How a single lobbyist stole a major LAX concession deal

Here's a small but telling example of how L.A. City Hall is really run, as reported by Gene Maddaus in the LA Weekly, Last fall, airport officials recommended that a new concession operator replace HMS Host, which has had the contract for like a zillion years. Host finished dead last among four bidders. By all rights, that should have been that. But in L.A. politics, you're only as good as your lobbyist, and Host had a good one in John Ek. His relationship with City Attorney Carmen Trutanich and Council Members Janice Hahn and Tony Cardenas turned things around:

Host spent $1 million on lobbying in 2010 and, guided by Ek, appealed the outcome of the bidding. Ordinarily, the appeal would be heard by the Airport Commission, which likely would reject it. But the Airport Commission never got a chance to weigh in. That's because Trutanich, who as city attorney was responsible for offering legal advice, found that commission president Alan Rothenberg had a conflict of interest. Rothenberg's conflict was that he served on the board of California Pizza Kitchen, which was part of Host's bid. Ostensibly, the city attorney's ruling would prevent Rothenberg from acting on Host's behalf. Trutanich could have merely disqualified Rothenberg and allowed the rest of the Airport Commission to hear the appeal. If the commission rejected Host's appeal, Host could have taken its case to the full council. Instead, Trutanich decided to disqualify the entire commission. That decision changed the entire process, sending the appeal into a different arena, one more solicitous to Host. The appeal went to the council's Board of Referred Powers, an obscure panel chaired by Cardenas and featuring Hahn as a member.

Host argued that the bidding process was flawed and should be thrown out. Kelly Martin, the city attorney assigned to LAX, wrote a response that strongly defended the airport. When Cardenas' chief of staff, Jose Cornejo, received Martin's arguments last June, the first thing he did was forward it to Ek, who digested it for him in an email: "Heavy on arguments on the policy issues and basically says they can waive requirements. Let's talk after you've read it."In other words: Martin is talking about substance. We're not going to win there. We're going to win on process.


By the time the Board of Referred Powers convened in July, Cardenas and Hahn were full of questions about the integrity of the bid process. "Would you say the panelists in food and beverage had experience in food and beverage?" Hahn asked. After that meeting -- the first of several that would drag out for three months -- Cardenas issued a list of 30 detailed questions challenging the airport's process. Ek and Host had Cardenas' and Hahn's votes in the bank, but they needed a third. To get there, they needed a new strategy. So in August, they claimed that the winning bidder on the most lucrative contract, SSP America, should be disqualified because of a conflict of interest.

The claim was frivolous - anybody could see that. But it was Trutanich who gave it legitimacy, which provided just enough cover for the board to disqualify the winning bidder. The board then voted 4-1 to restart the bid process, which means that Host will stay on for God knows how long.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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