State liquor marketing contract rescinded

Posted June 04, 2014, at 9:34 a.m.
Last modified June 04, 2014, at 3:47 p.m.

AUGUSTA, Maine — The state’s liquor and lottery agency has notified Pine State Trading Co. that a contract awarded in February for marketing operations has been rescinded and that a new request for proposals will be issued to restart the bid process.

The Bureau of Alcoholic Beverages and Lottery Operations notified Pine State of the decision in a letter dated Monday.

“This decision is based on the disclosure by Pine State Trading Company that its response to Section 1.0 of Part B of the Request for Proposals for Spirits Trade Marketing contained inaccurate information with regard to the extent of its trade marketing activities in New Hampshire,” reads the letter.

Nick Alberding, one of Pine State’s co-owners, said Wednesday afternoon that his company respects the decision.

Withdrawal of the contract will not affect the sales and distribution of spirits in Maine, according to Jennifer Smith, spokeswoman for the Department of Administrative and Financial Services, because those activities are contracted separately.

The state’s liquor contract was redrawn by Gov. Paul LePage and the Legislature last year with the intent of using the revenues to pay off $183 million in old state Medicaid debt to Maine’s hospitals through a bond that was sold earlier this year. That revenue is not affected, said Smith.

Dirigo Spirits, one of the losing bidders for the $750,000-a-year marketing contract, appealed the decision to award the contract to Pine State and took its case to an administrative panel from within the Bureau of Alcoholic Beverages and Lottery Operations. Pine State also was the winning bidder for the much larger sales and distribution contract. Both contracts were set to go into effect July 1.

At the center of Dirigo’s appeal was the contention that Pine State should have been disqualified or scored lower because of its involvement with marketing alcohol sales in New Hampshire. As part of the contract overhaul, Maine hopes to recoup alcohol purchases being made over the border in New Hampshire, where there is no sales tax.

An attorney for Dirigo argued that Pine State underrepresented its marketing activities in New Hampshire. A Pine State attorney argued that the company’s activities in New Hampshire accounted for less than 1 percent of total sales in the Granite State, though he acknowledged that a “numerical error” had been made in Pine State’s bid documents.

“We’re disappointed [by the state’s decision to rescind the contract], but we understand it,” said Alberding. “We acknowledged we made a numerical error, and we disclosed it. … Assuming that the new RFP is done in a way that we can be a bidder, we will proceed with that.”

Alberding said his company does not intend to challenge the Bureau of Alcoholic Beverages and Lottery Operations’ decision through legal means.

Ford Reiche, president of Dirigo Spirit Co., said in a written statement Wednesday that he is pleased with the ruling.

“We fully support the administration’s recent decision to cancel that liquor marketing contract award,” said Reiche. “The cancellation confirms the concerns included in our appeal. We look forward to participating in a new RFP process for the marketing of spirits in Maine, and particularly to addressing the issue of maximizing the state’s revenue by recapturing sales lost to New Hampshire.”

Duncan Stout, co-owner of CD&M Communications of Portland, a third firm that bidded for the marketing contract, said Wednesday afternoon that his company has not decided whether it will re-bid for the contract.

“Like everyone else, we’re very curious to see what the new RFP will look like,” he said.

Officials with the Department of Administrative and Financial Services would not comment on the timing of the new request for proposals.

Sun Journal state politics editor Scott Thistle contributed to this report.