Broward Commission skips bids, awards 15-year airport food contract to Delaware North

By William Hladky, BrowardBulldog.org 

Bypassing the county’s bidding process, the Broward County Commission earlier this month approved an Aviation Department recommendation to extend for 15 years Delaware North’s grip on food and beverage concessions in terminals three and four at Fort Lauderdale-Hollywood International Airport.

The deal means Delaware North could remain in place until as long as 2032. The reason: the 15-year extension does not begin to run until planned terminal renovations allow the company’s retailers to gain permanent occupancy.

Even though she voted for it, Broward County Commissioner Lois Wexler isn’t happy about the new deal. She’s upset because it means that by the end of the contract Delaware North will have been in the airport for almost half a century without being subject to bidding competition.

Wexler’s also concerned that she wasn’t informed about the lengthy contract extension until Dec. 3 when commissioners were asked to approve Delaware North’s lucrative new contract. Based on past food and beverage revenue at the airport, Delaware North has the potential to earn more than $500 million in gross revenue during the life of the contract.

“I had no idea it would be that kind of extension,” Wexler said in an interview. “We were not in the loop.”

Broward County Aviation Director Kent George disputed Wexler’s assertion, telling BrowardBulldog.org the commission was kept informed through his quarterly reports and individual briefings. He added that 15 years is needed for Delaware North to amortize the $21 million in capital improvements the company has agreed to make in terminals three and four under the new contract.

The new contract also calls for 15 percent of food and non-alcoholic beverage sales and 18 percent of alcohol sales go to the county. Delaware North has agreed to pay the county a minimum of $3.9 million annually.

Delaware North Companies, headquartered in Buffalo, N.Y., describes itself on its web site as family owned business and a “global leader in hospitality and food service” with more than $2 billion in annual revenues. It has controlled concessions at Fort Lauderdale-Hollywood International Airport since 1984, and now operates there through a joint venture called Lauderdale F&B Partners.

AN INTRIGUING COMPANY HISTORY

Delaware North, once known as Emprise, has an intriguing history. In 1976, an investigative reporter with the Arizona Republic, Don Bolles, was murdered when his car was bombed. Bolles was investigating Emprise at the time of his death. The Associated Press quoted Bolles’ last words as “the mob…Emprise got me,” according to the book, The Arizona Project.

In 1972, the House Select Committee on Crime held hearings concerning Emprise’s connections with organized crime figures. About the same time, Emprise was convicted of racketeering in connection with its concealed ownership of Las Vegas’ Frontier Hotel-Casino. Three men were later convicted in the Bolles case, but authorities reportedly found nothing to connect Emprise with Bolles’ death.

Wexler said the Broward Commission agreed in 2012 to bypass bidding and extended Delaware North’s contract through June 30, 2015. The extension was granted after the company agreed to give up concessions in terminals one and two, which subsequently went to Host International Inc. after Host came out on top during bidding competition.

Wexler said she had expected Delaware North to be given a second short extension after 2015. But she believed that when the second extension expired, the concession and beverage contract for terminals three and four would be open to bidders.

The failure to seek food and beverage concession bids for terminals three and four “irks me,” Wexler said.

George defended the Delaware North contract as being in the “best interest of the county.” Although the county in 2012 required Delaware North to invest $1 million immediately to improve concessions, the company actually spent $6.2 million by opening several new restaurants, George said.

“Delaware North proved itself over the last several years,” the director added, “and improved the service to the passengers at the airport and increased revenue to the airport.”

The Aviation Department also took into account Delaware North’s ability to operate while major construction would be occurring in the terminals over the next several years, George said.

James Meyer is a lawyer for MERABroward, a competitor. He said his company might have submitted a proposal to operate the concessions in terminals three and four if the contract had been open to bidders.

“Based on our experience competing with Host, we do think we would have a good chance to submit a more attractive and lucrative offer than what the county agreed to with Delaware North,” Meyer said.

