a ADMINISTRATIVE ADMINISTRATIVE A~TI(jN I ACTION 145633

,EFFECTIVE DATE I ~J"2£)IIy, ~.

CITY OF DALLAS See Administrative Directive 4-5 [Sections 6 Through 11]

for Additional Guidelines and Routing

Place an X"ln the appropriate box, complete and submit this form for the approval of: 1 c:::J

1. o C":) - :a " .- ..r::-

8 a. Low bid contracts of not more than $70,000 ~ - ! :: m ,-< >

b. Change orders for low bid contracts: $50,000 or less (may not increase original contract price by more than 25%) , ::::Q C') IZI c. ProfessionailPersonaVPlanning/Other Service contracts: $50,000 or less.

::t>W N c.') rr1 m m 0 d. Amendments to non-bid contracts: $50,000 or less, per City Code Sec. 2·34 .. ("")

-I:;:'" --0 e. WRR-FM expenditures: $50,000 or less per City Code Sec. 2-79© of the City Code. m P' 1 ." ~'-

0 f. Other (explain on attachment) '-.{ :x --..".

~;.> CN n, 2. Affach all supporting documents Including bid Information as required. Approval shall be obtained before sarvices are rendered. V) -<! (J1

_Q ~ 3. Is this expenditure related to a construction project? I [J Yes I8I No

4. Any Administrative Actions to this vendor In the last 12 months? (If yes, attach explanation) 1 0 Yes [8J No

Vendor Name: LE.K. Consulting

Subject: ,~ Gate Utilization Analysis 1 Department: 1 AVI , Approve consultant contract with LEK Consulting LLC for analysis of the Love Field Gates Action Requested: and their utilization

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. ~: " Contract Term: 311512014 To 611512014 -Background: As part of the settlement between American Airlines(AA) and the Department of Justice, AA is required to divest

its interest in the two gates currently leased from the City at Dallas Love Field. This contract will engage LEK to ,j", f: _~it.!!,\,\) 'J"J provide analysis and recommendations regarding the optimal utilization of the gates including any procedures the !~ ~'I,'lirf':Jl~t .1 11" City may need to develop to manage the gates on a common use basis.

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FUND DEPT UNIT ACTV 111"/0 &1 ; PROGRAM ENCUMBRANCE VENDOR AMOUNT II 'j~f!':":t.t ~I~ 0130 AVI 7710 . 3070 CT A VILEK0214 VSOOOOO83841 $50,000 ~ Funding: ,

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Project No.: l , cO..mm%ll!y'r~J:;C;' -I Financing I Change Order No. Original CRlAA No. Orlglnsl CfVAA Date ~0'l1gjn'il CRtA:«~' 'i, Tolal Pre,v/ous Change Amount Including ~f:oiaitCj,~ng~ \Orde;; W

f' A"·,.. .. /'-1_,0 :;!k"~ .JI Change Orders this Order t'P8'i68ntaae -'£:it "-I !J!I ~ . moun , .' '" .,,)

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MlwsE INFORMA nON- P~me and Subcontractors use this section for low bid contracts greater than $50,000 but less than $70,000.

Indicate Amount to Afrlcan·American Hlspenlc Caucaslan-Female Other Minority MWBE Certification Each Group ':'1' I

, Number

$ I / $ $ $ F'.' "'7SrblJfOJIsl: Approved al belna In accordance with the Budaet and ChaDter 2 of the Dallas City Code.

-~!')Z 3/1.0/tt( App"'_8S\'~ --- d'~'/L~ BVDepartment Dire~

0.h0:fffj) OATE I

0/~/'l1 By ASSIstant Cit}i"Mlfnager - I I DATE

Original - City Secretary REV 09/2012

STATE OF TEXAS § §

COUNTY OF DALLAS §

CONSULTANT CONTRACT

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THIS CONTRACT is made and entered into by and between the City of Dallas, a Texas municipal corporation, of Dallas County, Texas, ("City") and L.E.K. Consulting LLC, a Delaware limited liability company, having offices at 75 State Street, 19th Floor, Boston, Massachusetts 02109 ("Consultant").

