Airport concessions: Proposals due soon after two firms botched paperwork

By David Pendered

Atlanta’s clarification: See below

Atlanta sends letter Oct. 21 seeking additional clarification. See link to letter below.

Botched paperwork by two corporations fueled the decision by Atlanta to rebid the entire concessions package at the airport, said to be the largest airport concessions procurement in North American history.

The new bids are due next week – on Oct. 25 and Oct. 26. Atlanta cancelled its airport procurement program Sept. 2 and required every company to submit new bids, regardless of whether their proposals were flawed.

One of the two companies is trying to break into Atlanta’s airport: Delaware North, one of the nation’s larger vendors. The other company is Great Atlanta Concessions, a new joint venture involving one of the country’s biggest Hispanic franchisees, and a company controlled by an Atlanta businessman with diverse interests including service on a board with former Atlanta Mayor Andrew Young.

The two companies were not identified by Atlanta COO Peter Aman when he met with reporters on Sept. 2 to say he was supporting the recommendation to reissue bids. That recommendation came from Adam Smith, the city’s procurement chief.

Determining the companies that filed proposals deemed “non-responsive” is a simple exercise using information provided by the city.

The financial stakes are enormous for whoever wins the city’s contracts to sell food and drink at the world’s busiest passenger airport.

The concessions generate over $336 million in annual revenue, according to the LinkedIn page of an airport manager. A total of 12 vendors will control all of the 125 food and beverage sites at the airport, plus 27 retail shops, if the procurement is completed as now planned.

The delay in the bid process will not affect the opening of shops, restaurants and merchandizing units in the new concourse, airport General Manager Louis Miller said Sept. 2. The city’s original schedule, released in March, called for contracts to be signed by now.

The process for reviewing the proposals due next week calls for them to be vetted by a panel of airport officials and a consultant; the panel’s recommended winners delivered to the procurement department and mayor’s office; provided to the Atlanta City Council for consideration and adoption; signed by the mayor.

Delaware North Companies says it is one of the largest privately owned companies. Delaware’s website reports annual revenue of more than $2 billion, and a staff of 55,000.

DNC bid on three of the five major food and beverage packages, on concourses A, C, D and T.

DNC is an international concern. In January, the publication travelnewsdaily.com reported that DNC operates in more than 30 airports around the world, including the U.S., United Kingdom, Australia and New Zealand.

The company has won several awards for its food concepts. At Los Angeles International Airport, a recent example of such a concept is the plan to recreate the city’s Original Farmers Market at the airport and provide the artisan foods that have made the market an LA staple since before World War II.

Great Atlanta Concessions is a joint venture of National Concessions Management, LLC and Sun Holdings, LLC. That’s according to the articles of incorporation filed with the Georgia Secretary of State on May 26.

GAC bid on one major food package. It was the single largest package, on the Concourse A that’s served by Delta.

National Concessions Management is controlled by Oliver Lee, who serves as president and CEO, according to his biography with a company named Diversapack.

Lee serves on the Diversapack’s board with former Mayor Young, according to the company’s website.

Lee also is listed as president and CEO of Integral Municipal Services Corp. and StaSignal Systems, according to his biography on Diversapack’s webpage.

Sun Holdings is a Texas-based firm founded by President and CEO Guillermo Perales. The company runs franchises in Texas, Georgia, Florida, Indiana, Tennessee, Oklahoma and Kansas, according to a 2008 report when Perales was a finalist in Ernst & Young’s Entrepreneur of the Year program.

Sun Holdings reported $185 million in total revenue in 2009 with a staff of 4,000, according to the Dallas Business Journal Book of Lists, 2011 digital edition. Those figures were down from the previous year, when Sun Holdings reported $191 million in total revenues with a staff of 5,900, according to the same list.

Last year, the U.S. Hispanic Chamber of Commerce recognized Sun Holdings as one of the nation’s largest and fastest growing Hispanic Business Enterprises.

Note:

Atlanta COO Peter Aman on Tuesday provided the following clarifications to this story:

  • The airport concessions contracts were rebid because 41of 95 proposals were deemed non-responsive. In the large food and beverage package, four of 30 proposals were deemed non-responsive.
  • Chief Procurement Officer Adam Smith made the decision, not the recommendation, to cancel and rebid the airport concessions contracts.
  • Aman did not identify the companies whose proposals were deemed non-responsive because he does not know the names of those companies.
Deputy City Attorney Eric Richardson sent a letter Oct. 21 to raise four additional points. Click here to read letter from Deputy City Attorney Eric Richardson.

David Pendered, Managing Editor, is an Atlanta journalist with more than 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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