The Federal Aviation Administration is cracking down on contractors who try to defraud its minority inclusion programs, said FAA Acting Administrator Michael Huerta, at a June 11 Airport Minority Advisory Council (AMAC) conference.
This year, the Department of Justice alleged that a contractor used materials and services from a company that was supposed to be part of the Disadvantaged Business Enterprise (DBE) program.
“But the company was nothing more than a pass-through,” Huerta said. “The firm in question agreed to pay $500,000 to resolve allegations that it knowingly submitted false claims related to the DBE program.”
As part of the settlement, the contractor entered into a separate agreement with the FAA to use a contractor for DBE monitoring services to ensure future compliance with the program, he said.
“We are accountable to the nation’s taxpayers, and the success and viability of the program depends on both its integrity and its credibility,” Huerta said.
Huerta was the keynote speaker at AMAC’s 28th annual Airport Business Diversity Conference from June 9 to 12, held at the America’s Center. More than 1,000 industry professionals attended, and Lambert-St. Louis International Airport was the host airport for the conference.
Airports need to increase their oversight of DBE requirements because the FAA is undergoing a large transformation, he said.
In February, Congress passed and the President signed a long-term FAA reauthorization bill that provides $63.4 billion to fund the agency through 2015. This includes approximately $11 billion towards the FAA’s proposed Next Generation (“NextGen”) air traffic control system.
St. Louis is among the airports that is going through such renovations – from its traffic-control towers to satellite technology, said Ollie Dowell, a member of the conference’s planning committee.
Minorities should be part of the NextGen projects, she said, and Huerta’s presence in St. Louis is timely.
“We don’t want to miss out by minorities not participating in one of the most dramatic undertakings in the aviation system,” she said. “If we don’t get on board now, we will miss out.”
The bill specifically acknowledges the compelling need for the continuation of the Airport DBE program, Huerta said. It calls for a yearly report over the next three years on the number of new DBE businesses that participate in the program.
“We encourage small businesses to become certified, and for airports to remove barriers so that new businesses and under-utilized businesses can compete,” he said.
The reauthorization also includes a mandatory training requirement for people involved in the certification of DBE businesses, which will also affect the Federal Transit Administration and the Federal Highway Administration.
“While there were no resources included in the reauthorization to create this training program, we are working to adhere to the deadline of early next year for curriculum development and a training schedule,” Huerta said.
In the aviation industry, small businesses and new businesses must compete against large and established companies, he said. The DBE program is designed to make sure there is equal access to the business opportunities at all of America’s airports.
The FAA distributes more than $3 billion in grants each year for airport improvements, such as runway and taxiway improvements, terminals and roads, and environmental work and noise mitigation.
The FAA is responsible for making sure that airports follow certain rules that ensure that all types of firms have the chance to work in airports across the country, he said.
Making concessions
Nearly a quarter of the revenue generated by the food, beverage, news and gift concessions in airports comes from businesses owned by women and minorities. These businesses generated more than $1.5 billion in sales last year. Disadvantaged businesses also generated $168 million in airport car rental concessions last year.
And nearly 2,000 DBE companies worked on airport construction projects across the country last year. Their contracts totaled $424 million.
“We want to make the rules for airport concessions parallel with rules for airport construction contracts where appropriate,” Huerta said.
In 2011, U.S. Transportation Secretary Ray LaHood has issued a final rule increasing the cap on personal net worth for airport concession DBEs. The FAA is increasing the limit for the owners of airport concessions from $750,000 to $1.32 million. This increase is already effective for the contracting program.
The cap for concessionaires has not been changed in more than 20 years.
“We still have work to do in leveling the playing field for women- and minority-owned businesses in aviation,” Huerta said. “That’s why the work that AMAC does along with the Department of Transportation and the FAA’s legal and civil rights offices is so very important.”
Other speakers for the conference included entrepreneur and author David Kim, as well as pilot and entrepreneur Jamail Larkins.
