Former Supervisor Dennis Hansberger

“Scot really understands the industry in a way the rest of us don’t,” said San Bernardino County Supervisor Dennis Hansberger, an airport authority board member.

 

The following archived story is republished from the Press-Enterprise.

Putting troubles behind them
San Bernardino airport officials give no-bid contract for renovation to aviation insider with checkered past

08:55 PM PDT on Sunday, April 27, 2008

By JOSH BROWN
The Press-Enterprise

He spent four years in prison for bankruptcy fraud, oversaw a string of failed aviation ventures, and could be banned from the aviation industry altogether.

Yet, San Bernardino International Airport officials put Scot Spencer in charge of one of the largest redevelopment projects there in years — a $38 million terminal renovation on schedule for completion this summer. No one else was considered.

The complicated deal has Spencer’s company leasing the building while overseeing the project. The airport, in return, will pay him hundreds of thousands of dollars in developer fees.

“Scot really understands the industry in a way the rest of us don’t,” said San Bernardino County Supervisor Dennis Hansberger, an airport authority board member.

The airport has been struggling for more than a decade to revitalize itself and bring back the 10,000 jobs that vanished when Norton Air Force Base closed. Officials have tried unsuccessfully for several years to launch passenger service.

They said Spencer represented the fastest way to complete the terminal renovation, a key component in their bid to attract a passenger airline.

Meanwhile, a looming decision by the U.S. Department of Transportation could limit the scope of Spencer’s actions at the airport. The department must decide how much involvement he can have in the aviation industry after an administrative law judge in 2005 ordered him banned for operating unlicensed charter flights at the San Bernardino airport.

Spencer said he wasn’t able to present his side of story to the judge, and he plans to fight the decision in hopes of purging it from his record.

Spencer’s Triumphs

Officials say Spencer has used his expertise and connections in the aviation industry to bring much-needed exposure to the airport.

In the three years since the airport leased him its hangar complex, the affable aviation buff, who speaks with a constant grin and raised eyebrow, turned its empty bays into a bustling center for aircraft maintenance and renovation business. As many as 600 jobs are located there.

Spencer first lured So Cal Precision Aircraft Inc., an airplane repair company, to the airport. The firm has performed heavy maintenance for a slew of private companies since relocating to San Bernardino from a small Mojave airport in March 2006.

So Cal recently ran into financial trouble, but Spencer bailed it out, forming a new company to merge with So Cal under the name Norton Aircraft Maintenance Services.

Last spring, Spencer also announced he had purchased a franchise of Houston-based private aircraft services firm Million Air Interlink and would bring the operation to the airport within the next year.

Spencer’s company, SBD Aircraft Services, is leasing approximately 5 acres in the northwest corner of the airport on which the company will build a $7 million, 50,000-square-foot complex to host the company, which provides fueling and hospitality services to private jets.

Last fall, the company purchased longtime airport tenant Don Blue’s Aviation. Spencer plans to merge the operation with the new Million Air outfit.

He also convinced BaySys West, an aircraft interior remodeler and converter, to relocate there. The firm brought hundreds of jobs to the hangar and celebrity clientele for its high-end modifications.

Terminal Deal

With each success, Spencer’s creditability with officials grew, said Don Rogers, the airport’s interim director.

The authority approached him last year to see if he was interested in overseeing the terminal renovation, Rogers said. Negotiations with potential airlines had hit a standstill when none would commit without a fully functioning terminal. Airport officials needed to act quickly to keep airlines from landing elsewhere.

“The main reason we did it this way was timing,” Rogers said. Picking Spencer “saved us about four months.”

The airport could also use Spencer’s connections in the aviation industry to buy used baggage-handling machines and jet bridges, saving the airport millions of dollars, said Hansberger, the county supervisor.

Indeed, months before the airport authority picked him to oversee the project, Spencer was intimately involved in the initial design work for the terminal, advising both architects and the airport staff on the renovation, e-mails obtained by The Press-Enterprise show.

The authority, which is a government agency composed of county and city governments, voted in May last year to give the project to Spencer without considering competitive bids.

Bob Stern, president of the Los Angeles-based Center for Governmental Studies, said he believes the actions of the airport showed favoritism.

“They picked someone without seeing if it would be cheaper for someone else to do it,” Stern said. “You can’t tell me in this state there was no one else willing to do this project.”

Stern said the actions of the authority raise questions about the whole process.

“You want to make sure you’re getting the best contract for the money,” he said. “It’s clearly not the normal way for a government to handle giving out contracts.”

The company Spencer created just for the terminal renovation, Norton Development Inc., will receive a developer fee of about $512,000 for the work, depending on the final cost of the project, according to the contract. If Spencer’s company can complete work for less, the airport will pay it a bonus that could amount to as much as $50,000.

Spencer said it would have been hard for the airport to find a developer to do the project for less.

“We didn’t enter into this to make money,” Spencer said. “We have a vested interest in more activity at the airport.”

Contractors Take Bids

Even though the airport gave Spencer a no-bid contract, each of his contractors must take bids from subcontractors they hire and must pay prevailing wages. And when the project is complete, the airport will purchase the building’s improvements from Spencer at the exact amount it cost him to renovate.

Public laws require government agencies such as the airport authority to seek the lowest bidder in public-works contracts, but airport attorney Tim Sabo said the project did not require bids because it was a professional service.

“If any of the board members had been uncomfortable we could have gone through a formal solicitation process,” he said.

Sabo added that the airport did not have anyone capable of overseeing the project.

“The thought at the time was, ‘Here is Scot Spencer. He’s available, and he understands how the airport functions,’ ” Sabo said.

Hansberger said the airport might have been able to spend less money on the project by soliciting bids — but it might have spent more.

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