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R7L-Accept Recommendation Food And Beverage Services For MBCCCOMMISSION ITEM SUMMARY Condensed Title: A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Approving Option "A" And Accepting The Recommendation Of The City Manager Pursuant To Invitation To Negotiate No. 059- 2013me, For Food And Beverage Services For The Miami Beach Convention Center {ITN), And Authorizing The Administration To Enter Into Negotiations With The Second And Third Ranked Proposers, Centerplate And Aramark; Or, In The Alternative, Approving Option "B" And Rejecting All Proposals In Response To The ITN, And Authorizing The Administration To Include The Provision Of Food And Beverage Services For The Miami Beach Convention Center As A Component Of The Scope Of Services In The New Convention Center Management And Operation Agreement Being Negotiated With Global Spectrum. Key Intended Outcome Supported: Maximize Miami Beach as a Destination Brand Supporting Data (Surveys, Environmental Scan, etc: The 2012 Community Satisfaction Survey indicated that the average attendance last year at the Miami Beach Convention Center was four (4) times , yet 18% of the residents visited over six (6) times. Item Summary/Recommendation: On December 12, 2012, the Mayor and City Commission approved the issuance of Invitation to Negotiate {ITN) No. 059-2013ME For Food and Beverage for the Convention Center {ITN). ITN No. 059-2013ME was issued on February 4, 2013, with an opening date of March 12th, 2013. A pre- proposal conference and a site visit to the facility was held on February 13, 2013. Twelve (12) downloaded from The Public Group. Additionally, the Procurement Division notified 11 additional proposers via e-mail, which resulted in the receipt of four (4) proposals: Aramark, Centerplate, Ovations, and Levy Restaurant. On March 4, 2013, the City Manager via Letter to Commission (LTC) No. 076-2013, appointed an Evaluation Committee {the "Committee") which convened on March 26, 2013 to consider proposals received and interview proposing teams. The Committee discussed its individual perceptions of the proposers' qualifications, experience, and competence, and further scored and ranked the proposers accordingly. A motion was presented by Steve Hass and seconded by Ita Moriarty to recommended entering into negotiations with the three (3) top-ranked proposers: Ovations, Centerplate, and Aramark. Six (6) committee members were in favor of the motion presented; two (2) committee members, Jeff Lehman and Stuart Bloomberg, opposed to the motion. The motion passed. After considering the recommendation of the Evaluation Committee, the City Manager also exercised his due diligence. This review necessarily included his consideration of the conflict of interest issues and their potential impact, in determining whether or not to recommend the sort-listing of Ovations pursuant to the ITN, as well as the superior ranking received by Ovations in the process. As such, the City Manager recommends that the Mayor and the City Commission enter into negotiations with the second and third ranked proposers, Centerplate, and Aramark, or, in the alternative, that the City Commission reject all proposals in response to the ITN, and further authorize the Administration to include the provision of food and beverage services for the Miami Beach Convention Center as a component of the scope of services in the new Convention Center management and operation agreement being negotiated with Global. ADOPT THE RESOLUTION Advisory Board Recommendation: Financial Information: Source of Amount Funds: 1 I I 2 OBPI Total Financial Impact Summary: AD MIAMI BEACH 571 Account ~ City Manager --~------~~~~ --------4 3LN\ AGENOAITE DATE ~-JJ-!3 MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: FROM: Jimmy L. Morales, City Manager DATE: April17, 2013 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING OPTION "A" AND ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER PURSUANT TO INVITATION TO NEGOTIATE NO. 059-2013ME, FOR FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (ITN), AND AUTHORIZING THE ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH THE SECOND AND THIRD RANKED PROPOSERS, CENTERPLATE AND ARAMARK; OR, IN THE ALTERNATIVE, APPROVING OPTION "B" AND REJECTING ALL PROPOSALS IN RESPONSE TO THE ITN, AND AUTHORIZING THE ADMNISTRATION TO INCLUDE THE PROVISION OF FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER AS A COMPONENT OF THE SCOPE OF SERVICES IN THE NEW CONVENTION CENTER MANAGEMENT AND OPERATION AGREEMENT BEING NEGOTIATED WITH GLOBAL SPECTRUM. ADMINISTRATION RECOMMENDATION Adopt the Resolution. KEY INTENDED OUTCOME SUPPORTED Maximize Miami Beach as a Destination Brand BACKGROUND The initial term of the agreement with the City's current vendor, Centerplate, to provide food and beverage services at the Miami Beach Convention Center (Convention Center or MBCC), expired on September 30, 2012 (the Centerplate Agreement). The Centerplate Agreement also provides for two (2) five (5) year renewal options, to be exercised at the City's discretion. In anticipation of the expiration of the initial term of the Centerplate Agreement, the Convention Center Advisory Board (CCAB) held a discussion at its June 7, 2001 meeting on whether or not the City should exercise the first five (5) year renewal option under the Agreement, or issue a new competitive solicitation for food and beverage services for the Convention Center. The CCAB recommended that the City issue a new Request for Proposals. The Finance and Citywide Projects Committee (FCWPC) also discussed this matter at its October 27, 2011 meeting. At that time, City staff recommended that, should there be a desire on the part of the City to exercise the first renewal term under the Centerplate Agreement, it might be appropriate to consider breaking up the renewal term into shorter terms (For example, year-by-year terms rather than the one five year term). This way, any potential performance issues could be more effectively and immediately addressed. The FCWPC 572 Commission Memorandum-ITN # 59-2013ME Food and Beverage for MBCC April17, 2013 Page2 concurred, and recommended that the City exercise its option to renew the Centerplate Agreement, for a two (2) year initial renewal term, with three (3) subsequent one (1) year renewals (all at the City's discretion). At its December 14, 2011 meeting, the City Commission considered the FCWPC's recommendation and, following discussion, instead directed the Administration to issue a new Request for Proposals for food and beverage services at MBCC. Request for Proposals No. 39-11/12 for Food and Beverage for the Convention Center (the 2012 RFP or the RFP) was issued on April 25, 2012. Two (2) proposals, from Aramark Corporation and Ovations Food Service, respectively, were received. On May 22, 2012 and June 7, 2012, respectively, the City received