LCB panel opposed wine kiosks

HARRISBURG - The state's ill-fated venture into wine vending machines might never have been uncorked if the Liquor Control Board had listened to its own evaluation panel's warnings in 2008.

So say copies of documents distributed Wednesday by state House Majority Leader Mike Turzai, who is pushing to privatize the liquor board.

According to the records handed out by Turzai's office, an LCB evaluation committee recommended in July 2008 that the board not enter into a contract with Conshohocken-based Simple Brands, the company proposing to supply the wine kiosks.

Turzai's office also gave out copies of an e-mail dated the day after that panel submitted its recommendation. The message, from an LCB lawyer, instructed employees to hand over all hard copies of the panel's report and to delete all electronic copies.

An LCB spokeswoman on Wednesday characterized that instruction as routine.

The wine kiosks have been beset with problems since the program's launch last summer. As The Inquirer reported last week, the LCB has warned that it will end the kiosk program in September if the contractor doesn't pay up nearly $1 million the agency claims it is owed.

When the contract was first awarded, Republicans accused then-Gov. Ed Rendell of steering business to Simple Brands because two of its investors were major donors to his campaigns. Rendell and LCB officials repeatedly denied this, saying the process was fair and systematic.

Shortly after the kiosks went into service, consumers found them cumbersome to operate and mechanical problems prompted the LCB to shut them down temporarily over the winter holidays.

Turzai (R., Allegheny) wants to dismantle the LCB and privatize alcohol sales. His bill is scheduled to be vetted Thursday at a hearing near Hershey. Among the expected speakers is an official of the Wegmans chain, which told Simple Brands to remove kiosks from its supermarkets because of customer complaints.

According to the records released by Turzai, the LCB's 2008 evaluation panel anticipated such complaints.

"The committee has a general concern that the proposed process for purchasing products via the kiosk machine is cumbersome and may meet with public criticism for not being 'user-friendly,' " said a memo submitted by Matthew Bembenick, a middle manager who recently left the LCB. He could not be reached for comment Wednesday.

Bembenick's memo said Simple Brands had changed its business plan "on the fly as the committee has broached operational issues and concerns."

The memo also said, "The committee is concerned that the lack of a coherent business plan will open the [LCB] up to public criticism and could contribute to a potential project failure." The committee gave the proposal a score of 305.57 points out of a possible 1,000.

LCB spokeswoman Stacey Witalec couldn't immediately say Wednesday if it was unusual to give contracts to vendors with scores that low. She also said it was routine practice to delete copies of evaluations. "Asking to delete additional copies is simply to maintain the integrity of the one master file and to ensure it is complete vs. having any incomplete files within the agency," Witalec said.

Simple Brands president James D. Lesser could not be reached for comment. Under the contract, the firm was to provide kiosks at no cost but would share in proceeds. The LCB contends it was to be reimbursed for various expenses, such as for stocking or wiring the kiosks.