The Conti and PJ Show!

I watched the PCN Call-In with Joe "CEO" Conti and PJ Stapleton tonight. It just wound up, and here's what I took down. I'm scrambling and trying to remember, so I may not have who said what exactly correct, but the gist is here.

Host Brian Lockman (who interviewed me on PA Books, nice guy) went right at them with questions about the courtesy contract. Stapleton first said that the training is "desperately needed" for the employees to perform their jobs. "Desperately?" Really? This is the guy who said training on 'manners' would be ridiculous and unnecessary, because "our employees already are widely regarded as being welcoming and polite to our customers." Of course, he stuck to the line that it wasn't really about manners, even though the first priority of the tasking in the RFP is to "Improve basic customer service skills."

Not sure if it was here, but at one point Stapleton started talking about how the training is also about not serving underage or intoxicated people and said "If it saves one life, that's worth the price." God! I'm looking right at the RFP, the whole list of what this training is supposed to accomplish, and there's not one word about that. The only thing that even comes close is the last one, a catch-all: "Encourage engagement with the PLCB's current agency-wide initiatives; instilling a desire and ability to support these initiatives in interactions with customers and in merchandising techniques." Yet Stapleton made it sound like there would be specific training to save the children. Truly pathetic.

Lockman asks Conti about the possible problems with the awarding of the contract to Solutions 21, in light of the president of the company's wife being a high-ranking PLCB regional manager. Conti says they knew of the issue with the contract, ran it past counsel, and decided it was legal under the state's rules. Interestingly, he wound up by saying that the rules may need to be changed by the Legislature. Indeed. PJ says he feels strongly they made the right decision on the contract, cites the cost. No one questions why it's so low. Bummer.

Lockman asks if the RFP was put out and awarded too fast, as has been suggested by two of the losing bidders? Conti says not, really. PJ says it's standard stuff, and it is, and RFPs go out fast. It's not like teaching someone basic retail -- customer skills, conflict resolution, "embracing organizational change" -- is something earth-shatteringly new. Well...except for the PLCB employees who desperately need it, according to Stapleton. We'll see why in a bit.

Lockman asks Conti, so what have you been doing in two years? Essentially, he's been planning for two years. Strategic store initiatives, new look, new stores, new websites. You know, all that stuff they don't really need to do because they're a monopoly." We will be the specialty retailer we always should have been." Yeesh.

Lockman tosses Conti the cost softball: why are prices higher in the State Stores. Conti rips it up and tosses it aside, saying they aren't higher, except compared to Delaware, and that's because they don't have taxes, those naughty boys. No one ever mentions how well that seems to work for Delaware and the business it attracts. Lockman asks him if the Johnstown Flood tax is really for the Flood. No skin off their nose, that's the Legislature's fault. "The tax is a remnant." Conti dangles the possibility of lowering the Johnstown tax if more sales come in. (But isn't that The Legislature's call?) They repeatedly talk about how much the PLCB "brings in" without ever mentioning that 75% of it is taxes that would be collected anyway under privatization.

Lockman asks what's the Board do, what's Conti do? Stapleton babbles a bit, says the Board makes decisions, and "has the assistance" of Conti. Conti runs day-to-day operations. I guess he does, except when he's planning for two years. He admits the PLCB is a "Prohibition era bureaucracy." Then he dangles more money in front of us: "We want to provide revenues to the general fund so other taxes can be reduced." Oooo! Sure, that could happen, and if it does it would likely be the first time in the history of the state.

Lockman asks, is there a built-in conflict in the agency's two missions? Stapleton says that the stores provide customer service and encouragement for responsible use. "We 'control' the responsible use of alcohol." Wow.

Finally, the first call, from Narberth, I think, and it's the Jose Garces question. Two questions: What's the goal? And what's PLCB going to do to ensure it's fair to other restaurants? The initial concept is to provide a boutique wine experience, wines that aren't available in the stores. "We will be a tenant of his." No liquor served. 600 sq. ft. area next to it. Match and pair wines with foods. It's important to team with Jose Garces, because he's cool and respected. And then, no surprise whatsoever, he completely ducks the fairness question. Nicely done, Chairman Stapleton. The second-hardest question of the evening, and he deftly avoided addressing it. No follow-up.

Conti fields a question from Lockman: what about these wine kiosks. It's ongoing, God help me. "Very interesting." They're going to be using biometrics to determine your age and intoxication! It's 12 - 18 months away from getting out there. Lockman asks, Are the machines more secure than a clerk? Yes, Conti says. Even after this amazing training? Biometric technology to ensure 21 and not intoxicated. "Incredible technology." I'll bet. They will be testing the machines. Moving forward. They could be used in the stores.

Next call: A suck up, just as predicted. Doing a great job, great wines, used to shop elsewhere. The contract: there's always room for improvement. Wow. Amazing. Do you think there will be any calls like this on tomorrow's show with the Attorney General? Hey, AG, great job you're doing putting away those criminals!

Third call: weirdly pissed off person who wants to know how many other contracts on training they've let in the past year? Um, none. Just this one. Even I knew that one.

Lockman asks about selling beer at Wegmans. Had to be asked, but it's a waste of time: they're just administering the Liquor Code. The Wegmans are licensed establishments. Yada yada.

Next call: free drinks at casinos are not a fair playing field for taverns. It is a pure legislative manner, says Conti, and he's absolutely right.

Next call: why are we spending this money? We don't have a choice to go to some other place! People are sick and tired of waste. Yeah, and he was angry. I'm just sick and tired of not having another place to go to.

