New questions about concessions contracts at the Atlanta airport won’t affect the opening of the new international terminal next month, city officials say, but they ensure the deals will remain a cloud over the world’s busiest airport.
Doubts by federal regulators about whether four winning firms really qualified as “disadvantaged businesses” have the potential to generate major headaches, some city council members fear.
“This is potentially a huge legal problem,” city council member Michael Julian Bond said Friday.
The Federal Aviation Administration on Thursday released memos saying four concessionaires awarded contracts should not have qualified as disadvantaged or had inadequate documentation.
It isn’t clear if the FAA concerns will lead to altering or voiding any of the deals. Airports must make “good faith efforts” in disadvantaged business programs. Problems with compliance are generally resolved case-by-case through agreements between the FAA and airports.
Complicating the matter is that the four firms were certified by the state Department of Transportation and MARTA, not the city.
Mayor Kasim Reed’s administration, which has a big stake in both a smooth terminal opening and the integrity of the contract awards, said it will work with the FAA to address the concerns.
However, the city already faces a series of challenges to the concessions contracts from losing firms, and “this will also be something that they will definitely use in their legal proceedings against the city,” said council member Felicia Moore.
One losing firm had already filed a motion Friday seeking to renew its administrative appeal of the contract selection process, citing the FAA concerns.
The contracts at issue were awarded in a massive overhaul affecting more than 150 restaurant and shop spaces at Hartsfield-Jackson International. The contracts are for space in both the new international terminal and elsewhere throughout the mammoth complex. Their approval last winter was considered key to opening the terminal on time this spring, even though not all shops and restaurants will be open initially.
The FAA said two firms, Atlanta Restaurant Partners LLC and Mack II Inc., should not have qualified because they exceeded the $750,000 cap on personal net worth. In addition, Vida Concessions and Hojeij Branded Foods had inadequate documentation, the agency said in memos released Thursday.
Together, the four firms won a significant share of the concessions contracts, were chosen to operate dozens of new restaurants at the airport, and are in eight of the nine airport restaurant contracts approved by City Council and signed by Atlanta Mayor Kasim Reed.
GDOT said it is reviewing the FAA’s letter and its disadvantaged business files and will respond to the FAA. MARTA said it is working with GDOT on how to respond. In other industries that those agencies also deal with, personal wealth caps on disadvantaged business owners are higher.
“I’m sure there are going to be all sides playing the blame game,” Common Cause Georgia executive director William Perry said. “But the bottom line is there’s responsibility with everyone for rushing this process through and not making sure it was vetted.”
The FAA memos became public as the city prepares to open the international terminal May 16. The new terminal will be the focus of attention of travelers and competing airports all over the world.
The city had a goal of 36 percent disadvantaged business participation in the concessions contracts, and competing firms received points for meeting the goal. According to city documents, many of the new airport restaurant contracts would fall below the 36 percent threshold without participation from any of the four firms.
Losing concessionaire SSP America Inc. cited the FAA concerns in a motion Friday for reconsideration of a hearing officer’s decision to deny its appeal of the five largest airport restaurant contract awards. The hearing officer has said disadvantaged business status is not in his purview, but SSP filed the motion anyway.
“The City can either continue to put its head in the sand and deny that its bid procurement process was completely unlawful or it can finally do what is right by disqualifying the bidders” who are not eligible for the disadvantaged business status, the motion said.
After the hearing officer denied SSP’s appeal, the mayor’s office issued a statement saying the city hoped the company “will finally cease its litigious and wasteful efforts to overturn the fairest, most open and transparent procurement process in the City’s history.”
SSP noted that the city had already been informed of the FAA’s concerns by then.
Bond, Moore and council member Natalyn Archibong proposed a resolution to extend current concessions contracts by 90 days.
Moore, who like Bond voted against the concessions contracts during council review, said she worries about the disadvantaged business program being tainted.
“The city of Atlanta is known nationally and historically as being a vanguard and at the forefront of the support and creation of minority participation in contracting, and I don’t want our reputation for that to be diminished in any way,” she said.
“If it’s done wrong for one, it could be done wrong for others,” she added.
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