Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8i
ACTION ITEM
Date of Meeting
March 8, 2022
DATE: January 20, 2022
TO: Stephen P. Metruck, Executive Director
FROM: Jeffrey Wolf, Interim Director, Aviation Commercial Management
Amy McDonough, Aviation Conference Center Sales & Operations Manager
SUBJECT: AV Conference Center Exclusive Catering Contract
Amount of this request:
$1,000,000
Total estimated project cost:
$1,000,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to execute a contract for an
exclusive catering company to provide food and beverage service at the Conference Center (The
Conference Center) at Seattle Tacoma International Airport (SEA), for an amount not to exceed
$1,000,000 over five years (three-year contract, with two, one-year extension options).
EXECUTIVE SUMMARY
Commission authorization is requested to execute a contract for an exclusive catering company
to provide food and beverage service at The Conference Center. The anticipated start date of
the contract is October 1, 2022. Catering is an essential service to The Conference Center
operations for both internal (Port of Seattle) and external, revenue-generating clients.
This request is time-sensitive because SEA staff must start the procurement process as soon as
possible to ensure a smooth transition on October 1, 2022 and allow for an uninterrupted
positive conference center experience for internal and external clients.
The current and new, proposed contracts are a combined purchasing and concessions contract.
For internal Port meetings, the caterer will provide services at the Port’s expense, which is the
basis for the requested $1 million as part of this authorization. For catering services provided to
all external (or non-Port) clients of The Conference Center, the caterer will pay the Port a
percentage (to be determined as part of the competitive procurement process) of revenues
received. On average, non-aeronautical revenue generated from concession payments made to
SEA has been approximately $40,000-$50,000 per year (pre-pandemic).
COMMISSION AGENDA – Action Item No. 8i Page 2 of 6
Meeting Date: March 8, 2022
Template revised June 27, 2019 (Diversity in Contracting).
SEA staff estimates the contract value over the three years, with two, one-year extension options
to be approximately $1,000,000, or up to $200,000 per year for catering services. The requested
amount is based on historical spending levels prior to the pandemic closures, 2022 Aviation
department budget requests, and forecasted price increases from rising food and labor costs.
However, much of this information is difficult to forecast as additional conference center closures
may be necessary for health and safety reasons related to the pandemic.
The current catering agreement will expire on September 30, 2022. Although the current
contract allows for a one-year extension through September 30, 2023, the current caterer does
not wish to exercise the option.
JUSTIFICATION
Meetings and events held in The Conference Center often require food and beverage service.
To provide consistency of products, services, staffing, and generate additional revenue, the Port
elected to contract with an exclusive catering company beginning in October 2009. The first
contract was for three years (2009 – 2012), the second contract was four years (2012 – 2016),
and the current contract will end after six years (2016 – 2022). This new contract would be the
fourth contract of this type.
The use of one caterer is the best option to maintain quality food, consistent pricing, and service
standards. Note: the contract does allow for limited use of caterers other than the selected
vendor in special circumstances. The onsite prep kitchen is small and only provides enough access
and storage for one caterer. A single catering contract allows the Port to negotiate lower menu
pricing, negotiate a discount for internal Port orders, and a concession fee paid to the Port from
external client orders. A contract of this nature also allows a local, small business partner to
grow, gain exposure and increases the Port’s ability to generate non-aeronautical revenue
through conference room sales and catering concession revenue.
Diversity in Contracting
The nature of this contract is not conducive to additional subcontracting. The intent is to receive
catering services from one caterer and has historically been performed by a small business. The
requested dollar amount over the total contract term does not allow for meaningful
opportunities for the caterer to subcontract. However, as part of the procurement process, SEA
staff will work with Diversity in Contracting to do targeted outreach to identify and encourage
WMBE firms to bid.
DETAILS
This contract will provide exclusive food and beverage service for The Conference Center at SEA.
The contract term is three years, with two, one-year extension options. Total estimated costs to
the Port not to exceed amount is $1,000,000.
COMMISSION AGENDA – Action Item No. 8i Page 3 of 6
Meeting Date: March 8, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Scope of Work
This contract will provide catering services for events held in The Conference Center for internal
and external clients. The Conference Center is comprised of five meeting rooms on the
mezzanine level of the Airport Office Building (AOB), totaling just over 4,400 square feet. The
catering service includes food and beverage (including alcoholic beverages), staffing, set up,
servicing events, and clean-up of catering items for all events in The Conference Center such as
board meetings or luncheons. The caterer may also provide service for events on floors 1-5 of
the AOB on a non-exclusive basis (i.e.- SEA staff may elect to use other food and beverage services
for events in the AOB).
Schedule
Advertisement of the procurement is intended immediately following Commission authorization
for the Executive Director to execute this contract, to allow for an October 1, 2022 contract
commencement date. SEA staff will work with Diversity in Contracting to do targeted outreach
to identify and encourage WMBE firms to bid.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do not contract for catering services at The Conference Center.
Cost Implications: Lost revenue of approximately $20,000 to $40,000 per year due to no
concession fees collected on external client sales. Potentially no Port discount on catering
orders. Port spend is estimated to be approximately $200,000 per year on catering, with
administrative costs via staff time significantly increased (due to administrator’s time looking for
a caterer).
Pros:
(1) Conference Center clients would have the ability to use any caterer they choose to fit
their budget and menu preferences.
(2) Provides opportunities for multiple small, local businesses.
Cons:
(1) Clients would need to spend extra time selecting and coordinating with their caterer of
choice, which may not be ideal for clients looking for a turnkey experience.
(2) Would not have reliable and consistent catering service in The Conference Center.
