Liberals pondered liquor store privatization

One of the biggest provincial stories of 2012 was the BC Liberals' controversial, aborted attempt to privatize the Liquor Distribution Branch's warehousing and distribution.

There was no business plan and no formal industry consultation. There was plenty of intrigue, because BC Liberal backroom boy and BC Rail adviser Patrick Kinsella was lobbying for Exel Logistics. The government did its best to wrap the deal in a shroud of secrecy. We still don't know precisely how and why it was kiboshed before the shortlisted bidders could make their final presentations.

But the government didn't count on me and my li'l library of #LiquorLeaks shining some much-needed light on the specious process. Thanks, also, to good ol' fashioned brown paper envelopes and the documents inside. (I'm not finished yet. Far from it.)

So, what's the latest, you say?

Remember when the government released Treasury Board and Cabinet reports in late May? They were so heavily censored that the only information visible had been cut-and-pasted from already published service plans and financial reports. I appealed and pressure from the Office of the Information and Privacy Commissioner caused the government to uncensor portions of those reports. I'm not satisfied yet, but I am happy to report what the government was hiding from you.

Specifically, that the government was studying the sale of its chain of 197 B.C. Liquor Stores, along with the LDB logistics! I revealed this in Business in Vancouver on Dec. 13. The documents are below, which indicate anticipated opposition from the B.C. Government and Service Employees' Union was the biggest obstacle.

The government opted to keep the stores, but tried to sell the warehouses and distribution. Then, on Sept. 27, it agreed to a new two-year deal with the BCGEU that included a moratorium on any LDB privatization. This happened after liquor minister Rich Coleman spent six months banging the drum for a private warehouser and distributor to come along and help government save money (despite industry players warning that higher prices would be the outcome).

Cabinet & Treasury Board documents recommending privatization of liquor distribution in British Columbi...

#LiquorLeaks - still pouring

Coleman

In this Nov. 2 Business in Vancouver story, I revealed how the British Columbia government conducted secret consultations with select industry players about the plan to privatize the Liquor Distribution Branch's warehousing and distribution.

The internal documents on which the story is based are below. They are from briefings for Liquor Minister Rich Coleman and then-Finance Minister Kevin Falcon. They show that the government was concerned with the well-being of ContainerWorld, the largest of the pre-distribution warehouses on contract with LDB. ContainerWorld is owned by B.C. Liberal supporter Dennis Chrismas, who met with Coleman on March 2.

Falcon

Chrismas was originally opposed to any change in the liquor distribution system. When bidding opened, ContainerWorld was involved because the privatization would have phased out the pre-distribution program. In this May 29 Business in Vancouver story, I detailed the interesting relationship between ContainerWorld and Exel, the company that lobbied the B.C. Liberals heavily for seven years to privatize. From an observer's point of view, two of the four shortlisted companies may have been too close for comfort.

On page 89 of the documents below, you'll even find that an unidentified person scrawled "Dennis Chrismas." Either Mr. Chrismas's name came up during the ministerial briefing or it was top-of-mind for one of the participants.

The privatization was scrapped Sept. 27 when the government and B.C. Government and Service Employees' Union agreed on a new contract. The premature cancellation was announced the next day. And we still don't know the real reason why.

EGM-2012-00187

#LiquorLeaks reveals the latest Ask Roger email

This whole liquor logistics privatization, which was announced Feb. 21, has produced more questions than answers. Mainly because it was not accompanied by the publication of a business plan or cost/benefit analysis that would justify the sell-off. Also because of the contents of the intriguing internal Exel Logistics memo that came to light in my Business in Vancouver story on May 8, revealing the leading bidder's deep connections with the ruling BC Liberals and its clever strategies to gain the monopoly.

Roger Bissoondatt, last Movember.

Does a business plan exist? Liquor minister Rich Coleman told NDP critic Shane Simpson in budget estimates that it doesn't, yet. A list provided to me by the Liquor Distribution Branch via Freedom of Information indicates there are several reports that examine the dollars and cents of selling the warehouses and moving the business to a private operators. They don't want me to see the actual reports.

That does not inspire confidence in the process or the people involved. The uncertainty is multiplied for those who work for LDB, who wonder what the future holds under a private operator.

On June 4, two days before he secretly tendered his resignation (and 10 days before it went public on this blog), LDB general manager Jay Chambers invited employees to send him questions by email. He said he would make an effort to answer them. His interim replacement, chief financial officer Roger Bissoondatt (right), has carried on the gimmick.

Highlights of Bissoondatt's Sept. 11 email to employees include: 

• LDB will become a customer of the private warehouser and distributor, but Bissoondatt writes, "until the agreement is signed, we will not know what these delivery costs will be."
• Eighty-three LDB head office employees are retiring in 2012. Those who are displaced from the warehouse under the new operator can bump retail workers with less than three years of service out of their jobs.
• There remains confusion and skepticism over the March 21-signed memorandum of agreement with the B.C. Government and Service Employees' Union that is supposed to grant warehouse workers post-privatization job security and buyouts or early retirement. 
• Bissoondatt does not fully answer a question about the rumoured $200 million replacement cost of the Vancouver LDB warehouse being a reason for privatization. Instead, he sticks to the government line about improving the current distribution model and selling the warehouse to realize a financial gain for the province.
• Question 18 wonders "how can the general public be assured that the system of awarding the best company was done honest and fairly?" Bissoondatt parrots more government lines about the process being managed by "professional public servants" and that a fairness monitor, George Macauley, was hired. (NDP critic Shane Simpson found that Macauley's power to ensure and enforce fairness is somewhere between slim and none.)
• And, we find out that Viti Wine and Lager general manager Ralf Joneikies did get his 10 cases of Rogue Voodoo Doughnut Bacon Maple Ale order filled on May 22, despite his July 20 anti-LDB op-ed in the Vancouver Sun. Bissoondatt wrote that he was "troubled" when he read the Joneikies article: "We considered responding to him but decided that a response would draw attention to his unfounded allegations." (Huh? If there was an error, why not seek to have it corrected?)

