Some of the recent winners of lucrative contracts to run shops at the Atlanta airport were classified as “disadvantaged” businesses, in keeping with government goals of countering the effects of past discrimination against women and racial minorities.
But in this and other competitions for public contracts, being disadvantaged does not necessarily mean the candidate is a cash-strapped start-up. Some of the Disadvantaged Business Enterprises that won space at Hartsfield-Jackson International Airport have done business there for more than a decade. Some reaped more than $10 million in sales annually.
The airport set — and met — a goal of awarding 36 percent of the contracts by value to disadvantaged firms. In most cases they partnered with other firms, making the overall proposal more attractive because it helped meet the goal.
An airport concessionaire can qualify as disadvantaged if its revenues average less than $52 million per year over the previous three years, according to federal regulations that govern nearly every large concessions project at U.S. airports. In most cases, the businesses must be more than half owned by women or racial minorities to qualify.
Owners must have less than $750,000 in personal net worth, according to the U.S. Department of Transportation, not including their equity in primary residences or their stakes in the companies. (Under a proposed change already in place for construction projects with federal funding, that cap would rise to $1.3 million.)
Federal officials stress that disadvantaged does not mean poverty or lack of current business income. People who own successful businesses are often more affluent than the general population, but some accumulate less wealth than others.
“ ‘Disadvantaged’ is a relative rather than an absolute measure,” said Bob Ashby, a DOT attorney.
Companies must apply for the designation and it can be withheld or removed if they or their owners are found to be too wealthy.
At Hartsfield-Jackson, companies certified as disadvantaged businesses include several controlled by veteran, successful operators. For instance:
● Atlanta Restaurant Partners won a small contract for airport restaurants and parts of larger restaurant contracts as a subtenant. Owners include the co-chair of Mayor Kasim Reed’s 2009 campaign and two family members of former Mayor Maynard Jackson.
Atlanta Restaurant Partners was created by the same people who control Jackmont Hospitality, which has done business at the airport for years. Jackmont was founded in 1994, has more than $50 million in revenue and operates T.G.I. Friday’s restaurants at Hartsfield-Jackson and at other locations in Georgia, Maryland, Pennsylvania, South Carolina, Florida and Washington, D.C., according to the company’s website.
● Mack II, started in the 1970s by Mack Wilbourn, brings in over $11 million in sales from four concessions at Hartsfield-Jackson — two Popeye’s locations, a Checkers and an Edy’s, according to documents reviewed by The Atlanta Journal-Constitution. Wilbourn also has another company with a contract for Coca-Cola vending at the airport. Combined, the companies have nearly 200 employees.
Mack II’s Popeye’s restaurants rank No. 1 and No. 2 in the Popeye’s systems worldwide, while the Checkers ranks No. 1 in its system worldwide, according to documents submitted to the airport. With the latest round of contracts, Wilbourn gained a foothold throughout the airport. His company is listed as a subtenant in all five of Hartsfield-Jackson’s large contracts for airport restaurants. Wilbourn’s disadvantaged status played a key role in helping each of those large firms meet the goals for disadvantaged business participation. Mack II also won a small package of additional airport restaurants.
Atlanta Restaurant Partners and Mack II did not respond to requests for comment.
Critics question why companies that large and successful are still given special consideration.
“These people are well-to-do,” said John Sherman, president of the Fulton County Taxpayers Foundation. “That’s not disadvantaged.”
Brian Maloof, owner of Manuel’s Tavern, said he was disappointed that his establishment didn’t earn a spot at the airport, while several other local eatery brands did. Manuel’s is not certified as disadvantaged, though it partnered with minority businesses for its proposal.
The winners seem to be “the same people that have always been” at the airport, Maloof said.
However, the city contends a number of winners are new, including 10 of the 17 recommended subtenants for the large food and beverage “packages.”
Every winning proponent, including large companies such as HMSHost — a division of a European firm — included disadvantaged companies in their applications.
The city says the guidelines — crafted in accordance with federal rules — help remove barriers for small companies owned by women and minorities.
Since 1987, federal law has governed “airport concessions disadvantaged business enterprise” programs at Hartsfield-Jackson and other airports. Similar rules govern highway and transit construction projects that get federal money.
But the drive to help minority contractors at the Atlanta airport goes back at least to the 1970s when Jackson, the city’s first black mayor, vowed to set aside a chunk of construction contracts for the expansion of the airport for minority firms.
“I think that’s why Atlanta has always been in the forefront,” said Adam Smith, the city’s chief procurement officer. Even before federal regulators adopted the idea, the city had “a very aggressive program” to give minority contractors chances to compete, he said.
“The federal [DOT] kind of caught up,” said Hubert Owens, director of Atlanta’s Office of Contract Compliance.
In the recent round of contract awards, meeting the threshold for disadvantaged company participation did not guarantee a win, since other factors — including the business plan, financial projections, experience and concept — came into play.
There is also a downside to growing too large and doing too well. A company can lose the “disadvantaged” designation, which may make it a less desirable partner in large proposals.
A 2007 paper commissioned by the Congressional Black Caucus Foundation showed that for the 17 firms that “graduated” out of the Georgia Department of Transportation’s disadvantaged business enterprise program, average monthly revenues fell 45 percent.
Some disadvantaged businesses “tend to like to find ways to stay in the program,” said Ron Gomes, HMSHost’s vice president of strategic alliances.
Disadvantaged business programs are still necessary, according to a joint memo from Airports Council International, the Airport Consultants Council, the Airport Minority Advisory Council and the Conference of Minority Transportation Officials.
“The record is clear,” the groups said, “that discrimination is still a serious problem for minority- and women-owned companies.”
How we got the story
The AJC has provided unmatched coverage of the Atlanta airport’s concessions contract awards, one of the largest such awards in the nation. For this story, Atlanta city government reporter Jeremiah McWilliams and aviation industry reporter Kelly Yamanouchi inspected bid documents released by the city and federal documents on the Disadvantaged Business Enterprise program. They also talked to local and federal officials, concessions operators and experts.