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Second firm protests warehouse decision by NH Liquor Commission

New Hampshire Union Leader

January 29. 2013 6:50PM

CONCORD - The second-place bidder for a $200 million warehouse contract with the New Hampshire Liquor Commission has filed a formal protest with the commission over the bidding process, while third-place bidder Law Warehouses of Nashua appears headed for court.

XTL-NH on Monday filed a formal protest with the Liquor Commission over the award of the contract to Exel of Westerville, Ohio, a subsidiary of the German company Deutsche Post DHL. The deadline for protests was Monday.

XTL-NH maintains that Exel should have been disqualified from the bidding process during the initial stages of the Request for Proposals (RFP) evaluation period.

"Exel intentionally did not submit a proposal as per the RFP's rules, and therefore, failed to comply with the requirements of the RFP," said James Bianco, a Concord attorney representing XTL-NH, in a statement released late Monday afternoon. "Their proposal differed greatly from those bidders, like XTL-NH, who followed the RFP's rules and met the requirements included in the RFP. This created an unequal comparison among bidders, and destroyed the purpose of competitive bidding."

The company's protest also questions the cost-efficiency of the Exel contract.

"During the bidding process, XTL-NH submitted the lowest price out of the five bidders," said Louis Cerone, president of XTL-NH. "It is our understanding that traditionally, New Hampshire has always awarded contracts to the lowest qualified bidder. Our price for the contract that was awarded was at least $5.3 million less than Exel's. Over the life of the contract, these savings add up to a total of over $42 million. Why did the State of New Hampshire walk away from over $42 million in savings? It doesn't make sense."

The state Attorney General's office has defended the Liquor Commission in court as Law Warehouses pursued a Right-to-Know petition for more information on how the contract was awarded, but the Attorney General's office has not commented on the contract itself. Manchester attorney Stephen Judge, serving as liquor commission counsel in regard to the warehouse and transportation contract, said the commission needs time to review the XTL-NH protest.

"The Liquor Commission will review the statements that are made by anyone who files a protest," he said. "XTL is the only bidder that filed a protest, and under the RFP, there are five business days to respond. It would be premature for me to comment on the substance of what they have filed at this time."

Bianco, whose Concord law firm specializes in government relations, said the contract with Exel is not in the best interest of New Hampshire. "The NHLC improperly entered into an open-ended contract with Exel that allows the company ample opportunities to significantly raise prices in the future," he said. "This puts the state at risk of adding costs to and losing revenues for the majority of this contract."

Law Warehouses has been active in challenging the contract for several months, but XTL-NH, the second-place bidder, had been largely silent until Monday.

"We are very concerned about the process the NHSLC followed to award this contract," Cerone said. "We know that our company had the lowest price and most responsive bid for this contract. We are concerned that the NHSLC acted inappropriately by changing the RFP process to favor Exel."

XTL-NH's parent corporation, XTL Inc., currently provides warehouse services for the Pennsylvania State Liquor Control Board and maintains corporate headquarters in Philadelphia.

A spokesperson for Exel said earlier this month that the company is moving forward with plans to start business in New Hampshire and has identified a site along Route 3A in Bow for construction of a 240,000-square-foot warehouse. Payment for the warehousing operations does not come from the state, but from the distributors and distillers, who in effect pay the warehouse operators rent to store their product until it is sold.

The Liquor Commission posted its scoring sheet for the five warehouse bidders on its website recently, as part of a 44-page history of how the bid was awarded. On that scoring, XTL-NH had a lowest-cost bid, but scored lower than Exel in "overall solution" and "IT" categories.

The Exel proposal scored 93 points, compared to 91 for XTL-NH and 82 for Law Warehouses, which has done the warehouse and trucking work for the commission since the 1970s.

Attorneys for Law Warehouses on Monday sent a letter to the Attorney General's office raising many of the same issues contained in the XTL-NH complaint, but said the protest process was vaguely defined with no specific remedy.

"It is quite clear that under these circumstances, the New Hampshire Superior Court is the proper forum to determine whether the NHLC acted unlawfully in awarding a contract to Exel," wrote attorney Christopher Carter on behalf of Law Warehouses. "Law Warehouses is prepared to immediately pursue all available remedies, including litigation, to vindicate its rights and enjoin the NHLC from proceeding with the Exel contract."

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