Tell your Senator everything the PLCB's doing!

I copied this from a Facebook post; I don't think the original poster will mind. The idea is that while the Senators fiddle and diddle and talk about "modernizing" the PLCB instead of privatizing it -- privatization that the majority of Pennsylvanians continue to support -- we should remind the Senate what a great job the PLCB is doing. So...get on the phone, send an email, and let your Senator know that the PLCB deserves credit for all the things they're doing!

• Tell them that you really thought the wine kiosks were innovative 
• that you thought the date-rape ads were on target 
• that your mother liked the vodka 
• that you didn't mind that your wine sat in an non-air conditioned trailer in the summer 
• that you think the PLCB didn't have anything better to spend the now $35 million+ in computer cost overruns on 
• that bringing back the CEO under investigation for graft is a great idea 
• that TableLeaf is the best thing since the PLCB spent over $4 million to rename Wine and Spirits to Fine Wine and Good Spirits
• that you're impressed with the string of record annual sales figures (and the bookkeeping skills needed to explain why the net assets of the PLCB are negative)
• that thy have an amazing jobs program going that has more employees now with 601 stores then there were with 692 stores in 2000
• that it's great that the PLCB spend more on advertising than on education
• that they're saving money as the 3rd largest purchaser of wine in the world by not bothering to have a trained sommelier on staff?
• that smile training should be mandatory for all state workers (especially when you can keep it "all in the family")
• that you really appreciate having 90 stores less than there were in 2000 so there wouldn't be a liquor store on every corner. 

Pretty amazing when you add it all up, isn't it? Remember: call your senator today...and then call them again next week. And the following week. And so on, till you get a good reason why they'd rather vote against what the citizens want than for it.

Joe Conti's Greatest Hits

Joe Da CEO - 12/13/06 -- 2/2/13

Joe Conti's gone, and we're somewhat sorry to see him go. He was, as the alliteration-happy Commonwealth Foundation might put it, The Autocrat of Arrogance, King of The Kiosks, notorious Nabob of Nepotism, and the Duke of (Tone) Deafness. He will be back as a consultant, of course -- he is also the Prince of the Public Trough -- so we have hope that he'll still deliver us a final Endowment of Embarrassment!

In the meantime, here are our most fond memories of Joe Da CEO, and what he did to further the cause of privatization of the State Store System, along with a range of 1-20 points for each incident's CONTI score (that's Corruption, Oblivious-to-Consequences, Nepotism, Thick-Wittedness, and Insider-itis). Plenty of links to the blogposts that describe them too, and I have to say, they're some of my favorites. It was so much fun to rant about Joe Da CEO.

Joe's Job. Conti's CEO position was created out of whole cloth by Governor Ed Rendell, and apparently filled without advertising, without any other candidates being interviewed, and without any real clue on why it was needed. Here's the story. That might explain why Conti seemed to do nothing for the first two years he was in the position (though we were told he spent that time..."planning").
Score: 4. More about Joe, than it is Joe...but the shape of things to come.

Dr. Rendellstein's Monster. This was a minor incident, but one of my favorites, because it illustrated just how overly-independent the PLCB is. Rendell hears about the original TableLeaf "rebranding" idea, and has Conti in to talk about it. "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." Conti recalled the meeting differently. "[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." Just amazing.
Score: 8. A small gem of Continess.

Playing Restaurant Favorites. On Conti's watch: the PLCB opened a mini-winestore inside Garces Trading Company, Jose Garces deli/grocery. Really kind of cool...and really kind of unfair to all the other BYOs in Philly who would love to have a little winestore in-house, but never got asked (except when Conti allegedly offered one to Stephen Starr...see below). No more have opened, and Garces has distanced himself from the concept.
Score: 9. Tone-deaf, but Conti was not too publicly vocal about it. 

TableLeaf. He spent a lot of money on it for no understandable reason: rebranding a legal, police-enforced monopoly? When that got too ugly, he changed his mind and taped it on the front of a PLCB-created "house" wine brand. And then, when people got pissed off that the house brand was deliberately undercutting private winemakers...he lied about it.
Score: 10. Classic Conti characteristics, but a fairly small affair; an extra point for some bold lying. 

Fighting Privatization. Despite noting several times that it wasn't his job to fight privatization -- that was all up to the Legislature! -- Conti spent a lot of public time doing just that. One of the best was during this Legislative hearing, where he did what he does so well. He lied (about how much money privatization would "lose" the State, and about the results of the PLCB's internal review of the wine kiosks), he blustered, he threatened, and he obfuscated...all of it while fighting the idea of privatization, which he said he wasn't there to do.
Score: 11. No corruption, just doing his job. Wait...he said it wasn't his job. It's confusing.  

How many wine kiosks did you want?

The Death of the Wine Kiosks. Almost as much fun as the spectacle of the Wine Kiosks themselves was Conti's complete loss of reality-grip when the The Invincible Wine Robot Army (see below) was finally defeated at the Battle of Wegmans. Faced with total annihilation of his cherished idea, and the utter commercial failure of the misbegotten wine automata, what was Conti's reaction? "It certainly wasn't a failure." "I still think there is merit to the program." "It didn't end up successful, but we learned a lot and we will end up better for it."
Score: 13. Would have been higher, but no nepotism or (detectable) corruption. Just arrogance and stupidity. 

