Airport PFC Increase Should Include DBE Program Provisions

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Airport PFC Increase Should Include DBE Program Provisions

The national Airport Minority Advisory Council (AMAC) supports current FAA Reauthorization Proposals to increase airport Passenger Facility Charges (PFCs), but only with the inclusion of the Federal Disadvantaged Business Enterprise (DBE) program to ensure the participation of minority and women-owned businesses in airport improvement projects.

The current Federal Aviation Administration (FAA) Authorization expires in September 2015, making a reauthorization bill a priority for the current session of Congress. One key issue in reauthorization is the method to fund airport improvements. Locally determined PFCs were created by Congress in 1990 and have not been adjusted since 2000 when they were capped at $4.50. The airport industry is pushing for an increase in PFCs from $4.50 per enplanement (defined as each time a passenger boards an airplane) to $8.50. The additional proceeds will be used to pay for FAA-approved improvement projects, which will require more than $75 billion over the next five years to improve infrastructure and prevent passenger delays and congestion.

Representatives of the airline industry believe that current Airport Improvement Program (AIP) grants provide sufficient funding to pay for needed airport improvements; and that increases to PFCs unnecessarily tax the traveling public, resulting in slightly higher ticket prices. In 2014, the FAA approved AIP grants totaling $3.2 billion and reported that $2.8 billion was collected in PFCs by airports during the same period. Therefore, the proposed $4.00 PFC increase would nearly double the amount of PFCs collected by airports.

Minority and women-owned businesses represented by AMAC understand both sides of this issue and agree that increasing PFCs is the best method to ensure that airports have the funding necessary to keep pace with needed improvements, and to reduce airports’ reliance on federal grants. However, AMAC also recognizes that current draft reauthorization bills fail to include provisions ensuring that businesses owned by minorities and women are not excluded from the opportunity to participate in the potential $5 billion in annual projects funded by PFCs.

Research gathered from numerous disparity studies commissioned across the country have repeatedly found that diverse firms face discrimination in government contracting when there is no program requiring that recipients of federal funds implement policies to ensure that contractors provide opportunities and make a good faith effort to contract with companies owned by minorities and women.

AMAC leaders have discussed this issue extensively with many business owners who fear their firms will face adverse impacts if Congress allows airports to increase the collection of PFCs to replace their AIP grant funding (especially at large U.S. airports) without including requirements to implement the DBE program as a condition of the PFC increase. The DBE program was legislated in 1980 to ensure that firms owned by women and minorities have an opportunity to participate in projects receiving federal funding. AMAC asserts that since PFCs are federally approved funds, projects completed with these funds should also include the DBE program.

AIP grants already contain assurances that an airport will implement the DBE program. Furthermore, in order for an airport to implement a DBE program, it must first conduct a disparity study to show that discrimination against diverse firms already exists in the marketplace where the airport is located. DBE programs supported by a relevant disparity study have repeatedly been upheld in federal courts, while a number of local programs have not met this same legal standard. Consequently, AMAC believes that to replace or reduce AIP grants with larger PFCs not containing the DBE provision would potentially create a negative impact on minority and women-owned businesses.

Some airports suggest that they are better equipped to create opportunities for diverse firms through locally administered programs. While this may be true in some areas, these programs often shift with local politics and changes in administrations. Additionally, many local programs have not met the judicial scrutiny faced (and overcome) by the federal DBE program. Therefore, the best solution to ensure consistency and stability for diverse firms is the inclusion of the federal DBE program in any reauthorization bill granting the authority to collect higher PFCs for airport improvements.

Minority and women-owned firms have experienced significant inclusion in airport contracting since the start of the DBE program, but there is still a long way to go before diverse firms achieve full inclusion in contracting at airports nationwide. The AIP grant program including the DBE provisions have made a positive impact, and diverse firms don’t want to take a step back as the industry moves forward with increasing the use of PFCs to fund airport improvement projects.

AMAC urges members of Congress, diverse business owners, as well as concerned industry stakeholders to strongly support the inclusion of the DBE program in any increase in PFCs in the reauthorization bill.

Shelby Scales, President
Airport Minority Advisory Council (AMAC)
2001 Jefferson Davis Highway, Suite 500
Arlington, VA 22202
Office: 703-414-2622