PA AG Says PLCB exercised "poor judgment"

Pennsylvania Auditor General Jack Wagner has released his report on the audit of the PLCB's "courtesy contract," a $173,820 training contract that was granted to Solutions 21, a Pittsburgh-based company run by the husband of the PLCB's Western Region manager.

Auditor General Jack Wagner said today that the Pennsylvania Liquor Control Board did not violate state law but that it did exercise poor judgment in awarding a $173,820 employee training contract to the husband of a PLCB regional manager, creating the appearance of a conflict of interest.

"In awarding a contract to the spouse of one of its regional managers, the PLCB should have anticipated the reasonable public questioning that would result over a potential conflict of interest, regardless of whether that conflict was an actual conflict or the appearance of a conflict," Wagner said.

That's right, Chuck Ardo: far from accusing the PLCB of curing cancer, those of us who questioned this contract were actually engaging in "reasonable public questioning." That's from the state auditor general, Chuck, so you can take that to the bank. Wagner wasn't just talking about the awarding of the contract either, according a story in the Pittsburgh Post-Gazette:

Mr. Wagner said training to improve employee courtesy, manners and product knowledge wasn't a worthwhile expense. At the least, he said, it should have been done in-house.

So it was a dopey idea, and we were right about that. But the important thing is that state ethics laws were not broken!

Investigators found no evidence that the Western regional director used the authority of her employment or confidential information to assist her husband's business in obtaining the contract, Wagner said.

How did they determine this? Well, the regional director, Susanne Hobart, told them that the business was started before she married her husband, that she doesn't have any financial interest in the company, and "that she was aware her husband's company was going to submit a proposal in response to the RFP issued by the PLCB but she and her husband had agreed not to discuss it." How about that! They agreed, in the sanctity of their own home, not to discuss it.

What's the Auditor General say about that?

Wagner said his department's review of Solutions 21's corporate documents and the Western regional director's statements of financial interest found no evidence to contradict her statements. The report notes that the investigators' ability to determine the substance of communications between a married couple is obviously limited.

So what we have here is a contract let by the PLCB, to a company run by the husband of a high-level PLCB manager (who has no financial interest in the company, but...she's married to the guy, so you gotta figure she's got a financial interest in that), and that's legal because she told the auditor general that she and her husband had agreed not to discuss the RFP. Great! Good ethics laws we have, and I feel good about that!

Then it turns out that there were other irregularities in the evaluation process -- score-shaving, and one contract proposing to employ a PLCB employee as their on-site representative -- that taken all together raised some real red flags.

"Although this contract was awarded according to the letter of the law, there are several incidents that occurred that raise serious concerns and put the PLCB's procurement procedures in question," Wagner said.

Wagner then "made five recommendations to improve the PLCB's management controls, procurement policy and operational procedures, and three recommendations related to the prevention of conflicts of interest." These fall into the category of increasing paperwork and CYA activities, and some things that sound a lot like the office equivalent of the "courtesy" training:

• Exercise good judgment when awarding contracts to avoid even perceived conflicts of interest.
• Ensure that management and employees understand and comply with laws and policies pertaining to conflicts of interest.
• Require the members of future evaluation committees to properly document changes on their individual scoring sheets (like arbitrarily changing scores?).

Ummm... Duh.

How's the PLCB feel about this? Vindicated, sadly enough, and -- as you might expect -- truculent. Joe "CEO" Conti and PJ Stapleton said that they had received legal advice that if they had rejected the bid from Solutions 21, the PLCB might have been sued. For rejecting a bid from a company owned by the husband of one of their managers. “You could certainly characterize it might have been more difficult to reject bids for that reason,” said Conti. Yes, I suppose you could. Rejecting bids for ethical reasons must be a real bitch, at least for some agencies.

As you might guess, I have a much simpler and much more satisfying proposal than Wagner's for solving this kind of continuing problem. Abolish the PLCB. Get the state out of the retail liquor and wine business, where it has no place. Privatize the sale of spirits and wine. Join the 21st Century. And leave this kind of embarrassment behind.

Let's have a little more "reasonable public questioning" about that, eh?