Below is the Sept. 11 company-wide email in its entirety:

________________________________

From: Dahlke, Cindy LDB:EX

Sent: Tuesday, September 11, 2012 3:49 PM 

To: LDB D All Employees 

Subject: AskRoger - LDB's Wholesale and Distribution Services 

Message from Roger: 

Over the past month, a number of employees have sent questions to my AskRoger@bcldb.com email address regarding the privatization of the LDB’s Wholesale and Distribution services.  Thank you to those who have taken the time to write me.
Attached are the questions I have received and my responses. Some questions have been slightly abbreviated because of their length. Please do not hesitate to send any other questions you may have to AskRoger@bcldb.com.
With regard to the RFP process, the government evaluation team is currently working with the four shortlisted bidders to provide them with information they have requested so that they can refine their proposals. It is expected that the bidders will submit refined proposals in early October and the evaluation team will recommend the successful bidder by the end of October.  The four shortlisted bidders, in alphabetical order, as announced in my July 20, 2012 email to you, are: ContainerWorld Forwarding Services Inc.; Exel Canada Ltd.; Keuhne + Nagel Ltd. (sic); and Metro Supply Chain Group Inc.
Roger Bissoondatt
Acting General Manager

Questions and Answers.

Q1:         What guarantee is there that the stores will not be privatized shortly after?
R1:          Government has said on numerous occasions there are no plans to privatise government-operated liquor stores. 

Q2:         Dear Jay/Roger,
On Thursday May 31st, Minister Rich Coleman was the guest on “The Voice of BC” – a local talk show hosted by Vaughn Palmer.  At about the 36 minute mark, Matthew Phillips of Phillips Brewery asked this question:
We’re concerned about the Liquor Distribution Branch distribution costs and service levels and so we’re wondering if he [Rich Coleman] can commit that the new privatized scheme will have the same price and the same service levels that we’ve been accustomed to?
In response, Minister Coleman offered the following:
But really what it all comes down to is:  Is there a way to better distribute and warehouse liquor to the advantage of us and find savings and efficiencies to get service up?  We actually do get a number of complaints about service from our private sector partners whether it be liquor stores, pubs and those things about how we are servicing them in our present distribution systems.  So, to find out whether there is a better way of doing it, I don’t think anybody should be afraid of that.
As the Foreman of the Parts Department, which oversees the order picking for the Wholesale Customer Centre, it is my job to ensure that our private sector customers get the best possible customer service in terms of timeliness, productivity, accuracy and general load quality.  If there are complaints in this regard, it is my responsibility to follow-up on them and then to initiate corrective measures that will lead to improvements.  So, my question is:
Is there anything I can do, within the context of my current responsibilities, to address the complaints that Minister Coleman has received from our private sector partners?
Thank you for giving me the opportunity to ask my question.
R2:          I am confident that we provide our customers with good service and work hard to address any concerns they may have.  As Minister Coleman and Government have noted, the purpose of the RFP process is to determine if a privately operated liquor distribution model will be an improvement over the current one. 

Q3:         I was wondering if this RFP is considered to be a done deal? There are protests going on about this process, the public is beginning to question why this is being done, is there any chance the government is going to reconsider?  Or, is it already too late?
R3:          The decision of whether to proceed with privatizing the warehouse and distribution services rests with Government. Minister Coleman and Minister MacDiarmid have said on a number of occasions that in order to proceed there must be a benefit for taxpayers and the liquor industry. The RFP process will allow government to determine if there is a benefit to proceeding with privatization. 

Q4:         Thanks for the update to the RFP.  I have a question though. After March 2013, how will I know I will still have a job to come to every day?  I imagine that there is a lot of controversy around who will lose their positions, and probably lots of rumours flying around but nobody seems to have a definitive answer to this question.  Perhaps you could let us know where our positions are headed (like mine [IS Security] team …).
R4:          Until a new distribution/wholesale model has been approved and the related system requirements are determined, the LDB will not know the extent to which LDB positions could be affected.  If an employee is affected, then Article 36.2 of the Collective Agreement will apply. This article outlines the employee options with respect to placement should positions be affected. I appreciate that this uncertainty is stressful and I will ensure that employees are provided with timely information as it becomes available. 

Q5:         …In the meantime, I refer you to the Sun article by Ralf Joneikies on July 20, 2012 (attached) where he fires a number of criticisms at the LDB including WCC errors, reprisals for speaking up about service, order cancellations, Spec product appropriations and last but not least (if you can believe it) the Stockholm Syndrome.  In his article he alleges that we cancelled an order for 10 cases of Rogue’s Voodoo Bacon Maple beer and insisted that it be released to another customer. Well, I looked into this and found that Ralf Joneikies’ order for 10 cases of Rogue Voodoo Bacon Male Ale – SKU # 206730 was filled on May 22nd.  So, my second question is:
Are we (meaning the LDB) going to craft a response to Mr. Joneikies in an effort to reassure him that we do indeed take customer service seriously and that we are dedicated public servants acting in good faith at all times – this includes the men and women who work in the Wholesale Customer Service Centre and the many others, like me, who support them?
Again, thanks for allowing me to ask my questions!
R5:          Like you, I was also troubled when I read Mr. Joneikies’ letter in the Vancouver Sun and I wholeheartedly agree with your description of the people who work in our organization.
We considered responding to him but decided that a response would draw attention to his unfounded allegations. During this time of significant public and media attention on the distribution privatization issue, we can expect many people to express a range of opinions.  Rather than get drawn up in the debate, I believe that our best approach is to remain calm and continue to work hard to serve our customers. 

Q6:         What is the Provincial Government of BC’s issues with the present LDB operations that have driven them to put the privatization of the Distribution Centres out for bid?
R6:          Government has stated on a number of occasions that they are interested in determining if a private sector distribution model will be an improvement over the current system and will benefit taxpayers and the liquor industry.  Government has also stated that privatizing distribution will free up the LDB’s warehouse real estate that could be sold to help balance the budget. 

Q7:         How is selling and privatizing the warehouse and distribution of the LDB going to directly and indirectly affect the Liquor Stores and its employees?
R7:          The RFP is not related to our government-operated liquor stores, however if a private service provider is selected we can anticipate there will be a number of implications for our retail operations. For example, BC Liquor Stores will become a customer of the new service provider and the full impact of this will not be known until a formal agreement is implemented.
There is a possibility that BC Liquor Store employees could be affected depending on the decisions of displaced Distribution Center employees, some of which may elect to remain within the LDB. According to the Collective Agreement, only regular employees with less than three years of service seniority can be displaced or bumped. Currently, the majority BC Liquor Stores regular employees have seniority levels greater than this. 

Q8:         Given the time frame for the completion of the RFP, the closing date could possibly put 7 full time regulars in #079 Columbia Place in jeopardy of being bumped to the auxiliary list from the Kamloops or Vancouver Distribution Centre (KDC or VDC) employees;
a)      How does the LDB promote privatization as a positive move when we will have present full-time employees in jeopardy of losing their homes and vehicles due to a drastic cut in hours and now being in Auxiliary positions and getting part time hours?
b)      How would a present fulltime Regular employee be affected by being bumped out of a fulltime position into an on call Auxiliary position? I.e.  Loss of benefits, wage rate, etc.
c)       What is the plan from Store Operations for having the stores affected by a large number of bumps transition through training and successfully operate by getting as many as 7 people from the warehouse in Full time Regular positions with no customer service skills, product knowledge, till training, shelf stocking, beer and liquor invoice receiving, picking, staging, or the shipping of licensees from a liquor store perspective?

R8:          (a) The LDB is not promoting privatization.  Government has made the decision to examine the distribution model and determine if it can be better operated by the private sector.
(b) A regular store employee who is displaced or bumped and chooses to move to the auxiliary recall list is covered under Article 13.3 (4) of the Collective Agreement.  The employee would maintain their regular status (benefits) unless they have not worked 1,200 hours within the previous 26 pay periods. The employee’s wage rate and benefits would not be impacted. However, the employee would be considered to have auxiliary status for the purpose of vacation scheduling (15.3) and layoff notice (15.4).
(c) According to the Collective Agreement, only regular employees with less than three years of service seniority can be displaced or bumped.  Currently, the majority BC Liquor Stores regular employees have seniority levels that make it unlikely that any one store will have a significant number of displaced employees.
Prior to being offered a BC Liquor Store position, a displaced LDB employee would have to be deemed suitable and qualified. These employees will receive appropriate training similar to that provided to all new LDB employees and the ongoing training regular employees receive. 

Q9:         What is the projected profit in dollars for the LDB in what used to be called the Distribution Channel or Warehouse contribution for the fiscal year 2013 encompassing a full year of Private Distribution?
a.       What are the five year numbers for projected profits?
b.      What are the ten year numbers for projected profits?
R9:          The LDB’s warehousing and distribution system is a cost center for the LDB, not a profit center.  One of the objectives of the RFP process is to determine if a private sector service provider can operate the system more efficiently.

Q10:       What will the process be for the distribution of alcohol to stores?
a.       Who will be buying the product from the Wineries, Distilleries, and Breweries?
b.      Who will be receiving the initial mark-up dollars before selling it to wholesale channels?
c.       What will the discount % be for the BC Liquor Store Chain from the supplier?
d.      What will the discount be for the wholesale sector (LRS, RAS, etc...)?
e.      What will the profit margin be for BC Liquor Stores?  

R10:

(a)    It is anticipated that suppliers would own the inventory that would be stored in the private sector service provider’s warehouse(s). The process for ordering the product into the warehouse(s) would depend on the agreement between government and the service provider.
(b)   It is anticipated that the LDB would purchase the liquor at the time it is shipped and sell it to the wholesale customers. The LDB’s mark-up would be collected when the LDB sells the liquor.
(c)    , (d), (e) At this time, consideration has not been given as to how pricing policies may be impacted by the new distribution model. 

Q11:       Will all customers be on a level playing field for product availability? Specifically SIPS products and cold beer being available for all sellers of beverage alcohol in 1BC?
R11:       The RFP process relates to warehouse and distribution services, not services provided by government liquor stores.  At this time, there are no plans to change services offered by government stores. 

Q12:       How will the stores be affected in terms of the numbers of deliveries we now get being reduced to maximize profits by the distributing company trying to deliver more products less often? Example – a few years back Commercial Logistics/BDL cut the number of Beer deliveries from three to two deliveries per week in larger stores and from two to one in some others as it was more cost effective for them.
R12:       One of the key components of the RFP for the privatization of the LDB’s warehousing and distribution services is product delivery. The RFP evaluation team will be looking closely at how each of the four shortlisted companies plan to deliver products to our network of 195 stores across British Columbia.

Q 13:      How will delivery costs affect BC Liquor Stores?
R13:       If a contract is signed with a private service provider, BC Liquor Stores will become a customer of the service provider, along with private liquor stores. Until an agreement is signed, we will not know what these delivery costs will be. 

Q14:     How will delivery costs affect the present Wholesale Channel Customers given they have been subsidized for the past few years and will now have to pay the full shot?
R14:       Until an agreement is finalized, we will not know what the delivery costs will be. As a result of the new model, there may also be other changes. We will not know the total cost structure of the new model until all of the pieces are in place. 

Q15:       How will delivery costs vary dependant on where you are located in the Province of BC under the new distribution system?
R15:       The Wholesale and Distribution Services RFP requires all potential service providers to base their proposals on a “postage stamp” pricing model (same price for product delivery anywhere in BC).

Q16:       What is Store Operations plan in the event that a Wholesale Customer who is presently getting deliveries from the Wholesale Centre chooses not to order their product from the new distributors (due to increased delivery costs, concerns of customer service drop off, etc...) and decides on going back to getting their product from BC Liquor Stores, thus putting increased pressure on the stores? (less staff on the floor to provide customer service to Counter Customer thus affecting sales  and lost warehouse space due to more custom orders)
What contingency plans are there to combat the above scenario as far as labour control, picking charges, etc...?
R16:       An important consideration in choosing the successful bidder for the RFP will be the level of service they will provide to wholesale customers.  I am confident that an agreement signed with the successful bidder will ensure that the LDB’s direct delivery wholesale customers will receive a high level of service and will not have an interest in accessing products from our stores. 

Q17:       If costs are going to increase due to delivery charges from the Private Distributor, then how will the shelf prices be affected one month later when the HST is gone on April 1st 2013 and we go back to the old system of PST/GST?
R17:       Delivery charges will not be known until a final agreement is signed with a private service provider.  When the HST was introduced in July 2010 and the provincial portion of liquor sales tax was reduced from 10 per cent to 7 per cent, LDB  liquor mark-ups were increased to generally keep shelf prices constant.  The PST rate of 10 per cent on liquor will be reinstated with the re-implementation of the PST and liquor mark-ups will be reduced to their pre-HST levels to generally keep shelf prices constant. 

Q18:       With the bad press that was received by Excel Transport and leaked documents how can the general public be assured that the system of awarding the best company was done honest and fairly?
R18:       The process to select a service provider is being managed by professional public servants that have been involved in many government procurement projects and will ensure fairness and integrity in the process.  The Government has also hired a Victoria lawyer, economist and consultant George Macauley to augment the process and serve as a Fairness Monitor. In this role, Macauley is responsible for the following:
a) Review the procurement documentation so as to understand the RFP process;
b) Monitor the procurement process for adherence to the terms of the RFP, including participating at the Proponents’ meeting, site visits, oversight during evaluation of submissions and subsequent Proposal refinement process as well as final selection of the Selected Company; and
c) Prepare a fairness summary based on observations made during delivery of the procurement process. This report will be available to the public. 

Q19:       What are the anticipated changes to the BC Liquor stores ordering programs and procedures and timeline to transition into a new system supported by the new distributor?
R19:       The private sector service provider would be expected to have a robust ordering system to facilitate orders from LDB stores and private stores.  The details of the ordering system and the timing of implementation will be based on the agreement that government and the service provider would negotiate. 

Q20:       How can the employees be positive in their future job prospects when the Captain of the ship and other long term employees in major areas of Head Office are leaving in large numbers to other jobs outside of the LDB?
Q21:       Why are so many employees leaving Head Office?
R20/21: The number of employees throughout the Branch who have left the LDB so far in 2012, for reasons other than retirement, is consistent with previous years – about one per cent. However, a large number of employees are reaching retirement in 2012 – 83 to this point.
The LDB continues to have a strong core of experienced employees and will fill vacancies as they arise with competent replacements.
With respect to Jay Chambers, he clearly stated that after 15 years as the LDB General Manager, he felt it was time for a change. 

Q22:       Why are most recent Head Office postings only temporary positions?
R22:       This is nothing new at Head Office. From June to September, it is peak vacation time at LDB Head Office. This is the time when many long term Head Office employees take extended periods of time off and these key operational positions are back filled by posting them as temporary opportunities. Backfilling these roles provides employees with an opportunity to expand their knowledge and skills. When regular, full-time opportunities become available, they are posted as a vacancy not a temporary position. 

Q23:       How are jobs that are coming available in the next year being affected by the possibility of VDC/KDC employees that don’t choose to go to the new employer?
R23:       A Memorandum of Agreement (MOA) has been signed between the government and union regarding the privatization of the LDB’s Distribution and Wholesale operations. Auxiliary employees will be converted into vacant positions where possible.
Vacant positions (e.g. supervisory positions) will continue to be posted. However, these positions will be reviewed to determine if a potentially affected employee might be eligible for the position. 

Q24:       It was once brought into the public spotlight that one of the reasons privatization has surfaced is the VDC Warehouse is in need of replacement and it would cost in the neighbourhood of $200 million to replace it in a new Lower Mainland or Fraser Valley location, can you comment on this?
R24:       Government has stated a number of times that the interest in considering privatization is to determine if the current distribution model can be improved and to realize a financial gain from the sale of the LDB’s warehouse real estate. 

Q25:       What is the estimated selling price for the Distribution Centre/Service and how does it compare to the annual revenue now?
R25:       The intent of the RFP for Warehousing and Distribution Services is to determine if there is a private sector company that can assume the warehousing and distribution services in a manner that meets the needs of taxpayers and the liquor industry.  Government will not receive a cash payment from the service provider.
With respect to the VDC and KDC property, government intends to sell these through a separate process in the future. The value of those properties will depend on their market value at the time of sale. 

Q26:       Will buyouts be offered?
R26:       Government has signed a Memorandum of Agreement with the BCGEU to address impacted LDB Distribution and Wholesale Center employees.  One of the options that will be available to employees, depending on their circumstances is a Voluntary Departure Plan.

As always, stay tuned to this space for more developments and documents.

#LiquorLeaks - Jay and the 8-Day Delay

On June 4, general manager Jay Chambers sent a memo to staff, assuring them he would guide them through the process that is the privatization of the Liquor Distribution Branch's non-retail functions.

He also invited staff to send him questions and even had a dedicated email address, askjay@ldb.com

LDB, through its parent, the Ministry of Energy and Mines (Rich Coleman, minister), shared modified versions of two of the emails with me via Freedom of Information, plus the prepared response. Were there more emails? Who sent them?

Ten days after Chambers invited questions from staff, he announced his resignation to join the Motor Vehicle Sales Authority of B.C. The sudden and inconvenient June 14 announcement had all the appearances of getting out of the kitchen while the privatization pot was burning. Predictably, both Coleman and Chambers claimed otherwise: Nothing to see here, move along. NDP critic Shane Simpson didn't buy it and unsuccessfully attempted to have the privatization's so-called fairness monitor, George Macauley, halt the tendering process. Macauley's power is extremely limited. He's a monitor, not a referee.

I don't buy it either. Chambers had a conference call on April 12 with the MVSA's hired headhunter George Madden, on LDB company time. It's in Chambers's daily LDB agenda!

Here's the kicker. Chambers told Coleman's deputy minister Lori Wanamaker on June 6 that he was resigning! That's eight days before the June 14 memo! Why the eight-day delay in telling staff?

"It is with very mixed emotions that I have made this decision," Chambers wrote to Wanamaker, giving her a month's notice. See the letter below.

Chambers's last day of work was July 4. He left two days early with an afternoon office party at the LDB headquarters. Roger Bissoondatt took over in the interim and is leading the committee vetting bids to take over LDB's warehousing and logistics.

Jay Chambers' resignation letter

Ask Jay FOI

#LiquorLeaks has more questions than answers

There is no longer a six-pack of companies seeking to privatize liquor warehousing and distribution in British Columbia.

Four bidders were shortlisted July 20: Exel, ContainerWorld, Kuehne+Nagel and Metro Supply Chain Group. It was supposed to be a list of three, but there apparently was a third-place tie in the merit points rankings. The rankings were not released. 

Schenker and Hillebrand Westlink didn't make the cut.

Read my story in Business in Vancouver here. I asked a Schenker executive if he felt the process was fair. He said it was "very straightforward," but refused to say whether it was fair.

Listen to Minister Margaret MacDiarmid's teleconference above. She was peddling the usual government line about the importance of the role of the fairness monitor, George Macauley. NDP critic Shane Simpson found in June that Macauley is really powerless. He is not a referee, but an observer. Big difference.

You'll hear me questioning MacDiarmid about whether Exel and ContainerWorld are really bidding independently and whether the government is doing anything to ensure that is so. I tried to get her "off-message," to get a real answer. Not political spin. It was obvious that she came better-prepared to handle an agitator after being embarrassed July 12 by Vaughn Palmer's grilling, which you can hear here.

I still have so many questions for Minister MacDiarmid, such as: 

Why is the government delaying my Freedom of Information request on the list of times and dates that the six bidders submitted their formal proposals? Your ministry is stewarding the Distribution of Liquor Project bid process, but the disclosure has been delayed until Sept. 27 so that Energy and Mines can be consulted. You're also the minister of open government. Is your ministry really in charge of this process, or are you part of an elaborate communications strategy to deflect attention from liquor minister Rich Coleman, who has never been made available for me to interview? In Exel's own words, it pondered using its relationship with Mr. Coleman to influence the writing of the request for proposals.

Why did Mr. Coleman tell CKNW's Simi Sara in a Tweet on July 19 that bids closed June 30? The request for proposals states very clearly that the deadline was June 29 at 4 p.m. Did Mr. Coleman mis-speak or were the rules bent for any applicants? Kindly provide me the list of date(s) and time(s) that the formal bids were received (see above). 

Your ministry has released the transcript of the May 10 bidders' meeting. It has not released a transcript of the May 9 industry information meeting. Why? Is it because several industry stakeholders asked questions and were of the opinion that LDB privatization would harm the industry and raise costs? I was there and I posted a recording of the question and answer session. Listen here.

Again, I ask, what assurances does your ministry have that no bidders are working in collusion? I have evidence in Exel's own words, in its Oct. 6, 2009 "Project Last Spike" internal memo that says an alliance with or an acquisition of ContainerWorld was among Exel's strategies to become the warehouser and distributor. Exel's sister company Giorgio Gori has a longstanding business relationship with ContainerWorld and an option to buy the Richmond warehouse. ContainerWorld owner Dennis Chrismas met with Mr. Coleman on March 2. Has anyone from ContainerWorld met with anyone involved with Exel, directly or indirectly, since the RFP was published? 


Mr. Chrismas has not responded to my phone calls or emails. 

#LiquorLeaks wonders: is B.C.'s open government a sham?

I have used this space before to comment on Premier Christy Clark's open government sham, er plan. Excuse me.

I didn't think the Distribution of Liquor Project could get more suspicious, but the BC Liberals must not have been paying attention to public and media discourse. I made a very simple Freedom of Information request to find out exactly when the six bidders on the long list submitted their bids.

It's not the first I've made. Here is a previous post about how I found out LDB and the government are hiding cost/benefit analyses and business case reports regarding privatization. I have since appealed to the Office of the Information and Privacy Commissioner.

On this latest request, the government initially told me I'd get a response by Aug. 15. Now it has notified me that it is delaying disclosure until as late as Sept. 27 because it feels like consulting with another public body. It has the power to invoke further delays. Sometimes the information is so sensitive, that the government can make a valid case to delay disclosure. Most of the time the government is motivated to withhold records, either temporarily or permanently, for fear of embarrassment.

Minister Margaret MacDiarmid -- whose portfolio includes Open Government -- told me on July 9 that it was her ministry that was managing the privatization bidding process. Citizens' Services is in charge of government buying and contracting and Citizens' Services was in charge of receiving the formal bids by the 4 p.m., June 29 deadline.

MacDiarmid's staff now tell me they want to consult with the Liquor Distribution Branch and Energy and Mines. LDB answers directly to Energy and Mines and its minister, Rich Coleman. See the letter below.

The shortlist, which could be as little as one bidder or as many as three, is supposed to be announced July 20. (We know a lot about Exel, but how much do you know about ContainerWorld, the only B.C. bidder which has an interesting relationship with an Exel sister company? And what about Schenker and Kuehne + Nagel and their previous relationship with Exel in the European Union?)

Why does the government want to hide the time(s) and date(s) that the bidders submitted their documents?

If all six bidders did respond on-time, as per the rules, shouldn't the proof be made public now?

Laughable Delay & Bother

#LiquorLeaks reveals another LDB privatization foe

Is it beyond the tipping point yet? 

I'm referring to the controversy over the B.C. Liberals' rush to privatize the Liquor Distribution Branch's warehousing and distribution -- without a business plan or cost-benefit analysis (I've tried hard to get one, but it either doesn't exist or is a #hiddenplan) and without any formal industry consultation. 

Prominent B.C. Liberals have a too-close-for-comfort connection with the leading bidder, Exel Logistics. Exel is the subsidiary of German giant Deutsche Post DHL and owns the private Alberta monopoly Connect Logistics. Exel has used the services of B.C. Liberal lobbyists Mark Jiles and Patrick Kinsella for seven years, since John Les was the liquor minister. In Exel's own words, in an Oct. 6, 2009 internal "Project Last Spike" memo, the company contemplated using its relationship with liquor minister Rich Coleman to influence the writing of the request for proposals.

Now the Campaign for Real Ale of British Columbia, part of an international network of beer aficionados, has joined the chorus of those seeking to postpone or cancel the privatization. On July 11, CAMRA sent the following letter to Coleman, finance minister Kevin Falcon, citizens' services minister Margaret MacDiarmid, fairness monitor George Macauley and Roger Bissoondatt, the acting general manager and chief financial officer of LDB. 

From: CAMRA President <pres@camravancouver.ca> Date: Wed, Jul 11, 2012 at 5:38 PM  Subject: Campaign for Real Ale of British Columbia position LDB Distribution Warehouse Privatization
To: rich.coleman.mla@leg.bc.caCc: <Shane.Simpson.MLA@leg.bc.ca>, kevin.falcon.mla@leg.bc.ca, margaret.macdiarmid.mla@leg.bc.ca, Roger.Bissoondatt@bcldb.com, office@macauley.ca, <Karen.Ayers@gov.bc.ca> 

Dear Mr Coleman   

I am writing you this letter on behalf of the Campaign for Real Ale of British Columbia (CAMRA BC), a craft beer consumer advocacy group who represent more than 1000 individual and 100 corporate members here in British Columbia and of which I am the Vancouver Branch President and member of the BC Executive.  

Since the announcement of the BC Liberal Government’s plan to sell off the Liquor Distribution Branch’s warehouses and with them the province’s warehouse distribution system, many groups have come out against the plan, including the opposition NDP Party, Alliance of Beverage Licensees of BC, the BC Government Employee’s Union and the Craft Brewer’s Guild of BC.   

There have been complaints of the complete absence of consultation with BC’s liquor industry or the general public, and the lack of guarantees that this privatization plan will not negatively impact the alcohol industry and alcohol consumers of this province.   

It is now our turn, the craft beer consumers of BC, to voice our dissent due in large part to  the lack of information as to how this privatization will affect the craft beer industry and craft beer consumers and because the current government cannot guarantee 100 percent that this privatization deal, when completed and implemented, will not have a negative impact on the craft beer consumers of BC.   

No business case has been presented. A clear cost-effect analysis should be completed and presented to both the liquor industry and general public in order to clarify exactly how privatization will affect liquor prices before this process goes any further.   

No study has been done and no guarantees have been made as to whether privatization will affect access to BC-brewed beers from local, craft breweries.  

At the moment, the Provincial Government has a mandate to make these beers accessible, but will this continue after privatization?   

In short, CAMRA BC cannot currently support this privatization plan and will continue to voice dissent until the following steps are taken:

1. Conduct a study to provide objective data showing how this move will impact the craft beer consumers of BC  

1. Make public a business case and/or cost-effect analysis

1. Have a full and meaningful consultation with both the private and public sectors of the province in regards to the planned sale and privatization of the Liquor Distribution Branch's warehouses and warehouse distribution system  

If, after those steps have been taken and it is shown that this privatization plan will not negatively impact the craft beer consumers of BC, CAMRA BC will be willing to support this move publicly on behalf of our membership. Thank you for your time. 

--Paddy Treavor  

President CAMRA BC
Vancouver Branch

#LiquorLeaks reveals LDB wingding for Jay-C

Could there be whisky?
Mighty they have gin?
Could there be three or four six-packs?
I don't know...
Will there be a party?

With apologies to the Irish Rovers, there's a staff-only get-together at the Liquor Distribution Branch's Vancouver headquarters on June 27 in honour of departing general manager Jay Chambers. (Coffee and cake are advertised, but, ahem, the LDB has more than a few wobbly pops and bottles of hooch in storage.)

Remember him? Ten days before the resignation became public on June 14, Chambers sent staff this memo that implied he would be around for months to guide the taxpayer-owned company through the privatization. But he's driving away July 6 for a new job as president of the Motor Vehicle Sales Authority of B.C., and he still hasn't responded to my numerous interview requests. 


Here's the invitation for the June 27 event:

Jay Chambers is leaving the Liquor Distribution Branch (LDB) after more than 18 years. Jay has been the General Manager of the LDB since January 1997. He joined the LDB in January 1994 as the Director of Store Operations, and in March 1994 he became the Executive Director of Retail Services.  He will be missed!  

Come celebrate Jay’s many dedicated years of service at the LDB!! Wednesday, June 27, 2012 Coffee and cake will be served at 2:00 p.m. in the Atrium at 2625 Rupert 

To sign the card & donate towards a departure gift for Jay please come by the Communications area (on Peter Martin’s desk).

Almost a month earlier, on May 30, it was Chambers treating staff for lunch. He dropped $443.93 at Joey Burnaby for eight workers. For the record, no alcoholic beverages appear on the bill, which was obtained via Freedom of Information.

Jay Chambers and the Joey Lunch

#LiquorLeaks reveals the "Ask Jay" memo

Ten days before he announced his resignation, British Columbia Liquor Distribution Branch general manager Jay Chambers told employees in a memo that he would guide them through the coming months of uncertainty while private companies jockey to take over the taxpayer-owned company's warehousing and distribution.

Chambers even launched an email address to which curious employees could send him questions about the privatization.

Sources have told me post-privatization retirement was on Chambers's mind. (Chambers has not responded to several of my interview requests.) Now he is instead counting the days until his July 6 departure from LDB to start a new job as president of the Motor Vehicle Sales Authority of B.C., a B.C. Liberal-friendly, industry self-regulator.

The full memo is below. (The italicized emphasis is mine.)

Two items of note:

• The list of key dates at the end of the memo shows the negotiated request for proposals' release date as March 30. It was actually published April 30. 
• The body of Chambers's memo says that three companies would be shortlisted by July 20. In the timeline, it says "up to three." The NRFP documents says "up to the top three." On April 30, liquor minister Rich Coleman told reporters at the Legislature that the shortlist could be as short as one company. On May 8, I revealed in Business in Vancouver that one company, Exel Logistics, may have an advantage over the rest because of its intriguing connections to Coleman and the ruling B.C. Liberals.

Without further ado...

June 4, 2012  

Good afternoon,

As you know, the Provincial Government announced in its Budget speech that it would privatize the warehousing and distribution of beverage alcohol in British Columbia.  

Since this announcement, there has been extensive and ongoing media coverage about the government’s privatization plans. I appreciate that you will have many questions about how this decision may impact you and your colleagues.

We have a proud history of serving British Columbians for over 90 years and I often have opportunities to share stories about the long term dedication and commitment of LDB employees.  I am aware that uncertainty is stressful, so in the coming months, I will provide you with regular information updates about these privatization plans. 

Below you will find the timeline of the Request for Proposal (RFP) process. Some of these milestones have already passed. The next significant date is June 29 which is the RFP submission deadline. 

Currently, there are eight parties that have expressed an interest in submitting proposals for this  RFP — Centric Retail Logistics Inc., ContainerWorld Forwarding Services Inc., Dimex Distribution Corp., Exel Canada Ltd., GL Distribution, Green Light Distribution Services Inc., Kuehne + Nagel Ltd. and Schenker of Canada. The three shortlisted parties will be announced on or about July 20. 

It is not known how many of these interested parties will submit a formal proposal by the deadline. Once the RFP submissions are received, they will be reviewed by the RFP team and narrowed to a list of up to three qualified proponents by late July.  

I am sure you will have many questions as we move through this process. During this challenging time, I would like to invite you to send your questions to me at askjay@bcldb.com. These questions and their answers will be shared with all LDB employees on a regular basis.

Jay  

Key Dates  Request for Proposal (RFP) Process

February 21   Provincial government announces distribution privatization plans

February 27   First meeting of RFP team

March 21        BCGEU signs Memorandum of Agreement with the government for post-privatization job security 

March 27        Victoria lawyer, economist and consultant George Macauley is appointed "Fairness Monitor" to oversee the procurement and evaluation process  

March 30        RFP is issued and posted on BC Bid website (http://www.bcbid.gov.bc.ca/open.dll/showDisplayDocument?sessionID=27492391&disID=22111058&docType=Tender&dis_version_nos=3&doc_search_by=Tend&docTypeQual=TN) 

May 9               Industry information session 

May 10             LDB’s RFP information session and warehouse tour of Vancouver Distribution Centre

June 29           Deadline for RFP submissions 

July 20            The provincial government announces RFP shortlist (up to three potential candidates) 

October 16     Announcement of successful proponent 

March 1/13     Agreement negotiated and signed with successful Proponent by March 1, 2013.