The Courtesy Contract. If you've forgotten...the PLCB let a contract (on a low-ball bid) for "Improving basic customer service skills" to a company run by the husband of a PLCB regional manager. Conti's watch, and he loved it: "This is a vast adventure, and it's one we have to take," he said And the training was ridiculous, probably unnecessary (there was a customer complaint once every 288,000 transactions...), and ineffective: customer complaints actually went up after the training. And Conti decided to continue it. The Auditor General said: "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." Conti's reaction? Vindication. Classic.
Score: 14. No obvious personal corruption. And the nepotism was someone else's... 

The Wine Kiosks (AKA The Invincible Wine Robot Army). The most amazing idea that could never work. Here's a video of just how ridiculous they were in case you'd forgotten:



Conti oversaw this Carnival of FAIL from the initial flawed idea, through the single-bidder contract (to the completely inexperienced company that was heavy with contributors to Gov. Rendell's campaign), through overriding the advice of a PLCB internal review to reject the idea (which he then lied about to a Legislative hearing) to the bloated execution (which hid costs) and the eventual disaster that was the implementation. You can see most of that here.
Score: 18. Close to perfect, but no obvious nepotism.

Contigate. According to the state Inspector General, Conti accepted Phillies and Union tickets from PLCB vendors and "lobbied" vendors and restaurateur Stephen Starr for a job for his daughter; Conti may also have hinted in the same conversation with Starr that maybe Starr could get one of the sweet in-store PLCB "winebox" pop-up stores like Jose Garces got (and NO ONE ELSE seems to be able to get). And...he was dumb enough (or arrogant enough; your pick) to use his State-issued Blackberry to do the business.  Score: 20. Doesn't get much more Conti than this.


Ah, Joe, Joe...it was great to have you around. It kept the fight interesting, and kept it fair, too. I mean, it was just 2/3 of the citizens of the Commonwealth vs. the UFCW and the Legislature! But you and your great ideas like the wine kiosks kept us going!

Too bad the PLCB's dumb enough to hire you back at $80 an hour as a consultant. Yeah, really, they are...on an official "emergency" basis. That's a move so dumb you'd almost think it was Joe's... Score: 22.

Auditor General: "The Board and the vendor lost credibility..."

I'm back from vacation...and apparently just in time! Auditor General Jack Wagner's audit of the wine kiosk fiasco -- sorry, program -- is out today, and it's pretty much unforgiving. Well, the man's an auditor; of course it's not forgiving, that's not his job, and this was a fiasco. Some pertinent stuff (the full report's here in PDF format; the AG's statement is here (added emphases are mine, of course)):

Wagner’s special performance audit...chronicled the problems that existed from the beginning of the ill-fated kiosk program. The six findings, are:

• The board used kiosk technology that effectively controlled the purchase of alcohol (about the only positive statement in the whole report)
  
• The board followed state procurement requirements, but the request for proposals did not enable fair and just competition
  
• The board and the sole responding vendor negotiated the kiosk contract in ways more advantageous to the vendor than necessary
  
• The board spent $1.12 million more than it took in over two fiscal years and has invoiced the vendor for the losses. But the vendor has not paid
  
• The board and the vendor lost credibility when the kiosks malfunctioned,
  
• The board overstated the convenience of the kiosks

Note that he says "effectively controlled the purchase of alcohol." Not "efficiently," or "nonintrusively." The same thing could have been "effected" by a live person standing at each kiosk -- which the malfunctions eventually also required -- and the statement would have still been true. But weak competition on an RFP, vendor-favorable negotiations (when the vendor is heavily invested in campaign contributions to a sitting governor), losing money on a supposedly cost-free project, operation failures during the busiest sales season of the year, and the total cluelessness on the definition of "convenience?"

Look, read the statement, which covers most of this. Read the actual report, and pay particular attention to Section C, beginning on page 71, where the Board responds to the report. The AG's report takes that response and pretty much shreds it, saying over and over that the Board simply chose not to respond to some (the most awkward) of its findings.

But the message here? The wine kiosk program was a failure. Black and white, accountant-certified, this thing was a catastrophe. The break-even point -- as stated by the PLCB -- was 210 bottles a week per kiosk; only 3 out of 32 machines met that threshold; 17 -- over half! -- sold under 100 bottles a week. They simply didn't work: in the first three months of operation, "auditors determined that 1 out of every 21 transactions was problematic." That's leaving the general shadiness of the contract and the apparent lack of any escape hatch for the Board aside!

And the response from PJ Stapleton (who apparently may have been reading a different report)? "As it has done throughout this process, the Board will attempt to take whatever steps it can to maximize the possibility that the wine kiosk program will succeed."

PJ. Dude. It's over. Walmart blew you off. Wegmans blew you off. Where are you going to put these things? In Post Offices? In courthouses? Wait, wait, I know: how about in the State Stores! 

As I have said for a long time, the major problem at this agency -- beyond the tonedeaf attitude, beyond the terrible business model, beyond the insane insistence that the little stores out in the sticks carry thousands of SKUs when there's no demand for them, beyond the personnel system that doesn't properly reward product knowledge and sales competence, beyond all these serious problems -- is hubris. PJ and his Pals on the Board, Joe Da CEO, and their lieutenants have consistently responded to criticism with an attitude of 'you don't understand, what you call failure is innovation; what you call unethical is faithful to the letter of the law; what you call inconvenient is controlling the best interests of the people of the Commonwealth.' As if we are somehow too stupid to see that this is simply very bad management.

