Unsuccessful KCI bidders join to challenge city’s selection, calling it ‘predetermined’
All four of the firms that bid unsuccessfully to operate concessions at Kansas City’s new airport terminal are joining forces to publicly question the city’s selection and scoring process ahead of a planned City Council vote on the lucrative contract.
Vendors portrayed it as a rare move in the industry, where competition is keen and lost bids are a common occurrence. Their protest reflects what they say are irregularities in the city’s process of awarding the contract to Vantage Airport Group.
“We all play politics. We all push plans and ideas. We all work very hard to win these contracts around the country. But everybody believes something’s not right,” said James Wilson, vice president of new business development at Delaware North, one of the unsuccessful bidders for the contract.
“The smell of a predetermined award, the stench of that rises very quickly,” he said.
The concessionaire contract for the $1.5 billion terminal at Kansas City International Airport represents a rare opportunity in the aviation industry to operate all food, beverage and retail businesses in a brand new facility.
Wilson insists the backlash is more than sour grapes.
“If this were awarded to any three of the other groups that were proposed here, I would walk away the next day with no questions asked. Because I know the quality of the work we all do in this industry. Sometimes you win, sometimes you lose,” he said. “But for this particular group to have won, and the questions around how they won, it just doesn’t bode well for the industry as a whole.”
A Kansas City Council committee last week voted to approve a 15-year contract with the Canada-based Vantage to run concessions at the new terminal. The full council will take up the issue on Thursday afternoon.
Late Tuesday, a local lawyer representing PLTR-SSP, one of the five teams vying for the concessions contract, emailed council members and local media after the company learned details of the leading bid through an open records request.
In the email, Kansas City attorney Roxsen Koch said the council had been given “limited information” that didn’t reveal the actual rents Vantage would charge tenants if its contract with the city is finalized. A private city selection committee unanimously recommended Vantage.
But Koch’s email said that the firm would charge local stores and restaurants more in rent and provide less revenue to the city than the bid from PLTR-SSP. Virginia’s SSP America, Atlanta’s Paradies Lagardere and Kansas City comedian and concessionaire Elliott Threatt joined together on the PLTR-SSP bid.
Lucas unpersuaded
Pat Murray, senior vice president of business development at SSP America, said the council appears to be in a rush to approve the Vantage proposal without fully vetting the particulars. Council members have largely relied on the work of the selection committee and city staff.
“I haven’t been involved in anything like this,” Murray said. “This thing is just getting stuff that’s not logical in every direction. I would just ask anybody in good government, why are you in a hurry to do something and shouldn’t you try to seek understanding of what’s all involved.”
Murray said city scoring documents revealed discrepancies between the selection committee’s reviews of the bids and information city staff presented to council. Vantage and PLTR-SSP both received scores of 80 out of 100 on qualitative scorecards, but city staffers created a matrix summarizing the bids that showed Vantage as the top contender.
“It was presented as though Vantage was better,” Murray said. “That’s not actually true.”
In a statement Wednesday, HMSHost officials called the city’s selection process “flawed.”
That company joined with the Hudson Group to draft the Kansas City Restaurant Group contract proposal. HMSHost officials said their team included two of the largest and most financially stable companies in the industry, along with more than 30 local and minority-owned businesses. They said their bid met or exceeded all of the city’s criteria and offered local businesses the best opportunity to suceed at the airport.
“City Council should not approve a company which has not been properly vetted and a model that will not be able to deliver for the people of Kansas City who deserve to have a transparent process,” the company’s statement said. “We are looking to City Council to review the details and make the right decision.”
Mayor Quinton Lucas, who has vehemently defended the procurement process, said he isn’t persuaded by the latest concerns.
“None of the information raised by unsuccessful bidders has led me to believe that multiple ethical, career city staffers would jeopardize their careers to intentionally and materially misrepresent information to Mayor and Council and to potentially commit criminal acts in so doing,” Lucas said in a statement.
The mayor said he has no interest in the outcome, other than supporting the city’s procurement process and staff, “unless unbiased information” supports any of the claims made.
Vantage officials were not immediately available for comment.
Should Fowler have recused?
The airport contract has raised wider questions about the city’s procurement process, which largely plays out in private. The city withheld specifics of the airport bids from the public and members of the council, until the five bidders all agreed to waive privacy concerns.
In a meeting last month, Councilwoman Katheryn Shields, District 4 at-large, said the current setup puts the council in a disadvantage when weighing a contract. Essentially, the elected body is asked to vote yes or no on a proposed deal, without scrutinizing individual proposals.
