Atlanta airport’s minority contract rules spur dispute

Airport contracting at Hartsfield-Jackson International is again generating controversy, this time through a challenge filed by a contractor that claims it was unfairly disqualified for not fulfilling minority contracting requirements.

Vanderlande Industries is appealing the city’s decision on a nearly $40 million contract to design and build baggage system conveyors and install new explosives detection machines to screen checked bags in the bowels of the world’s busiest airport.

The dispute prompted a hearing before a contract compliance hearing officer, with Vanderlande and the city each presenting arguments.

Vanderlande, based in the Netherlands, submitted the low bid of $38.3 million but fell far short of the city’s goal for minority partners. The city instead selected Jervis B. Webb Co., part of Japanese baggage handling giant Daifuku Co, which bid about $39.9 million.

The dispute highlights the complex web of minority contracting requirements for airport work and other government contracts, and how the rules can affect the cost of government contracts and who gets the work.

The city of Atlanta’s office of contract compliance has as its stated goal to “mitigate the effects of past and present discrimination against women and minority business.”

The way the city does that and encourages minority participation is intricate and involved, with specific requirements for certifications, forms and percentage goals — sparking a cottage industry of consulting firms that help some bidders meet minority contracting requirements.

In the Hartsfield-Jackson contract dispute, Vanderlande officials say they made a good faith effort to find minority contractors, but that the highly-specialized work made it difficult to meet the goal of 15 percent representation.

Atlanta airport contracts often end up tangled up by delays or disputes involving disqualified bidders, cancelled procurements and lengthy extensions. The baggage system contract went through two rounds of bidding, after the first effort was canceled.

Protest hearings are rare, however, and could lead to litigation.

Vanderlande, whose North America headquarters is in Marietta, put in a bid with 0.19 percent participation by certified “disadvantaged business enterprise” firms, called DBEs.

Webb was the only other bidder and met the 15 percent goal.

The goal is not a quota — meaning if a company doesn’t meet the percentage, it isn’t automatically disqualified.

A company can still win it it falls short but shows it made a good faith effort to contact minority firms.

At issue during a protest hearing is what constitutes good faith effort, and how much of a hurdle it is to find qualified, certified minority firms to do specialized work.

Two-page form

Vanderlande managers contend that the company contacted a number of disadvantaged businesses but didn’t have enough room on the city’s two-page form to show all of its efforts. Vanderlande officials believed the company’s bid would be disqualified if it included the additional information.

City attorneys say Vanderlande only showed it contacted three disadvantaged businesses, and that it could have attached additional documents to show its efforts.

“There are hundreds and hundreds of DBEs out there,” said Martin Clarke, a senior assistant city attorney, yet Vanderlande “inexplicably” listed only three DBE firms it had contacted. Clarke called that “mere pro-forma efforts,” and not good-faith efforts.

“They were woefully inadequate,” Clarke said, adding that there were more than 50 firms Vanderlande could have contacted. That’s how many winning bidder Webb Co. reached out to, according to the city.

Vanderlande team leader Kay Morgan-Turner contended the city’s requirements for subcontractors to have experience installing at least three in-line baggage handling systems limited the pool.

“There aren’t that many companies that can perform this work, period,” she said.

“I personally put forth a good-faith effort,” Morgan-Turner said emphatically, becoming frustrated and upset during the hearing and later asking for a break.

Difficult goal

Russ Owens, Vanderlande’s general counsel, argued that meeting the Atlanta contract goal was made more difficult because the city required use of one subcontractor, Brock Solutions, whose bid took up 25 percent of the total contract value. Brock is female-owned but not certified as a DBE by the Georgia Department of Transportation, so it did not count toward the 15 percent goal.

Morgan-Turner said she opted not to use one certified DBE, Jordim International, because it did not meet the company’s criteria.

“We’re talking about one of the hardest projects to not only install, but to maintain, in the world’s busiest airport,” Morgan-Turner said. “You have to pick the best-qualified subcontractor that you know has the skills to do the work.”

Webb Co. included Miami-based Jordim as a DBE in its bid, which helped it to meet the 15 percent goal.

Owens contended the process can drive up contract costs.

“That’s not fair to the bid prime bidders, or to the taxpayers, to have bidders for city work required to use a particular [subcontractor],” Owens said. “It creates unfairness because that [subcontractor] knows they’re the only one that can be used and they inflate their price.”

Hearing officer Clarence Johnson expects to issue a decision later this month.