In an effort to end the virtual monopolies that restaurant and hotel operators enjoy in national parks, Interior Secretary Manuel Lujan announced yesterday a revamped contracting policy designed to make services more competitive and substantially raise franchise fees for businesses that earn "excessive profits."
"We're not looking to break anyone or be unreasonable," Lujan said, adding that he expected no price increases for park visitors. "I am very happy with the system; I just want a greater return."
Franchise fees, which run as low as 0.75 percent of gross revenue, will be raised on a case-by-case basis, with the money going back to the parks for improvements instead of into the U.S. Treasury. Over the next year 25 contracts are up for renewal.
Contracts for concessions -- everything from hotels to canoe rentals -- are now almost automatically renewed, provided that the vendor equals any competitive bid. The operator also can own the facility and gain market value equity from improvements, making it prohibitively expensive for the government to switch contractors because of the expense of buying out the vendor.
"It's impossible for a new entrant," the secretary said. Out of 29 large contracts recently up for renewal, only one brought a competitive bid, he said.
Lujan wants to open the contracting process to competition by ending the "preferential renewal" and "possessory interest" parts of the 1965 law that set park concession policy.
Department officials said they were optimistic that Lujan's proposals will be well received next week before the Senate Energy and Natural Resources Committee's public lands, national parks and forests subcommittee.
The fee changes, however, do not require legislation. The department hopes to raise fees to as high as 22 percent from the current average of 2.5 percent. According to the department, park concessionaires earned $500 million in gross revenue in 1988 and returned $12.5 million to the government.
Some of the proposed changes were immediately criticized by the industry as unfair and likely to lower the quality of service.
"We're very disappointed that the secretary would suggest several things that would undermine and weaken the successful partnership between the private sector and the government," said Allan Howe, Washington representative of the Conference of National Park Concessioners, which had sued to keep the government from releasing information on concession profits. "We think the system's worked very well."
Howe said buying out facilities at book value, instead of the higher market value that is now required by law, is tantamount to changing the rules in the middle of the game and would scare off investors.
Moreover, he said, the loss of preferential renewal would lessen vendors' incentive for superior performance and would upset the continuity of service now enjoyed by visitors.