Why Didn't I Ever Ask?

It just hit me like a ton of bricks.

If Pennsylvania's State Store System is as wonderful as PJ and Joe "CEO" say it is...

How come you never see out-of-state plates in the parking lots?

It's like the Worker's Paradise. The Berlin Wall wasn't put up to keep people out of East Germany...

I'll grant, you may see some NJ plates in stores close to the Delaware River. But I'll betcha it's more about people ducking NJ auto insurance rates than it is about visiting the wonderful State Store System.

Still...if you see an out-of-state plate in a State Store System parking lot, and you can get a picture that clearly shows the plate and the store, send it. I dare ya.

One Year Later

I started this blog a year ago today.

In that time we've seen the PLCB propose automated wine-selling 'kiosks' and expensive name changes to their monopoly stores. We've seen Joe "CEO" Conti come out of his planning cave to start taking action; much like that symbol of Pennsylvania's greatness, the groundhog, though it's hard to say whether Conti saw his shadow or not. We've seen a contract let -- under questionable circumstances -- for training that appears to be beneath basic expectations. We've seen failures in the State Store System's on-line ordering system. We've seen the PLCB propose a partnership with individual restaurateurs that would be a breath-taking example of unfair monopolistic power. We saw Conti and PLCB Chairman PJ Stapleton bear up under a largely critical audience on a TV call-in show.

We've also pointed out 15 Reasons why the PLCB should be abolished. We've suggested ways for the State to make money on the process, we've suggested ways to cushion the blow to the system's employees, and we've suggested ways for you, the citizens of Pennsylvania, to help this happen. We've run amusing polls on the site. We've made allies in the general public, in the State government, and in the restaurant business, and we've brought some of those people together. We've linked to numerous stories about the PLCB in Pennsylvania's newspapers. We've even published e-mails from PLCB employees.

I've been interviewed for newspaper and radio stories. I've done a video interview. I've written letters to Pennsylvania newspapers. I've written letters to Pennsylvania legislators, to Governor Rendell, and to the PLCB, and received some responses. Despite being a freelance writer, I've yet to sell a story or make a dime on the issue. (That's okay; this is a hobby.)

Have we had any impact? I believe we have, albeit small. We've fed arguments and ideas to people who can use them with greater leverage. We've created a Web presence around which anti-PLCB/anti-State Store System anger and action can coalesce and concentrate. We've connected people who can now work together. We've given the idea of privatization a bit more impetus and legitimacy.

What do I have planned for the next year? Most importantly, more wine. I want to get some guest bloggers in here, people who know what the PLCB's screwing up in wine sales. That has the potential to bring a lot more people in on our side. More alliances, as we find more people and groups who have a natural antipathy to the PLCB: business groups, political groups, enthusiast groups. More confrontation, as we start to take this fight to Harrisburg. More Reasons, of course: we've only scratched the surface. More outrage, probably, as the PLCB moves to implement its plan for spending more of your money to put more lipstick on its piggish monopoly face. And more hammering away to smash the liquor monopoly the State has held for over 70 years.

The State should not be in the retail booze business. The State has no compelling reason to continue the monopoly sale of wine and spirits. The PLCB Should Be Abolished.

Whose Money Is It To Spend?

The latest bone-headed idea from the PLCB? Change the name of the State Stores. Steve Twedt, at the Pittsburgh Post-Gazette, reported on this over the weekend. This is part of the $3.7 million "rebranding" boondoggle the PLCB has engaged in, for truly questionable reasons.

Happily, there is at least one person in Harrisburg who sees this for the worthless idea it is: Governor Ed Rendell. According the ever-spinning Chuck Ardo,

"The governor expressed his opinion that the PLCB stores as currently named were recognizable and had a brand value of their own and he strongly discouraged PLCB from attempting to change the names of the stores... The governor was vocal in making his opinion known."

However, as we're frequently reminded, the PLCB is an independent agency. Accordingly, Joe "CEO" Conti was not concerned about the governor's opinion. Indeed, it sounds like they may not have been at the same meeting:

[Conti] described the meeting with Mr. Rendell as "more a directional discussion" covering a wide range of topics. "The governor was delighted with everything he saw," said Mr. Conti.

