Part 4: Small Business Compliance Issues at New Airport Terminal
(APN) ATLANTA — As previously reported by Atlanta Progressive News, the Federal Aviation Administration sent a letter to the Hartsfield-Jackson International Airport, the City of Atlanta, and others regarding the airport’s non-compliance with federal requirements meant to protect small and disadvantaged businesses and ensure such businesses have a meaningful chance to run concessions stands at the airport.
A new terminal, the Maynard H. Jackson, Jr., International Terminal opened this week at the airport, including several new concessions establishments who were recently awarded contracts by the City of Atlanta. The Mayor had cited the need to open the new terminal on time as an excuse to rush the concessions legislation through City Council.
However, according to the FAA, many of these new contracts do not comply with federal ACDBE (Airport Concessions Disadvantaged Business Enterprise) requirements.
This article will explore some of the ACDBE irregularities that have been raised by bidders who were not selected for contracts.
“The FAA’s review of certification files and discussions with GDOT staff identified ACDBE certified firms that had PNW [personal net worth] in excess of $750,000 at the time of application. Based on the current regulations regarding PNW, certain firms were ineligible to be ACDBE certified. We also have identified additional issues, primarily related to insufficient documentation, that may affect the certification eligibility of these firms,” the FAA wrote, in the letter dated April 20, 2012.
“The FAA reviewed certification files of four ACDBE firms. These firms are: (1) Atlanta Restaurant Partners, LLC; (2) Mack II, Inc.; (3) Vida Concessions, Inc.; and (4) Hojeij Branded Foods, Inc… These firms were awarded concession packages, or were part of awarded concessions packages as a joint venture arrangement or subcontractor, based in part on the firms’ incorrect ACDBE certification status,” the FAA wrote.
“The above-referenced issues made the firms ineligible to be considered as ACDBE certified at the time of contract award, and therefore the firms should not have been given scoring preference or counted toward any ACDBE participation goal that the Airport may have had in place for the concessions RFP,” the FAA wrote.
None of the protests filed with the City of Atlanta raised any issues related to any personal net worth over 750,000 dollars. However, the protests did raise numerous other issues related to insufficient documentation as well as firms making too much money to be eligible as small and disadvantaged businesses.
For example, “The Mayor’s Office of Contract Compliance was tasked with reviewing the proposals for responsiveness concerning all ACDBE requirements and scoring the ACDBE components of the proposals,” SSP wrote in its April 20, 2012, Merits Brief before the Procurement Appeals Hearing Officer of the City of Atlanta, a copy of which was obtained by APN.
“The Office of Contract Compliance limited its responsiveness determination to whether,
based on the face of the ACDBE forms, there was at least 36% participation of purported
ACDBE entities in each proposal. There is no record evidence that the Office of Contract Compliance reviewed the proposals in their entirety to determine whether proponents disclosed information plainly disqualifying their subconcessionaires from being counted toward the ACDBE quota,” SSP wrote.
“However, the Office of Contract Compliance was required to review each proposal in its entirety… in order to determine responsiveness,” SSP wrote.
“Atlanta Restaurant Partners, LLC (“ARP”) is listed as an ACDBE subconcessionaire in HMS Host’s proposals on Packages 1, 3, and 5 and Concessions International’s proposals for Packages 2 and 3. Without ARP’s participation as an ACDBE in each of these proposals, the proponent would fall below the ACDBE threshold and be deemed nonresponsive,” SSP wrote.
According to SSP, one of the documents submitted by a bidder, but apparently not reviewed by the City, showed plainly that the bidder’s subconcessionaire was not ACDBE eligible.
“The Form 10s for ARP submitted in HMS Host’s proposals on Packages 1, 3, and 5 show that ARP has annual gross sales of at least $56.5 million, which exceeds the ACDBE maximum income threshold of $52.47 million,” SSP wrote.
But according to SSP, the same subconcessionaire submitted a different amount of annual gross sales to the City as part of a different bid, apparently not raising any red flag with the City.
“Concessions International submitted Form 10s for ARP on Packages 2 and 3 showing that ARP’s annual gross sales with $51.5 million. The omission of $5.0 million in gross sales, thereby placing ARP within the gross sales limits for ACDBE status and satisfying the 36% ACDBE quota for Concessions International, is unmistakably intentional. Indeed, ARP must have known that it provided two materially different schedules of financial information to its prime concessionaire partners,” SSP wrote.
“Crediting ARP’s full disclosure of gross sales exceeding $52.47 million, ARP cannot be counted toward the 36.0% ACDBE quota. Accordingly, HMS Host and Concessions International’s proposals that depend upon ARP to meet the ACDBE quota are nonresponsive,” SSP wrote.
In an earlier protest document, SSP also wrote that many of the winning bidders “allow ACDBE a stake in one or two of their low-grade locations. This subjects those partners to the whims of flight scheduling and pins their success to the survival of those individual locations.”
In general, the protests paint a picture of a highly flawed process on the part of the City of Atlanta to consider billions of dollars worth of contracts.
According to SSP’s protest, three of five of the members of the scoring panel for the Large Food and Beverage concessions contracts failed to take notes while reviewing the proposals independently.
“While many took notes during their individual review of the proposals, they were instructed to destroy them before the awards were announced,” Takeoff Concessions wrote in their Protest of a Small Food and Beverage concessions award to another company, Vida-Velocity Management, LLC.
This destructions of documents may have been in violation of the City’s own records retention policies and the Georgia Records Act, which requires retention of public records.
After the individual panelists reviewed the proposals, the respective panel met to come up with a so-called collaborative score, in which the entire panel agreed on a single score, instead of averaging the individual scores.
During Council deliberations of the contracts, Councilman Michael Julian Bond (Post 1-at-large) raised his concerns about the subjective nature of the collaborative group-think scoring process.
According to Take-off Concessions, the panelists were prohibited from taking notes during the collaborative scoring session, so there is no record of how decisions were reached.
“The City could not have meaningfully evaluated 60-plus small package proposals without generating any documents,” Take-off Concessions wrote.
However, evaluator Paul Brown, Director of Concessions at the airport, who also served as an evaluator, participated in the selection of other evaluators, and trained other evaluators–did take notes, and although he was not supposed to, he did assign grades to each proposal.
Brown had significant conflicts of interest. “As a consultant, I have worked with Wassim on several possible deals,” Brown wrote on his LinkedIn page, in an unsolicited, glowing recommendation regarding Wassim Hojejj of Hojejj Branded Foods.
“The permanent, public LinkedIn recommendations given and received by Paul Brown prove personal interests with Hojejj Branded Foods and HMS Host,” SSP wrote.
HMS Host also wrote a recommendation for Brown on LinkedIn.
SSP argues that Brown’s participation in the Large Food and Beverage package procurements violated the Atlanta City Ethics Code.
Overall, the information raised by the protesting bidders raises the concern that the collaborative scoring process was in fact driven by Brown.