Possible lawsuits, other unknown results of cancelled airport procurement

By David Pendered

Atlanta’s announcement that it has decided to cancel the procurement process for all food and beverage concessions at the airport, and start over, left a host of questions and dearth of answers over the Labor Day weekend.

Atlanta’s COO, Peter Aman, said the eight corporations competing for contracts were notified of the cancellation Friday, Sept. 2, at 3 p.m.

The city’s decision upended the corporations’ proposals for 125 food and beverage locations, and 23 for retail, that are to extend up to 13 years. Concessions revenues are said to exceed $336 million a year.

A few questions include:

• Is Atlanta destined for litigation to defend the contracts it ultimately awards against lawsuits that may be filed by companies that don’t win a contract, but whose proposals were in compliance with the city’s original requests for proposals?
• Will the new international terminal open with comfort services for passengers, and what will become of services whose leases are expiring in other terminals?
• Will the secret financial proposals that companies have submitted to the airport be unveiled to their competitors and the public, now that the previous procurement process has been terminated?
• What are the ramifications for Atlanta Mayor Kasim Reed as a result of the city’s part in handling a process that one of the mayor’s press statements called “one of the largest procurements in North American airport history”?

Reed took ownership of the airport concessions procurement process as recently as June. At the time, he was responding to a white paper issued by Common Cause of Georgia concerning Atlanta’s history of awarding airport contracts to friends and campaign contributors of city officials.

In a statement issued June 8, Reed said:

“Under the capable leadership of new Aviation General Manager Louis Miller and new Concessions Director Paul Brown, we are working hard to make sure that the airport concessions procurement process runs smoothly and fairly.

“My administration has taken unprecedented steps at the airport over the past 18 months and should be judged by our record so far,” Reed said.

Aman, the COO, said the decision to cancel the procurement process rested solely with Adam Smith, the city’s chief procurement officer.

“The fact of the matter is, while we are not happy to be here, Adam, as the decision-maker, thought this is the best course of action, and as COO my job is to support him,” Aman said.

Smith said he had no choice but to cancel the process because so many proposals had been botched by the corporations that submitted them.

Smith said 36 percent of the 95 proposals vendors had presented to the city were fatally flawed. The flaw was a failure to submit a properly completed form – one required by state law – confirming that all workers have legal permission to work in the United States.

Smith was appointed to the post in 2003, by then Mayor Shirley Franklin. Smith came to the city from the corporate law group of the national law firm Holland & Knight LLP. Since joining the city, Smith has overseen billions of dollars worth of public contracts, according to the Procurement Department’s website.

This is a snippet of Smith’s description of his decision-making process concerning the flawed proposals for airport concessions:

“It put me in a very difficult position to decide how am I [going to be] objective in looking at this overall, and the best way was to start all over – stop the process here and start all over.”

The city’s Law Department is reviewing the question of whether the proposals previously submitted are open to competitors – and the public – now that the procurement has been cancelled, according to Reed’s spokeswoman, Sonji Jacobs.

The city has maintained that proposals submitted during a procurement process are confidential. Several city officials made comments Sept. 2 that indicate they think the new procurement process is a continuation of the process that was cancelled.

Miller, the airport’s general manager, said he expects the corporations will resubmit their existing proposals.

The latest possible opening date of the new international terminal is just about the only certainty to be derived from the events of Sept. 2.

The Maynard H. Jackson, Jr. International Terminal will open on or before June 20, Aman said.

Though that date is months later than the general expectation of an opening in April, Aman said it fulfills the city’s stated plan to open in Spring 2012.

“The commitment all along was to open in Spring 2012. Spring ends on June 20, or June 21,” Aman said.

According to “The Old Farmer’s Almanac, the summer solstice next year is June 20 at 7:09 p.m. EDT.

“There was a target opening on April 15 … in discussions with the airlines,” Aman said. “We have been using a working date of April 15. That may slip by a couple weeks because of the need to rebid.”

Aman said Delta Air Lines is “100 percent” supportive of the city’s decision to cancel and restart the procurement process for concessions.

Delta, a major tenant at both existing gates at Hartsfield Jackson Atlanta International Airport and the new international concourse, could not be reached Sept. 2 for comment.