SECTION 1. PURPOSE

The purpose of this Contract is to state the terms and conditions under which Consultant shall perform professional services to assist City by providing a framework for City to evaluate the best use of the American Airlines divested gates at Love Field.

SECTION 2. DESCRIPTION OF SERVICES

Consultant's services hereunder shall include, but shall not be limited to, the following:

A. Consultant shall perform all the services as set forth in Consultant's Scope of Work, dated February-22, 2014, attached hereto as Exhibit A (the "Statement of Work" or "SOW"). Exhibit A is made a part of this Contract for all purposes; provided, however, should there be any conflict between the terms of the Consultant's Scope of Work and/or the terms of this Contract, the terms of this Contract shall be final and binding.

B. Consultant shall work closely with City's Director of the Department of Aviation, or his or her designee ("Director"), and other appropriate City officials as directed and shall perform any and all related tasks required by the Director in order to fulfill the purposes of this Contract.

C. Consultant shall deliver to the Director all reports, designs, and related documents, information, or other data which are required to be produced and given to City in performing services under this Contract ("deliverables") in the format required by the Director.

SECTION 3. PERFORMANCE OF SERVICES

Consultant and its employee.s or associates shall perform all the services under this ' Contract. Consultant represents that all its employees or associates who perform services under this Contract shall be fully qualified and competent to perform the services described in Section 2.

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SECTION 4. TERM

The "Term" of this Contract shall begin on the date of execution of this Contract by City (see signature page) and end fifteen (15) days thereafter. Consultant understands and agrees that work will be completed pursuant to the time line in the SOW. All deliverables are to be completed and delivered to City by the termination date, or by the milestone or completion date or dates provided in a performance schedule agreed upon between Consultant and the Director, unless an extension of time, based upon good reasons presented by Consultant, is approved by the Director.

SECTION 5. PAYMENT FOR SERVICES

In consideration of the professional services actually performed by Consultant under this Contract, City shall pay Consultant a fee based on agreed upon deliverables completed and accepted by City and the agreed upon compensation schedule in Exhibit A; provided, however, the fee and expenses paid to Consultant shall not exceed $50,000.00 during the Term of this Contract. If other conditions necessitate additional services or a change in services as provided in Section 6, any increase in compensation must be authorized and funded in advance by resolution of the City Council or, where applicable, by duly authorized administrative action signed by the City Manager and approved as to form by the City Attorney. Consultant's charges for its services are not to exceed similar charges of Consultant for comparable services to other customers. Payments to Consultant shall be in the amount shown by the billings and other documentation submitted and shall be subject to the Director's approval. All services shall be performed to the reasonable satisfaction of the Director, and City shall not be liable for any payment under this Contract for services which are unsatisfactory and which have not been approved by the Director. The final payment due under this Contract will not be paid until the required deliverables have been received in the required format and approved by the Director. The Director shall have three (3) days to approve the deliverables. If, after three (3) days, approval has not been given by the Director, it will be assumed to have been given. Any and all payments of undisputed invoices hereunder will be due within 30 days of the date of the City's receipt of the applicable invoice. City may, at its option, offset any amounts due and payable under this Contract against any debt (including taxes) lawfully due to City from Consultant, regardless of whether the amount due arises pursuant to the terms of this Contract or otherwise and regardless of whether or not the debt due to City has been reduced to judgment by a court. Undisputed invoices that remain unpaid after 30 days will be charged an interest rate in accordance with the Texas Prompt Payment Act. Any approval to be provided by Director hereunder shall not be unreasonable withheld.

SECTION 6. CHANGE IN SERVICES

City, acting through its Director, may request from time to time changes in the scope or focus of the activities, investigations and studies conducted or to be conducted by Consultant pursuant to this Contract. Any change in the scope or focus which varies significantly from the scope of services set out in Section 2 and would entail a significant increase in cost or expense to Consultant shall be mutually agreed upon by Consultant and the Director. Changes in the scope

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which in the opinion of Consultant and the Director would justify an increase in compensation requiring additional funding by City must first be authorized as described in Section 5.

SECTION 7. CONFIDENTIAL WORK

No deliverables or other infonnation (including infonnation given by City to Consultant to assist Consultant's perfonnance under this Contract) developed by, given to, prepared by or assembled by Consultant under this Contract (the "Work Product") shall be disclosed or made available to any third party individual or organization by Consultant without the express prior written approval of the Director, provided that Consultant IP (as defined herein) may be used by Consultant without Director or City approval.

