Liquor board’s actions come under fire

By Erin Van Bronkhorst

Associated Press

Carousels turn, turret trucks roll and boxes of liquor bottles bounce along rollers at the state’s new $10 million liquor distribution system in a south Seattle warehouse.

"When it’s up and running, it’s beautiful," distribution manager Gene Kramer said.

But five months after the system was installed, it is still unreliable and hasn’t met delivery goals. The Washington State Liquor Control Board’s new system has had so many glitches that some liquor is still shipped from another warehouse 20 miles away in Auburn.

That means costs rising into the millions of dollars for the 68-year-old state agency, which regulates all hard liquor and distributes it to merchants across the state.

High prices need not trouble the liquor board. It’s so profitable that it returned $209 million in excess funds to state and local governments in the fiscal year ended last June.

Still, the conservative Evergreen Freedom Foundation criticized the agency Wednesday.

"Someone needs to be accountable for this. Someone needs to be fired, if that’s what it takes, to make sure they’re spending taxpayer money wisely and getting what they say they’re buying," said spokeswoman Marsha Richards.

Rising costs include:

  • $2.2 million in rent for the temporary warehouse in Auburn — $74,202 monthly for 30 months since the Seattle warehouse was finished in November 1999 but cannot be fully used because of delays in bidding, buying and testing the handling system. The Auburn facility will be kept open through the end of March.

  • $78,440 to pay eight swing-shift workers — $15,688 monthly from September 2001 through at least this month — to keep up with faulty computer commands at the new warehouse. They’ll be kept until the performance tests are met.

  • $102,500 extra paid to trucking firms — $20,500 monthly from November 2001 through March 2002 — because of problems in operating out of two warehouses 20 miles apart.

    The state has paid $7.4 million to Alvey Systems of St. Louis, the manufacturer, with no penalties thus far even though Alvey’s system has not yet met the contract requirement of shipping 21,250 cases per day.

    New administrative director Pat Kohler said Wednesday that software bugs are being fixed and all the state’s liquor has been shipped out of Seattle for two weeks.

    But shipment shortages have not stopped. Two sources in different parts of the state, who did not want their names used, told The Associated Press that major and random shortages have occurred since the two-warehouse setup began last fall.

    Kohler, former assistant director of the state General Administration Department who began work Jan. 1, said delays due to software problems alone have cost $980,000. But she said the difficulties are not unusual for such a complex system.

    She defended the agency’s decision to replace an antiquated warehousing system in an old building that needed millions of dollars in repairs.

    The high-tech Alvey system will decrease billing errors, improve the accuracy of inventory records, improve customer ability to order in advance, and reduce employee lifting by 60 percent, thus creating a safer workplace.

    Looking back, most of the delay was caused by unforeseen problems in bidding, she said. The first two rounds brought bids that were too high or did not meet specifications. The contract was awarded in May 2000after two years and a rewrite.

    Then a five-month city permit process caused delays, according to Alvey Systems. The system was installed by July 2001. But when managers tried to ramp up in the fall, they found it failed to operate reliably.

    "The system would ship, but ship short, because we simply could not feed it fast enough," Rick Phillips, then acting administrative director, said in November.

    The system was shipping short by 4,000 to 6,000 cases a day in late October, Phillips said.

    With the holiday rush approaching, managers and Alvey quit testing and moved most distribution back to Auburn. As many as 35,000 cases of liquor must move daily to the agency’s 315 stores during the rush.

    In November, 20 percent of shipments were handled through Seattle and 80 percent through Auburn, said Liquor Board spokeswoman Tricia Currier.

    Tests resumed in January. During the first week, 25 percent of shipments were made through Seattle and 75 percent through Auburn, said Board spokesman Bob Riler.

    In the second week, Alvey said 10,000 to 12,000 cases per day were shipped, which was all the liquor needed in the slow season. On Tuesday, Kohler said, 17,000 cases were shipped.

    That’s still short of the contract performance level of 21,250 cases. Alvey hopes to meet that level during tests in February and March.

    Ken Thouvenot, Alvey’s vice president of project management and marketing, said this is a normal installation with delays caused partly by the two-month testing halt during the rush season.

    He noted the complex system requires a liquor board computer to communicate with warehouse management software, which must communicate with factory floor software, which must communicate with logic control equipment.

    "Then all of that is working in conjunction with a complex mechanical system," said Thouvenot. "It takes time to get all of that."

    While, Kohler said there’s no reason to impose penalties on Alvey at this time, Robert Nelson, a spokesman for Gov. Gary Locke said the state will decide whether to seek damages after an evaluation of the system is completed in February.

    "We do expect the liquor control board to be run efficiently, and we don’t think the delays associated with this project, while regrettable, are typical of state government, nor should they be," Nelson said.

    Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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