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"Atlanta hits more turbulence on Hartsfield concession deals"
Saturday, April 28, 2012
City hits more turbulence on airport deals
By Kelly Yamanouchi
The Atlanta (GA) Journal-Constitution
New questions about concessions contracts at the Atlanta airport won't
affect the opening of the new international terminal next month, city
officials say, but they ensure the deals will remain a cloud over the
world's busiest airport.
Doubts by federal regulators about whether four winning firms really
qualified as "disadvantaged businesses" have the potential to generate major
headaches, some city council members fear.
"This is potentially a huge legal problem," city council member Michael
Julian Bond said Friday.
The Federal Aviation Administration on Thursday released memos saying four
concessionaires awarded contracts should not have qualified as disadvantaged
or had inadequate documentation.
It isn't clear if the FAA concerns will lead to altering or voiding any of
the deals. Airports must make "good faith efforts" in disadvantaged business
programs. Problems with compliance are generally resolved case-by-case
through agreements between the FAA and airports.
Complicating the matter is that the four firms were certified by the state
Department of Transportation and MARTA, not the city.
Mayor Kasim Reed's administration, which has a big stake in both a smooth
terminal opening and the integrity of the contract awards, said it will work
with the FAA to address the concerns.
However, the city already faces a series of challenges to the concessions
contracts from losing firms, and "this will also be something that they will
definitely use in their legal proceedings against the city," said council
member Felicia Moore.
One losing firm had already filed a motion Friday seeking to renew its
administrative appeal of the contract selection process, citing the FAA
The contracts at issue were awarded in a massive overhaul affecting more
than 150 restaurant and shop spaces at Hartsfield-Jackson International. The
contracts are for space in both the new international terminal and elsewhere
throughout the mammoth complex. Their approval last winter was considered
key to opening the terminal on time this spring, even though not all shops
and restaurants will be open initially.
The FAA said two firms, Atlanta Restaurant Partners LLC and Mack II Inc.,
should not have qualified because they exceeded the $750,000 cap on personal
net worth. In addition, Vida Concessions and Hojeij Branded Foods had
inadequate documentation, the agency said in memos released Thursday.
Together, the four firms won a significant share of the concessions
contracts, were chosen to operate dozens of new restaurants at the airport,
and are in eight of the nine airport restaurant contracts approved by City
Council and signed by Atlanta Mayor Kasim Reed.
GDOT said it is reviewing the FAA's letter and its disadvantaged business
files and will respond to the FAA. MARTA said it is working with GDOT on how
to respond. In other industries that those agencies also deal with, personal
wealth caps on disadvantaged business owners are higher.
"I'm sure there are going to be all sides playing the blame game," Common
Cause Georgia executive director William Perry said. "But the bottom line is
there's responsibility with everyone for rushing this process through and
not making sure it was vetted."
The FAA memos became public as the city prepares to open the international
terminal May 16. The new terminal will be the focus of attention of
travelers and competing airports all over the world.
The city had a goal of 36 percent disadvantaged business participation in
the concessions contracts, and competing firms received points for meeting
the goal. According to city documents, many of the new airport restaurant
contracts would fall below the 36 percent threshold without participation
from any of the four firms.
Losing concessionaire SSP America Inc. cited the FAA concerns in a motion
Friday for reconsideration of a hearing officer's decision to deny its
appeal of the five largest airport restaurant contract awards. The hearing
officer has said disadvantaged business status is not in his purview, but
SSP filed the motion anyway.
"The City can either continue to put its head in the sand and deny that its
bid procurement process was completely unlawful or it can finally do what is
right by disqualifying the bidders" who are not eligible for the
disadvantaged business status, the motion said.
After the hearing officer denied SSP's appeal, the mayor's office issued a
statement saying the city hoped the company "will finally cease its
litigious and wasteful efforts to overturn the fairest, most open and
transparent procurement process in the City's history."
SSP noted that the city had already been informed of the FAA's concerns by
Bond, Moore and council member Natalyn Archibong proposed a resolution to
extend current concessions contracts by 90 days.
Moore, who like Bond voted against the concessions contracts during council
review, said she worries about the disadvantaged business program being
"The city of Atlanta is known nationally and historically as being a
vanguard and at the forefront of the support and creation of minority
participation in contracting, and I don't want our reputation for that to be
diminished in any way," she said.
"If it's done wrong for one, it could be done wrong for others," she added.
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