(3) No contract in place to hold caterers accountable for quality and service standards or
consistent pricing.
(4) The Port may have to invest in large-scale coffee equipment because individual caterers
would not install their equipment and allow use by other caterers. Without the
equipment, caterers would need to bring brewed coffee and would not have the option
for onsite add-ons and refreshing coffee service.
(5) Significant increase in administrative time to collect and verify proof of insurance,
health documents, and liquor licenses. Staff time also required to assist caterers with
access to parking and delivery locations, and access to the meeting rooms.
COMMISSION AGENDA – Action Item No. 8i Page 4 of 6
Meeting Date: March 8, 2022
Template revised June 27, 2019 (Diversity in Contracting).
(6) Requires additional operational time during events to coordinate with clients and
caterers, confirm orders, address onsite issues or concerns, and ensure proper food
safety and handling.
(7) The Port will likely not receive a discount on catering orders at SEA. We also would not
earn catering concession fees paid to the Port from external orders, which reduces non-
aeronautical revenue.
(8) Reputational risk to the Port and The Conference Center if caterers do not meet clients’
expectations.
(9) No onsite prep or storage areas for multiple caterers. They would need to load in and
out all service items and bring everything with them, which could increase labor and
other costs for clients, including the Port.
This is not the recommended alternative.
Alternative 2 – Contract with multiple caterers to service The Conference Center.
Cost Implications: Lost revenue of approximately $20,000 to $40,000 per year due to lower or
no concession fees collected on external client sales. Potentially no Port discount on catering
orders. Port spend is estimated to be approximately $200,000 per year on catering, with
administrative costs via staff time significantly increased (due to administrator’s time looking for
a caterer).
Pros:
(1) Greater variety of menu items, price, and quality.
(2) Provides a new contract opportunity for multiple small, local businesses.
Cons:
(1) Significant operational challenges for multiple caterers to use the existing small prep
kitchen and limited storage.
(2) Additional administrative time needed to coordinate with multiple caterers, verify
orders and invoices, and catch errors in advance (e.g., wrong delivery time or room
location on invoice).
(3) Additional administrative time needed to monitor and enforce contract requirements.
(4) Caterers may need to brew coffee and prep items off-site, which could increase pricing
due to multiple trips back and forth and more staff time required to provide service.
(5) No guarantee that each caterer will receive the minimum number of orders necessary
to make the contract profitable and beneficial to their business. A small business would
likely not be able to maintain staffing levels to service The Conference Center without
a certain number of orders.
(6) Anticipate no or very small concession fees paid on external client orders due to inability
to guarantee a certain number of orders or minimum spend for each caterer available
to use. There is greater risk involved for each caterer sharing the clientele, so they are
unlikely to offer as much for commission or other payment to the Port.
This is not the recommended alternative.
COMMISSION AGENDA – Action Item No. 8i Page 5 of 6
Meeting Date: March 8, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Alternative 3 – Competitively source the exclusive catering contract for October 1, 2022,
commencement date.
Cost Implications: Port spend is anticipated to be approximately $200,000 per year on catering.
Selected vendor to offer discount percentage off all internal Port catering orders. Estimated
commission paid by selected vendor on external clients’ gross receipts approximately $20,000 to
$40,000 per year (percentage fee determined through the procurement process).
Pros:
(1) New contract opportunity for the small, local business community.
(2) Ability to negotiate menu pricing and menu items to ensure caterer meets clients’ needs
and expectations.
(3) Ability to negotiate a standard discount for all Port orders and a standard concession
fee on external orders.
(4) One caterer will have adequate space to install their own coffee brewing equipment
and store a reasonable amount of required stock items at The Conference Center to
efficiently service events.
(5) Reduced staff time spent confirming orders and communicating with the caterer,
compared to alternatives 1 and 2 with multiple caterer scenarios.
(6) With guaranteed orders from the Port, the caterer has a greater opportunity to
maintain minimum staffing levels to effectively fulfill the contract’s Scope of Services.
Cons:
(1) No option for clients to use the caterer of their choice.
(2) Given the Port’s restriction on employee food and beverage expenditures for most of
2020 and 2021, staff is not able to confidently forecast Aviation department spend on
food and beverage for 2022 through 2025.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
The contract will have a not to exceed amount of $1,000,000. This is the Port’s estimated spend
on food and beverage for the duration of the contract.
The exclusive catering contract generates non-aeronautical revenue for the Port through
concession fees paid on external client catering orders’ gross receipts. The actual concession fee
percentage will be determined through the procurement process and is estimated to generate
$20,000 to $40,000 per year in non-aeronautical revenue.
COMMISSION AGENDA – Action Item No. 8i Page 6 of 6
Meeting Date: March 8, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Annual Budget Status and Source of Funds
The budget for purchasing catering services through this contract is within each departmental
expense budgets. Each department sets their own budget for meetings and catering. The current
contract has over fifty (50) Port departments spending on food and beverage for their meetings
and events.
Financial Analysis and Summary
Project cost for analysis
services, totaling $1 million over the potential five-year
Business Unit (BU)
Effect on business performance
(NOI after depreciation)
IRR/NPV (if relevant)
CPE Impact
ATTACHMENTS TO THIS REQUEST
(1) Agreement
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
April 13, 2021 – The Commission authorized the Executive Director to extend the contract for
exclusive food and beverage service at The Conference Center at SEA to September 30,
2022, with an additional one-year extension option through 2023.
February 9, 2016 – The Commission authorized the Executive Director to execute a contract
for exclusive food and beverage service at The Conference Center at SEA. Total estimated
cost was $775,000.