two letters from Centerplate setting forth the reasons as to why it had chosen not to submit a proposal, and requesting that the City discontinue the RFP process and renew the Centerplate Agreement for one ( 1) year. Centerplate's letters essentially alleged that a conflict of interest "tainted" the RFP process, inasmuch as the City's current manager at the Convention Center, Global Spectrum, had provided the City with input in the initial stages of the RFP preparation process, and that Global Spectrum and Ovations Food Service, one of the proposers, were affiliated, in that they were owned by the same parent company, Comcast Corporation (Note: A more detailed discussion of the conflict of interest issues alleged by Centerplate, including the City's analysis and subsequent actions taken to address same, is addressed later in this Memorandum, under separate heading). At the September 12, 2012 City Commission meeting, the City Commission adopted Resolution No. 2012-28006, and exercised its right under the RFP to reject all proposals received pursuant to the 2012 RFP. Concurrent with the rejection, the Administration recommended that the Centerplate Agreement be extended, to ensure continuation of service during peak usage of the Convention Center and to provide the City with sufficient time to draft and issue a new solicitation and complete that process. The Administration also recommended that the Mayor and City Commission refer discussion of the new solicitation process to the Finance and Citywide Projects Committee. The Finance and Citywide Projects Committee met on November 9, 2012 and discussed the new solicitation process. The Committee recommended proceeding with the issuance of a new Request for Proposals which would give proposers the option of responding 1) for the overall management of the Convention Center; and/or 2) for the provision of catering/concession services at the Convention Center. At the same time, City staff explored the possibility of issuing the new solicitation not as a Request for Proposals, but as an Invitation to Negotiate {ITN), reasoning that the ITN process permits simultaneous negotiations with the selected, short listed proposers (as opposed to the RFP process, which only permits negotiations with one proposer at a time). In this regard, it allows for more comprehensive negotiations that can result in better overall results for the City, and provides needed flexibility for complex negotiations. At the December 12 2012 City Commission meeting, the Administration presented a Resolution seeking authorization to issue an RFP, or an ITN, for the management and operation of the Miami Beach Convention Center, and/or to provide catering and concession services for the Convention Center. The City Commission approved the issuance of an ITN, but limited it to the provision of catering and concession services for the Convention Center. With regard to the overall management of the Convention Center, the City Commission directed the Administration to enter into negotiations with the City's current manager, Global 573 Commission Memorandum -ITN # 59-2013ME Food and Beverage for MBCC April17, 2013 Page 3 Spectrum and, if successful, to bring the proposed new agreement back to the City Commission, for consideration and approval pursuant to a waiver of competitive bidding. ITN PROCESS On December 12, 2012, the Mayor and City Commission approved the issuance of Invitation to Negotiate No. 059-2013ME For Food and Beverage for the Convention Center (the ITN). The ITN was issued on February 4, 2013, with an opening date of March 121h, 2013. A pre- proposal conference and a site visit to the facility was held on February 13, 2013. Twelve (12) prospective proposers downloaded the solicitation from The Public Group. Additionally, the Procurement Division notified another eleven (11) additional proposers via e- mail to expand the pool of prospective proposers. On March 12, 2013 proposals from the following four (4) firms were received: 1. Aramark; 2. Centerplate; 3. Ovations; and 4. Levy Restaurant. On March 4, 2013, the City Manager via Letter to Commission (LTC) No. 076-2013, appointed an Evaluation Committee (the "Committee") consisting of the following individuals: • Stuart Blumberg Chairperson Convention Center Advisory Board; • Georgie Echert Assistant Director City of Miami Beach Finance Department; • Steven Haas Chairperson Greater Miami Convention and Visitors Bureau and Owner of City Hall the Restaurant; • Ita Moriarty Sr Vice President Convention Sales Greater Miami Convention and Visitors Bureau and Resident; • Jeff Lehman General Manager Betsy Hotel and Chairperson of the Miami Beach Visitor and Convention Authority; • Kenneth Lyon Owner Operator Lyon and Lyon; • Cathy RickJoule Southern Regional Manager National Marine Manufacturers Association Miami International Boat Show; • Judy Stein Executive Director Swimwear Association of Florida Swim Show; and • Alex Tonarelli General Manager Loews Miami Beach Hotel. The City Manager also appointed the following alternate committee member: • Jeffrey Klein Vice President of Food Beverage Fontainebleau Miami Beach. The Committee convened on March 26, 2013 to consider proposals received, and interview proposing teams. The Committee was provided with an overview of the project, information relative to the City's Cone of Silence Ordinance and the Government Sunshine Law. The Committee was also provided with general information on the scope of services, Performance Evaluation Surveys, and additional pertinent information from the proposers. Additionally, the Committee engaged in a question and answer session after the presentation of each proposer. Stuart Blumberg was unanimously elected as chairperson of the Committee. Committee member Cathy RickJoule was unable to attend. The Committee was instructed to score and rank each proposal pursuant to the evaluation 574 Commission Memorandum -ITN # 59-2013ME Food and Beverage for MBCC April17, 2013 Page4 criteria established in the ITN, as follows: Evaluation Criteria/Factors: Evaluation Criteria Rroposer Experience & Qualifications and past performance based on client surveys: (Experience and qualifications of the Proposer in providing food and beverage concession and catering services in comparable size facility(ies) (as defined in the ITN); List of events serviced in 2011 for each comparable size facility; Management team's (including Executive Chef's) experience and qualifications; and Volume and quality of surveys submitted by clients. Financial Capability to perform the services outlined in the ITN). Approach & Methodology: (Staff training/manual procedures; Approach to customer service and maintenance of quality standards; Proposed plan to improve food quality and service; Approach to providing/improving concession services; Ability to provide back-up management expertise on short notice; Cash control computer system and