Bidding process for DIA concessions is unfair and needs reform, city auditor says

Denver International Airport’s operator selection process for its restaurants, bars, retail businesses and passenger services is not fair and the incentive program the airport offers to concessionaires should be scrapped, said the city auditor.

In a report released ThursdayDenver Auditor-Elect Tim O’Brien says the DIA’s dealership contract award process may be in violation of an executive order require that most municipal contracts be subject to a competitive bidding process. The airport could be missing out on revenue by not selecting the best contractors for its opportunities, the audit found.

“They should have grabbed it a long time ago,” O’Brien said in a press release accompanying the report. “Denver Airport is one of the busiest in the country. With millions of people passing through, these concession contracts are very lucrative. Companies do not need additional incentives to want to operate there.

O’Brien and his team discovered that the airport allows some concessionaires to bypass bidding processes. The DIA’s “Premium Concession Program” was designed to provide incentives to concessionaires that airport officials believe bring value to the airport, according to the audit report. But the airport pays $500,000 a year to an outside company to run the incentive program and has never assessed whether it is truly beneficial.

There are also many elements of the airport’s contractual operation that are unfair, including allowing concessionaires whose contracts have expired to “book” and keep their spaces. As of August, 40% of active concession deals at DIA were backlogs dating back to at least the end of 2019, according to Thursday’s press release. The average length of contract expiry was more than 5.5 years, with some going back a dozen years.

The airport’s practice of destroying score sheets that measure bidders’ suitability for concession opportunities also renders the process opaque and raises further questions about fairness, the auditor’s report says. The process was also audited in 2014 and it was recommended at the time that airport officials stop destroying the sheets.

The bidding process for airport concessions was the focus of a 2018 lawsuit. That lawsuit alleged, in part, that DIA officials destroyed tally sheets showing that a contract for four catering locations had been awarded to a lower rated bidder. The case was dismissed but refiled in 2019 with additional allegations that the FBI was investigating the bid-rigging allegations. That case is still pending in Denver District Court, according to attorney Stephen Long.

The auditor’s office provided a list of recommendations to the DIA to resolve the problems encountered in the concession award process. Ending the top incentive program. Other recommendations include conducting a cost-benefit analysis, updating the airport concessions master plan, revising maintenance contracts, and updating record keeping policies. Specifically, the airport should keep scorecards of concessionaires bidding on competitive contracts for seven years, the auditor’s office recommends.

“I’m concerned about how these issues have gone on for so long,” O’Brien said in his press release. “But I believe airport officials are willing to make the necessary changes in the future. I look forward to seeing their progress when we follow up.

DIA officials did not immediately respond to a request for comment Thursday afternoon.

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