Consultant shall retain all intellectual property rights and ownership in Consultant's ideas, inventions, processes, analyses, templates, techniques and know-how created prior to or separately from this Contract, or any general skills, know-how, processes or other intellectual property (including a non-City specific version of any Work Product) which Consultant may have discovered or created as a result of perfonning the services hereunder (collectively, "Consultant IP").

SECTION 8. OWNERSIDP OF DOCUMENTS

Upon acceptance or approval by City, all deliverables prepared or assembled by Consultant under this Contract, and any other related documents or items shall become the sole property of City and shall be delivered to City, without restriction on future use, subject to Section 7 above. Consultant may make copies of any and all deliverables and related documents or items for its files. By execution of this Contract and in consideration of the fee for services to be paid under the Contract, Consultant hereby conveys, transfers and assigns to City all rights under the Federal Copyright Act of 1976 (or any successor copyright statute), as amended, all common law copyrights and all other intellectual property rights acknowledged by law in the Work Product, subject to Section 7 above.

Throughout the tenn of the Contract and thereafter, Consultant's advice shall be solely for the confidential use and infonnation of the parties to the Contract and may not be used by the City, its senior management, the Mayor, its City Council, or the Director, as applicable, for any purpose other than the purpose contemplated by the SOW, and advice and infonnation provided by Consultant pursuant to this SOW may not be disclosed, summarized, excerpted from or referred to by any person other than the parties hereto without Consultant's prior written consent, which consent may be withheld by Consultant in its sole and absolute discretion.

The parties hereto acknowledge and agree that certain infonnation possessed by either party, including all or portions of the Work Product containing Consultant IP, may be subject to public disclosure under the Texas Public Infonnation Act or other public disclosure statutes. The City agrees that, if access is requested to infonnation in the Work Product that contains Consultant IP, the City shall review the issues thoroUghly with Consultant, and, if requested by Consultant, shall request an opinion by the Attorney General's office prior to releasing any infonnation requested under the Texas Public Infonnation Act or request a legal opinion or ruling if the request for public disclosure is made in accordance with another applicable public

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disclosure statute In the event that the Attorney General's Office or other official or governmental body to whom the initial public disclosure appeal was made rules that the information containing Consultant IP is to be made public, Consultant, if dissatisfied by that ruling, may request City to further appeal such opinion or ruling to release the information to a court of competent jurisdiction. In such case, Consultant shall pay both its own legal fees and court costs and those of the City; provided, however, should both the Consultant and the City agree to appeal the initial ruling by the Attorney General or other applicable public official or governmental body, then, in such case, each party shall bear their own attorney's fees and court costs.

SECTION 9. CONSULTANT'S LIABILITY

Approval of City shall not constitute or be deemed a release of the responsibility and liability of Consultant, its employees, agents, associates, or subconsultants for the accuracy and competency of the deliverables prepared by Consultant, its employees, agents, associates, or subconsultants, as required under this Contract. In addition, approval of City shall not he deemed to be the assumption of any responsibility by City for any defect, error, or omission in the deliverables prepared by Consultant, its employees, agents, associates, or sub-consultants, unless such defect, error or omission is the sole result of information provided by City.

SECTION 10. COMPLIANCE WITH LAWS AND REGULATIONS

This Contract is entered into subject to and controlled by the Charter and ordinances of the City of Dallas, as amended, and all applicable laws, rules, and regulations of the State of Texas and the Government of the United States of America. Consultant shall, during the course of performance of this Contract, comply with all applicable City codes and ordinances, as amended and all applicable State and Federal laws, rules and regulations, as amended. Consultant expressly acknowledges and agrees that this Contract and the documents, the media and other deliverables that comprise the Work Product may be subject to release under Section 552.001, et seq. of the Texas Government Code ("Texas Public Information Act"), subject to Section 8 hereunder.