Let me lay this out in such straightforward terms that it can't be ignored.

• The wine kiosks are a public relations and sales disaster that have indeed cost the Board credibility
• The very real disaster of the PLCB's Oracle-based inventory system (subject of another audit) that wound up costing the Board hundreds of thousands in ruined wine (though they say it's fine, and what the hell do they care) and ad hoc storage fees in an absolute orgy of managerial ignorance
• The "courtesy contract," which exposed the PLCB's total lack of basic sales skills and was awarded in a way that showed poor judgment and created the appearance of a conflict of interest, not to mention being an expense that was not worthwhile...according to the AG again (in...yeah, another special audit)
• The embarrassing spectacle of over 20 workers at the PLCB's Philly warehouse being fired for undisclosed "financial irregularities" -- and they are still "undisclosed" 10 months after Joe Da CEO promised an investigation
• The PLCB's large number of unprofitable stores -- in a police-enforced monopoly -- and questionable business models
• The beer registration raid fiasco, where the PLCB's ineptly-kept beer registration database led to pathetically comic 'raids' by armed BLCE officers on three respectable Philly restaurants and one respectable Philly wholesaler, costing them thousands in lost time and sales (read it all here and here)
• The terrible record on nuisance bars (sure, it's the BLCE doing the enforcement, but the PLCB does the administrative punishment, and it's soooooo sloooooowwww....)

That's just in three years. Three years! I mean, speaking pragmatically, PJ and Conti have been a godsend; they're making my job easier. But speaking as a PA taxpayer? When are they going to resign because of their incompetence?! These are major screwups, this is a terribly run agency that lurches from one disaster to another, reacting to the Legislature, arrogantly ignoring the Governor and lawyerly disagreeing with the black and white criticisms of the Auditor General. But who do they answer to? Apparently no one. Which is, in my mind, one of the biggest Reasons of all that they need to be completely restructured, and the retail monopoly taken away from them.

Terrible PLCB news!

I just heard from an internal PLCB source who's been pretty reliable that the wine kiosk idea is dead. That's really bad news, because I was hoping it would be a public relations disaster for the PLCB. I'll just have to see what I can do to shove it up their nose anyway.

By the way, speaking of public relations disasters? The courtesy contract was renewed.

Didja Forget About the Courtesy Contract?

Do you remember how pissed off everyone was about the PLCB's "courtesy training contract?" Back in March, it came out that the agency was going to spend $173,820 on training State Store System clerks "how to greet someone, where to stand, and how to read a customer's cues." When that hit the fan, the PLCB tried to distance themselves from it by denying it was about manners: "A $173,000 contract on teaching manners – as has been widely reported – would be ridiculous," said PLCB Chairman PJ Stapleton. Yet the RFP for the training stated the following as the very first objective for the training:

1. Improve basic customer service skills, such as greeting customers appropriately, servicing customers, and completing sales with professionalism and courtesy."

"Greeting customers appropriately" and "completing sales with...courtesy" don't involve manners? Let's not be coy: bullshit, PJ. "Basic customer service skills" are good manners.

But that's old news...and that's the whole point of this post. We all got terribly upset -- rightfully so -- and more so when we found out that the contract had been awarded to the husband of one of the PLCB's regional managers. We were outraged, and an audit was called for, which exonerated the agency on legal grounds, but found that the agency had exercised poor judgment in awarding the contract to the husband of a manager and that "training to improve employee courtesy, manners and product knowledge wasn't a worthwhile expense." HA! So there, PLCB!

...and then we forgot about it, leaving them off the hook, again.

Well, not my man Eric Heyl at the Pittsburgh Tribune-Review. Eric's a columnist there, calls me for comment (a classic at the end of that one) from time-to-time when he has a booze story. For some reason, the Pittsburgh newspapers are hotter on exposing the PLCB's idiocy that the Philly papers are, and Heyl wields a blowtorch in his latest column, titled "Excuse me, but your discourtesy is showing."

Heyl brought back the courtesy contract. It went ahead, you know: training started in April, and Heyl, a taxpayer, wanted to know if what we'd bought (although the agency states that it's not tax money, it's their revenue that paid for the training, I can only assume they're being facetious in this claim: if they hadn't spent it, it would have gone into the general fund, so I fail to see a meaningful difference) was having any effect. As he put it:

The controversy was dying a lingering death in relative anonymity when I decided to nurse the poor thing back to health. I did so by using the LCB's own statistics to attempt to measure the manner-polishing program's effectiveness since it began in April.

See, the PLCB actually keeps track of customer service complaints, and Heyl got those numbers. What triggered the desire to improve customer service, the training? 84 customer service complaints between April and October of 2008...out of 27.2 million transactions. As Heyl said, "No wonder Solutions 21 was hired. Agency officials had to be embarrassed over that deluge of dissatisfaction." Indeed.

So, what did we buy, how has the training addressed this burning issue? "Between April and October 2009, the LCB received 103 complaints in 29.7 million transactions." Yeah. It got worse: one complaint for every 288,000 transactions, as opposed to one in every 324,000 before the training. The training was ridiculous, unnecessary, and it was ineffective. Nice trifecta.

