Wednesday, February 08, 2012

Complaint on airport eatery/bar bid denied

A bid protest by a Miami concessionaire on the second food-and-beverage contract at Phoenix Sky Harbor International Airport has been rejected by a city hearing officer.

Areas USA’s recent protest on the contract is also a test of the city’s new appeal process for companies that suspect their bids were unfairly judged by evaluation panels that suggest the winning bidders.

In the fall, an evaluation panel for this latest food-and-beverage deal recommended the city award the contract, worth at least $45 million annually in gross sales, to SSP America based in Leesburg, Va. Ranked second was HMS Host, based in Bethesda, Md., which had already won the first contract for the other spaces in Terminal 4. Areas USA came in third.

The three are vying to fill nearly 20 restaurant and bar spaces in Terminal 4. HMS Host is in the middle of filling the other half of the terminal’s spaces with local restaurants such as Barrio Cafe and Sauce.

In December, Areas complained that its competitor and the recommended winner of the second contract, SSP, had failed to fully divulge its financial health to the panel that reviewed the bids. The city attorney rejected the claims.

Areas also complained the panel that reviewed the first contract bids misportrayed the amount of revenue the company could promise to the city.

In a Feb. 2 decision obtained by The Republic, hearing officer Harold Merkow rejected Areas’ complaints.Merkow wrote that the evaluation panel found SSP “had the financial wherewithal” to pay for renovations for new restaurants and bars and to operate them. He also wrote that Areas should have asked city staff for clarification on the issue of revenue.

Areas had promised $7.5 million to Sky Harbor each year. SSP projected a return to the airport of $9.1 million.

Areas’ attorney, Michael Manning, called Merkow’s ruling “unfortunate and surprising.”

“While the city’s hearing officers are always inclined to find in favor of the city, SSP’s proposal for the airport has fundamental and fatal flaws that would poorly serve Phoenix and her airport,” he said in a statement.

Hearing officers are hired by the city. City officials maintain that they are one way to offer companies an objective review of their claims.

Areas is threatening court action to force the city to stop the contract.

SSP officials said they won’t comment publicly until the council has voted on the contract. Phoenix Aviation Director Danny Murphy said he was pleased Merkow “found no legal or factual basis to overturn the evaluation committee’s recommendation.”

Phoenix finance chief Jeff DeWitt said the Areas protest is the first in the city to be reviewed by a hearing officer, a new step in the city’s appeal process.

Until last year, companies appealed concerns to leaders of the department in charge of the contract. Businesses and council members complained this created a conflict of interest because at times, the department leaders also were on the panel that chose the winning bidder.

The city now can appoint a hearing officer to consider a bidder’s complaint, or it can send it for review to a panel comprising the city manager, a resident, a representative of the city audit department, the head of the department handling the contract and the head of an uninvolved city department, DeWitt said.

More complex protests, such as that by Areas, are reviewed by a hearing officer. Simpler matters will be handled by the panel.

The Phoenix Aviation Advisory Board and City Council will vote on the contract sometime this spring.

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