“I think we ought to revamp how all bids and requests for proposals are brought forward to us so that we actually have fuller information,” Shields said.
She told The Star Wednesday that she wanted to see more public discussion, adding that she was ready for it anytime a majority of council members agreed.
“I think there are problems with the bid,” Shields said. “I think there are problems with what was presented to us on the bid.”
She said that the allegations from the opposing bidders indicate her position was justified. But Shields questioned whether it would change the position of other council members.
Councilman Dan Fowler, the only council member on the concessions selection committee, previously hired local consultant Jason Parson to work on his election campaign. Parson is a partner in Vantage’s bid for the concessions contract, which the selection committee unanimously recommended.
Wilson, of Delaware North, said Fowler should have recused himself.
Fowler reported the issue to the Municipal Officials and Officers Ethics Commission, which found “no direct conflict of interest” and “no direct evidence of favoritism.” But the commission said it would have been appropriate for Fowler to recuse himself.
“Your city council person should have recused himself — period,” Wilson said. “If you are a city staff employee sitting on a panel with an elected official who can affect your employment, you’re going to go align with the elected officials’ desire to protect your own job.”
Fowler, of District 2, downplayed the criticism this week.
“What I make of their claims is that they are a losing bidder and they’re upset about it,” he said. “So they’re trying to do everything they can to try to reverse the action. And that’s it.”
But losing vendors continue to question whether Vantage’s approach will work in Kansas City. Under what is known as the developer model, Vantage will not operate any stores or restaurants itself. Rather it will rely on a tapestry of other contractors and tenants. That model is less common across U.S. airports.
Other vendors propose a different approach in which they would self-operate individual concepts, oftentimes through licensing agreements with local brands. They said it allows small businesses to get into the airport without taking on the financial burden of construction costs and monthly rents like Vantage will charge.
“If the city signs off on the (Vantage) proposal it creates lots of opportunity for small businesses who have never operated in airports,” Wilson said. “It sounds good on the surface but you’re setting up a lot of small businesses for failure in the future.”
Opposition may continue
As the city approaches a final decision on the contract, more information has surfaced about some of the partners included in the Vantage proposal.
The Star previously reported that OHM Concessions Group, identified as the principal food and beverage provider in the proposal, was pushed out of the much smaller Greenville-Spartanburg Airport in South Carolina. That airport commission moved to replace concessionaires after OHM “experienced financial and operational challenges.”
In one of the lengthy documents included in the Vantage bid, an independent auditor wrote that OHM’s operations were significantly impacted by the pandemic “and thus substantial doubt exists about the Company’s ability to continue as a going concern.”
RMD Holdings, another partner in Vantage’s bid, has also come under scrutiny in recent days as other vendors have unearthed multiple lawsuits against that firm alleging breach of contract.
To Steve Mora, those issues are more evidence that the city didn’t do enough vetting.
“They didn’t do their due diligence,” he said. “These are things that all of us knew about.”
Mora is a vice president at Metropolitan Culinary Services, which joined together with Mexico’s Mera Corp. and California’s Skyview Concessions and Blue Stone Management to put together the Mera KC bid for concessions.
The request for proposals issued by the city says that bidders must agree to “waive any right to protest the Solicitation or award based on any theory related to the single firm concept.” It also requires that they “abide by the decision of the Selection Committee without exception,” and that any evaluation criteria does not create a right or expectation of winning the bid.
But Mora said the four bidders that have not been recommended may continue opposing the process beyond Thursday, if the council votes to award the contract to Vantage.
“I don’t know that everybody’s prepared to walk away,” he said. “There were a lot of mistakes made by the aviation department and there are still a lot of questions to be answered. We made a sizable investment and expect to be treated fairly.”
He said the process began with high-minded goals like best serving customers and representing the city. But now it appears that money is the city’s only interest in weighing the proposals.
“If the city council had done the evaluations themselves, things would have looked a lot different,” he said.
Councilwoman Melissa Robinson isn’t convinced that there were any mistakes in the selection process.
She said the city followed its procurement process and it appears that Vantage submitted the best proposal.
“I get their point as relates to the different financial pieces but from a city’s perspective and just from a third district perspective, I’m more concerned about how people are going to get to the airport versus are we going to get a maximum guaranteed price that is 2% above,” she said. “For me, I feel like we should look at the overall scoring and make the best decision for the city.”
Robinson, who represents District 3, said the contracting process started going downhill once the bids were made public.
“And two, when everyone started sharing all their information,” she said. “There’s a reason why we have a process in place that says everything is closed until after the decision is made.”
This story was originally published October 6, 2021 at 4:41 PM.