Heyl asked Joe "CEO" Conti about this, bless his soul (all emphases added):

"Eighty to 100 complaints is really so anecdotal that I don't know that we'd use those as a barometer" of the program's success, he said[...] (But 84 complaints was enough to trigger a training contract at $173,00?)
The LCB can renew the Solutions 21 contract annually for the next five years. While the agency hopes to eventually perform the training in-house, Conti would not commit to that happening as soon as next year.
"At this point, I can't give you a firm yes or no as to whether we will need an extension (for Solutions 21)," he said.

How about you, boys and girls? Can you give "CEO" Conti a firm yes or no as to whether we need any more of Solutions 21's "training?" Well, don't bother, because he won't listen. Tell your state Senator! Tell your Representative! Tell them something like this (I just did):

The PLCB hired Solutions 21 to teach basic sales manners to their clerks in April. The Auditor General found that the agency had exercised poor judgment in awarding the contract to the husband of a PLCB manager, and that such training was in general not a worthwhile expense. Not only that, it hasn't worked: the PLCB's own statistics show that customer service complaints have gone up since the training started. PLCB CEO Joe Conti recently said that Solutions 21's contract may be extended. Please consider advising Mr. Conti that this would be an unwise use of funds that would otherwise go to the General Fund.

Get mad. Get active. After all, as Arlo said, "If you want to end war and stuff, you got to sing loud."

Thank you, Beaver County Times

It's sad that the only media outlet that pointed out the real problem with the "ethics" of the recently-awarded PLCB 'courtesy contract' was the Beaver County Times. Take a look: they nailed it. In a nutshell? The Auditor General had no choice but to say that the contract was "legal." And there's no doubt that the contract presented -- at least -- the appearance of a conflict of interest; it was awarded to a company run by the husband of one of three PLCB Regional Directors. As the editorialist says, "While legal, the contract speaks volumes about a political environment that parses what’s legal and what’s right with great care."

What's really sad is, given how obviously wrong it was, how arrogantly the PLCB strutted their innocence after the Auditor General's reluctant statement of legality. Chairman PJ Stapleton had this to say in a letter to Wagner (that he also released to the press, he was so damned proud of it): "We are gratified by your conclusion that we affirmatively and properly dealt with potential conflicts of interest when they arose. "

I don't really remember Wagner saying that. And the only way the PLCB "dealt" with the potential conflicts of interest was by requesting an audit -- which they knew would pass on legality, clearly the only thing they cared about -- after there was a hue and cry about that potential conflict of interest in the press and the governor questioned the contract. That's "affirmative and proper"...in Pennsylvania.

He goes on about how smart they were to award the contract even after realizing there was a potential conflict of interest:

"The rejection of such a qualified proposal for a service deemed to be necessary and without substantial legal justification would expose the PLCB to litigation. Further, when a properly conducted RFP process produces a qualified bidder at substantially lower cost to the Commonwealth (and I'd still like to know more about why the winning bid was so much lower than the other bids), we are duty bound to regard that as a positive development to be availed, rather than cause for scrapping the process and starting over... Thus, while our two agencies agree as to the goal sought, it appears we have differing perspectives on this particular matter, differences we feel obliged to respectfully note."

Yeah, they have "differing perspectives," all right. The Auditor General clearly said that while what the PLCB did stayed within the letter of the law, it presented grave problems of potential conflict of interest. The PLCB clearly said...they didn't give a damn, it was all about the money.

I just wish that the PLCB would act this arrogant and "I'm a monopoly, I'll do what I want to" when it comes to doing a bunch of pointless "make nice" stuff like changing the names of the stores and "creating a brand." That would save us some serious coin. And I'm sure it would be "legal."

But then, it appears we have differing perspectives on this particular matter.

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?

The Chairman (not the CEO) Responds

The following letter from PLCB Chairman PJ Stapleton to state Senators Orie and Eichelberger (who publicly questioned both the courtesy contract and its award to Solutions 21) was posted, in full, on the website of WGAL-TV and other places. I've re-posted here (in what I believe constitutes fair use, since this is a letter between two public officials) in order to comment on Chairman Stapleton's points; I've also added emphasis at times. It's an informative view into how the thinking on the other side of the issue goes.


Dear Senators Orie and Eichelberger:

Thank you for your letter regarding professional development at the Pennsylvania Liquor Control Board. I would like to take this opportunity not only to answer every one of your questions, but also to make certain you and all those who care about public policy in Pennsylvania understand that the PLCB is a careful and responsible steward of the resources entrusted to us. We know that the taxpayers of Pennsylvania expect nothing less than our very best in managing those precious resources – particularly given the vulnerable state of our nation’s economy.

Unfortunately, the media coverage that led to your inquiry was profoundly misleading. A $173,000 contract on teaching manners – as has been widely reported – would be ridiculous. It would also be unnecessary, as our employees already are widely regarded as being welcoming and polite to our customers.

• (No offense to the clerks, but this is news to me, as in, I've never seen that reported. I've generally found State Store employees to be adequate at best, and at times mulishly uncooperative. I have heard from a few people about exceptions to that average. If there is a more scientific survey available, I'd be happy to report on it.)

But that’s not what this contract is about. The contract is a 65-page document covering a host of professional development priorities aimed at giving our employees the resources they need to be even more helpful when interacting with our customers

• (There's about two pages in the document that deal with those priorities; the rest is boilerplate).

