The Santa Monica City Council is considering ways to make the city’s competitive bid process easier for small businesses.
In the next few months, city officials will look at how the city leases public assets, how existing lease holders are treated in the “request for proposal” process, and how the city can encourage more small businesses to submit proposals.
Councilmember Herb Katz brought the issue to the City Council’s attention on Tuesday, October 11th, after the owner of Perry’s Beach CafÈ and Rentals complained about the current competitive bid process for the beach concession stands.
The City of Santa Monica owns the four Santa Monica State Beach concessions stands and leases them to Perry’s owner Richard Chacker.
“Someone applying for this would need to put up upwards of $525,000,” Katz said. “I am concerned because maybe we are not looking at small businesses for the beach concession stands.”
A consultant was hired by the city to write the request for proposals for city-owned food serv-ice operations at the Civic Auditorium, beach concession stands, and a beach cafÈ on the Pacific Coast Highway.
Chacker said the request for proposal process puts small businesses at a disadvantage and favors large business lease holders because the city is requiring too much capital investment.
Chacker wrote in a letter to City Council members that language in the request for proposals “encourages prospective bidders to bid on all food service and retail operations for all locations.”
“It is unlikely that a small business or family operator will have the financial and/or human resources to successfully bid on all operations identified in the request for proposals.”
The current competitive bid process for the food service operations ended Wednesday, October 12th.
Katz said city officials informed him that small business did submit proposals.
City attorney Marsha Moutrie said businesses could have bid for segments of the food service operations and not all operations.
“Our duty is to direct staff to look at the request for proposals and give favorable consideration to small business,” Katz said.
Moutrie said that asking staff to make changes to the process after proposals have already been submitted would be inappropriate.
City manager Susan McCarthy warned that accepting recommendations from a current lease holder about the competitive bid process would be “unwise.”
Chacker made several recommendations to the City Council about the process in his letter.
“One factor that staff feels strongly about is that the entire process be unbiased, with nobody on the inside track,” she said.
She said the bid process was fair to small businesses.
“Small businesses fail because they do not have a good business plan and do not understand the expectations,” McCarthy said.
“The city made every effort to make the expectations clear and we believe that a creditworthy small business can meet our financial expectations.”
Councilmember Kevin McKeown said the City Council and city officials should discuss the competitive bid process by also looking at Third Street Promenade operations.
“We don’t determine who gets these contracts, we just set the policy,” McKeown said. “This is part of a larger issue about our guidelines for leasing public space.”
“Competition is good for the city and good for businesses,” McCarthy said.