Pardon my French, but one of these two guys is clearly full of crap. If you know Governor Rendell, you know what "strongly discouraged" and "vocal in making his opinion known" means. I'm pretty sure I know what "delighted with everything" means. I'm guessing the Governor is looking at Conti and feeling a bit like Victor Frankenstein.

But that's all silliness and name-calling. What this is really about is wasting your money. When this contract comes up, when the courtesy contract comes up, whenever the PLCB spends on consultants or signage or harassment of former Board members, the stock answer is always that it's not the taxpayer's money, they're a self-supporting agency and that their 'expenses' come out of the money they 'make' selling booze.

Could we cut the bull? The PLCB's real main argument for existence, the only reason they still have the monopoly on liquor and wine sales in Pennsylvania, is because of the money they funnel into the state's coffers. Three-quarters of that money is taxes, and we'll close our eyes and pretend that's a straight push-through. But a quarter of it is 'profits,' going into the general fund to be spent on programs to benefit the citizens of the Commonwealth. If this 'independent agency' is spending some of its gross on questionable stuff like changing the name of their monopoly stores, it is the taxpayer's money that is not going into the general fund.

Just how independent is the PLCB? Who exercises oversight on this agency? It's not the governor, clearly, as his "opinion" doesn't count for spit. Is it the Legislature? Don't know, although Conti and Stapleton were quick to dump most of the criticism of the PLCB's practices in their laps, as being responsible for The Almighty Liquor Code.

At least the PLCB is acting like a proper monopoly: high-handed, unaccountable, and arrogant.

"I love my job."

I got another response from a person who says they work for the PLCB today (the first one is here). There was no subject line, and I'll keep the name under wraps (to the writer: if you don't mind, or would like your name used, I'd be happy to add it, just let me know); the only thing I will say about the identity of the person is that their e-mail address ("willfulmissconduct") makes what follows a little suspicious...but even PLCB clerks like to have some fun, I guess. Until I have a better reason to believe that the following is a put-up job, I'll take is as genuine.

Here's what she had to say, my response follows:

Paid more than other clerks? I don't know how many years these high paid clerks have been in the PLCB, but I make 10.58 an hour. I have been here almost two years. I cannot even afford to pay my rent and bills on that, when all my taxes are taken out. I stay, because I love my job, I love my customers and I have the benefit of very reasonable medical insurance rates. What will happen to me if privatization happens? Will I get medicaid and food stamps? Sure, I can get another job. But.....it will probably cost me 500 to 600 a month for medical. Total Wine? Yeah, right. My friend used to work for them, and they do not even offer medical plans. When they do, it is so unafordable it is not worth it. My friend took a hefty paycut, but is happier at the PLCB.

We do a good job. It's not a matter of training people to do their jobs. It's a matter of firing those that do not. I spend my free time reading wine books and attending classes. Many of my customers thank me and come back and ask for me by name. It is not unusual for me to give my attention to a customer (or set of customers in a group) for 15 to 30 minutes. I love my job. I love my boss, I love the people I work with. We are all just like everyone else, trying to earn a living and support our families. The PLCB is the best thing that ever happened to me. I am a college graduate as well, IQ of 145, and not stupid, as you would like to have folks believe. I went through a horrible divorce and my child and I were homeless at one point. No one helped us. The PLCB gave me hope for a future, supporting myself and taking care of my child, instead of ending up on welfare or in a shelter.

I turn away many people every day who are underage or have no valid ID. Try seeing the same at most beer distributors, when the owner is concerned his or her profits are down. Go ahead.... buy your wine from a grocery store, when all you have to tell you about the wine is the tag on the shelf, put out by the company making the wine. Sure thing they are going to tell you their wine is "good." As far as restaurant markups, complain to the restaurant. It is their decision if they want to buy a wine for 8 bucks and charge 25 for it.

I love my job. I cannot state that enough.