Specifically, the contract requires the contractor to: (I've located the amended RFP for this contract (and Solutions 21's proposal, and the contract) at the PA Treasury site if you'd like to have a look.) Provide for 24 training sessions for more than 2,800 clerks plus training for more than 800 managers (a cost of about $2 per employee per session) (which kind of looks like a lowball bid for a a company used to training heavy hitters like Pfizer and Heinz, doesn't it?). The training subject matter includes improving sales skills, improving customer service,

• ("1. Improve basic customer service skills, such as greeting customers appropriately, servicing customers, and completing sales with professionalism and courtesy." (Yet Stapleton says characterizing this as 'teaching manners' is "ridiculous.") "2. Promote a positive atmosphere and attitude towards customer service in the PLCB stores; one in which providing excellent, knowledgeable customer service is celebrated and encouraged.")

complaint resolution, creating a positive atmosphere in the workplace, improving product knowledge (and this is where we depart from complete accuracy; what the RFP actually required on "product knowledge" training is this: "Improve sales skills, including the ability to translate product knowledge into relevant and effective conversations with customers that result in increased sales and increased satisfaction among customers." Not the same thing as "improving product knowledge," and there is no further mention of improving product knowledge; in fact, the overview of the PLCB in the contract makes it sound like they've got that whole product knowledge thing well under control), internal communications, and training on other LCB initiatives such as dealing with minors and dealing with visibly intoxicated persons;

• (nothing specific about this in the contract either, just a vague "Encourage engagement with the PLCB's current agency-wide initiatives..." and something about "managing difficult customers.")

Train LCB employees to continue the training process after the contractor has left; Provide all the training materials for the training sessions; and Provide a mechanism to evaluate - and to evaluate - (interesting phrasing...) the effectiveness of the training provided.

• (So the party providing the mechanism of evaluation of the contractor's product...is the contractor, not the PLCB. Sweet.)

This contract is appropriate – both in its content and in the way it was awarded. I am eager to share with you those facts. And we would welcome the opportunity to sit down with you or any of your colleagues in the General Assembly to discuss this issue in further detail.

• (And I hope the Senators take him up on this, and do their homework first.)

Our professional development program for our retail employees is a key component of our effort to deliver on Governor Rendell’s mandate to transform the PLCB from a prohibition-era government bureaucracy into a 21st century business that puts the customer first. (It is not, and cannot be, a business!) That is our focus today and will be tomorrow, as it will ensure that this agency gives Pennsylvanians the service they deserve while continuing to responsibly grow the revenues that we transfer to the General Fund, revenues that help millions of Pennsylvanians.

As you know, the Liquor Control Board operates 620 Wine & Spirits stores, which had sales of more than $1.7 billion in 2007-08. These sales generated some $428 million in 2007-08 for the Commonwealth’s General Fund in taxes and profits (please keep in mind: the taxes are about 3/4 of the take, and would be the same -- or more likely significantly larger -- under a private store regime). This makes us a significant retailer, whose successful financial management has a tremendous positive impact on the Commonwealth. The most successful retail business leaders know that creating and maintaining first-rate customer service is vital to their survival and success. So like our retail colleagues in the private sector, we are making this critical investment in our business. The fact that the LCB is a monopoly does not diminish this imperative. Our customers and your constituents still deserve a top-notch retail experience. (As we have for years -- still waiting -- and could have had with a privatization resolution.)

Our customer surveys have shown that our 3,000 union store employees generally provide good, and at times exceptional (I'd like to see the measures and definitions used), customer service to the citizens of this Commonwealth – a perspective that was repeatedly reinforced in much of the television news coverage this week. But it is our desire to provide excellent customer service consistently to all customers -- all the time. So, for the first time in many years, this program endeavors to give our hard-working employees the education and tools needed to provide our valued customers the superior service they expect and deserve.

This initiative is not news. In May 2008, we announced a series of steps to transform the shopping experience both inside our stores and online. It’s part of our comprehensive effort to put our customers first. At that news conference, which was well attended by the media, I announced that our efforts would include a fresh, new and welcoming look for our stores and, yes, more training for store staff to give them the tools they need to offer customers an outstanding shopping experience. Investing in such training is standard operating procedure in retail environments nationwide.

Consider:
Training Industry Inc., which monitors employee training trends, reported that U.S. companies spent $129.2 billion last year on the sort of professional development we have planned. A recent survey by the National Retail Federation found that more than 40 percent of retailers spend at least $500 per employee, per year, on training. The contract in question here amounts to less than $50 per employee (again: lowball bid? Too little to be effective?). Other state agencies have also recognized the importance of educating their employees to provide the best possible customer service.

Investing in improved customer service is a proven way to sustain sales – and thus sustain our support of the Commonwealth’s General Fund – during an economic downturn. Publications such as Business Week have reported that some companies are fighting to preserve customer-service initiatives during the recession while others are adding to these programs. If our customer-service initiative raises our sales just 1 percent for just one week – or $339,706 based on 2007-08 figures – it will have paid for itself more than twice over. (By increasing the gross by that amount? Doesn't ROI work on net? And...how will you know the increase came from the training? By using the measurement tools Solutions 21 designed?)

To fulfill the policy we announced last May, the LCB in November 2008 posted a public Request For Proposals (“RFP”) to solicit proposals for a contract under which the winning bidder would provide professional development training to the LCB’s retail store employees. Further, the winning bidder would provide leadership training to allow supervisory employees to continue the professional development initiative once the contract has expired. The LCB received five (5) qualified bids that were evaluated by a committee chosen for this task. The bids consisted of a technical submission and a cost submission, which are evaluated separately, when determining the winning proposal. After review of the technical submission of the proposals and in accordance with the Procurement Code, the cost submissions of the three highest scoring bids were reviewed. The winning proposer, Solutions 21, submitted a bid of $173,000. The other two bids were $453,521.76 and $1,212,175.00 (wow, that Solutions 21 bid is low). This fact has been left out of every news report on our awarding of the contract to Solutions 21. The only inappropriate use of our resources would have been to reject a qualified proposal to pay two-and-a-half or even seven times more.

