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Government & Politics

State puts off awarding controversial airport concessions contract — but not before current vendor sues

Concourse A at BWI Thurgood Marshall Airport was expanded last year. The state was planning to name a new contractor to run the airport’s concessions operations, but has now been hit by a lawsuit. Photo courtesy of BWI Marshall Airport.

The Maryland Aviation Administration has halted the process of awarding a lucrative contract to manage the expansive concessions operations at BWI Thurgood Marshall Airport.

The MAA, which runs the airport, issued a terse, one-paragraph notice to bidders late Friday afternoon informing them of the decision, but providing few details.

“In light of legal concerns raised by the Office of the Attorney General, the Maryland Department of Transportation is seeking additional clarification about the Maryland Aviation Administration’s solicitation for a new concessionaire,” the notice said. “The contract will not be scheduled for the Board of Public Works at this time.”

Officials at the Attorney General’s office and at the Maryland Department of Transportation, the aviation administration’s parent agency, told Maryland Matters Monday they could not discuss the decision to put the contracting process on hold.

On Tuesday, court filings revealed that the current holder of the airport concessions deal sued the state on Friday, maintaining that the company the MAA recommended for the new contract is trading on its political connections and is unqualified for the job. An MDOT official said the MAA said the agency decided to pause the procurement process before being notified about the lawsuit.

In its suit, the current vendor, Fraport — which with its corporate predecessors has operated the concessions at BWI for 18 years — seeks to block the MAA’s initial recommendation to grant the new contract to New Market Development Joint Venture, LLC, and wants to have New Market disqualified from the bidding process.

“Under the express terms of the RFP, the inexperienced New Market could not have possibly outperformed incumbent Fraport — or any of the other [applicants] for that matter — most of which have decades of experience in the airport concession industry,” Fraport said in its lawsuit, which was filed in Anne Arundel County Circuit Court. “But for New Market’s political connections, New Market would not have been considered for this important concession contract at the State’s busiest airport.”

Fraport also disclosed its intention to file an appeal with the Maryland Board of Contract Appeals — even though Maryland Department of Transportation officials say that bids for a concession contract cannot be appealed to that entity.

Fraport’s lawsuit was filed by attorneys for the Washington, D.C., based law firm Husch Blackwell LLP. An affiliated company, Husch Blackwell Strategies, has registered lobbyists representing the company in Maryland.

“The Court’s intervention is necessary here to uphold important safeguards in Maryland’s public procurement system and to restore public trust in the way MAA buys services for its citizens,” Fraport lawyers wrote in their lawsuit. “Even just the appearance of impropriety warrants the injunctive and declaratory relief requested here.”

RFP changed twice

The proposal to find a new vendor to operate concessions at the airport — food, drink, retail and other hospitality services — has generated controversy since the state first issued a request for proposal (RFP) seeking bidders this summer. Twice in rapid succession, the MAA changed provisions of the RFP in a way that appeared to favor New Market Development Joint Venture, LLC, a new entity set up by Major Riddick, a veteran political player in Maryland, who established the company in 2021 specifically to bid on the airport contract.

Last month, MAA informed other bidders for the contract that it would recommend New Market Development, pending a review from agency officials, and planned to forward that recommendation to the Board of Public works, which would ultimately award the contract.

As is standard operating procedure, the aviation administration offered losing bidders an opportunity to be briefed on why they weren’t selected. But days later, according to the Fraport lawsuit and other sources, the agency informed the companies that the debriefing would last no longer than 30 minutes and that the losing bidders could not bring their lawyers to the Zoom sessions.

Airport concessions are big business, involving several players at any given time. In addition to BWI, Fraport, a Pittsburgh-based company also operates the concessions at airports in Nashville and Cleveland, and has portions of the business at JFK International Airport in New York and at Newark International Airport in New Jersey.

The new contract to run airport concessions at BWI would run for 20 years, and is valued at billions of dollars. While state agencies have been mum during the procurement process for the BWI contract, and the bidders have been prevented from commenting publicly, several sources said that at most, a handful of companies are seeking the BWI Marshall deal. Most are established players in the industry.

But New Market Development’s bid is noteworthy because the company was just created in 2021, then it hired a few industry veterans, including Brett Kelly, a former top executive with Fraport who oversaw the company’s operations at BWI and other U.S. airports, to help run it. New Market now is also in partnership with another established airport concessionaire, HMS Host.

Riddick, a former chief of staff to former Gov. Parris Glendening (D) and two-time chief administrative officer for Prince George’s County, is no stranger to airport concessions. For the past two decades, while also working as a lobbyist, business consultant and political adviser, he has operated a company called Great Foods LLC, which has fast food contracts at both BWI and at the airport in Pittsburgh.

Even with all the experienced hands at New Market Development, the company did not qualify for the bigger BWI contract when the state first issued its RFP.

The request for contract proposals specified that the winning bidder 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 unusual and troubling.

