Bidders fret that lucrative BWI Airport contract may be rigged

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Concourse A at BWI Thurgood Marshall Airport was expanded last year. Soon, the state is expected to name a new contractor to run the airport’s concessions operations. (Photo courtesy of BWI Marshall Airport)

On a steamy summer morning, hundreds of business owners, lawyers, lobbyists and government contractors packed into a hotel ballroom near BWI Thurgood Marshall Airport. They were there to hear about the state’s plans to find a new contractor to run the concessions operations — food, drink, retail and other hospitality services — at the busy transportation hub.

“The purpose is to improve on a very good airport concession and make it exceptional,” Morris Williams III, manager of the Commercial Business Activities Section in the Office of Commercial Management at the Maryland Aviation Administration, told those assembled at the hotel.

The very size of the crowd spoke volumes about the expansiveness of the operation at BWI and about what’s at stake financially.

This is the first time the state has sought a new vendor to run the commercial operations at the airport in nearly two decades. But as the state moves closer to awarding this lucrative, 20-year contract, there are concerns in the airport management industry that the bidding process favors a new player with longtime political ties.

Since the Request for Proposal (RFP) was issued to find bidders for the new contract, the state’s proposal has been amended twice in ways that appear to benefit one of the interested companies — New Market Development, a new entity associated with two of the state’s wiliest and most durable political players, Major Riddick and Bruce Bereano.

The Maryland Aviation Administration, which runs BWI Marshall Airport, could announce its recommended vendor sometime this week. It will then be up to the Board of Public Works to award the contract — and that vote is expected to take place in late November or early December, when two of the three Board of Public Works members, Gov. Larry Hogan (R) and Comptroller Peter Franchot (D), have just a few weeks left in office.

The sequence of events so far has left some airport management professionals wondering about the integrity of the process. And they are also questioning the efficacy of putting such a financially consequential and long-lasting decision in the hands of a lame duck Board of Public Works.

“I think this stinks to high heaven,” said one executive with an airport concessions development company, who like many people interviewed for this story requested anonymity because there is a blackout for bidders and other stakeholders to comment publicly on the procurement while the Maryland Aviation Administration examines the bids for the concessions contract. “I think the fix is in.”

Despite the presence of hundreds of people at the Maryland Aviation Administration briefing session at the Westin BWI Hotel this summer, there are about a dozen companies that develop and fully manage the concession programs at U.S. airports. Many of the other people present that morning represented smaller contractors, who get pieces of the concessions business from the main operator.

For the past 18 years, the airport concession contract at BWI Marshall has been held by Fraport USA or its predecessors. Fraport is a company based in Pittsburgh that’s affiliated with an international company based in Frankfurt, Germany. The contract technically has changed hands a few times, as ownership of the concessionaire has changed.

The Maryland contract originally went to a British company called BAA, which was then bought by a company called Air Mall, which was then acquired by Fraport.

Fraport USA is a recognized player in the industry, and currently runs the concessions operations in airports in Nashville, Cleveland, Pittsburgh and parts of JFK International Airport in New York and Newark International Airport in New Jersey, in addition to BWI Marshall. (This summer, the Allegheny County Airport Authority, which operates Pittsburgh International Airport, seized control of the concessions operations from Fraport, claiming the company’s performance had slipped — a dispute that is now in court.)

Like every major company in the airport management game, Fraport has a stable of high-powered and plugged-in Annapolis lobbyists.

The company is currently represented in the State House by Husch Blackwell, a national lobbying firm with a Maryland presence. Its chief lobbyists here are Sarah Peters, a former Maryland Transit Administration government affairs official under Hogan, and Bill Pitcher, one of the most senior and best-respected lobbyists in Annapolis. Pitcher has represented the company since 2009, when he was affiliated with other lobbying firms.

But beginning in 2015, and running through this spring, Fraport was also represented in Maryland by Bruce Bereano, a singular force in Annapolis and arguably the most successful lobbyist in State House history. Bereano abruptly cut ties with Fraport in the spring, without explanation.

Through the years, Fraport has also relied on another powerhouse Annapolis government relations firm, Manis & Canning, which was part of the company’s lobbying team from 2013 to 2019, according to records with the Maryland State Ethics Commission, which regulates State House lobbyists.

