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Pappas Restaurants files prote...

Pappas Restaurants files protest with City of Houston over Hobby Airport contract

Days after being ousted as the main concessionaire at Houston’s Hobby Airport during a contentious — and controversial — bidding process, Pappas Restaurants has filed a formal protest with the city alleging that City Council violated local and state laws over the course of a convoluted procurement process that spanned nearly four years and several rounds of bidding.

Locally-owned Pappas, operating as 4 Families, has managed concession operations at the airport since 2002, when they won the first of two 10-year contracts with the city. On March 8, after delaying the vote for several weeks, City Council finally decided to award a new contract to Areas USA, a company based in Spain with an offshoot in Miami, Florida (and now, Houston). While the new contract will mean the end of Pappas-brand restaurants in the airport, Areas intends to bring local brands like Galveston hangout The Spot, Spindletap Brewery, and Killen’s Barbecue to the transportation hub.

The deal is worth $470 million and is expected to bring “a significantly higher rate of return” than Pappas’ proposal, according to the Mayor’s Office of Communications. During debate ahead of the vote, Turner said the deal constitutes a difference of $20 million in revenue for the city over the next 10 years.

The process of awarding the contract, which first began in 2019, was unusually drawn out, in part due to the COVID-19 pandemic. But representatives of 4 Families, including Pappas Restaurants CEO Chris Pappas, have also pointed to a cryptic process that was at one point shelved by Council for being too close to call.

“The City violated its own policies throughout the entirety of the Hobby Airport procurement process, and we intend to continue to investigate and hold them accountable,” Chris Pappas said in a statement Tuesday. “In addition to filing a protest, we have requested a post-award debriefing, which is permitted by the City of Houston’s most recent Procurement Manual. We have not received a response from the Procurement Department to either the debriefing request or our protest.”

In a statement provided to Chron, Jedediah Greenfield, Houston’s chief procurement officer, said “The City of Houston has received the protest and request for debrief. We are working expeditiously on our review and response to the protest. Once we complete our review and response, we will reach out to schedule the requested debrief as per our standard process.” The city’s procurement office has 30 days to investigate and respond to the protest.

Among nearly a dozen issues laid in the formal protest, 4 Families alleges:

  • Some members of the evaluation committee lacked the relevant experience to serve on the committee
  • The City applied unstated evaluation criteria
  • The evaluation committee improperly failed to identify 4 Families’ local participation as a strength
  • The City improperly failed to apply the Hire Houston First Ordinance

4 Families wasn’t the only group who saw issues with the city’s procurement process. During debate on the vote on March 7 and 8th, several members of council expressed frustration with the city’s procurement manual, including a lack of guidelines on how to proceed if a two bids are too close to decide, along with what constitutes “too close.”

Council member Robert Gallegos, who represents the district in which Hobby Airport is located, said that the restaurants within Hobby constitute a $5.8 billion dollar benefit, and that while Pappas’ success has been proven over the past two decades, Areas has not. “This procurement process has holes in it,” he said. “Do you rally want to risk that?”

As for 4 Families, Pappas has said the company is exploring all of it’s legal options.

“We will continue to fight for a just process, and we will continue to pursue all legal actions available.