Bidder Wants LAX Decision Reconsidered

The top-rated bidder to run some coffee shops at Los Angeles International Airport has charged that an airport commissioner who is the county’s top labor leader led an effort that unfairly blocked the nonunion firm from winning the contract.

Larry Emerine, president of Local Concepts, also said the commissioner, Miguel Contreras, had a conflict of interest because his wife heads a union that represents workers for a competing company.

Emerine said he would ask the city’s airport commission today to reconsider its decision, saying he is a victim of a “pay to play” system in which contractors must sign union contracts to win airport concessions.

“Don’t bother to put out a request for proposals and have us spend a fortune responding if the reality is you have to be union to be awarded the contract,” Emerine said. “It’s crazy.”

A panel of five airport managers and the administrator of the airport department recommended that the concession to operate three coffee shops at LAX go to Local Concepts because it proposed to pay a significantly higher rent than six other bidders and has a good record with nine other concessions at city airports. The five-year contract is worth nearly $12 million.

However, Contreras, an airport commissioner who is head of the Los Angeles County Federation of Labor, introduced a motion, approved unanimously by the commission Sept. 7, to reject the staff recommendation. Instead, the board extended the contract of the existing concessionaire -- Java Java, a nonunion firm -- for nine months, with a provision that the contract could be canceled with 30 days’ notice.

Emerine said he thought the cancellation provision was designed to allow the board to bring in a union bidder in the near future while sidestepping his winning bid by extending the old contract.

Contreras argued that the city should first complete a master plan for concessions before seeking new bids.

Emerine said he believed Contreras pressed his motion because Emerine’s workers were not represented by Local 11 of UNITE HERE, which represents food workers at LAX. UNITE HERE was created this summer by the merger of the Hotel Employees and Restaurant Employees International Union and a textile workers union.

Local 11 is headed by Maria Elena Durazo, who is married to Contreras, and it is a member of the labor federation. It represents the employees of Host International, which came in third in the bidding.

“How can you have the husband of the person who runs the union sitting on the board making the decision that directly affects the union and its pocketbook?” Emerine asked. “It seems to me to be a clear case of a conflict of interest.”

Emerine -- who voluntarily agreed to abide by the city’s living-wage ordinance -- said the airport commission has made it a practice in recent years to not award food concessions to nonunion firms. Contreras said he did not believe his wife’s job is a disqualifying conflict for him. “I don’t think that’s much of an argument,” he said.

Bruce Aoki, an executive with the city Ethics Commission, said his office has not looked into the matter. But he said “it seems a stretch” that Contreras has a legal conflict since his wife’s involvement is indirect.

Contreras denied that the issue of union jobs was a factor in his push to throw out the bids and start over, even though the restaurant workers union supported unionized Host for the concession.

Contreras, a former organizer for the restaurant workers union, said he was concerned about awarding concessions piecemeal without a master plan, and he was skeptical that Local Concepts could pay rent that was 40% higher than the average for the other bidders.

“The question of union representation was not the issue here,” he said. “The issue was the services we provide to people at the airport.”

The panel of airport managers noted that the firm offered a minimum annual payment of $432,368, which was $72,000 more than the second-place bidder, Gloria Jean’s Gourmet Coffee Corp., and $117,000 more than third-place Host International. “It is suspicious,” Contreras said.

In addition, Emerine’s company offered to invest $530,000 in improving the shops, which substantially exceeded the minimum requirement.

“The Evaluation Committee believed that the higher investment in capital improvements would result in a higher-quality facility and translate into higher gross sales,” according to a staff report to the commission.

When the commission raised questions about the recommendation, Kim Day, interim executive director of the department, fired off a memo that said her recommendation was not based solely on the higher financial return.

“The other criteria were relevant experience; concept, merchandise and pricing; facility design and capital investment; and management, operations and customer service plans,” Day wrote.

Emerine said the commission action represents a significant loss for taxpayers because his offer could provide the airport with more than $300,000 per year more than Java Java now pays.

To buttress his argument that Contreras was partial toward Host, Emerine released a copy of a March 2000 letter in which Contreras wrote to his fellow airport commissioners in support of Host-Marriott, a corporate affiliate of Host International, which was receiving a separate contract for a different concession.

In that letter, he cited concerns by representatives of the restaurant workers union. Contreras wrote that Host-Marriott was the most qualified bidder, in part, because it “guarantees that quality wages enjoyed by the majority of LAX food service workers will be extended to these new contracts as well.”

As for the new concession contract, Emma Worthington, an organizer for the union, said she and other representatives attended the commission meeting two weeks ago to ensure that employee working conditions -- not just the financial return to the city -- were considered.

“We supported the best, most responsible bidder,” Worthington said, adding that she believes that bidder was Host in the latest competition.

Emerine said the decision to throw out the bids undermines the city contracting process.

“We are the most qualified. We were recommended unanimously by the staff. And then one commissioner steps in,” Emerine said.

“It was simply because we weren’t union.”