The state has been wrangling with the process of choosing a vendor to run the concessions at BWI Thurgood Marshall Airport for three years, but could close the deal in a matter of weeks. (Photo courtesy of BWI Marshall Airport)
The Board of Public Works abruptly postponed a vote Wednesday on a lucrative, long-term contract to run the concessions at BWI Thurgood Marshall Airport that has been the source of controversy for almost three years.
The 20-year contract was set to go to Fraport Baltimore Partnership LLC, which has run concessions at Baltimore-Washington International for the last two decades under various corporate names. But it was pulled from the agenda as the meeting began, extending the uncertainty surrounding the future of the retail, dining and other hospitality operations at the state-owned airport.
An item is almost always placed on the BPW agenda when state agency officials believe it will be approved by the three-member board, and removed only if members start to have pointed questions about a proposal, putting its approval in doubt. The board consists of Gov. Wes Moore (D), State Comptroller Brooke Lierman (D) and State Treasurer Dereck Davis (D).
Participants in a high-stakes government procurement process, including the bureaucrats who vet contracts, are discouraged from speaking publicly until a contract is awarded. In a statement to Maryland Matters Wednesday, Maryland Department of Transportation spokesperson David Broughton said the agency was working “with the many stakeholders involved in this important long-term contract to ensure that all questions are addressed.”
MDOT’s head of procurement, Valerie Radomsky, told Maryland Matters that she expects the contract to be back on the BPW agenda for its next meeting on Feb. 12. Broughton said he could not confirm that.
The fact that the airport contract, worth hundreds of millions of dollars, is likely to remain with the longtime incumbent was never a sure thing. In fact, since the fall of 2022, state officials have tried to steer the contract to other companies — twice.
Even now, as MDOT officials recommend staying with Fraport, executives at one of the other companies that competed for the airport contract, BWI Experience Partners, is breaking with protocol and publicly claiming that their bid was superior — and that the agency’s procurement process has been flawed.
“Governor Moore has put forward a clear vision for building wealth for Maryland residents and local companies,” said Greg Reaves, CEO of Mosaic Development Partners, a Philadelphia company that is one of the partners in BWI Experience Partners. “Based on our understanding of MDOT’s own scoring, this MDOT recommendation does not achieve those objectives. BWI Experience Partners’ proposal is stronger on local equity, prioritizes Maryland companies and workers and exceeds [federal guidelines for minority business] participation.”
BWI Experience Partners is a partnership between a national airport concessions company, Vantage Airport Group, and several Black entrepreneurs from the mid-Atlantic, including Gregory “Steve” Proctor Jr., a prominent State House lobbyist, and Alexandra M. Hughes, a former chief of staff to two Maryland House speakers.
The decision to speak up now may be more an attempt to pressure the BPW before it votes than signal any possible future legal action.
In documents that MDOT prepared for Wednesday’s BPW meeting, officials ranked Fraport first among bidders in technical ratings, with BWI Experience Partners second and an entity called Asur/RMD BWI JV, which is affiliated with Mexican airport services company ASUR, in third. All three bidders ranked equally when it came to the money they were offering the state.
For its latest bid, Fraport boosted its diversity score in its leadership group by teaming up with a Baltimore-based Black-owned development firm, Ernst Valery Investments Corp. Federal rules demand major consideration for airport contractors with robust minority participation.
Fraport, according to the documents, is projecting gross sales of $734.3 million from airport concessions over the first five years of the contract. The company has committed to sharing 90% of its revenues with the state and estimates that it will be able to pay $39.3 million to the state in the first full year of the contract.
The MDOT documents also touted other aspects of the proposed contract with Fraport.
Airport concessions operators reach sublease agreements with dozens of vendors to provide a range of hospitality services. Fraport, according to MDOT, agreed to “labor peace” with all the unions that represent hospitality and restaurant workers at the airport, “which will help stimulate economic development locally, regionally and to the State of Maryland.”
Fraport also agreed to keep food prices relatively low at the airport and pledged to participate in several programs to reduce carbon emissions and promote recycling.
Through its 20 years as the airport concessions contractor, dating back to the administration of Gov. Bob Ehrlich (R), Fraport “has continued to provide outstanding service to customers” at BWI, the MDOT documents said.
A procurement comes full circle
Just last fall, state officials had a different idea of who they wanted to run hospitality services at BWI. And they launched a procurement process in 2022 in part because they had a notion that they might want a new direction for the concessions operations at BWI.
