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LOVE FIELD CONCESSION CONTRACT

PROPOSAL

Dallas will be investing over $1 billion in Love Field with the objective

of making it the finest mid-size airport in the nation. With thisinvestment and the commencement of non-stop flights to both theeast and west coast, Love Field could have an enormous impact on theeconomy of the City and the region.

To achieve this, the concessions will need to be of the highest qualityand offer the best value to the traveling public. This will requiresoliciting innovative concepts, strong brands and sound operatorswhile producing opportunities for local and minority businesses. It isalso important that the awarding of these contracts be viewed as fair,transparent and producing the best business arrangements for the City

and its citizens.

The following proposal is based on these standards. It affords an open,competitive bid process while encouraging continuity of the operationsduring the construction period. In addition, to ensure consistentthemes and overall marketing and merchandising concepts throughoutthe airport, which will be critical to eventual success, it shifts to directcontracting by the City with individual space operators.

OVERALL STRUCTURE

Modified Direct: The City will directly manage, including developingoverall concepts and space themes, soliciting proposals, evaluatingand selecting proposals, and monitoring performance ofconcessionaires on an on-going basis, the concessions at Love Field forboth Food and Beverage and Retail beginning with the opening of thenew terminal. The City will identify and add experienced staff for thisfunction.

In the interim, the City will endeavor to gain an extension of existing

vendors through the construction period.

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CONTRACT POINTS

Stage 1: Construction period

The City will offer current concessionaires the opportunity to

extend existing contracts through the construction period.This will include the spaces in the old terminal and run untilthe 2013/14 turnover dates.

o During this period, concessions would operate under

current operating provisions unless otherwise stated.

o The MAG in existing terminal will be waived upon

execution of the extension

o To encourage the extension, a limited first right of

refusal opportunity in the New Terminal will be providedas described in the next section below.

o Unamortized capital improvements, provided they are

approved by the Airport staff prior to the expenseincurred, will be reimbursed.

o If during the construction period, enplanement levels

for the West Wing (for the 12 months preceding thedate of the execution of the extension) drop more than5%, incumbents will be eligible for rent reductions ofthe spaces in the West Wing in proportion to the loss ofthe traffic.

o Upon extension, current pricing policy continues during

extension periodo If incumbents choose not to extend contracts within 30

days of Council action, space in the old terminal wouldbe put out to bid as part of the RFP portion as describedin Stage 2. If the contracts are not extended, there willbe no first right of refusal on space in the new terminal.

Stage 2: New Terminal

The entire space for the new terminal will be competitively bid througha process described below. The process will include a limited first rightof refusal opportunity for the incumbents, provided they extend theirexisting contracts through the construction period and meet thecompetitive standards set below.

Competitive bids will be solicited for each space in the newterminal beginning upon completion of the new terminal,

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projected in 2013/14. (Each RFP may be for a single space ora combination of two or three spaces to create best value forthe City. Such a package would be designed to encompass acombination of high interest spaces with spaces that may notsolicit a high interest if offered individually.)

The Physical plan and theme will be developed by the City,

with assistance from specialists in developing retail and F&Bspace in airports operations, and include areas designatedfor:

o Food and Beverage

o Retail

Incumbents, as all other possible operators, will beencouraged to bid for new terminal spaces. If they choose toextend current contracts through the construction period andthey are not determined to be the best proposal for at least25% of the overall terminal concession value (in theircategory), they will be given a first right of refusal to acquireup to 25% of the bid space value, inclusive of any spacesawarded through the original RFP process (selected on arandom basis) under the following conditions:

o Selection of the packages will be random. For each

package selected, incumbents will be given a right ofrefusal.

If incumbents choose to match the award in total,they will assume the space under the conditionsof the selected proposal.

Conditions to be met will include Rent, Capital

Investment, Operational Commitments,Comparable Brands and MAG.

If incumbent decides not to exercise theiropportunity selected at random, the value of thatpackage is reduced from their 25%

o After the initial contract term, all first right of refusal

rights cease.

The following provisions will be common to all RFPs andawarded proposals.

o Products to be sold at street pricing with emphasis on

brand names.o Non-alcoholic beverages can be sold at both Retail and

Food and Beverage locations.

o Term will be 7 to 9 years, plus 2 one year extensions at

the Citys option for the Food and Beverage.

o Term will be 5 to 7 years, plus 2 one year extensions at

the Citys option for the Retail.

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o City reserves the right to solicit proposals for and

designate certain products to be offered throughout theterminal. Rights for exclusive product offerings and thevalues for this will accrue to the city.

Water brand to be sold (except National franchiseaccounts)

Pouring brand rights (except National franchiseaccounts)

Coffee brand (except National franchise accounts)

o Alcoholic beverage sales within the terminal common

areas will need to be researched further; however, theintent is that these will be handled as separate spacesand rights. There will be an opportunity for anyconcessionaire to competitively propose that service foreach identified location.

Other Key Points for all vendors:

Cancellation for convenience/compensation terms

Provide for proper transition terms at end of contract

Vending rights remain with the City of Dallas

Wi-Fi/ Broadband rights to City of Dallas

Future product determination rights remain with City of Dallas

Evaluation of performance to include peer airport and vendorcomparison to be added to other criteria

Customer Service

o Secret Shopper program

o Establish strong customer satisfaction measurements

o Short cure period (time allowed to fix problem)

Scoring Factors:

o Brands

o DBE/MWBE

o Economics

o Operations

o Financial Capability

o

Experienceo Retention/employment of existing employees

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First Right of Refusal Process

Incumbents must chose to extend their existing contracts toprovide services during the construction period to be eligible forthe process described below

Staff creates packets for the spaces located throughout the newterminal

o Also determines a value for each packet based on concept,

location, etc.

o Packets will be paired with weak and strong locations toensure weak areas have sufficient base by which tooperate successfully

o Goal will be to:

Create as many packets as possible

Create the highest value for the airport

Staff solicits for proposals on each packet

o Then reviews proposals and scores each

If Incumbents are:

o the best proposals for greater than 25% of the total value

of all packets of the concessions within their respectivecategory, then all selections are made on the basis of thebest value for each packet

o the best proposals for less than 25% of the total value of

all packets of the concessions within their respectivecategory, then selections are made on the following basis:

the differential is determined between 25% of thetotal value of all packets of the concessions withintheir respective category and the value of thepackets in which the incumbent was the best value

Remaining packets with values in excess of this

differential are separated for consideration in thefollowing step. (as an example, if the incumbentswere best proposal in packets having a total of 20%of the total value, all proposals having value greaterthan 5% would be removed from consideration forthe next step.

Incumbent would then randomly select packets fromthe pool of packets remaining in the above step

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With each selection, incumbent will eitherchose to match the best proposal (brands willhave to be of comparable stature) or decline

If incumbent declines, the declined value iscredited against their 25% right of first refusal

Following this process, all other selections are then

made on the basis of best value for each packet

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