FAA investigating complaint against City of St. Joseph for alleged violations of airport bid practices
Cameron Montemayor
ST. JOSEPH, Mo. (News-Press NOW) — Federal regulators are investigating a complaint filed by a local airport group alleging the City of St. Joseph violated federal grant regulations and bidding processes by improperly awarding an airport lease to one company last September.
Officials with the Federal Aviation Administration on Jan. 13 notified and requested the City respond to allegations in a complaint filed by local entrepreneur Lute Atieh, alleging the city violated as many as five federal grant assurances by improperly awarding a Rosecrans airport lease to Pan-Am Flight Services last September.
FAA grant assurances are legally binding, long-term obligations that airport sponsors like the City must agree to when accepting federal funds to support operations.
Atieh, who is representing his bidding group St. Joseph Air Center and company FlyTech Pilot Academy, as well as several concerned airport tenants, claims the city failed on multiple occasions to properly evaluate airport bid proposals — among a wide range of allegations — and let internal pressure campaigns by bidders and city officials heavily sway the selection of an alleged inferior bid, this coming despite internal documents showing his proposal rated the highest on at least one full round of scoring.
“If the FAA finds merit to my complaint, the city may be required to correct the process and address any compliance issues to protect future FAA funding,” Atieh told News-Press NOW. “This is a city airport, but federal dollars come with federal obligations, and those obligations are not optional.”
The city has until Feb. 12 to provide a response to the allegations according to the FAA’s notification letter, including the status of any attempts to resolve it, after which the FAA will review and either facilitate a resolution or move forward with a full investigation to determine potential noncompliance or dismissal.
A spokesperson for the city declined to comment on the FAA’s request or allegations in the complaint, citing a pending legal matter.
The FAA’s decision to move forward comes after an initial review of Atieh’s complaint to identify allegations requiring further investigation, including requests to the city to disclose administrative records related to the matter.
Atieh was one of four entities who submitted bid proposals for a Fixed Based Operator lease at Rosecrans Memorial Airport last year, including Pan-Am Flight Services, the current awardee, and Apex Aero Center of Kansas City, the company initially awarded the bid. FBOs are entities authorized to provide specialized aircraft services for general, commercial and private aviation, including maintenance, refueling and providing hangar space.
“This is not retail real estate. Running an airport operation requires regulatory compliance, specialized training, and deep industry experience,” Atieh said. “When proposals are evaluated using objective aviation criteria and expert input, the outcome should favor the most qualified operator, not the best connected. FAA oversight exists to keep the playing field level.” Atieh said his plan emphasized preserving existing facilities, with nearly $3.8 million in investments, rather than demolishing city structures to consolidate space for one tenant and displace more than a dozen tenants and operators.
The complaint alleges the bidding process and current plan with Pan-Am violates multiple grant regulations, including excessive consolidation of property and reducing or eliminating multiple independent aeronautical businesses — including his — without a workable transition plan, threatening fair prices and the continuity of key aviation services and opportunities for other business users.
He said he’s not interested in being pushed out, instead he’s hoping to stand up for other concerned tenants and future entrepreneurs looking to make St. Joseph home.
Internal documents paint telling picture of bid process
Details on the FBO bid process spilled into public view last August when bidding groups, including Steve Craig on behalf of Pan-Am, raised concerns publicly to City Council about allegations of do-overs on scoring proposals following Apex Aero Center’s selection, raising doubts about which proposal was truly scored the highest.
Of the four companies who bid for the FBO, documents show SJAC received the highest score among four of the five scoring panelists on at least one round of voting, an average score of 87 out of 100, except for one Aviation Board member, Chad Welch, who rated SJAC with a “0”, a drastically lower score compared with other evaluations.
This document shows the second round of scoring for the Fixed Base Operator Lease at Rosecrans Memorial Airport.
On the other hand, Welch also gave Pan-Am a perfect “100” rating — something the complaint takes issue with. The “0” score reportedly resulted in the panelists’ removal from the selection process due to claims of bias.
“Several panelists scored my proposal near the top, but one evaluator gave it a zero, which dramatically changed the outcome,” Atieh said. “When one outlier score can override the rest of the panel, it raises serious questions about fairness and whether the process is protected from bias.”
After appointing a new voting member, scoring documents for the second round of voting ended with SJAC scoring first. The scoring committee submitted a written recommendation to City Council for SJAC until the bid process was withdrawn and improperly re-initiated later according to the complaint, with Apex ultimately being selected.
Less than a week after the City Council meeting, Apex Aero Center, a leading entity with multiple FBOs in the Midwest, withdrew from the planned agreement, a decision the complaint attributes to a campaign of pressure, citing multiple witnesses who heard the interactions. Not long after, Kansas City announced an agreement with Apex to develop a new $55 million FBO complex.
Following Apex’s decision, the city pivoted to an agreement with Pan-Am Flight Services after City Councilmember Kenton Randolph sponsored a resolution directing city staff to negotiate a lease and operation agreement, which at this time is a non-binding agreement with plans for a 30,000-square-foot hangar and other aircraft facilities.
Atieh contends his proposal would have generated more revenue for the city — particularly through a higher fuel tax — and helped preserve existing facilities as opposed to the current proposal, the details are which are likely to come to the forefront as the review unfolds and a full investigation potentially awaits.