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agency has notified Pine State Trading Co. that a contract awarded in February for marketing operations has been rescinded and that a new request for proposals will be issued to restart the bid process.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

That information and other details of the bid process and competing proposals for the trade-marketing portion of the state’s liquor business came to light during a two-day hearing of an appeal of the marketing contract award by Dirigo Spirit in May.

The decision by the bureau Monday came before the review panel issued its determination on whether Pine State should have been awarded the contract.

Dirigo Spirit, headed by former Safe Handling executive Ford Reiche, had argued that the extent of Pine State’s marketing work in New Hampshire made the company ineligible to bid on the Maine marketing contract, under the terms in the RFP. The company also argued Pine State had not fully disclosed the extent of its marketing work in New Hampshire. Both issues were contested by Pine State.

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“We fully support the administration’s recent decision to cancel that liquor-marketing contract award,” Reiche said in a prepared statement Tuesday. “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.”

A lawyer for Pine State Trading could not be reached Wednesday for comment.

Withdrawal of the contract will not affect the sales and distribution of spirits in Maine, said 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 Medicaid debt to the state’s hospitals through a bond that was sold earlier this year. That revenue is not affected, Smith said.

Dirigo Spirit, 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 within the Bureau of Alcoholic Beverages and Lottery Operations. Pine State was also the winning bidder for the much larger sales and distribution contract.

At the center of Dirigo’s appeal was the contention that Pine State should have been disqualified or scored lower because of its involvement in 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.

A lawyer for Dirigo Spirit argued that Pine State underrepresented its marketing activities in New Hampshire. A Pine State lawyer 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.

The next step in the appeal process could be Kennebec County Superior Court. Officials with the Department of Administrative and Financial Services would not comment on the timing of the new request for proposals.


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