SECTION 11. NOTICE OF CONTRACT CLAIM

This Contract is subject to the provisions of Section 2-86 of the Dallas City Code, as amended, relating to requirements for filing a notice of a breach of contract claim against City. Section 2-86 of the Dallas City Code, as amended, is expressly incorporated by reference and made a part of this Contract as if written word for word in this Contract. Consultant is expected to fully comply with the requirements of this ordinance in the event of a claim, in addition to all other requirements in this Contract related to claims and notice of claims.

SECTION 12. INDEPENDENT CONTRACTOR

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Consultant's status shall be that of an independent contractor and not an agent, servant, employee, or representative of City in the performance of the services under this Contract. Consultant shall exercise independent judgment in performing services under this Contract and is solely responsible for setting working hours, scheduling or prioritizing the work flow and determining how the work is to be performed. No term or provision of this Contract or act of Consultant in the performance of this Contract shall be construed as making Consultant the agent, servant or employee of City, or making Consultant or any of its employees eligible for the fringe benefits, such as retirement, insurance and worker's compensation, which City provides its employees.

SECTION 13. INDEMNITY

Consultant agrees to defend, indemnify and hold City, its officers, agents and employees, harmless against any and all claims, lawsuits, judgments, costs and expenses for personal injury (including death), property damage or other harm for which recovery of damages is sought, suffered by any person or persons, that may arise out of or be occasioned by Consultant's breach of any of the terms or provisions of this Contract, or by any negligent or strictly liable act or omission of Consultant, its officers, agents, employees or subconsultants, in the performance of this Contract; except that the indemnity provided for in this paragraph shall not apply to any liability resulting from the sole negligence or fault of City, its officers, agents, employees or separate contractors, and in the event of joint and concurring negligence or fault of Consultant and City, responsibility and indemnity, if any, shall be apportioned in accordance with the law of the State of Texas, without waiving any governmental immunity available to City under Texas law and without waiving any defenses of the parties under Texas law. The provisions of this paragraph are solely for the benefit of the parties to this Contract and are not intended to create or grant any rights, contractual or otherwise, to any other person or entity.

To the extent permitted by law, and, without waiving any rights it may have as to governmental immunity" the City agrees to release Consultant and its affiliates and its and their officers, directors, employees, partners, representatives and agents, and the successors and assigns of the forgoing persons (collectively, the "Consultant Indemnitees"), and indemnify and hold harmless the Consultant Indemnitees from and against any and all losses, liabilities, claims, demands or causes of action (including all costs, expenses and reasonable attorneys' fees) to the extent arising out of, relating to and/or resulting from: (a) a third party's receipt, use, review or reliance on any deliverables, work product or advice provided by Consultant to the City pursuant to this Agreement directly due to any act of commission or omission by the City; (b) the response by Consultant to any subpoena or similar discovery request relating to this Agreement, the Services, or any deliverables, work product or advice provided hereunder in any action, proceeding or dispute; and (c) changes made, without the consent of Consultant, to any work product, deliverables or information provided by Consultant to the City.

Subject to applicable law, notwithstanding anything to the contrary set forth herein, Consultant's aggregate liability hereunder shall be limited to the cap set forth in Consultant's insurance coverage, and shall under no circumstances be greater than $1,000,000 under such insurance coverage, regardless of the cause of action or legal theory pled or asserted and, subject to applicable law, if such liability is not subject to Consultant's insurance coverage, shall not

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exceed two times the fees actually received by Consultant hereunder, unless such liability is the result of Consultant's gross negligence or willful misconduct.

The City shall not settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened claim, action, suit, dispute, inquiry, investigation or proceeding in respect of which indemnification may be sought ,hereunder, unless such settlement, compromise, consent or termination contains a release of Consultant reasonably · satisfactory in form and substance to Consultant.

SECTION 14. INSURANCE REQUIREMENTS

A. Consultant shall procure, pay for, and maintain during the term of this Contract, with a company authorized to do business in the State of Texas and otherwise acceptable to City, the minimum insurance coverage contained in Exhibit B, attached to and made a part of this Contract.

B. Approval, disapproval or failure to act by City regarding any insurance supplied by Consultant or its subconsultants shall not relieve Consultant of full responsibility or liability for damages, errors, omissions or accidents as set forth in this Contract. The bankruptcy or insolvency of Consultant's insurer or any denial of liability by Consultant's insurer shall not exonerate Consultant from the liability or responsibility of Consultant set forth in this Contract.

