ATL concessions: FAA closes inquiry, decides not to appeal GDOT’s rulings that helped four firms win contracts
By David Pendered
The FAA’s review of concessions contracts at Atlanta’s airport has ended with no plan to appeal the matter to the U.S. DOT, the FAA announced Thursday.
The decision evidently means that the $3 billion concessions contracts signed in March 2012 by Mayor Kasim Reed will stand without further governmental inquiry.
Reed’s administration did not issue a statement, but did forward the FAA announcement 13 minutes after its release by the FAA. Reed and his administration had maintained throughout the contract process and subsequent review that the city’s process was above board and without reproach.
This is the statement issued by the FAA:
“The FAA will not appeal the Georgia Dept. of Transportation (GDOT) decision to maintain certification of the four Airport Concessions Disadvantaged Business Enterprise (ACDBE) firms. We will continue to work closely with our partner agencies within the U.S. Department of Transportation to develop a plan for ensuring that certifications processed by GDOT are consistent with the Disadvantaged Business Enterprise and ACDBE regulations.”
The FAA notified the city in April 2012 that it had found merit in complaints filed against some of the prime vendors chosen by the city to operate food and beverage storefronts in the airport. The FAA warned the city that four or more winning vendors that GDOT had certified as DBEs should not have received the certificate, and that the DBE status should not be factored in as a scoring advantage in the the formula used by Atlanta’s review team.
The package of concessions contracts was said, by Atlanta, to be the largest airport procurement project in the history of North American airports. As such, the process always was expected to be controversial and, possibly, litigious.
In all, more than 150 storefronts were up for bid in a process that began in January 2011 and concluded with the mayor’s signature on contracts.
The FAA’s decision evidently clears the names of four prime vendors whom it had contended did not deserve special treatment as disadvantaged businesses. That designation was awarded by the Georgia DOT and the FAA determined that GDOT had erred.
The four firms that had been under review are Atlanta Restaurant Partners, LLC.; Hojeij Branded Food, Inc.; Mack II, Inc.; and Vida Concessions, Inc.
Here are the FAA’s initial determinations of the four companies, which led to almost a year-long review. The FAA notified the firms in April 2012 of these determinations:
“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 [personal net worth] 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 percent female owner is of concern.
“Mack II, Inc.
Applicant’s PNW exceeded the $750,000 PNW [personal net worth] 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.”