Next call: just angry. I'm cool with that, because, after all, these guys are not going to make any mistakes that might result in answering a question.

Next call: is there any patronage on the wine kiosk contract, anything that might benefit anyone related to someone at the PLCB, or the Governor's Office? (Does this guy know something?) Conti ducks it by saying it followed the same track as the courtesy contract, a track that he already questioned the effectiveness of, but said it was legal. Okay...so you heard it here: Conti is implying that there is no questionable connection between the PLCB or the Governor's office and Simple Brands LP, James Lesser president, of Bala Cynwyd, the only bidder on the contract, according to news stories on this project.

This one smells funny. This is a big, tech-heavy, expensive project. Yet Simple Brands has no website, no web presence at all that I can find, which seems kind of odd for a company bidding on such a technology-heavy project. Anyone ever heard of Simple Brands, or James Lesser? Who's he married to? Who's he know? He was formerly the head of JDL Management, and made retro-fitted Skeeball games with red balls with flashing lights. Great. If you're curious, the contract is here; you can see the RFP and the contract by clicking on the successive PDF links.

Next call: Stapleton and Conti essentially admitted that they hire employees with no real experience or training. Good God. They blame the civil service system they're stuck with. Stapleton says that the future includes "A formal PLCB training academy." Really, he said that. Can't wait to see the bill on that one.

Lockman asks: why are State Store employees paid so much more than clerks in liquor stores in other states? (And they are, I've seen the same report he mentions.) Stapleton appears surprised by this, takes moral high ground by saying they're not ashamed of paying the clerks a living wage. I don't recall Lockman saying that the other clerks were poor, just that the State Store employees were paid a lot more than other retail clerks. Yet on the last question, Stapleton admitted that these were inexperienced employees.

Lockman ask, before Conti was hired, was Chairman was highest position at LCB? No, says Stapleton. The Board is responsible for decision-making. Ah. "Decision-making." That's not important. He says there was no office to oversee all the departments, someone to distill all the info and requests. It's an antiquated system. Yet, Lockman asks, you functioned for years without a CEO, who is now paid 2.5 times chairman salary. Stapleton says the chairman was not running the shop. Who the hell was? And they're about to add three new executives. Wonder what their salaries are.

We get another suck-up call. You're doing a great job and I don't want to stand beside drunks in the grocery stores, thank you, thank you. So...anyone buying off-premise beer is a drunk? But the people who buy off-premise wine and spirits at State Stores aren't? What a fraud call.

I finally get through, and while I'm waiting, I hear someone on the phone asking my question: if things are so good, why are all those stores on the border? They tap dance. The prices aren't really that good, they're only better right at the border, you go ten miles into New Jersey and the prices go up. (So what? I'm not going to go ten miles in Jersey then, am I?) Selection? Those stores don't really have a better selection -- a brazen lie, I'll happily take him to Total Wine and make him eat it if someone can get him to go -- but they're very good at talking you into buying something else. Not just a lie, but nasty.

They said over and over again that the State Stores had such a great selection and served the state so well. Horsecrap. I don't know how they can possibly serve the state that well when the number of stores is about 1/3 the number states of similar size have, and the 'great selection' is all online and special order, many of which you have to buy multiple bottles of. That's not a great selection, that's an annoyance. When they had their little temporary kiosk at the Pennsylvania Whisky Festival, back in November, they didn't even have all the brands available at the festival: you had to special order stuff they knew was going to be there! Ridiculous to compare that to a fully-stocked liquor store.

So when I got on, I asked, look, I see a lot of PA plates in those cross-border stores. Do we know how much in sales and taxes we're losing in cross-border bleed? If it's so great here, why do people go there? They quoted a study they had done -- love to see a copy -- that showed that very few of such trips were 'destination' trips; people weren't going there just to buy booze. And that they still bought 75% of their booze in PA. And they were only losing 3-4% to cross-border bleed. Burying me in numbers that mean nothing if I can't see the methodology.

You know what? I know someone who crosses the border just to buy box wine. They save a few bucks on each box, so they get two or three whenever they go to Maryland. That's not a destination trip, but it's definitely part of the trip. I can't help looking at the concentration of stores across the border and wondering: if there's not much to be made in luring Pennsylvanians across the border, why are those stores there, and why do they continue to run full-page ads in the Inquirer?

And that was it. No surprises. No revelations. No real answers. And some really misleading stuff. I was very sorry no retailers called in...but I'm not surprised.

PLCB's 'CEO' Conti and Chairman Stapleton on PCN Call-In tonight

Got questions about the PLCB? Want to know why your favorite wine (or bourbon, Sam) has disappeared? Curious about SLO? Jealous of the towns that have beer sales at their Wegmans or Sheetz? Can't figure out why we have the case law, or why beer is sold in private stores but not wine and liquor? Want to know why the PLCB is training their clerks to be polite? Want to ask Joe 'CEO' Conti just what it is he does? Would you like to hear them defend their very existence?

Itch for knowledge no longer. Both 'CEO' Conti and PLCB Chairman PJ Stapleton will be on PCN-TV tonight on the Call-In show for an hour, at 7 PM. I'd urge you to watch this. If you do call in a question, please be civil. I'd hate to have Chuck Ardo think you were criticizing them for curing cancer.

This should be fun.

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.

I think he means it

Wow. Tell us how you really feel.

Joe Roberts at 1 Wine Dude lets it fly about his true feelings for the PLCB. Can you feel the love? I feel it.