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.

Quick hits: Who's Joe Conti, and A Response to my Letter

If any of you who came to the party a bit later are wondering who Joe "CEO" Conti is and where he came from, here's a great bit of catch-up for you from The Illadelph. Great capsule of the "WTF!" anger that was blowing around that week.

If you remember the big legislative midnight pay raise scandal from a few years ago, Conti is the guy who gained...notoriety, I guess, for refusing to give back money from unvouchered expenses because he'd used it to buy a new water heater. The only way he would return the payments would be "if the [Pennsylvania state] treasurer came to pick up the new hot-water heater." Ballsy, defiant...but then he gave in, paid it back, and decided to retire at the end of November 2006. Two weeks later he got the PLCB CEO job. A job Governor Rendell said he had been considering for months. How interesting!

And I got a response to my letter from Senator Wonderling:

Lewis,

I agree 110 percent!

Rob

That guy can write my new version of The Almighty Liquor Code any day!

A Plea to the PLCB

Okay, that's six posts here in four days. I've got to ask the PLCB: would you please stop making bad decisions so I can get some paying work done?

Thanks. And get the Legislature to vote you out of existence, too. Make my life a lot easier, I tellya...

PLCB Playing Favorites in Philly

Philadelphia Magazine has a "Web Original Article" up about a simply amazing new PLCB initiative -- that's right, another one -- that has jaws dropping all over Philly. Restaurateurs' jaws, that is, at the stunning favoritism and clueless unfairness it demonstrates. Check this:

José Garces' ... new something involves the Pennsylvania Liquor Control Board. That’s right — as part of a wider effort to rebrand its image, the PLCB will be pairing up with notable chefs and restaurateurs to open a handful of boutique wine stores, aiming to give oenophiles a more personal experience. (The Philadelphia location will be the first.) The specialty stores, whose inventories will include a few hundred bottles of wines not available in traditional Wine & Spirits stores, will hold tasting events and have a highly trained staff to help you find that perfect Pinot.

Let's leave aside the easy joke -- that the "highly trained staff" must be the ones who already know how to say "Hello!" and "Thank you!" -- and take a look at this. Suppose you're a Center City restaurant owner, a similar cafe-type joint known for their wine selection: Tria, for instance, since that's the only wine bar kind of place I've ever been to in Philly (disclosure: I have taught three classes at Tria's Fermentation School). How do you feel about the PLCB opening a take-out store inside a competitor's restaurant -- bad enough already, when wine take-out is illegal for you -- that sells wines "not available in traditional Wine & Spirits stores," and the PLCB staff is going to hold tasting events for those take-out wines right there in that other restaurant? I'd feel pretty damned hard done by.

This is a government agency. If Pennsylvania was not a control state, and it was a private business doing this -- Moore Brothers, for instance, and wouldn't it be a happy freakin' day if the PLCB were to go away and Moore Brothers could come to Center City? (disclosure: I have done no business whatsoever with Moore Brothers, they don't know me from Adam) -- hey, no problem! Actually, given the arcane and pointless circumlocutions of liquor law across the country, it would probably be a huge problem getting it licensed, but ethically there's no problem. It's two businesses reaching an agreement, and Garces would either be paying Moore Brothers for the exclusivity or they'd be paying him for the floor space, depending on who got the jump on who. And if Jon Myerow at Tria wanted to cut a similar deal with Canal's, he could.

But the PLCB is a government agency with monopoly retail power. Myerow can't just find another company to make a deal with, or do it himself, because that's illegal. Illegal! He's got to go to the PLCB, hat in hand, and beg to be part of this new program. As would the folks at Chick's, or Southwark, or DiBruno Brothers, or any number of wine-friendly cafes and restaurants.

And the PLCB will either grant them the boon or not, according to their own agenda. A government agency that has an ironclad monopoly on retail sales has no right deciding to essentially grant that right to retail to one business and refuse it to another. The PLCB is totally out of touch with reality. They are "acting like a business" when they aren't a business. They are a 'business' with whom it is illegal to compete, a 'business' with the full force of government enforcement and coercion behind them, a 'business' that can interpret the law to suit themselves without fear of contradiction.

I'm going to have to quote Buddy "I married a PLCB manager" Hobart to express what I feel about this new initiative. "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." When you find that page, I believe you'll find the PLCB logo next to that definition.

