Mar. 27—City Council on March 9 granted a 10-year, $470 million concession deal at Hobby Airport to Areas USA, a subsidiary of the Spain-based Areas SAU, sidelining Pappas, the airport's food and beverage service provider for 20 years. The decision was reached on an 11-6 vote.
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Since the proposal first appeared on the council agenda in February, Pappas repeatedly has criticized Houston officials for what it considered a "flawed" contract process, prompting Mayor Sylvester Turner to accuse the family-run restaurant empire of conducting a "smear campaign" against the city.
Pappas submitted its protest March 13 with Houston's interim chief procurement officer, Jedediah Greenfield, requesting the city set aside the contract awarded to Areas and reevaluate the bids according to the law.
"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," Pappas Restaurants CEO Chris Pappas said in an emailed statement. "We will continue to fight for a just process, and we will continue to pursue all legal actions available."
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Houston's decision to remove Pappas from the airport followed a lengthy procurement process featuring three rounds of bidding since 2019. Eventually, 4 Families, the Pappas-led company, narrowly lost to Areas by a score of 85.8 to 85.2, with the amount of revenue to be shared with the city being the determining factor.
In its protest, Pappas attorney Rachel Hooper argued that the difference of less than one point warrants a reevaluation, especially considering that the second round of bidding was canceled due to close scores.
City records obtained through a public information request indicate that Areas did not rank highly in the earlier bidding round, initially placing seventh out of eight bidders before finishing in fourth place. The Pappas group initially ranked first and ended up tied for second after a best-and-final offer. LaTrelle's, which received half of the Hobby contract, finished first, while SSP America tied with the Pappas group for second place.
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Turner and supporting council members said the decision to go with Areas came down to money. In the third and final round, Pappas held the lead when the scores did not factor in compensation to the city. However, it fell to second place after pledging only 15.5 percent of its revenues to Houston, compared with Areas' 22.2 percent.
Mayor Pro Tem Dave Martin said he had "50 million reasons" to award the contract to Areas when he cast his vote this month, referencing his calculations that the Areas deal would yield that much more money for the city if carried out over 20 years.
In the protest, Hooper alleged that some members of Houston's evaluation committee lacked relevant experience, misapplied criteria and applied unstated ones, and went against the Hire Houston First ordinance, which favors local businesses, among other violations of city law and regulations. She also claimed that the council meeting agendas contained errors, violating the Texas Open Meetings Act.
Turner has defended the city's procurement procedures, saying the process that granted Areas the contract was the same one used in the last three approvals, which sailed through City Council without debate.
The mayor's office Monday did not address the specific points raised in the protest and reiterated that "the city of Houston has followed our normal process regarding the bid process."
Besides demanding the city rescind the contract award, Pappas also requested a post-award debrief from the city, which would include details of and the rationale for the selection decision.
"We have received the protest and request for debrief and are working expeditiously on our review and response to the protest," Greenfield said in an email response. "Once we complete our review and response, we will reach out to schedule the requested debrief as per our standard process."
Areas did not respond to requests for comments. Having paired with several local partners on the deal, the company is expected to bring to the airport restaurants and bars including The Spot, SpindleTap Brewery, Killen's Barbecue and Clutch City Coffee, as well as national brands, such as Raising Cane's and Longhorn Steakhouse.
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