Pappas sues Houston over Hobby Airport deal, citing call from former mayoral aide during bid process

William-Paul Thomas, who resigned last year amid federal corruption charges, called CEO Chris Pappas during the first round of bidding.

Chris Pappas, CEO of Pappas Restaurants, Inc., and other team members stand during a City Council meeting in February, as the company fought to renew its contract at Hobby Airport. The restaurant group filed a lawsuit Tuesday against the city.

Chris Pappas, CEO of Pappas Restaurants, Inc., and other team members stand during a City Council meeting in February, as the company fought to renew its contract at Hobby Airport. The restaurant group filed a lawsuit Tuesday against the city.

Jon Shapley/Staff photographer

Pappas Restaurants officials sued the city Tuesday, alleging a former mayoral aide who resigned amid federal corruption charges called CEO Chris Pappas about a Hobby Airport contract while the deal still was in its first round of proposals, violating a city rule that prohibits such discussions.

William-Paul Thomas, then the mayor’s liaison to City Council, called Pappas on Nov. 25, 2019, according to the lawsuit. Pappas did not answer nor return his call. Thomas retired last year after admitting to federal prosecutors that he accepted bribes in an unrelated case.

“Oh, Mr. Pappas, this is William-Paul Thomas, Mayor Sylvester Turner’s Office. I wanted to visit with you regarding the upcoming airport concession at Hobby Airport,” Thomas said in a voicemail message to Pappas, according to the lawsuit. “Um, I had a great meeting with a couple of folks and I’m going to share with you some of the thoughts that we had going forward. Please give me a call at your convenience.”

Company representatives are not allowed to discuss pending contracts with city officials or workers, except for the city’s designated employee overseeing the procurement. Thomas' call was made while the city was accepting its first round of proposals for the Hobby contract, which it later canceled in May 2020 due to the COVID-19 pandemic.

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It was the first of three separate rounds of bidding the city advertised for the Hobby contract, which culminated more than three years later last month with City Council awarding the 10-year, $470 million deal to Areas , a subsidiary of a Spanish concessions company.

Thomas' attorney could not be reached for comment.

Turner’s office declined comment on the new allegation Tuesday. The mayor’s office previously had accused Pappas of running a “smear campaign” about the contracting process . The Turner administration and supporting council members have argued the city followed the same process it used for three separate airport deals that sailed through council without a whiff of public controversy in the last year, and the same one Pappas had won several times in the last two decades.

City officials have cited the companies' different cost proposals as the driving factor behind the decision. The new company, Areas, offered the city 22 percent of its revenues, while Pappas offered 15.5 percent. Most companies offered around 15 to 17 percent.

“Today, Four Families of Hobby filed a lawsuit against the City of Houston,” Chris Pappas said in a statement, using the name of the Pappas-led venture that applied for the airport contract. “On Friday, April 7th, we received the city’s response to the post-award protest we filed with the Procurement Office. Unfortunately, the response was conclusory at best and clearly did not take seriously our concerns that the city failed to comply with state law, city code, as well as the city’s own policies and procedures in this procurement.”

Christina Pappas, director of marketing for the company, said Pappas did not notify city officials of Thomas' message at the time.

“He did not notify anyone, as we were in a no-contact period, and he made the decision to ignore the message,” Pappas said.

In the lawsuit, attorney Rachel Palmer Hooper argued the voicemail indicates Thomas may have had access to confidential information about proposals from earlier rounds of bidding, which is why Pappas was raising it now.

The complaint alleges Thomas “met with people about the airport concessions at issue here and may have misused official information.” Thomas had left the city by the time the most recent round of bidding began.

As with the protest the company filed with the city last month, the lawsuit also alleges the city treated the Pappas-led group, called Four Families of Hobby, unequally, applied unstated evaluation criteria when reviewing the proposals, allowed airport staff instead of the evaluation committee to assign compensation scores, and misapplied other evaluation criteria. It also says the city should have used Hire Houston First in grading the proposals, a program that gives preference to local companies for city contracts.

Council’s vote last month effectively ended Pappas' 20-year run at the airport after the company waged a monthlong public battle to renew its contract. Pappas officials criticized the selection process as “flawed,” questioning why the city canceled two earlier rounds of bidding for the contract. Areas, the winning company, finished in fourth place in the previous round, canceled late last year due to close scoring between the Pappas-led group and another company.

In that case, the two scores were separated by 0.2 percentage points. In the latest procurement, Areas was ahead of the Pappas-led group by 0.6 percentage points. The company’s officials allege this round should have been too close to call as well.

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Jedediah Greenfield, the city’s chief procurement officer, told an attorney for the Pappas officials last week that he was denying their protest.

“I have reviewed this procurement thoroughly and am confident it was conducted in accordance with relevant law, ordinance, and policy,” Greenfield wrote. “Consequently, I am denying your protest and your request to reevaluate proposals. This procurement is complete.”

Greenfield said the Hire Houston First ordinance raised by Pappas officials should not have been used because it was a contract that generates revenue for the city. Hire Houston First only applies to contracts in which the city is spending money, Greenfield and City Attorney Arturo Michel have said.

He said there is no law that requires the city to re-bid a contract when the scoring is close, and he said the city graded scoring in this contract as it does with others.

The city followed all of its policies and applicable state laws, according to Greenfield. It “was handled as all other concessions contracts have been handled in recent years. It was not arbitrary and capricious, but rather objective and fair to all proposers.”

The lawsuit was filed in the 189th District Court. A hearing was set for 9:30 a.m. Wednesday, but was delayed until Thursday.

The Pappas-led team is asking the court to restrain the city from forcing Pappas to move out of Hobby Airport so a judge can examine their broader claims.

Pappas is due out of the airport by May 11.