FAA continues investigation of airport concessions contracts; GDOT closes its probe into DBE compliance

By David Pendered

Federal authorities said Friday they are continuing their investigation into the recently issued concessions contracts at Atlanta’s airport even though a related probe conducted by the state has been closed.

The Federal Aviation Administration has determined that some vendors who won concessions contracts do not qualify as disadvantaged business enterprises, according to letters the FAA sent to the city, MARTA and Georgia Department of Transportation. For the city to provide these companies with a preference because of their “incorrect” claim to be DBEs, “could have impacted the selection process,” the letters state.

GDOT, which oversees the state’s DBE certification program that was used by the city, looked into the matter and has closed its investigation after making some administrative changes to bring its certification program into compliance with federal standards, according to a letter sent by GDOT to the FAA. The letter was released by Mayor Kasim Reed’s office.

GDOT’s letter states:

“The Georgia Unified Certification Program did not find any information that would change the ACDBEs about which the FAA received the anonymous call. Therefore, GDOT is closing the review on this matter. Thank you for your assistance and cooperation.”

The mayor’s spokeswoman, Sonji Jacobs, issued the following statement Friday:

“We are pleased the Georgia Department of Transportation did not find any information that would change the status of the concessionaires it certified in 2011 as disadvantaged business enterprises and that GDOT is closing the review on this matter. The city will continue working to ensure that passengers receive world-class, quality service at the Maynard H. Jackson Jr. International Terminal.”

GDOT’s decision does not affect the FAA case, federal authorities said in a statement released Friday:

“The FAA is continuing to review Airport Concession Disadvantaged Business Enterprise certifications which were conducted by the Georgia Dept. of Transportation and MARTA.  When the FAA concludes its review, it will communicate the results directly to the agencies involved.”

The FAA notified the city April 20 of findings from its investigation into a federal program that’s designed to help disadvantaged businesses. It contains some differences from the program used for contracts that occur outside of aviation and is called ACDBE – Airport Concessions Disadvantaged Business Enterprises.

Fifteen percent of a company’s score on the criteria used to rank companies for concessions contracts was based on its ACDBE performance, according to the scoring sheets released by the city in January. One component of the ranking is the personal net worth of the company’s owners.

The FAA reviewed the paperwork on the Atlanta concessions package and included these remarks in an April 20 letter addressed to airport General Manager Louis Miller:

“Based on the current regulations regarding PNW, certain firms were ineligible to be ACDBE certified. We also have identified additional issues, primarily related to insufficient documentation, that may affect the certification eligibility of these firms.

“The above-referenced issues made the firms ineligible to be considered as ACDBE certified at the time of contract award, and therefore the firms should not have been given scoring preference or counted toward any ACDBE participation goal that the Airport may have had in place for the concessions RFP.”

The FAA investigated four companies awarded contracts to run food and beverage concessions at Hartsfield Jackson Atlanta International Airport. The companies are:

  • Atlanta Restaurant Partners, LLC;
  • Hojeij Branded Foods, Inc.
  • Mack II, Inc.;
  • Vida Concessions, Inc.

The FAA letter to GDOT says the FAA investigation determined the following about each of the four companies:

 

“Atlanta Restaurant Partners, LLC

One of the owners was denied certification in the past by GDOT due to not meeting the definition of a “socially disadvantaged individual” as defined in 49 CFR § 23.3(6). The reason given by GDOT was that this owner is a Canadian Indian and part of the Upper Cayuga/Six Nation Canadian Tribe, which is not recognized by the Bureau of Indian Affairs.

Value of the applicant’s equity ownership in firms other than the firm seeking certification was not documented properly and verified. A second owner’s PNW exceeded the $750,000 PNW cap. Loans and lines of credit were not documented properly and verified, and there was no evidence that any loan or line of credit that the company held was personally guaranteed by the applicants using personal assets outside of the business.

There was past evidence of a trust in the Jackmont Hospitality, Inc. certification file that included the second owner and others as beneficiaries, but there was no mention of that trust and its value or dissolution and tracking of the disbursement of assets in the new certification materials for Atlanta Restaurant Partners, LLC.

Applicant’s real estate, mortgage values, and personal possessions were not documented properly and verified.

 

“Hojeij Branded Foods, Inc.

Value of the equity ownership in firms other than the firm seeking certification was not documented properly and verified. Control of the firm by the 100% female owner is of concern.

 

“Mack II, Inc.

Applicant’s PNW exceeded the $750,000 PNW cap. Loans, lines of credit, and bonding personally guaranteed by the applicant, using personal assets outside of the business, were not documented properly and verified.

“Vida Concessions, Inc.

Both the independence of the firm (see 49 CFR § 26.69) and control of the firm by the applicant (see 49 CFR § 26.71) appear to be vague or unsubstantiated. The firm’s relationship with Hojeij Branded Foods, Inc. is of particular concern. Applicant’s real estate, mortgage values, and personal possessions were not documented properly and verified.

Value of the applicant’s equity ownership in firms other than the firm seeking certification was not documented properly and verified.”

 

About David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with nearly 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.
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