Last March, Gov. John Baldacci signed legislation effectively privatizing Maine’s liquor business. As part of that process, the last of the state’s liquor stores closed in November. While the state will continue to regulate the price of liquor to ensure fairness, the distribution business as it has run since prohibition will be handed over to the private sector by the end of June.

As required by state law, the transfer of the liquor business was accomplished through a competitive bid process. As commissioner of the Department of Administrative and Financial Services, it was my charge to ensure that the process was conducted in a fair and open manner.

Much attention has been given to the decision to award the contract to Martignetti of Maine LLC. I felt it was important to take this opportunity to present your readers with a better understanding of the process followed by the department in awarding this contract, in addition to some of the factors that guided our decision.

Last summer, as we began making preparations for creating a request for proposal (RFP), I made the decision that the department would conduct this process with the maximum input from stakeholders and the public. Throughout the summer and fall, the department held several public and private meetings with interested parties, in addition to providing regular briefings to the legislative oversight committee.

By late fall, our five-member review panel began the process of compiling all of the information we had collected to create a working document. Nearly six weeks later the panel issued an RFP.

The state was fortunate to receive three outstanding proposals. Each of the proposals offered dramatically enhanced services for Maine’s 280 agency stores and should result in the opportunity for increased profitability.

Ultimately, after reviewing hundreds of pages of proposals, the panel chose Martignetti of Maine LLC as the successful bidder.

Martignetti will operate the liquor business from a warehouse in Gorham. It will be entirely staffed by Maine workers and will deliver products to Maine stores via a Maine trucking company. Martignetti expects to employ 31 new full-time employees, as well as additional seasonal staffing.

Since the decision was announced, concerns have been raised by the unsuccessful bidders centering on four topics:

. The winning bidder is an out-of-state entity;

. The winning bidder was allowed to supplement their proposal after the deadline;

. Rules were not implemented to guide the process; and

. The winning bidder will have too much control of the liquor business.

The panel rejects each of these claims.

First, Maine repealed its in-state preference law in 1981 and for the panel to factor in the home state of any bidder would have been a violation of law. Nevertheless, each of the three qualified bidders formed a Maine limited liability company for the purpose of conducting this business opportunity; each would be located in Maine; each would generate new Maine jobs; each proposed to use current Maine businesses as subcontractors; and each proposed to rely upon substantial investment from out-of-state sources to finance their obligations. No one bidder can lay claim to being more of a Maine company than another.

Second, as required by law, no bidder was allowed to supplement their proposal after the bid deadline. There have been claims that Martignetti offered a transition plan that supplemented their original document. In fact, a transition plan was not required in the RFP, but rather each bidder was asked to share their transition plans during their oral interviews. Martignetti simply provided material that was asked for by the state as did the other two bidders.

Third, claims have been made that all of the bids should be rejected because the Department failed to enact rules to guide the bidding process. In fact, the state already has rules that govern the awarding of contracts. (Title 5, Sec. 1825-C, Chapter 110 – Rules for the Purchase of Services and Awards.)

As an example, those appealing the award suggest that the department should have formulated rules to define a “wholesale liquor provider.” However, in the very same law that directed the privatization, the Legislature provided a definition.

To further define the term would have only served to reduce the number of qualified bidders and undermine a competitive process. Additional appellant concerns centered on rules to require split cases, timely delivery of the product statewide and protections for the rights of state employees. Again, privatization language enacted by the Legislature on these items was transferred directly from the law to the RFP and each of the bidders affirmed their agreement to the terms of the RFP in their proposals.

Finally, the department remains the contract administrator and as such the ultimate authority with regard to decisions related to the business. The state retains the authority for pricing of all liquor, as well as determining which products may be sold. Concerns that the winning bidder will be allowed to manipulate pricing and squeeze out competitors are baseless.

It is clear that the unsuccessful bidders are disappointed. They clearly spent hundreds of hours and considerable resources preparing their proposals. For their efforts we are appreciative. However, it remains the panel’s legal obligation to select the best value bid for the state. To slip back into a spoils system where the best bid goes to the person with the most political connections or ensuring that everyone gets their “fair share” regardless of their proposal would not only be wrong, but a violation of law.

The panel is proud of the open process we carried out during this award and welcomed the scrutiny this proposal has received. We are confident that we selected the best deal for the state of Maine that will result in a higher level of service and increased profitability for nearly 300 Maine small businesses.

Rebecca Wyke is the commissioner of the Department of Administrative and Financial Services.