Grand Canyon back to drawing table after proposal for lucrative contract fails to attract bids

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FLAGSTAFF, Arizona — Officials have given up for now on soliciting bids for one of the Park Service's largest and most lucrative contracts, to run iconic hotels and restaurants at the Grand Canyon's South rim.

The National Park Service failed to garner any bids that met its terms for the 15-year contract — worth an estimated $1 billion — despite several amendments since August 2013 that were meant to make the deal more attractive, the agency wrote in court documents.

It plans to go back to the drawing board and revise the proposal substantially before putting it out to bid again.

The contract now held by Xanterra Parks & Resorts, based in Greenwood Village, Colorado, expires Dec. 31 and cannot be extended.

Some of the most popular draws at the South Rim are the historic El Tovar Hotel and mule rides that ferry visitors into the depths of the canyon. Grand Canyon Superintendent Dave Uberuaga has said a temporary contract will ensure that most services now under Xanterra's contract won't shut down come Jan. 1.

The timing for a long-term contract is uncertain. Officials from the Park Service did not respond to repeated requests for comments this week but said in court documents that it would consider separating the services into different contracts.

Changes to the franchise fee, the amount owed by the winning bidder for improvements made by Xanterra and clarifications on employee housing did not help lure a potentially winning bid, court documents state.

Xanterra sued the Grand Canyon in October, alleging the contract proposal gives an unfair advantage to a competitor and would result in a money-losing operation. Xanterra wants requirements in the long-term contract declared unlawful and to prevent a smaller contract that absorbed some services now provided by Xanterra to go into effect.

A hearing in the case is set for Tuesday in U.S. District Court in Colorado.

The Park Service disputed Xanterra's allegations in recent court filings and asked the judge to dismiss the complaint. The agency said the issue is moot since the proposal for the long-term contract has been canceled.

David Nimkin, Southwest regional director for the National Parks Conservation Association, said he suspects the court case might be playing into a decision for the few concessions companies that could handle the contract to submit a responsive bid.

"That's clearly gotta be part of it," he said. "Is it possible the Park Service has overestimated what the value should be? That's certainly possible, but from what I understand, those become negotiable points."

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