THE FORT WAYNE ALLEN COUNTY AIRPORT (FWACAA) CONCESSIONS REVENUE AUDIT SERVICES RFP ADDENDUM #1 (OCTOBER 26, 2017)

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1 THE FORT WAYNE ALLEN COUNTY AIRPORT (FWACAA) CONCESSIONS REVENUE AUDIT SERVICES RFP ADDENDUM #1 (OCTOBER 26, 2017) Questions Received from Katz, Sapper & Miller 1. The RFP document refers to an audit and examinations. Which service are you requesting in the RFP? a. We are requesting revenue examinations of concessionaires located at Fort Wayne International Airport to ensure compliance with the applicable lease agreement. 2. What is the number of concessionaires at FWA? a. Rental car companies: 5 i. Avis/Budget ii. National/Alamo iii. Enterprise iv. Hertz v. Dollar/Thrifty b. Food and gift: 1 i. First Class Concessions c. Parking Lot: 1 i. Republic Parking Systems 3. Has this type of engagement been performed in the past? If so, are audit reports available for review? a. Yes, this type of engagement was performed in the past, but it has more than 15 years ago. b. No, reports are not available for review. 4. Can we see the portion of the lease agreement related to lease payments? a. Yes, it is attached. 5. Do you rely solely on reports from the concessionaires? a. Yes 6. Can you rely on work done from outside audits of the concessionaires? a. We have not requested this information in the past. Questions Received from MCM General Questions 1. Is it required for the contractor to have an affirmative action policy? a. Yes 2. What is the Authority s preference as to CPA reporting? Agreed-upon procedures engagement, compliance audit report, or other?

2 a. See item 1 above under Katz, Sapper & Miller questions. 3. Are we required to provide Exhibit B (Indiana Legal Employment Declaration) with the RFP submission? Engagement Specific Questions 4. What are the currently anticipated timelines? (i.e. periods to be audited, fieldwork dates, expected report completion dates) a. We anticipate the initial period to be audited to be December 1, 2016 through November 30, 2017 with fieldwork being completed in the first quarter of Additionally, do you prefer for the audits to be performed concurrently or staggered throughout the period? a. We anticipate a minimum of one audit per year depending on budget appropriation. 6. The RFP states that the audit period is the most recently completed year of the concession agreement. Are most of the concession agreements on a calendar year basis? 7. Generally speaking, do the concession agreements charge an overall concession rate on revenues, or are there other categories of concessions that will be required to be audited? a. Revenue concession rates vary by type of concessionaire. 8. In customizing our audit plan, are there any known areas of concern or unique contractual considerations/terms that the contractor should consider in designing its tests? Please provide any details as available. Questions Received from Sikich 1. We would need a copy of all the lease agreements for all five concessionaires to properly assess and develop audit programs as requested in the RFP. a. See item 4 above under Katz, Sapper & Miller questions. 2. Can you provide a copy of a previously issued report or is this the first time for these audits? a. See item 3 above under Katz, Sapper & Miller questions. 3. Can you provide a sample of the revenue reports that have been submitted by the concessionaires to the Airport Authority? 4. Where are the records for the concessionaires located for us to perform our procedures? a. Records would be located at the corporate offices of the concessionaires. Questions Received from BKD 1. When were the concessionaire contracts last reviewed or is this a new process for the Authority? a. See item 3 above under Katz, Sapper & Miller questions.

3 2. Is a firm currently performing this function for the Authority? If so, who? 3. Was there something that occurred that prompted this RFP? If so, can you provide a high-level description? 4. On page 6, it states that the proposals must contain an index. Could you kindly clarify if this is referring to a table of contents at the front of the proposal or an actual index which is typically located at the back of a proposal? a. This is referring to a table of contents. 5. Do the concessionaires contracts contain any restrictions related to the Authority s right to obtain historical transactional data electronically? 6. Do you foresee or anticipate any issues with obtaining data sets from any of the concessionaires? If so, which ones primarily? This is important to clarify as it may impact our planned approach and hours. 7. Please confirm if Exhibit A is for purposes of example only or is this to be completed and returned as part of the proposal? a. Exhibit A is not to be completed and returned as part of the proposal.

4 ATTACHMENT: Lease and Concession Agreement Terms DEFINITIONS 1.1 Annual Rent Refer to Subsection Annual Privilege Fee Refer to Subsection Contract Year 1.4 FAA Contract Year shall mean each successive twelve (12) month period during the term hereof commencing December 1 and expiring November 30 of the following year. FAA shall mean the Federal Aviation Administration. 1.5 Gross Revenue General Definition The term "Gross Revenue" shall mean the total amount due to Company from its customers, whether payment terms are cash, credit, barter, pre-paid, exchange or otherwise, in connection with Company's operation of its vehicle rental business at the Airport. Company shall not divert business, exchange vehicles, modify accounting treatment of revenue or rename or redefine services or products in any manner in an attempt to deprive FWACAA of revenues that should, under the terms of this Agreement, be payable to FWACAA. Gross Revenue includes all charges and fees of whatsoever kind shown on the face of the motor vehicle rental agreement, or any supplemental agreement, whether billed or unbilled, regardless of when or whether paid, unless expressly and particularly excluded from Gross Revenue under this Agreement. Gross Revenue for each rental car contract shall be reported in the month that the rental car contract ends. Gross Revenue includes all charges regardless of when or if payment therefore is received by Company. Company shall not adjust Gross Revenue based on discounts, rebates, refunds, losses, credits or similar items not specifically deducted on the individual customer's rental contract.

