarantee of traffic. All assumptions used by Offeror’s in developing proposals and financial offers shall be made by the Offeror and used at the Offeror’s own risk.

I. The current storage rates for in-terminal storage at each of the Airports are included in the RFP in Section III, I. Offeror’s shall not mark up the storage rent charged to Concession Operators.

J. Historical pass-through charges to Concession Operators can be found in Section III, H. Offeror’s shall not mark up the pass-through charges to Concession Operators.

Attachment 5 - Proforma Statement

Metropolitan Washington Airports AuthorityFinancial Offer for Ronald Reagan Washington National and Washington Dulles International AirportProforma Statement, Food Service and Retail Management

5-YEAR PROFORMA(constant 2012 dollars)

Year 1 Year 2 Year 3 Year 4 Year 5 TotalPROJECTIONS 2013 2014 2015 2016 2017REAGAN WASHINGTON NATIONALEnplanements1 9,765,000 9,850,000 9,940,000 10,025,000 10,113,196 49,693,196Sales per Enplanement $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Total Square Footage of Concession Program

Gross Sales Existing/Extended Leases $0 New Leases $0 Total Sales $0 $0 $0 $0 $0 $0

Concession Operator Payments Rental Payment for Existing/Extended Leases $0 Rental Payment for New Leases $0 Total Gross Rental Payment $0 $0 $0 $0 $0 $0

Pass-through Charges to Concession Operators $0 Capital Investment Charged to Concession Operators $0Total Concession Operator Payments $0 $0 $0 $0 $0 $0

WASHINGTON DULLES INTERNATIONALEnplanements 12,095,000 12,415,000 12,740,000 13,075,000 13,419,005 63,744,005Sales per Enplanement $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Total Square Footage of Concession Program

Gross Sales Existing/Extended Leases $0 New Leases $0 Total Sales $0 $0 $0 $0 $0 $0

Concession Operator Payments Rental Payment for Existing/Extended Leases $0 Rental Payment for New Leases $0 Total Gross Rental Payment $0 $0 $0 $0 $0 $0

Pass-through Charges to Concession Operators $0 Capital Investment Charged to Concession Operators $0Total Concession Operator Payments $0 $0 $0 $0 $0 $0

TOTAL NATIONAL AND DULLESTotal Gross Rental Payment (National and Dulles) Existing/Extended Leases $0 $0 $0 $0 $0 $0 New Leases $0 $0 $0 $0 $0 $0 Total Gross Rental Payment $0 $0 $0 $0 $0 $0 (Total Gross Rental Payment as a % of Total Sales) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Management Fee to Manager -$ (Fee to Manager as a % of Total Gross Rental Payment) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

COMBINED NATIONAL AND DULLESFee Manager Expenses Salaries $ $ $ $ $ -$ Benefits $ $ $ $ $ -$ Legal Services $ $ $ $ $ -$ Accounting Services $ $ $ $ $ -$ Office Equipment and Expenses $ $ $ $ $ -$ Marketing and Promotional Expenses $ $ $ $ $ -$ Depreciation and Amortization $ $ $ $ $ -$ Overhead $ $ $ $ $ -$ Insurance $ $ $ $ $ -$ Other Professional Services $ $ $ $ $ -$ Bad Debt - Tenant Rent $ $ $ $ $ -$ Other $ $ $ $ $ -$ Total Expenses -$ -$ -$ -$ -$ -$

Notes:1. The enplanement forecasts that have been inserted into the template for years 2013 through 2016 are taken from the Authority’s Bond Issue Prospectus Series 2011C-D; 2017 enplanements were calculated using the average annual growth rate. The enplanement figures shall be used when calculating “Sales per Enplanement.” It is important to note that the enplanement forecasts have been provided for calculation purposes only. The stated enplanements are not a guarantee of traffic. All assumptions used by Offerors in developing proposals and financial offers shall be made by the Offeror and used at the


ATTACHMENT 6

Pre-Proposal Conference Notice


PRE-PROPOSAL CONFERENCE NOTICE

The Airport Authority’s Pre-Proposal Conference concerning the Request for Proposals for the Marketing, Leasing, and Management of the Food Service and Retail Concessions at Ronald Reagan Washington National Airport and Washington Dulles International Airport will be held on Tuesday, April 24th at 1:30 p.m. The conference will be held in Conference Room 1C on the 1st Floor of the Authority’s Headquarters at Ronald Reagan Washington National Airport, 1 Aviation Circle, Washington, D.C.

Please complete the information below and return via email to Richard Myrah at [email protected] to be received no later than April 16, 2012.

Company Name: _________________________________________________________

Company Contact: _______________________________________________________

Telephone Number/Facsimile Number: ____________________/___________________

Email Address: ___________________________

Please complete the following to indicate attendance:

Event Will Attend (please check)

Will Not Attend (please check) Number in Party

Walk-through of concession program on April 23, from 1:30 p.m. – 4:00 p.m. at Dulles International Airport

_____ _____ _____

Walk-through of concession program on April 24, from 9:00 a.m. – 11:00 a.m. at Reagan National Airport

_____ _____ _____(limited to 3 people)

Pre-ProposalConference on April 24 at 1:30 p.m. at Reagan National Airport

_____ _____ _____(limited to 3 people)

Please email your completed form to:

Mr. Richard Myrah Procurement & Contracts Department, MA-440

E-mail: [email protected]