An appeal to a regional regulatory agency has been filed by Mery & Associates LLC, also known as Buena Vista Barges, challenging the legitimacy of the Go Rio San Antonio partnership recently selected by City Council to receive the 10-year, $100 million river barge contract.
Mitsuko Ramos, the lobbyist for the Mery/Buena Vista group, filed the challenge on June 1 and a revision on June 4 with the South Central Texas Regional Certification Agency (SCTRCA) in San Antonio, a relatively obscure 501(c)(3) nonprofit regulatory body whose mission is “enhancing participation for Disadvantaged, Small, Minority, and Woman owned businesses in public/government contracting and purchasing activities.”
The nonprofit agency exists under authority of the Small Business Administration.
In the appeal, Ramos challenges the legality of the Go Rio partnership’s Small Business Enterprise certification after it restructured its ownership between the first and second round of scoring conducted by City staff. VIA Metropolitan Transit Board Chair Hope Andrade, listed as an individual owner along with Lisa Wong, owner of Lisa’s Café & Cantina, partnered with Houston-based Landry’s Seafood Restaurants to bid for the contract the first time around.
In the second go-around, however, Andrade was presented as a business rather than an individual. That change allowed the team to collect crucial extra preference points as a small, woman and minority-owned business with a 51% majority interest in Go Rio.
“Since the mayor and the Council overwhelmingly approved Go Rio to bring a new level of service to our river, our focus has been on the transition and planning for operations. We have scheduled a tour to Wisconsin to see the new barges and are working daily with City staff on many other issues,” Andrade told the Rivard Report. “The false allegations raised by the lobbyist for the third place team are red herrings and not supported by the facts.”
Ramos argues in her appeal that the SCTRCA never conducted a second evaluation to certify the new structure, and City staff never scrutinized the reorganization, either.
“Instead of an individual, you have a business in control [of Go Rio],” Ramos told the Rivard Report on Tuesday. “A business could be purchased,” but an individual can’t. “That is why joint ventures are not eligible for certification.”
Andrade and Wong have no past experience in operating a river cruise business. Andrade’s move, Ramos’ appeal argues, was a subterfuge with Landry’s still responsible for 100% of the investment in the river barge operation, and with more than 1,000 employees locally and 60,000 worldwide, an entity that is not eligible for Small Business Enterprise certification.
“[Andrade and Wong’s] control is being basically handed over to Landry’s,” Ramos said. “That’s not a bad thing necessarily – to team up is great … but in order to qualify [for SBE certification and points] they have to also show the individual owner has control over the local operations.”
Without the local preference points granted to Go Rio under its reorganization, it would have failed to win the contract. Instead, Chicago-based Entertainment Cruises would have finished ahead of Go Rio and three other bidders. The Chicago group finished far ahead of other bidders in the original round of scoring by City staff, but that scoring was negated when Mayor Ivy Taylor objected to the presentation made to staff on behalf of the group by former Mayor Phil Hardberger.
Each bidder hired lobbyists to represent it through the process, and while Hardberger was not registered as a lobbyist, Taylor and other bidders said he acted as one. The mayor directed City staff to start over and conduct a second round of presentations and scoring.
That was when Andrade reorganized, in essence, as a new, one-person business, giving her and Wong majority control of Go Rio as local businesses in partnership.
“City staff will continue to act based on the vote by City Council. However, we will monitor the SCTRCA challenge process,” Assistant City Manager Lori Houston stated in an email to the Rivard Report. “The City is not involved in the challenge. Consequently, we are not in a position to comment on the merits of the challenge or to speculate on its potential outcome.”
“Managing the contracting process is City staff’s responsibility,” Taylor said in a separate statement. “I did specifically ask a clarifying question about certification from the dais and staff responded that Go Rio was properly certified.”
If all the teams were properly certified, Ramos argues, Go Rio would not have qualified for the 10 local preference points.
George Mery, who owns Mery/Buena Vista, is convinced his “100% local” company should have won the contract. Mery & Associates operates Elegant Transportation Services, which has more than 150 limousines, buses, and other vehicles for hire deployed across Texas. Compared to dealing with the regulations, maintenance, and other logistics associated with his existing “tourism transportation” business, Mery said, “driving 44 boats five miles per hour in a circle,” should be easy.