SECTION 15. CONFLICT OF INTEREST

The following section of the Charter of the City of Dallas shall be one of the conditions, and a part of, the consideration of this Contract, to wit:

"CHAPTER XXII. Sec. 11. FINANCIAL INTEREST OF EMPLOYEE OR OFFICER PROHIBITED --

(a) No officer or employee shall have any financial interest, direct or indirect, in any contract with the City or be financially interested, directly or indirectly, in the sale to the City of any land, materials, supplies or services, except on behalf of the City as an officer or employee. Any violation of this section shall constitute malfeasance in office, and any officer or employee guilty thereof shall thereby forfeit the officer's or employee's office or position with the City. Any violation of this section, with knowledge, express or implied, of the person or corporation contracting with the City shall render the contract involved voidable by the City Manager or the City Council.

(b) The alleged violations of this section shall be matters to be determined either by the Trial Board in the case of employees who have the right to appeal to the Trial Board, and by the City Council in the case of other employees.

(c) The prohibitions of this section shall not apply to the participation by City employees in federally-funded housing programs, to the extent permitted by applicable federal or state law."

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For purposes of clarification, any contract between Consultant and the DallaslFort Worth International Airport Board shall not be considered a conflict for purposes of this Contract.

SECTION 16. GIFf TO PUBLIC SERVANT

City may terminate this Contract immediately if Consultant has offered, or agreed to confer any benefit upon a City employee or official that the City employee or official is prohibited by law from accepting.

For purposes of this section, "benefit" means anything reasonably regarded as pecuniary gain or pecuniary advantage, including benefit to any other person in whose welfare the beneficiary has a direct or substantial interest, but does not include a contribution or expenditure made and reported in accordance with law.

Notwithstanding any other legal remedies, City may require Consultant to remove any employee of Consultant from the Project who has violated the restrictions of this section or any similar state or federal law, and obtain reimbursement for any expenditures made as a result of the improper offer, agreement to confer, or conferring of a benefit to a City employee or official.

SECTION 17. ASSIGNMENT

This Contract provides for unique professional services. Consultant, therefore, shall not sell, assign, transfer or convey this Contract, in whole or in part, without the prior written consent of City's Director.

SECTION 18. TERMINATION

City's Director may, at its option and without prejudice to any other remedy City may be entitled to at law, in equity or elsewhere under this Contract, terminate further work under this Contract in whole or in part for cause or for the convenience of City by giving at least ten ( .0) days advance written notice of termination to Consultant, with the understanding that all performance being terminated shall cease as of a date to be specified in the notice. City also has the right to request that Consultant assign and transfer to City all of Consultant's rights and obligations under existing subcontracts it has to perform Contract work in the event of termination under this Section. City shall equitably compensate Consultant in accordance with the terms of this Contract for Contract work performed as well as any and all reasonable expenses incurred prior to the date of termination specified in the notice, following inspection and acceptance of same by City's Director. Consultant shall not, however, be entitled to lost or anticipated profits should City choose to exercise its option to terminate.

SECTION 19. NOTICES

Except as otherwise provided in Section 11, any notice, payment, statement, or demand required or permitted to be given under this Contract by either party to the other may be effected by personal delivery in writing or by mail, postage prepaid. Mailed notices shall be addressed to

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the parties at the addresses appearing below, but each party may change its address by written notice in accordance with this section. Mailed notices shall be deemed communicated as of three (3) days after mailing.

If intended for City, to: Mark Duebner Director City of Dallas Department of Aviation Love Field Airport Terminal Building 8008 Cedar Springs Road Lock Box 16 Dallas, Texas 75235

SECTION 20. NONDISCRIMINATION

If intended for Consultant, to: Shuba Satyaprasad General Counsel L.E.K. Consulting LLC 75 State Street, 19th Floor Boston, Massachusetts 02109

As a condition of this Contract, Consultant covenants that Consultant will take all necessary actions to insure that, in connection with any operations under this Contract, Consultant, its officers, employees and subcontractors, will not discriminate in the treatment or employment of any individual or groups of individuals on the grounds of race, color, religion, national origin, age, sex, or handicap unrelated to job performance, either directly, indirectly or through contractual or other arrangements. Consultant shall also comply with all applicable requirements of the Americans with Disabilities Act, 42 U.S.C.A. §§12101-12213, as amended. In this regard, Consultant shall keep, retain and safeguard all records relating to this Contract or work performed hereunder for a minimum period of three (3) years from final Contract completion, with full access allowed to authorized representatives of City, upon request, for purposes of evaluating compliance with this and other provisions of the Contract.

