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March 14. 2013 8:20PM

House reconsiders Liquor Commission oversight

CONCORD - Lawmakers who want the governor and Executive Council to have final say over state Liquor Commission contracts had a chance to explain their legislation to a House committee on Thursday in a hearing that raised more questions than it answered.

Controversy surrounding a $200 million warehouse contracted awarded last year by the Liquor Commission to Exel Inc., of Westerville, Ohio, prompted the bill. The bill is sponsored by Hudson Republican Lynne Ober and Peterborough Democrat Peter Leishman.

In testimony before the House Committee on Executive Departments and Administration, Ober said the original intent of the legislation was to restore oversight of Liquor Commission contracts to the Executive Council - oversight the council had always enjoyed until the state Legislature passed the Liquor Commission Modernization Act of 2009.

Based on an interpretation of the act by the state attorney general, the commission conducted the request for proposals and awarded the contract with no Executive Council vote. Law Warehouses of Nashua, the third-place bidder which has done the work since the 1970s, filed a right to know petition in Superior Court and has since filed a lawsuit to overturn the award.

The second-place bidder, XTL-NH, with U.S. headquarters in Pennsylvania, was the lowest-cost bidder, but placed second. That company also filed a right to know petition in Superior Court and formally appealed the decision to the Liquor Commission, but was denied.

"We all know from reading the newspapers that there have been a number of lawsuits filed, and that the 20-year contract was not awarded to the lowest bidder," Ober told the committee.

She said the attorney general's office has already spent $288,000 on outside counsel for the Liquor Commission contract, and the lawsuits are ongoing. "We always do better if we have more eyes on a contract, particularly one that does not go to the lowest bidder," she said. "This is not an attempt to say the liquor commissioners are horrible people, but it is designed to get more eyes on these contracts."

The bill as written would give the Executive Council authority over all state contracts worth more than $25,000. It was filed late and went through several iterations before it was assigned for hearings. In addition to the Liquor Commission, it also affects the University System of New Hampshire and the state Community College System.

Executive Councilor Debra Pignatelli testified against the bill because the council currently reviews contracts that are worth more than $10,000. She said she supports Executive Council review of Liquor Commission contracts, but she recommended against increasing the amount to $25,000.

The interim chancellor of the university system argued against any legislation that would require Executive Council review of university contracts, leases or grants, given the modest level of state support to the university system and the large number of contracts involved.

"Why can't we make this strictly toward the Liquor Commission and leave everything else the way it is?" asked Manchester Democrat Jeffrey Goley.

Leishman replied, "That's fine with me. That was our original intent."

The Liquor Commission Modernization Act was designed to enhance the commission's ability to raise money for the state by enabling it to function like a private business. "No one realized that by giving them that authority that contracts of this kind would not require Governor and Council approval," Leishman said.

Committee members suggested a better route might be to amend the Modernization Act with regard to Liquor Commission contracts, rather than introduce new legislation.

No one testified on behalf of the Liquor Commission.

dsolomon@unionleader.com

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