interfaces to be provided; and Operational service plan(s)). Business and Creative Marketing Plan: (Business and marketing plans as presented for the food and beverage program, including social/gala and other catering services and concession services; Approach to enhancing social catering opportunities; Corporate Responsibility Plan and approach to community integration). Financial Factors: (Proposed Commissions, Other Financial Considerations, including Capital Reserve, Marketing Reserve, Capital Investment, Scholarship Contribution). Sub-Total Maximum Possible Points: Weight Maximum Roints 35 30 15 20 100 The Committee discussed its individual perceptions of the proposers' qualifications, experience, and competence, and further scored and ranked the proposers accordingly. Additional points, over the aforementioned potential points were to be allocated, if applicable in accordance to following ordinances: LOCAL PREFERENCE: The Procurement Division may assign an additional five (5) points to Proposers, which are, or include as part of their proposal team, a Miami Beach-based vendor as defined in the City's Local Preference Ordinance. VETERANS PREFERENCE: The Procurement Division may assign an additional five (5) points to Proposers, which are, or include as part of their proposal team, a small business concern owned and controlled by a veteran(s) or a service-disabled veteran business enterprise, as defined in the City's Veterans Preference Ordinance. However, none of the proposers were deemed eligible for either of the aforestated preferences. 575 Commission Memorandum -ITN # 59-2013ME Food and Beverage for MBCC April 17, 2013 Page 5 FINAL RANKINGS A motion was presented by Steve Hass and seconded by Ita Moriarty to recommend entering into negotiations with the three (3) top-ranked proposers: 1 )Ovations; 2)Centerplate; and 3)Aramark. Six (6) committee members were in favor of the motion presented; two (2) committee members, Jeff Lehman and Stuart Blumberg, opposed the motion. The motion passed. Attachment "A" provides an overview of the financial proposal submitted by all proposers. DISCUSSION OF ALLEGED CONFLICT OF INTEREST ISSUES Following the City's receipt of the two letters from Centerplate (on May 22, 2012 and June 7, 2012, respectively), which initially raised the possibility of a conflict of interest with regard to the relationship between Ovations, as a proposer to the 2012 RFP (and later to the ITN), and Global Spectrum, as the City's manager at MBCC, the City Attorney's Office and City Administration reviewed the issues raised therein. With respect to the 2012 RFP, the City Attorney's Office and City staff did, in fact, share Centerplate's concerns with regard to what, if any, participation Global had in the preparation of the 2012 RFP specifications. Upon further review, the City confirmed that Global did provide minor input during the preparation of the 2012 RFP. The City Attorney's Office and City Staff concluded that 1) Global's input was requested at the behest of the City; 2) the input itself was minor and non-prejudicial; and 3) there was certainly no intent and/or attempt by Global to influence the process by providing the input (i.e. it was acting at the City's direction). However, because it was still early enough in the RFP process (proposals had been received but not yet evaluated), the City Attorney's Office and City Staff recommended that if, in the interest of full transparency, the City Commission determined that a "course correction" was appropriate, it would be in the City's best interest now, rather than later, to reject all proposals and re-issue a new competitive solicitation. Accordingly, the City Commission exercised its right to reject all proposals received pursuant to the 2012 RFP, and start over with a new solicitation (which resulted in the issuance of the current ITN). At that time, as well, in addressing the other conflict of interest issue raised by Centerplate (that is, the issue of whether or not it was appropriate for Ovations to submit a proposal due to its affiliation with Global), the City Attorney's Office indicated that, given that concern, it would be appropriate for Ovations to request an opinion from the Miami-Dade County Ethics Commission on this issue; particularly, should it seek to bid on any subsequent solicitation that the City might issue for the MBCC food and beverage service.1 1 Chief Deputy Raul Aguila's subsequent February 20, 2013 e-mail to Ovations, attached as Attachment "B" hereto, 576 Commission Memorandum-ITN # 59-2013ME Food and Beverage for MBCC April17, 2013 Page 6 In conjunction with its submittal of a proposal in response to the ITN, Ovations did, in fact, submit its request for an opinion to the Ethics Commission and, on March 20, 2013, the Commission issued a non-binding, advisory opinion (See Request for Advisory Opinion (RQO) 13-03, attached as Attachment "D" hereto). Having determined that Ovations was an affiliate of Global Spectrum which, as the City's manager at MBCC, is also contractually charged with the duty of overseeing and evaluating performance of the MBCC food and beverage contract, the Ethics Commission concluded, "It is evident from the aforestated facts that, based upon prior opinions issued by the COE [Commission on Ethics], that there is an inherent conflict of interest where Global would be supervising, evaluating and overseeing the performance of its sister affiliate, Ovations." [Brackets supplied]. MANAGER'S DUE DILIGENCE After considering the recommendation of the Evaluation Committee, I have also exercised my due diligence. This review necessarily included consideration of the conflict of interest issues discussed above, and their potential impact, in determining whether or not to recommend the short-listing of Ovations pursuant to the ITN, as well as acknowledging that Ovations was the number one ranked firm by the Evaluation Committee while the other two (2) firms were a distant second and third. There exists a legitimate concern as to whether the relationship between Global Spectrum and Ovations would create a recurring conflict of interest, and impair (or, at a minimum, create the appearance of impairing) the objective administration and evaluation of the food and beverage service contract. Under its current agreement with the City, Global Spectrum is not only charged with administering, managing, and assuring compliance with the MBCC food and beverage contract but, more significantly, with the responsibility of providing periodic status reports as to the food and beverage service vendor's performance, as well as with providing recommendations for improvements under the food and beverage contract. Because the latter responsibility requires subjective input and judgment, there is the potential for (or at least the potential for the appearance of) impaired objectivity. In other words, where Global is required under its