Airport concessions are big business. BWI Marshall Airport’s passenger traffic has increased steadily over the past quarter century, and so have its concession sales, according to statistics from the Maryland Aviation Administration. The airport saw a record 27,125,054 passengers pass through its terminals in 2019, but that figure declined precipitously during the worst of the pandemic, in 2020. In 2021, 18,844,956 passengers passed through BWI Marshall.

Concession sales also topped out in 2019, at $158,412,622, went down in 2020 and recovered to $106,449,909 in 2021.

A common industry measurement known as concession sales per emplaned passenger has also increased robustly at BWI Marshall since the late 1990’s. It set a record of $11.71 in 2019, fell to $10.87 in 2020 — the same figure as in 2018 — and went up to $11.32 in 2021. But that’s a figure MAA officials believe can increase at an even faster rate when the new concessions contract is awarded.

“You’ve got an audience that can’t go anywhere,” Jo Schneider, the MAA’s director of architecture, told the business people at the contract briefing this summer, describing the potential business at the airport. “…No mall out there, especially now, is ever going to claim those kinds of numbers.”

The RFP that the Maryland Aviation Administration put out for the new contract requires the winning bidder to commit to paying the state at least $800,000 a month.

Inside operators

Riddick is no stranger to aviation concessions operations. The former chief of staff to Gov. Parris Glendening (D) and two-time chief administrative officer for Prince George’s County, Riddick has held contracts to operate fast food restaurants at BWI Marshall for almost two decades, through a company he owns called Great Foods LLC. The company also has a concession contract with the Pittsburgh airport.

Bereano is currently registered as a lobbyist for Great Foods LLC. He has three other clients associated with BWI Marshall Airport, according to lobbyist registrations: BWI Airport Fire Rescue Local 1742, BWI Airport Professional Firefighters, and BWI Taxi Management Inc.

Riddick has been a presence in state politics for decades, and was the first and only African-American to serve as chief of staff to a Maryland governor. Since leaving state government with Glendening at the beginning of 2003, Riddick has started businesses, worked as a lobbyist, counseled countless political candidates, and served a second tour of duty as Prince George’s County chief administrative officer in the first years of current County Executive Angela Alsobrooks’ administration. His wife, Manervia Riddick, is a retired Washington Gas executive who has served on the Maryland Stadium Authority since 2009 — appointed and reappointed by former Gov. Martin O’Malley (D) and reappointed twice by Hogan.

But Riddick is poised to become an even bigger political player in Maryland — and a considerably more prosperous one — if he wins the airport concessions contract.

His company would also be one of the very few minority-owned businesses to run an airport concessions program, though in most airport procurements around the U.S., minority- and women-owned businesses are given preferences on many subcontracts.

Riddick did not respond to messages left at his office in recent weeks.

According to Maryland business records with the secretary of state’s office, Riddick created a business called New Market Development on Jan. 12, 2021, and a related entity called New Market Development Joint Venture LLC, on Dec. 7, 2021. Both used the same Landover address as Riddick’s other companies.

New Market Development has swiftly assembled a formidable team of airport management experts in an apparent bid to win the BWI Marshall concession contract.

According to the company’s website, Riddick is the founder, president and managing partner. In the chief operating officer position is Brett Kelly — who until recently was a top executive with Fraport, overseeing the company’s operations at BWI Marshall, among other U.S. airports.

The company’s chief commercial officer is Jay Kruisselbrink, another former Fraport executive who most recently was vice president for Restaurant Development at SSP America, an operator of airport restaurants.

Two other New Market Development executives have worked with Riddick and his long-established airport company, Great Foods: Chris Diamondidis, executive manager of Severn Capital, LLC, a Severna Park-based real estate and private equity firm; and Roy Dabney III, who has held a variety of roles with Riddick and in the hospitality industry.

Also involved in the effort is uber-lobbyist Bereano, who says he is “working with” Riddick on the airport concessions project. Riddick and Bereano sat together in the hotel ballroom during the Maryland Aviation Administration’s briefing on the concession contract during the summer.

Bereano, in an interview, called Riddick “a brilliant, hard-working, very mentally-organized human being,” and said Riddick has “tremendous experience” at BWI Marshall airport.

