When Maynard Jackson became Atlanta mayor in 1973, one of his first initiatives was to insist that the paltry amount of municipal contracts that went to minorities - at the time about 1 percent - increase. By 1979, the percentage of minority contracts soared to 39 percent.
Soon, minority firms were filling potholes, erecting public buildings and, notably, winning gigs among airport concessionaires.
The catchphrase for the program was "DBE" - disadvantaged business enterprise. Atlanta quickly began nurturing black entrepreneurs and the DBE program became synonymous with Atlanta.
Still, the DBE program has been controversial. Over the decades there have been lawsuits and indictments linked to the program. And now the DBE program is again being called into question, this time thanks to the Federal Aviation Administration (FAA), which has concluded that some of the well-connected firms and executives claiming "disadvantaged" status, are, well, not. The federal government oversees the airport's DBE program.
Last year, the city selected firms to revamp Hartsfield-Jackson Atlanta International Airport's lucrative restaurant and retail spaces. The entire process was rife with politics, headlines, and lawsuits. A tight group of "disadvantaged" supporters of Mayor Kasim Reed won big - by some estimates close to half of the $3.4 billion in anticipated revenue for the concessions over 10 years
Lyndon Wade, the former CEO of the Atlanta Urban League, a nonprofit community advocacy group, had a legitimate airport DBE, the Hot Dog Zone. He says: "They just washed us away. The rules didn't mean anything to them. They just picked the ones they wanted."
Reed has claimed he had no role in the selection process. Exhibits in court documents, including dozens of calendar entries which a concession company claims show that Reed met on the concession process, allege he had intense involvement. Those exhibits may ultimately be argued in court as to whether that involvement meant the deck was stacked in favor of Reed's supporters.
One person who won in the recent airport concessions procurement process was Dan Halpern, the CEO of Jackmont Hospitality, a firm founded by Maynard Jackson. Halpern is one of the city's most politically connected Democrats and among the top 200 fundraisers for Barack Obama. Halpern is Mayor Reed's former campaign co-chairman, and has been appointed by Reed to the Atlanta Housing Authority's board of commissioners.
According to a glowing tribute to Jackmont in the August 2011 issue of Black Enterprise magazine, Halpern ran two T.G.I. Friday spots at Hartsfield-Jackson Atlanta International Airport, which garnered his company about $13.5 million of its annual $50 million in revenues.
After Jackson's 2003 death, Jackmont's partners were Halpern and Brooke Jackson Edmond, the former mayor's daughter. Halpern, Edmond and Jackson's former wife, Valerie, also created a related venture, Atlanta Restaurant Partners.
It's a great success story, with Halpern now self-proclaiming that he is heir to an African-American business dynasty. Atlanta Restaurant Partners claimed DBE status in the airport concessions, winning one small contract and parts of many larger contracts. Minority status was critical for the success of those contracts, and had the company not qualified, the lack of minority participation would have doomed most or all of the contracts that included Halpern's firm.
Many people have assumed Halpern is black. "He certainly presented himself that way," Alan Hughes, who wrote the Black Enterprise article on Halpern, told me. But, it ain't exactly so, as the federal government has now determined.
When some Atlanta reporters earlier this year questioned Halpern's minority status he said his minority claim is Native American ancestry, the Upper Cayuga Six Nation tribe. Unfortunately, that tribe is Canadian. The FAA, which is trying to decertify Halpern and other firms from their disadvantaged status, wrote the tribe doesn't qualify for DBE status because it "is not recognized by the (U.S.) Bureau of Indian Affairs."
Also, Halpern and other Reed-connected minority vendors at the airport - notably Mack Wilbourn and Hojeij Branded Foods' Carol Hojeij - were too wealthy to merit disadvantaged status, according to the FAA. Generally, "disadvantaged" firms doing business at the airport must generate less than $52 million in annual revenue over three years and its principals must have a personal net worth of less than $750,000.
Wilbourn has feted President Barack Obama at his $1.2 million manse in Ansley Park, a strange "disadvantage."According to WSB-TV Channel 2 investigative reports, Hojeij allegedly created a front company to expand its share of airport winnings. A Hojeij spokesman has said the two outfits have a "mentoring" relationship.
Atlanta Restaurant Partners - Halpern - won hundreds of millions of dollars in airport concessions because it is "disadvantaged." But Halpern, according to the FAA, doesn't qualify as a minority. And, according to an FAA letter, there is "lack of sufficient evidence to support the conclusion that firm owners Valerie Jackson and Brooke Jackson Edmond control the firm... ." The FAA asserted that the women lacked credentials showing they work at the airport. They have responded by saying that they visit the restaurants when they fly out of the airport.
The DBE program evolved out of an effort to break a hegemony on city contracts by cronies. Now, according to critics, minority contracting is a ruse to create new windfalls for a few politically connected companies. Many real disadvantaged minority firms are now starved from city business because the well-connected outfits grab most of the money.
There are lessons about what's happened to minority vendors in the city:
First, Maynard Jackson envisioned a "graduation," where DBE companies grew to where they were no longer disadvantaged. A shining example is the large contractor H.J. Russell & Co., which flourished as a DBE but which now no longer claims preferential status. Similar graduations have long passed for other firms that have prospered.
Second, Atlanta mayors gave women and minorities the opportunity to get a boost in numerous enterprises via DBE. But, according to critics including litigation from companies that lost concession deals, on the outside it looks a lot like the program at the airport has become a spoils system, with the bulk of the money going to large campaign contributors.
The Georgia Department of Transportation, the state agency tasked with certifying that DBE firms claiming disadvantaged status are, in fact, disadvantaged, was finishing its work on a report about Wilbourn's and Jackmont's DBE status as CL went to press.
If those firms are deemed ineligible for DBE status, it will fuel the litigation challenging the airport concessions. Atlanta's brand as a city where minority firms can turn determination into an enterprise will be tainted. The city should restart the whole process without favoritism and conflicts of interest. Meanwhile, to ensure that true, struggling women- and minority-owned firms get a break, the whole DBE program needs an overhaul.
NOTE: An earlier version of this column linked to an appeal that was ultimately rejected by a city administrative official. The column has also been updated to say the company alleged that Reed was involved in the process. In addition, the airport's disadvantaged business enterprise program is a federal, not a city, program.
UPDATE: On Dec. 20, 2012, Georgia Department of Transportation officials concluded that all four firms whose DBE status was questioned by the Federal Aviation Administration deserved to retain their special certification.
Complete disclosure: John Sugg is a board member of Common Cause of Georgia. Mayor Reed accused Common Cause members, including Sugg, of conflicts of interest during last year's airport concessions selection process after the government watchdog group questioned the procurement. Communications between Reed and Sugg are on the Common Cause website.
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