contract with the City to perform tasks (in this case, tasks specifically relating to the oversight of the food and beverage contract) that require certain objective assessments, can it be truly objective? It should be noted, however, that in assessing this concern, and in making the recommendation herein, at no time should there be any question of either Global's integrity, or its superlative performance and service as a vendor to the City thus far. That is certainly not the issue. However, the written opinions of the City Attorney's office with respect to the conflict of interest, plus the non-binding (but certainly persuasive) opinion of the Miami-Dade Ethics Commission cannot be ignored. I do note that at the Palm Beach Convention Center, Global operates the facility and Ovations handles the food and beverage services. But I cannot get comfortable with the conflict, and certainly cannot recommend that approach to the City Commission. notes that, given the City's reliance on a previously issued binding advisory opinion by the Ethics Commission on a similar conflicts issue (Request for Advisory Opinion (RQO) 08-19, which is also included as part of Attachment "8"), the City might not have any choice but to disqualify Ovations, should it elect to submit a proposal in response to a subsequent solicitation. However, upon further communication with counsel for Ovations, and upon being informed that Ovations intended to submit a request for opinion to the Ethics Commission, but that the Commission would not be able to hear same until after the ITN opening date, Ovations was ultimately permitted to submit a proposal in response to the ITN (See Mr. Aguila's March 5, 2013 e-mail to Ovations' counsel, attached hereto as Attachment "C"). 577 Commission Memorandum -ITN # 59-2013ME Food and Beverage for MBCC April17, 2013 Page 7 If the City Commission is interested in having Ovations, in light of its superior ranking by the Evaluation Committee, provide the food and beverage services at the Convention Center, the only way to do that would be to have Global be directly responsible for all of the management and operation, including the catering and concession services. They could then utilize Ovations as a subcontractor. But Global would be directly responsible and liable for the food and beverage operation at the Convention Center. As such, for the reasons set forth herein, I hereby recommend that the Mayor and the City Commission enter into negotiations with the second and third ranked proposers, Centerplate, and Aramark, or, in the alternative, that the City Commission reject all proposals in response to the ITN, and further authorize the Administration to include the provision of food and beverage services for the Miami Beach Convention Center as a component of the scope of services in the new Convention Center management and operation agreement being negotiated with Global. CONCLUSION The Administration recommends that the Mayor and City Commission of the City of Miami Beach, Florida approve Option A and accept the recommendation of the City Manager, pursuant to Invitation to Negotiate No. 059-2013ME for Food and Beverage for the Convention Center (ITN), and authorize the Administration to enter into negotiations with the second and third ranked proposers, Centerplate, and Aramark; or in the alternative, that the Manager and City Commission approve option "B," rejecting all proposals in response to the ITN, and further authorizing the Administration to include the provision of food and beverage services for the MBCC as a component of the scope of services in the new MBCC management and operation agreement being negotiated with Global Spectrum. T:\AGENDA\2013\Aprii17\ITN-59-013ME Food and Beverage MBCC -Memo.doc 578 U'l ....... <0 Capital Investment Three (3) years commencing on or about July 1, 2013, Plus one (1) two (2) year renewal option to be exercised by the mutual agreement of the parties. $750,000 for equipment and leasehold improvements for the term of the contract. If the term expires or the agreement is terminated by either party for any reason prior to the full amortization of the investment, the City shall pay to ARAMARK an amount equal to the unamortized balance of the investment (as ofthe date of termination) on or before such date of expiration or termination. Three (3) years plus a two (2) year mutual option. ,000 into the Food and Beverage operations. Three (3) years commencing on the award date, Plus one (1) two (2) year options to be exercised at the City of Miami Beach's sole discretion. as follows: i) $1,250,000 towards food and beverage capital projects as outlined during the first contract year. 2) $250,000 into a one time marketing fund (in addition to the required marketing accrual). Investment will require industry standard buy-back protection in case of early termination for any reason. ) years commencing on the award date, Plus one (1) hvo (2) year extension option at the mutual agreement of both parties $800,000 toward capital foodservice projects; to be mutually agreed upon. The Investment will be amortized and for depreciated on a three-year schedule from tile date of the term, deployment, or installation whichever is later. If the agreement expires or terminates for any reason whatsoever, prior to the amortization of the investment, the unamortized portion will be reimbursed to Ceterplate by the City of the successor concessionaire. Three (3) years commencing on the award date, plus one (1) two (2) year extension option at the mutual agreement of both parties. $800,000 toward capital foodservice projects; to be mutually agreed upon. The Investment will be amortized and !or depreciated on a three-year schedule from the dale of the term, deployment, or installation whichever is later. If the agreement expires or terminates for any reason whatsoever, prior to the amortization ofthe investment, the unamortized portion will be reimbursed to Ceterplate by the City of the successor concessionaire. U'l 00 0 Commission Rates ARAMARK wi:l pay commissions to the City in accordance with the below commission schedule. Ail Gross Receipts (as defined below) t!er levels for commission calculations set forth herein wiil be increased at the end of each contract year in accordance with the applicable Consumer Price Index. Aggregate (Commissions & Catering) Annual Gross Receipts Commission Rate $0-$4,000,000 28% $4,000,001 -$5,000,000 30'?