The bill is coming due on Miami International Airport’s billion-dollar expansion program. Yet Miami-Dade County commissioners just don’t seem as concerned as they should be. Otherwise, why would they award a contract to a baggage-wrap company that stands to provide less revenue for the airport than the bid that they spurned?
Last month, county commissioners rejected the administration’s well-vetted recommendation to re-award the contract to Sinapsis. According to the county mayor’s office, in the 25 months that it has provided the bag-wrapping service, Sinapsis has paid the county $22.5 million. Compare that to the return from Secure Wrap of Miami, which had the concession for about a decade. It paid the county — as per agreement, to be fair — approximately $12 million during all that time.
When the contract came back up for bid, Sinapsis — now called TrueStar — offered the better deal, a selection committee determined. But somewhere in between the submission of the bids and the commissioners’ decision, a platoon of lobbyists dropped in, and second-place Secure Wrap of Miami — now named Safe Wrap — got the commission’s OK.
TrueStar has sued, saying commissioners violated the procurement process. Indeed, commissioners are meddling where they shouldn’t, taking advantage, no doubt, of transition at the top. Jose Abreu, who last week retired as aviation director — and a stellar one, at that — leaves MIA with a higher credit rating and lower airline landing fees. He wrestled the out-of-control expansion project into one that has set the standard. Commissioners should not undercut Mr. Abreu’s good work.
County Mayor Carlos Gimenez vetoed the commission’s decision, even though it was an 9-2 vote, pretty much veto proof unless several commissioners who rejected TrueStar’s bid change their minds.
And they should. The economics call for it. Last year, Sinapsis asked the county to lower the company’s “minimum annual guarantee” — MAG — payment to the airport to $8.7 million from $11.1 million. The company said that it was difficult to compete because Secure Wrap, which had had the contract, was now wrapping bags off-site. Passengers who might have been Sinapsis customers were waylaid beforehand. (Baggage-wrap vendors must pay the airport either the MAG or a percentage of its monthly gross revenues, whichever is greater.)
Commissioners reduced Sinapsis’ payment, cut its contract and put out a new bid.
This time around, Safe Wrap matched TrueStar’s $9.6 million minimum annual guarantee, but not its 65 percent of monthly gross revenue, offering 52 percent instead. This is even lower than the 56.5 percent Sinapsis now pays. Mr. Gimenez has said that in months with heavy passenger traffic, the percentage of monthly gross revenues from wrapping baggage has exceeded the minimum required payment. He says that hiring Safe Wrap could cost MIA $6 million in baggage-wrap payments in the first three years of the 10-year contract. That’s not small change. Now that the airport is putting the finishing touches on its $6.5-billion capital program — including new terminals, an upgraded baggage-handing system and a people mover that connects to the MIC — it’s time to pay the bonds that financed it. MIA needs to clear $1 million a day to make good on its debts.
The economics of TrueStar’s bid make sense, the commission vote does not. It should support the mayor’s veto and go with his recommendation.