You’ll pay a bit more for liquor in NC thanks to a 10-year ABC warehouse contract
The N.C. ABC Commission has given a 10-year contract extension to the warehouse vendor that was the subject of a scathing 2018 report from State Auditor Beth Wood.
The new contract for warehouse services with LB&B Associates will cause the state’s “bailment” fee that pays for warehouse operations to nearly double, although for consumers that equates to only a 20-cent price increase per bottle of liquor.
The commission called for the contract to be re-bid after Wood’s audit. She found that the agency approved repeated price increases totaling $5.5 million from LB&B and didn’t review whether the increases were valid.
The audit also included photos of a largely empty warehouse in Clayton that was costing $300,000 per year, a facility that was added to the ABC Commission’s existing Raleigh storage warehouse. The audit said the commission also paid LB&B for services it wasn’t required to pay for.
The ABC Commission approved the new contract with LB&B this month, and the terms are difficult to compare with the cost figures in Wood’s report, because the new contract calls for the state to pay LB&B $2,350 per load shipped, as opposed to the flat figures used in years past.
That per-load price will increase by 2% each year starting in 2022. The new deal calls for “a requirement of nearly error-free and on-time deliveries as well as increased delivery frequency to the state’s 171 local ABC Boards,” the commission said in a news release.
But according to a copy of the contract provided to the NC Insider, the new contract will also be harder for the state to break. The contract says that “in view of the excellent track record of LB&B,” the state won’t be allowed to do a “termination for convenience,” although it could still do a “termination for default.”
LB&B’s latest bid for the ABC Commission contract lists commission Chairman Zander Guy as one its references.
ABC Commission spokesman Jeff Strickland defended the decision to keep LB&B in an email.
“Our process has been thorough and transparent over the entire (request for proposal) process, which has spanned nearly 3 years at this point,” he said. “We have confidence that the bidding for warehouse services has been handled fairly and has been open to all. The evaluation and recommendation of the incumbent vendor’s bid was made by an outside evaluation committee and then referred to the commission staff for negotiation. LB&B’s bid response was thoroughly reviewed and found to be well qualified.”
As for the findings about LB&B in Wood’s audit, Strickland said that “none of the state auditor’s findings related to the warehouse or delivery service performance of the vendor or would have disqualified LB&B from responding to the RFP.”
And as for the underused Clayton warehouse highlighted in the audit, “it is important to note that the state has seen steady year-over-year increases in the numbers of cases shipped to the 171 ABC boards, and the Clayton warehouse (leased by LB&B) has given the ABC system the flexibility to meet that growing demand,” Strickland said.
The new contract was first reported in Carolina Journal, a publication of the conservative John Locke Foundation.
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This story was originally published March 22, 2021 at 4:26 PM with the headline "You’ll pay a bit more for liquor in NC thanks to a 10-year ABC warehouse contract."
