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Auditor OKs DIA phone deal
By John Accola
Rocky Mountain News
Friday, November 11, 2005

Denver's city auditor has signed off on a controversial airport concessions contract that went to the low bidder after two other companies were booted for not partnering with a certified disadvantaged business.  Auditor spokesman Dennis Berckefeldt said Denver-based RMES Communications Inc. essentially won the airport pay-phone contract by default, even though the company's annual income projections for the city fell well under one of the rival bidder's.

RMES, owned by black businessman Herman Malone, is a city-certified DBE, or disadvantaged business enterprise, that formerly operated Denver International Airport's pay phones with MCI and later Qwest Communications.

"Basically, the airport had no choice," Berckefeldt said.  "RMES was the only vendor left that met (the city's) disadvantaged business enterprise requirements."

City Auditor Dennis Gallagher had held up the pay-phone contract for more than a month after questioning a procurement process that disqualified Chicago-based FSH and New York's Verizon Communications.

In proposals to operate 200 pay phones at Denver International, both companies said they were committed to fulfilling a federal rule for 40 percent DBE participation.

Denver's Division of Small Business Opportunity, however, ruled that they were ineligible because neither had committed themselves to a partner that held current DBE certification from the city.

FSH, a minority-owned company that acquired Qwest Communications' pay-phone division last year, failed to persuade City Council members to reject the RMES contract.  The three-year contract, with an option to renew for two more years, gives the city a 16 percent cut of pay-phone sales.  RMES estimates annual revenues of roughly $1.3 million over the next two years.

FSH submitted a bid offering a 30 percent commission that would have generated an additional $1.5 million for the city over five years.

The company has since filed a lawsuit against the Denver Department of Aviation and the city's small-business office, alleging a corrupt procurement process.

http://www.rockymountainnews.com/drmn/other_business/article/0,2777,DRMN_23916_4229545,00.html