NDP liquor critic Shane Simpson today called for the BC Liberal Party government to immediately halt the privatization of the Liquor Distribution Branch after revealing new documents that show how key proponent Exel Logistics has pursued the contract.
At a July 12 news conference, Simpson revealed 38 pages obtained via Freedom of Information that show Exel was the only company pushing for privatization. The distribution giant hired Liberal lobbyists Mark Jiles and Patrick Kinsella to seek out the deal and last summer met then-liquor minister Shirley Bond at the premier's Vancouver office.
Exel vice-president Scott Lyons wrote September 24, 2010, to liquor minister Rich Coleman with a 10-point proposed criteria for a "proper, timely and effective procurement process that meets the business needs and objectives of the government, industry and consumers."
Lyons proposed including criteria such as experience in beverage alcohol distribution, business stability and financial capability, a relationship with the B.C. Government and Service Employees' Union (BCGEU) and the ability to provide global freight and real estate development. He proposed the Alberta system, which Exel operates, whereby "suppliers fund the warehousing and distribution of products. Under this system, the LDB collects the warehousing and distribution fee from the suppliers and reimburses Exel for the costs of operating the network."
Lyons suggested the government commission PricewaterhouseCoopers to "comment on the benefits of a similar approach in B.C."
Lyons suggested the appointment of a "project champion" who could be a "liaison between the organizations."
The "Project Last Spike" Exel internal memo of October 6, 2009, obtained by Business in Vancouver, said Exel wanted to use its relationship with Coleman to influence the writing of the request for proposals and claimed it had co-operation from the BCGEU. The memo also contemplated proposing the government directly award it a private-public partnership. Lyons proposed just that in a June 13, 2011, email to cultural minister Ida Chong. Then-liquor minister Bond responded in an August 2, 2011, letter that said the province was not considering changes to the liquor distribution system, but, "should this change, I will ensure that your P3 proposal will be given careful consideration."
Lyons also met Bond at her Prince George golf event and sent an email request for a formal meeting with Bond on July 4, 2011, to her ministerial assistant Marc Douglas.
The meeting took place August 25, 2011, at the premier's Vancouver office in Canada Place with Bond, Douglas and LDB chief financial officer Roger Bissoondatt (now acting general manager following Jay Chambers' resignation last month). Lyons was joined by Exel business development senior vice-president Fred Takavitz and lobbyists Jiles and Rob Madore.
After the meeting, Bissoondatt wrote to Chambers, "I would appreciate getting your input as to how far I should go at this stage, especially since Min. Bond is expecting to have a discussion with you about it on Sept. 12."
Bond signed a Cabinet Concept Paper on December 5, 2011, about Liquor Retail and Distribution Model Options. She also submitted a January 18, 2012, report to Treasury Board. Both were heavily censored. Among the documents revealed was a diagram identical to one included in Lyons' June 13, 2011, letters to government, yet without the Exel logo.
Coleman reassumed the liquor portfolio in this February's cabinet shuffle. The privatization was announced in the February 21 budget and request for proposals issued on April 30.
Exel, ContainerWorld, Hillebrand-Westlink, Kuehne + Nagel, Metro Supply Chain Group and Schenker of Canada responded by the June 29 bid deadline. A shortlist is expected by July 20.
On April 30, Coleman told reporters in Victoria that the shortlist would be a maximum of three, but could be as small as one company.
The government wants to turn over LDB warehousing and distribution to a private operator by March 1, 2013, before the May 14 election.
Citizens’ Services Minister Margaret MacDiarmid, who is responsible for government-wide procurement, told BIV that she stands by the integrity of the process.
She downplayed the “Project Last Spike” memo, in which Exel pondered using its relationship with Coleman to influence the writing of the RFP.
Just because people say things doesn’t make it so,” MacDiarmid said. “People can make assumptions about how they’re going to be able to influence processes, and so on; people can say all kinds of things.” .
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