Politics Could Stop Proposed Contract, Bid Winner Says
Saturday, May 10, 2008
The local start-up firm trying to get a contract to run the District Lottery complained Friday that politics are trumping fair competition and jeopardizing its proposed contract.
The deal, worth up to $120 million, has a Thursday deadline for approval, but the firm said D.C. Council Chairman Vincent C. Gray (D) has not placed it on the agenda for Tuesday's council budget meeting.
The firm has not been given any reason for the lack of a confirmation vote after it won the competitive bid, W2Tech co-owner Alaka Williams said.
"It's not anything based on the merits," she said. "The process was fair. We're offering the best technological solution. The price is the best."
Gray's office confirmed that he will not place it on the council's agenda Tuesday but had no comment.
If there's no new contract, the lottery will have to extend its deal with the group that has run the games since their creation 25 years ago. That firm, Lottery Technology Enterprises, was the losing bidder on the contract.
The stakes are high. The proposed contract is written for more than $11 million a year, growing to $74 million over six years and potentially $120 million over 10 years. The actual amount paid to the firm could be different, however, because it is based on a percentage of tickets sold.
LTE gets 4.22 percent of the sales. The proposed new contract cuts the percentage almost in half.
Both companies have been pulling out all the stops. LTE has protested the bidding process and tried to defend itself against critics who say its operation is outdated. Its competitor has launched a major lobbying effort, visiting council members and having an attorney write to Gray.
Both firms have had problems. The winning firm is a joint venture named W2I, composed of international lottery firm Intralot and W2Tech, a local start-up owned entirely by Alaka Williams and her husband, Warren C. Williams Jr., she said yesterday.
Warren Williams was an owner of Club U, which rented government office space for a nightclub but was closed after a patron was fatally stabbed in 2005. Williams also was named in March in a Washington Post article that was part of a series on landlords who allegedly were driving out tenants by failing to maintain their buildings. Williams denied the allegations.
LTE is a joint venture involving international lottery firm GTech and New Tech Games, which is owned by P. Leonard Manning. During the firm's time in charge, the District has complained about poor service in the lottery terminal network and outdated technology. Plus, a security breach in 2006 allowed the printing of $70,000 worth of bogus winning tickets. LTE has said that it provides excellent service, that complaints are out of context and that it bid to upgrade the lottery to a state-of-the-art system.