My response to her:

I feel you deserve a response. I have said on the blog, many times, that the situation and future of the PLCB employees is the thorniest part of privatization. It's one of only two issues that really concern me, the other being how to keep the new system fair, insofar as how new licenses are created, approved, issued, and transferred.

When you say "It's not a matter of training people to do their jobs. It's a matter of firing those that do not", I could not agree with you more. I hear from, and about, people like you, who are genuinely interested in their jobs and try to learn more about the products. I recently talked to a young man in a PLCB store in the Philly area who is very interested in single malt Scotch whisky, has developed a nice collection of it, who aspires to travel to Scotland to learn more. People like him, and you, should be rewarded. The type of clerks I unfortunately run into much more often, who either mumble "I don't know," or predictably, cynically, point to the most expensive wine in the section and say "This is good," when I ask for a recommendation -- both of which I've had happen multiple times in the State Stores -- should be getting training and being evaluated on it.

As far as the pay, that's a simple matter of numbers. There is a study out there on salaries of retail clerks nationwide, I've seen it, and PLCB clerks rank rather high on it. That may be more a reflection on how poorly-paid retail clerks are than on how well-paid PLCB clerks are, but the fact remains that PLCB clerks are paid more than most, and "CEO" Joe Conti did say in the PCN interview that experience is not a factor in hiring, and seemed to be concerned about that.

But I take issue with you saying that I think of, or portray, PLCB clerks as stupid. I will say that I have run into some that are ignorant of their own products, or of any products that might not be on the shelves; I'd have to lie to say that hadn't happened. But I don't think the clerks are stupid, and I am always polite and friendly to them, and hopeful of their knowledge. I do think PLCB clerks are handicapped by the system, by the policies of the agency.

I also disagree with you about carding at beer distributors. I've seen carding going on, and I've seen people turned away. I did it myself when I worked beer retail in PA back in the 1990s. The people at beer distributors are just as conscientious as PLCB employees, and by so callously saying it is not so, you do them -- and yourself -- a disservice. It's a simple fact: most underage drinkers don't buy with fake ID. They get booze from relatives or friends who buy it for them, something that happens at State Stores and beer distributors, and nothing clerks do can stop it.

As for grocery store wine sales and restaurant markups... If I just want a bottle with dinner, and I know what I want, what's wrong with buying at the grocery store? Nothing. If I want better wine than that? Well, if I lived in a non-control state, which I have in the past, I would go to a store that specialized in better wines and service, just like I go to my local cheesemonger when I want something other than block cheddar. Choice. It's what private stores are all about.

Restaurant mark-ups aren't really the issue in Pennsylvania, either. It's about the price the state charges to the restaurant, and the lack of service delivered to the restaurant, and the lack of options. Why do you think Philadelphia has many more BYOBs than other big cities in America? One reason: Pennsylvania's archaic, overbearing, monopolistic liquor code.

The main point of your e-mail, though, is about your job, and I don't blame you. I don't want you to be unemployed. You sound like just the kind of clerk I'd love to run into. But the PLCB is not a jobs program. The state should not be in the retail business, any kind of retail business. There is no good reason for the State Stores to exist.

I'd love to see you get a severance package of loans and discounts from the State that would allow you to open your own wine store, maybe in partnership with your current boss and fellow clerks, that would let you run with your love and serve the people who appreciated it. Believe me, there would be so many happy wine-lovers to support you, your store would be a runaway success. And you'd be making a lot more than $10.58 an hour.

That's the way wine retail is in New Jersey, in Delaware, in Maryland. That's the way it could be, should be, in Pennsylvania.

Sincerely,
Lew Bryson

The PLCB is not a jobs program. The Turnpike Commission, maybe, but the PLCB is not. I have said from the beginning that the plight of the employees is the toughest part; here's what I said in a comment on my very first post on the blog, the day after I started: "The hardest part about writing this, getting people to see the problems with the PLCB, is thinking about the effect it could have on people's livelihoods if I were somehow successful." Since then I believe we've come up with some workable ideas on how to ease that transition, and I hope that some legislators take a look at them.

But...the PLCB is not a jobs program. Shouldn't be, can't be. It's bad enough that it's got the State in retail.