August 04, 2020

Baldacci defends decision on liquor Governor denies that contract award was product of ‘a flawed process’

AUGUSTA – A day after being hospitalized because of an early-morning car crash, Gov. John E. Baldacci was back on the job Thursday and defending the state’s decision to award a $125 million liquor distribution contract to a Massachusetts company.

Appearing pale while recovering from a broken rib and a concussion from the Interstate 295 accident in Bowdoinham, Baldacci rebutted claims made by one of the unsuccessful bidders who alleged the state’s selection was the product of a “flawed process.”

“I’m completely confident in the process that was undertaken,” the governor said. “Those who want to appeal the decision have the opportunity to do so. It’s healthy and it’s part of the process and it provides an opportunity to go through the point system and nuances that contributed to the selection.”

Maine Liquors of Augusta and MaineCentric of Auburn have appealed the state’s decision to award a 10-year lease for liquor distribution rights in Maine to Martignetti Cos. of Norwood, Mass. Maine Liquors alleges that because of irregularities in the state’s request-for-proposals selection process, Martignetti gained an unfair advantage over other bidders.

Both of the losing bidders maintain the $125 million deal was not a good one because the state gets about $26 million a year from its current operation of the wholesale liquor business, which adds up to about $260 million over the 10-year life of the lease.

The 37-page appeal alleges the state allowed Martignetti to amend its proposal in violation of state rules. The Augusta firm also charges Martignetti failed to meet all of the state’s requirements and that Maine Liquors filed a stronger proposal with better references than Martignetti.

MaineCentric alleged the state “badly miscalculated” the amount of royalty payments it would receive under its proposal and “unfairly misjudged” the strength of the Auburn company’s operational plan.

Both losing bidders were told Thursday that an appeal hearing has been set for Feb. 23, with a prehearing conference scheduled for Feb. 11.

On Thursday, Rebecca Wyke, commissioner of the Department of Administrative and Financial Services, also defended the administration’s choice before the Legislature’s Legal and Veterans Affairs Committee.

She told lawmakers on that panel that privatization of the state’s wholesale liquor business was proposed as part of a strategy to close a $1.2 billion structural gap in the state’s current budget cycle without raising sales or income taxes.

She and the governor said Thursday that, despite the inference that an in-state business should have been selected, there was no way the state could consider giving an advantage to a Maine company since the Legislature repealed its in-state preference law in 1981.

The law was repealed because other states began taking similar positions in retaliation for lost business to Maine companies.

Although most members of the committee seemed satisfied with Wyke’s explanation, Rep. Pat Blanchette, D-Bangor, said the state’s 10-year contract with Martignetti gave her “a great deal of heartburn.”

“I understand the reasoning with the money they put upfront,” she said. “I’m having some problems with the fact that we are literally going to be held hostage for 10 years by an out-of-state company that might or might not hold themselves to the level of service that they’ve promised in this bid. Is there any safeguard for the merchants whose livelihood depends on reliable service?”

Wyke said the state’s scrutiny of the bids was made with sensitivity to the needs of Maine’s 280 licensed liquor agents as well as licensees who sell alcoholic beverages.

“We gave a lot of consideration to this and wanted to make sure that whoever came forward understood the business and its financial aspects and had a plan that made sense to us,” she said.

Have feedback? Want to know more? Send us ideas for follow-up stories.

comments for this post are closed

You may also like