Two notes at the end. First, I'm not pissed at José Garces, not in the least. I don't blame him for doing this, it's a sweet deal, and he would have been a fool not to take the PLCB up on it. And I do look forward to the opening of his new Village Whiskey, which is, yes, a whiskey bar, coming soon, probably May, at 20th and Sansom.

And of course, I'm shocked -- shocked, I tell you! -- that PhillyMag would run this story without a word about how this might unfairly impact other city businesses. What's that you say? Why yes, that's the same PhillyMag that co-sponsors the Philadelphia Whiskey Festival with the PLCB (which also runs one of these mini-stores right at the festival, while not allowing brewers to sell at beer festivals), and not a word of disclosure in the story. Good separation of advertorial and editising departments there.

"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.

A Shot Across the Bow

Time to step things up. I just sent the following to Governor Rendell, Senators Wonderling, Tomlinson (my local senator), Greenleaf, and Rafferty, and Representative Farry (my local rep), cc;'d to the three PLCB Board members. If you feel like it, send them something similar, but don't use my letter; they'll just write it off as kook action. You can get their e-mail addresses (and those of your legislators) easily: here's a list of senators, representatives, and the governor. Have at it.


Gentlemen,

As a Pennsylvania citizen, taxpayer, and native, I strongly believe that the time has come to end the Commonwealth's monopoly on the sale of wine and spirits. This week's reports of a $173,820 consulting contract with Solutions 21 to train State Store clerks and managers "how to greet someone, where to stand, and how to read a customer's cues", and the ensuing concerns over a possible conflict of interest when it was revealed that the head of Solutions 21 is married to one of three PLCB regional managers, put a cap on a building series of questionable decisions by the Board. The people of Pennsylvania deserve better from their state agencies.

But this is almost beside the point. There is no good reason why the State is in the booze business. Approximately 75% of the monies transferred to the general fund from the PLCB are taxes that could just as easily be collected by private businesses, as is done in other states, as is done in Pennsylvania by beer distributors now. The "profits" from the PLCB stores are not insignificant, but it is very likely that any revenue loss from privatization would be more than made up by greater in-state sales when Pennsylvanians ceased going across the borders to buy spirits and wine in other states. There is, after all, a very good reason that there are huge booze superstores right across our borders; people can get the service and selection there that they simply cannot get in the State Stores. Privatization would bring those stores into Pennsylvania, keep those sales and taxes in Pennsylvania, and bring those jobs to Pennsylvania.

It has been argued since Repeal of Prohibition that the Commonwealth's 'control' of liquor and wine sales is in the interests of the citizens, that control serves, in the words of the Pennsylvania Liquor Code, "for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon, and all of the provisions of this act shall be liberally construed for the accomplishment of this purpose." But all control has proven to be is an inconvenience and annoyance to the citizens. Pennsylvania's record with underage drinking, alcoholism, and drunk driving is not significantly better or worse than neighboring states that have fully privatized wine and spirits sales. The State doesn't sell gasoline, guns, or prescription drugs: why does it sell wine and spirits?

If there is no benefit to the citizens in tax revenue, convenience, satisfaction, or safety, there is no compelling reason to continue with the State-controlled retail (or wholesale) of wine and spirits. Indeed, the State's image suffers from the accusations of favoritism and patronage that dog actions like the Solutions 21 contract and the non-competitive appointment of PLCB CEO Joe Conti.

It has been estimated that privatization would bring the State a windfall of over $1 billion from sale of product stocks and other assets, and the sale of new store licenses (and I would urge the Legislature to set up any new licensing structure to benefit the State rather than the holders of licenses; it angers me, as a taxpayer, every time I hear of a restaurant license sold for hundreds of thousands of dollars that the State should be getting). Even if that's generous, and the windfall is only $500 million, that would go a long way towards plugging the current budget deficit, and tax revenues should increase dramatically. It's a win for almost everyone, excepting current PLCB employees. Some of the windfall could perhaps go for early retirement packages and re-training for the clerks and managers, they could be given preference on other state jobs, and perhaps even low-interest loans to open their own, private stores.

There may never be a better time for privatization to succeed; times such as these favor bold solutions. Pennsylvania could find new jobs and new tax revenues while pleasing the majority of the citizenry. Please consider this in the coming session.

Sincerely,

Lewis Bryson

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.