Bereano has not registered to lobby for the company, however. Instead, he is described as an investor and adviser. In the past few months, Capitol Strategies LLC, another elite Annapolis government relations firm, has registered to lobby for HMSHost, another airport concessions operator that is now, according to sources, teamed up with New Market Development.

Problems and solutions

But for all the company’s political firepower, New Market Development had a problem when the Aviation Administration first issued its RFP. The request for contract proposals specified that the company must have at least seven consecutive years in the business over the past decade— a standard industry practice, according to several veterans in the field. As a brand new entity, Riddick’s company would not qualify.

Yet within weeks, the MAA amended its RFP to say that a company’s experience in the airport concessions business no longer had to be a determining factor in awarding the contract. Instead, the state said that the executives of the bidding company merely had to have seven consecutive years in the field over the past decade, a provision that industry experts described as highly unusual.

That change clearly put Riddick’s business back in the running.

Jonathan Dean, a spokesman for the Maryland Aviation Administration, said administration officials would not be able to comment on the change in the RFP, or any other aspect of the procurement process, because the contract proposals are currently under review.

But that wasn’t the only move that appeared to advantage Riddick. In another amendment to the RFP, the aviation administration said bidders had to have all of their minority subcontractors lined up in advance, before they submitted their bids to the state. Often, on contracts of this scale, bidders commit to meeting certain minority hiring and contracting goals before identifying which contractors they would use on a project.

That change in the RFP brought a letter of protest in late August from Eboni Wimbush, the president and CEO of the Airport Minority Advisory Council, a national trade association dedicated to promoting people of color and women in employment and contracting opportunities throughout the aviation industry.

In her letter to the Maryland Aviation Administration, Wimbush wrote that the agency’s new procedure for certifying qualified minority- and women-owned businesses “will have unintended consequences resulting in lower [minority] participation.” She asked that the RFP be amended to let bidders line up their minority subcontractors by Jan. 1, “reducing the unintended barrier to entry and participation of local, small and diverse businesses.”

This particular provision of the RFP appears to have helped Riddick — who is a board member of the Airport Minority Advisory Council — because as a minority-owned company, New Market Development did not need to scramble to line up minority subcontractors for the BWI Marshall contract the way many of its competitors did. One other company bidding for the contract, which has lined up a majority of minority investors and stakeholders, is also likely to benefit from this provision.

Dean, the aviation administration spokesman, said he could not comment.

The Maryland Aviation Administration, which operates BWI Marshall Airport and Martin State Airport in Middle River, is run by a team of professionals, but its top leader is a political appointee. The current executive director and CEO, Ricky Smith, served as the chief operating officer at the agency during the administration of Gov. Bob Ehrlich (R) — who Larry Hogan served as appointments secretary — and held several other key jobs at the Maryland Department of Transportation. In the private sector, he has worked for IBM, H&R Block, and other companies.

Smith left the aviation administration when O’Malley (D) took office, and ran the Cleveland Airport System for several years. When Hogan was elected, Smith returned to Maryland to become MAA administrator. He is known to be close to Lt. Gov. Boyd Rutherford (R), who has worked for the federal bureaucracy as well as serving as Maryland Department of General Services secretary under Ehrlich.

On Sept. 26, Smith co-hosted a fundraiser for Wes Moore, the Democratic nominee for governor, at the Pasadena home of Drew Hawkins, who spent 30 years as a Morgan Stanley executive and is now CEO of Edyoucore Sports and Entertainment, a company that teaches financial literacy skills to entertainers and athletes. At least two groups of entrepreneurs who hold contracts for food concessions at BWI Marshall Airport were also listed as co-hosts for the event, which was geared toward Black business leaders and philanthropists. Craig Thompson, a close adviser to Moore who is a lawyer at the top-flight law firm Venable LLC and is chair of Moore’s campaign, was also a sponsor.

Moore, who is favored to win the election, gets to pick the leader of the aviation administration. Two representatives of airport management companies who are bidding for the new BWI Marshall contract and asked not to be named said the companies received invitations to the fundraiser for Moore that Smith co-hosted, which made them uncomfortable.