“MAA provided no rationale for why these changes were made or why having entities rely exclusively on their personnel for experience was beneficial to MAA or the State,” the Fraport lawsuit reads. “If the personnel left the company, MAA would be left with a wholly inexperienced entity to run the concession contract at the State’s largest airport.”

A second change to the RFP, on minority subcontracting, also appeared to favor New Market Development, which already has a person of color — Riddick — as its CEO. That change appears to have also favored one of the other companies bidding for the contract, sources said.

Riddick did not respond to a message left at his office on Tuesday evening.

More public scrutiny

Even before Fraport filed its lawsuit late last week, the bidding process for the airport concessions contract attracted the attention of The Baltimore Sun editorial board. The Sun published an editorial on Dec. 1 urging the state to put off any decision on the airport concession contract. Citing reporting on the contract process in Maryland Matters, the editorial board wrote that the state should not be rushing the process when two-thirds of the Board of Public Works — Gov. Larry Hogan (R) and Comptroller Peter Franchot (D) — are leaving office next month.

“Is this a shady deal? Is there any wrongdoing? Or is it merely the grousing of losing bidders?” the editorial board wrote. “We don’t know…But we do know this much: There is no earthly reason why BWI should be locked into such a contract in the waning days of the Hogan administration. The danger is that outgoing officials, who no longer have to worry about what judgment voters may pass on such a transaction, will be tempted to rush it through to benefit their friends and allies. That’s not to suggest that’s the intent, but the perception is there when any administration is leaving office. And Maryland has a long enough history with pay-to-play arrangements with state contractors and other political machinations, dating to Spiro T. Agnew, to take such allegations seriously. What better protection against this possibility than to have the newly elected governor and comptroller providing fresh scrutiny?”

Hogan, who chairs the three-member Board of Public Works, appears eager to avoid having controversial contracts come before the panel during his final weeks in office.

Last month, the Hogan administration delayed for several months a highly-anticipated BPW vote on a major contract that would have advanced the governor’s controversial plans to widen Interstate 270 and the Capital Beltway, effectively handing the decision to the next iteration of the BPW. And in October, the BPW pulled a scheduled vote to hire a private contractor to provide health services at a state-owned hospital in Western Maryland after facing criticizing from lawmakers, a public employee union and community leaders.

Michael Ricci, a spokesperson for Hogan, told Maryland Matters that the governor was apprised of MAA’s decision to pause the procurement process for the BWI concessions contract on Friday afternoon, before the agency informed the bidders. Ricci did not directly answer a question about whether Hogan is trying to sidestep potentially contentious items at the BPW before his term ends, but said in an email, “Can never really predict what will or won’t come before the Board. This [BWI Marshall] procurement is a good example. It was never on our radar as imminent.”

Hogan leaves office on Jan. 18 and Franchot’s term ends on Jan. 16. The third member of the BPW, state Treasurer Dereck Davis (D), who is almost certain to be elected to another term by the General Assembly in January, has expressed apprehension about a lame duck BPW voting on the BWI concession contract. The BPW has three more meetings scheduled before Hogan and Franchot leave office: on Wednesday, on Dec. 21 and on Jan. 4.

In a commentary published in response to the Baltimore Sun’s editorial urging a halt to the BWI Marshall procurement process, the Rev. Alvin Hathaway, a veteran civil rights activist in Baltimore, praised Riddick and the Maryland Aviation Administration for attempting to advance the interests of minority-owned businesses.

“The airport’s recommendation for award…is a triumph for diversity, equity and inclusion goals for the state,” wrote Hathaway, who disclosed in the op-ed that he is a member of the New Market Development team. “For too long and in too many corners of private-sector dealings, the inclusion of minority-owned firms has been controlled by the largest companies and subject only to their charitable impulses. I am encouraged to see MDOT and MAA ‘walk the walk’ to support the agenda of our state leaders to provide meaningful and significant opportunities to small, local and minority-owned businesses.

“State-controlled public spaces must provide economic opportunity for Marylanders and, where possible, in under-represented communities. New Market Development itself is made up of both and their plan for small and minority-owned firms is ambitious and unprecedented in the industry.”

It isn’t clear what is going to happen next with the BWI contract. In its lawsuit, Fraport asks for a court hearing by Dec. 20 on its request for an injunction by Jan. 1 temporarily blocking the state from taking any action on the airport concessions contract before a fuller trial on the merits of the company’s suit. But that request may have been rendered moot by the Maryland Aviation Administration’s notice that it was pausing the procurement process.

What seems inevitable is that any final decision on the airport contract will be kicked to the administration of Gov.-elect Wes Moore (D). Riddick has already made generous campaign contributions to Moore and to the other incoming member of the Board of Public Works, Comptroller-elect Brooke Lierman (D).

But Fraport and the other companies that bid for the BWI Marshall concession contract also have their share of heavy hitters and political donors — both in the state and beyond.

Editor’s note: This story has been updated to reflect that state officials did not learn about Fraport’s lawsuit until after deciding to pause the procurement process.