Atlanta’s airport concessions contracts delayed, in part to bolster small businesses

By David Pendered

Atlanta appears to be reinforcing its effort to help small businesses get a piece of the pending food and drink concessions trade at the airport.

The city’s procurement department has added language to its request for proposals for the airport concessions contracts.

The new language hammers home Atlanta’s decision to require the big prime operators to allow their sub-tenants to join up with other prime operators that are competing for contracts.

The amendment, released July 6, result in the city being about a month behind schedule in receiving proposals to run the airport’s food and drink concessions. Proposals that initially were due starting June 21, and then postponed to July 12, now will be due starting July 21.

Airport General Manager Louis Miller said in March the goal was to sign contracts in September. The earliest possible date now appears to be some time in October, given that Miller allowed 90 days to review the responses and submit recommendations to Atlanta Mayor Kasim Reed and the Atlanta City Council.

The delays are intended to give companies time to respond to the amendments, according to airport spokesman John Kennedy. This is the fifth addendum.

“We have added multiple addenda to the RFPs, in response to the proponents input, and therefore we have extended the deadlines to allow proponents more time to review and submit their RFPs accordingly,” Kennedy said in an email.

The city’s procurement department added the following restrictive language to one provision. This provision prohibits prime operators from requiring their sub-tenants to agree to work only with one prime operator.

The addition is underlined in boldface italics:

• “Proponent may not take steps to restrict the ability of any subconcessionaire or potential subconcessionaire to participate as a subconcessionaire, with like brands or concepts or otherwise, to any other prime concessionaire submitting a proposal in response to this RFP or any other airport food and beverage RFP issued by the city contemporaneously herewith.

Further, the city added language that will bounce out of competition any prime operator who fails to provide documentation that there are no exclusivity deals.

The addition is underlined in boldface italics:

• The prime operator “will be deemed nonresponsive and will be ineligible to participate in procurement or for award of the contract on which it submits a proposal.”

The amendment, and the extra time to deal with it, underscores some of the difficulty that prime operators and sub-tenants appear to be having in adapting to Atlanta’s novel approach to the concessions contracts.

Several prime operators have said this is the first competitive negotiation they have entered in which they forbidden from requiring sub-tenants to work exclusively with one prime contractor.

The result is viewed as beneficial to small businesses, which are the sub-tenants who actually run the restaurants and kiosks on behalf of prime operators.

That’s because they are a virtual horse in multiple teams, increasing the likelihood that one of their teams will get a concessions contract.

But it is a challenge to prime operators who know that the subs they talk with are cutting deals with competing prime operators.

The stakes are enormous.

Winners will get to run part of a concessions operation that involves 27 retail locations and 125 food and drink locations in the world’s busiest airport.

The concessions business inside the airport generated almost $71 million in 2009, and the sites now up for grabs represent almost two-thirds of the concessions space available, according to two airport documents.