Earlier this year, MERABroward bid on the food and beverage concessions in terminals one and two. The Aviation Department’s selection committee, however, ranked MERABroward third and gave the contract to Host, a large airport concession company headquartered in Bethesda, Maryland,

MERABroward lost the bid even though the company promised to pay the county the highest annual minimum fee, pay airport concession workers the highest hourly wages, invest more in capital improvements, and pay the county a higher percentage of retail proceeds

MERABroward, whose parent company is MERA Corporation which operates in Mexican and Ecuadorian airports, is located in Lake Worth.

Despite her concerns, Wexler joined seven other commissioners in approving Delaware North’s new contract after she persuaded the commission to require it to conduct customer satisfaction surveys twice a year, starting on the second anniversary of the contract.

Commissioner Kristin Jacobs abstained from voting because her son works for an affiliate of Delaware North.

Wexler wanted the surveys to keep pressure on Delaware North to maintain good service. “Once you get the deal, you get compliance in year three or five, but maybe not in year ten,” she said.

AIRPORT CONCESSIONS ‘RUN BADLY’?

In the past, Delaware North airport concessions have been poorly run, Wexler said, adding that service improved only recently in response to former Commissioner John Rodstrom’s constant haranguing about bad concession service.

George pointed out that the new contract calls for Delaware North to be fined if certain violations occur. The violations range from failure to remove offensive materials to commencing construction without approval. The fines range from $50 to $5,000 per day.

Wexler decided not to oppose the Delaware North extension and instead push for customer satisfaction surveys because she knew that most of the commissioners were not “troubled” by the lack of bidding and would vote for the contract. “I have to choose my fights,” she said.

The commission on Dec. 3 discussed “very little” about the Delaware North extension and other airport contracts then up for approval, Wexler said.

Only Wexler and Commissioner Dale V.C. Holness raised major questions about the proposed contracts. When Holness questioned an aspect of the Host contract which also was up for approval Dec. 3, other commissioners gave him “looks”.

“Don’t look at me like that,” Holness said at the meeting. “Okay? Don’t.”

Commissioner Stacy Ritter and Mayor Barbara Sharief said they gave him “looks” because they did not want to “negotiate (the contract) from the dais.”

“I am sorry you don’t like the way my face looked,” Ritter told Holness. “But that’s just its natural reaction when I get horrified.”

Sharief added, “I too had that look on my face, because I feel like we have gone over this over and over again.”

Instead of questions, several commissioners gave praise. Commissioner Chip LaMarca thanked Aviation Director George for his “hard work”. Commissioner Ritter was “delighted” that Delaware North had “shown a commitment” to the airport. Mayor Sharief talked about the “hard work that has gone into this.” Commissioner Martin David Kiar praised Host to agreeing to pay its workers “a living wage.”

NO CONE OF SILENCE

But the only time commissioners as a group can influence contract negotiations is from the dais. The county’s code of ethics prevents commissioners from sitting on county contract selection and negotiating committees.

Because the Delaware North contract was an extension and a renegotiation and not the result of bidding, the county’s Cone of Silence ordinance did not apply, Wexler said. Broward County’s “Cone of Silence” ordinance prohibits company representatives and lobbyists from communicating with commissioners until a contract is approved.

Visitation records reveal that the day before the commission approved the Delaware North contract, two Delaware North lobbyists visited Commissioners Ritter, Wexler, Kiar, LaMarca and Sue Gunzburger and Mayor Sharief. Three Delaware North lobbyists visited Commissioner Tim Ryan.

Wexler said the process was legal. But “was the public fully protected?” Wexler asked. “No.”

Lobbyists filled the commission meeting room on Dec. 3, Wexler said. After the airport contracts were approved, the lobbyists “high fived” and “hugged each other,” she added.

UNITE HERE, a union that represents many airport employees, encouraged commission approval of the Delaware North contract. In a letter to the commission, Unitehere noted that Delaware North has agreed to provide “living wages” and “affordable health care” for its members. Because of the agreement, the union supported the contract extension.

Wexler said unions and lobbyists “have a great deal of influence” and at time more influence than the aviation department in shaping contracts.

Mayor Sharief failed to respond to several requests to comment on the Delaware North contract.

William Hladky can be reached at [email protected]