Southern California -- this just in

« Previous Post | L.A. NOW Home | Next Post »

Top LAX executive calls for rejecting bids for its largest concessions contract

September 17, 2010 |  2:37 pm

Setting the stage for a possible vote Monday, the top official at Los Angeles International Airport has called on members of a City Council panel to cancel its search for a company to run the largest of the airport’s five restaurant concessions.

Gina Marie Lindsey, who heads the agency that oversees LAX, sent a letter Thursday saying that her agency lacks the “unambiguous, firm legal ground” needed to award a contract to SSP America, which was in line to run three food courts and four coffee shops at the airport.

Lindsey said the board should reject all four bids submitted for the package, which had been valued at $56 million annually.

“I am disappointed that the benefits to the traveling public in Terminals 4, 5, 7 and 8 will be necessarily delayed by this recommendation,” wrote Lindsey, the executive director of Los Angeles World Airports. “Nonetheless, I believe that, in the absence of a clear legal path, service to the public is best insured by making no award that puts that service at risk.”

The letter delivered another setback to SSP America, which had been ranked first out of four bidders by airport officials. And it echoed a legal opinion from City Atty. Carmen Trutanich, who concluded last week that a judge would likely void a contract with SSP based on conflict-of-interest grounds.

The Board of Referred Powers, which is made up of five council members, is scheduled to meet Monday to begin reviewing five food and beverage contracts. Trutanich concluded last week that SSP had retained a company that had advised airport officials on the preparations for the concession bidding process.

At stake is the quality of the gift shops, restaurants, bars and coffee shops that will soon occupy LAX, a facility whose concessions have received dismal customer satisfaction ratings in recent years.

SSP, which had promised to bring companies such as Geisha House, LA Mill Coffee and La Serenata de Garibaldi to the airport, has vigorously disputed Trutanich’s findings, saying he did not do the proper research to make his assessment and has misapplied state conflict-of-interest laws. “Our position will remain the same -- that the city attorney’s opinion is too far reaching,” said Pat Murray, a senior vice president for the company. “We are hoping to dialogue with the Board of Referred Powers on this. We are prepared to articulate our views and take it from there.”

Trutanich concluded that three other food and beverage contracts posed little or no legal risk to the city on conflict-of-interest grounds, while a fourth posed “some” risk. Councilman Bill Rosendahl, who represents a district that includes LAX, has said repeatedly that he wants at least three contracts to be awarded by the board.

Lindsey said she had considered the consequences of having a judge void the contract after the fact, and concluded that it would deny passengers “uninterrupted access to food and beverage” at four of the airport’s terminals. But she did not explain how or when the SSP contract, also known as food and beverage Package No. 1, should be rebid.

If the Board of Referred powers follows the advice of Lindsey and Trutanich, HMS Host would remain the incumbent concessionaire until a new competition can be held.

HMS Host filed the conflict-of-interest allegation against SSP and has been pressing council members to throw out the search process for all eight of the contracts under review by the Board of Referred Powers.

On Friday, a representative of Host issued a statement praising Lindsey’s recommendation but insisting that the whole bid process be scrapped.

“We have always maintained that the City of Los Angeles deserves fairness and transparency in their public processes, and this is recognition that the process was flawed,” said company spokeswoman Susan Goyette. “However, serious conflicts and flaws exist on all the packages, so if one package is suspect, they are all suspect.

-- David Zahniser at Los Angeles City Hall

and Dan Weikel