~ (on the increment) $5,000,001 -$6,000,000 32% (on the increment) $6,000,001 -$7,000,000 34% (on the increment) $7,000,001 -$8,000,000 36% (on the increment) Over $6,000,000 38% (on the increment) ,"Jotwithstanding the terms and conditions set forth herein, ifthe City desires a minimum commission guarantee, ARAMARK welcomes the opportunity to discuss a minimum commission guarantee and financial arrangement that would be mutually acceptable to ARl\MARK and the City. Revenue Share Compensation: City to receive the following Revenue Share Compensaiions: Ail Sales $0 -$6,000,000 25.0% $6,000,001 -$8,000,000 27.5% (on the increment) Greater than $8,000,000 30.0% (on the increment) Guaranteed minimum of $1,500,000 will Gross Receipts from food and Base Management Fea be pa!d at the close of each year should beverage Centerplate shall receive a Base commissions on gross sales paid to the Zero $4,000,000 20.0% \11anagement Fee i .0% of Gross City of Miami Beach not exceed th!s $4,000,001 $5,000,000 25.0% Receipts during each contract amount. If for any reason the show Art $5,000,001 $6,000,000 30.0% year, payable in twelve monthly Basei-M!ami Beach shall cease to be $6,000,001 $7,000,000 35.0% instal!ments. hosted at the Miami Beach Convention $7,000,001 $8,000,000 36.0% Center, Ovations reser1es the right to $8,000,001 sg,ooo,ooo 37.0% Incentive Fee negotiate an adjustment commensurate $9,000,001 and greater 38.0% Centerplate's Incentive with the show's value to food ser1ices Management Fee shall equal Commissions-Percentage of 5.0% of the Net Operating Profit, Concessions Food and Alcohol Gross Receipts payable in 12 monthly Beverages Calculated on the increment and insta!!ments. $0-$660,000.00 26% all tiers as shown are adjusted by $660,001 -$990,000 27.5% CP! Net Operating Profits: Gross $990,001 and up 29% Receipts less the actual out-of-Catering Food, Non Alcohol and [1 J Centerplate proposes the pocket costs of the food and Alcohol Beverages same percentage rent for branded beverage concession and catering $0 • $2,320,000 26% foods as the rates for Concession services from the total Gross $2,320,001 -$3,480,000 27.5% Food and Beverage, provided the Receipts. These costs include but $3,480,001 and up 29% commissions due to the City are are not limited to the actual Catering Supplemental Fee (Service decreased dollar for dollar for the expense of the product, on-site Charge) royalty fee (typically at 5.0% to payroll, payroll taxes, fringe $0-$360,000 26% 6.0% of sales) associated with benefits, depreciation of $360,001 -$540,000 27.5% the branded food concepts. investment as outlined above, on-$540,001 and up 29% site operating expenses such as Net Paid to Ovations From repair and maintenance, cleaning, Subcontractors office supplies, advertising and $0 -$248,000 65% marketing, Reserve Funds, $248,001 -$372,000 68.75% Scholarships and Management $372,001 and up 72"50% Fee as out!ined above. U'l 00 ~ Reserve Funds Marketing Scholarship • Capital Reserve Fund: ARAMARK I 1.5% cf All Sales proposes to contribute an amount equal to 1% of annual Gross Receipts to a capital reserve fund for the repair, maintenance and replacement of food and beverage service equipment, small wares, and other leasehold improvements directly associated with the Ser<ices. fviarketing Fund: ARAMARK proposes to I 1.0% cf Catering Sales contribute an amount equal to 1% of annual Gross Receipts to a marketing fund for the marketing and promotion of the Services at the Facility. ARL>,MARK proposes to contribute $20,000 annually to the City of Miami Beach Scholarship Fund. Additionally, ARAMARK proposes to contribute $30,000 annually as follows: • $20,000 to the Miami Beach High AOHT-Hospitality/Tourism department • $10,000 annual to multiple Miami Beach Senior living Facilities SiO,OOO per year Annuai Capital Reserve Fund As a % of Gross Receipts i .5% Annuai Marketing Reser.;e Fund As a %of Gross Receipts 1.5% • Annual Hospitaiity Scholarship Fund $20,000 Note: The City has the option to utilize the additional $250,000 marketing grant in any way it deems. A community grant can be establIshed using a portion of or ali of these funds and should be weighed in final bid evaluation. Percentage of Gross Receipts In order to maximize the visitor and Percentage of Gross Receipts In order to maximize the visitor customer's experience at the and customer's experience at the Center, we believe an annual food Center, we be!ieve an annual food and beverage capital and beverage capita! reinvestment program and a reinvestment program and a promotional program is prudent: promotional program is prudent; scope and nature to be mutually scope and nature to be mutually agreed upon by both parties. agreed upon by both parties. Centerplate is proposing to fund a Centerplate is proposing to fund a Capita! Repair and Replacement Capital Repair and Replacement Reserve as per the RFP, and Reser<e as per the RFP, and Marketing and Promotional Marketing and Promotional Reserve based on percentage of Reserve based on percentage of the Gross Receipts as fo!lows: the Gross Receipts as follows: • Capital Repair and Replacement'• Capital Repair and Replacement Reserve 0.5% Reserve 0.5% Marketing and Promotional Reserve* 1.0% Marketing and Promotional Reserve* 1.0% *The Marketing and Promotional ,. The Marketing and Promotional Reserve shall be the greater of Reserve shall be the greater of $20,000 or 1.0% of Gross $20,000 or 1.0% of Gross Receipts, Centerplate proposes to contribute $20,000 per annum towards a scholarship fund (the "Scholarship Fund") for qualifying in-need Miami Beach residents pursuing a career in facility management and/or the hospitality and tourism industry Receipts. Centerplate proposes to contribute $20,000 per annum toward a scholarship fund (the "Scholarship Fund") for qualifying in-need Miami Beach residents pursuing a career in facility management and! or the hospitality and tourism industry. U'l 00 f\) Notes Gross Receipts 1. All Sales shall refer to the total As used herein, "Gross Receipts" shall amount of money received by levy in mean the total revenue received by conjunction with the operations of ARM•1ARK from its provision of the Food and Beverage services, Services at the Facility less (a) sales including the net amount received by taxes and other direct taxes imposed levy from subcontractors and upon receipts collected from consumers, specifically excluding sales and other (b) creditidebitigift card transaction fees taxes, credit card fees, amounts not and charges, (c) discounted sales, (d) received from bad debts or cash sales by subcontractors, (e) shortages, discounted sales, gratuity administrative charges, and (f) and service charges. gratuities paid to employees. The portion Z. The Investment shall be of revenue received by ARAI'v1!