An attempt to award a catering contract for the Midwest Airlines Center has been delayed by suggestions that the convention center staff is trying to steer the contract to a Boston firm headed by three employees that used to work for the catering company that currently has the contract.
“I want to make sure everything is done legally and above board. There have been a lot of rumors and speculation about this contract that we have to go the extra step to make sure it is on the up and up.”
— State Senator Alberta Darling
The planned awarding of the contract was delayed at the April 30 Wisconsin Center Board meeting after some board members expressed concerns about the process, which included allowing all four bidders to review their competitors’ cost proposals and then being offered the opportunity to resubmit new, revised financial proposals.
In addition, four District staff members, including Wisconsin Center District President Richard Geyer, have been removed from the subcommittee overseeing the awarding of the catering contract to alleviate some of the concerns that staff may be showing favoritism. The subcommittee, which also includes four board members, has been reviewing the proposals and is to make a recommendation to the full board.
“I have some real concerns about the way this process has been conducted,” said Milwaukee Alderman Marvin Pratt, a member of the District Board, who is on the review subcommittee. “We need to make sure there is no favoritism shown to anyone.”
State Senator Alberta Darling, a member of the District’s Board, said she was also very concerned about the bidding process, so much so she wanted it delayed “until all the questions were answered.”
“I want to make sure everything is done legally and aboveboard,” said Darling, a River Hills republican. “There have been a lot of rumors and speculation about this contract that we have to go the extra step to make sure it is on the up and up.”
Darling said she was also concerned by suggestions that had been made that District staff was trying to steer the contract to Distinctive Catering, a Boston catering firm.
“I am willing to give District staff the benefit of the doubt and listen to their side of the story,” she said. “But I don’t want to be on a board where something like that would happen.”
Geyer could not be reached for comment. He has stated in several recent letters to the catering firm representatives that he is trying to ensure the process is fair to all four bidders.
“During this process it has been, and continues to be, extremely important to the committee that each bidder is given equal information and an equal opportunity to propose its most competitive bid,” Geyer wrote in an April 18 letter to the four bidders.
Changing prices
Distinctive Gourmet lowered its proposal from $300,000 annually to $125,000 a year, without having made any other changes in its proposal. The new proposal allowed the subsidiary of Boston Concessions Group to go from the highest fee proposed to the lowest, prompting speculation that the firm had been given information about the other firms’ financial proposals.
“We’ve never been part of or heard about one like this. I was shocked to learn that they were allowing proposers to change their bid. This type of action is unheard of.”
— Jeffry Wineman, Jr., Levy Restaurants
Several District Board members said Distinctive Gourmet is headed by three employees that used to work for the District’s catering firm, Fine Host Corp., until it was bought out in late 2002. Chris Verros, president of Distinctive Gourmet, was a group president for Fine Host, in charge of the food and beverage operation of the Wisconsin Center until earlier this year. Greg Fender formerly was Fine Host regional vice president, and Jerry Moses was Fine Host executive vice president.
In fact, due to that speculation, the Wisconsin Center District, on May 1, decided to allow all bidders to resubmit financial proposals and to provide each of them with the financial proposals of the other three firms.
“It has been suggested financial information from respondents’ submittals has been shared with other respondents,” Charles Graupner, an attorney for the Wisconsin Center, wrote in a letter to the four bidders. “Without commenting on the accuracy of those suggestions, it is the decision of the District to make sure all of the respondents are working from an even playing field.”
The District gave the four firms until May 7 to resubmit their financial proposals. The full Wisconsin Center Board is expected to meet May 9 to pick a new caterer because its current contract expires at the end of May.
Darling said it was “highly unusual” for a public board to allow companies to resubmit financial proposals and even more unusual to allow them to see the financial bids of the other firms that had proposed on the contract.
“That just doesn’t smell right,” she said.
In fact, Jeffry Wineman, Jr., executive vice president of development for Levy Restaurants, a Chicago catering firm that is one of the four bidders for the contract, said in the “hundreds” of catering contracts he has bid on, none had ever allowed a proposer to resubmit its price or had provided the original financial proposals to all of the bidders.
“We’ve never been part of or heard about one like this,” he said. “I was shocked to learn that they were allowing proposers to change their bid. This type of action is unheard of. We intend to honor our original bid.”
Comparing the numbers
The following are the original price submittals and the revised submittals as of May 6 for the management fee of the food and beverage contract for the Midwest Airlines Center:
| Company Name |
Original proposal |
Revised proposal |
| Aramark |
$350,000 per year
2.5% of revenue
4% of revenue in excess of $4 million |
None submitted (as of May 6) |
| Sportservice Corp. |
$300,000 per year
3% of revenues |
$150,000 per year
1.5% of revenues |
| Distinctive Gourmet |
$300,000
5% of revenue in excess of $2 million |
$125,000 (first two years)
1.5% of revenue |
| Levy Restaurants |
$175,000 (first two years)
10% of revenue in excess of $6.5 million |
Same as original proposal |
Source: Documents submitted to Wisconsin Center District
Four bidders
Levy is one of four bidders for the contract. The Chicago firm operates many catering contracts around the country, including at Lambeau Field in Green Bay, Staples Center in Los Angeles, McCormick Place Convention Center in Chicago and Orange County Convention Center in Orlando, Fla. The other firms to submit bids are Distinctive Gourmet, Sportservice Corp., Buffalo, N.Y., which holds the food and beverage contract at Miller Park, and ARAMAK, a Philadelphia catering firm.