5 1.5.2 Examples of Gross Revenue By way of illustration and example only and in no way as a limitation, Gross Revenue includes: (a) (b) (c) (d) (e) (f) (g) (h) Time and Mileage. Time and mileage charges for rental or leasing of motor vehicles whether paid by cash, credit or otherwise. Payment in Lieu of Rent. Charges in excess of payments received from any insurance company and that are received from customers for vehicles that are out of service for repairs as a result of the customer s actions or inactions. Insurance. Premium charges and all other charges or collections on account of the purchase of personal accident insurance or any type of insurance by customers. Waiver. Fees charged by Company to waive insurance deductibles or to waive Company's right to recover from the customer for vehicle or equipment damage (commonly referred to as Collision Damage Waiver (CDW) and/or Loss Damage Waiver (LDW)). Fuel. All charges related to vehicle fuel or petroleum products charged upon the return of a rented vehicle including but not limited to fuel surcharges, fuel, etc. Revenue realized by Company from advance charges to customers for fuel and fueling services, pursuant to a rental agreement is included in Gross Revenues. Fees. All fees assessed by Company, as permitted in the Agreement, including intercity fees (vehicle is returned to a location other than the Airport), drop fees or similar fees. All revenue derived from any current or future fee or charge in connection with the rental or delivery of vehicles to customers at or from the Leased Premises. Fees designed to recover Company s costs for operation under this Agreement through a concession fee recovery/recoupment assessment. Charge or fee for late return of a rental vehicle. Violation of Contract Terms. Fees charged to a customer for use of the vehicle contrary to the terms of the vehicle rental contract including but not limited to speeding, driving under the influence of an intoxicant or controlled substance, taking the vehicle out of state or out of an approved area as defined in the contract, regardless whether customer was arrested, cited or otherwise penalized by law enforcement authorities for such conduct. Vehicle Exchange. All charges for car rental contracts entered into at the Airport although the car initially rented is exchanged elsewhere and a new contract is submitted therefore.

6 (i) (j) (k) Other Charges. All fees and charges, including but not limited to those related to driver's age, additional drivers, electronics, communication or technological devices (e.g. GPS, cellular telephones, facsimile machines, satellite radio service), vehicle equipment, infant/child seats, personal property of whatsoever kind, guaranteed reservations, service, maintenance or vehicle operation; and revenues attributable to the lease portion of a lease- to-own agreement. All revenue that may be derived from sources similar but not identical to these described herein, including revenue for the retail sale of rental vehicles from the Leased Premises. Marketing programs: All fees and charges paid by customers in relation to their voluntary participation in programs. Volume Discounts: Corporate or volume rebates or refunds unless Company can establish for each corporate or volume customer invoice: 1) the amount of the rebate or refund; 2) that the customer has a contractual right to the rebate or refund; and 3) that the amount Company claims as an exclusion from Gross Revenues is attributable to rental vehicle transactions at the Airport by that corporate or volume customer. Gross Revenues may not be reduced by such volume discounts unless the discount is documented for each transaction and the documentation is submitted with Company s monthly report to FWACAA Sole Exclusions Gross Revenue excludes only: (a) (b) (c) (d) Sales Taxes. Charges to Company's customers for federal, state, county or municipal transaction privilege (sales) taxes separately stated on the rental agreement and payable by Company to the taxing jurisdiction specifically identified as such, now in effect or hereinafter levied. Damages or Theft. Charges to Company's customers and/or any monies received by Company as compensation for the sale of capital assets, damage to automobiles or other property of Company, or for loss, conversion or abandonment of such automobiles. This exclusion does not include any sums received by Company in lieu of rent for those vehicles. Customer Facility Charge. The Customer Facility Charge defined in Section 7 below, collected from customers by Company. Fuel Reimbursement. Revenues realized by Company as reimbursement for refueling a vehicle rental pursuant to a rental agreement under which the customer is obligated to return the vehicle with the same amount of fuel furnished at the inception of