SECTION 21. RIGHT OF REVIEW AND AUDIT

City may review any and all of the services performed by Consultant under this Contract. City is granted the right to audit, at City's election, upon reasonable notice to Consultant and during regular business hours, all of Consultant's records and billings relating to the performance of this Contract. Consultant agrees to retain such records for a minimum of three (3) years following completion of this Contract. Any payment, settlement, satisfaction, or release made or provided during the course of performance of this Contract shall be subject to City'S rights as may be disclosed by an audit under this section.

SECTION 22. VENUE

The obligations of the parties to this Contract shall be performable in Dallas County, Texas, and if legal action is necessary in connection with or to enforce rights under this Contract, exclusive venue shall lie in Dallas County, Texas.

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SECTION 23. GOVERNING LAW

This Contract shall be governed by and construed in accordance with the laws and court decisions of the State of Texas, without regard to conflict of law or choice of law principles of Texas or of any other state.

SECTION 24. LEGAL CONSTRUCTION

In case anyone or more of the provisions contained in this Contract shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Contract, and this Contract shall be considered as if such invalid, illegal, or unenforceable provision had never been contained in this Contract.

SECTION 25. COUNTERPARTS

This Contract may be executed in any number of counterparts, each of which shall be deemed an original and constitute one and the same instrument. If this Contract is executed in counterparts, then it shall become fully executed only as of the execution of the last such counterpart called for by the terms of this Contract to be executed.

SECTION 26. CAPTIONS

The captions to the various clauses of this Contract are for informational purposes only and shall not alter the substance of the terms and conditions of this Contract.

SECTION 27. SUCCESSORS AND ASSIGNS

This Contract shall be binding upon and inure to the benefit of the parties and their respective administrators, successors .and, except as otherwise provided in this Contract, their assigns.

SECTION 28. ENTIRE AGREEMENT; NO ORAL MODIFICATIONS

This Contract (with all referenced exhibits, attachments, and provisions incorporated by reference) embodies the entire agreement of both parties, superseding all oral or written previous and contemporary agreements between the parties relating to matters set forth in this Contract. Except as otherwise provided elsewhere in this Contract, this Contract cannot be modified without written supplemental agreement executed by both parties.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

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EXECUTED AND EFFECTIVE this the to day of ~cJL- , 2014, by City, signing by and through its City Manager, duly authorized to execute same by Administrative Action No. 14- , and by Consultant, acting through its duly authorized officials.

APPROVED AS TO FORM: WARREN M. S. ERNST City Attorney

By: _U~4-Sarah F. Hasib V-Assistant City Attorney

CONSULTANT: L.E.K. CONSULTING, LLC

Title: ~~

ATTACHMENTS & EXmBITS

Exhibit A Consultant's Scope of Work

Exhibit B Insurance Requirements

CITY OF DALLAS A. C. GO EZ

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Bangkok

Beijing

Boston

Chennai

Chicago

London

Los Angeles

Melboume

Milan

Mumbai

Munich

NcwDclhi

New York

Paris

San Francisco

Sao Paulo

Seoul

Shanghai

Singapore

Sydney

Tokyo

Wroclaw

February 22, 2014

A.c. Gonzalez City Manager City of Dallas Dallas City Hall 1500 Marilla Street Room4EN Dallas, TX 75201

Dear A.c.,

Exhibit A

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L.E.K. Consulting LLC

75 State Street

19th Floor

Boston, MA 02109

USA

T: 617.951.9500

F: 617.951.9392

LEK.com

The purpose of this letter (collectively with the Terms and Conditions attached hereto) is to confirm our agreement for L.E.K. Consulting LLC ("L.E.K. Consulting") to assist The City of Dallas (the "City" or "Client", and together with L.E.K Consulting, the "Parties" or each individually, the "Party") in addressing its position on American Airline's divestiture of its gates at Love Field, as contemplated herein and the attached Terms and Conditions. Please let me know if you believe it should be modified in any way; otherwise, please sign below and return a copy to me.