“During this process it has been, and continues to be, extremely important to the committee that each bidder is given equal information and an equal opportunity to propose its most competitive bid.”
— Richard Geyer, president, Wisconsin Center District
The center’s catering contract currently is held by ARAMARK. The firm took over the contract from Fine Host when it acquired the food service management firm in December 2002. That acquisition allowed the Wisconsin Center is end its catering contract with Fine Host, because of a contract clause that allows for the cancellation if the company is sold.
Fine Host was originally awarded the five-year catering contract in February 1996 and it was extended for another five years in 1998. It was due to expire in 2005.
As part of the rebid, the winning catering firm will be required to put up $1.5 million that District officials plan to use to fund the necessary purchases of equipment and improvements to the Cellular One Arena for the relocation of the Milwaukee Wave and the administrative offices of the Milwaukee Bucks from the nearby Bradley Center.
Milwaukee Alderman Tom Nardelli, a member of the District Board and the review subcommittee, said problems on the contract started during an interview with Sportservice when Charles Pesano, the District’s chief financial officer, questioned whether the firm understood that it only needed to put up a $1.5 million capital investment, not a $3 million investment which had been included in its original proposal.
That prompted the District to offer Sportservice an opportunity to resubmit its financial proposal based on the lower capital investment. In an April 18 letter to all four bidders, Geyer said that because “certain communications on several financial issues were not clearly provided to or understood by all bidders,” all four companies were now being allowed to resubmit their financial proposal.
“After review of our actions, the committee, with concurrence from our attorneys, now feels that it would only be equitable to provide all bidders the opportunity to review its original fee proposal and submit a lower one, if they should choose," Geyer wrote in the letter.
Angry response
That decision prompted an angry response from Levy Restaurants, which pointed out that each firm had to agree to all of the terms and conditions when they submitted their original response.
“I am perplexed that you would allow one bidder the opportunity to reduce its proposed management fee based on their inaccurate assumption of a much larger required capital investment,” Lawrence Levy, chairman and chief executive officer of Levy Restaurants, wrote in an April 21 letter to Geyer.
Sportservice went ahead and submitted a revised management fee of $150,000 a year. Distinctive Gourmet, even though it did not include a higher capital investment in its original bid, reduced its management fee from $300,000 a year to $125,000. It also dropped a 5 percent incentive fee on all sales above $2 million to 1.5 percent on all revenues.
Wineman said he was amazed that Distinctive Catering had lowered its bid by $175,000 even though it did not make a mistake in its proposal and called the reduction “very suspicious.”
“Why would someone who did not make a mistake in their proposal all of sudden lower their fee by more than half?” he said. “That is very suspicious.”
Wineman said all he was asking for was “a fair evaluation of the four original proposals,” and to let the District Board make the decision on the credentials and financial proposals of each firm.
Distinctive Gourmet’s Verros could not be reached for comment.
Michael Tulley, vice president of business development for Sportservice, said he did not have any problems with the process or the opportunity to resubmit financial proposals.
“It’s totally up to the District on how they want to handle the process,” Tulley said. “It’s an RFQ (request for qualifications) and they can do what they want with it. They are just trying to get everyone on the same playing field to see if they can get the best possible fee. I don’t have any problems with that.”
Rough interview
Wineman said throughout the process he has been concerned about its fairness. He said Levy officials were treated in a “very antagonistic manner” by Geyer and other Wisconsin Center staff during its interview, which several District board members confirmed. Levy said the four District Board members treated Levy officials with respect.
“I’ve done hundreds of interviews and I have never been treated so unprofessionally in my entire business career,” he said. “They brought up a number of things they claimed they had heard, but didn’t have time to check out because they were too busy. They all turned out not to be true.”
For example, he said the firm was grilled over its alleged high paper costs in its operation of the catering service for AmericanAirlines Arena in Miami. However, in a letter to Geyer, an official with AmericanAirlines Arena said the confidential operational review that Geyer had cited did not include paper costs and in fact, Levy Restaurants’ paper costs were in line with industry standards.
“I speak for the entire Miami Heat organization when I say that the level of satisfaction with the concession operation at AmericanAirlines Arena has never been higher,” wrote Samuel Schulman, senior vice president of business operations for the Miami Heat.
Nardelli defended Geyer and said he was posing questions to ensure Levy was qualified for, and could handle the District’s, food and beverage contract.
“He was checking on things that were known in the industry,” Nardelli said.
Nardelli said he is confident the board will be able to select a firm that will handle the contract effectively when it meets May 9.
“We need to make sure we make the decision that is in the best interests of the District,” he said.
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05.09.03