The Citizen published the following commentary by Granite State Taxpayers Chairman Jim Adams on August 18, 2016.
The Executive Council exists to prevent costly mistakes like the present train wreck – the State Liquor Commission (SLC) Warehouse mess.
I have to disagree with the opinion piece published on Aug. 11 by a liquor broker extolling the virtues of the State Liquor Commission’s controversial warehouse contract with the German company, DHL’s subsidiary called Exel. As a taxpayer advocate for many years, I think that this deal is very suspicious and should be investigated.
The author admits that he “cannot speak to the selection process.” This selection process resulted in two separate lawsuits against the SLC by the second and third place bidders. Litigation like this is rare, which suggests that something went sideways in this deal.
According to news accounts, the court files are rife with allegations of collusion, bid-rigging, and favoritism exhibited by the SLC toward Exel, which was not the low bidder. The third place bidder, Law Warehouses of Nashua, was paid $2.5 million to settle its lawsuit just prior to the trial. The low bidder, XTL, Inc., of Philadelphia, which holds the Liquor Warehouse contract in the Philadelphia area, was low bidder by more than half a million dollars for the first 30 months of the contract. According to news reports, XTL is now seeking over $50 million in damages from the SLC.
The opinion piece brags about the fact that the SLC saved $3 million in the first 12 months over what the previous provider would have charged. The savings would have been much more if XTL had been chosen. What the piece doesn’t mention is that the $3 million savings were completely wiped out by the $2.5 million settlement paid to Law Warehouses, plus the more than $1 million paid to an outside lawyer hired by the Attorney General to help the five Assistant Attorneys General who defended the SLC in these two lawsuits.
According to news reports, the original estimate for the lawyer’s services was only $10,000. Was this done to escape review by the Executive Council? Recent news updates showed that this amount has ballooned to $1.1 million as of March. After preparing for and sitting through the recent XTL trial, is the private lawyer’s bill approaching $1.5 million? Who is keeping track of this for the taxpayers? When will the bleeding of the State Treasury stop? The Attorney General’s Office had five Assistant Attorneys General handling these cases. Why did they need to hire an expensive private lawyer? Who is minding the store?
For these higher costs that Exel is receiving, are they at least providing a better product? The opinion piece praises the “efficiencies” of the new warehouse, but court filings show that Exel gave the SLC a 20th century solution that relies on manual picking of product, while XTL had offered a 21st century solution of a fully automated warehouse with state-of-the-art robotics that would have saved additional millions over the 20-year contract.
In fairness to the Executive Councilors in office in 2012 when this contract was approved, it did not come before the Council because of a mistaken law passed in 2009 that exempted SLC contracts like this from Executive Council oversight. That mistake was corrected by the legislature in 2013 so that future contracts like this will come before the Council for review. I would like to be a part of that process.
I’m running for Executive Council precisely to prevent these types of shenanigans and to exercise oversight over State agencies like the SLC to make sure taxpayers are protected and all vendors bidding on State contracts are treated fairly.
I believe the taxpayers should receive a dollar’s worth of value for every tax dollar spent by the State. Unfortunately, in this case, that was not done.
Jim Adams is Chairman of Granite State Taxpayers.