John and I are very excited to work closely with you in resolving these critical issues and assisting in this important decision process for the City of Dallas.

******** A. Background

American Airlines, as part of its settlement with the Department of Justice (DOJ) in its merger with US Airways, is required to divest its rights to two gates at Dallas Love Field (DAL). The close proximity of DAL to downtown Dallas and limited gate availability has generated significant interest in these gates from other airlines, including Southwest (based in Dallas and currently the largest operation at DAL), Delta, and Virgin America. Given the critical role that DAL's airlines play in the local economy and the important service they provide for the citizens of Dallas, the City is looking to develop a framework for evaluating potential new airline tenants for the gates and establishing a clear position on what is the optimal outcome for the City and its residents.

City of Dallas, TX February 22, 2014 Page 2

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B. Objectives1

The primaLY objective of this project is to provide a framework for the City to evaluate the best use of American Airlines' divested gates at DAL and a weD­reasoned position on the optimal outcome of the current process for the City of Dallas.

In order to meet these objectives, the City needs answers to the following questions:

• What overall objectives should guide the City's assessment of potential new airline tenants for the DAL gates?

• Who are the key stakeholders in the decision to award American Airlines' divested gates at DAL? For example, (but not necessarily limited to):

o DALitself

o DAL employees

o The local business community

o Citizens of Dallas / the flying public

o DFW (as a separate interest of the City whose own performance could be impacted by any changes at DAL)

o Southwest Airlines and American Airlines (as key Dallas-based employers)

• What are the primary interests of each stakeholder group as they relate to the awarding of the DAL gates? For example (but not necessarily limited to):

o Airport revenue (both aeronautical and non-aeronautical)

o Airport/airline jobs

o New non-stop destinations

o Frequency of service

o Fares

o Loyalty programs

o Airline innovation (particularly associated with the passenger experience and airport-related investment)

o Airline financial stability

o Airline commitment to DAL / track-record of serving similar markets

o Degree of overlapping service with DFW

• Given the above, what is an appropriate framework for evaluating the options and determining the optimal solution for the City?

• What specific criteria should be used to determine the "best" use of the gates for the City of Dallas? How should those criteria be weighted?

1 The City of Dallas consents to and agrees that L.E.K. Consulting may share information and data related to this project with its global associated L.E.K. Consulting offices.

City of Dallas, TX February 22, 2014 Page 3

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• How does each potential airline rate across the key evaluation criteria?

• Overall, which airline (or airlines) represent the best fit for the DAL gates given the City's objectives and why?

c. Approach and Services

Given our experience in similar projects we will execute this project in the following manner:

• Work with DAL and the City to understand: their primary objectives, views on key stakeholders, relative importance of key criteria, any relevant work performed to-date, etc.

• Review any relevant proposals or other materials that airlines have prepared as part of their process to win the DAL gates

• Identify and outline the key stakeholders in this process

• Leverage L.E.K. experience with airport development to outline and describe the objectives for each stakeholder

• Develop an overall evaluation framework based on the objective criteria of the various stakeholders

• F or each objective, assign a "weighting" to determine relative importance against other objectives

• Perform secondary research and leverage prior L.E.K. airline experience and industry expertise to assess how any of the possible gate tenant airlines would perform against the evaluation criteria

• Based on the expected outcomes from each gate use scenario, rate each scenario against each objective for the stakeholders providing both direction (benefit/ harm) and relative magnitude

• Using the output of this matrix with the relative weight of each objective, recommend a "preferred" option to the City

• Synthesize all findings and recommendations and develop a set of presentation materials that the City can use to communicate its preferred option to various stakeholders

City of Dallas, TX February 22, 2014 Page 4

·D. Outputs

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The most important output of this study is to provide the City with a well-reasoned recommendation on the gate award at DAL. Specific outputs of the project will include:

• List of key stakeholders with their expected objectives

• List of expected scenarios (different carrier sdections) with assumptions for gate utilization, potential destinations served and expected fare impact

• Matrix of stakeholder and objectives against expected scenarios with estimated impact for each instance

• Recommended scenario for the City based on L.E.K's VIew of the weighting for each objective

• Framework for the City to evaluate future scenarios

E. Team. Timing and Compensation

This project will be conducted by consultants from our Boston office under the direction of John Thomas and Darren Perry, both Managing Directors of L.E.K. Consulting LLC. A team of 2-3 additional professionals will be assigned to the project. We will complete the project over a period of two weeks. As we have discussed, professional fees alone for this project would typically be $120,000 but we are prepared to conduct this work for $50,000, inclusive of both professional fees and expenses, given the time pressure that the City is under and as a sign of good faith to develop a rdationship with the City.

Any professional time incurred beyond this time frame will either be billed on a per diem basis or negotiated as changes occur in the scope or duration of the project. The professional fees quoted herein shall expire and be invalid 30 days after the date first written above, unless this Agreement is executed within such 30-day time period.

Billing will be monthly in arrears. The total cost of this project, inclusive of fees and expenses, will be $50,000.

City of Dallas, TX February 22, 2014 Page 5

F. Summary

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A.c., as we have discussed, we are delighted to be helping you with such a critical issue. If you have any questions about this letter, please call my office (my assistant is Julie DeBaggis), or leave me a voicemail at 800-929-4535, extension 9589.

City of Dallas, TX February 22, 2014 Page 6

TERMS AND CONDITIONS

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Reference is hereby made to that proposal letter (the "Letter") attached hereto, as may be amended from · time to time pursuant to the terms set forth herein (together, with these Terms and Conditions, the "Agreement"). Unless otherwise set forth herein, all capitalized terms shall have the meanings ascribed to them in the Letter.

A. Cooperation

The Company shall furnish L.E.K. Consulting with all information and data that L.E.K. Consulting shall reasonably request in connection with the services to be provided under the Agreement, and shall provide L.E.K. Consulting full access, as reasonably necessary and requested from time to time by L.E.K. Consulting, to the Company's officers, directors, employees and professional advisors. In connection with the services to be provided pursuant to the Agreement by L.E.K. Consulting, the Company agrees to provide prompt notice to L.E.K. Consulting of all developments materially affecting such services or the accuracy of information previously furnished by the Company to L.E.K. Consulting.

The Company and L.E.K. Consulting recognize that L.E.K. Consulting will be relying on information and data (x) provided by the Company, its agents, employees, or other representatives, (y) from generally recognized public sources, or (z) from sources otherwise agreed to by the Company and L.E.K. Consulting or otherwise deemed helpful by L.E.K. Consulting.

Aclmowledgement

The Company acknowledges and agrees that L.E.K. may have served, may currendy be serving, or may in the future serve other parties who participate in the same market as the Company, including parties with whom the Company competes, and the Company hereby waives any objections to any such representations by L.E.K. Consulting.

B. Non-Solicitation

Without L.E.K.'s prior written approval, the Company will not solicit for employment, nor will the Company hire, any current professional employee of L.E.K. Consulting. In the event the Company does hire an employee of L.E.K. Consulting without prior written approval, they will be responsible for a fee of 30% of the employee's compensation earned during the prior 12 months at L.E.K.

NOTICE

FILE NUMBER ___ 1_4_5_6_3_3 ___ _

THE ATTACHED ADMINISTRATIVE ACTION OR CHANGE ORDER WAS SUBMITTED AND ASSIGNED A FILE NUMBER AS IT APPEARS TO BE

COMPLETE.

VALIDATED BY __ ~---+I----+--+-~~ ___ _ PRINTED NAME

DATE RETURNED ____ M_AR_2_6_20_14 ____ _

PREPARED BY cs Chris Soto

[THE CITY SECRETARY'S OFFICE HAS NO KNOWLEDGE OF THE PREPARATION OF THIS DOCUMENTATION; PLEASE DIRECT ANY INQUIRIES TO THE

INITIATING DEPARTMENT. THANKS!]

CITY SECRETARY

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OFFICE OF THE CITY SECRETARY CITY OF DALLAS, TEXAS