I would also take this opportunity to address the unfair implications of media reports involving a devoted and long-term LCB employee, Susanne Hobart, who is married to the president of Solutions 21. Ms. Hobart is the regional manager for our stores located primarily in the western and northern part of the state. Neither Ms. Hobart, nor any of the employees she supervises, was involved in the procurement process. Neither Ms. Hobart, nor any of the employees she supervises, were part of the committee that reviewed the bids submitted under this RFP.

The State Adverse Interest Act prevents a Commonwealth employee from influencing or attempting to influence the making or supervision of any contract with the Commonwealth in which the person has an adverse interest. The Act defines an adverse interest as being a party to such a contract or having an interest in a party to such a contract. Ms. Hobart does not have an adverse interest, and she was not involved in the making or supervising of this contract. She is not the contract administrator, nor does she supervise the contract administrator. Her only involvement in this contract is that she and employees she supervises will receive training under the contract (and spending the money Buddy brings home?). Similarly, the Ethics Act, which deals with the awarding of contracts to state employees or their family members was not violated through this public procurement process. We believe that any fair review of the process will find that both the Liquor Control Board and Solutions 21 acted appropriately at all times. We would wholeheartedly cooperate in any such review. (I would hope so. And I hope it is a full review.)

Finally, and despite media reports to the contrary, the awarding of the contract for professional development did not involve taxpayer money (Of course it did). As you are aware, the LCB is self-supporting and spends no tax money; as stated earlier, it generates several hundred millions of dollars each year for the Commonwealth General Fund in terms of taxes and profits. (And any money spent out of the PLCB's gross to support this training is money taken from the taxpayer that never gets to the general fund. The LCB takes in millions in tax monies; are we to believe that the money is not fungible? Of course it is.)

Thank you for giving me this opportunity to address the issues raised in your letter. If we can provide additional information in this matter, please do not hesitate to contact me again.

Very truly yours,

Patrick J. Stapleton, III Chairman, Pennsylvania Liquor Control Board


Perhaps the most "ridiculous" thing in this whole letter is the talk about the product knowledge of State Store System employees. Yet it is fairly widely believed that State Store employees are not allowed to make recommendations, and never specific brands. Not the kind of reputation you'd expect in a system full of subject matter experts.

I'd say this training was desperately needed...only what's desperately needed is privatization. This is embarrassing, this is frustrating, this is ludicrous, and it only points up how ridiculous the entire system, the entire concept is. Take this albatross from around our necks. Abolish the PLCB.

If you Read About this Blog in Michael Klein's column in the Inquirer...

Greetings, and thanks for coming by. Let me give you a little navigation help.

• The discussion of the PLCB opening a 'store' in Jose Garces's planned new cafe is down here.
• If you're interested in the controversy over the PLCB's new "charm offensive," designed to teach State Store clerks how to say "hello" and "thank you," you can find that here and here.
• If you'd like to read about the controversy over how the contract for the training in the charm offensive was awarded to a company run by the husband of a high-ranking PLCB manager, that's here (one of my favorite post titles, too), here, and here.

Or you could just roam around, hopefully learning more of my Reasons why the PLCB should be abolished. Cheers, welcome!

And if you haven't seen Klein's column, which includes discussion of the whole Jose Garces/PLCB issue, it's here. Thanks for covering this, Michael!

A government system, run by government people, that serves the government

"It is rather for us to be here dedicated to the great task remaining before us--that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion--that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people shall not perish from the earth."

I apologize for dragging Lincoln into this -- he's been dragged into everything lately -- but the parallels between that famous last line of the Gettysburg Address and the last lines of yesterday's editorial in the Pittsburgh Post-Gazette were too good to pass up. Here's what they said about the continuing controversy over the PLCB's "charm school" contract:

Pennsylvania can run all the employee training sessions it likes, add Sunday hours to some stores and put a few outlets in supermarkets (separate cash registers, of course). But, in the end, it will still be a government system, run by government people, in a way that serves the government.

See what I mean? They nailed it. No matter how the PLCB dresses things up -- tux, tails, dancing with Gene Wilder -- booze retail run by the State is a monstrosity.

"All conflicts of interest should be investigated"

The Governor has a refined position on the courtesy contract controversy. According to the Inquirer, he said at a press conference in Pittsburgh on Wednesday that "All conflicts of interest should be investigated." The ever-helpful Chuck Ardo "added that the governor didn't necessarily believe the contract was wrongly awarded, 'but rather believes that the facts should be investigated and the truth should come out.'"

I like the Gov's position better. The facts are pretty plain. It's the intent and the spirit of this thing that need investigating. Which is why I'm not liking the response of PLCB Chairman PJ Stapleton to the situation. According to the Post-Gazette, Stapleton sent a letter to state Sens. Jane Orie and John H. Eichelberger Jr. (who had questioned the contract and how it was awarded) that said, in part, that the "contract is appropriate -- both in its content and in the way it was awarded." He further responded to questions from the Post-Gazette that "there was no legal basis to exclude Solutions 21." In fact, the State Auditor General will be auditing the contract, and Stapleton is sure they will find nothing inappropriate. Nothing, that is, that violates the letter of the state's Adverse Impact law.