\RK from on a straight-line basis subcontractors will be included in Gross aver five (5) years, and should the Receipts. Agreemertt terminate for any reason, the unamortized portion of the Investment shall be reimbursed to Levy. 3. This proposal assumes full operational capabilities throughout the Terrn. Should the Convention Center larnpomri!y be closed for renovation, both parties will mutually agree in good faith upon a revised economic modeL 4. Sales Tiers shall increase annually by the CPl. 5. This proposal assumes levy is provided a Tum-Key Facility throughout the Term. Ovations has reviewed the terms and conditions included in the RFP. Recognizing that now is not the appropriate time to negotiate the final agreement, Ovations wishes to reserve the right to mc;JOtiete the terms end conditions of the food and baverage agreement if it is selected by the Miami Beach Convention Center as the successful bidder. U'l 00 w Other Considerations • The above commissions for the food and beverage services shall be paid as a percentage of Gross Receipts (total revenues less sales or other taxes, service charges/catering supplemental fees, employees meals and reduced or at cost items). Gross Receipts wiil include the amount received by Ovations from third party subcontractors and not the gross receipts generated by the subcontractors. • Ovations proposes the same percentage commission for branded foods as rates for concession food and beverage sales provided the commissions are decreased dollarfor dollar for the royalty fee (typically 5-6% of sales) associated with the branded food concepts. There are no royalty fees on Ovations' intemaliy created brands. Hurricane/Natural Disaster/Emergency Ovations agrees to all of the terms and services required as outlined in the ITN. Our plan for Hurricane!Natural Disaster/Emergency is included in our response. Aguila, Raul w From: Sent: To: Cc: Subject: Attachments: Importance: Dear Mr. Lawrence: Attachment "B" Aguila, Raul Wednesday, February 20, 2013 12:33 PM 'charles.lawrence@ovationsfs.com' Smith, Jose; Sklar, Max; Denis, Alex; Estevez, Maria CITY OF MIAMI BEACH INVITATION TO NEGOTIATE 059-2013-ME/ FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (the ITN) ATTODamE_Opinion_2013-02-20_11-37-03.pdf High I was advised by Asst. City Manager Max Sklar that a representative of Ovations attended the Proposer's Conference on February 13, 2013. Again, as with Ovations' submittal of a proposal in response the City's prior Request for Proposals (RFP) for the Convention Center food and beverage contract (which RFP, as you know, was rescinded by the City), it is still the City's opinion that, given Ovations' continuing "sister company" affiliation with the City's current manager for the Convention Global Spectrum, such relationship creates an inherent conflict of interest. This is especially true where Global is charged (as of its contractual duties under its Management Agreement with the City) with administering, managing, and assuring compliance with the Convention Center food and beverage contract. This also includes, without limitation, making periodic reports and recommendations to the City with regard to the food and beverage contractor's performance and quality standards. The City's opinion is supported by the precedent set in the attached Miami Dade County Commission on Ethics Opinion. As in the attached opinion, were Ovations to submit a proposal in response to the above referenced ITN, a significant conflict of interest would exist if Ovations were to be awarded the contract in that its affiliated company, Global, would be tasked with the responsibility of overseeing and supervising Ovations. In keeping with the Ethics Commission's recommendation in the attached opinion that "certain contractual arrangements create an inherent conflict of interest and should be determined prior to award," were Ovations' to submit a proposal in response to the current ITN, the City would-absent other authority-have no choice but to disqualify such proposal from consideration. That being said, we have consistently urged Ovations on numerous occasions--following the rescission of the prior RFP and prior to issuance of this ITN-that should it wish to obtain another opinion, it may request a formal opinion from the Miami-Dade County Ethics Commission, as to whether (given the specific facts in this case) Ovations may submit a proposal in response to the ITN. However, so as not to unnecessarily delay and/or hinder the City's timeline, as set forth in the ITN, such opinion must be requested and issued by the Commission PRIOR to the proposal submittal deadline in the ITN, or no later than March 6, 2013. Please don't hesitate to e-mail me should you have any questions and/or comments regarding the above. Thank you. MIAMIBEACtl Aguila, Chief Deputy City Attorney OFFICE OF THE CITY ATTORNEY 1700 Convention Center Drive-Fourth Floor, Miami Beach, FL 33139 Tel: 305-673-7470 or 305-673-7000 I Fax: 305-673-7002 I www.raulaquila@miamibeachfl.gov 584 ~TH£CSCOMMISSIONJ1lRS Kerry E. :Riltfillllu!l., Clullr:plli'IIOII l>liiWii E. Addy, Vke Ckairpci'SI}Il .Magdi!Abdo-Gloiilllll Re~ne Mo11esll!ile &ymllll!'Gelber ROBEtn A. ME:\'Erul l!XECIJ'l'IVE lliiii:CTOR MlC~AELP. MtJRAWSKI A!!VOCA'I'! AMVT.U WALKER STAfF «lEI!EIIAI.COUN5EL VIA FACSIMILE (305) 461-3383 AND :REGULAR MAIL April 25, 2008 Leah Miller Art, Design and Construction, Inc. 4111 LeJeune Coral Gables, FL 33146 " " ··. ·• · FOR ADVISORY Dear Ms. Miller: ·· The Commission on Ethics and Publ Trust your request for an,advisory opinion at its meeting on April 24, 2ooe and its opinion on the in your letter. You requested an opinion regarding whether Art, Design and Construction (ADC) may bid on a construction contract where a company performed des work. In your , you advised the Commission that the Seaport Department reaently issued a solicitation a construction contract a at Cruise Terminal D. The project a story parking garage and includes sidewalks, roadways, signage, utility connections, landscaping and Bruno-Elias Ramos is the principal of Art, Design Construction (AOC) and Sruno~El (BEA) . BEA currently has a contract with the Seaport to provide Capital Development ~ursuant to that agreement, BEA was with the 585 f / I responsibil providing design for two parking garages including the parking garage for Cruise D. The scope of work under work includes bidding and negotiating services for construction . As Engineer for the project, BEA will construction phase project. The Commission found ADC may not serve as construction company on a eat a is serving as Engineer of Record on the project and will provide bidding 1 .negot and construction phase on the project. Ethics Commisa · · ·:previously opined ·t·hat:. "a firm may not services where an liate1 or subsidiary firm ·will provide oversight, management or selection services related to the contract. In a series of opinions, the Ethics Commission has opined that certain contractual arrangements an inherent confl of and should be to award. For example, a conflict exists if a contractor has overlapping ities on different phases of the same project (i.e. AE on one of project as value , .CIS or CM on another of supervisor or project subcontractor on or related phase or project) . conflict may exist if roles or responsibilities two related . These arrangements create conflict they lead to disclosure of ial information independent judgment by the contractor the its contractual obligations. BEA and ADC a common management. In feot, ADC serves as the construction arm of EEA. As such, potent conflict where one company is tasked li of 586 ' ' 1 ... evaluating construction bids and iaipating on a contract whe~e the other firm is bidding on cont~aot. any potential conflict will continue award since BEA has construction phase responsibilities capital development contract. Aooordingly, ADC may not ·serve as construction company for the Cruise Terminal D Parking contract, This opinion construes the MiamiwDade conflict .Interest and Code of Ethics ordinance only and is not applicable to any conflict tmder state' law. contact the · , .. ··State· of F:lodda: ·Comm:l:srsion on Ethics· if ycnr have any questions regarding .conflicts under state law. If have any regarding this opinion, please call undersigned at (305) · 5'79~2594 Ardyth Walker, Staff General Counsel at (3·05) 350·0616'. Sincerely Yours~ ' ,..,, ' ..... [. 