“To members of the public who are paying attention, it would be justified to wonder if this person is trying to keep their job,” said Joanne Antoine, executive director of Common Cause Maryland, the political reform group. “It doesn’t look good optics-wise to host a fundraiser. It’s one thing to make a contribution.”

Friends in high places

If the Maryland Aviation Administration announces this week that New Market Development is the preferred vendor for the BWI Marshall contract and the proposal gets to the Board of Public Works before the end of the year, Riddick and company will see friendly faces there.

Bereano was the earliest and most enthusiastic Hogan supporter in the Annapolis lobbying corps. He was also close with Franchot for many years and endorsed the state comptroller’s unsuccessful bid for governor in this year’s Democratic primary. Riddick was also a Franchot supporter this year, even as most elected officials in Prince George’s County gravitated toward Moore in the Democratic primary. And Riddick and State Treasurer Dereck Davis (D) are both veterans of Prince George’s County government and politics.

But is it appropriate for a lame duck Board of Public Works to take action on such a large and important contract?

Eight years ago, after Hogan’s election but when O’Malley was still governor, Franchot lobbied heavily for the BPW to delay action on a proposal to lease a state-purchased farm in Kent County to a nonprofit headed by a major Democratic donor for just $1 a year. Franchot, a frequent O’Malley critic who turned into a major Hogan ally, hinted there was something fishy about the deal, and suggested it would be better to take some time and consider the matter when the new governor had taken office. The proposal effectively died once Hogan became governor.

A spokeswoman for Franchot said last week that the comptroller intends to vote on all items that come before the Board of Public Works until he leaves office early next year.

“Comptroller Franchot will continue to perform the duties of his office, including his responsibilities as a member of the Board of Public Works, until his successor takes office,” the spokeswoman, Susan O’Brien, said.

Davis, the state treasurer and junior member of the BPW, who will become the senior member when Hogan and Franchot leave office, said he has mixed feelings about consequential matters being taken up during the current board’s final four meetings.

“If you’re elected to a four-year term, you’re entitled to govern, to vote, all the way until the end of your term,” he said. “But just because you’re entitled doesn’t mean you should.”

Davis said that for his part, on the airport concessions contract and other weighty matters coming before the BPW, “I’ve got to do my due diligence. I’m not going to willy-nilly rubber-stamp everything.”

Antoine, the Common Cause leader, said it is “concerning” that a contract of the scope of the BWI Airport concessions deal might come before the board in the final days of Hogan’s and Franchot’s terms.

“It is concerning that while we’re in this process of preparing for a major transition for the state, that big business like this is being conducted,” she said. “Business needs to continue, we understand that. But big contracts, if there is a way to hold them until the new administration comes in, that would be the most sensible, unless there’s an emergency.”

Earlier this year, the leaders of the General Assembly’s two budget-writing committees, Senate Budget and Taxation Chair Guy Guzzone (D-Howard) and House Appropriations Chair Ben Barnes (D-Prince George’s), wrote to Smith at the aviation administration about the concession contract. The lawmakers urged the agency to be as transparent as possible during the procurement process and also suggested that the agency “include diversity of perspective from Maryland’s robust private sector to ensure an active and thoughtful evaluation process for the award. This could include members of the panel from outside of government, including key airline stakeholders, to bring fresh perspective and analysis to each of the proposals.”

Guzzone and Barnes also asked Smith how the anticipated windfall from the federal government’s robust new infrastructure funding law would impact the state’s selection of and negotiations with a new airport concession contractor. In an interview, Barnes said he and Guzzone simply wanted to convey that the state’s budget writers were aware of the enormity of the contract and were interested in its fiscal impact.

Smith, in a written response, assured the lawmakers that the “points in your letter have all been carefully considered.”

In the weeks ahead, government reformers and legislative leaders won’t be the only ones watching. Every other company that’s bidding for the BWI Marshall contract has years of experience in the industry, an army of lawyers, and a whole lot of money. If New Market Development is awarded the contract, appeals and lawsuits seem inevitable.

Bruce DePuyt contributed to this report.

This article was written by WTOP’s news partners at Maryland Matters and republished with permission. Sign up for Maryland Matters’ free email subscription today.

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