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D.C. Takes Issue With Lottery Firm's Performance

By Yolanda Woodlee
Washington Post Staff Writer
Tuesday, May 6, 2008

The firm that runs the D.C. Lottery was fined $336,124 in January and given poor ratings for timeliness and quality of services in a written evaluation in August, according to the Office of the Chief Financial Officer.

Lottery Technology Enterprises, which has had the lottery contract for nearly 25 years, received a good rating for business relations and acceptable ratings for cost control and customer satisfaction. The company, which is partnered with GTech, the largest provider of lottery services, received the evaluation before submitting its contract proposal in September to continue the city's lottery services.

Documents released to The Washington Post by the office of Chief Financial Officer Natwar M. Gandhi show that there have been 58 performance issues with the lottery supplier since August related to online system incidents, hardware failures and telecommunications difficulties.

"We strongly disagree with the two poor ratings," said Ann Walker Marchant, a spokeswoman for LTE. "Incidents are very common in the industry, and most are insignificant. The real issue is having a vendor who is capable of resolving them."

The information on LTE's performance comes as the District is trying to award a $120 million contract to a new firm -- a joint venture between W2Tech, a nine-month-old local firm, and Intralot, the second-largest gaming supplier. The contract is worth $11 million a year for six years and could grow to $120 million if a five-year extension is granted.

The new firm could reduce lottery costs to $6 million a year, a $5 million savings produced by new games and better technology, according to Eric W. Payne, the contracting officer for the finance office.

Walker Marchant said LTE's most recent proposal includes new equipment. She said that the lottery decided not to upgrade in 1999 and that it's "not fair to ding" LTE for the city's decision.

The written evaluation was the first such document LTE had received since 1983, when it began operating the lottery, LTE officials said.

David Umansky, a spokesman for Gandhi, said it was the "first time the contracting office has used this form to evaluate contractors." He said that independent audits of LTE had repeatedly identified problems in its operations.

In response to the evaluation, Leonard Manning, LTE's chief executive, wrote that the lottery's 10-month evaluation was "not representative of LTE's actual performance" during that time period or since 1999, when the contract was renewed.

"You said the evaluation reflected the fact that software was missing from the last batch and that the gaming system is old and lacks certain capabilities (although you said this was more of a [lottery board] problem than an LTE problem)," he wrote. "LTE is eager to receive more details about the areas in which it was rated 'poor' and any other feedback about its performance that has not been shared." LTE was fined approximately $150,000 for damages assessed between 2000 and 2002 and eventually paid $18,000. No penalties were assessed between 2003 and 2007.

The $336,124 assessed this year pertained to operational glitches that occurred in March and July last year, Walker Marchant said. She said that LTE calculated the damages at $152,681 and that Gandhi's office had failed to respond to two letters challenging the higher fine.

Both LTE and W2Tech are lobbying council members for support.

The D.C. Council must approve a lottery contract by May 15 if it is to take effect in the summer.

W2Tech, in an effort to show it's a bona fide lottery services provider, has hired Guy B. Snowden as vice president of operations and Brian Roberts as vice president of marketing. Both are former officials of GTech, which is LTE's partner. Tom Little is chief executive of Intralot, Gandhi said.

The firm has moved its founder, Warren C. Williams Jr., into the background. Williams Jr. owned a nightclub with his father, Warren C. Williams Sr., at which a man was fatally stabbed.

Williams Jr., a real estate developer, also has been accused by tenants of allowing a building he owns to deteriorate so he can convert the units to condominiums. He has denied the allegation.

Another principal owner, Janisha Richardson, an elected Advisory Neighborhood Commission member, has stepped down, according to Alaka Williams, general manager of W2Tech.

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