Mayor Reed responds to inquiries about airport concessions

By Richard Halicks

The Atlanta Journal-Constitution

At its next meeting Jan. 3, the Atlanta City Council may award the contracts for running restaurants, bars and shops at Hartsfield-Jackson International Airport.

The deals are long-term ? many cover at least 10 years ? and during that decade the total concession sales at the airport will be in the hundreds of millions. Because there?s so much money involved, airport concessions over the years have sometimes been tainted by corruption and challenged in court. This year, however, Atlanta?s new mayor said he would establish a new and transparent method for awarding those deals.

The Journal-Constitution sought to interview Mayor Kasim Reed about airport contracting, but he declined and said he would only accept written questions. Here are the AJC?s questions and the mayor?s responses.

1. Essentially, the fact that many of the winning bidders are significant contributors or participants in your campaign can give the impression that they won because they have a close relationship with you, or at least that the relationship was a factor. Was it?

No. I was not involved in the solicitation, evaluation or selection of the winners of this procurement. This question requires context about the decision made by the Department of Aviation (?DOA?) and the Department of Procurement (?DOP?) to bid the entire concessions package at once. This is something that has never been done. Typically, the packages are bid in phases. The DOA and DOP decided to rebid everything at once to ensure the most fair and ethical process possible. Why? If city officials had phased in the program, some would have argued that companies that received lease extensions were getting special treatment because they donated to my campaign. So, instead, my Administration started the procurement process from a blank slate where everyone could compete on a level playing field.

Since my inauguration, I have taken or directed my Administration to take a series of unprecedented actions regarding the management and business operations of Hartsfield-Jackson Atlanta International Airport, including:

1. Returning campaign contributions from vendors competing for a procurement;

2. Implementing a new process for hiring the Aviation General Manager at Hartsfield-Jackson Atlanta International Airport. I appointed a panel of nine, well-respected business leaders to identify and review candidates for the position. The result? The selection of Louis Miller, who spent 28 years running two of America's busiest airports without a hint of scandal or any ethical lapses. He has led and been the primary architect of this process, and his record as a professional should be noted;

3. Disclosing the financials of Hartsfield-Jackson Airport to our airline tenants, most notably Delta Air Lines, which resulted in a $30 million contribution to our bond financing efforts;

4. Bringing the Corey litigation to a satisfactory conclusion for the plaintiff and the City of Atlanta;

5. Conducting background checks on the members of the selection panel;

6. Committing to make the names of the selection panel public, an action which has never occurred at any point before, during or after an airport procurement in the City of Atlanta.

2. Conversely, it would appear that bidders that did not give a lot of money did not win. Is that coincidental?

Again, I was not involved in the solicitation, evaluation or selection of the winners of this procurement. This question also requires more context. It is important to note that I have returned all contributions from airport vendors since the procurement process began, an action which is unprecedented. I have raised about $3.6 million since I began campaigning for Mayor. The amount of contributions I have received from airport vendors represents a very small percentage of my total campaign contributions. It is also worth noting that the other two candidates for Mayor of the City of Atlanta in 2009 also received substantial contributions from airport vendors. A review of the campaign disclosures of the three candidates concluded that the contributions made to them had no direct correlation to whether or not a particular proponent would be successful in winning a concessions bid. Please see the attached document.

3. Why would you have airport concessionaires play such a role in your campaign in the first place? Given that it could have been predicted that questions would be raised about possible conflicts of interest at the airport, why was Daniel Halpern your co-chair? Why not go with someone who?s not a significant contractor?

There is no conflict of interest because I was not involved in the solicitation, evaluation or selection of the winners of this procurement. I selected Dan Halpern as my campaign co-chair because of his qualifications for the position. Mr. Halpern is a member of the Democratic National Committee, Chairman of the Georgia Restaurant Association and a Board Member of the National Restaurant Association. Mr. Halpern also served as a member of the National Finance Committee for the campaign of President Barack Obama. It is important to note that I selected other well-respected individuals such as Elaine Alexander, Gwen Keyes Fleming and Peter Aman as my campaign co-chairs as well.