Tell me something, PJ. If, just for an example, Governor Rendell's god-son were to bid on a PLCB contract...would that be okay? Because, you know, technically they're not related. I'm sure it would be legal, but this is the kind of thing we read about happening in third world countries, and we shake our heads about those poor countries with corrupt governments.

Get the State out of this business.

"If the LCB were to find a cure for cancer..."

Either Governor Rendell or his press secretary, Chuck Ardo, apparently thinks people like me -- and maybe you -- are just anti-PLCB cranks. Check this out from that Pittsburgh Post-Gazette piece on the courtesy contract controversy:

Such criticism was to be expected from longtime critics of the PLCB, countered Chuck Ardo, a spokesman for Mr. Rendell. "The LCB decided their retail staff needed some training to ensure courteous service," he said. "If the LCB were to find a cure for cancer they would find a reason to criticize it."

"Cure for cancer"? In light of what's been going on lately, it seems more likely that someone at the LCB's brother-in-law would be peddling Laetrile, Chuck, and yeah, I'd criticize that.

In fact, even your own boss criticized the courtesy contract controversy...at least, until someone got to him and, er, pointed out the facts. Check it out, and how Chuck spun it right around (emphasis added, cuz I wouldn't want you to miss the important stuff...):

Mr. Rendell, when asked about the customer service training contract at a news conference, said it was the first he'd heard of it -- and of the relationship between the consulting firm's president and an PLCB manager. "If it's true, it's something that should be corrected," Mr. Rendell said.

But the governor made that comment before he had all the information about the contract, Mr. Ardo said. "He is not calling for the contract to be rebid," said Mr. Ardo. "He answered instinctively [because] the way the question was asked it seemed there might be a problem, but once the details unfolded it was clear there is no problem."

Clear? You bet! It's clear to me that Rendell's "instinctive" response to hearing about a fairly large state contract being let to the husband of a high-ranking agency manager was that it was "something that should be corrected." How much more information do you need? That it's "in compliance" with the state's Adverse Interest Act, according to LCB spokesman Nick Hays? Yeah, that's a tough standard. Check out the Post-Gazette's careful, damning parsing of that:

Hays said the contract was "in compliance" with the state's Adverse Interest Act, which among other things prohibits state employees from influencing contracts in which they have an interest.
The act also prohibits state employees from having an "adverse interest" in any contract with the state agency that employs them. The act defines that interest as being "a stockholder, partner, member, agent, representative or employee" of a company seeking such a contract. Hays said Susanne Hobart does not do any work for her husband's firm.

Let me get this straight. Is this coming from the same state agency that recently required an investor in Philadelphia brewpub Earth Bread + Brewery to sell his investment to his wife (because he was also an investor in another small Pennsylvania brewery, which might influence the managers of EB+B to buy beer from that brewery), and then further required his wife to sign an affadavit that her husband would never profit from her investment? Really?

Did they require Mrs. Hobart to sign a similar affadavit? They're married. The state's "Adverse Interest Act" doesn't cover that? I guess that's one of the "details" Chuck was talking about.

The Gov should follow his instincts more often.

More People Upset by the PLCB's Latest Off-Pitch Idiocy

It's not just me that thinks the PLCB is crazy, stupid, and wasteful spending $173,000 of Pennsylvania taxpayers' money (in a budget crisis...) on teaching PLCB clerks to say 'hello' and 'thank you' (I hope they're not training them to say "Have a nice day!"). Check out this from the Chambersburg Public Opinion:

But let us take our own stab at it.
Pennsylvania liquor store employees: When conducting transactions and serving customers during your work hours, be solicitous and respectful, smile, and always say please and thank you.
There! We just fulfilled the fundamental intent of this insane PLCB endeavor, and it cost you less than a buck.

Much obliged.

NBC affiliate WCAU/Channel 10 in Philadelphia had a proper response, and pointed out that Philadelphia's Department of Licenses & Inspections, another agency with a bad customer service reputation, was getting free customer service training, courtesy of the Ritz-Carlton Hotel in town.

Shameful.
Not only are you (the taxpayer) footing the $175,000 bill for a better experience at your local liquor store in Pennsylvania. Guess who gets that money? Turns out you're padding the pockets of a man who is married to one of the Liquor Control Board's top-level employees, according to the Inky. How convenient.
But there's no conflict.

Suuuuure there isn't!

The Lehigh Valley Express-Times was quite a bit more blunt about the whole thing:

Pennsylvania's antiquated system for selling booze and wine has been out of date for decades. But don't look for the state to give up the cash-cow system and its cache of patronage jobs anytime soon.
Maybe the powerful bureaucrats can teach their brothers-in-law how to say hello and thank you before they get the job.
It would save us all a few bucks.

Ouch!

But the PLCB -- and the lucky Buddy Hobart of Solutions 21 -- knew people might be skeptical (at least, skeptical of the program; looks like the whole nepotism thing caught them off-guard). From the initial story:

"What I say to the skeptical," said Buddy Hobart, president of Solutions 21, "to those of us in the world who believe we've arrived and don't need to improve: Look up the word arrogant in the dictionary."
Added the LCB's Conti: "This is a vast adventure, and it's one we have to take. We know some people will critique us, but we like that. It only makes us better."