That’s not to diminish the expertise required to safely and effectively navigate the narrow, historic River Walk, Ramos said, but “[Mery] is overqualified for that.”
But Council never got a chance to hear Mery’s presentation. Even after adding staff with more experience with river barges and the River Walk, Mery/Buena Vista scored lower on over proposal quality and experience during the second round, but was able to capture local preference points.
“Wouldn’t you assume that you would gain [experience] points? Well, no, we lost points,” Mery said. “It’s obvious that there is an issue [with this process] … it’s tainted now for sure, and I think it requires a third verse.”
Mery told the Rivard Report that Jim Mery, a distant cousin who works for the City’s Center City Development and Operations, recused himself from involvement in river barge contract talks years ago.
Ramos’ letter to Assistant City Manager Carlos Contreras poses several direct questions about how City staff vetted the five bidders in the second round, and asks whether staff contacted SCTRCA to confirm new certifications for Go Rio, or whether Go Rio even informed officials at the agency about its new ownership structure. Ramos also asked City staff if they asked Andrade whether she intends to resign as VIA Chair so she can devote her full-time attention to the river barge business as CEO of Go Rio.
City Council voted 10-1 to approve Go Rio’s selection, with only City Councilman Ron Nirenberg (D8) opposing the selection. Nirenberg and Taylor are engaged in a tense home stretch run to the June 10 runoff election for mayor. Early voting concluded Tuesday at 8 p.m. Nirenberg declined comment on the appeal.
Disadvantaged individuals and companies that bid for public contracts first seek certification from the SCTRCA to establish their eligibility for preferential consideration from government bodies that award competitive bid contracts. Cities, counties, and other entities routinely rely on the agency to handle such certification and rarely challenge the findings.
“I really want people to respect the intent of the SCTRCA’s mission and the City’s mission to really help out small businesses and the community,” Ramos said.
A bidder unable to win SCTRCA certification would be unlikely to qualify as a disadvantaged, small business, woman or minority-owned business. But once individuals, companies, or partnerships do win such certification they gain a considerable business advantage in the competitive bidding process. In essence, they are awarded points not for their business performance, but for who they are.
“They have a big agency here and they make you go through an extensive process to determine whether you are a minority business,” stated Frank Burney, a lobbyist working with the Go Rio team. “We provided all the documentations they requested and our client was certified and there has been no change in the status of Go Rio since then.
“Based on everything I know there is no reason for the agency to change its certification as a small, women, minority-owned business.”
Critics of the system say the City of San Antonio and other government entities use the certification to avoid conducting their own independent analysis of bidders. In the Go Rio case, for example, Wong acknowledged in its second round presentation to City Council that she and Andrade have a combined net worth of more than $30 million, yet they were treated as disadvantaged business owners.
Paul Sanett, vice president of Engagement and Innovation at Entertainment Cruises, had not seen the document when the Rivard Report spoke with him on Tuesday, but said “if there is an opportunity to throw our hat back into the ring we would love to do that, obviously.”
While the Chicago-based team has left San Antonio, Entertainment Cruises continues to explore opportunities with the organizations and partners developed while working on its river barge operation RFP, Sanett said, including Chef Johnny Hernandez and Sweb Development Founder and CEO Magaly Chocano. He’s also looking into the possibility of hosting students from St. Philip’s College in Chicago to intern with the company.
“Whatever happens with the river barge, we haven’t given up on San Antonio,” he said. “We built a lot of good relationships in SA and remain committed to the city”
The City’s process for bidding the lucrative river barge contract has come to be one of the most troubled and controversial contract lettings in many years. The process that concluded with the vote in late May actually began four years ago.
Now it appears the contract is headed toward regulatory challenge and, depending on the outcome, possible litigation. Ramos asked City staff to refrain from negotiating the actual contract terms with Go Rio while the appeal with the SCTRCA is under consideration.
This article was originally published on June 6, 2017. It has been updated with clarifications about Ramos’ challenge.