7 the rental. Revenue realized by Company from advance charges to customers for fuel, pursuant to a rental agreement is not excluded from Gross Revenues. (e) (f) New Vehicle Preparation Expenses. If such expenses are reimbursed to Company by the vehicle manufacturer or dealer. All such credits shall be fully documented and this documentation shall be provided FWACAA for its review and consent before these expenses will be exempt from the definition of Gross Revenues. Insurance Proceeds. Amounts received as insurance proceeds as a result of damages to vehicles or other property of Company. (g) Post-Contract Customer Collections. Fines, tolls, impound fees, vehicle damage and similar expenses incurred by or caused by Company s customer whereby Company paid the billing entity, then Company receives reimbursement from the customer for these expenses after the end of the rental agreement. Unless revenues are expressly and particularly excluded from Gross Revenues under this Agreement, such revenues shall be included in the definition of Gross Revenues. Company s exclusion from Gross Revenues of any revenues required to be included under this Agreement will subject Company to any remedies set forth herein Minimum Annual Guaranteed Privilege Fee (MAG) The Minimum Annual Guaranteed Privilege Fee, or MAG, shall be the amount Company presented on Attachment C of the Fort Wayne-Allen County, Fort Wayne International Airport Invitation for Bids for Rental Car Terminal Concessions. 1.7 Percentage Privilege Fee Percentage Privilege Fee shall mean ten percent (10%) of Gross Revenue (as defined in Subsection 1.5). 1.8 Executive Director Shall mean the Executive Director of Airports of FWACAA. 1.9 Total Annual Fees Total Annual Fees shall refer to the sum of the Annual Rent and the Minimum Annual Guaranteed Privilege Fee (MAG) payable in a Contract Year.

8 RENTAL AND PRIVILEGE FEES 4.2 Annual Privilege Fee During each Contract Year of the Term, Company shall pay to FWACAA the Annual Privilege Fee for the right to conduct a car rental concession at the Airport in an amount equal to the greater of: (a) M A G ; or (b) P e r c e n t a g e P r i v i l e g e F e e. 4.3 Monthly Payments Company shall pay FWACAA, in advance and without demand, on or before the first (1st) day of each calendar month during the term hereof, One-twelfth (1/12th) of the Annual Rent Company shall further remit to FWACAA, without demand, on or before the twentieth (20th) day of the month: (a) All Customer Facility Charges collected by Company pursuant to Section 7 during the previous month; and. (b) One-twelfth (1/12th) of the Annual Privilege Fee. Note: The Annual Privilege Fee shall be calculated based on the then current year-todate actual gross revenues to the extent that amount exceeds the Minimum Annual Guarantee paid year-to-date; and (c) Any sales or other taxes due and payable in connection therewith, in lawful money of the United States, without deduction or setoff, at the offices of FWACAA or such other place as FWACAA may designate in writing from time to time All other amounts due and payable by Company to FWACAA shall be paid within thirty (30) days after receipt of invoice therefore. 4.4 Monthly and Quarterly Statements With each monthly payment as specified in Section above, Company shall provide documentation to adequately, in FWACAA s sole opinion, support the payment made by Company. Such monthly documentation shall include a report showing the number of rental contracts applicable to the collection of the CFC,

9 the number of rental contract days applicable to the collection of the CFC and the total amount collected that month. Additionally, quarterly and at any other time upon written request from FWACAA, within thirty (30) calendar days after such request or at the end of each quarter, Company shall submit to FWACAA, in such detail and form as may be specified by FWACAA, certain information, including but not limited to, (1) the number of contracts entered into during the applicable period of time, specifying the number of transactions and the number of days the vehicle is leased per transaction; (2) a detailed schedule of all revenues by category for that period of time itemizing each item of revenue; (3) a detailed schedule of revenues upon which the Privilege Fee due to FWACAA is computed; such schedule shall separately identify any exclusions from Gross Revenue as provided herein; (4) the calculation used to determine the Privilege Fee being paid to FWACAA for such period of time pursuant to Section 4.2; and (5) the amount of Customer Facility Charges collected during such period of time. Said statement shall be signed by a responsible accounting officer of Company. FWACAA reserves the right to request this information at any time during the term of the Agreement and as specified in Section 5.3 herein. FWACAA also reserves the right to change the form of the monthly or quarterly statements and to require the submission by Company of other information pertaining to the payments hereunder, and Company agrees to change the form of its statements to that requested by FWACAA and to provide any such additional information FWACAA may request. CUSTOMER FACILITY CHARGE (CFC) During the term of this Agreement, Company agrees to collect the Customer Facility Charge adopted by FWACAA, as amended from time to time. The Customer Facility Charge shall be charged to the rental car companies' customers on a per-day basis, for the purpose of recovering FWACAA's costs associated with the facilities used for rental car concessions. Company shall collect the fee and remit it to FWACAA as set forth in Section of this Agreement. The CFC collected by Company shall be deemed to be the property of FWACAA and shall be held in trust by Company for the benefit of FWACAA. FWACAA may at any time and for any reason, change the amount of the CFC, or discontinue it, upon written notice to Company. Company shall list the CFC separately on its customer invoice, describing it as a "Customer Facility Charge," or with such other words as FWACAA shall approve in writing, and shall charge the fee in connection with each and every rental car contract entered into in connection with its operations on the Airport. The CFC is not considered as part of Gross Receipts as herein defined. At the execution of this Agreement, the CFC is Two Dollars and Twenty-Five Cents($2.25) per day. Each twenty-four (24) hour period or portion thereof for which a full day s rental rate is assessed the customer by Company shall apply to the CFC. Notwithstanding the foregoing, the CFC shall only be charged for the initial ten (10)

10 days of each rental agreement. FWACAA agrees on a quarterly basis to provide Company a report illustrating the expenses incurred by FWACAA, the total CFC s collected applicable to those expenses and the current amortization schedule.