Mississippi State Tax Commission

Mississippi Department of Revenue

Request for Information

#2017-01

Privatizing Operations of the Liquor Distribution Center

October 9, 2017

MISSISSIPPI DEPARTMENT OF REVENUE

REQUEST FOR INFORMATION

PRIVATIZING THE OPERATIONS OF THE LIQUOR DISTRIBUTION CENTER

Purpose and Background of the RFI

The purpose of this Request for Information (RFI) is to assist the Mississippi Department of Revenue (DOR) and the State of Mississippi in determining potential alternatives to operating the state’s only liquor distribution center (LDC). The purpose of privatizing the LDC is to reduce the state’s cost of operation and to reduce the need for the state to invest the funds required to maintain and operate the LDC.

With this RFI we request information regarding your company and your services to determine if your company would be interested and/or able to operate the LDC. The same information will be gathered from different companies and will be used to evaluate the business case for potential outsourcing of the LDC operations.

As the statewide wholesaler of wine in the State of Mississippi, the Office of Alcoholic Beverage Control (ABC) imports, stores, and sells all legally distributed distilled spirits and wine throughout the State. ABC case sales were 3,032,501 for calendar year 2014, 3,130,463 for calendar year 2015, and 3,222,129 for calendar year 2016. These numbers represent a 3% growth annually and show a 6.25% growth from 2014 to 2016. The ABC has 2,200licensed retailers, including package stores and restaurants. ABC currently carries approximately 4,300different sku’s in bailment at the LDC. At the current sku level, the capacity of the warehouse is approximately 450,000 cases. ABC does take special orders which represents another 8,000 sku’s. Next day deliveries are made to all licensed retailers upon orders of a 5 case minimum. Currently, the ABC contracts with two separate trucking companies to deliver the product and as such, does not maintain its own fleet of delivery trucks.

The LDC facility is located in Gluckstadt Mississippi and is a 211,000 square foot distribution center. The facility is not climate controlled with the exception of a 25,000 square foot fine wine room. The facility was built in 1983 and the fine wine room was added in 2003. The LDC has a mile and a half of consolidation conveyor system which releases the cases based off of waves. There is a tunnel scanner with six heads that sends the cases to the correct door based on the picking label placed on the case. There are 6 receiving docks and 6 shipping docks. The LDC currently operates two shifts. The day shift receives product and works Monday through Thursday from 6:00 am to 5:00 pm. The night shift ships product and works Monday through Thursday from 4:00 pm to 3:00 am. Monday and Thursday are the heaviest nights with an average of approximately 18,000 per night. Tuesday and Wednesday nights average 13,000 and 12,000, respectively. Holiday times of Thanksgiving, Christmas, New Years, Memorial Day and July 4th see per night volumes increase.

Statement of Need

The DOR is currently gathering information to identify viable options to privatize the inbound and outbound operations of the state LDC.

If an acceptable agreement can be reached with one or more parties interested in operating the inbound and outbound operations of the state LDC, the state would privatize the operations of the warehousing and distribution for the ABC. However, ABC will continue to issue permits to new businesses, renew permits for existing businesses and continue enforcement efforts. ABC will also continue to make all wholesale sales of spirits and will be responsible for taking all orders for product from permittees and for purchasing the product at wholesale from the supplier. The new LDC operator would be responsible for receiving trucks, unloading the product, stocking the product, fulfilling the orders and delivering the product.

Issuing Officer

The Request for Information is issued by the Mississippi Department of Revenue.

The issuing Officer is:

Herb Frierson, Commissioner of Revenue

Mississippi Department of Revenue

RFI response procedure

The ABC will be holding an informational meeting which will involve a question and answer session as well as a tour of the facility. This meeting will begin at 10:00 a.m. CST on November 30, 2017. The address for the facility is 1286 Gluckstadt Road, Madison MS 39110. All interested parties are encouraged to attend this meeting and tour.

The responses to the Request for Information should be received on or before 5:00 p.m. CST on December 31, 2017.

To answer this RFI, please fill in the attached form.

The responses to this RFI will be evaluated by staff in the DOR.

To respond to this RFI, please send the attached form in PDF or word-format . Responses may also be mailed to: Meg Bartlett, P.O. Box 22828, Jackson, MS 39225.

For questions regarding this RFI, please contact:

Meg Bartlett

Associate Commissioner Business Taxes and ABC

601-923-7401

A copy of the RFI in e-form may be obtained online at or by emailing Meg Bartlett, Mississippi Department of Revenue,

Questionnaire

Name, Website and Address of Company. If you anticipate a new company being formed, please indicate the investors, managers, and officers you anticipate being involved with the new company as well as their contact information.

Name, E-mail address, and Phone Numbers of Contact Person.

Would your company be interested in operating the LDC for a per case handling fee?

If not, would your company be interested in operating the LDC for a flat yearly fee?

Would you be interested in operating the LDC if the contract was limited to 5 years?

Would you be interested in operating the LDC for 5 years with a mutual option to renew for another 5 years?

What would be the minimum length of time that you would bid to operate the LDC?

What would be the maximum length of time that you would bid to operate the LDC?

If you could choose the length of time you would hold the contract operate the LDC, how long would it be?

Would you want to operate the LDC from our current warehouse space that is a state owned facility? If not, where would you propose to locate your facility?

If you would intend to build a new facility, how long would you anticipate it would take to construct the facility?

What would you expect to be the per case operating fee?

What would you expect to be the flat annual fee?

Would you offer next day delivery of product to every permittee? If not, how often would be make deliveries to permittees?

Would you have a minimum case amount for delivery and if so, what would the amount be?

Would you allow a permittee to pick up smaller orders at the distribution center and if so, what size order would you allow to be picked up?

Do you currently have any distribution operations? If so, please give details of what you distribute, how your operations work, how long you have been in the business, etc.

Explain your distribution plan including number of warehouses, locations of warehouse(s), etc.

Explain your proposed delivery methods including frequency, required minimum volume purchase, limitations based on retailer location, etc. Please include whether deliveries will be contracted out or made by your company.

How would you handle by the bottle orders or less than full case orders?

Please give any additional information you would like to provide for consideration.