State denies delay in liquor deal

AUGUSTA – The director of the state Bureau of General Services has denied an Augusta company’s request to delay contract negotiations for privatizing the state’s $125 million wholesale liquor business.

Elaine Clark, director of the Bureau of General Services, has notified Augusta lobbyist Severin Beliveau that his client, Maine Liquors LLC, had not met the state’s criteria necessary for granting his request for a stay in the negotiations.

Specifically, Clark stated that Beliveau:

. Did not present sufficient information to determine whether Maine Liquors LLC stood a “reasonable likelihood of success on the merits” of its appeal.

. Did not present a convincing argument that his client would suffer “irreparable harm absent” the granting of a stay.

. Failed to demonstrate there would be “no substantial harm to adverse parties or to the general public” if the stay were granted.

Beliveau was not available for comment Friday, but Lee Umphrey, director of communications for Gov. John E. Baldacci, said the decision should counter some of the criticisms lodged against the administration over the way the contract was awarded.

Two weeks ago, the state chose a Massachusetts-based company to run its wholesale liquor business, prompting lawyers for two losing bidders to appeal the decision.

Maine Liquors asked the state Monday to hold off on awarding the contract to Martignetti Cos. of Norwood, Mass., pending the appeal that was filed Friday.

Earlier this week, Beliveau told The Associated Press that Maine Liquors decided to appeal the state’s awarding of a contract to Martignetti because of irregularities in the selection process. He said lawmakers were required to be directly involved but played little, if any, role.

The 37-page appeal alleges that the state allowed Martignetti to alter its proposal in violation of state rules, that Martignetti failed to meet all of the state’s requirements, that Maine Liquors filed a stronger proposal and that Maine Liquors submitted more and better references than Martignetti.

MaineCentric of Auburn, another losing bidder, also planned to file an appeal, according to its attorney, Jonathan Pierce.

Martignetti received a 10-year lease to store and distribute liquor statewide. The deal, which has not been completed, calls for Martignetti to pay the state $125 million upfront, plus additional payments whose size will depend on how lucrative the contract is.

Umphrey maintained Friday that the selection of Martignetti was thorough and beyond reproach.

“The governor is confident that both the selection and appeal process has been thorough,” he said. “The state chose the provider with the best proposal in a company that is incorporated in Maine, will pay Maine taxes and hire Maine workers.”

Larry Benoit, a consultant for Martignetti, said his client is confident its selection will survive any legal challenges because the state’s award process was rigorous. The Legislature agreed last year to privatize the state’s wholesale liquor business at Baldacci’s request. That allowed the state to book an extra $125 million in the current budget cycle, helping to balance the books in the face of a $1.2 billion budget shortfall.

At the time, critics argued that the $125 million deal was not a good one because the state gets about $26 million a year from the wholesale operation, which adds up to about $260 million over the 10-year life of the lease.

The Baldacci administration said the state would fare well in the long run, thanks in part to the extra payments that Martignetti has agreed to make, and to the taxes the company will pay. Any appeals will be decided by the state, which will appoint a panel of officials to review them. A bidder who loses an appeal to the state can file another challenge with the courts.

Clark said March 19 has been set as the date for approving the final contract award.

The Associated Press contributed to this report.