Almost three years and many controversies later, they are more or less at square one.
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The state’s quest to find a new vendor to run concessions at BWI dates back to mid-2022, during the administration of Gov. Larry Hogan (R). The Maryland Aviation Administration, a division of MDOT that operates BWI, put out a formal Request for Proposal (RFP) at the time seeking bids for the contract.
But as Maryland Matters reported in October 2022, some of the companies seeking the contract cried foul at the time, after the aviation administration twice changed the RFP in ways that appeared to favor one of the bidders — New Market Development Joint Venture LLC, a politically connected firm launched just months before the procurement began. One tweak to the RFP, dealing with the level of experience needed to run concessions at BWI, benefited New Market Development, which would not have qualified for the contract without the change.
In November 2022, MAA staff recommended awarding the contract to New Market Development, which was owned by Major Riddick, a former chief of staff to ex-Gov. Parris Glendening (D) and longtime powerbroker in Maryland politics. Through other companies he owns, Riddick has won smaller contracts to operate fast-food franchises at BWI and at the airport in Pittsburgh for many years, but has no experience running overall airport concessions operations — even though some of his business associates had.
New Market Development was bidding to be one of the very few minority-owned businesses to run an airport concessions program in the U.S., though in most airport procurements, federal rules dictate that minority- and women-owned businesses are given preferences on many subcontracts. State officials have been scrambling to follow federal rules on minority participation for the broader BWI procurement throughout the process.
In December 2022, before the Board of Public Works got around to voting on the aviation administration’s recommendation, the MAA put the process on hold. Fraport, the incumbent concessions operator, sued the state in the same week, seeking to block New Market Development from getting the contract.
Fraport has been allowed to temporarily run BWI concessions ever since.
One month after he took office, Moore announced that he wanted the procurement process to go back to the drawing board. Pointedly, MDOT Secretary Paul Wiedefeld, who ran the Maryland Aviation Administration under former Gov. Martin O’Malley (D), decided that his agency would lead the second round of contract bids, rather than the MAA. The aviation administration CEO, Ricky Smith, is a holdover from the Hogan administration, who co-hosted a fundraiser for Moore in the fall of 2022.
The second procurement officially launched in September 2023, and then last fall, an evaluation committee at MDOT recommended granting the contract to URW/Harbor Bankshare, a partnership between the international development company Unibail-Rodamco-Westfield SE and Harbor Bank of Maryland. In the U.S., URW is best known for building and operating shopping centers, including several in Maryland, under the Westfield name.
Three people familiar with the procurement said MDOT did not hold in-person interviews with the companies seeking the BWI contract and did not ask the bidders for what’s known as “best and final offers,” which could have potentially generated extra revenue for the state. What agency officials evaluated were simply based off the sealed documents the bidders submitted to the state.
According to documents prepared by MDOT for Wednesday’s BPW meeting, final negotiations between URW and the state fell apart, but no information is provided, beyond opaque legalese.
“On September 9, 2024, an Intent to Award letter was issued; however, the initial intended awardee declined to sign the contract and as a result was eliminated from consideration for award of the contract,” the MDOT documents say.
Broughton, the MDOT spokesperson, did not provide details. URW’s media office did not respond to requests for comment this week.
Instead, MDOT has opted to go with Fraport again. If Fraport ends up winning the contract, it could have control of BWI concessions for over 40 years total, dating back to the Ehrlich administration.
Unlike other contracts that the Board of Public Works awards, large concessions deals cannot be appealed by the losers to the State Board of Contract Appeals — they can only be challenged via a lawsuit. It’s unlikely, though not completely out of the question, that this contract award could go to court.
Broughton said in his statement to Maryland Matters that the deal is close to finally being completed and that agency officials are looking forward to winning the approval of the governor, comptroller and treasurer.
“The Maryland Department of Transportation (MDOT) completed a thorough, fair and competitive process to select a new developer for the retail, restaurant, and commercial concessions services contract at BWI Marshall Airport,” he said. “MDOT continues to work with the many stakeholders involved in this important long-term contract to ensure that all questions are addressed and looks forward to bringing the item to a future agenda when all questions have been answered. Until awarded by the Board of Public Works, this remains an active procurement and MDOT cannot comment further.”
It will be instructive, whenever the proposed contract finally comes up for final approval, to hear what Moore, Davis and Lierman have to say, because they’ve had to keep quiet about it publicly. It’s possible that a procurement process that began in controversy could end in controversy too.