1 v[_,_,ft. ' ·----·- ROBERT MEYERS Executive Director oc: Maria Cerna, Seaport 587 Attachment "C" Raul From: Aguila, Raul Sent: To: Tuesday, March 05, 2013 4:24 PM 'Benedict P. Kuehne' Subject: RE: CITY OF MIAMI BEACH INVITATION TO NEGOTIATE 059-2013-ME/ FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (the ITN) Dear Mr. Kuehne: I appreciated the opportunity to speak with you today regarding your e-mail of February 27, 2013. Notwithstanding, the concerns cited by the City in my 2/20/13 e-mail (that is, the City's concern that, should Ovations be recommended for award pursuant to the ITN, there may be an inherent, recurring conflict of interest as a result of its sister company, Global Spectrum, being charged with the duty of managing the Convention Center food and beverage contract), it is not our intent to preclude Ovations from participating in this competitive bidding process. Thank you, Raul Aguila I J. Aguila, Chief Deputy Attorney OFFICE OF THE CITY ATTORNEY 1700 Convention Center Drive -Fourth Floor, Miami Beach, FL 33139 Tel: 305-673-7470 or 305-673-7000 f Fax: 305-673-7002 I www.raulagulla@miamlbeachf!.gov We are committed to providing excellent public service and safety to all who live, work and play In aur vibrant, tropical, historic community. from: Benedict P. Kuehne [mailto:Ben.Kuehne@kuehnelaw.com] Sent: friday, March 01, 2013 11:20 AM To: Aguila, Raul Subject: RE: CITY OF MIAMI BEACH INVITATION TO NEGOTIATE 059·2013-ME/ FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (the ITN) Raul- Thank you for your email. I am generally available most of today (Friday) for a telephone conference. l do intend to attend a Judicial Investiture at the Miami-Dade Courthouse from Noon to about 2 pm. Benedict P. Kuehne Law Office of Benedict P. Kuehne, P.A. 100 S.E. 2d Street, Suite 3550 Miami, FL 33131-2154 305.789.5989 x7 Tel 305.789.5987 Fax ben.kuehne@kuehnelaw.com bkuehne@bellsouth. net www. kuehnelaw.com from: Aguila, Raul [mailto:Rau!Aguila@miamibeachfl.gov] Sent: Wednesday, February 27 1 2013 4:34PM To: Benedict P. Kuehne Cc: Sklar, Max; Denis, Alex; Estevez, Maria; Smith, Jose; 'TOM.MARCHffiO@OVATIONSFS.COM'; 'Charles Lawrence' RE: CITY Of MIAMI BEACH INVITATION TO NEGOTIATE 059-2013-ME/ FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (the ITN) 1 588 Dear Mr. Kuehne: Thank you for your e-mail. I too regret that we have been playing phone tag, and would welcome the opportunity to speak with you personally on this matter. I am tied up today and tomorrow with our Convention Center expansion/renovation project. Is there a convenient time that we can speak more about the ITN (and Ovations' proposed bid in response thereto) sometime on Friday? Please let me know of your availability. Thanks, Raul MIAMI BEACH Raul J. Aguila, Chief Deputy City OFFICE OF THE CITY ATTORNEY 1700 Convention Center Drive-Fourth Floor, Miami Seach, Fl33139 Tel: 305-673-7470 or 305-673-7000 I Fax: 305-673-7002 I www.raulaguila@miamibeachfl.gov We are comm/Ued to providing excellent public service and safety to all who live, work and ploy In our vibrant, tropical, historic community. From: Benedict P. Kuehne [mailto:Ben.Kuehne@kuehnelaw.com] Sent: Wednesday, February 2013 3:23AM To: Aguila, Raul Cc: Sklar, Max; Denis, Alex; Estevez, Maria; Smith, Jose; 'TOM.MARCHETTO@OVATIONSFS.COM'; 'Charles Lawrence' ......... ,~-..... CITY OF MIAMI BEACH INVITATION TO NEGOTIATE 059-2013-ME/ FOOD AND BEVERAGE SERVICES FOR THE MIAMI BEACH CONVENTION CENTER (the ITN) J. Aguila, Chief City Attorney Office City City Miami 1700 Convention Center 33139 Raul, I been recently engaged as counsel Ovations Food Services in connection with its response to the City's ITN # 059-2013ME for the management and provision of food and beverage services at the Miami Beach Convention Center. I have left a number of phone messages for you over the past few days, but we have not yet connected to discuss pending matters. Thus, I am corresponding in writing. 2 589 Ovations received your February 20 1 2013 email and your follow up email dated February 21, each of which was addressed to Charles Lawrence. Your February 20th email notified Ovations that it is the City's opinion there is an "inherent conflict of interest" in any bid to be submitted by Ovations in response to the ITN. This opinion is apparently based· on the fact that Global Spectrum, a separate but related company to Ovations, manages the Convention Center. Your email suggested that Ovations must request from the Miami-Dade County Commission on Ethics & Public Trust a formal opinion as to whether Ovations may submit a bid in response to the ITN, and further required that the opinion must be requested and issued by the Ethics Commission prior to the proposal deadline of March 6. Your February 20th email was the first formal notification Ovations received of the City's position on this matter. Your February 21 email then extended the period by which you are requiring Ovations to obtain the opinion to March 11. First, Ovations does not believe any conflict of interest exists. Rather, it is Ovations' considered opinion that one of its competitors has suggested a conflict in an attempt to eliminate Ovations from bidding for the contract, thus giving this competitor an advantage in the bid process. This attempt to limit competition only harms the City and defeats the purpose of soliciting competitive bids. The facts of this matter are easily distinguishable from those on which the 2008 opinion-the one cited in your emails to Mr. Lawrence -was decided. In fact, Global Spectrum currently manages over 10 facilities at which Ovations provides the food and beverage service, including the Palm County Convention Center. Concerns of a conflict have never been raised or materialized at any of these facilities. Second, it is unreasonable for Ovations to be required to secure an opinion merely to participate in the I'rN application process. No part of the ITN requires a conflict of interest opinion as a precondition to applying. Nor any provision in Miami