4. Did you or your staff discuss the bids with any bidder during the RFP process or provide help or advice of any kind?

I did not have any discussions with bidders or provide help or advice of any kind. Further, I am not aware of any discussions between staff and the bidders. The City of Atlanta implemented a ?black-out? period during the active phase of the procurement, which is the period between when the RFPs are issued by the Department of Procurement and the time that the Atlanta City Council awards the contracts. The black-out period also includes any additional time during which any resulting protests are resolved or the RFPs are otherwise canceled. During the active procurement process phase, proponents and individuals acting on behalf of proponents are prohibited from communicating with City-appointed officials and employees about the solicitations or proponents.

5. Can you characterize your relationship with the following individuals: Wassim Hojeij, Daniel Halpern, Mack Wilbourn and Terry Harps?

Sure, I know each of them. The individuals listed above are well-known, successful businessmen in the City of Atlanta.

6. Was the fact that certain companies? proposals would be disqualified a factor in the decision to reissue the RFP?

Chief Procurement Officer Adam Smith decided to re-issue the bids because 36 percent of the proposals would have been disqualified due to errors with the state-mandated E-verify form. It is worth noting that my Administration met with members of the Atlanta Journal-Constitution?s editorial board and a large contingent of reporters and editors on Friday, September 2, 2011, to share the rationale behind the decision and its implications prior to making a public announcement. Chief Operating Officer Peter Aman, Deputy Chief Operating Officer Duriya Farooqui, Chief of Procurement Adam Smith and Director of Communications Sonji Jacobs attended the meeting from the City of Atlanta; James Mallory, Bert Roughton, Kyle Wingfield, Matt Kempner and Kelly Yamanouchi were among those AJC reporters and editors who attended the meeting. It is also important to note that Delta Air Lines, the airport's largest tenant, supported the city's decision to re-bid this procurement in order to insure that we had the highest amount of competition possible so that the city can repay the $1.5 billion in debt that is associated with the airport, namely financing of the new Maynard H. Jackson International Jr. Terminal. Earlier this month, we were recognized by The Bond Buyer for the Deal of the Year in the Southeast Region for the debt financing around that transaction.

7. Would Delaware North Companies? proposals have been disqualified during the first round?

Once again, I was not involved in the solicitation, evaluation or selection of the winners of this procurement so I did not know which companies were competing in the bid process. The initial RFP was cancelled when the Department of Procurement conducted its initial review and found that 36 percent of the proposals would have been disqualified due to errors on the state-mandated E-verify form. I believe the Chief Procurement Officer?s decision to re-bid was the correct course of action because this process occurs once every 7-10 years, and we needed maximum competition. If approved by the Atlanta City Council, the recommendations will significantly increase competition as shown by the fact that the airport is projected to receive $23 million dollars more per year in additional revenue.

8. Would that have affected Mr. Halpern?s contract wins? Did Halpern or anyone on his behalf discuss this issue with anyone with the city (including in the mayor?s staff, procurement, law, aviation, etc.) or on the city?s behalf?

I was not involved in the solicitation, evaluation or selection of the winners of this procurement so I do not know what would have affected Dan Halpern or any other vendor, nor am I aware of any such discussions between Mr. Halpern and city staff. Again, the City of Atlanta implemented a black-out period during the procurement, which is still in effect.

9. When did the city make the decision to prohibit exclusive agreements between primes and subtenants and have no limit on the number of contracts subtenants could win? Why did the city make that decision? Was it a result of small businesses asking for that provision? Which, if any, companies asked for the change?

This question should be referred to Louis Miller, General Manager for Hartsfield-Jackson Atlanta International Airport, and the Department of Aviation staff because I had no role in making that decision.

Source: http://www.ajc.com/news/atlanta/mayor-reed-responds-to-1270951.html?cxtype=rss_news_81963

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