The LePage administration has abandoned its plan to negotiate directly with bidders for the state’s next wholesale liquor contract and will instead make a traditional request for proposals, in light of key lawmakers’ concerns about fairness and openness.
“A decision was reached internally last week that the RFP approach would provide the most objectivity and fairness, with a clearly delineated appeals process defined by statute and rule,” Sawin Millett, the state’s financial and administrative services commissioner, said in a letter to Sen. Roger Katz, R-Augusta, dated Wednesday.
Millett said the decision followed several internal discussions and consultations with the state Attorney General’s Office.
The request-for-proposals process spells out what the state is requesting and details how a bid will be judged. It also allows for appeals.
The liquor contract promises to be lucrative. The current 10-year contract, which expires in 2014, has generated a total of about $110 million in net income for the contractor, Maine Beverage Co.
Maine Beverage won the contract in 2004 through a request-for-proposals process. As part of the contract, it made a $125 million payment that helped the state close a $1.2 billion budget shortfall.
For the next contract, Katz and other members of the Legislature’s Appropriations Committee raised concerns about direct negotiations with individual bidders and how much proprietary information would be shared among bidders. Katz also questioned how bids would be scored and how losers could appeal.
The state faces a June deadline to have a new wholesale liquor contract. It wants to revamp the contract, under which Maine Beverage now gets a guaranteed annual profit margin of 36.8 percent based on sales of all liquor.
Millett said in his letter, “I believe we remain on track to meet all of the deadlines necessary to secure a new liquor contract, while preserving a fair process for all bidders, with our end goal being to realize significantly increased revenues to help ease the tax burden to the citizens of the state of Maine.”
Beyond weighing options for the liquor contract, Millett said the department has been considering Maine’s request-for-proposals process in general, in response to recent problems with a natural-gas proposal.
Earlier this month, a multimillion-dollar state contract to build a gas pipeline in central Maine was canceled. An appeals panel invalidated the contract for Brunswick-based Maine Natural Gas to build the pipeline after finding the bid-review process was flawed, unfair and illegal. A rival bidder, Summit Natural Gas of Maine, had appealed the contract award.
Millett said the director of the state Bureau of General Services, the state controller and the chief information officer are reviewing the request-for-proposals process and will recommend changes within the next few weeks. Those recommendations would help shape the bidding process for the liquor contract, Millett said.
In a letter to Millett dated Sept. 21, Katz raised concerns about the state’s plan to negotiate with bidders for the liquor contract.
“My unease about this (direct negotiations) approach is that I just do not understand how it works and how losing bidders would know they had been treated fairly,” Katz said in the letter.
Katz questioned what type of scoring process would be used and what appeal rights a losing bidder would have.
In his response, Millett said the option for direct negotiations was included in the supplemental budget that passed in the last legislative session, “at the behest of the current beneficiary of the state liquor contract.”
Maine Beverage and Katz did not return calls seeking comment Wednesday on the state’s new plan to request proposals.
Dirigo Spirit, a new company that has expressed interest in bidding for the next contract, said it was an early and vocal advocate for a competitive, transparent and fair process.
“The new liquor contract will deliver such a large new revenue stream to the state of Maine that the outcome will impact the entire state operating budget,” said Dirigo Spirit President Ford Reiche. “It is important to everybody that this bidding process be done the right way, in the light of day.”
Other members of the Appropriations Committee expressed relief about the decision.
“It’s likely to be more transparent,” said Dawn Hill, D-York. “With procedures in place, we’ll be able to see how we arrive at the decisions that are made.”
Staff Writer Jessica Hall can be contacted at 791-6316 or at: