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LAX Concession Fight Continues Today; Contracting Wars Explained

This morning the weirdly named Board of Referred Powers, which is a special L.A. City Council committee, will meet to discuss what has become a strangely controversial issue -- airport food.

In short, everyone agrees the food is lousy (beating only -- yuck -- Newark's in one recent 18-city survey) but the existing concession company HMS Host has had the contract for 45 years and is fighting hard to keep it. Everybody's hired a bunch of lobbyists, everybody's got various conflicts-of-interest, and away we go.

As the Weekly's Gene Maddaus reported last week, City Attorney Carmen Trutanich gave a major victory to HMS Host, when he recommended disqualifying Host's rival, SSP America.

Host finished last in the bidding process, and filed a protest alleging the selection process was flawed. Host's lobbyists complained that SSP had an unfair advantage because it does business with SmartDesign, an architectural firm that was used as a consultant on creating the bids. (SmartDesign has also done work for Host.)

The city attorney also concluded Host would be disqualified because Alan Rothenberg, the chair of the Airport Commission, serves on the board of California Pizza Kitchen, which is part of Host's proposal.

Trutanich said the board "may choose to reject all bids" for the contract and start anew. That would work in favor of Host, which is the incumbent contractor. It could take a year or more to redo the bid process, during which time Host would continue to own the concession contract.

There's a third company in the running: Delaware North is a multibillion-dollar operation that already runs a Wolfgang Puck Express and a Pink's Hot Dogs at LAX. Bid evaluators weren't that excited by the company's plans.

The Weekly will be at this morning's meeting, in force.

Last week, the estimable Greg Nelson, former chief-of-staff to former L.A. City Councilman Joel Wachs and head of the Department of Neighborhood Empowerment, explained at CityWatch why city contracting devolves into so much foolishness. (The golf cart concession saga at city golf courses has been similarly ridiculous.)

Nelson says the city pays an "aggravation surcharge" -- companies tack on extra money to their bids knowing there'll be some sort of political fight even if they win the bidding. The extra money goes to pay lobbyists and PR hacks. The situation was so bad Nelson was able to find many office supplies cheaper at a retail outlet than what the city was paying.

And why?

The city's contracting system is causing all the angst.

City staff designs bid documents and evaluates them after they are returned. A team gives scores to each qualified bidder and makes recommendations.

Cost or revenue generated for the city, ability to perform the work, delivery times, and quality of the product are some of the factors.

From my experience, it's a high-quality and objective process.

But after every evaluation, there is usually one winner and a bunch of losers.

Then politics rears its ugly head.

The losers hire lobbyists to demean the winner, and sometimes even the staff, and the winner hires lobbyists to fend off the attacks.

The first public battle usually takes place at the commission level while the mayor is privately lobbied.

In the text books, the commissioners are independent citizen participants in the process.

In reality, they owe their position to the mayor, and if the mayor changes his mind the actions of the commission will seem erratic.

After the commission acts, there is again usually a single winner and a boatload of losers, so the battleground moves to the City Council.

Some of the fights can be as vicious as a political campaign complete with personal attacks and innuendo.

Nelson recommends reforming the system with ideas such as requiring super majority votes by commissions and the City Council if they wish to overturn staff decisions on the bid winner, or a simple process in which bidders sit in a room and bid against each other until one is left standing, with the pols locked out of the process. He also recommends allowing city agencies to bid on contracts so that public workers aren't locked out.

No doubt, these reforms will happen any day now!


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