Is This Any Way to Run an Airport?

After years of flying first class, politicos and lobbyists are now having their baggage inspected -- by federal agents

Federal investigators have issued grand jury subpoenas for all county documents relating to the airport's fuel-farm contracts. They also demanded records from Air Terminaling, Advance Petroleum, World Fuel Services, and International Recovery. "What I told those idiots at the FBI is that they don't need any subpoenas," Bradley says. "If they want to know something, all they have to do is ask me. There is nothing there. I don't know why they're making a big thing about Rick and I supposedly being friends. I never ask anyone for any favors. I don't need any favors."

A review of the subpoenaed county records, as well as interviews with a half-dozen current and former airport employees involved with the fuel farm (several of whom also have been interviewed by the FBI), reveal that Elder did not follow normal county procedures with the fuel-farm agreement and that as a result, Air Terminaling has reaped substantial financial benefits. (Howard Goldman, a spokesman for International Recovery Corporation, says the company has complied with all requests for documents made by the federal grand jury, adding, "We do not believe there have been any improprieties.")

On December 17, 1991, two weeks after Elder selected Air Terminaling and the company began operating the fuel farm, the county commission without debate ratified the emergency month-to-month contract. At that same meeting commissioners also approved a "request for proposals" (RFP) to find a permanent long-term manager not only for Pan Am's fuel farm but for the airport's other fuel storage facilities controlled by the county.

Normally, following commission approval of an RFP, the request is advertised and bids are received. But the RFP for a fuel-storage management company was never advertised and no bids have ever been taken.

Shortly after the commission approved the RFP, says one airport official, Elder began having "second thoughts" about the bid process. He repeatedly ordered reviews and changes to the RFP, delaying any advertising of the contract. "It seemed like it went back and forth, time and time again," says the airport official, who was knowledgeable about the process and who requested anonymity. "Some of the changes were legitimate, but others seemed like bullshit."

Aviation department engineer Rich Raymond says he doesn't want to comment regarding the necessity of the changes Elder ordered. "He did keep sending me back to do more of this and more of that," Raymond explains, "but he was the boss and I was the messenger."

One result of these delays is that Air Terminaling has been allowed to continue operating the fuel farm under an unusually profitable contract. According to aviation officials familiar with the fuel industry, Air Terminaling is estimated to be making profits of between two and three million dollars per year. (Air Terminaling refused to divulge its profit figures for this article.) But a company operating the fuel farm under the terms of a new management agreement (such as the one Elder delayed) would make far less profit, as little as $250,000 per year, according to the same aviation officials. If that is the case, Air Terminaling may have made more money this past year alone than it would have under ten years of the proposed management agreement.

Air Terminaling saw another advantage in keeping its emergency month-to-month arrangement: the terms of the proposed long-term agreement would have prohibited it from even bidding for the contract.

In drafting the qualifications for potential bidders, aviation department staffers sought to avoid conflicts of interest; they did not want one oil company or fuel importer or airline to control the vital tank farm, which could give that firm a powerful weapon over competitors. And so the proposed agreement excluded oil-refining companies, fuel suppliers, and airlines. The proposed agreement went even further by restricting any subsidiary of such companies, for fear subsidiaries would simply follow the orders of their parent firm or pass along confidential information about competitors. Air Terminaling was therefore barred from consideration because its affiliates, Advance Petroleum and World Fuel Services, were fuel suppliers.

In early 1992, Elder ordered a slight change in the wording of the proposed long-term agreement, a change that made it possible for fuel suppliers, as well as their affiliates and subsidiaries, to bid on the contract. And with that, Air Terminaling was now qualified to bid.

This caused a small uproar within the fuel industry, as companies decried what they saw as a double standard. Why should fuel suppliers now be allowed to compete while oil refiners and airlines were still excluded? Dan Hill, chairman and chief executive officer of the oil-refining company Coastal Fuel, wrote to Elder: "The exclusionary description crafted to limit qualified bidders in the way yours does is unfair and, in our view, highly suspect from the legal perspective."

Elder responded with an indignant letter of his own: "We recognize and respect your right to disagree, and in fact expect that you would disagree, but do not respect the tone of your letter, which has degenerated in an obvious attempt by Coastal to cast doubt and aspersion on the fairness of the process or the intent of the county staff."

Did Elder's alteration of the proposed agreement serve the best interests of the county? Not according to acting Aviation Director Gary Dellapa. One of his first acts upon taking charge of Miami International Airport was to rescind Elder's changes and reinsert the conflict-of-interest restrictions.

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