Beach's procurement require an advance conflict opinion merely as a qualification to apply or submit a bid. Nevertheless, in order to alleviate any concerns the City may have, Ovations is in the process seeking an opinion from the Ethics Commission. We are currently in the process of drafting the Request for an Opinion to submit to the Commission this week. The timing of the Commission's response and opinion is out of our hands, however. It is unlikely the Commission will be in a position to issue any formal opinion prior to your March 11 deadline, since no March Commission meeting has yet been set. The Commission's timing is a matter for its own exercise of governmental authority, and one which Ovations cannot be held responsible. If the Commission requires a public hearing for issuance of a formal opinion (as is its standard practice for requests for an opinion), that can only occur at a 3 590 scheduled public hearing that has not yet been set or noticed. Ovations does not have the power to require the Commission alter established method of responding to opinion requests, nor to expedite timetable for responding. Thus, your requirement that an opinion issued prior to March 11 effectively bars Ovations from responding. We do not see the merits, or authority, in mandating such an arbitrary deadline -one that is well in advance the date on which determination to award the contract will be made. It certainly not included as a requirement of the ITN. Therefore, we ask you to reconsider your self-imposed deadline and allow Ovations to submit its bid together with our request for a Commission on Ethics opinion. In sum, Ovations intends to submit a competitive bid to manage and provide the food and beverage service the Center. Prior to bid submission, Ovations intends to request an opinion from the Ethics Commission regarding the alleged conflict. We expect that our bid will be considered on its merits, and look forward to receiving from the City a fair opportunity to have our bid received and evaluated. Respectfully submitted, Benedict Kuehne Benedict P. Kuehne Law Office of Benedict P. Kuehne, P.A. 1 00 S. E. 2d Street, Suite 3550 Miami, FL 33131-2154 305.789.5989 x7 Tel 305.789.5987 Fax ben. kueh ne@kuehne!aw .com bkuehne@bellsouth.net www.kuehnelaw.com 591 4 March 20,2013 Benedict P. Kuehne, Esq. Miami Tower, Suite 3550 1 00 2nd Street 131-2154 Re: RQO 13-03 Attachment "D" MIAMI-DADE COUNTY COMMISSION ON ETHICS & PUBLIC TRUST Request Advisory Opinion on behalf of Ovations Food Services LP Dear Mr. Kuehne: You have requested an advisory opinion from the Miami-Dade Commission on Ethics and Public Trust (COE) in connection with the bid of your client, Ovations Food Services LP ("Ovations"), to City of Miami Beach Invitation to Negotiate the Food Beverage Services contract for the Miami Beach Convention Center (ITN-059-2013-ME). This request has been made upon the suggestion of the City of Miami Beach Attorney's Office to Ovations in connection with its intent to bid on. the aforesaid contract. The basis of the request is to seek, an advisory opinion the COE concerning whether your client may participate in this contract considering that its sister company, Global Spectrum LP (''Global"), is the holder of the existing contract for the management Convention Center. We have reviewed your letter supporting documentation submitted on behalf ofyom· client's position that there is no prohibited conflict of interest You have taken the position that the two companies, while sharing a substantially common ownership, are corporations with separate management, and, therefore, there should not be any prohibited conflict of interest in connection with their involvement i~ the two contracts in question. The City of Miami Beach Attorney's Office has opined that there is an inherent conflict of interest inasmuch as Global is charged, pursuant to duties under management contract with the City, with "administering, managing, and assuring compliance with the Convention Center food and beverage contract," which "includes, without limitation, making periodic reports and recommendations to the with regatd to the food and beverage cont1:actor's perfom1ance and quality standards." 592 In support of its position, the has relied upon a prior COB opinion (RQO 08~19), which cited prior COB opinions for the proposition that "a finn may not provide services where an affiliate, parent or subsidiary firm will provide oversight, management or selection services related to the contract" ' It is clear that Ovations is an affiliate of Global because of the common o\.vnershlp they share. Based upon the organizational chart provided materials submitted by you on behalf of Ovations, Comcast Spectacor Ventures, LLC (PA) owns 81.76% of Ovations and 94.0625% of Global. Additionally, two other subsidiaries of Comcast Spetacor Ventures --Ovations Food Inc. (PA) and Global Spectrum, Inc. (P A)--each have a minor share .in one of the two subsidiaries involved in this scenario. Comcast Spectacor Ventures, LLC (P A) is itself the subsidiary ofthe parent company, Comcast Specacor, L.P. (PA) to the extent of95% ofits value. It is evident from the aforesaid facts that, based upqn prior opinions issued by the COB; that there is an inherent conflict of interest where Global would be supervising, evaluating and overseeing the performance of sister affiliate, Ovations. This opinion is a non-binding advisory opinion issued in response to your request and that of the City of Miami Beach. For the COB to exercise binding authority over the issue of whether your client, a private contractor, may be awarded this contract, one of three conditions would have to be present: 1) the issue involving the private contractor or subcontractor is explicitly subject to the Miami-Dade Conflict of Interest and Code of Ethics Ordinance ("the Ordinance"); 2) the ITN(or RFP or RFQ), or the terms of the proposed contract or subcontract explicitly provide the COE with the authority to make a binding determinatibn of the presented; or 3) pursuant to Section 2-11.1(13) of the Ordinance, the contract staff of the private contractor or subcontractor has been designated by the Manager or the Manager's designee as being required to comply with the provisions of the Ordinance denoted in the latter section. Inasmuch as none of the aforesaid conditions is applicable in this instance, the COE is unable to provide a binding opinion on this matter. This opinion does not address whether any conflict exists under state law. Please contact the State of Florida Commission on Ethics if you have any questions regarding. possible ,conflicts under state law.· ~ ' u have any questions regarding this opinion, please call the undersigned or Senior Staff 1 Attotney Victoria Frigo at 305-579-2594. cc: Raul Aguila, Assistant City Attorney, City of Miami Beach RQO 13-03 Kuehne, on behalf of Ovations 2 593 RESOLUTION TO BE SUBMITTED 594