Another high-stakes airport contract bogs down in controversy

At the Board of Public Works meeting last week, Gov. Wes Moore (D), Treasurer Dereck Davis (D) and Comptroller Brooke Lierman (D) were public and intentional about the need to restart the procurement process for a highly lucrative contract to operate concessions at BWI Thurgood Marshall Airport, which had fallen apart following allegations of favoritism weeks earlier.

All three officials pledged their commitment to a fairer, more transparent process. And they voted unanimously to indefinitely extend the contract of the current longtime concessions operator on a month-to-month basis, until a permanent vendor can be selected.

But at the same meeting, the Board of Public Works also voted, without debate or explanation, to draw out the term of another longtime airport contractor in another bidding process that has also become mired in controversy. That dispute is now headed to the Maryland State Board of Contract Appeals, with a hearing scheduled for this Wednesday.

At issue in the second airport contract fracas is the Maryland Aviation Administration’s decision to boot the company that, in its current iteration or through its corporate predecessors, has held a key service contract at the airport for more than three decades. The company, Menzies Aviation, maintains mechanical operations on passenger loading bridges, baggage and baggage claim conveyor systems, automatic door systems and manual doors, power gates, fire doors, wheelchair lifts and checked baggage inspection systems at BWI and at Martin State Airport in Middle River.

These services may be less visible than the retail, restaurant and hospitality concessions that became ensnared in the higher-profile contract fight and charges that the process had been rigged. But they’re no less vital to the airport’s operations. And the dispute offers another window into the highly competitive and lucrative world of providing services at major airports — and into the state’s cumbersome procurement process.

In the latest procurement for the services contract, which is re-bid every five years, the aviation administration sought to award the work to a Menzies rival, Elite Line Services, Inc., deeming that company’s bid technically superior to the incumbent’s — even though Menzies’ bid came in at a lower price.

Because the procurement process is under appeal, there is a limit to what the parties can say about it. But a Menzies executive made it clear that the company feels as if it lost out on the contract without adequate explanation or justification from the state.

“Our team has a 30-year track record of excellent service at BWI, and we made the lowest bid for this contract by a significant margin,” Nigel Shuttleworth, senior vice president of Menzies’ East Region within the Americas, told Maryland Matters. “MAA’s decision to award the contract to a company with no prior experience at the airport, for $1.3 million more than what we proposed, defies logic. We continue to engage MAA through proper channels, but they have failed in response to our repeated requests to provide an explanation that makes sense or stands up to scrutiny.”

In its filing with the Board of Contract Appeals, submitted by Ashley Gifford, an attorney with the Washington, D.C., firm Foley & Lardner LLP, Menzies lays out its grievances and cites instances that, in its estimation, shows that the Maryland Aviation Administration was less than transparent in its deliberations and subsequent explanations about the contract award.

In a written response, filed by an assistant state attorney general, Gary Posner, the MAA characterizes Menzies’ appeal as nothing more than sour grapes.

“At its core, the…appeal represents a disgruntled incumbent service provider’s effort to cling to a contract on which it has been the incumbent provider for nearly 40 years and feels entitled,” the state wrote.

What emerges from the filings and in discussions with people familiar with this procurement is that there was a degree of uncertainty over the process and outcome — enough so that MAA officials kept extending Menzies’ contract over short periods and eventually decided to start the bidding over, with procurement process now more than 2 1/2 years old. The proposed contract award never made it to the Board of Public Works for a formal vote.

Menzies took over the MAA services contract in 2017 after acquiring the company that previously had held it for decades. In July of 2020, MAA solicited bids for the next five-year contract. Half a year later, the agency informed Menzies that it had lost the bid, and Menzies launched a protest with the agency on the grounds that MAA had replaced an incumbent contractor in good standing without revealing the winning bidder, among other issues.

For the next several months, the MAA extended Menzies’ contract on a short-term basis. By February of 2022, Menzies lost its initial appeal in the Board of Contract Appeals. A month later, MAA extended Menzies’ contract for a full year, rather than completing the deal with its preferred vendor, Elite Line Services, and announced it was restarting the bidding process. In August of 2022, the MAA once again recommended awarding the contract to ELS.

Menzies’ executives were dismayed — and stunned.

In its filing with the Board of Contract Appeals, Menzies repeatedly called the aviation administration’s decision “arbitrary and capricious.” The company noted its stellar record at BWI and described MAA officials as evasive when asked to explain why they wanted to grant the contract to Elite Line Services. Menzies representatives have also argued that turning the work over to a new contractor will disrupt services at the airport, since the company already has several hundred highly skilled employees on site at the airport or working nearby.

Menzies is an international aviation services company that originally started in Edinburgh, Scotland, in the 1940’s and now operates across the world. Its U.S. headquarters are in Grapevine, Texas. Most of its contracts are for baggage handling services — less complicated work than what it provides at BWI — though the company is diverse enough in its mission that it recently won a joint contract for a pilot project at Los Angeles International Airport to install electric vehicle charging stations and operate battery-powered cargo vans.

In its filing with the Board of Contract Appeals, the Maryland Aviation Administration acknowledged that it found Menzies’ prior work at the two airports exemplary, but asserted that the company’s record was no basis for judging its latest bid against its competitors.

“Resonating throughout…[the] protest and appeal is an insistence MDOT MAA should have evaluated Menzies for what it had done, rather than for what the offerors’ proposals offered to do,” the state wrote.

The MAA acknowledged that Menzies’ bid came in at a lower price than Elite Line Services’ — $23,820,505.24 versus $25,179,002.92 — but said it was prioritizing the technical aspects of the bid over the proposed cost. It also suggested that Menzies’ less complicated contracts at most airports could become an issue in fulfilling the scope of its work at BWI and Martin State. State officials wrote in their filing with the Board of Contract Appeals that they also found Menzies’ oral presentation lacking.

“The presentation was lackluster, read and fell short of demonstrating Menzies’ ability to perform at an optimal level as it relates to continuous improvement methods and innovative industry practices,” the filing said.

The state also took issue with the timing and venue for Menzies’ appeals, saying the company announced its appeal late and relied too heavily on electronic communications. And the MAA explained that it needed to rebid the contract after the first round because its preferred vendor, Elite Line Services, would not agree to hold to its bidding price when the process for finalizing the contract became bogged down.

Elite Line Services also has a broad portfolio and routinely provides many of the same services at airports around the world as Menzies. With its U.S. operations based in Carrollton, Texas, the company is part of an international conglomerate, Daifu Airport Technologies Inc.

When the Board of Public Works met last week, it voted to extend Menzies’ contract with the aviation administration another four months, through July 31. The contract extension was one of several items on a Maryland Department of Transportation agenda that received no discussion and was part of a blanket vote approving all the items.

What happens next may depend on what the Board of Contract Appeals decides to do. Menzies executives have not ruled out the possibility of taking the state to court.

“Ultimately,” said Shuttleworth, the Menzies regional official, “it’s the Maryland taxpayer who bears the brunt of decisions like this.”

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