P.S.: As usual, I remind kind and loyal readers that I gladly accept envelopes containing credible documents addressed to me at the following addresses:

Business in Vancouver

102 4th Ave. E., Vancouver, B.C. V5T 1G2 

The Tyee
PO Box 88484, Vancouver, B.C. V6A 4A7

Booze Barn Boss Bolts!

Amid the most controversial privatization in British Columbia since BC Rail was sold to CN Rail in 2003, Jay Chambers, the $200,000-a-year general manager of the Liquor Distribution Branch, dropped a bombshell on June 14 by announcing his resignation.

Here is the memo to staff, obtained by #LiquorLeaks:

"I am writing to advise you of my decision to resign from the Liquor Distribution Branch effective July 6, 2012.

"It is with very mixed emotions that I have made this decision. Words cannot properly describe just how much I have enjoyed being the General Manager of the LDB. However, I have been in this job for over 15 years and I feel that it is time for a change, both for me and the LDB.

"I have accepted an offer to be the President of the Motor Vehicle Sales Authority of BC. In this role I will continue to have the opportunity to work with government, stakeholder associations and consumers. These are the areas I have learned so much about during my time at the LDB and I look forward to being involved in them at the VSA.

"Upon my departure, Roger Bissoondatt, our Chief Financial Officer, will be acting as the General Manager of the LDB until the process of finding a permanent replacement has been completed.

"On a personal note, what I will miss most about working at the LDB is you, the great employees. It has been a pleasure and privilege to work with you. The LDB was a very well-run business when I joined the company and I am very proud to say that, because of your efforts, it continues to be a very well-run business. This is a reflection of the quality of staff that work at the LDB – no individual or single department has been responsible for your success – it is a team effort."

Jay

A source told me there was an employee breakfast at the LDB headquarters in Vancouver where Chambers was serving flapjacks with a smile to workers on the morning of June 14. Workers were flabbergasted when, about an hour later, they received the resignation memo from Chambers.

There you have it. The general manager of the province's liquor retail authority isn't sticking around to complete the taxpayer-owned company's biggest strategic move in its history. He is instead going to oversee the retail of automobiles and trucks. From the drinking industry to the driving industry, in a legal fashion.

Driving away

The Motor Vehicle Sales Authority was established in 2004 as a non-profit, industry self-regulator during Premier Gordon Campbell's first term. MVSA regulates and licences 1,600 dealers and 7,000 salespeople and now reports to Justice Minister Shirley Bond. Former Nanaimo mayor Graeme Roberts is the chairman of an 11-member board. Directors include Langley lawyer and onetime Liberal nominee Rebecca Darnell and Richmond chiropractor Dr. Don Nixdorf, also a Liberal donor. Darnell, according to the Elections B.C. database, donated $14,475 to the BC Liberals since 2005. Nixdorf donated $1,170 since 2006. The most-prominent director is the province's biggest car dealer, Moray Keith of Dueck GM.

Keith is also chairman of the new B.C. Sport Agency, director of B.C. Lottery Corporation, co-founder of the B.C. Lions Waterboys and chairman the 2011 Grey Cup Festival. His Chiefs Development Corporation built the Langley Events Centre. One of the tenants is liquor minister Rich Coleman's constituency office.

Keith donated $95,000 to the BC Liberals via Dueck, $3,825 through the B.C. Automobile Dealers Association and New Car Dealers Association of B.C. The latter entity is a client of lobbyist Mark Jiles, who is also a lobbyist for Exel Logistics, the German-owned, leading bidder for the LDB logistics contract. Exel boasted in an internal memo that it had a close relationship with Coleman and pondered influencing the writing of the request for proposals.

It's a small province, after all.

Doug Longhurst, MVSA's Director of Finance and Operations and Director of Learning and Communications, told me previous president Ken Smith announced his retirement last fall “as his contract required six months notice” after serving eight-plus years.

“The recruiting and advertising was handled by (corporate headhunter) Pinton Forrest Madden," Longhurst said. "The process was directed by a three-member committee of the board beginning in the fall. The process included the normal process of development of the position description for the posting, a long list, a short list and final selection. The position was on the PFM site for two months (plus or minus).”



Coleman did not respond to yet another one of my interview requests. (Yes, "Mr. Coleman Country," I'm like a broken record.) Neither did Chambers reply to repeated requests.

In a statement provided by Coleman's office, the liquor minister claimed the Chambers shuffle is unrelated to the LDB privatization and his departure won't affect the process. NDP critic Shane Simpson is, understandably, in disbelief. Chambers is the key bureaucrat on the file, heading a committee of LDB executives charged with sifting through the bids and picking the best one.

Bids are due June 29 and the shortlist of one to three companies is expected July 20. The winner is expected by October and the contract to be executed by March 2013 -- right before the May 2013 provincial election.

In the summer of 2006, then-liquor minister John Les was pondering a corporate shakeup, including hiring a new GM, at LDB. That never came to fruition. My sources tell me Chambers was planning on retiring from LDB after the logistics privatization was complete.

You can hear his voice in the audio below recorded May 9, 2012 at an industry information session at the LDB Vancouver headquarters about the privatization.

Boost your volume. It's especially entertaining at the 3:30 mark after the first of several pointed questions by Spirits Canada executive vice-president C.J. Helie, who opposes the set-up of an Alberta-style, private monopoly to store and move booze in B.C.