Hello? What I say to the Buddy is that it's all about the money his firm is getting paid for these truly questionable services. Because no one on earth believes that the PLCB has "arrived" or doesn't need to improve. Actually, that's not quite true; as I've said before, I don't want the PLCB to improve, I want them to go away.

And Conti? "A vast adventure"? "We like that. It only makes us better"? Please! Spare me the happy talk. Learning to say "Please" and "Thank you" is not a vast adventure.

What you should be doing is creating a divestiture plan, a plan to make the most possible money for the State by dismantling the State Store System, selling off its assets, setting up a new licensing system for private liquor stores that will actually benefit the State instead of the store owners, and minimizing the impact on the PLCB clerks and the costs of privatization.

That would be a vast adventure worth taking.

Where the pig bought her lipstick

An interesting story surfaced today on the PLCB's 'charm school' efforts. Here's the nut, from today's Inquirer:

The president of the Pittsburgh-based company hired to train state liquor-store clerks and managers in the basics of being nice is married to one of the Liquor Control Board's top-level employees.
Buddy Hobart, president of the Solutions 21 consulting firm hired to conduct the training, is the husband of Susanne Hobart, the Liquor Control Board's regional manager in Pittsburgh. Hobart, who is paid $85,000 a year, is one of only three regional managers for the agency.
Liquor Control Board officials said yesterday that Susanne Hobart has no sway over contract matters in general and had no say over the $174,000 contract recently awarded to Solutions 21.

The contract, according to the PLCB, is "in compliance" with the state's Adverse Interest Act. Which is good, I'd hate to have it not be. Hobart's firm was one of five that bid, and submitted "the lowest and best" offer, according to the PLCB spokesperson. But my kids used to listen to John Flynn's The Duck Song when they were little, and I think it's instructive at this juncture:

If it looks like a duck and it quacks like a duck
And there's duck-do on your pick-up truck
Buddy you can bet your bottom buck
It ain't no armadillo

This contract looks like a duck, at this point. Haven't heard it quack yet. But...the husband of one of the PLCB's top managers (who will be getting the training, by the way) gets a juicy contract for services that, realistically, the PLCB doesn't even need -- monopoly, you gotta get your booze here cuz the law says you got no choice, remember? -- and they're telling us it's an armadillo. Maybe it is.

But maybe we should check the pick-up truck.

There's a better, more complete story at the Pittsburgh Post-Gazette, too.

More lipstick for the pig, and Joe Conti surfaces

From an AP story I saw in the Inquirer:

The PLCB is going to spend more of Pennsylvania taxpayers' money (that's money taken out of their 'contribution' to the general fund; more 'operating expenses') to pay a Pittsburgh company $173,820 this year to train State Store System managers "how to coach their staffers in the fundamentals of being good sales reps." This coaching will consist of teaching them "how to greet someone, where to stand, and how to read a customer's cues." Really, that's what they apparently believe the SSS clerks need to learn. I suppose we should be grateful that they're at least paying a Pennsylvania company to do the training.

Folks, this is more lipstick for the pig; it is, as I said here, about as natural as my dog walking on hind legs, wearing a dress, and smoking a cigar. This is not a business. It is a state-owned and mandated monopoly. The reason the PLCB is spending money on this is defensive. They want to keep you just satisfied enough to distract you from the reality of this unnatural situation.

It's pretty telling that the clerks will not receive any product training on wines and spirits under this program. No, they don't get that until they've learned courtesy. Amazing that the SSS has gone this long without realizing there might be a need for this stuff.

There are big ads in the Inquirer every week for the giant liquor/wine/beer superstores located just over the border in New Jersey and Delaware. Why are the ads in the Inky, why are the stores just across the border? Because Pennsylvanians shop there in droves, every week, because the State Store System either doesn't have what they want, doesn't have as good a price, or can't be bothered to give them good service and assistance.

The reason why is simple: the SSS has no incentive to deliver that. They're just doing their job, selling the bottles, and if you want them, okay, they'll sell them. But -- with a few, dedicated, interested exceptions -- the employees are not interested in helping you. They don't have to. All they have to do is keep the shelves stocked and ring up your purchase and bag it (don't try to bag it yourself, a lesson I learned; that's the one thing that will bring out passion in these folks as they quickly tell you you're not supposed to do that).

Now they're going to get training to be nice to people. To say 'Thank you.' Oh, boy. It changes nothing. The State Store System has to go. It is unresponsive, it is ridiculously, unnecessarily state-owned, and it is robbing Pennsylvanians of jobs.

Side bits of interest. PLCB "CEO" Joe Conti was quoted in the article, the first mention of him from the board in months. Has he been behind the scenes, working away? Maybe, though it's hard to believe a long-time legislator wouldn't have made sure he got his due. Has he been resting his ass in a job that most people assumed, from the way it was handed to him without any job search or serious interview process, was a total sinecure? Maybe, though I'd rather not think so. Hard to say.

The story also quoted Eric Epstein, identified as "a Harrisburg activist and founder of RockTheCapital.org." Epstein "politely called the idea 'a demented interpretation of happy hour.
It's a sad state of affairs when you have to train people to be kind and courteous,' he said, 'but I guess things are so bad that even booze peddlers have to pretend to be nice.'"

"Even booze peddlers." Thanks, Eric, you schmuck. It's not like they're pushing crack on street corners.